Of lock towns throughout the city. Traffic wasnt as bad as i expected. A lot of people took head of the warnings to stay clear of the area. First lets get to the markets. Check out the futures this morning. Youll see big gain across the board. Right now it looks like the dow futures are up by 250 points. The s p futures up by 24 and the nasdaq up by 52 points. She said it would likely be appropriate to raise rates if near zero in her words sometime later this year. The understanding we had when she spoke last week after taking q and a and stuff it seemed like a very dovish excuse at that point. Markets have sold out since then but yesterday it sounded like it was full speed ahead and they would like to raise this year. We never know cause and effect because everybody has different opinions. It looked to us like they had big down days. That would have been a switch from the markets rallying every time we heard that would have been a switch. I can think of what youve been saying. But i have already read this morning that although she said a rate hike could come this year i have read her comments interpreted by a couple of people because its going to remain low for a long time. And they were attributing the rise in the markets to it. But theres still people around that think easy money is the answer. I think theres been a market shift. That is that good news is actually good news at this point and bad news is bad news and people are looking closely to see if the Global Economic slow down impacts the United States. Right and if they do end up raising, it means wrote think the United States can avert. Hearing from caterpillar yesterday. Right. But thats a global company. Theyre going to have continued hardships. The United States can stand firm in that and it is out performing. Thats what it is. But then when i look at europe across the board up 2. 5 and that, you know, our futures do go up when were not trading but they do see whats happening in europe and then i thought i think europe is up because the dollar is up. Thats what i thought. So that opportunity necessarily mean that its up they had, you know, a fed rate hike here means differ things to us than it does the germans. It means that the euro gets weaker. 111 now. For exports that helps. Germany can certainly use good news because the dax is now down 20 from when qe started. A lot of that has to do with obviously volkswagen but a lot of people are saying the auto makers here are down. Its the sign of a bigger picture. The auto makers are under pressure to meet some of these stringent emission standards and cafe standards and theyre scrambling and when you scramble, you wonder how madolf started. He started by im not going to make this week. I better let me just take a little from here to put it in here and then how am i going to do that . The germans it was like wow, really not going to be able to make these clean diesels but people want diesels. We got this little device here that will turn it off and its a slippery slope that now heads are really going to roll and its impacting auto makers around the world. Theres questions about other auto makers at this point. Earlier this week we were saying they werent doing that and now theyre spreading and multiple countries said were going to change the testing and make it much more rigorous. Youre stupid enough to buy diesel you deserve it. Theres no such thing as clean diesel. No. I had one once. Its totally like why did i do this . A small health care for chairwoman yellen last night. She is said to be okay this morning after receiving medical attention. She appeared to pause and cough multiple times while wrapping up her remarks. She was helped off the stage but walked off under her own power. She felt dehydrated at the end of a long speech under bright lights. I know how i feel after a long speech. It was a 40 page speech. Listening to a fed head. Remember when we used to listen the Alan Greenspan i would get like that. Were used to bright lights. They get to me too. Theres a lot of you can imagine the cartoonists would go crazy. Its a tough job she has. The weight of the world is on every move that they make and that is an unbelievable amount of pressure and it would get to me i know. The pope looked tired last night too. They have long days and busy schedules and the weight of the world on their shoulders. Right. Especially the fed. She was seen by emt staff on sight and then continued her schedule so it could definitely just be a 40 minute speech of reading fed stuff. I can imagine if you had a busy day and you havent taken time to hydrate i can imagine that too. Its bad enough to listen to a speech. Think about giving a speech like that, it would be even worse, right . Take even more of your power and stamina. I understand that. Lets get to the other big stories this morning. The new apple iphone 6s hits stores today. Take a look at some pictures from sidney australia overnight. Thats where fans lined up for the new device. Analysts forecast 12 to 13 million phones will fly off the shelves this weekend. Iphones generated nearly 2thirds of apples revenue. People watching all the time trying to make sure that the latest device has as much demand as previous devices have. You can see the fed stock up by 1. 2 . Also in washington today president obama will welcome his chinese counter part for an official state visit. Those talks are expected to include the tense issue of alleged cyber theft. On the economic agenda today a final reading on Second Quarter gdp. Forecasters are looking for the economy to expand at a 3. 7 annual rate. Thats the same as the previous reading a month ago. Stocks on the move this morning, nike, the Quarterly Results topping estimates despite fears of a china slow down. Sales there soared 30 . Nike is calling the china numbers amazing. By my calculation, there are 2. 8 billion feet in china. Thats a huge market. Bed bath and beyond posting earnings and revenues in line with estimates. Also announcing a 2. 5 billion Share Buy Back and shares of jabil beating the streets on the top and bottom lines. Marvell Technology Going to reduce by 17 as part of a restructuring of the mobile business platform. Janet yellens comments driving todays market conversation. It will likely be appropriate to raise the target range to the federal funds rate sometime later this year and to continue boosting shortterm rates at a gara gradual place there after as the labor market improves further and inflation moves back toward 2 objective. Joining us now, he is Rbc Capital Markets chief u. S. Strategist and jonathan, our take on is is that the fed sounded dovish last week when they decided not to raise rates. It seemed to me like she came out with a much more hawkish stance yesterday. Whats your take . When im talking to investors and looking at the markets, the market is entirely confused here. What they got yesterday was, you know, number one, a clear path and number two joe you may disagree on this is that a moving forward raising rates is, in fact, what the market really wants. It was actually dovish what she said yesterday. I think the fed lost a lot of credibility by being all over the place and contradicting that yesterday. Are you saying the market is going to go up on easier money well in the future instead of going up on normalizing rates . Normalizing the rate environment is what the market wants. The market doesnt want life support. Its slow . Yeah because the market doesnt want this to be disruptive. Youre having it both ways. Im not having it both ways. They wanted to go up slowly. The market doesnt want to see Interest Rates at 2. 5 in the next six months. Would the market like to see the fed move a quarter point every other meeting . Yeah i think they would. Its absolutely clear. Fed futures. I look at a ten year bond yield. You could look at other things and its clear on days when Interest Rates rise stocks go higher. It happens across all sectors and virtually all markets. Did those guys wave . The policemen did . Theyre nice. New yorks finest right outside. I wouldnt mind if they were just there every day at that corner. Well, we can give a shout out to them. Maybe we can get them to wave back in again. So jonathan, if youre looking at the scenario, we saw rates actually we saw stock prices rise here on anticipation. Would you be buying into this or do you think it will be a lot more volatility between here and now . While were thinking the fed is a little more hawkish today, theres no guarentee. The most important story is you had a huge spike we should get the policemen in here to give their comments on the fed but the big story, this huge spike in volatility, the markets sold off by about 12 and you shouldnt get a bounce back not because conditions are better in the economy but simply because volatility naturally kind of comes back down to earth and things renormalize and stocks should move higher. But is it volatility heading up this direction. No, volatility should move toward Something Like 15. But you can have volatility and have the market rocketing back and forth but moving higher all the time. Yeah, i think what youre going to see, i think conditions should normally come. What the fed did is they took an unsettled situation and threw kerosene on that fire through all of their statements but they didnt fix this with one speech. Great. Thank you for coming in today. All right. Hes fine. Hes not coughing. Hes not dehydrated. You got through that. But it wasnt a 40 minute the lights are are a little heavy though. The lights are bright in here. And were not making him stand. In Corporate News volkswagen is holding a News Conference in germany. Theyre expected to announce new leadership. Nancy is there with the latest. Good morning. Good morning, joe. And thats right, the vw Supervisory Board is meeting here at the campus as we speak and any minute now they are widely to announce that the new ceo will be the porsche ceo at the moment. This will be welcomed news for the community that has like all of germany and a large part of the industry been rocked by this scandal. He is a volkswagen veteran. He joined audi, 1977. He got training as a tool maker so hes a product guy and into design and porsche has a fairly good reputation in the United States and he managed to double sales since 2010. All of that is good news for a company struggling to repair its images in the United States. But others is just what other names are expected to role. Who will follow professor winterkorn out of the door. Some names could be the rnd chiefs at porsche and audi and also that michael horn will have to leave as well. Well also be check out for Additional Information on where do we go from here. And theres more costs and more managing for this ceo. Back to you guys. Thank you. Lets get more on volkswagen, diesel gate fall out but now im seeing carmagedon which is a rip off. Thats what was going to happen when they closed down the 405. It didnt happen. Its going to be tough for volkswagen to win back people because diesel buyers really counted on the low emissions and the power that they wanted. Theyll be mad for awhile. Serious car nerds and serious car loyalists. You have volkswagens, you have diesels, these are enthusiast cars for enthusiast drivers but the upside is these guys do have a built in loyalty and perhaps a patience with these guys. If the cars can be fixed and volkswagen does it transapparently and you still get your performance and mileage. But that was the whole point. You cant get it which is why they took these extreme measures. Bob lutz was on a couple of days ago saying for years they were trying to figure out how volkswagen did it. But they didnt install the system that is the secret sauce. It has been proven by the same people that busted them that some are in compliance and were talking one element of pollution. On the Global Warming score theyre still knocking it out of the park. But smog. Ill take the co2. Its the disgusting stuff that can kill you not 50 years now from. Exactly. I talked to the engineer that busted the scheme and hes con fireworks den that a software fix and not a giant reengineering of the car can fix the problem. A Different Software fix. A positive software fix. I try to figure out the slippery slope. You start small, you dont start out wanting to completely cheat the epa but you end up there somehow. Is that how it is. Its a 30 year struggle here. Its this constant pushpull and the auto makers are under this intense pressure to dramatically lift fuel economy here and in europe and cheating has gone on for a long tile. This is just the most blatant example. A few years ago hyundai was caught fudging their fuel economy numbers. They had to buy back numbers and give them a debit card for free gasoline you start thinking about the Class Action Lawsuits for the 11 million cars i would be ticked off on 15 different levels. No one is dead. No one is dead but you can imagine that the fines are going to be hefty. Absolutely. Theyre hoping for sure they can limit the damage to america obviously as much as possible and thats the thing that seems to be influx. 7 might be after tax. I dont know, do they get that was just for the us. Now theyre talking about other countries looking into it. That doesnt consider Class Action Lawsuits from the people that bought these cars. Right. Would a lawyer accept a Class Action Lawsuit just on epa stuff . Theyve already been filed. They have . What am i asking would a lawyer what am i say somethi something. Their point is probably going to be that the resale value are zero at this point. Hopefully not zero but it all hinges on what kind of recall fix they come up with according to the engineer thats on this, its a apology yantd sponge in your car picking up this pollution. You send a little more fuel through the system to burn it off. So youll waste a little more fuel to zap out this pollution. So youre looking at a fuel miles per gallon decrease. We dont know how much. Its a car getting 50 Miles Per Hour youre still talking a big amount but owners will still need to be made hole. You have damages there. Volkswagen needs to come up and change that corporate culture. They need to come out big and come out strong, i think, with a plan that really makes owners feel like they have been getting an apology and money on top of it to make themselves feel good again. Do you know about bmw and porsche electric cars . Absolutely. I test them. I drive them. Thats all i do. That could be a problem for tesla, cant it . Them jumping into the electric market. They have such a good image. Not as good of an image as porsche. Theres been a lot of talk about many other companies about really jumping into the electric game. We have been seeing it three to five years from now but they dont bring much to the market. They have a beautiful electric hybrid but its a spectacular sports car. Whether they can bring that stuff to the mainstream. It will be 60 grand, right . No, kidding. Thank you. Very welcome, thanks. When we come back this morning, squawk hits the campaign trail. John harwood catches you with jeb bush. Well get to that next. But first as we head to a break, take a look at this date back in history. John harwood has the latest edition of his speak easy series and catches up with jeb bush. Governor, thanks for doing this. Yeah. So in solidarity with your paleo thing i got the same thing. Thank you. Theres times i looked at you and i thought maybe you lost too much weight. Do you think that might be no, trump has proven the point if youre loud and you repeat something over and over again you think that that turns it into truth. This guy has created significantly more energy if you think about it. If youre overweight and not in good shape you cant sustain the kind of campaign i do. I campaign. For real. I dont just go down the elevator and have a press conference or stay in my room and call in. It should be arduous. You have to deal with putin. Lets talk about economics for a minute. We had 12 years of reagan and your dad. 8 years of clinton, 8 years of your brother and now 7 years of obama. The only president who aver saw 4 growth in every year of a term in the last generation was bill clinton in the 2nd half of the 1990s after he raised taxes which many republicans said was going to tank the economy. Just as they said about obamas taxes. When you look at the economy, no one is celebrating 2 growth except for the liberals. The new normal is reject it. Bill clinton didnt reject the new normal. He signed trade agreements. He was not hostile toward capitalism. Do you think obama is hostile to capitalism . I do. I think he has a deep seeded belief that through Government Programs and through government regulation you can improve the social condition. I think thats his default place. Theres been a lot of republican predictions in recent years that tax increases, obamacare was going to destroy the economy and with clinton the economy got better over the course of his term and with obama the economy has gotten better. Its not great but its gotten better than it was. Its the worst recovery in modern history and disposable income. He inherited the greatest recession since the great depression. At what point do we start saying the dog ate my homework and its someone elses responsibility. You once in describing your years in prep school said i was a cynical little terd. This is the second time in the last week ive had to talk about my teenage years. I have got to think that the events that have unfolded in the campaign so far have revived a little bit of that cynicism. Not at all. Really . Man, this is the greatest the look on your face in that debate stage when youre hearing the stuff from donald trump next to you that theres a look of disgust that not cynical. Not at all. It is what it is. Its part of this angst that people feel. I can sense why hes a phenom but i think people want people with the skills and ability to lift them up and im not deterred by that at all. Thanks. Thanks for the dinner. You heard what jeb bush is counting on which is the long run. The run in which his 100 million super pack will kick in and try to bring back what jeb bush and many republicans would consider normalcy to this race and a push on top is normalcy in the party so well see if that comes to pass guys. Well,