Could chalk up its biggest weekly advance in six months. We will continue to follow the story out of ukraine and keep you updated throughout the morning. The Russia Ukraine situation, that is not the only geopolitical story on the radar. Chuck hagel sounding the alarm on the situation in the middle east arguing that the longterm threat of isis is even more dangerous than al qaeda. Chuck hagel talking about the 9 11 threat to the United States. Jim, isil is as sophisticated and well funded as any group that we have seen. They marry ideology, sophistication of strategic and ticketical military prowess. They are tremendously well funded. This is beyond anything that weve seen. So we must prepare for everything. And the only way you do that is you take a cold, steely hard look at it and get ready. Also today, fighting between israeli and palestinians continues. Israel air strikes continuing for a third day following the collapse of ceasefire talks. The Israeli Military says it carried out 20 air strikes in gaza earlier in the day. We are going to go beyond geopolitics in just a second, but tsd amazing. And i question you being here. Did you miss me . I missed you. But got four days under your belt and now this is a reset. Any progress youve made has been canceled out. Although andrew is not here, so thats a little bit easier for you to come into this. One day of work isnt a big deal. But youre not coming in next friday. Im not. But you came in on the money, its syndicated. I question the the sanity . Yes. And you, i remember hearing from you after about ten days like i am so happy. Never going to be up to although, okay, so do you remember it was one week ago, the markets opened strong, and then we had the ukrainian stuff happened and then they destroyed the convoy, remember . And the markets went up 80 down a hundred and now here we are, its another convoy and its a friday and what is ukraine going to do now . Here at any time, they did the same thing again. And this thing with isis, did you see that guy sitting there and not even hes so brave. But isis, now were finding out that youre not even going to be able to do anything to him. The president talks about containing them. Others say we have to try it bass it could actually undermine or destroy this group, but theyre in syria. Were so worried about Mission Creek now back of the past ten years, the country is so receipt sent. We dont have it in our we dont seem to have the what hagel said is really important, though. It presents a massive threat to homeland security. The stories in usa today said there are 500 british people who are over there with british passports is a hundred americans. The idea that these are people who could cross back in this is unfortunately his wacky base while watching every move he makes that they can attribute to mission, its not what he said initially. Its not just humanitarian. Going into syria to try to get this . No way that its well talk to these guys are more dangerous than al qaeda. Thats what theyre saying. They supposedly are close to having the capability to do serious damage to a city. Ben is sitting down right now. I guess we rushed him in here for the geopolitical hes happy. Because youre ready to talk all Different Things. I will talk about all Different Things at any given lets go. Beyond geopolitics, the other story, and we have to talk about yellen. If only we could get like one of the major fed heads to actually be with us, to speak today, to that will be an amazing feat. Bullard, if he would be available. If only. Oh, wait, he is. Hes joining us at 8 00 eastern time. 7 30 or 8 00 . I think its 8 00. That will be great to talk about this. I went back and i raeld read the piece in the journal about inflation being back. I went back and looked at his entire presentation delivering alpha. These are questions that i want jim to be able to im sure hes really because those guys have seen all this stuff. And then youve got yellens address in jackson hole. I dont know why people are saying she might talk hawkish. She is a dove. They were much more hawkish. He said he was feeling that people were listening to their actions. Were still q. E. It would be regardble if she were more hawkish. But then again, we still doerchbt know, does this definitely mean the markets sell off . Eventually. You usually see a knee jerk wobble, at least. Anyway, were at 28 new high for the year. Shes going to start speaking at 10 00 a. M. Thats important that ben white is going to start speaking at like 6 08. We know the markets move more on that than janet yellen. The central bank is expected to talk on the labor market. Pomzmakers were surprised about the improvement in the employment picture. In an interview with Steve Liesman yesterday, philly fed president plosser warned against waiting too long to hike rates. I would prefer us to begin raising rates sooner and more gradually. But the longer we wait, the more risk i see it as us having to raise rates quickly in response to a stronger economy and perhaps more inflation. Bullard seems to consider the facts. I guess youd say overall hes more hawkish than the others. He can surprise either way sometimes. You dont know what hes going to say. But he will join us live. Hes in st. Louis, the president president. You missed some of the good stu stuff. Ive been hearing about the water yesterday and i heard about the helmet. No, no, no. We were talking about he was arguing with me that everyone is leaving the suburbs and moving back to the cities because he said theres a book that we had. But then we had jeb from cocoa and he said absolutely not true, that the whole rest of the country, everyone is still moving ben just moved to the suburbs. There you go. You think in indianapolis and denver and all those places theyre moving back to the city . He said i dont really consider any of those places cities. He didnt actually say that. Swear to god. He was kind of doing it to just oh, andrew. To be a caricature. But i could see that he meant it. Those are some great cities, too. Denver . Chicago. You know how you try to be funny sometimes . Trying to give you a what, on twitter . And then off camera he said all these places have downtowns. Theyre not really cities. You cant out people what what they say off camera. If i start adding you for off camera i already did. Ben white is here from politico. Right here. So many things. So many things. Is this not unbelievable . Then you throw ferguson into the whole mix, as well. With so many things happening it was not a relaxing summer. Some is not over yet. This is a side show from isis. But even the New York Times decided to Start Talking about the golf right after view. I think its a good turn for the serious this past week. I mean, i think the decision generally i dont know what president s do in their leisure time. One minute hes on tv talking about the heading of an american journalist. People are skashd, theyre scared about what happens to this yun man and his family. And then hes smiling on the golf course. About ten minutes later. The juxtaposition of those images struggling to people and not just republicans who always criticize him for whatever hes doing, but for democrats, there are democrats on the record quoted in that story saying this was a bad idea, this was a bad move on his part because it reinforces this narrative and the Motion People have that hes somewhat checked out from the job right now. Theres a lot of stuff he doesnt like to deal with. Then a few minutes later, hes on top of the world play iing golf. So he has made it clear that his last campaign is in the past . Right. Okay. And the people that are not president obama fans already know how they feel and the people who support the president no matter what he does, theres a certain percentage of those, and right now hes at the bottom. 40 as we talked about earlier. He could do anything and and not going below 40. I dont think he cares. He had a great tee time, a beautiful day. And thats fine. Maybe he waited until later in the day. I think he should have taken the day off. Whether or not at New Hampshire. We have a poll out in the New Hampshire race this week, considered fairley safe for democrats, running for scott brown, but shes now, according to the latest university of New Hampshire poll two points ahead of scott brown. Maybe that poll is not look at obamas numbers there. Theyre down to Something Like 37 . Hes dragging democrats down right now. This is going to hurt democrats in the senate. I think so . I think so. I think he has to reininvestigation to get those numbers. How reingauge . What does he need to be doing . I think on the substance, hes doing a fair amount. On isis, obviously, we are bombing, were active. Hagel talking about what else needs to be done. I think there are things going on. To a degree, its optics, being reingauge in ga reengaged. You have democrats on the record saying they have no relationship with this president. Its the worst that they have ever seen it. He feeds to be up there talking to him more actively about whats going to happen the rest of the year. If he wavents to do ewe lateral action on inversions or immigration, these are serious policy moves hes going to make. Hes going to need widespread democratic support because republicans will go nuts. And if you doesnt have solid democratic support to that, hes going to be lost. You cant do anything with inversi inversion. The Treasury Department is trying to come up with ways to handle that. He wanted to yell at and the president said, you know, gary, ive got some stuff happening here. I liked him for saying that. It was like, well, what are you guys doing . You want me to go and individually call about every one of these . Just work together. I liked when he did that. You liked that . Yeah. Just to illustrate that he doesnt seem particularly engaged. I like the point when his base hates him. Thats when i like him. I do. That makes sense to me. The fact that he does not have this relationship with democrat is in the senate who want to see fire from him, who want to see him go up there with republicans and be engaged with him. As he said in that New York Times article, he doesnt care about his critics. He love ago gave up on what people saying did. Reporter but he wants to carry the senate again. Its another year to have two eye of your term be both houss. S i think the senate i dont know what you can take how about there is a piece in fact huffington post, you missed this. And it was momentum endorsement for obamacare. Momentous endorsement for obamacare. And im like, wow, what happened . Is it some big republican . What happened . And i went into this. Its by this guy that i should have known, jason linkedin. But guess what it was. It was one of the economicic senators two roted for obama care. There are some stuff. At the big gyms. He didnt say what was volatile. He said i actually voted for for preexisting conditions. Lets be pair to mark. He has cancer and his Insurance Company couldnt drop by because of obamacare. But this is what democrats will do. I think its smart. Theyll pick out the things that and its a commentary on how much of a burden it still is in states. And hes getting hammered on it. So theres an argument that he had to respond. Hes not so active. But, you know, the headline was momentum endorsement. Im glad i came back for a day. This is fun. That was an interesting fact that he would do an act where he talked about positive care. You should embrace it. And republicans at some point will have to come up with something other than repeal. Like now youre doing the work of the other side . Oh, wait a second. Dont let him say whatever he wants. No, no, i just take one issue at a time. They know exactly what they want to do. I watched paul ryan on the show. And great interview, as ever. And he said i want to repeal obamacare. But he did not come out with a proposal. Not then. There are some that theres things that we could do, theres things that we should have done beforehand. And this is exactly why obama needs to change his operating method so he doesnt lose the senate. If he does, republicans will send him with bill after bill after bill, first of which will be the repealing of the medical device acts, you repeal that, how does weve done a lot of the pullbacks in terms of the seas that you charge for the fines. They got rid of some of the mandates, saying you know what . Ive got to pay for that. Theres going be a number of things, its going to be either shut down the government or agree to riders that the republicans will put on everything they send him. It will be a nightmare for him. Did you see paul ryan . No. He said that he has aspirations, leading in iowa, at least hes the one that might i heard him say he would get on mitts bandwagon. He said he would be the best guy to run the country, ryan romney or romney line. Vort for his book, as well. Remember when romney got blasted in that hammer down. What i like, its going to take one more cheap shot, far be it from me to do this. John kerry, secretary of state, the biggest threat facing the United States at this point, cash i dont knowon dioxide. Do you remember when he said that . I dont remember that. Yeah. He said Carbon Dioxide is the biggest threat facing the country at this time. Is that really what they think when theyre in those ivory towers . He has not covered himself in glory so far as the secretary of state would be. All right. Good job. Yeah, thank you. Im doing a lot of cardios, lifting some weights, salads. Although ive learned, joe, that you dont have to avoid all carbs in the evening. Its actually a good idea to eat some. He help you sleep and give you more energy the next day. You should avoid them earlier in the day. Did you see my beach shot from my vacation . I would love to see it. Bring it on. Do you have it . No, were not going to show it here. Oh, no. You come over here. Ill show it to you here because i want to show you the progress that ive been making. You look great. You look awesome. After we finish this love fest, when we come back, home depot names a new ceo. Plus, how under armour is trying to lure kevin durant away from nike. Squawk box will be right back. Welcome back, everybody. Home depot names craig menear as the new ceo. Home depot stock has nearly doubled during its six years of him running the country. Fraj blake is someone who has been widely credited with just doing a phenomenal job, even for the housing crisis. I asked for that. Got it earlier this week. Macys last week, they were supposed to be different than everyone else because theyre waiting for home depots numbers. Theyre up like 7 . New high, the stock was up two or three points. And one retailer that, really, the ohm one and then we said is lowes going to be the same . And lowes wasnt. By the way, he stepped in in 2007 right before the housing crash managed to keep that company afloat and maneuver through a very good time. Ive talked about the airlines, how one guy at the top, can you manage to filter stuff down, the ticket agent, Flight Attendant and everyone else . I havent seen that yet. Right now, there are a lot of unhappy but it makes a difference. When you go through just about any of the airlines. And i think home depot employees, they seem to be happy and connected. I walk in and they immediately talk to me. I would agree. Maybe ill get there. A do it yourself kind of man . At different times. Yeah. They usually all work for the same and i have people to help me through. More questions about General Motors today. Federal prosecutors have learned lawyers for the automaker present at key meetings during which information about some problems with some of its vehicles were discussed. Then what they did with that information that was shared. Gm has, for the most part, blamed lowlevel employees not being reported. In squawk sports news, under armour, trying to lure kevin durant away from nike. Espn. Com says the deal could be worth as much as is there an extra number here . No. 285 million. It is said to include stocks and other incentives, including a Community Center built in durants mothers names. Nike would have the right to match the deal under his current contract with the apparelmaker. Hes well liked on and off the court both. Hes seen as a humble guy. And, you know, thats a lot of money. And, you know, a lot of times we worry about some people making too much money and other people not making enough. If the market says youre worth that much, i really like plus you like to see it for a nice guy, too. I wish everyone had this same thought. Yes cried when the won the mvp and he thanked his mom. Speaking of, a study on the wealth gap getting some attention this morning. The Census Bureau reports the median net worth of the richest haas holds rose 11 between 2000 and 2001, but the majority of americans saw their net worth drop. They point to a lot of different factors and its been something weve been talking about for years and even more so this year. You happen, theres been no wage growth and its all tied in with the fed, its tied in with what the response to 20308, which was you know, weve seen assets come back. Home prices havent rocketed back quite at sharply. And nordstrom, tiffany, neiman marcus, mercedes, ritz carlton, and then down at the bottom walmart has been under pressure, mcdonalds. At least its susceptible to that. Yeah. Lets tell you about another story this morning, too. Twitter the dealing with the controversial issue of whether or not to take down graphic images. The social network began removing images of james foley after his familys request to do so. But it says it isnt actively searching for them. Its a fine line for a company thats been dedicated to Free Expression and its raced a lot of questions with james foleys question. Are you terrorists who are terrorizing people with these images. . Gud a i wouldnt i dont know if im deeply september. Watching his expression. He spent two years looking at death right in the face and, you know, daily baitings and everything else. And he was a pretty xwepgzal individual to start with, i think, because thats why he was there. He wasnt there because he liked taking pictures. He was there because he liked showing to the world what was happening. Truly, we throw the word hero around a lot, but i think the daily news got it right today. Hero to the end for this guy. Anyway, if youre just waking up, check out the futures. Weve been seeing a drop following author headlines out of russia because were worried the same thing could happen. Trucks in the convoy moving across the ukrainian border. More on this breaking story when squawk box returns. Sfwhoo breaking news out this hour. Reuters is reporting about 70 trucks on the russian aid convoy, and we use the word aid, we dont know who theyre aiding. Across the russian ukraine border. Aiding this, things other than humanitarian items. The ukrainian state security chief says that the movement of russian trucks into ukraine represents a direct invasion by russia. So thats what whether this could be the beginning of Something Like that and you know that the guys in ukraine i dont know if i call them trigger happy, but they said they got rid of that last convoy that came in pretty quickly. I was shocked that they would actually destroy it. And that affected the markets we saw and turned things and pushed futures down. You can see this morning, moscows market is under pressure. Our futures are down, but just slightly at this point. Just down by about 22 points. Joining us now to talk more about it, jadon pride. On fixed income, we have kevin giddes, from raymond james. Gentlemen, welcome to both of you. Id like to talk a little bit about what you think just about geopolitical news at this point. Is it something that makes you nervous . Is it something you Pay Attention to but you continue to invest . What do you do it with it at this point . Well, look, becky, this is an environment where you have to kind of recognize the risks. Weve gone from having an undervalued equity market to having a market thats relatively full valued. It may not be extremely expensive, but were at least at prices here that dont protect you as much from the downside. Were not sitting closer to the floor. So you have to take into account the risks that come about. And geopolitical risks come about on a regular basis and do hit the markets quite off. More likely than not, theyre transitory. But there are the odd events that could have an economic back. When we look at russia, our backdrop thought on this is theyre heavily incentivized not to have this whole situation breakdown. They get 10 of their economy from europe. And then on top of it, 52 of their federal budget revenues come from their sales of oil and natural gas into the european union. That amount of their budget actually kind of restricts their ability to do a lot of things and be truly dent mental to the economy. We may have to deal with the skirmishes, the invasions and the whipsawing that comes from that, but the Economic Impact from our perspective looks like its something that it would take a very kind of Core Financial decision for the country to actually have that come through and hit us. Kevin, do you think that putin really cares all that much about any Economic Impact at this point . It doesnt appear so right now. Clearer heads may prevail in the end, but this is part of the plan of his and its been in place for a while. I dont think at some point in time hes too concerned about what hes losing economically. What do you expect to hear from janet yellen today . Thats the other thing that could impact trading today. Well, i think the market prepared for a complete dove report from the fed chair. Anything other than that is going to be negative for the bond market. So i think we are bracing ourselves for, really, more of the same from her in terms of the labor market and where she is with her version of fed policy. We would have a pretty quick selloff. In the last fed meeting, did you catch it . Yeah. Its stuck in my its something that happened again. I know. And then they keep playing that. Kevin. Thanks, mac, for helping. I mean, at the last fed minutes that we got from the last fed meeting, it did sound like they were a little more hawkish around the table. Do you think she has to take any of that into account . I think so a little bit. But i dont think that that is going to change her view on Interest Rates and when were going to raise Interest Rates. And a lot has happened since july 29th and 30th when those fed minutes were actually created. In terms of the economy . In terms of the economy, in terms of the geopolitical risk, in terms of the general view of the marketplace. So i think the numbers arent as strong in august as they were in july when the fed was making these decisions and making these comments. So i think theres a little bit of a different world, even in the last two weeks. Thats a fair point, jason. We have heard some concerning news from some of the Big Companies that weve heard from, even mcdonalds talking about some of these issues. Walmart not looking at strong as it in before. How does the fed handle that . I think the fed is basically looking at when were hearing this difference between yellen and the committee, were talking about a difference between when they start between Second Quarter of next year and Third Quarter next year. Were getting fine tuned here and maybe overemphasizing sometimes how much the different is. Theres a possibility that the fed members would actually say, okay, we started and lets go very slow in getting into it because the economy just its not going to be rocked too much by any news that comes out of this. You think the fed has done a good job of priming the market for these higher rates . You know, i think they have generally for higher rates. At the same time, i recognize the fact that the market tends to take these news items and react fairley dramatically to them when it really doesnt make all that much sense, just a slight wording change and youll find that the market moves, you know, 50 basis points or a full percent on that news alone when in reality, i dont know if the true impact of whats going to happen is really changed. Its just that sent mental change of one person saying one thing and the committee saying the other and that back and forth that occurs. Actually, i think that the fed, to some degree, creates that somewhat just to see how the markets react to the different pieces of news in order to gauge how they will actually implement the policy down the line. I think it may actually help them see what the market thinks of those different types of actions going forward. Before they actually implement. Kevin, what do you think of that . Well, i think we have to keep this in perspective. The fed is their charge is to raise shortterm rates. If youre going to affect the shortterm market. The story this year has been the longterm market and the value in treasuries versus other sovereigns in the world and the lack of inflation. So as long as inflation is present, we got 30 basis points out of the ten year quickly with a lack of inflation as well as what were debating the feds future tightening needs are. So, you know, theyre going to theyre going to raise rates here on the short end of the curve. But the best story of the year in treasuries has been in the long end of the curve, a lack of inflation, call it geopolitical risks included. But if you compared the tenyear treasury against germany, against canada, against france, and even against italy, it comes out pretty inflatable. Thank you so much for joining us today. Thanks for having me, becky. Coming up, a record breaking week. The health of the consumer, some of those numbers as we head to break. A quick check on whats happening in the european markets right now with that convoy, moving along. Welcome back. U. S. Equity futures down about 21 points. Were flat at the beginning of the show. News is sort of trickling in about you see it . Nope. What happens with hes getting some newspapers. For the slide. We this convoy is moving . It started around the top of the show, about 70 trucks. Last friday, a convoy went in and it was destroyed by ukraine, the russian convoy. Now theres another one going in and some say its going as a direct invasion. Some ewe crayan officials are calling it a direct invasion, yes. Right now, some modest led arrows here for the United States futures. Overseas, weve seen some red arrows, as well. Some of those european markets down by 0. 7 . This is happening as weve been watching whats happening with this trucking convoy. The dax right now in germany, down by 0. 8 . Well continue to watch this through the morning. It has been a big week in retail, as well. Home depot, lowes and kohls hitting highs. Next week, abercrombie is out with results. How should investors feel about the sector and the health of the consumer . Joining us right now, jay rogers, Worldwide Enterprises ceo. Also our very own courtney reagan. What is happening with the consumer . Whats taking off with this . Its hard to get a feel for that right now. I think if youre winning, youre really winning. I think if youve got names, the big brands, macys has been a stand out in the Department Store secretarier for a while and i dont see that changing. Home depot, a winner in the Home Improvement space as well as in the format in general. Theyre beginning to use their stores and distribution centers. You have the big standouts. The ones that are filling are filling. Consumers are fickle and theyre strongly fickle. They have Discretionary Income that theyre willing to spend on items like sweaters and shoes. I believe thats beginning to slow, but its been a tough go for some of these retailers. I think the bifurcation is about to stop bifurcating. If we see wage growth then people like walmart who havent been participating will start to participate. I think its true, thats what weve seen so far. The upper end has done really well, the lower end hasnt. Unemployment is rising, wages are starting to have some growth. People are about to give up their love affair on boig a brand new car. When that happens, well start to see booeg people buying sweaters again. They may still be mad as hell at the polls this november, but theyll be wearing a new sweater when they get there. The Consumer Confidence is going to get better even if their attitude towards politics doesnt get better. Is that the the end of the new normal . Do we get back to a more normalized growth rate . Do customers feel better . Looking at the Corporate Bond issuance, its hitting new highs, taking off on things. Is that a sign that Companies Feel more competent, too . Companies do feel more confident. I dont think anybody thinks were coming back to a new normal. All evidence is were going to see slow growth for a time. Is that evidenced by the stocks . No. Its the best set up for Department Stores that ive seen in a long time. Ive just walked stores in chicago in the last two days, 20 hours in the malls, didnt buy anything. Inventories are at the cleanest in the mall and at the Department Stores that i think ive ever seen them. That tells you we can have pretty good strength on the back half even with moderate growth. Also, the setup is great for the weather, right . The weather compared to last year has to be better. Were going to see one more day between thanksgiving and christmas on selling. All the things youre looking for with a healthier consumer is about to happen. So we should be when you think about the Department Stores, i think macys. I think macys, kohls, jcpenney and nordstrom are all buys right now. Theyre going to have a good back half. Im not pushing dillards. I think theyre starting to struggle a little. I think part of that is penney Getting Better. Part of it is macys online. Part of that is those two dont have big online businesses. More than 100 of the growth in retail sales this fall is going to come online, meaning brick and mortar does less online and its all the growth. You have to be a big player. Macys is the best at that. Nordstrom is the best at that. Penneys is Getting Better at that. Kohls is good at it. Gap, too, one of the good omni channel retailers. Theyre about the only guy in the mall i really like unless you include people like foot locker that are just best in class, right . But as far as being disadvantaged by the business moving online, gap is going to be less disadvantaged than all those other guys in the mall. One thing weve heard again and again is online sales are great, but theyre not as profitable with brick and mortar sales. That may be true, but they better get used to it because its going to be what happens. Only 10 of those sales are happening online, but its all the growth. So you better get good at it. And the future of retail, i dont believe and most people dont believe stores are going to completely disappear in the future, even 25 years from now. But they will probably be less important, perhaps more showrooms, perhaps some retailers are more important than others. I think theyll be very important for the home depots of the world with lumber and things like that. But i think that the online is something that retailers are having to really give themselves a react check about. Courtney, jan, thank you both. Do you like a sharp i love it. See, theyre not bugs. Find out which Little Critter is also actually not a big fan of suburbia. Roaches. Like cities. Bed bugs . No theyre not bugs. And then theyre arachnids. And then later this morning the newsmaker of the morning. You can kill as many roaches as you want but its a sin to kill a spider. St. Louis fed president jim bullard will be on at 8 00 a. M. Central bankers gathering in jackson hole debating issues including future rate hikes. Were going to talk about his response to all kinds of stuff. Druckenmiller, feldstein. Hes going to have a hard time with dawes. 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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. [ male announcer ] humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal infections and cancers, including lymphoma, have happened, as have blood, liver, and nervous system problems, serious allergic reactions, and new or worsening heart failure. Before treatment, get tested for tb. Tell your doctor if youve been to areas where certain fungal infections are common, and if youve had tb, hepatitis b, are prone to infections, or have flulike symptoms or sores. Dont start humira if you have an infection. [ woman ] take the next step. Talk to your doctor and visit humira. Com. This is humira at work. I need more time than three minutes to talk about this. One of the biggest fears of people are afraid of spieders. Which is pathetic. Anybody that kills a spider doesnt know what theyre doing. You dont kill spieders. I killed a spider this week. Dont kill spiders. Do not kill spiders. It was in the bathtub with me. Live and let live. I never kill them outside. You should leave them in your house. They kill disease they kill mosquitoes. Im glad for that. They kill roaches. They kill what if they fall on your head when youre in the shower . So what . They kill clothes moths. They stay away from humans. You shouldnt get too close to them because they might bite. But they usually wouldnt. But they kill all these other Disgusting Things it scared me. It is like harper lee. You can shoot as many blue jays as you want. I agree with that in theory but when almost drops on your head. But they do kill all these other things and flies, too. I know, i saw charlottes web. I agree with you on every count. You remember the babies . Joy and arannia and nellie. She was nice to the pig. Agreed. A report from the l. A. Times, you know, sorkin thinks nobodys moving into the city actually, when you look at what happens to animals in urban environments, some of them thrive. Like raccoons apparently do very well in urbanization because they learn to become urbanized. Pigeons do very well. They eat garbage. Most of the time people do not do well like humans do not do well in urban areas because youre all too close together. You get grouchy. Im kidding about the humans. But that was actually for andrew. But they have theyre checking now, scientists, to see how some species do, urbanization, and spiders do very, very well. And you might why . They looked at these spiders that they could follow for a long period of time. Theyre this golden orb spiders. They make semipermanent webs where their live their whole life so you can follow the females the whole time. The females were bigger, better at mating, thats call eed bigger, fatter, and the reason, warmer environments. Urban heat islands. That makes sense. Not all species do better. Dont, please and im fecund . You can kill as many blue jays as you want. Its a sin to kill a spider. I apologize. When we come back we are going to talk about futures under pressure, whats been happening. Squawk box will be right back. [ male announcer ] dont just visit miami. [ jackhammer pounding, horns honking ] [ siren wailing ] visit tripadvisor miami. [ bird chirping ] with millions of reviews, tripadvisor makes any destination better. E with millions of reviews, financial noise financial noise financial noise financial noise breaking news. Moscow defying kiev. Trucks from an aid convoy passing the ukraine border. One official calling it a direct invasion. The fed in focus. Janet yellen and the worlds other leading central bankers gathering in the mountains of wyoming. This is no time for the markets to be on vacation. Making money in the stealth summer rally. Opportunities abound and well bring you many of them. Second hour of squawk box begins right now. Good morning, everybody. Welcome back to squawk box. We are following a breaking story for the global markets. Stock futures have been trading lower this morning. Obviously were off the lowest levels of the day. But weve seen some pressure that started after reuters first reported that a russian aid convoy entered ukraine without government permission. And without a previously agreed to red cross escort. Ukraines state security chief says this amounts to a direct invasion by russia. Again at this point looks like the futures are down by about 7. 5 points. They were up by about 20 or 30 points at the highs this morning. Down by close to 40 points. And, continuing to fluctuate as these news reports come in. So, the news is important, and its big. We werent necessarily breaking news, futures down six, based on russia no but did you see how we have to show the futures to let you know whats happening based on this big story. But were not saying futures down six because what were saying is, look out. Because, the situation in russia and ukraine affected the markets greatly in the past. Also if you look at whats happening with the russian stock market this morning, it was down by about 2. 3 . Looks like the simpsons, ken brockman with the big storm. The death toll currently zero. And we will monitor the other big story, market story this morning. The street we didnt sell it. Because people at home, i dont want them, you know, dont want to be a cliche. We realize, sometimes ive got serious problems. The street anticipating new comments from fed chair janet yellen. Shell be speaking in jackson hole, wyoming at 10 00 eastern. Investors looking for new clues on when the fed may start to raise Interest Rates. The summer rally rolls on. The s p notching its 28th record close of the year. The nasdaq back at 14year highs. And the dow just over 100 pajss away from its alltime high. All of this as Investor Sentiment sits at a ninemonth high. Are these reasons to feel more bullish or should you be afraid . Joining us is Vice President and editor of the American Association of individual investors journal. Rich steinberg is the ceo of steinberg global asset management. Gentlemen, welcome to both of you. Charles lets start with you. This has been anything but a typical, quiet summer. How do investors feel after all these ups and downs this year . Well, we just had a big upward swing in optimism. It rose about 15 Percentage Points over the last two weeks. And i think its a reaction to the market not correcting. If we go back two weeks we two weeks ago we had the s p 500 down about 4 . And there was some fear that a correction was finally starting to occur. Now, obviously, weve had a reversal. The s p 500 is now at new highs. And i think were actually seeing a relief reaction to the market not correcting. So investors are looking at the upward momentum, seeing it continuing, and are now feeling more optimistic than they did just a few weeks ago. Charles, is that a good sign or a bad sign . Its neither. When we look at optimism, right now its really within its historical range. So i think its more of a psychological reaction. And probably more of a shortterm reaction. Whats interesting is when i talk to individual investors im not getting this big sense of optimism. Even last month i was talking in San Francisco, and one of the questions i was asked was, do i think a correction is going to occur . So im not seeing im not getting the sense that investors are really overly optimistic. I think theyre encouraged. But theres still a sense of caution out there. That almost sounds like capitulation, too. Like keep waiting for that drop and you dont get it. Rich, how do you feel about things this summer . Well, you know, since last time i was on, becky, we had that go back to the 1920 level. Were back up at this trading ridge and i think were going to be stuck in this trading range. Your guest talked about, you know, investors feeling more bullish. But its really going to be the difference between what they say and what they actually do. So now were at the 17,000 dow level. Earnings are getting more coming in well. But unless investors start to really plow that extra cash in, were not getting a sense from our channel checks that the Retail Investor is completely frustrated with the cash on the sidelines. And until that cash and capitulation occurs where you get a blowup rally i think were going to be stuck in a trading range for awhile and investors should be waiting for that cash to buy on the way back down. Maybe back to the 1920 level. So for now i think were going to tread water. So you would buy at 1920 but when you approach 2,000 on the s p youre staying away from it, rich . Were staying were in the at the firm were about 75 invested. And my feeling is, if the market moves higher, which it could because oftentimes you get further pushup from valuation, but its okay to make less on the way up until we really see that the earnings are going to really start to come in and people are going to focus on 2015. Rich, lets forget about sentiment for awhile. Lets just talk about valuations for stocks and based on earnings do you think stocks are expensive right now . Based on this years earnings, the markets expensive. The s p is going to earn 119 this year. Geopolitics aside, unless earnings start to get hurt by a slowdown in europe, the markets trading at over 16, almost 17 times earnings. Next year earnings are going to be about 130 dollars so if you apply a 16 multiple which is pretty close to the fiveyear average we could see 2100 on the s p. Which would be about a 7 total return. 5 in price and 2 . So if you get a pullback, investors will have a chance to have a decent year next year. But its not going to be walking up a series of steps. Its going to be a pullback, and give and take for awhile. Charles, what do you think happened to make investors feel better over the last couple of weeks . If you look at global headlines, theres certainly not a lot to feel great about. I do think a lot of it was the upward momentum. Youre right. The global headlines are negative. We did have that incident, in missouri, which is ongoing and that took some of the negative headlines from the global perspective. Off the front page. Obviously todays news in ukraine cause for concern. But i think a lot of investors right now are looking at the trend, and the big challenge for a lot of investors if we look at stocks, were not seeing a lot of stocks that are cheap. But then when you look at bonds, theyre not really cheap, either. So for a lot of investors, its very frustrating, because theyre not getting interest on their cash. But theyre looking at stock valuations, and theyre not seeing that stocks are cheap. I wouldnt say theyre expensive. But theyre certainly not cheap, either. Rich, theres a story in the wall street journal today about how Corporate Bonds are just on fire. That entire market has sold close to 100 billion this year alone. That the money that companies are putting out there in terms of what they want to put back into plants and spending, thats up about 90 from where it was a year ago. Thats an awfully good sign for the markets, isnt it . Well, it is, it will help earnings. But i think whats happening, becky, is your corporations know that the feds going to be raising rates maybe by midsummer next year. And theres a race to kind of grab that cheap cash right now. The question will be, are they going to use it to hire more people . Are they going to use it to refinance other debt . Or are they going to be investing in capex . Those are questions we dont know yet. But i think its important to realize the part of the bond market that the other guest was just talking about that we should also be thinking about, in order for the market to have the next leg up over the next 15 months, endowments and pensions are going to have to say bonds are just too expensive. Should we be shifting more money out of bonds, and then into equities . September 30th theyll start to be thinking about the managers that they have going into the end of the year. And i think its something we should be watching over the next couple months. Okay. Rich, charles, gentlemen, thank you to both of you and have a great weekend. You, too. Have a great weekend, guys. Okay, see you guys. In corporate news, could the anticipated cement launch of the iphone 6 be delayed . Reports say apples suppliers are scrambling to produce enough of the screens. I guess theyre bigger, for the new phones. After production was halted due to the redesign of a key component. Apple hasnt yet officially announced the date for an iphone launch event. Still got two . Yeah. Blackberry and an iphone . Mmhmm. Havent tried the dictation . No. On the iphone . But i like it. I know. Youre carrying two phones around. There was a time when you had none. Now you got and that and i also have a mini pad. An ipad. I also have an ipad. Citigroup facing restrictions on sales of Hedge Fund Investments following a deal with the s. E. C. The bank reportedly sending Hedge Fund Firms letters telling them it cant sell investments in hedge funds and private equity funds to clients at this point. And another Company Facing a Security Breach this time it hit a Venture Capital firm, Kleiner Perkins that famous California Firm and detectives out there are investigating the theft may put some valuable Financial Data at risk. Thats surprising. You would expect Kleiner Perkins to theyre so tech savvy you would think they would be on top of everything on top. That is weird. All right when we come back, squawk box takes flight. Airline stocks soaring to record highs riding on low oil prices and strong consumer demand. Well put the best investing opportunities in the sector up on the board right after this. And then speaking of travel, las vegas welcoming its first new resort in five years. The big bet of one Legendary Hotel owner still ahead. 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. Welcome back. The futures now down 14 points. Among our stocks to watch today, foot locker. The companys earnings beating the street by a dime. Revenues also better than consensus. Quarterly samestore sales jumped better than expected 7 . And that all looks good there for foot locker. Im not sure why. Foot locker is doing so much better than so many other retailers. I want to see a longer chart but thats 7 same stor sales. This is the time to buy sneakers. Whoa. Ill say it again how do you spell whoa . Whoah . What is whoa. Thats all i can say to that. You got oh, my god. You got obsolescence, planned obsolescence with sneakers. And i do believe it because i start getting shin splints. I noticed it this week. Its my hips that hurt. I need a new pair right now. Because they look the same. Yeah. But they really do its the wear and tear. I dont believe them i do. You cant be more than 200 miles on them. I was walking in here today thinking i need new sneakers and i need them right now. It used to be if youre not a runner you wear the shoes until they wear out it doesnt matter. You can feel it. I feel it right here. Its oh, boy. All right. Also United Airlines hoping the wave of business travelers wallet is through their stomach. It is revamping the menu in first class in hopes of filling the cab be. Phil lebeau joins us with more. This is a good thing. Upgrading food. We like that. We dont see this very often these days, becky. And this is something that i think some people who fly United Airlines on a regular basis will say what . Thats a nice change of pace, adding meals for a few more flights. Heres what united is doing. Really two changes. One is the fact that starting next year they will be adding meals for their premium customers, were talking about people in the Business Class and those few flights, very few flights that have first class. Those are on domestic flights at least 800 miles in distance. Thats a little bit shorter than they were in the past. At the same time what were going to see starting next month is united revamping its Business Class meals to include salads and wraps all in a hopes of freshening the menu, and adding a little bit more pizzazz to those who are really frankly tired of what theyre seeing when they come to the meals in Business Class. Menu fatigue is probably our Biggest Issue i think when youre flying. Because if you fly a lot you see the same thing no matter how often you try to change it. For us its like basically once this rolls out im already going to start working on wiping it clean and starting all over again because were going to have to in about nine months, a year, you know, reinvent the wheel and start from scratch. We caught up with a United Airlines chef yesterday when they were showing off the new offerings that theyll be having in Business Class. Look airlines have been shifting their meal plans on domestic routes over the last eight, ten years. Used to be youd get a meal, and any class on the airplane. Not the case anymore. But american and delta have cut back their meal plans on many of their routes here in the u. S. As you take a look at shares of the airlines keep in mind that for the airlines they look at meals as being important for making those top tier customers happy, but its not going to bring people in to an airline. Generally speaking, most people in the Airline Business will tell you that this is important on the margin. On the edge. But its a very important edge when youre talking about those Business Class customers, the people who are paying top dollar, becky and joe, they would like to see something a little bit different in their meals in first class, or new when it comes to certain routes. How about something other than a basket that has bananas and cookies in it . The bananas and the chips and the canada, and then you always see somebody who is like, well, here, let me take three of these. And then youre like one this is not like trickortreating when youre a kid and you stick your whole hand in there. Yeah. You have a friend who does that, right, phil . Oh, boy all those other people believe me if i did that people would say something. So yes, people notice. People notice. Im going to say something. Heres lebeau i just want to say one thing in defense of the whole air its hard to travel. It is. Ever since the shoe bomber and all that, its hard. I will concede that. But, i still think we take it for granted. I think we take the price for granted because it hasnt gone up in 25 years, really. Correct. And if you take your kids, and get in an suv and drive 1,000 miles, and when youre done, tell me that flying is hard. No, i just did it. I went to maine and back. That was an 11hour drive. Every big long truck that you pass where youre going okay i think were going i think we probably are going to survive this truck. And then theres another one. No, if youre driving if youre going less than 12 hours, youre better off driving because of the delays and the time it takes from the time no, drive something hard and dangerous. Its hard and dangerous and taxing and you go crazy and you need a vacation i just flew out to indiana, to chicago and drove to indiana to see my grandmother. It took us almost as long, it would have been two hours i know it would have been two hours longer if i would have left the door and drove there. Were just too fat. Were fat and happy now and we dont appreciate flying. And if youre lucky enough to get an upgrade, phil, to one of those united beds with the you got every movie. My kids dont want to get off it. Seven hours is not long enough. It never was like that before, phil. Dont ever take a trip with becky. Dont take a trip with becky. You play the license plate game when you drive . With becky you got to you got to make sure i got 29. You make sure theres a barf bag. A couple barf bags. Thats true. Thats not the airlines fault. Goldfish crackers. Youll grab one of those bags. No one time there was no bag, i grabbed a never mind. Pillow case. Oh. Doesnt work very well. Oh, god. Okay. Thanks nobody wants to fly next to me. Airline stocks have been flying high. Check out the performance for the major airlines. United, jetblue, delta, American Airlines and southwest all soaring. Theyre telling me. So is now the time to buy . Has the big Market Opportunity already taken off . Joining us now is joseph denarddy transportation sector analyst. There was a time even Warren Buffett said i made a mistake, i bought an airline. Theyre not investments, theyre at best trades. But there are other people that say in the last five years thats changed. What about it, joe . Yeah, i think a lots changed since warren, mr. Buffett made those comments, i think consolidation is really helping the group quite a bit. I think that, you know, capacity discipline has created a very healthy pricing environment for these guys domestically. So i think theyre making money in both markets now domestic and international. You know, in the past theyve really made all their money internationally and then broken even or lost some on the domestic side. So i think quite a bit has changed over the past few years. What was it that was so messed up . I mean there were some really bad ceos 10, 15 years ago. I dont know what they were doing running some of those places. But was it hard to come off of deregulation . Were we not ready . What went wrong back then and you said whats going right now a little bit of disciplining and capacity discipline is helping. But, what was wrong with the industry . Yeah i think it was a function of how mature the market was at that point. That it was more about market share and growth. I think at this point the u. S. Market is very mature. Youve got a good industry structure in terms of how many airlines, and the market share that each of them have. So i think thats allowing them to focus more on roic, returning cash to shareholders. You now have five or six airlines either paying a dividend or buying back stock. Thats a huge difference between you know, this cycle and past cycles. So i think that says a lot about how the industry has changed and we think it is suitable as a longterm investment. Really. So your favorite stock is delta at this point . But youd buy them all . Yeah, i think theres a lot of upside for the group. If you look at valuation, they still trade at significant discounts to the s p. Similar to the rails previously. You know, before that industry went through consolidation. So we think as Airlines Start to look at their Balance Sheets and their capital plans look more like industrials that they can get a better multiple. I think that will take a few years to occur. Given where Investor Sentiment towards the space is. Its still fairly tenuous. But i think, you know, that thats a pretty good next leg for the industry. Well i would even think that the shale revolution which takes less pressure off of, you know, oil for were always going to need it for certain things. If we can replace some other things with it. You worry about an oil shock with jet fuel and then you worry, you know, unfortunately we still worry about some horrific event that someone does on purpose with an airliner. You remember what happened last time. Thats always looming. Hopefully that never happens again. We got a lot of security hopefully. But, its a dangerous world. But so go ahead and do it, and even though you saw the charts, they go straight up, just stay in them and buy them . Yeah, i mean our top pick is delta. We probably like delta, united, spirit. So we think theres a lot of upside left in some of these names. All right, joe, thank you. Okay. Okay coming up, our newsmaker of the morning is jim bullard. The big fed guy. Whats he going to say . Well, hes warning investors that it could be reading the fed all wrong at this point. Well see what we mean by that when st. Louis fed president jim bullard will join us first on cnbc at 8 00 eastern with liesman. E financial noise financial noise financial noise financial noise for the evert time. She let him plan the vacation. Off the beaten path he said trust me he implored alas, she is beginning to seriously wonder why she ever doubted the booking genius planet earths number one accomodation site booking. Com booking. Yeah welcome back, everybody. Happy friday. Take a look at this video this morning. Comedian chris rock sitting in the front row behind third base. That dugout at yankee stadium. Yeah, he was in the right place at the right time. A foul ball came his way. It wasnt a clean catch but the ball did land in his seat, and nice guy that he is, he snatched it up and handed it off to a young fan down the row. Yay. Good for him. Mmhmm. When we come back, Nbcs Richard Engel will join us to talk about the big geopolitical stories of the morning. Squawk box back after a quick break. [ male announcer ] since we began, mercedesbenz has pioneered many breakthroughs. Breakthroughs in design. Breakthroughs in safety. In engineering. And technology. And now our latest creation breaks one more barrier. Presenting the cla. Starting at 29,900. Tdd 18003452550 can take you in many directions. Spark your curiosity starting at 29,900. Tdd 18003452550 you read this. Watch that. Tdd 18003452550 you look for whats next. Tdd 18003452550 at schwab, we can help turn inspiration into action tdd 18003452550 boost your trading iq with the help of tdd 18003452550 our live online workshops tdd 18003452550 like identifying market trends. 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This was, as you can imagine, richard, for us unsettling, for you, i mean it must be a constant, constantly in the front of your mind whats happening. But im sure that didnt make it any easier just to look at the images, or to read about the actual story, and i think we just need to see what life what the value of life is in certain parts of the world. It just is not consistent on how a value of human life is measured, i guess. Yeah, well, its always terrible to report on the death of a colleague, and particularly when it is a brutal, horrible execution. James foley was held for two years. And other people who were with him, who were released, describe how he was singled out for abuse because he was americans. And that his kidnappers really had no intention, no serious intention of letting him go. They asked for 100 Million Euros or 130 plus million dollars, which is a ridiculous amount. Many times more what other hostages were being negotiated for. And it seems like they wanted to keep him for pressure, for political reasons, to execute him. And they found this opportunity, when the u. S. Began airstrikes. Isis felt it was immune. It was operating in syria, then it crossed over in to iraq, it didnt think that the u. S. Would get back involved in this war, after nearly a decade of a very painful experience with the United States. And then the air strikes began and isis took out its prisoner, sent an email to foleys parents saying, he is going to be punished for these airstrikes, and then they beheaded him on a videotape. Yeah. All the different ramifications and angles we havent talked in a while, richard, so the big story today it involves, in most of the u. S. Papers, and that is the we really dont have, as a country, or i dont think the administration, you know really feels like getting more deeply involved in the middle east at this point in terms and you see Mission Creep every time the president does something even incrementally bigger than what weve announced, it comes under criticism. But now were hearing to actually deal with isis we might even have to go into syria. So it seems like we are our options are not very we dont have any really good ones. No, the options are all terrible. You have to think of isis now, unlike other terrorist groups. Most terrorist groups, theyre small cells, they dont control territory, they hide in the shadows, they meet in safe houses and they plot attacks. Isis has effectively a state. It doesnt even call itself isis anymore. Its now called the Islamic State because they control about a third of syria, they control large sections of Northern Iraq, including the city of mosul, which is 2 million people. They have heavy weapons. U. S. Made weapons stolen from the iraqi army. So just carrying out airstrikes in iraq doesnt do much against the group. It contains them. It pushes a little bit them back over the border into syria, but since they operate both in iraq and syria, its not going to eliminate the group, because if they get hit in iraq, they just retreat back over the border into syria, regroup, and live to fight another day. What were seeing now is the senior u. S. Officials, including the defense secretary, and the chairman of the joint chiefs, saying, this isnt enough. This isnt working. We can bomb Northern Iraq forever, and trying to bomb, you know, the isis targets, and its not this problem isnt going to go away. And this group is dangerous. It is incredibly radical. It is blood thirsty. And it is it wants to attack the u. S. Its not just satisfied in carrying out attacks in iraq and syria. Its clearly says were going to go further. We wanted another 9 11. And its attracting a lot of recruits. So the question is what do you do about it . Do you send forces into syria . Do you start carrying out air strikes into syria . Or do you have to have some sort of rapprochement with Bashar Al Assad . Bashar al assad, the regime, the brutal regime of syria, the u. S. Policy until recently has been to topple the regime, to support the rebel movement. But now were sort of fighting on the same side. So, were starting to hear more about well, maybe we should rehabilitate Bashar Al Assad and let him do the fighting against isis in syria. So that the u. S. Doesnt have that Mission Creep you were just talking about. Richard something you told us six or eight weeks ago is now the lead story in usa today this morning. It talks about how there are people with western pass ports, Something Like 500 british citizens, and another 100 american citizens, who are there at this point, helping and what a huge problem that presents. I mean if this is something that we can identify those numbers, cant we also identify those people . We have u. S. Intelligence has names. Because a lot of these people, they go missing, they leave their country. They go most of them through turkey where i am right now and they never come back. A lot of them also become active on twitter and post their exploits to syria. So there are names. The u. S. Has thousands of names of these fighters. But its no guarantee that we have all of the names. And once youre dealing with people who have western passports, it does make it easier for them to get through border controls. Its not like these are people operating in pakistan. When anyone comes from pakistan and lands at jfk, theyre flagged. But its not the same if they come, if they have a french passport or a belgian passport it doesnt get the same level of scrutiny. So each one of these people who has a name tries to land at jfk, yeah, theyll be picked up. And thats happened before. When landing in the uk, or in france, and other countries. But if theyre not on the list, and they dont have a and they dont have a suspicious passport, it could be a lot easier for them. To enter the u. S. Richard strange things happening politically over here. We have this odd bedfellows created between libertarians like rand paul and some of the people in the president s party that dont want any engagement whatsoever. And the idea that we have to police the entire world given that the last ten years people dont necessarily think that thats our role. Does this show im usually i think maybe theres some truth to that. But now it seems like there really was a vacuum in the of leadership in the middle east. And it seems like vacuums sometimes can be filled by things like this caliph that youre talking about. If we had been more involved could we have done anything about this . Do we need to continue to lead . Well, if you ask the people where i am right now, the answer is a resounding yes. Think about what happened for a minute. The arab spring happened. And this is what the root of the conflict is. The chaos introduced in the middle east by the arab spring. Mubarak was toppled. Libya was toppled. The revolution began in syria, and the u. S. Was encouraging it. The u. S. Was encouraging it with political statements, encouraging sanctions against the regime. We were behind it. Washington said, go for it. Take down the regime. And the people who went and rose up against Bashar Al Assad thought that they would get a nofly zone. They thought that they would get weapons. And then it never happened. Because the arab spring started falling apart. It started to get ugly. And the u. S. Backed away. And the rebels who were encouraged to rise up felt that they were left hanging. And they became desperate, they became angry, and out of that desperation and anger and bloodshed and carnage by the way, 200,000 people according to the u. N. , which released the figure today, have been killed in the three years of conflict. So out of this horror, a group like isis comes in and says, okay, the u. S. Isnt going to help, were going to do it, and theyre getting and they have weapons, and theyre capturing resources that bring them money so its a problem. Now if the u. S. Wants to ignore it and very tempting. Who wants to deal with this . It would be wonderful to not have to think about this group. But this group thinks about us. Yeah. Well you know what . Hillary, dont do stupid stuff is not a policy that there you know thats looking pretty smart as at least it looks like that makes sense. It would be nice if it was just dont invade anyone and everythings going to be fine but i dont know this is really scary and as you say, theres state of intention is another 9 11 and theyre much more together much more powerful with much more capability. Much more money, too. Richard engel, as we always, you know, i dont even like bringing up the subject, but just be safe. You know, we see Something Like that and we just worry about a lot of things. And we appreciate what you do. So, well talk to you soon. Well, i look forward to it. Thank you. Thank you very much. Okay. When we come back this morning. Gasoline prices have been plummeting this summer. The decline is expected to continue. So for every cent consumers save filling up how much gets pumped back into the economy . The stats and what they foreshadow for the markets. Plus sin city is sizzling. Las vegas opening its first new resort in five years. A big bet on the gambling mecca. Thats still ahead this morning. vo rush hour around here starts at 6 30 a. M. On the nose. But for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. Your studied day and night for her drivers test. Secretly inside, you hoped she wouldnt pass. The thought of your baby girl driving around all by herself was. You just werent ready. But she did pass. cause shes your baby girl. And now youre proud. A bundle of nerves proud. But proud. Get a discount when you add a newlylicensed teen to your Liberty Mutual insurance policy. Call to learn about our whole range of life event discounts. Newlywed discount. New College Graduate and retiree discounts. You could even get a discount when you add a car. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. Drivers want to go further with their electrical vehicles. But you cant take a trip from lisbon to stockholm if you cant recharge along the way. The green emotion project, funded by the European Commission is using the ibm cloud to make this possible by creating a single charging and Billing Network across 28 countries. So drivers can travel as far as they want to go. Take your business further with the ibm cloud. The ibm cloud is the cloud for business. Trading bloc this morning oil prices down more than 10 this month. This is what i did you see this . Gas prices i mentioned this earlier this week, gas prices this time of the year, lowest since 2010. 3. 20. Filled up this morning. On my way in it was only 54. The national average, 3. 42 per gallon of regular right now. Joining us is tom kloza, why at this time of year, and does it indicate anything about the oil dynamics . Well it indicates that speculators got spanked when they chased oil up on all the International Intrigue and violence. And so weve got crude oil prices down about 10 or 14 from their highs. And the other side of this is that the season was front end loaded. People drove more in the first half of the year. Driving less since july, and into august. And i think that trends probably going to continue. I keep hoping, thinking that the natural gas revolution that all energy is going to be reprised based on how much of the stuff that we have. But its not directly replaceable. You cant replace jet fuel for example with natural gas. Yeah. You could do trucks with natural gas. Im hoping some day that the whole supply demand dynamics for oil gets reset. Is that happening . I mean, here we are, were stuck at 95 for oil with all this stuff happening. Maybe without all this stuff happening in ukraine and syria, maybe it would be 80. Maybe it would be 75. Maybe thats what holding it up at 95. I do think the World Oil Price and the notion that maybe two years from now or whatever we might be exporting oil probably has something to do with it. Becky wont let us export any of it. No. Lets say we get around her objections to this. Is it too high right now . Are there dynamics that would force it lower . I think the world price is probably reasonable. About 100 a barrel. I think the u. S. Price, and you know, everyone looks at the wti futures price, which is in the 90s or whatever. Theyre selling wti this week in west texas for about 76 a barrel. 78 a barrel. North dakota crude is in the 80s. Canadian crude is in the 70s. We really are the privileged continent. We see it on natural gas where our price is a third or a quarter of the Natural Gas Prices elsewhere. Its more subtle on gasoline and its more subtle on jet fuel and diesel. These are the lowest prices for oil, those products, though. I know but were Getting Better and better, you know all the arguments about everything, were going to run out of everything, and then Technology Gets us, now we got horizontal fracturing and all of a sudden all the stuff that we thought was going to happen didnt happen. We keep, you know, finding more i think were on the right path. I really do. Were going to probably be between 10 million and 12 Million Barrels a day of oil production, which is higher than it was when Richard Nixon was president. And the cafe standards, they kick in at 36. 5 later this decade and then up into the 50s, the mix will change a little brit. Natural gas will get some traction. But i dont think i think were still going to be dependent on fossil fuels with the occasional tesla and so forth. Right, right. Thank you. Appreciate it. Joining us right now with more on how Lower Energy Prices could prime the economic pump, michael darda, mike what do you think . Is this really making consumers spend more money on other things right now . Becky, i thinkth a very positive story that fits into a few other elements of a brightening economic outlook. The first thing we have to ask ourselves, though, is why are Energy Prices falling . If theyre falling because of weak demend and thats not a good thing, if theyre falling because of a supply side shock thats positive more production coming online, the horizontal drilling and fracking boom, that is like a tax cut, that is positive. So i think it definitely helps in that context but were also seeing rising confidence levels, so the Conference Board has a specific measure of the present situations index its called at a cycle high. That ones very highly correlated to Economic Activity so good news there. And then were seeing leading labor market indicators like jobless claims fall to cycle lows. Job openings from the jolt survey hitting cycle highs. So i do think that we have a firming foundation under Consumer Spending going into the back half of the year. In terms of what gasoline prices themselves have meant, what would have happened if wed just say, been near normal levels . Well, its funny, i mean if you look at if you look at a fouryear chart what you see is were basically moving on to the low end of a fouryear range . And unfortunately, you know, if you look at these things you dont find a stable relationship between, you know, x percent fall or rise in fast lean prices and what it means for Consumer Spending. It really depends whats driving it, as i mentioned before. In the context of rising confidence, and improving labor market prospects, i think this recent pullback in gasoline prices is certainly a positive. Mike, we talked to a couple people this morning who have said that they think wages are climbing from here. And thats certainly going to help the economy overall. The consumer in particular. You agree with that . Well, i think were going to need to see a tighter labor market. I mean if you just look at the head line Unemployment Rate the u3 rate we may not be far from a level that would start to generate some upward pressure on wages. But some of these broader measures of labor market like the u6 rate that adds back people that are part time that want full time work or if you look at an employment ratio for prime age adults you know those are still at levels that are consistent with pretty weak wage growth. It doesnt mean that Income Growth cant accelerate. Because hours worked are going to be moving up along with job gains. But i think we could have a ways to go before we really see a lot of upward pressure on wages. By the way, that may not be the best thing for the stock market. Because if we start to see nominal wages breaking out into a 3 to 4 zone then were going to be on the front edge of monetary tightening and we could be in the later stages of a Business Cycle at that point. And mike, were your ears burning last week . No, was i yeah, joe was talking about how debonair you are. One of your colleagues. He probably told him. I saw that. So i got the message, joe, and im here. Happy to join you guys. Yeah. And you what are you like an ultimate fighting champ or something they what do you do . You do some kind of jujitsu. Yeah . Are you any good . Well, its a good thing that i dont have to rely on that for income, lets put it that way. But i have fun with it. Can i just ask you what did the other guy look like . What the hell happened to you . It depends who im training were that day. Yeah. Im not were not we dont want to know we dont know what the hells going on there. Anyway, jujitsu, thats where you sort of you use your enemys strength against you, right . You like move whet he comes at you and he like misses you like a bull fighter sort of . Yeah its joint locks and choke holds. Okay. Saying please lets get out of here like they dont like this. Anyway, darda. Guess they dont want the were entertained. Mike thank you for joining us. Okay, thank you guys. When we come back this morning it looks like las vegas is finally shaking off its recession hangover. The sls will be the first major resort to open on the strip since 2010. With it a new economic era will be ushered in and jane wells has that story after the break. Also at the top of the hour dont forget a first on cnbc interview with st. Louis fed president jim bullard. Live from jackson hole, wyoming. Squawk box will be right back. Tomorrow the doors to the Sls Las Vegas will open to the public. A big milestone on the strip. Jane wells is there, and joins us with more. I dont you know, now its las vegas, too. Bacon. Livestock. And las vegas. What and pot. And pot. So why dont what are you joe, the list gets longer and longer. So if you think about it, i cover everything. It was also the Mile High Club this week. And the Mile High Club, jane . Congratulations. When did that happen . Oh, you covered it. Im sorry. More on that in a minute. Its my favorite small business. Well anyhow. This development here when you add it all up is worth about 800 million. Its the first casino resort to open on the strip in five years and theyre putting the finishing touches for midnight tonight is what is expected to be the biggest opening in vegas in a long time. There was a time it did not look good though for the Sls Las Vegas. Its owner l. A. Based sbe founded by sam nazarian bought the property at the worst possible time, on the north end of the strip, the worst possible place, but they hung in there and two years ago decided the time was right to Start Construction betting big on the vegas recovery. When you look at visitation there, Southern California and the economy slowly starting to turn, financing markets starting to get their legs, then we decided this is the time you begin construction. You get ahead of the curve, because we knew that investments would come into this territory. All right. Vegas has been a bright spot this year for gaming companies. Over 20 million visitors through the first half up 4 . Revenue per available room up almost 11 . Gaming revenue only up 3. 5 . Because millennials, the cool hipsters that sls targets prefer clubbing to gambling. Were seeing growth away from gaming, las vegas is becoming much lest gaming centric and much more dependent on upon night life covers, room rates, fine dining. Actually, the sls expects only a third of its revenue from gaming. It used to be the other way. You get 70 from gaming. Now its flipflopped. Later on squawk on the street how the north end of the strip may be the hottest place to be this is just the first of a new wave of developments. Too much too soon . And then on squawk alley, only in sin city, this Airline Takes you up in the air for the sole purpose of joining the Mile High Club and its slogan is what happens over vegas stays over vegas. Oh, my gosh. And becky tells me that your mr. Wells actually is a pilot, your husband. Thank you, put me on the spot. He yes, he is. Hes not a pilot for this this no, i dont mean for them i just meant in general. That, that we dont have time to talk anyway, jane. Yes, hes a pilot. Good. Happy friday. Have fun. All right, watch squawk on the street. That thing is old hat for her. Her husbands a pilot. Thank you. Oh, boy. When we come back this morning, fed hawks and doves are starting to sound a lot more alike. But the central bank is still give identified over the health of the job market. Up next st. Louis fed president jim bullard on the growth in employment and how he thinks the fed should respond. And, if the thought of a screwtop wine bottle makes you uneasy get ready for this. Brace yourself for wine in a can. Well talk to the founder of Union Wine Company. 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. Is caused by people looking for parking. In a city thats remarkable that so much energy is, is wasted. Streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years. We wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then theres a mesh network that takes this information, sends it over the internet so you can go find exactly where those open parking spots are. The collaboration with citi was important for providing us the necessary financing; allow this small start up to go provide a service to municipalities. Citi has been an incredible source of advice, how to engage with municipalities, how to structure deals, and as we think about internationally citi is there every step of the way. So the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge. The squawk newsmaker of the morning. Savt louis fed president jim bullard. His view on the slack in the labor market and how employment is separating the hawks from the doves. Trucks from a russian aid convoy crossing the ukraine border, escorted by prorussian rebels, well bring you the latest. Plus its opportunity friday. The inside scoop on pimcos global value plays. And Union Wine Company has a message for wine snobs. Dont hate the cans. He hates these cans stay away from the cans well ask the companys founder why he thinks canned wine will catch on. The third hour of squawk box starts right now. You like this song . Do you know. Darius rucker . Hes a genius. I like the song, too. Like everything about it. Love him. Welcome back to squawk box here on cnbc. First in business worldwide im joe kerner along with becky quick, andrews off today. Were going to get to jackson hole in just a moment. Were going to talk to st. Louis there he is. St. Louis fed president jim bullard. First check out this video catching our attention. An atlanta postal carrier learning the hard way that cameras are everywhere these days. We will have the full story later and talk about how companies are dealing with bad behavior caught on tape. Oops. Do they have any cameras around here . Yeah i assume we do all the time. Those Little Things you got caught. On the ceiling. What did i do . You moved a poster. Oh, yeah, yeah yeah but they set that up to catch me doing that. The other ones are everywhere anyway. Yeah. Little things like that. Yeah, i think about that, they can read lips like in 2001, too. I figure im being watched all the time. Yeah. Cant computers be looking at you, too . You put a mustache. You got caught oh, on carls picture. I did that, too. That was another one. Anyway, we are counting down to fed chair Janet Yellens big speech about 2 1 2 hours away at this point. Two hours. She is expected to focus on the labor market. The hawkish minutes coming from the last fed meeting suggested that policymakers were surprised by the improvement that weve seen in the employment picture. Take a look at the futures at this hour and at least right now things have improved. Dow futures and the nasdaq futures are indicated higher. Dow futures up by just about 4. 5 points. S p futures down by less than a point. This is all coming after the s p set yet another record yesterday. Right now take a look at whats happening with the tenyear note. At this hour looks like its yielding 2. 396 . Just below 2. 4 . Lets get to Steve Liesman in jackson hole. He has a very special guest for our first on cnbc interview. Steve, good morning. Good morning, becky from jackson hole where its a little on the cold side and the rainy side here. I want to get right to jim bullard, st. Louis fed president. Frequent guest on squawk. We were both kind of shaking our heads at the Market Reaction to the minutes. My take was they suggested, you know, maybe you guys might move earlier and yet stocks have gone up in the wake of that and bond yields kind of unchanged. And maybe even down a little bit. I dont think a little more hawkish slant has to be bad news for the economy. It means that the committee could be more confident that the economys going to improve in the future and going to be able to handle the higher rates that will eventually come. The market has been extraordinarily sensitive to any fed pronouncement, any tilt hawkish. Does it seem like the market and the fed maybe are going separate ways in a sense that the market is maybe more focused on it is than fed policy . The markets been trading more dovishly than the median of the committees sep forecast. I felt like thats a bit of a mismatch. I think the committee means what it says. And you know, youve got everybody putting their dots out there, and im not sure why the committee thinks they want to price for the very lowest end or even the very lowest end of the committee. Explain that specifically. The markets are looking for a funds rate down the road that is lower than what the fed itself is forecast the whole path is lower. Than what the median of the sep is. At least what ive seen. I havent checked it recently. But i think this has been true for months. Does that make you nervous that maybe there are excesses in the market that maybe the market is not ready for a shift that could be coming . Yeah, i think the economy has been improving. Weve had weve got the 4 number on Second Quarter gdp. I think that was kind of a relief that showed us that there was a anomaly in the First Quarter. Unemployment has come down dramatically. Growth is projected to be three plus percent over the second half. And into next year. I expect more payroll growth 200,000 plus. I expect unplimt to come down to a 5 handle. This is pretty good, especially given where weve been. So its going to be time at some point to pull back the normalization. The debate is just about the subtleties of exactly how to do that i think. So where are we in that in your mind as to where the Federal Reserve should be relative to Interest Rates . Should it already be telegraphing that theres going to be a rate hike coming soon . No, im sticking right now with, you know, end of the First Quarter, liftoff. But you know that is very dependent on my forecast which has us growing you know 3 plus percent in the second half and nonfarm payrolls and other labor market indicators continuing to improve as they have. What happens to the Unemployment Rate in your forecast next year . Youre putting me on the spot. Got to have a five handle on it, right . It is going to have a five handle. I think weve got 5. 8 for the end of the year, and then weve got different coin amics in the out years. So i think ours is probably a little bit different. But if you just took literally what has happened in the last year, and projected it out, wed be low 5s, you know, a year from now. Thats how fast this has improved. Its really pretty dramatic. To be fair yous guys collectively at the fed have been wrong about growth, youve been too optimistic. And wrong about unemployment, youve been too pessimistic. What makes gives anybody confidence youre going to be right about next year . Now, i just want to point out that the dust has settled on 2013 gdp growth. We said 3 , turned out it was 3 . So its actually the committee has not been wrong all the time. We did get that right in 2013. I think the committee has been too pessimistic on unemployment, and that has fallen faster, and thats really wrapped up with this Labor Force Participation story. So do you still are you are your concerns about inflation growing, are your concerns about excesses in markets created by low Interest Rates growing . Yeah, i think thats a big risk over the next two to three years. So i think the debate today is about, you know, how are we going to play this over the next two to three years . If we go very slow, very gradual, you know, are we going to get another housing bubble . And a big disaster on our hands . And so i think thats a, its a huge issue. Its obvious that thats got to be top of mind. Weve got ideas about how to handle that but i think part of it has to be to normalize Monetary Policy. So youre at odds, then, with the statement, which suggests theres significant underutilization of labor resources . You dont think thats true . I tried to argue in the meeting against the word significant. I think theres underutilization of resources because unemployment is somewhat higher than what we think the rong run level should be. But at this point we still want to use the word significant. Because significant to me hearkens back to 2010, 2011, 2012 when Unemployment Rates are much higher or all these other labor market indicators are much worse than they are today, so i think we should acknowledge the progress. Were still not completely there but we made a lot of progress so i would have said underutilization. You agreed to stick around after the break. I know joes on the edge of his seat, wants to ask you questions and becky, as well. So let me toss it back to joe and on the other side of the break jims going to stick around and answer your questions, guys. Great. I always want to. And then im glad youre there, steve, too, because you know, you can explain some of the ask about taylor. You know what john taylor wants to do. You want to see what president bullard has to say about that. And a lot of other stuff. Were going to take a quick break. Continue our conversation later fed chair janet yellen will deliver the keynote address in jackson hole. Thats scheduled for 10 00 a. M. Eastern. First talk to bullard some more. Get some highlights that can move the markets right here on cnbc. Back to the feds jackson hole conference where Steve Liesman and st. Louis fed president jim bullard are standing by. Youre right. I have a lot of backup. I have backup questions. It hasnt been that long since weve seen jim, but i feel like i got a million things that i want to ask him about, and ill get to that john taylor question, too, but first, lets start out with some other stuff, steve that youve already sort of touched on. But i want to make it a little bit more specific, jim, and thanks for appearing. Theres two ways to worry here. And maybe we dont need to worry at all. I dont know if you saw Paul Mcculley on from pimco. He said you guys have won. You can declare victory on inflation, theres been a dagger thats been stuck or a stake in the heart of inflation. You guys can take a victory lap. Youve saved the economy and there will be no adverse consequences. Thats one way to think about it and i hope that thats true. Then theres the other side. Ive got three guys to talk about druckenmiller, warsh and martin feldstein. Theres one group of people that worry that theres a day of reckoning that come because youve mispriced risk by orchestrating where rates have been for so long. And you already addressed part of that with are there bubbles looming somewhere . But then theres another group like kevin warsh that thinks weve already seen sub par growth and a malaise, and no Income Growth at the low end. Weve already seen that because of what youve been doing for the past five years. Youve got it, youve let a Balance Sheet recovery instead of an income statement recovery. So lets talk about that first. Have you caused ceos just to borrow money to buy back their stock instead of investing in plants and equipment and causing real income and investment in plants, and employment and things like that . Are you responsible for this tepid growth . Well, i dont really think so. Weve done the best we can to try to support the recovery, and i think we have we did get 3 growth in 2013 as i was just talking about. 4 in the Second Quarter looks like 3plus percent in the second half. So if youre willing to throw out First Quarter this year which looks anonymous now had pretty strong growth. The labor markets are showing that. 200,000 plus payrolls this year, actually since qe3 if i had my numbers right, since qe3 was launched 200,000 plus dramatic ge kleins in unemployment that were unexpected. So i think we really got you know a good situation here. And weve managed to get things back to the. You know, i appreciate Paul Mcculley saying that we can declare victory and everything. But you know the games never over in Monetary Policy. Its not like baseball. Where the game can be over. In a hurry. Thats the other flip side. Im not sure im convinced that youve made the argument to the point where im not worried anymore. Because i mean a lot of the job growth is parttime. You know the Participation Rate still sinks. Some of the theres been no wage growth at the bottom. The income disparity continues to widen. We dont people in this country dont feel like were at a 6 Unemployment Rate when things are just going swimmingly. We feel like this has been the worst recovery to a recession, really, this century, almost. So, i mean, certainly its been a tough five years. And i certainly agree with that. However, let me say this about labor market indicators. We have two workhorse indicators. Nonfarm payrolls and unemployment. You know, then weve got a whole spread of indicators that in the past we wouldnt have looked at. Or we wouldnt have worried about or wouldnt have thought about that much. I think a lot of the debate at this conference is how much weight should you really put on those other indicators because, you know, how much are they really telling you about Economic Performance that isnt captured already in the Unemployment Rate, or in the nonfarm payrolls number . And historically, the answer has been not very much. Okay. So i think those have to make the case that theyre telling you Something Special beyond what youre getting from your workhorse. The other argument is that, you know, in 2004, 2005, 2006, we thought, wow, feds doing great. But if you add in the growth from 2002 to 2010 you have a much better idea of what some of that stuff that the fed was doing early in the 2000s came home to roost. We feel like were doing pretty well now but we dont know whats ahead of us. In druckenmillers view he looks at where we are, he looks at ipos. 80 of the ipos have never earned a dime now back earlier in a previous bubble was only 83 . Corporate credit is growing at a rate faster than it grew in 2007. Covenant light loans are 300 billion dollars. They were only 100 billion in 07. All of these things are, if someone came from mars and said, look at all these parameters, 6 unemployment. The fed is still at zero and its still doing qe. Theyre still in emergency mode, and all this stuff is happening. Are they way behind the curve in terms of the fed fund should be at 5 now according to some people. So yeah. So there must be dislocation somewhere, or imbalances so ive been making arguments ive been making arguments similar to Stan Druckenmiller but may be a different approach. But ive been saying that were pretty close to our goal variables, were not quite there. But inflation has now moved up toward target. And unemployment has come down were only about 80 basis points away. And yet as you say, you know, Monetary Policy is still at emergency setting. So, the debate here is about how were going to play this over the next two to three years, and the 2004 to 2006 example is a good one. You know, the fed was slapping itself on the back during that period as we were tightening, as if everything was okay. But by the time we actually got to normal Interest Rates, the die was cast. Housing prices had already peaked and were starting to decline in 2006. And world global disaster was on our was on our hands. So, i think you really have to be very careful about how you play this, it may seem like things are going well and then theyre not going so well when you look out five or seven years instead of just one or two years. Jim, you mentioned debate out there which is i guess becky go ahead. Hi, becky. Its great to see you. Very quickly you mention that there is debate that takes place. Whats the thing that has surprised you the most, or irritated you the most, in that running debate . The debate on labor markets . Yeah. I think that these labor market indicators are things that we havent really talked about historically. In macro economics. And the reason is we considered them not employment of about the overall state of the economy thats one thing. We considered them outside the realm of labor policy. Something like the Labor Force Participation rate which is usually driven most by demographics, i was in the fed in the 90s and Labor Force Participation was rising. I dont remember anybody saying we had to adjust things because Labor Force Participation was trending in a particular direction. So, so i think you know, these labor market indicators, the onus is on people that want to stress special labor market indicators other than nonfarm payrolls, and unemployment in making this debate, in making their points, and so i think were going to hear a lot about that today. Probably more than more than were used to. What do you stand on the issue, alan krueger saying longterm unemployed are not coming back to work. Yeah. That they do not exert downward pressure on wages. People who have dropped out of the workforce are not coming back to the workforce. Whats your sense of that . Whereas janet yellen has said they are . Thats a great thats a great issue. And so, historically, we would not be sitting here talking about longterm unemployed for that reason. But it is very high compared to where it was. And so, is it a special is that a special signal about whats going on today . Or should we take the historical evidence that this thing has not really been correlated with Business Cycle movements the way we normally think of them and what is kind of what alan krueger is saying . Steve, i want to get to that taylor thing come back slowly. That taylor thing and explain it this way. There are some people that would call what the fed does whether its under greenspan or bernanke or yellen almost flying at the seat of their pants. So youve got one fed chairman hes dovish, youve got another one whos hawkish, you call one of the maestro as if hes someone that should be in a position to be conducting the economy. John taylor thinks that, you know, that all this should be taken out of the equation. And there are people that agree with it. And it should be a mathematical, something just more ridged. That who cares whether someone is dovish or hawkish, they shouldnt be in a position to guide the World Economy based on their opinion. It should be done in a more rational way with mathematical formula. Is there anything to that . Theres a lot to that. And you know, john taylor has had enormous influence on macro economics and monetary economics, exactly for this reason. Because he has stress ed that yu really cant talk about Monetary Policy without talking about Monetary Policy rules. Chair yellen has given speeches in the past where shes employed variance of taylors rule so its very pervasive and all the thinking about Monetary Policy. The truth is though that there has been a lot of improvisation in the last five years, and you know, theres still a lot of hand wringing about what that improvisation means. How effective was it . Number one. And does it bode ill for the future, number two. And so, thats broccoli the core argument from taylor saying lets get back to normal. Lets get back to something that worked pretty well in the 1980s and 1990s now that the crisis has passed. Hmm. Steve you were going to need to explain my question there to him because weve talked about this so much with john taylor. The more i thought about it, its like really seriously so someone thinks we ought to be doing this and you know just to call someone maestro its like an it gives him so much i mean what if you get a different maestro then everything changes. Just so you know, joe. Joe i want to throw a wrench into your thinking. Taylor considers the greenspan era to have essentially been a rulesbased era. Really . The big debate in the fed, this is how crazy it gets is over what rule to use. There are at least three variants of the taylor rule, and if you look to any of these guys with this meeting and say which varied of the taylor, you eastern orthodox christian, are you Greek Orthodox i mean theyre crazy rules that they debate it. John taylor says it was my original rule and bernanke said it was the second rule and somebody else says the third rule. Right. All right. I have more questions but we got to go. Jim, president bullard, great to see you. Hope to see you back here soon. I dont like the cardinals very much. But i know you do. Least they had a good weekend, joe. Thats very hard. Losing six straight. But, you im ready to throw in the towel there. Thank you, jim, and you, too, steve. Well see you soon. When we come back this morning, it is opportunity friday. Investment ideas from pimco still ahead. [ male announcer ] during the cadillac summers best event, lease this allnew 2014 cts for around 459 a month or purchase with 0 apr. Hurry in this exceptional offer ends soon. Or purchase with 0 apr. Iit has become another way for. Our customers to talk to us. We listen for it, we listen to it, and we use it to help deliver better protection and a great member experience. Whether thats in an agents office, online or over the phone. Its important that we deliver a consistent experience. A more complete picture is made with ibm analytics. Welcome back to squawk box for some bacon news this morning. 2 million can buy a whole lot of bacon, or it can buy one prize kentucky ham. That was the winning bid for the grand champion ham at the kentucky state fair. The ham was purchased by Republic Bank Hermitage Farm and bridgemond foods. It weighed 15. 98 pounds. That works out to fearly 126,000 per pound. That better be a pretty tasty ham. Whats the is it its for charity . It must be. I cant imagine. Okay. That yeah. The 126,000 a pound we saw a 30 million ferrari. Hams pretty good. Ham is good. Yeah. Im thinking, you know, dan greenhouse was in. He wont even any pig or animals because of the way theyre treated. Now hes got me thinking because pigs are really cute and theyre like dogs. Should we worry about that . Do i i mean i have so many things to worry about then. Ive got to start worrying about the way pigs are treated . Bacon. Yeah. Coming up, pimco beefing up its Global Equity team. Deputy cio from the investment giant will tell us where shes finding value in u. S. And global stocks. Cows are nice, too. Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. But parallel parking isnt one you do a lof them. Ings great. Youre either too far from the curb. Or too close to other cars. Its just a matter of time until you rip some guys bumper off. So, here are your choices take the bus. Or get Liberty Mutual insurance. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. See Car Insurance in a whole new light. Call Liberty Mutual insurance. [ squeaking ] [ water dripping ] visit tripadvisor hawaii. [ whistling ] with millions of reviews, tripadvisor makes any destination better. With millions of reviews, welcome back to squawk box, everybody. In some of our headlines this morning. Dynegy is buying coal assets from duke energy. The two deals are valued at 6 billion and will almost double dynegys Power Generation capacity. Also shares of game stock getting a boost this morning. Quarterly results for game stock beating the streets expectations. Revenues surging 25 . The company benefited from new game releases and solid sales of gaming hardware from microsoft and sony. That stock is up by about 6 . American airlines is extending the fees for unaccompanied minors on planes. Now any child who is age 5 to 14 flying alone will cost an additional 150. That fee currently applies to children between the ages of 5 and 11. 150. For solo kids. Yeah. Andrew, we got to youre talking about steerage . We need some kind of Additional Charge for zero to 5. Dont you think . For flying with parents . Especially in first class. They should be sent through the mail like we used to do. With earnings season nearly at a close, lets take a look at how the large cap reports came in. And dominic chu joins us with the details. You know full well, dominic, that janes husband does not fly for the mile high airline. Hes tweeting that. Did we find out for sure . Dom did . Did he find out for sure no, no. He does not fly for that airline. Get your mind out of the gutter. I was just trying to clarify because there was a Little Exchange at the end of janes last segment. Oh, sure. I want to make sure that i have the record straight on this whole thing. Sure. Anyway lets talk about earnings season. I will get off of my mind out of the gutter type thing. So were just about at the end of the whole season here and for the bulls out there that were hoping for a better corporate results to boost the stock market, you pretty much got it. According to analysis by Thompson Reuters as of yesterday the vast majority of s p 500 companies, 481 of them have reported their results. Of those 68 have beaten the average analyst estimate for earnings. Now that figure is slightly better than the longerterm trend for earnings beat rates. So thats a good sign. Also 10 of companies have reported earnings that were in line and 22 have missed expectations. So thats the bottom line. Profits. Right . As for the top line, or revenue results, theyre not too shabby, either. 63 of companies that have reported have exceeded analyst Sales Estimates and thats also better than the longterm average for revenue beat rates. So those are the Bigger Picture numbers. If you drilled down a bit further into the growth rates of those particular markets and senters, and Companies Overall the numbers are also generally positive. Q2 earnings per share grew by nearly 8. 5 over the same time last year. The expectations for that growth rate before the season even started were for about 6. 2 growth. So companies did better on the Profit Growth front. On the sales side, we saw a gain of 4. 6 . Analysts were expecting a little over 3 growth of sales ahead of the Second Quarter. So also, better than expected on the sales front. Overall the season turned out pretty well on the microeconomic or Company Specific front. Later on on squawk on the street were going to take a look at some of the standout sectors during this past earnings season so stay tuned for that. One that you may not have thought really really led the way higher, double din it earnings growth, much better than expectations. Well tell you more later on in the next show. Dominic, thank you. We will see you soon. Joining us with her thoughts on where shes seeing opportunities for investors ahead of yellens jackson hole chief is cio at pimco. Just to start off i really need your take on when Interest Rates finally rise so we get the next year and we finally see that fed finally do what people are talking about, there are two schools, one is that thats the time, the bells ringing, the bull market at least is going to take a breather, get out, or others have said okay that indicates the economy is finally coming back. Great time to buy stocks. What do you think its going to be . I think it may not be as simple as that. I think clearly it depends on what Global Growth around the world is doing. But one of the characteristics of the world currently is this new multispeed world where you have the u. S. And the uk ahead of the curve, if you want, in terms of normalizing Monetary Policy over the next 12 to 18 months. And in europe, japan, and china, where potentially we have more qe coming away. So i think for me, what happens in the u. S. And the uk clearly is important. And its going to depend on how those rate increase happened. We believe theyre going to be very gradual, and they will reflect, as you mentioned, an improvement of the underlying situation. I think in that environment equity markets will continue to do well. Do you think at this point the fed has drns i dont you work with paul. And Paul Mcculley im talking about, and hes really, really strident that the verdict is already in, they were successful. This is theres no way you can say its not a victory in terms of inflation, and in terms of bringing the economy back. Is there any day of reckoning to come for all of this really once in a lifetime stuff weve seen out of the fed that was really untested before heretofore . Well, i agree with paul completely. My perspective on the global basis, however, is that they are pockets in the world be it on a geopolitical side or on the growth side, particularly in europe, where things are still lagging. And i think its very important for us to have the u. S. Doing better and doing the rate or the normalization at the right time. Because if we did it too early clearly that would have an impact on the world. And the u. S. Is a good global citizen, if you want. Of course thinking about all those things. So i think whats important, of course, is when we start but also where we end and how we get there. And our view is still that its going to be, you know, quite slow and real rates will remain below what weve seen historically because growth is quite slow around the world. Were in that mutual environment. We also have all around the world a very uneven recovery. Youve seen parts of the society doing quite well. Weve seen unemployment in europe is still very high. And of course the Financial Recovery is second place but the fundamental and underlying economy is still very slowly healing. So i think all those different dimensions are very important to bring into place when you think about that great normalization exercise. So pimco, virginie, a couple of times you made reference to i almost felt that i was just too u. S. Centric in my questions from the kind of answers that you gave me. Does it mean that for pimco you need to consider all these factors around the world to decide what to do with domestic stocks . Or are you saying pimco is recommending youre all over the world in terms of emerging markets and Frontier Markets and bric countries and do you need to be everywhere to get a good return and maybe spread your risk around . Well, im going to give you my answer as head of equities at pimco. I think that clearly when we look at equities we should look at the overall world opportunity set, and that is including emerging markets. From that spend point of course the u. S. Is very important. But they are a lot of stocks all around the world. And to build global portfolios i think its only fair that we should look at every opportunity that we have. All this said, i still like the u. S. Market, i think that clearly were seeing the u. S. Ahead of the curves. Were seeing some very nice delivery in terms of earnings. And i think that this will continue. There are areas that are like the normalization. One of the impacts of normalization of Monetary Policy potentially earlier in the u. S. And the uk will have an impact on currency. And that will in turn hopefully lead to a weakness of the euro versus the dollar and will help europe. So i think its not only where the fundamental picture in the economy is going, but also where our stock price versus the expectations from that standpoint a think that theres still some very nice companies to have in europe, particularly if you look at industrials, or the pharmaceutical sector, or in fact financials. And then finally, if you look at japan, i think japan is like this is also an area where we can find some good companies. Okay. Last but not least we do got to go virginie. But i hear thank you. What . Just quickly, you now talk new neutral, versus new normal. But it seems like if low Interest Rates are the new neutral its kind of being caused by the new normal in terms of growth being below what weve seen in previous decades. So is there really a difference between the new neutral and the new normal . Yeah, well the new neutral is about a world where real rates are lower. Youre absolutely right. The growth aspect is important. But its also a world where inflation is very low. And where there is a lot of debt in the system. All that debt that was put in place in order to help navigate through the very difficult time and a lot of it is government debt. So i think all of this makes quite a bit difference between the new knew tlal in our new and a new normal. Very good. Thank you. Appreciate all your time this morning. See you soon, bye. All right. Still to come this morning, wine snobs listen up. If you look down your nose at screw top bottles and boxed wine you might want to brace yourself for this next segment. Union wine company is working to popularize fwhien a can. Its selling faster than the company can make it. Up next the companys founder. Welcome back to squawk box. Stocks on the move this morning. Hibbett sports is down significantly after the retailer had quarterly revenues which were below expectations. The company had already warned that traffic was weaker, and discount had affected Profit Margins. And another retail name, ann which is no its the Parent Company of ann taylors. Why did they do that . Because they have the loft stores, too. So they wrap everything in. Although i dont know, ann is not i dont know why they did that. Like when they change united or wool worth. We dont we dont like a worldwide brand name, wed rather get everyone used to venator. Or united. How about allegiance or primrica. I dont know. Its the branding basically we dont like change. No. Results topped estimates but the retailer warns that the second half of the quarter was, in its words, challenging. We dont like change but this is something you may just have to get used to. Check this out, it is wine in a can. Were talking about pinot noir and pinot gris specifically. Its available in 40 markets and counting. The winemaker says theyre pushing for a pinkies down movement making wine more accessible to the masses. Also to appeal to a new varietal of wine drinker. Joining us is the founder and uner of Union Wine Company. Ryan, good morning. Good morning. How are you guys . Good. How did you come up with wine in a can . Well, it was a kind of an extension of that whole pinkies down idea. And we were trying to think about, you know, what could we do to actually put it into a different package, what kind of lifestyle things were exciting for us to be thinking about for kind of our next adventure here with wine . And as we were, you know, great brainstorming session we said hey a can is a perfect vehicle. Just to kind of simplify things. Its definitely kind of pinkies down. Were definitely all about kind of taking it down a notch, trying to simplify things. We thought the can was a great vehicle for that. I will admit ive gotten used to the idea of a screw top wine bottle. That makes sense to me. But wine in a can may be a little bit of a stretch. How is it selling . Sales have been phenomenal. We launched the idea as just kind of a test concept last september. The response from consumers, and attention from the media kind of drove us very quickly to bring it to a commercial product. We launched it in june and we basically cant make enough wine right now to sustain both our bottle sales, and much less our can sales. Ryan, trying to think about soda, maybe one time thought there was a difference in the taste out of a bottle than out of a can. Im not really smur there is. With wine is there any can taste either with metallic taste . Either with a because the red you wouldnt drink it cold. Youd just drink it room temperatures. And then the white you probably have it cold. Can you taste anything with either one of them . And if you pour it, is it indistinguishable from something out of a glass bottle . Yeah, so weve been doing a lot of internal testing. You know, we like to do a lot of tasting, obviously, in the wine business so were certainly comparing that product against our bottled product. And from our experience so far we dont see any difference. And in doing blind tasting we actually routinely confuse ourselves thinking that, you know, were supposed to be the experts and we often will pick the bottled product as the canned product. So, so far we feel really good about the performance of the can for the quality of the wine. Hmm. Maybe we should do our own taste test here, joe. You want to try it . Yeah, i got some water here. I would like to pour it into something. I got a pinot noir. What do you have . Pinot gris. At least they didnt give me a they gave me pinot noir. They didnt give me whats that other stuff . Its not bad. Its not bad. You know this isnt chilled so i have to admit its not chilled. I feel like im at mass. Thats what i you know. I need a that tastes i dont think i can taste the can. You know, ryan, i know you havent i got a sick mind but the first thing i thought of was jesus juice and Michael Jackson in the coke can. I mean this is not the first time the wine has been in a can . Yeah, absolutely. And certainly overseas the concept exists, and theres been a few people playing around with it domestically. I think our idea, one, was to take it to the larger can that its a 375 milliliter can. So its a little bit bigger than your 12 ounce can and we really like that size. We think its something that people are very familiar with and comfortable with. It certainly helps is this two glasses . You know is this two glasses, ryan . Yeah, its a solid two glasses. Whoa. It is pretty good. And i got to when youre trying to lose weight or just dont want to feel bloated or something. Ive been drinking more wane and drinking it out of a glass is, you know, i would drink it out of a glass. That tastes pretty good. And its red. Yeah. And weve been seeing, you know, people have been drinking straight from the can, you know, out on social media kind of seeing what people are doing with the cans. But certainly lots of people, especially because of the serving size are pouring it into a glass, obviously its a great product to share for two people, or youre just kind of having a casual evening and dont want to drink it out of the can. I have a feeling for me that first six pack would go down pretty smooth. Right. I think that first would go down would go down ryan, is there an advantage just in terms of its not as heavy as glass, cost efficient . Yes, absolutely. Its one of the exciting parts to bring it to the market place. Theres no degradation of aluminum going through the recycling process, and then, also, just from a simple shipping stand point, we can ship about twice the amount of wine in the same foot print we ship the glass products, so theres definitely some efficiencies and economic benefits. I think youre on to something. I think youre on to something, im not kidding. Ryan, thank you for joining us today. Cheers. Have a great weekend. Yeah, cheers, you guys, thanks. Good. Would it be colder in a can . Maybe. I dont know. This is warm. I bet this seems cold, and it tasted good, it was a red. I need to try yours. This is good, but we should have chilled it first. Thats our mistake. When we come back, the 49ers put grass in the stadium four months ago. Why rip it out now . We have that story next, stick around. [ male announcer ] during the cadillac summers best event, lease this 2014 ats for around 299 a month. Hurry in this exceptional offer ends soon. E hurry in this exceptional offer ends soon. Financial noise financial noise financial noise financial noise developers are all about speeds and feeds. Its all about latency. Its all about how fast does it run. I often sit with enterprises who ask me about how Mission Critical and hows the performance of the cloud. And i tell them, if you can make gamers happy, you can make anybody happy. Speed is made with the ibm cloud. The ibm cloud is the cloud for business. Welcome back to squawk box, the futures right now are almost back not quite to where they were when we started out. Weve been waiting for three hours the entire show to whether any hear anything from ukraine, russia, with the con y convoy, 70 trucks moved across the border. They went without red cross. I think that was the deal, red cross would escort them along the way. They did that without it. Last friday, the guys in ukraine destroyed the convoy. Right. Well see markets sold off. Well see if this has people worry and have a repeat of that. Ross stores a winner, earnings, revenue, and Profit Margins better than expected. They benefitted from better expense controls, and problems at the San Francisco 49ers new stadium, the glass was to sustain the punishment of a 300pound lineman, but the Playing Field could not wi withstand its first week of football. The field was damaged in the first game last sunday. The team removed a 100 yard stretch of grass down the middle of the feel and working on installing a new playing surface. The 49ers say its ready for this sunday as gain against the charge chargers. Do you waesnt sound like itg to be grass. Thats weird. Exactly a hundred yards too. Right down the middle. With cameras everywhere these days, difficult to get way with bad behavior. I can tell you that. And in atlanta, a postal carrier found that out. A home surveillance carrier caught him delivering a package by airmail. That box, unfortunately, oh, boy, contained a handmade ceramic cup. The homeowner happened to be checking his home camera via computer at work and saw the unusual delivery method. You have to love the guy though. Too many stairs. The carrier will be disciplined. By the way, the cup did not break. Oh, hey, no harm, no foul. That would be think if it was an apartment complex and all it was was steps like that. Every day, its like again and again. Would be old, right. I kind of get why the guy would do it, and the cup didnt break. Right, the cup didnt break. When we come back, a slippery slide for another brand, why americans shy away from jello. Thinking twice about skipping breakfast . Squawk box will be right back. Your 16yearold daughter studied day and night for her drivers test. Secretly inside, you hoped she wouldnt pass. The thought of your baby girl driving around all by herself was. You just werent ready. But she did pass. cause shes your baby girl. And now youre proud. A bundle of nerves proud. But proud. Get a discount when you add a newlylicensed teen to your Liberty Mutual insurance policy. Call to learn about our whole range of life event discounts. Newlywed discount. New College Graduate and retiree discounts. You could even get a discount when you add a car. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of Fidelity Investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. People questioning if jello lost its jiggle. Sales tumbled 19 in four years. Alternatives like greek yogurt took a bite out of its popularity, and theres the issue of dyes and sugar, and foods natural are bigger sellers, plus the horse hoovs. I like the jello. I like it. Put fruit in it i dont like it. I do. See you monday, and squawk on the street starts right now. Good morning, welcome to squawk on the street, im david faber with simon hobbs and cz sarah eisen. Carl and jim are off. We have the annual symposium in jackson hole, wyoming. Watch is on to see if yellen provides clues into the feds Interest Rate outlook or change, perhaps, in that key outlook. I could just look that beautiful view. The sun is coming up. I love the gathering of economic papers, a
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