Transcripts For CNBC Squawk Box 20240622

Last week. Then on monday that nearly 600 decline. Another 200 point loss tuesday before yesterdays big surge the dow is still down though. More than 1 this week. But the nasdaq has narrowly erased this weeks losses off by. 2 . I was on the floor of the New York Stock Exchange all week and its not just the crazy moves where we settle, its the intraday volatility. Everybody was bracing for a repeat of tuesday. They had this giant rally and it started to lose steam and everybody thought here we go again and then it charged back. A bounce . A technical bounce . The first day, looks like wow, this is great. This is great. Its slowly declined down 200 and the next day it looked like thats going to happen again. You know at the end its going to melt up this time tnchts question is what comes next. Looks like were extending those gains. Is that the bottom . Is there a place called youre going to ask me if its the bottom. We dont talk about the bottom . 50 chance of a bottom. It doesnt matter what i think about a bottom and theres only going to be one bottom. And its going to be hard to call. But i think its what people want to know. But nobody does know and you can talk about it and its useless. Bloomberg, is there a place called bloomberg that does this kind of stuff . Yes. There was life before cnbc. Do they have a tv . Has anyone ever seen it . People watch it. Not nearly as many as watch here. Bloomberg is reporting that chinas government intervened according to sources to boost the market today. Theyre saying that the Chinese Market was down with a modest loss with 50 minutes to go and then ended up 5. 3 . China supposedly went into the equity market with big money buying blue chips. Theres the chart. And you know why . They want the market better for the september 3rd celebration which we know theres a big military parade celebrating the world war ii victory over japan where there arent many western countries going there because they think theyre going to throw it in abes face. Restart some type of little tif with japan. But thats going to happen other september 3rd. This goes back to your theory about how on the premieres birthday the stock market must go up. They did do that. That was a done deal. Now you know where theyre getting the money to do this. Thats okay right . We want them to support their stock market. Im a little actinxious that what theyre doing is artificial it creates a whole thing. If we all try to support stock markets using government money, sooner or later we run out. You run out of other peoples money eventually. You need from the ground up. Well theyre productive. They would probably say theyre getting there. Theyre trying to move toward a more market based economy but there are bumps along the road obviously and its not a good source of pride. Is this related to the former mayor of new york city. Is it all part of the 100 his company. Hes back in charge. Are you familiar with i know mayor mike. Youre familiar with this news. He run ace good company. I used to love it until they took them away from us about 15 years ago we had them here. If youre just waking up lets get you up to speed in the overnight action in asia and europe. The stock market there jumping more than 5 to close back above that key 3,000 mark. People are watching. Stocks swinging wildly in the final minutes of trading or so. China intervened to shoot up stocks. More on that from our reporters. As for the early action in europe a lot of green arrows on the screen. Bullish momentum following the big gains yesterday. The dax is germany is up 3 gains across the continent. Well check in with our colleagues in asia and europe in just a moment. Also the price of oil which was lower yesterday because wti today is surging. Brent up 4 . Backing off a little bit of buying of equities. A second look at Second Quarter gdp supposed to be higher later this morning. The euro is weaker. Strong dollar back in charge against the euro and against the japanese yen. The strong dollar has been correlated with strong u. S. Stocks yesterday and gold is higher today. 360. Its early. 1128 is the price of gold. Gold bulls were disapointed to see it didnt get better this week. Usually if you see an 11 point drop on the dow buy gold. Been a long time since anyone bought gold for anything which is evidence in the price. They bought the euro instead. Thats true. Im going next week. Where. For a wedding. A very good event. Wow, tuscany is one part ive never been too. A lot of Economic Data and a couple of key earnings report. At 8 30 eastern we get a read on Second Quarter gdp. The number expected to be revised up sharply. First reading was 2. 3 . Also weekly jobless claims at 8 30 and later in the morning pending home sales in the Kansas City Fed survey. On the corporate front the consumer is front and center. Well hear from tiffany and Dollar General and gm smuk, smu and then theres the fed. Many gathering in jackson hole but theyre not gelling with yellen this time. Shes a no show. As you know, was it worth 600 points to crack addicts out on wall street . Maybe it was. Bill dudley cracked headline with this comment. From my perspective at this moment the decision to begin the normalization process at the September Fomc meeting seems less compelling to me than a few weeks ago but normalization could become more compelling by the time of the meeting as we get Additional Information on how the u. S. Economy is performing. I think these guys sit around and okay lockhart. You say were still going to do it. Dudley you say were not going to do it. Well keep people on their toes. Good cop bad cop. Not raising a quarter point is good for 600. It really did so that happened during the 10 00 hour when we were on set. The dudley news and stocked rallied a little bit off of that and then they lost team and the gains are being attributed to the dovish comments but you didnt see the 600 point gain when he was speaking. If you dont think at 9 50 that the market already thought they werent going in september. I think were back to thinking they still might go. If you read all the commentary yesterday if the market stabilize theyre on track with the economic numbers theyre on track to start in september. They want to do it. He said that. I hope we can do it. I didnt think he said anything beyond conventional. Im still hoping. I know. That they go. Im still thinking they will. Im hoping that they will. Less compelling is a signal. Its a signal that the market has already processed. Here we are talking about it again. Its the signal in that. Not just the quarter point. Everyone knows thats easy policy but that is a signal that theyre in tightening mode whether the next one comes right after or not. They could wait another year. Just get on the board. We talked about having a monkey and a dog on the set. What a dove. Monkeys are disgusting stuff. Doves, constantly. They manufacture stuff. Dogs, you know, you can take them out. Take them out. Do your business. Come back in. Its all very civilized. But then you need a hawk. You have to balance. A hawk on one side. Take the dove down to times square where everybody goes in this new city that de blasio has. Its one big toilet down at times square. Julian is laughing. Thank you, can you sit here for awhile. I need some help today. Anyway. Hell join us with his conversation with Esther George. Andrew, its your read now. Lovely. Our global cnbc team has the market story covered this morning. Well talk about it as seema mody is in london but before that hong kong where susan lee is hanging out. I think everyone agrees out here its consensus that there was Government Intervention and buying from china in the last 45 minute of trade because we were down 1 and then up 5 which is the biggest rally weve seen since july 9th or so and we saw these sizable bids coming from china finance Security Corporation backed funds and its backed by the state council and other people took notice of the csf flows and it did seem obvious that china stepped n. They were buying banks. Some are saying this support is showing china and the markets look pretty good. And theres a term called saving face. Thats what theyre trying to do going into september 3rd. Were seeing funds going back in with china supporting the market again. Theyre trying to keep things light and hong kong following chinas rally but akocross the regions we saw japan following wall streets lead seeing a rally of 1 but they say this was not institutional money. The big institutions are still staying on the sidelines at least for today. They need a more compelling story to chase the markets. It wasnt a convincing rally today and well see how long those gains last. That balance in asia a positive session in wall street and a positive read on the health of the euro zone. That is right, lending to firms and households have increased in the month of july. Thats a vote of confidence for the ecb. This suggests that qe is working and the recovery here in europe is intact but thats not it, spain actually reporting a strong gdp number up 1 . Thats the fastest pace of growth weve seen in spain in the last 8 years. Spain seen as one of the come back kids here in europe. Now our attention turns to the upcoming election. This is the spanish equity gain around 2. 7 . Oil and gas given the rebound in oil prices this morning. Some of the natural gas and Resource Companies moving higher. Glencore with a gain of around 4 . Over to you. Thank you for that. In the meantime back here the Global Market turmoil hitting Many Hedge Fund Investors including bill ackman. He was one of last years best performing Hedge Fund Managers but now the firm is down for the year after the markets dropped. Three weeks ago he told clients the firm was up about 10 for the year through the end of july but despite the sharp moves they have made no meaningful recent changes so its current portfolio holding. It believes the value has not changed but diversity is not his thing. He likes to have a basket of half a dozen, a dozen stocks and hes betting on those stocks and thats the deal. Thats a company that i happen to cover, the stock is down 10 since he announced the stake this month. 80 of their business is overseas. They have ton of business in emerging markets. I always wonder how many of a macro take he looks at. How macro hes thinking when hes looking at a stock like that in terms of the value. Bank of america and other lenders were issuing calls to clients loaned by investment portfolios. Thats what happens when the market goes down. This coming according to the wall street journal. A big business for brokerages and the important part here is also that the firms are likely to take a hit on profits with a securitys based loan. A person pledges all or part of their portfolio collateral. But the client uses it for real esta estate rather than other securities. A rally for the market after six sessions. Joining us now. We dont need to know if its an exact bottom but we need to know if were making a botd tom. And whether this turns out to be a correction and not the beginning of a secular bear where we go down 20 or 30 . I think were in the process of making the bottom. Wouldnt surprised me to retest some of the lows. But not another 10 to 15 down from here . Thats more than a retest of the lows. If we were down another 10, that would be down roughly 15 . So you could see another 10 . I dont know if it will be exactly 10 but were down another 10 00. Nothing has been truly resolved here. The fed has not made a decision one way or another. Would it shock you if we already put in the lows. Thats possible too. To andrews earlier reporting on the margin calls you could see that happening when they have to be resolved at the end of the day. Especially with nyse margin calls. Is that why the 3 00 hour has been so crazy . I think so. Thats when you start to button up the margin calls. We were looking at that monday morning. Theres been a fair amount of damage here. Im not sure it would workout so neatly that the bottom would put in. Its been a v shaped correction. Can you compete with a guy with a bow tie and glasses like that . Do you want to try . Or defer to him . No. Basically if you look at the bear markets of the last 25 years every single one of them has been accompanied by a recession. So when we look at the u. S. Economy there is the probability of a recession over the next year and a half is very, very slight. You know,the jobs picture is strong the Housing Market is strong and what we got yesterday was this strong durable goods report. Were not saying the industrial economy is going to revival magically but it was a day that people had not been expecting. So its the last two weeks if the better like that around the world, you would be full on for the rate hike . The Economic Indicators are what the fed is looking for to raise. Absolutely. So they do need to care about animal spirits or stock market valuations. The fed, whether its overt or otherwise always has the International Situation in the back of their mind and you could make the argument that the chinese devaluations a couple of weeks ago was the first fed rate hike in a lot of ways. You had a lot of the effect that you might expect. It would make it worse if they did one. Were still thinking. Were calling for the hike in september. Really . Were sticking with our guns. Obviously the fed has made it clear that the data dependency is greater given the last several weeks. On our side of the house our view is that wed see the rate increases sooner than later. If you look at the numbers, the car sales, we have car sales at 17, 18 million rate. Last time we saw that was in 2005. Last time we had unemployment at these levels, 2. 5 , ten year rates were close to 4. Do we need an Interest Rate policy now . No. If the u. S. Market cannot tolerate a 25 or 50 basis point raise in rates if they raise Interest Rates in the middle of Global Market turmoil that would influence the outlook. Thats what bill dudley was saying yesterday. Thats a fair point but after almost a decade of zero Interest Rates when the realization that its coming to an end is going to create volatility in and of itself, if youre worried about volatility you end up getting in a circular argument. So you have to live with it regardless of the environment. It will never be an ideal time to raise Interest Rates. You have to look at the numbers to get on with it. The sooner you do it, the better. Rip off the bandaid. If you do go beyond the domestic economy, theres no country too small. It could cause them not to raise the economy. So we had greece. We worried about greece. Then we worry about europe and Southern Europe and now its china. It could be russia it could be brazil. Every single place we cant raise because of that . They may it clear they dont want the repeat of 1937. The fed doesnt want to derail the us. So they have been extra cautious but what we would say is its very typical when youre getting this close to the start of normalization to actually see a normalization in volatility and investors should not be fearful of this volatility. They should try to use it to their advantage. Okay. All right. Thank you. You did fine. You were not intimidated at all. Relief. Do you have anything interesting . I do but were going to switch gears. I was pointing because were switching fwegears to a tragic story. We have details about the mind set of a hand that shot and killed two former colleagues a tv reporter and videographer. He faxed a document to abc news in which he described himself as a human powder keg waiting to go boom. Nbcs sarah reports from roanoke, virginia this morning. Colleagues describe Allison Parker and adam ward as special people. The kind that were up before sunrise to put in long hours reporting the news. Their off camera lives were just as busy. Parker had recently moved in with her boyfriend. Ward was engaged to be married. If i walked into the office in the morning and the firstperson i saw was either adam or allison i got a smile on my face. They were interviewing a local official live for cbs affiliate when he opened fire killing parker and ward. He filmed the shooting and posted it to social media later as he was pursued by police before he turned the gun on himself. Its obvious this gentleman was disturbed in some way of the way things transpired at some point in his life. Things were spiraling out of control. Flanagan that was fired from the station two years ago went by the name Bryce Williams when he worked there. Management describes him as an angry employee. After awhile, a number of incidents, we thought it was best if he left the company and he did but not happily. He had to get some assistance from the police to get him out of here. Meanwhile, a growing memorial outside wdbj is focused on the lives of parker and ward. Late wednesday the Community Came together to mourn their loss. The nation used to covering the news, now the center of a tragic story of its own. In roanoke, virginia, nbc news. Woman being interviewed at the time of the shooting was also hit and is in stable condition this morning. Coming up on the show, more on that big market move that weve seen pretty much all week. The market story of the morning. Futures pointing to a higher open. Plus steve sits down with Kansas City Fed president Esther George on the big fed debate. As we head to break lets check out how were setting up for the morning. Dow futures up 183. Youre watching squawk box on cnbc. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. Meg joins us with more on the cholesterol drug wars. This is a new class of drugs for those that cant tolerate statens or dont get enough benefit from it. This is pcsk 9 inhibinhibitors. They reduce cholesterol levels by significant amounts even on top of other drugs. The question now widely expected to get fda approval is how broad will that approval be and how high will they replace this drug. They set the price at 40 a day or 14,600 a year for these drugs. Folks are anticipating a lot of competition either among the two companies themselves or from the pharmacy benefits managers and ensur insurers that will try to pit them against each other to get higher discounts. Is that already built in to the stock . Approval is built in but its where the approval comes down. How broad. Depending on where they price it could effect the stock as well. Do they still keep track of mortality data . Not just to see that it cuts cholesterol but keeps people from dying from heart attacks . They are. We still dont know. Thats one of the Big Questions with these drugs. Theyre running cardiovascular outcomes trials and those take many more years so we should get those data over the next few years. Stat nts lower the risk of heart attack and stroke and people are questioning whether that translates to that for every kind of drug. Thats because theres been drugs before that havent done that. People are worried about it. Thank you. Appreciate it. Were going to talk fed. Were going to talk jackson hole right now because the annual jackson hole conference kicking off today where policy makers are keeping the close eye on the major markets move and steve sat down with the host of the event. Esther george. When the stock market opens up down 1,000 points, do you get nervous . I Pay Attention. Because again thats volatility you want to understand but remember weve been in a period of a highly accommodative policy with the kind of tools being used by the fed that were targeted at asset values so when you effect those kind of prices for a long period of time and how are we positioned to deal with that. So you link the recent market volatility to fed policy . It has an influence on it and i take that because when we did quantitative easing, policy makers were clear about how it would effect asset values so whether assets are overpriced i dont know. But it does produce an important factor in how assets are in the economy. That begs the question as to whether or not what happens in the markets and the markets recent reaction should influence the Federal Reserve and whether or not it changes rates. Policy makers are trying to define whether the forecast should adjust. You have to be aware of why the markets move. You think the fed shouldnt raise rates. Has anything youve seen the last several days changed your opinion of that . So ive been talking about the normalization of rates for sometime. This weeks events complicate the picture but its too soon to say it fundamentally changes that picture. In my view the normalization process needs to begin and the economy is performing in a way its prepared to take that. Whats your view of the u. S. Economy now . I think its continuing a trend rate of growth. It has been uneven. The First Quarter took us back a little bit to understand why growth contracted but it looks again Second Quarter that were back on track. So i think the economy fundamentally is is in a good place. Kansas city fed president Esther George pretty sharp and direction in my book and her attitude is if you play with fire dont be surprised when you get burn first degree youre going to use asset prices as part of your policy with when you with draw stimulus youre going to have the volatility. And the key talks more about inflation and the potential market effects from a rate hike which is if youre going to with draw the stimulus dont be afraid, or deterred from your actions if the asset prices fall. Make mess wonder what the conversation is there. Given this is such an interesting time for jackson hole to be happening about the dangers of not raising rates sooner than later in september or this year or the dangers of raising rates too early. I feel like thats the debate that people in the markets are having. What are they saying over there . The trouble with the people like george who want rates to go up is all the dangers are perspective. Theres nothing apparent in terms of you have this inflation and the bubbles out there arent obvious. Although some people say they are to them but theyre not all that clear. Thats where they say you need to move now or face these unclear, uncertain dangers that are there. Your own opinion is totally clouding your judgment there. Weve had this talk so many times that all the stuff happening, all the buy backs that maybe shouldnt have been done. All the borrowing that shouldnt have been done, you dont know when that comes home to roost. Thats what im saying, joe. Listening to her i was like i wanted to play some patriotic music. Lets go. Dudley and you have price stability and youre going to add asset values to this . Stock market values are the third mandate that they have now to keep high . I think they would describe it more as Financial Stability right now but yeah youre right. We need to hang on to the gains we solicited in the stock market. We cant get either of those back. I think like she had an i told you so attitude around this interview here which is this idea of she was against, along with her predecessor this idea of using asset prices as part of the policy so shes saying i told you this was going to happen here. Heres the interesting question. If this is a reaction, should you stomach this and take this and go ahead with your policy of raising rates . We can debate this. If what you get as a result of raising rates is a 10 sell off in the market are you getting off cheep here . Considering you went from 6 or 8,000 up to 16 or 18,000 and all you do is come back to 16 in if this is it. Go for it. Dont stop. If every time you go to go forward and the market else is off and you stop Going Forward because of that then youre not realizing that what youre see as good the market reaction. Youre underestimating the strength of the dollar and what that will do to u. S. Growth and the fact that the fed is the Global Central Bank whether it wants it or not. We cant feel bad for every country that happens to have crappy currency because their economic fundamentals are no good. Maybe its not an accident that every time the fed talks about raising rates something bad happens. That bad is the thing steve, the other thing, the benefits are are gone. So why worry if theres any possibility this is going to come home to roost because of what youre doing you need to get out. We dont know whats lying ahead. What do you mean the benefits are gone, joe . Its not going to induce anything. I want steve to try to read through raise in september. Dudley is closer to yellen. Are you 100 no im not going to ask when we bottom i asked that. I think theres a debate here guys and Esther George is one side of that. Go for it. Do it. Lets start this process. Because of the things joe was talking about. She didnt mention joe. But the potential bad outcomes here and you have dudley thats a little more center. Dudley is like lets just be a little more careful. Its less compelling right now. He still wants to raise this. Who is she actually listening to . Isnt dudley closer. Thats right but the world has moved a little bit closer to year ago. The vice chairman is speaking on saturday. Kansas city. Midwest turned common sense versus new york. High in the sky, progressive. Oh gosh. Exactly what it is. We have to go. Bye steve. Watch out for the elk. Theres lots of elk. Quite beautiful. Lot of elks. Elk. Its like deer. When we come back walmart kicking off the holiday push earlier than normal and theyre hoping the Star Wars Force will be a big sales driver. That story next. But first as we head out to break lets look back at this date in history. If you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end august 31st. Share your summer moments in your mercedesbenz with us. Seven out of ten Power Outages in the us are caused by weather. But utilities can now predict where the power will go out, within a few city blocks. 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Ge software. Get connected. Get insights. Get optimized. Welcome back. Lets get you up to speed on the markets this morning. China shanghai composite jumping more than 5 to close back above that key 3,000 mark. Stocks swinging wildly. Actually just going up. Straight up in the final 30 minutes of trading and reports say that china intervened buying the blue chips. The government bought a bunch of blue chips. They want the market higher for the big september 3rd, world war ii victory commemoration or thats the implied reason which is if you are going to be a communist country and have state control of everything, go full, man. You got all the taipnks and stu. You dont want a crappy stock market when thats happening. No, very reasonable. They have plenty of treasuries to sell. Which they have been doing. But they have to get that market under control. Its been crazy. You scare me. Do we need to get it under control here . Should we be buying s ps here. No different kind of market. Its a stock market right. Yeah but people always say that the Chinese Market is casino. It was rigged to begin with. Accept what it is. Then its not really a market is it . Lets tell you whats making headlines this morning. Walmart is launching its holiday layaway two weeks later than last week. Among the drivers the december release of star wars, the force awakens. Walmart will have 500 new star wars products on september 4th. We talked about yoda. Will he be around . I dont know. You dont know . Isnt he like a core character. I dont know. Which one is this . Its like reboot number nine. Theres so much hype. Were talking about you go after the show, right . A little bit of yoga. You do . I did touch my toes. I cant touch my toes. When we come back go like this. Coming up, tech names leading the rally on wall street. The sector jumping more than 5 yesterday erasings all the weeks losses. We have that story and a lot more when squawk box returns in just a moment. But it is not the device that is mobile, it is you. Real madrid have about 450 million fans. Were trying to give them all the feeling of being at the stadium. The microsoft cloud gives us the scalability to communicate exactly the content that people want to see. It will help people connect to their passion of living real madrid. S p tech sector snapping back and rising more than 5 yesterday and facebook, amazon, netflix and google played a big part in the s p performance this week all posting very strong gains of 5 or more. Joining us is gene who covers most of these stocks. Good morning to you. Good morning. Did we miss it . Is the big chance to get in at a discount price this week, is it over . Well, probably for this week but if you think about the broader secular theme the reason these stocks just ripped back is because investors recognize that these are great secular themes so if you take the approach of trying to get a quick buck you probably missed it. Investing for six months and beyond these are all Great Stories to own. Of the stories, which story do you like the best . Near term its apple. I think that theres a lot of skepticism around these difficult cull comps and ultimately theyre gaining share and separately is facebook. We talked a lot aboutfacebook. This whole occuec thing is a term of revolution of augmented reality theme and i think thats something to pick up momentum in the near term. We debate apple all the time. Whats the potential of apple . Can it get back to the most recent highs . I think it can. I think theres going to be a subtle shift in how investors think of apple over the next couple of years and shift more to this annuity, very predictable type of business. We are mott going to have the 30 growth but a steady kind of have we had a predictable Technology Company before . There really has not been. I think thats a reason it doesnt get multiple like cocacola, for example. But if they can kind of sustain this upgrade pattern that they have, and continue to inch market share i think as much as a tech company is predictable, apple could be one. You can get the 30 where you were pounding the table on it instead of 30 from there, you can get it back to the 785. Yeah. I mean, theres that. Our price target is much more optimistic. We have 60 upside to the stock which thats what i mean, yeah. You didnt lower the price target at all. Watched it from 385 billion to the 5s last week and it was in market cap like 5 i dont know what it was, 520 or something. You department change anything. We actually raised the target because we felt more optimistic about the share gains an enso i feel great that this is one whats your target now . Pardon . What is your apple tarl get now . We are at sorry. Were at 172. Were at 109. 69. Okay. Gene, dare i ask, we have to run, google or now alphabet . How do you think about that . Theyll give more transparency and investors like. It is a good steady story but i think theres other of the fang theres more attractive withins at this point. Okay. Gene, thanks for waking up there early. Thank you. Fang is amazon, fanga . A in fang is amazon. Not apple. We were off track. Thank you. All right. Coming up, deal news to report to you as we look toward the market open. Futures extending gains on top of yesterdays 600point rally in the dow. Rance company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. Can a a subconscious. Mind . A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . You forgot the milk thats lactaid. Right. 100 real milk, just without the lactose. So you can drink all you want. With no discomfort . Exactly. Here, try some. Mmm, it is real milk. See . Delicious. Hoof bump oh. Right here girl, boom. Lactaid®. 100 real milk. No discomfort. And for a creamy and delicious treat, try lactaid® ice cream. Coming up, shares of saipt jude medical jumping right now. Well talk about it on a report of abbotts labs preparing a 25 billion bid for the company. That story and more when we return in a moment. No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging, a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. China shot up more than 5 . Futures indicating another big up move today. What to expect as we count you down to the opening bell. The global selloff worshipping out this years gains for the persian Square Holdings but saying hes not switching gears. And the feds jackson hole symposium is hottest ticket of the year. Inside the peaceful mountain resort, the great Interest Rate debate is raging. Steve takes us behind the scenes as the second hour of squawk box begins right now. Welcome back. Right here on cnbc. First in business worldwide. This morning, becky has the day off. Our top story this morning, of course, the markets. U. S. Futures indicated sharply higher this follows yesterdays snapback of more than 600 points in the dow. It was the biggest gain, biggest point gain ever for the blue chips. Third biggest. Broke the streak not the biggest. Third biggest. Third biggest . Thats what it said. Best day percentage wise for the dow and s p since 2007. European equities, at this hour, as well. You are seeing a green arrows there with the dax and the cac up close to 3 . Ftse 100 up. And some of this happening in part we think because as joe was saying its china propping up its own market toward the end of the day yesterday. I think we know. Bought blue chip stocks. Nice move, 5 . Thats what happens if you throw money at things. Its very appealing. As a technique that i think we should think about over here. Things are a little sad and all of us, oh my god, we feel horrible. Buy some stock. Come on in. Down 10 to up 20 or something . Dont you think we have more powerful tools . Thats powerful. We have to work around the edges. Cash is a powerful tool. We have to do qe and we recollect just do it. It worked, didnt it the. You said it did. All justifiejustified. Take it away and wont matter. China had to do something. The stock market is getting crazy. You are wearing red today. Im wearing red today. Breaking overnight, china did rally. A stunning intraday move from a los to a 5 rally in the final hour of trading an enthe support that joe reports, the reports that the government stepped in to buy shares of Large Companies. The rally ended, steepest fiveday slump since 1996. Thats what i was talking about. Back in the u. S. , it is a focus on u. S. Economic data. A Second Quarter read on Second Quarter gdp and the number up sharply from the First Reading. 2. 3 . Economists are expecting it to go up a full percentage point. 3. 3 . Better Second Quarter. Pay attention to the weekless jobless claims numbers. Per shing square founder said the firm is down for the year. Three weeks ago, ackman said the fund was up. In a financial statement, he said the firm made no meaningful recent changes an was not leveraged in a way that would force the sale of holdings at an inopportune time. I have to think, though, a lot of hedge funds hit on the massive market move out of nowhere and ended six years of calm in the u. S. Stock market. I imagine if others september out letters and i dont believe they have yet they would read a little bit like this. Probably. Possible depending on what happens in the market putting out the letter today, i dont know what time he put it out. Thats when it was reported. A carlisle fund up, 100 million in a week based on the currency shorts in emerging market. We decide china is like a corporation. Run by the government and buying back their own stock. This is a buyback. You know my view on buybacks. If that worked, why wouldnt everyone do it . Sooner or later you run out of money. Theyre not running out of money. They have our money. Lets tell you about another big deal this morning. A possible takeover deal is in the works. Financial times reporting that abbott labs is preparing a bid for st. Jude medical and working with jpmorgan and citi on the deal sending the shares of st. Jude higher in premarket trading and looking at it up 12 in the premarket. I have to get on the phone. I can tell you some stuff about this real quick. Please do it. Lets look at if we have a oneyear chart of saipt jut. Ju. Starting in midjune sold off to where they can offer a premium and get back to where it was on july 21st, st. Jude announced there you can see it. Announced an acquisition of t when thoratech and not taken positively. I dont know what this means if abbott buys st. Jude. Try to scuttle not sure if they would or not. Both of them trying to make not heart transplant and mechanical hearts but the devices that allow you to support i think theyre left ventricle assist devices and things like that. Given where st. Judes trading, though, dont you this theyll say no go . We dont want to do this deal in. St. Jude will say that. Talk to the hand. Talk to the hand. But they have probably maybe they bought thoratech knowing this is in the works and offering a premium to be back on its own. A sign that the deals will continue maybe even though what we have seen . Yesterday yeah. We had roger altman in here just yesterday. And roger said that there hadnt been a slowdown. He was not you know, we had asked. I think a project or two he said. Little slower. But otherwise he said well steam ahead. Questions of whether it will maintain on the ipos. I think if that doesnt happen, you have the private market situation. Yeah. Getting rid of the ipo this week is nerveracking. Whens the birthday . In may. Do you have a do you have actual blue boxes that you buy something at kays and put in it a blue box . No. Never done that . Only the real thing. There was an earnings miss for tiffanys today. The sorkin family did not contribute enough . A lot of people have blue boxes and go to you know, another place. Stick in it there. Speak for yourself. I have friends that have done that. Five cents below estimates. Tiffany pointing to a strong dollar and challenging Economic Conditions in certain market. Tiffany is like needles markup. Tiffany is so much more expensive than what you can get on 46th street. I dont know. With yesterdays gain, the s p ended out of correction territory. Which stock and stocks snapped back the most . Ill bet you when i read Something Like this you know what im leading to . Dominic chu. Right . Yes it is. I knew it. You knew it. Because you have no life. You do this every day, figure something else. I dont have a life whatsoever. Im glad that you appreciate the fact i have no life right now, joe. Right. Misery loves company. It does, for sure. Okay. So that tiffany chart you showed over the last year, shows real negative momentum and down year to date at this popt here so when we look at snapback stocks and find the one that have fallen the most and bounced back the most and not those proverbial falling knives or dead cat bounces. Maybe its a shortterm pop. What we did is took the s p 500, looked for the biggest drops on tuesday, those that fell by 2 or more at least on tuesday. 500 stocks became 167. We then said, okay, then what about wednesdays action . Up by at least 5 . That 167 fell to just 19 stocks in the s p 500. And then we said, in order to avoid those falling knives, look at the ones still positive year to date. Right in the ones that have shown some strength, relative momentum going into these numbers and that 19 became just 2 stocks. Theyre both technology. The first one here is semiconductors and we know how beaten up that sector has become. That industry has become. This one is invidia. You can see there, in the extended hours and two days and the last year and a half, theyre up about 8 , 9 during this time, as well. You can see there. Relative strength. Another one here, guys, is a dow component in technology and not intel or cisco. Visa shares up. You can see over the last couple of days, pretty decent gains. Two stocks bought on the dip tuesday and then kind of really went up on wednesday. The big snapbacks ones that invest or thes keep an eye on because theyre perhaps signs that that momentum can continue to the upside given that trajectory. Back over to you. Interesting, dom. Thank you. My friend. You have people help you with this. Youre not like a genius, right . Im not like a genius. We have a group of smart people here but we are a bunch of spreadsheet jockeys and goes to the i have no life here that happens. You do. Thats the way to do it. You have a great team. Absolutely. Humility is good. No doubt. For more, lets bring in Barbara Rhine hart, chief investment at Credit Suisse now . For barbara, since this is her business, this is her job, maybe we do ask her. You want to ask her . I do. Is it a bottom . Have we made the bottom . Thats from yesterday. You made fun of me asking. Thats the mocking of him. I think youre just mocking everybody. Now youre asking the question. But is it a bottom . Great question and one that Everyone Wants an answer to. We look for bottom and violent selloffs is a capitulation in Investor Sentiment and we have not seen that. Looking at the Risk Appetite index, American Association for individual investors, theyre all getting down towards oversold levels but they havent pierced through them and when you have violent moves like this, you generally need to see a capitulation. As an investor listening to what youre saying and you have cash on the sidelines, are you supposed to wait for this violent moment that youre talking about or do you go in now . No. We are actually staying neutral. We have been holding cash for the better part of this entire year and more than average cash thinking theres going to be a volatility move. We got to august of this year without any one standard deviation and thats very unusual because you generally get three a year. So we felt as though theres a pullback and we dont think did we have three last year . Yes. We have had had these little moves in the last couple of years . Three a yore. Didnt do 10 . In 2013, you only had two. Last year you had throw. If you could have bought on the lows from a couple of days ago, would you have bought there . No, we did not. You didnt have time. No. The other thing, as well, in these types of selloffs, you need to see either a very big down day on very low volume and exhausting the sell earls or the other thing you need to do is see a very up day on very big volume confirming it. Can you imagine vick telling you these things . Theres thinking and rational and work that goes in. Dont knock him. I dont care whether youre thinking its a bottom. There are things that you can do, right . Some of the beaten up parts of the market, thats going to be a very big positive carry and to do something barbara, wasnt this whole rally that we have seen, this it wasnt a we didnt reach levels of optimism that are so, i mean, it is not i mean, you say we havent seen the pessimism. This is a whole big year of a gains, taking some gains and then taking them backment right . Its a frustrating people werent overly bullish and havent been for a move, have they . Exactly. This is one of the most unloved, underowned, underinvested rallies since 2009. Maybe we dont need that capitulation. You had it in 2011. You had the big capitulation in 2010 with big market moves like this. Last time of a greater than 10 decline in 2011 went from may until october of 2011. You had a 19 peak to trough to decline in the s p and oversold panic levels more severe than you saw than lehman. That was greece and the u. S. Downgrade. Whats the why now or just li psychological and emotional . Its the emerging markets in completely bear market territory. Right . They have pierced through 20 peak to trough declines. This is the first time the fed wants to raise Interest Rates since 2006. Thats not a benign event to digest. And then the last piece of it, as well, is you have bond yields very low. Stubbornly low and investors reluctant to say i want to move into equities and been a very untrusted market. What level on the s p, were at 1940. What level just as an estimate since you dont know where that capitulation would be but what level would you expect it to be where you see an event like that . 1600 . No. It is difficult to say. 17 . 14 . Give me an idea. Which one . It generally is a transition, of course, from a valuationled recovery into an earningsled recovery okay. You know, there are some very important lows that were reached in the market and held what are some of those numbers . 1820 is a big one. Okay. Theres a Technical Support levels below that, as well. In the 1700s. Well into the 17s. Similar to the 17s. This is what we think. We think that this has not exhausted itself. That is nice counter trend moment and theres indigestion to come before this is over. A clinic in actually talking about this, i think. No. We know what to look at. Right . Maybe totally wrong. We may go up from here but at least thats a really definitive what you heard on the floor yesterday. During that 600point rally. Well, traders on the floor it is oversold whats they . They were quick to warn. One of the best indicators we have. Good to know. Where can we find that . Might need a business . Might need an account. Thank you. Theres that word again. When we come back, retailers reporting, courtney moves down the results. Tiffany under heavy selling pressure down 7 , a big miss. And then investor thomas white is bullish on china. Find out why he says the fears driving the selloff are overblown. Later, more of Steve Liesmans interview with ester george and reaction of a former new york fed official on the timing of the elusive fed Interest Rate hike. Stick around. You are looking at two airplane fuel gauges. Can you spot the difference . No . You cant see that . Alright, lets take a look. The one on the right just used 1 less fuel than the one on the left. Now, to an airline, a 1 difference could save enough fuel to power hundreds of flights around the world. Hey, look at that. Pyramids. So you see, two things that are exactly the same have never been more different. Ge software. Get connected. Get insights. Get optimized. Welcome back to squawk box this morning. Look at the futures. We have green arrows after quite a good day. The dow opening up higher. S p up 17 and the nasdaq up about 45 points. Also a quick update on an earlier story. Bill ackman we said saw gains wiped out by the market selloff according to a letter to investors yesterday saying he was down 10 but i should tell you doing reporting this morning that was based on their nav on tuesday. So if you think about that, its possible that were maybe instead of down 10 , down 7 , 6 . He was up 10. Even or no. Im sorry up 10. And then even . Now he said he was down. That was on tuesday. A lots happened since. Just down . Just down. I shouldnt have given percentages and now really understand the dating on that, depending on where he was yesterday, its possible that hes back in the black. 3 to 4 moves for the broader average estimate. Several retailers with earnings this morning. Courtney reagan joins us with more. Highend jeweler tiffany falling and weak guidance. Comps flat in the u. S. Due to the lower Tourist Spending and tourists were apparently spending in europe and japan. Comps of 19 and 21 respectively. But again, u. S. Is the big market there. Separately, after the bell yesterday, pvh corp. Turning in a quarter that surprised the street to the upside. Beat on earnings and revenue. Ceo pointing to strength in the calvin klein merchandise, particularly the underwear. I guess the ads are working. Lower traffic in key tourist stores. Pvh expects headwinds to continue and held up pretty well for the quarter. Williamsonoma slight beat on revenue and the weak quarter outlook dragging down shares. Hardest hit in the wake of the west coast port disruption and that pain continues. The ceo says it incured further supply chain costs to restore the inventory levels. The big pieces of furniture they had to move and got stuck in the west coast ports so it was a big pain for them and still obviously dragging on the results. For tiffany, they have overseas business worth less brought back in the local currency and then shoppers at the u. S. Store are tourists and theyre just not spending as much. In the key destinations like in honolulu and here in new york, San Francisco. Thats still the issue here . It is, it is. Strong dollar, the Tourist Spending, interplay between the two not helping. Consumer discretionary is positive for the year. One of the best performers. It is. It is hard to paint it all with a broad brush. See shares of pvh did better than tiffany and dealing with the same headwinds to some extent and theres some Management Issues there, as well. Mens underwear at calvin klein . I feel like it probably the women buying the mens underwear based on the ads. Im just saying. Joe . Not that i know. Any expertise . Who needs it . Coming up, a big win for teslas model s this morning. The car getting an unprecedented review. That story is next. Eeep breath and. Exhale. Aflac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just one day. Ahh so he had your back . Yep. In just one day, we approve and pay. One day pay, only from aflac. [duck snoring] no students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. Coming up, famed short seller says china is worse than you think. Well talk to an investor betting that the dropoff in chinese stocks is a huge overreaction. Were back in a moment. Right now, at t is giving you 50 percent more data. Thats 15 gigs of data for the price of 10. And get 300 dollars credit for every line you switch to at t. I agree with you. Welcome back to squawk box. Mng the story that is are front and center at this hour, abbott labs reportedly preparing a 25 billion bid for st. Jude medical. The Financial Times saying it would be a cash and stock transition an trying the line up financing for that transaction. The report saying that jpmorgan and citi working with that company. Jm smuckers earnings beating by 9 cents a share and revenue better than expected and michaels earnings beating by a penny. Revenues roughly in line. Then theres the new model of tesla s scoring a big win this morning. Consumer reporting giving a score of 103 ever on a scale maxing out at 100. Acceleration and top fuel economy, theyre calling the model s the quickest car ever tested going from 0 to 60 Miles Per Hour in 3. 5 seconds. It really does almost everything better. And something we arent used to seeing from cars at all. Its more like something you see in electronics. So it really kind of blew up our system, really. It scored actually above 100 before we actually had to make some changes to our scoring system to account for this car. Wow. Shares of tesla up this morning. Elon musk got to be happy about that. Shares trading at 230. 50. Coming off the highs. Chinese equities are bouncing back overnight after reports of the government stepped in and actually bought shares in Large Companies. Lets bring in thomas white, president and ce io of thomas white with over 2 billion under management. You invest in chinese stocks . Yes. Its the second largest economy and very interested in it. Been very active in it over 20iers. Hard to find a bull on the chinese equity market right now given the crazy swings that 60point gain they had at one point in the year is wiped out. Yes. But most of that was a confusion over what happened. Morgan Stanley Capital international was going to increase them, put them in the indices and huge amount of passive money coming in the new effort they came across technological problems they couldnt get the settlement. They put it off. And when they put it off, the market fell back down again. Thats a blip up, a blip down. China is a huge economy. It will be the largest economy in the world in the next few yores. Why not just buy a yum brands getting 52 of the revenue in china or an apple getting almost 30 . Well, of course, companies whether theyre in europe, japan, the United States, have had a good 20 , 25 of the earnings from china for a long period of time so theres not a Global Company alive that doesnt have some of the top executives in china working aspects of it, manufacturing or selling there. Chinas a big part of it. You just dont have very many people that truly understand the stock market in china. It is hard to understand. I mean, today, report that is they stepped in and bought shares to get it under control after you were cut rates. Ratio requirements. Pumped pumped pumped pumped pumpedly liquidity. That is government with 3. 2 trillion of reserves. Were a government who doesnt have any near that. We bought every bond alive for five years before our economy and yet youre so sensitive theyre buying a few of their stocks and the stock market is nothing. 18 of the people have stocks in china. The rest are owned by the gft. Not a casino. Thats sort of a reputation it has. That its kind of a fake market. Let me assure you that they have a population which is 4 1 2 times many people in the United States. They have them aggressive, wanting to be entrepreneurs and places to put their money. Real estates too high now. They want to do it but they are also speculators by their very nature and they have always had been and but those small percent of the people dont let it confuse you. China is at the lowdown these are probably the its governed by the best policy makers in the world. They have turned the market 30 years ago a basket case through a period of time and now the second largest economy in the world. And now theyre going to be the first before literally five years and the biggest stock market in the year within 12 years. And its just because that stock market will open up to the world. They do not have an exchangeable economy right now. You cannot buy their stocks. Very few people you ever had on this show ever bought in asia. How do you do it . So the shares are available to institutions. Eight shares and shares that have been on the southern New York Stock Exchange. Thats 4 of the World Economy and second largest in the world. When they had the number of stock that is equal the size of their economy and that will happen, and it will happen by way of benchmarks and the passive investors will flow in there, you have got a major event coming up over 12 years. It is a big name and yet this confusion has brought the shares down to Single Digits. You have a tremendous opportunity ahead of you and yet the shares priced at Single Digits because people how would you recommend since individual investors cant get access, buy an etf that tracks the chinese stock market here . Morgan stanleys chinese index is the affect. Sure. Those shares are as i say very inexpensivnexpensive, rela Strong Economy. Their slowdown and its happening, theyre converting from an economy which is manufacturing things right. You see this as part of the process of consumption and service and in that conversion they have a certain part of the economy slowing down and they should have slow down and more than that, they have most of their businesses are stateowned enterprises. Theyre not as competitive as they should be. A slowdown, a growth, recession will really help them and make them much more competitive. This country is run out of university chicago, harvard, stamford. Its ready to move. What do you think . Its not a view we typically hear, andrew. Its truth. The you understand passive investing, you understand when they get exposure to the Chinese Market which is coming. It wasnt canceled. It was delayed. That exposure will put huge amount of passive money into the market. Huge. Is there one individual stock you would buy . Yes. Im not here to quote individual stocks. Do you look at an ali bboba . China is converting as a manufacturer of products for the west to basically a more sustainable economy which is consumption and service like ours is. Did you foresee the past couple of years in terms of 7 or 8 to 4 . Probably saying this all along, right . Things have changed and slowed significantly in the past two or three years and talk to chinos. I think a lot of people are like this. We have people that, you know, the consensus is they know exactly what theyre doing and state controlled. On the economy, not necessarily the stock market. Sooner or later. They have a lot to navigate in terms of property rights, personal freedom, with everything else. Absolutely. The stock market has been a force that has been difficult to force control. Correct . They have a small stock market externally and internally. What would you call the last two or three years . A little bit of a they had a huge surge in growth. Right. That surge in growth created unsustainable buildup of minds right. Empty department buildings. Thats rare. Really . Empty stadiums and no one playing soccer. That a rarity. They have too much of certain things as they convert those things slow down and others pick up. Why dont you think that state sponsored aloe case of capital theyre going to screw up if they dont use Market Forces . Thigh they know thats wrong. They are run right out of the mba book. Theyre not allocating capital . They know that. They know yes. They know its ineffective ways to create an economy. Theyre bringing up what they need now is a Large Capital market. Yeah. And a large stock market. Theyll get it. They have tremendous joe, one of the strengths of a country is how big it is. This is 4. 3 trillion people. Yes. These are energetic people. Theyre learning how to get what . 4. 3 billion. Okay. Billion. Billion. Versus our 320 million. Right. Thank you. Thanks for sharing your views. Got to leave it there. Great story. A great book for you. There you go. Always looking. Always looking. I thought 2 billion. Is it 4 billion . 4 . Number of people . Yeah. I thought it was 2. Its 1. 4 billion people. Okay. You said 4. 3 billion. All right. Anyway, sorry. 1. 4 billion people. The United States is 320 million. Right. Okay. Four times. That is big consumer market. Coming up, fed policy makers gathering in wyoming amid uncertainty of the timing of rate increases. Hearing from kansas city president ester george next and reaction of former new york fed official. Thats coming up. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Kansas city fed ester george saying the u. S. Economy is prepared for fed policy to normalize. Heres what she told our senior economics reporter Steve Liesman about the fed rate hike path. I hope we can go gradually. I think that given how long we have been at zero would be the ideal path to be able to lift off, to wait and see how the economy does and then decide when the next move is. When it comes to raising Interest Rates, are you concerned that the market would bring forward all future rates to today, this idea that they sort of price to the terminal rate . Thats been the traditional reaction to bring that forward. I think through a lot of communications and efforts to be more transparent about how policy makers are thinking about rates this time, i hope will help that. But, yes, to some degree that always pulls forward in some sense. A stronger dollar, lower come bod my prices, weaker chinese economic, what impact on the nearterm Economic Data . I expect disinflationary pressures for sometime. What extent that feeds through to the real economy, to what extent we see that changing expectations, remains to be seen. Hold have held up pretty well and why i think its a transitory story. Why did you come up with inflation as a topic for the conference . The issues we are seeing globally, major Central Banks struggle with. And the question i think is, is it a function of the nature of the crisis we just went through, what adjustments may have come from that, the time that it takes to restore economies to their full potential is having these effects. Are you concerned about the market fallout from the Federal Reserve raising Interest Rates in the current environment . I think there could be volatility, steve. Do i worry about that . If i thought the economy was not on relatively sure footing here, then i think the complications from that would cause policymakers to have to think about that. Given the fundamentals i think we are in a good position now and we cant wait until we can determine whether Market Conditions are just right. So theres bit of an ester george framework for raising rates which is look at the economy, if the economys able to withstand the rate hike, look at markets but dont be swayed by them. I think the more extreme way of putting this, dont be allowed to be hostage by the markets do. The policy and let the market fall out where it is. Tomorrow morning i think we have the other end of the spectrum, the Federal Reserve president and i dont know how much you like this but almost certainly arguing not for rate hikes but additional easing. Okay. Steve, thank you. Appreciate it. Well continue this conversation though now with a former fed insider, joining us is the vice chairman of evercore and head of the groups Global Policy and Central Bank Strategy team and former executive Vice President at the new york fed. Read between the lines for us. Handicap what happens in september for us. Look. I think that the probability of a rate hike in september is pretty low at this juncture. Now, this clearly is sentiment on the committee they would like to move forward with raising rarts as soon as circumstances allow. But even before the markets sold off the last few days you had falling inflation break even, falling oil. Falling commodity prices. Strength in the dollar tightening things up and a substitute for rate hikes. The case for september weakening before the selloff and i think the selloff does matter even though you absolutely shouldnt set policy for the benefit of the markets. We keep hearing from different voices, right . One of the things thats always hard as an outsider to understand is, who actually has the ear of janet yellen . What does she listen to and who does she not listen to as much even though im sure she probably thinks shes listening to all of them. You hear ester george, against a dudley. You have others coming on tomorrow and who might even be more dovish. How does that work inside the room . Well, look. I think that janet genuinely is respected around the table for dealing fairly with people for listening to their opinions, to trying to build a consensus. With that said, clearly, her own thinking is closer to and she listens more to certain officials than others. Now, im speculating from the outside as the next man at this point. Obviously, bill dudley, stan fisher, very close dialogue with janet. John williams who she worked with at the San Francisco fed. Perhaps from the dovish camp and people paying some attention to, i think. She will be she is not out on the dovish extreme of this committee at the moment. She is more in the center. You know, you heard the word transitory used and a fed president s favorite words to suggest its temporary. Whens the shelf life on transito transitory . Because we havent seen inflation back to the target. So forget the markets for a moment. They have an excuse in the fact that core inflation is 1. 3 . Way below their 2 target. So i think thats really absolutely on the nail. Right . Because if we were seeing wages accelerating, if we were seeing core pce accelerating or say Core Services inflation which is pretty insulated from oil or the dollar, accelerating, then there could be quite a strong case for these effects but its awol. Theres no sign of the domestic inflationary pressures arriving on schedule. Will they arrive some day if unemployment continues to decline . Yes. But in a timely enough manner with enough force to overcome the external headwinds to get inflation back to target if two, three years . Thats the question. Not clear to be confident on that right now. Another quick thing. I dont know if you saw the bridgewater report out earlier this week and suggested effectively we need more qe, not less. Its not about tightening but the opposite direction. Talk to us about the Straight Line idea. Is it possibly a tight end and then how do you communicate to the public if you dont plan to tighten again immediately afterwards. Well, you can do that. Thiss the socalled dovish hike hypothesis. You hike once and then you issue those dots in the sep that show youre flattening down expectations for hiking. Only one this year and done as of september and wrap it in cotton wool in the press conference. I think thats a superficially attractive strategy and i dont like it actually. In the final analysis, you would still be tightening financial conditions and ray says you should be easing them. I dont think that certainly on the balance of probabilities the next move is to ease but there is some real insight in that argument which is the following. You have to be really careful here. The aim of the game is not to get rates off zero. The aim of the game is not to be back at zero. One, two years from now. If you dent like the idea of having to go become into qe4 in the future, you have to be very careful not just about the timing of liftoff but communicating to markets and in the end the real economy, the households, that you are going to shepherd this expansion through the phase where rates are low and external shocks can present a serious risk of pushing you back to the zero bout. Take us through to some safe, secure prosperous future. Thats the challenge right now. Always great for your insights. Thank you. Thank you. Thank you very much. When we come back, more on the reports of the deal by abbott labs to buy st. Jude, the biggest gainer in premarket action. Meg terrell will join us next. New Jersey Governor Chris Christie joining us on set to talk china, the markets and, of course, taking on donald trump. Two streetlights. The only difference that little blue thingy. You see it . Thats a sensor. Using ge software, the light can react to its environment getting brighter only when its needed. In a night, it saves a little energy. But, in a year it saves a lot. And the other street . Its been Burning Energy all night. For frank. Franks a cat. Now, two things that are exactly the same, have never been more different. Ge software. Get connected. Get insights. Get optimized. Possible deal in the works, abbott labs reportedly preparing a 25 billion bid for st. Jude medical. Meg terrell joins us with more. Financial times reporting the deal could be about 25 billion which happen which would represent a capital mark for st. Jude yesterday. This might potentially make sense. The two Companies Already work together, selling the cardiovascular Product Portfolio to hospitals and seeing consolidation in the medical device space because the Companies Need more leverage talking to hospitals when theyre trying to negotiate on the prices of these things and so if companies can get bigger, they have more power there. Abbott itself has been slimming down a little bit. Divesting the Animal Health unit and brand of generics and then folks wondering what they were going to do after that and they were planning or folks expected them to gear up or m a. They were expected to do smaller deals, 5 billion to 7 billion and bigger than expected for abbott an doesnt totally not make sense. Im trying to understand hostile bid . Friendly deal . Whats going on here . Unclear. Unclear from this. Given the market price, where st. Jude is sitting right now, i would think they want a lot more. Because theyre going to look at the market an say, look. Look at where we used to be. Right . Well, yeah. You can say that for a lot of potential targets right now. Thats always the question, right . A big depression in the market like this, people are more vulnerable. Some folks might argue that the highs of the prices arent reasonable so on this whole idea of watching the markets and the bull market continues and 400 billion since january and Health Pharma and not over. Continues across the board. Thank you. Coming back, much more on the Global Market rebrown. Citis levkovich and paulsen join us and then new jersey Chris Christie here on the set. Fighting the trump of listening machine when we come back. Well, sir. After some serious consideration id like to put in my 15year notice. Youre quitting . Technically retiring, sir. With a little help from my state farm agent, i plan to retire in 15 years. Wow youre totally blindsiding me here. Whos gonna manage your accounts . This is a devastating blow i was not prepared for. Well, im gonna finish packing my things. 15 years will really sneak up on you. Jennifer with do your exit interview and adam made you a cake. Red velvet. Oh, thank you. I made this. Take charge of your retirement. Talk to a state farm agent today. Dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Global market alert. China reportedly stepping in to shore up stocks today. European shares surging and u. S. Futures point to a big gain at the open. Global market turmoil not crushing all deal talk. Shares of st. Jude medical popping on report that is abbott labs preparing a 25 billion bid for the company. And its your money, your vote. Our news maker this hour, new Jersey Governor Chris Christie, the republican president ial hopeful joins us in studio. Ready to sound off on the economy, on chinas role in this weeks market madness and on battling the donald on the campaign trail. The final hour of squawk box begins right now. Welcome back to squawk box here on cnbc. Im joe with andrew and sarah. Bec beckys off today. Less than 90 moneys from the opening bell on wall street now and the futures up over 100. Thats less than before and still positive after a 600point gain yesterday. Checking out the markets in europe, which are probably catching up a little with our move yesterday and still all 2 or so. Another wild ride in the Chinese Markets overnight. Stocks went from a loss to a 5 rally in the last minutes of trading and the final hour there are reports that the government stepped in to buy shares of Large Companies and ended the steepest fiveday slump since back in 1996 when hardly anyone was even watching. Now obsessed with it. Glued to it. But its interesting quiet moves. Almost 20 years. The new thing. Percentage its all the same, right . We said that would have to happen. 4 move yesterday. 4 s okay. We talked we hyped that 1,000point weekly move in the dow and that was 6 . 1,000 isnt what it used to be. Thats what we said on monday. The markets going to show us what a real move is and it did the next day. On monday down 1,000. Its been every day, yeah. All right. Here are the story that is investors talking about besides the crazy market swings today. A revision to Second Quarter gdp due in about 30 minutes and expected to be revised up sharply from the First Reading of 2. 3 . Kansas city fed president george telling our Steve Liesman theyre prepared for a rate hike despite the market selloff. This weeks events complicate the picture but i think its too soon to say it fundamentally changes that picture so in my own view, the normalization process needs to begin and the economys performing in a way that i think its prepared to take that. Her own view. Being the key phrase there. And the new version of the tesla model s scoring a big win Consumer Reports giving a score of 103 on a scale that normally maxes out at 100. Among the drivers, acceleration and top fuel economy. It really does almost everything better, something we arent used to seeing from cars at all. Its more like something you see in electronics so it really kind of blew up our system, really. It scored actually above 100 before we actually had to make some changes to our scoring system to account for this car. Bullish report there. And the stock tesla up nicely in the premarket this morning up 2. 3 , well off the highs we saw earlier. You want people to think about their answer. I think. You know . Consider their answer before they speak. Oh few other stocks on the move, abbott labs reportedly preparing a 25 billion bid for st. Jude medical. You can see its up 2. 66 now. Lets tell you what we know. Meg terrell getting off the phone with a spokesperson for abbott an not pursuing a deal for st. Jude. We saw that stock begin to tumble a little bit. In the ft report, no guarantee. They said they were preparing a bid. The spokesperson saying on the record theyre not preparing a bid. Not not even preparing one . There is no offer. Meg, megs on the sidelines right here. Yeah. She doesnt have an mic on her. Not preparing a bid. Specifically on the record saying theyre not preparing a bid. Oh well. Shooting down that story. In the ft. Shooting down that story in the ft. Of course, you know, it remains to be seen whether they can come back and make a bid later. Traditionally something you dont do. If youre contemplating a bid for a spokesperson to come out on the record and say were not preparing a bid, a, unusual, b, makes it very difficult to later change your mind. But of course, crazier things have happened before. Keep reading. Im supposed to keep reading . I dont know. Me . You, sir. Im sorry. Im happy to keep reading. Meg will join us. This is like straight on the set. Straight on the set. Just off the telephone with the pokes person for abbott telling us that there is no deal. You can see this is like this is cool, yeah. Live tv. Broken through the fourth wall, right in you get the see the whole thing, sausage made. I wish the phones connected before we came on and why the deal makes sense. Thats right. Abbott spokesman confirming on the record not pursuing a record for saipt jude. As you were saying, thats unusual to hear a Company Spokesperson shoot something down definitively. Doesnt seem like its happening right now. Okay. Well keep your eyes on that stock. We have to say, while youre here, went through the trouble, i mean, talk about the cholesterol . No. Should we talk about underwear . We already did that this morning. Lets talk about another mover in the premarket session . We have smartass viewers. They said, right . When you have a diaper, who needs underwear. I tweeted it out. I fueled the foir. A good one liner. I said it just depends. Just depends. Tiffany falling after so clever. Using your noggin. Yeah . Kidneys. Tiffany falling after both earnings and revenue missed estimates. Citing a strong dollar and challenging Economic Conditions. And certain markets. Discount retailer of Dollar General, a penny above estimates and revenue below forecast and samestore sales increase of 2. 8 also below estimates, as well. And check out the blue chip indexs roller coaster ride over the last week. Friday, a 530point drop. Monday, after a fiveminute 1,000point decline and then back to almost ended down 600 and then 200point loss on tuesday and before yesterdays big surge, and that 600point gain. The dow down more than 1 this week. Joining us, citigroup chief u. S. Economic strat jik and jim paulsen, chief investment strategist. Well get with you in a second, tobias. Jim, you know, we get your snapshot of whats happening quite frequently. Right from the year you expected both not much in the terms of gains. You thought this would be at least a consolidation year. Probably didnt surprise you that when you cant seem to break out of a really narrow range, when you do break out its violent. This time it was down. Healthy . Well, i think so, joe. I mean, i think the drop had more to do with the vulnerabilities of the market as you say than with china or commodity prices. That was the straw that broke the camels back but i think we had a market that got, you know, richly priced. We have one that where we had investors get too calm and complacent and we came into the year, we faced the more immediate need to reset Interest Rates in this country. And i think that eventually got the better of the market. Who knows if were done . Thats always hard to tell. I guess what i one thing i really dont like is the reaction to this to me so far has been that its just a refreshing pause and an ongoing bull market. I believe that myself. But i hate it that everyone believes that. Right. And that this is a buying opportunity and its reinforcing the buy in the dip thats been so successful. Right. I see no panic. I see no flight to safety. Treasury xwreelds going up, not down. The dollars down. The golds down. I think maybe we got to go lower yet. Maybe down around 1800 to really scare everybody and start have people talk that this could be a bear market and could be a recession before maybe we finally bottom out. Not the first person to say that, though, today, jim. So, you know, both sides, Barbara Rhinehart on earlier saying didnt see the downward move as volume flows, capitulation that you see a lot of times. But then, if its a correction, instead of a bear market low, if its a correction, do you always see a capitulation . Do you always see one of those classic capitulations even in just a 10 correction . Not all the time, joe. Certainly not. I think thats what we need here because i think we have to gate better foundation, if you will, to continue this bull. Right. We have a very pa chur earnings cycle which is not going to grow near as fast as it did earlier in the cycle. We still havent started to reset rates which is really an odd phenomenon this far in and we need more like 15 times, 16 times earnings and a lot more cautious Investment Community to deal with what we have to deal with which is higher rates, probably some wage cost push margin pressures that we havent had to deal with yet and i just think were going to need a capitulation trade if you will to set us to be able to sustain another run. What do you think, tobias . Do you agree . Kind of disagree. Sorry, jim. A couple things. You know, for example, mondays open where you had certain stocks down 25 , 30 on the open, that sounds capitulatory to me. My wife complains that i dont like to talk about how i feel about stuff but the notion if i look at interest stock correlation, going into this, we were in the low teens. We are pushing the 60 range. Stock correlations and the mid70 ranges already and that usually suggests a herd mentality of selling. Everything is trending down the same way. You are seeing signs of investors throwing in towels. Ill tell you a different factor. End of mondays trade, divided by the 30day implied volatility, more than three standard deviations below average to 2000 and only happened 20 previous days. What does that tell you . You have a contango in volatility. People believe that the shortterm volatility is too high and a 96 probability of stocks up in 3 months. But wildly above random. Random is about 30 probability. So when you kind of look at those factors and you say, forget about how i feel and what i have a conversation with the client on the other end, what is kind of happening in the market . Suggesting that you are finding this bottom. I agree with jim that earnings are an issue and saying all along the first half of the year not good on earnings and Second Quarter numbers, down about 2 or so. If you x out energy and cant say just take out the bad stuff but theres a reason for the exercise. 5 , take out fx, up about 7 . As the year progresses, those drags will diminish with easier comparisons so just naturally, if the economy did Nothing Better than the Second Quarter, earnings would start to show an improving trend. I think earnings are critical for markets. I dont expect didnt expect a phenomenal year anyway. Up 6 . The dow down 8. 6 on the year. Is that it . I think its fair to suggest theres no great reason for everybody to start buying tomorrow. They probably do want to hear mr. Fischer this weekend and see the ism and the nonfarm payr l payrolls next week for confidence and thats the biggest thing in the conversation of investors in the last couple of days and where does the courage come from and, you know, i think of them, think a number of them hit the bottle a last few days and not sure thats where you want the courage, too. Thanks, jim, tobias, thanks. Thanks, guys. Coming back, china trying to stop the stock slide and reportedly buying stocks to prop up the markets themselves. China watcher will join us next. And then Economic Data that could move the markets. We have gdp revisions and jobless claims hilting the tape at 8 30 a. M. Eastern time. Plus, this is going to be big, president ial hopeful governor Chris Christie is going to join us right here on the squawk set this morning. We have questions and conversations to have with him. When you get up to 50 off hotels with travelocity, it means you can also afford to get up to 50 romanticer romantic sunsets. Making it the place to find a place for labor day. Go and smell the roses no students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. Our next guest long sounding the alarm on china and a bearish call in midapril saying the nation is far too dependent own exports and steer clear of the markets there. The shanghai composite is down 30 and joining us is Peter Navorro and author of crouching tiger what the militarization of china means for the world. Slated to be released this november. Good morning to you. Your call is right. The question, of course, is, when do you decide to not be bearish on china . Great question, andrew. What i think i would like to look at is copper, for example. And also, the long bond. I mean, as long as coppers in the toilet and as long as the long bond stays where it is, china aint going nowhere and xhi ins not raising Interest Rates and the Global Economy down on the back. Structurally we have chinas two biggest customers and the United States growing below norms to keep China Growing with the export dependent model. So thats kind of the structure. Nothing changed overnight even though we got bounces. And i think until china adopts policies Like Health Care reform, pension reform, things like that, to lower the savings rate an encourage chinese rates to consume, build up the domestic economy, we are fighting this structural imbalance and it could go on for a while. Talking about the policy moves to make, theres one thing to try to prop up the stock market on any given day which apparently they just did, but to actually get to the point of the policy reform that is you are talking about, thats years from now. Yeah. It is. And thats the problem. Because this has been probably 14 years in the making since china got into the World Trade Organization and really opened up their economy and our economy to the world. So, its going to be a very long and painful adjustment. It needs to take place. The problem, andrew, is that the knee jerk response that Chinese Communist party every time this happens is to resort to mercantile measures. Well see a devalued yuan, more dumping of steel into american markets, thats going to ripple over into hurting American Steel companies and brazilian Steel Companies an its going to be very difficult. Of course, when china is having trouble, bravilles having trouble. Australias having trouble. Canadas having trouble. And so, its got to be a structural adjustment and i think the lesson we learn over the past few years, the white house and the fed still hasnt figured out is that the problem is structural. You cant handle it. China needs a lesson, too. They try to intervene and fix the market somehow. Thats not going to work. I understand the structural problems. Is there something more systemic to Pay Attention to thinking about the banks over there and interconnectedness elsewhere and think back to 2008 and what happened here in the United States. Yeah. Another great question because as you know the Banking System even to this day remains far less organized and its not transparent. And so, its a fragile ent my. Politically, i think its worth noting that the new president xi jinpings battle on corruption and all that is causing great nervousness among people in china who have a bunch of money. So theres a tremendous rush to try to get money out of the country. And that further destabilizes the Banking System. And then, of course, youve got people leveraged to the hilt buying houses and stocks and things like that. Real estate bubble, financial bubble. Again, its going the chinese curse may you live in interesting times, its really interesting how they get out of that. My biggest concern is kind of a wag the dog scenario where domestically, communist party is in trouble and then start banging on japan or vietnam in the South China Sea and then things really get out of hand and they can get out of hand. Thats a scary scenario. Everyone trying to figure out how much china matters. We know its a second biggest economy. Its 15 of global output. But its been a huge contributor to Global Growth so whens the slowdown mean in terms of resetting the expectations for Global Growth and the reverberations in the u. S. . Yeah. Lets go back to the days when the United States economy basically was the big dog in the globe and it pulled everybody along in its wake. The question i think to frame it another way is can the u. S. Resume that role . We have a really Strong Economy and what were blessed with now and really been benefiting us over the last several years has been this whole shale gas revolution and the ability not to see our gdp drained by oil exports. So thats the question. And if we dont need china as much as we thought we did, its only because the American Economy is going to be able to pick up the slack ft im not so sure about that, particularly the way our american multi. National companies are interconnected in china. If you looked at the tape the last couple of days and see all this red, you see cisco, ge, gm, all those companies have made a big bet on china for growth so even if our economy is able to sustain itself, im not sure the stock market can because of all that exposure in china. Okay. Peter, thank you. We appreciate it. Always a thoughtful take. Well talk to you soon. My pleasure. Coming up, breaking Economic Data revision to gdp. Second quarter gdp and the feds next move and the newsmaker of the morning, new jersey governor christie joining us right here in studio. What are you squawking about this morning . Were reading your tweets and facebook comments. Well read system of them in a bit. If you send us a story, use keepsquawking. These two oil rigs look the same. Can you tell what makes them so different . Did you hear that sound . Of course you didnt. Youre not using ge Software Like the rig on the right. Its listening and learning how to prevent equipment failures, predict maintenance needs, and avoid problems before they happen. You dont even need a cerebral cortex to understand which is better. Now, two things that are exactly the same have never been more different. Ge software. Get connected. Get insights. Get optimized. 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Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. We are just seconds away from gdp, the revision and jobless claims. The futureless right now have been up. Right around there. Thats a little better. Um almost 2 an then just over 1 and now 158 on the dow, the s ps indicating up about 18. 5. The nasdaq up 43 or so. Rick santelli at the cme in chicago. Rick, the numbers please. All rightment lets see what the second look at Second Quarter gdp, it is a barn burner. 3. 7, from 2. 3 to 3. 7. That is, indeed, a large number. Consumption, 3. 1. Thats kind of as expected and boring by comparison to the headline. Sell it off because the price index personal Consumption Expenditure quarter over quarter for what it may not be worth is 1. 8. 271,000 on initial dlams. That is down 6,000 from an unrevised 277. Continuing claims, whisker un2. 27 million. Corporate profits up versus the last look at 7. 9. So many ways to look at this. Its nice to see this bump up. And in the context of what were looking at the First Quarter, the averages come back in line to some extent and this does help. The other issue is, i guess if we came from mars and saw 3. 7 gdp wed probably say, oh my god, were still at zero Interest Rate policy. What do you think, joe . I was just trying to figure out its sick, rick. Im figuring how the market to take this. You didnt get clarity of William Dudley yesterday . On this hand, on this hand, on that hand a lot of hands yesterday. Is it too far in the rear view myrrh railroirror were gr that level and the market should go down because they might raise again in september . I dont know. I think its crazy. I think we need some hard and fast rulebased central banking. I dont know. If the markets up, rick. The world will be running on battery cars and making rockets that dont crash, we should be able to come up with an algrithm that long to take care of this. The subjectivity of the fed brains doesnt make sense and fit with this. It is amazing. You cant have it both ways. Read the articles yesterday in the journal talking about the great things and comes back to, you know, less compelling, you know, all the soft, spongy words. How important is university of Michigan Sentiment to your familys investing for your future . Is that one of your key inputs . I think that theyre going to be strong this year. Actually. But i dont know. Ohio state obviously is a team to beat but i think theyre going to be pretty good. I dont know. But why . What are you hearing . Well, i just think yesterday i was kind of surprised that university of michigan and their Sentiment Index was from the dudley speech. Highly showcased. Getting the read of the reaction to the Global Market selloff on fridays u of m and emphasis on it. You never know how the students vote this. You cant top that compliment by the number two at the fed. I guess were all locking at the wrong data points. Yeah. Did that 20 years ago. We would say the students, you know, their parents didnt send them their checks and in a bad mood so they vote anyway, thanks, rick. Steve liesman in jackson hole at a big fed gathering. Est esters got it going on, steve. 3. 7. Lets go. Theres never a good time. Picking an awful day to quit sniffing glue. Never a good day. Lets go. Its airplane, steve. I didnt quit today, joe. You know . Because i have a lot of work. Real quickly, a very good report. Almost everything revised up. Consumer spending, Business Investment revised up big. A word of caution here. A big part of the upward revision of inventories. We have a near historic and may have been historic. I got to check. A rise in inventories in the Second Quarter. Every economist on the street thinks it works off in this quarter and future quarters. So dont take this 3. 7 at face value. The reality is still strong and weaker than this and you get payback, some economists 1. 7 in the Third Quarter. The atlanta fed, lower for the Third Quarter because of an inventory drawdown from the historic build. Another thing to watch out for, huge surge in state and local Government Spending. A big part of it. I dont know if that continues, either. Underlying fundamentals, final sales pretty good. L highlights the dilemma. The fed to figure out Pay Attention to the markets or the Economic Data . Back the you guys. Thank you, steve. Next, the man of the morning, republican president ial hopeful Chris Christie joining us in studio when squawk box returns in just a moment. In fact, the number of mris has increased by ten percent a year. 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For a free quote today,call Liberty Mutual insurance at see Car Insurance in a whole new light. Liberty mutual insurance. All right. We are excited to get to the newsmaker of the morning, new Jersey Governor Chris Christie is here joining us on set. Great to have you here. Happy to be back. Governor, you know, its rnc chairman Reince Priebus . Correct. He said republicans learned and its a kinder, gentler primary season this time around. What happened . Something went wrong. Does it begin with a t . 17 people decided to run. It is difficult to have a calm process with 17 people running. It is not bad. I dont think anybody should overreact now. What we should really be talking about and concerned about are the things im hearing in New Hampshire doing 18 town halls now. Theyre concerned about terrorism, student debt, this economy and jobs and so this is the things to be talking about. The become and forth amongst the candidates, it settles itself out. Thats why we have elections. Theres times when i admit im a little bit older and i look around the and social media, i point to it as a problem in exacerbating a lot of things that human nature used to have under control a little bit better and cant help but think and celebrity worship and things like that. This is like a circus. I said the rest of the world might be laughing at us. Look at their plt call process. 12 different parties, form the coalitions. Theyre no better and joined them in the muck sort of. Doesnt make me proud the stuff were talking about and focused on. The ultimate responsibility is each one of us as candidates. It is what we talk about, focus on, what we emphasize. You have to get traction. If you focused just on substance and on issues, you may end up not being noticed as much as you would be if you focused on some of the other stuff. I dont think ive had a personality problem. No. Right . So the fact is that, youll be noticed over time. Remember something. Its august. Theres lots of time to go here in terms of a campaign. Campaigns matter. And they matter if youre communicating ideas, if youre communal kating a vision and leadership for the future. Thats a hinge things to do. Well get there. Every campaign has different phases to it. Remember something. Four years ago herman cain was at 30 right now. 30 . So are you still friends with donald trump . Yeah. I am, as well. I watch whats going on. He really does want i thought maybe he enjoyed the process. It would be amazing to be leading the rnc and then i thought maybe he wants to be a building and be donald trump again. I think he really does now want to win the nomination and want to be president. I dont think he is any longer just i have no idea. You know . You have to ask donald. I mean we did. Im in the race because i want to be president of the United States and because i want to fix the problems that people need fixed and, you know, people talk about outsiders. You understand this better than anybody. Im a republican in new jersey. This means i wake up morning as an outsider. And have to fight against Democratic Legislatures and entrenched special interests like Teachers Union and people want someone to fix the problem in washington. Donald tapped into frustration and anger of the inefficiency. Walk us through the path. For you. Path to completion. What has to happen . I say that by the way i think of the context of this week of a superpac against you and dropped they have gone out of business because your poll numbers didnt have an interest. They raised 3,300 in their history. To raise 1,300 and they spent 3 and went out of business. I kind of think it was really just a press release more than anything else. Hers the path. The path is same for me as anybody else, me or whether youre scott walker or marco rubio, you got to do well in one of the first three states. Iowa, New Hampshire and south carolina, you have to do well or you cant continue. My path is no different than anybody elses and the way im doing this is to do what i did in new jersey and have done in new jersey over six years. Holding more town Hall Meetings than anybody else. Meeting voters one on one. Letting them ask me questions and direct answers and thats going to matter ultimately. People are going to want to know what are you standing for and will you interact personally. Not hover over them and wave to them but answer their question. And thats what im doing and thats the pathway to winning. Governor, these red meat issues at both sides seem to focus on, here we are in the sixth, seventh year of a recovery, 3. 7 number, i dont know. Thats an outlier. Totally. I wish it was real and the fact its 2 or less for 7 years. So the republicans supposedly know how to generate private sector growth and if i were a republican, thats all i would be talking about. But instead, were we talk about a lot of crazy republicans talk about crazy stuff. I dont know how theres no way to put this immigration issue away to talk about the economy because its going to be front and center because its so much play. Now that the left has other things they like to focus on but this is what we should talk about, prosperity and narrows the income disparity which allows us to pay off all the entitlements easier and made america great. Private sector prosperity and all we should be talking about. You know, joe, my first two speeches on this on entitlement reform. Only person that talked about that in any detail with any kind of specific plan. Second was, you know, a regularity tax reform speech with real e dales and change the system. So we there are people talking about it and will come around to that. When people focus on it. I could tell you in New Hampshire people worried about, ask me about, how to grow the economy, how will i take care of my kids student debt and how do they live after this if they cant find a job to pay off the debt . And also awfully concerned about terrorism and about preserving their lives in this country, not only the way of life but they actual life. Well get the those subjects. Were starting the. I have a question on markets related to the economy. We have the crazy swings and this is a a bottom yet . Historic week in the markets and i think i read what you said president obamas dealing with china and economic problems, you blamed him. But the stock market is up 140 since president obama took office. So should he get credit for that . Well listen. A president gets credit and blame for anything that happens on his watch. Okay . So thats the way it goes. Barack obama can take credit for making the rich in this country richer. Hes done a great job of that. The guy who claims to care about income inequality made it worse than its been in the countrys history and played to the investor class and to make rich people richer. Heres the problem. Middle class wages are stagnant for 15 years and in fact behind the rate of inflation and what i said about china is this. The reason were so susceptible to changes in the chinese economy is because the chinese have lent us so much money and have so much of our debt. If china gets a cough we get the flu. Because this president s run up more debt than any president in american history. So specifically, what i was talking about was that in this current moment of crisis, on the markets, its about chinese debt, people in china owning so much of our debt that were so much more dependent on them as an economy. Should we be less connected the. No. Borrowing less money from china and get the fiscal house in order. Stop spending so much and joes right. Growing the economy at 4 than 2 we could borrow less from china. The left, jeb is also talking 4 . The left loves to laugh about that. They wallow in the notion that 2 is our maximum growth now which is probably true in a European Society where everybody does the same and everythings all even and nobodys equal. No ones too well or too badly. 2 we should be satisfied. Lets ask bill clinton. It happened when he was president , too. Maybe his wife doesnt have that optimism ant america but i do. I love this country and ill tell you this. The problem is the government squashed the ingenuity and the energy of the American People by the biggest regular laity scheme we have ever seen. Last year 81,000 pages of new federal regulation by this administration, the most ever and now his own Small Business Administration Says it cost 10,000 per employee for Small Business to comply with federal regulation. Awful. Its crazy. Governor, speak to this the you could. Tax plan. Donald trump said this week he would get rid of carried interest. Your take . Listen. I put out what would you do . I put out my plan. Get rid of every deduction or loophole except for Home Mortgage Interest Deduction or charitable contribution and lower to 28 on the top end. 8 on the low end and one in the middle. Do the taxes at 15 moneys for most americans then and keep more of your money. Now, the rich arent going to like that because theyre the ones that benefit from the loopholes and deductions. Most americans use a standard deduction. Lets get rid of them. You dont why people hate the irs . They think the tax system is rigged for the rich and you know why they think that . It is. Its rigged for the rich. Make it simple, easy, make everybody pay their fair share. We do that, were going to have Economic Growth that you have never seen before combined with a regularity outlet to let businesses make the decisions and not washington bureaucrats. We were supposed to come together for six years. Rich against poor. Its hesitate to say it. Theres divisiveness in the country right now. What do we need in the next president . Should you lets say theres still a few democrats left in congress and will be, will you do an infrastructure deal . Will you build some roads . Will you do any public works . Any education that involves Government Spending . Or is it my way or the highway . Look at what we have done in new jersey. I wake up with a Democratic Legislature and have for every day ive been governor. We controlled the budget in new jersey. We spent less today than eight years ago. We have 9,500 fewer employees. We reformed tenure. We reformed the pension and benefits system. We have done things like make sure that business gets tax cuts of 2. 3 billion. All with a Democratic Legislature. It can be done and you can reach across the aisle and make accommodations. They need to know youre strong and what you would compromise on and what you want and get the know you. One of the disgraiss of this president is reading three or four weeks ago, first time john boehner was air force one. The republican leader of the house for your presidency . When im president , you want to come on air force one, come to camp david, the oval office . Come. The president hasnt visited a lot of his own members in Congress Much less members of own party. Divisiveness. The president compares the Republican Caucus to the protesters in iran chanting death to america. You want to know why americas divided . Because we have a divisive leader who believes that he is right all the time without exception. Look at this iran deal, joe. It is one of the worst things a president has ever foisted upon a country. Secret deals. Know my bottom line . I trust the voice of the American People than the votes of the u. N. Security council. This president , this president is now careening us towards a country like iran he is getting getting a nuclear weapon. Lining up democratic support and not public support. Its a Strong Majority of the public is against the deal. You know why . The American People know how to use common sense. How can you let we are going to let the the iranian rev lugs nary guard inspect Iranian Military sites and tell us whether they are cheating. They have been cheating for 12 years, the same regime that has been chanting death to america since 1979. Why the heck do we think they will change their strategy . What do you predict will happen there . I am out there hard and strong with jewish leaders and saying, this is wrong. It needs to be rejected. You know what other secret deals i want to know about. I want to know the secret deals that he is offering to the members of congress who are voting yes. We are going to have to pay for those later. You know, with some of the people who are now saying they voted yes, glichb past history on israel. I want to know about the secret deals with members of the Democratic Caucus in congress who are caving and putting our National Security at risk. I want to get your reaction to a domestic issue, this terrible tragic shooting yesterday of this reporter and cameraman. Clearly, a Mental Health issue but created a debate about gun control again. Im curious if this has had any effect on your thoughts about it. I am incredibly sad for those families. It is terrible whats happened to them. Every time you see Something Like this, you think, there but for the grace of god go i. I feel for the families. Lets enforce the laws we have already. Lets not worry about making more laws. It makes no sense to me. Lets enforce the laws i was a prosecutor for seven years. We strictly enforced the gun laos. They are the ones committing crimes. How do we keep guns out of the hands of those that have Mental Health issues . I put forward a proposal that the Democratic Legislature in new jersey wont adopt. It makes sense. It doesnt make headlines. We have to give doctors more authority to involuntarily commit people that talk about committing violent acts. We have to have more Mental Health records available for people to review. These are common sense things. It doesnt make a headline for left wing liberal outlets who think the next thing we need to do is take more guns away from lawabiding citizens. Thats not the problem. Nine months for me to finally be allowed to purchase a firearm. Nine months. They had to look at me. The state had to look at me. The county had to look at me. I could have gone to Washington Heights that afternoon if i wanted to be a criminal. I could have bought a gun that afternoon. Figure that out. They want more laws to make it more difficult for guys like him. I know how you feel. This is in a safe. Only a fingerprint opens it up. You know me. Im scared of guns in all context. Im more scared of criminals than i am of guns. If there is a criminal around or a bad guy and one of the Law Enforcement has a gun, you wont be nearly as afraid. It does expose the dark side of social media. That dark side is people. I dont want to blame the media. It is not like we didnt have really deeply disturbed criminals before twitter or before facebook. I think that we have to hold people responsible. One of the things i think the American People are so frustrated about, there is no sense with our politicians or with other people. There is personal accountability and personal responsibility for your conduct. We are going to blame twitter or facebook. Heck, i dont think thats the problem. The problem is, the stuff we put on it. The stuff we put on it is a problem. You know who does that . Someone who takes their device out and types it in. It doesnt get there by itself. Thats why folks are frustrated. They think politicians dont take accountability. You have Hillary Clinton saying the law doesnt apply to me. It doesnt apply to me. She makes jokes about it. Can you imagine . She should be disqualified to run for president of the you states. Now, she says, it was clearly the wrong choice. Wiping it clean and i love snap chat. Because it eliminates it by itself. She thinks this is fun by but meanwhile the diplomate in america was doing all her business on a private server hid in her basement. Do you think she wiped that clean because there is nothing on there that incriminates her . The reason she is being investigated by the fbi is because people that do that kind of stuff, on struck justice and mishandle sensitive, classified information should be investigated and prosecuted. If this Justice Department prosecuted David Petraeus and sandy burger, you better be sure they should be prosecuting Hillary Clinton. The president of the United States, she worked for him. He should hold her accountable. The president should xwoe out and say, madam secretary, reveal all the administration. It is an embarrassment to my administration, you are playing hide and seeks with americas National Security. Who knows who got access to that and the information on there. It puts the National Security at risk. What she really should do is get out of the race. Governor, thanks for coming. Dont be a stranger. My wifes favorite show. Now, i know she is watching me. The rest of the stuff, maybe, maybe not. Smart, perspective lady. Up next, jim cramer. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Lets go straight down to the New York Stock Exchange. Looks like some good followthrough, dow futures up over 200 after last night. A lot of people are liking that we held for monday. The dudley comments were thoughtful and really did control. What we have been looking for, rather than hard line, it is not like we wanted soft line. That doesnt help either. We are looking at the data and the international turmoil. We talked to sanders last night and when the market is down, say, 11 , 12 on the s p, thats factoring in a rate hike. Sometimes i feel if we just got it over with, we would go higher. Thank you for the thought. I know you have been critical of the fed members lately. It means a lot. See you in a few minutes for squawk on the street. This morning, we asked you to send the stories that you buzzing. Share some responses. Lots of buzz around market swings. Squawk man, christopher, sharing his tweeting. He also says he is losing hair daily and days like this can make or break your year. Were all losing it. Who has more hair, you or andrew you . I got your back there. Thank you. Thanks for joining us. More squawk on the street is next. Good morning. Ike david faber along with jim cramer. Were live from the New York Stock Exchange. Carl quintanilla has the day off. We are looking for an up open. Things can change. Europe has been open for quite some time. Take a look at the major markets, all of which are significantly in the green. You can see there