now. good morning. welcome to "squawk box." i'm andrew ross sorkin along with joe kernen. becky is off today. and stocks are rallying to multiyear highs. we'll focus on how you can make sure to capitalize on the action. among the headliners we've got, goldman sachs asset manager chairman jim o'neill will join us live at 7:00. then in the next hour, michael spence, his take on the world central banks and what really is driving this market rally. we continue of course for watch the violence in the middle east. deadly protests against the internet video that's angered much of the islamic world. libyan officials now say chris stevens and three others were not killed as part of the spontaneous protests there. >> planned by foreigner, by

people who whethill enter the country a few months ago and they were planning this criminal act since their arrival. >> meantime in afghanistan, americans were killed by the very troops they're supposed to be training. the chair of the skroint chiejo has called it a serious threat. senator john mccain yesterday on that. >> it's unraveling because all we tell the afghan people is we're leaving. we're not telling them we're succeeding. we tell them we're leaving. >> we'll talk about both of these major geopolitical stories with david ignatius at 7:30 a.m. eastern. and back in the u.s., occupy wall street marks its first anniversary today following weekend protests, activists plan once again to descend on new york and attempt to surround the new york stock exchange and disrupt rush hour. kayla tausche is monitoring the

situation on the ground and she'll be joining us live with the latest at 6:40 eastern. but first, let's get you up to speed on this morning's other top headlines. and before we did that, you were right on occupy wall street. 100% right in fact. we talked about a year ago you were saying this is not going to amount to anything. and while it's changed the national conversation, aim in the sure it's done much more than that. >> i don't know if i'd say that, but that tape we were just showing, was that this year? >> yeah. >> there weren't a lot of people. what, 250? that's the number that i saw originally. are there who are people than that? >> i do not know, but i remember very well us having this similar conversation about a year ago, i said what was there, 80 people down therend at internet exploded, but -- >> you know where they did have a huge influence was if that

batman movie were real, then they would have taken over new york city and they would be systemically making people like you walk out into a frozen east river to fall through the ice and freeze to death. but they did not take over. one thing i'm confused about, you're here, becky is not. the world is upside down. >> are you going make a religious comment? my rabbi could be watching. >> happy new year. >> that's right. yes. >> do you know what year it is? do you keep that -- >> i believe it's -- i'm going to be wrong on this. i'll get in trouble. i won't try. >> yeah, find out for sure. but you you're here, becky's not. just -- >> that is true. i'm not sure what we can say about that. >> all right. we'll talk more when you come over. regulators are said to be

investigating several major u.s. banks whether they failed to monitor transactions properly and that allowed criminals apparently to launder money. the "new york times" reports the office of the currency is leading the investigation. the paper says that the agency could soon take action against jpmorgan. the office is also said to be investigating b of a, bank of america. elsewhere gasoline prices rose. aaa says the average price for a gallon of rely is $3.87, up five cents in the last week. 16 cents from a month ago. 24 cents from a year ago. nothing to do with the fed. we'll it talk more about gasoline prices and the impact on consumer spreending at 8:10 with the national association of convenience stores. and i've been thinking about this. >> about the strike. >> >> welwell, i've been thinki about that, too. if you do qe-3 and we've seen

how really it does help wealthy. probably hurts -- anybody worried about income disparity. because people that own stocks benefit from it, people that own bonds. but if it raises those asset prices, why is so hard to believe it could raise the price of oil or gold or -- >> it has. i know that there are other people -- >> your pseudo economists on the left that really just want a keynesian answer to everything say it has absolutely nothing to do with it. but the chicago teachers strike is entering week two, i thought it was settled. just from the news over the weekend. it looked like they had reached some kind of deal. but union members say i think they got a little, so they want more now. they're see something weakness. they saw -- they think emanuel blinked. i don't know if he did. but they've decided on extend their work stoppage in order to better understand a proposed new contract after the announcement of the strike extension, mayor

emanuel did call on the city's attorneys to pursue a court order, he wants to force the teachers back to the classroom calling their delay and accepting the proposed new contract in his words wrong for our children. >> it is wrong. very upsetting. let's talk about other interesting headlines this morning. yahoo!'s new ceo is saying good-bye to the blackberry. marissa mayer september nt an e employees promising them a new apple, samsung, nokia or htc smartphone, but no blackberry. and they'll discontinue i.t. support for all blackberries. the idea is to use the phones that use hugh usyahoo! years ar actually using. check out this chart. tale of two cities if you ever saw one right there.

>> i think cramer did something on that where you can find 30 companies market cap has gone down. >> if it's any cancellation, i have seen and played with some of -- they handed out some of the new blackberries that they'll come out next year. it is pretty cool. i just tonight know ifdon't kno up -- but it has the keyboard. >> i have a decision to make, i do. but to get an upgrade on my -- >> your two year contract is over. you can do it. >> really? the form that you need, i think that's the way they prevent from you actually doing it it. >> you're talking about the form here at comcast nbc universal. you aren't even talking about at&t or verizon, whomever your carrier is. >> no, just talking about what i need to know about myself in terms of employee numbers and supervisors and things that they ask for and you into to do it on line.

and you have to put these things in and send it somewhere, they have to okay it. and i don't think i'm capable of doing it. so i may just stick with the blackberry. i might. even though i think i could get an iphone 5. did you see at&t said sales records with the i phoiphone 5. >> you type, though. >> did you buy an iphone 5? >> i have not. but i'm thinking about it. >> you'll have one this week. i'm sure of it. >> maybe next couple weeks. i might do it. but i might get rid of the blackberry. >> but you'll have like fancy apps on it. did you see what the wing kekle brothers are doing? >> yeah. >> do you know how it works? will you read the articles and report back to me? >> i've seen the articles.

>> it doesn't say how it works? >> i don't know enough about it. >> can you do some reporting? >> i'll can to some reporting. >> can your assistant make some calls? do something. get back to me. i like when they come in here. let's check on the markets this morning. the whole qe-3, more conjecture over the weekend. we have a couple guys coming in, we'll talk about qe-3. i don't know. the word is crazy. it's just all sort of ephemeral and sugar at this point. do we have any fundamentals? >> no, you're not really investing on fundamentals. you have to think about what is the government going to do for you. >> and it does irritate me that it is the asset owners that will benefit. but one thing if you are going to get a mortgage, you have time, i think. right? >> a lot of time.

i may have screwed up that whole refinancing situation. it may go down again. but actually where was the ten ye year? >> hasn't come up yet. >> we'll get there. >> anyway, futures were down just slightly today. there's what you're seeing. surprised we're not over 100 in crude, but maybe we'll still get there. iea said demand was going to shrink, but that doesn't keep us from $100 for oil. there's the ten year, 1.86. >> so we're still okay. >> the race to the bottom, the currencies. we have a -- look at that, 1.31. but it doesn't hurt the dollar. with all their problems over there. and you see the stuff that keeps hitting about whether the banking union is on hold, whether spain will accept anymore cuts. we still see all kinds of both

positive and negative news coming out of europe. it's not a done deal. finally, let's check out gold which had probably a better week than stocks last week. 1772. i'm rea to renoticing my it won't -- put that back up. i'm ready to renig on my won't go over 2,000. i'm not taking it back because i think that trade was tired at the end of last year. but it's sort of like a protest vote that if the fed is going to be this accommodative, 40 billion a month indefinitely, then i can't -- of no one really expected that. i didn't believe we'd go to qe 15 or qe 20 and now i'm saying i can't control gold prices. being right, i can't be be right anymore. >> what happens if we get to your 30%? >> why wouldn't we? 40 billion a month.

>> are you going to take credit for it? >> yeah, i'm still going to take credit. i don't know why these things happen. we'll ask carone. let's get to kelly evans for the global market report. you get paid in dollars. you might as well forget -- don't go through the chunnel. you can't afford a krocroissant. >> i know. now we're right back up at 1.62 and it's painful, believe me. if you look at the relative rate differenti differentials, we may have seen more support for the dollar in the next round of qe-3 just because the rate differentials for others aren't quite as supportive. but in the hr kmarkets this mor,

3:10 to the down side. a couple of corporate stories. starting with h&m, down 2.2%. comes out with its august numbers, shows an overall sales gain of 6%, but only half the level expected. same store sales fell by 4%. the fact that shares are only down about 2%, mainly because investors are giving the company the ben if i have the doubt. the company saids of unusually warm weather across europe that hurt sales. >> lonmin says activity at the mine remains minimal. they're up. eads and bae, i did versity and earnings stability were the reasons for that.

more attention on whether it's britain's interests to give up some ownership. risks coming back off the table. same thing with copper. crude and nymex lower, as well, can despite the flare up inned in mideast concerns of late. and the euro-dollar, down about 0.1. but again, 1.3117.mideast conce. and the euro-dollar, down about 0.1. but again, 1.3117. i think i'll hold off on my paris trip. >> thank, kelly. kevin carone and bob bruska, we'll just call you the tie, and he's wearing i should say --

much more fashionable, almost conventional tie. explain yourself. i mean, does this have something to do with the markets some more conventional thinking? >> i don't know about conventional thinking, but i don't like the quantitative easing program. i think it's a problem. i don't think it will be effective. i think we'll have inflation. i think bernanke has been disingenuous about describing what it is. i think it's a plan to get inflation higher. >> so you think that this whole strategy is to get inflation higher? >> i think it's a pro inflation plan. i think most economists think that. and i believe mr. liesman asked him the question about the inflation target and he kind of drifted off to talk about the dual mandate. and the problem is that the fed wants to raise the inflation rate, it needs to tell us what it's going to do and reassure us that it won't get out of hand. and if it won't do that, then

there's a problem. i think the problem is that the fmoc hasn't really admitted that's what its policy is going to do. >> you can't explain why everybody thinks inflation is bad, they might want to raise stock prices going, we hire more people, but to just say they want to -- are you saying it because the debt that we owe now you pay back for half price? >> no, you -- >> why would you want to cause inflation if you're a central banker? >> i think there is a belief that housing prices go up, the fed chairman said they want to stabilize housing prices. and so how do you do that. the problem is i don't think the mechanism they have will be able to target the kinds of, quote, inflation that they want. think if you stimulate aggregate demand, what will happen because of the gdp gap. you'll wind up with real output increasing.

classical keynesian economics. and i'm afraid it won't work that way. i think the fed is being just a little bit too coy. i think the committee handle admitted to itself what its policy will do. >> given the battles that we've fought in the fast, germany with the wheelbarrow full of -- do you actually -- if you told someone our central bankers are trying to cause inflation, that is heresy to certain people that you would try to do that given the hard-fought battles that we fought back in the 80s. >> i was working it at the fed in those periods. that's why it's a question of how much. if you think a little bit can help, it's a question of how much. getting the markets on board. you tell the markets where

they're going so they want to go there with you. but if you don't tell them, when they get the surprise of inflation, how do they react. >> the fed perceives themselves as the last a game in town. and ben bernanke, you can go back to before he was the chairman of the federal reserve and he has been in for example his discussion with the japanese several years ago about hearing their problem, and the concept of a reflationist shouldn't come as a surprise to anyone because he's been very outspoken on what to do in a deflation, what to do in a depression. student of the great depression. so i think that ultimately what the fed is up against is the fact that the aggregate amount of credit in the economy is not expanding. >> i want to know what happens to the market, though. not this little mini rally. for the end of december, if joe is going to get to his 30%.

>> bernanke never says where the market is going. >> i think you're looking at a market that is higher over the next three to six months. s&p 1450 to 1500 seems to be a reasonable kind of range in the near term. i think longer term after we get beyond march of next year and we have to deal with fiscal cliff we might have a little bit of a different situation. but as far as our data is concerned, we have a barometer and that barometer began falling last spring and is troughing now. so we put out a commentary last week that said that we thought that most of the decline in the fundamentals that we've seen in the last six months is behind will us. >> you were on something last -- was it here? >> here friday, yes. >> but before -- what is it that bernanke -- you say he's a

student of the great depression. we avoided the depression four years ago. so we're in a slow period right now. but it doesn't seem like we're in 1933 or 1934 where we had a brief respite and then we head back off a cliff. but he was so forceful with what he can it, he has a lot of people scared about what the fed knows that the rest of us don't know to take such extraordinary steps. now, what are you saying, ears worried we could end up like japan for 20 years? >> yes. and he's not worried about us being in some actual like re-entering some horrific financial break, right? >> if i can just say one thing. what he's concerned about is that the expectations bill that the price of the stock market, the price of a house, the price of a car will be cheaper next month. so why wait. or why do anything now. i'll wait and -- >> and the only people that are doing okay are people that are

stocks. and that will just -- the end will be ju dems will be more upset if the income disparity is even more. more unfair. >> where are you on this? >> i don't like the qe-3. but i don't necessarily blame bernanke because if i had a dual mandate and i knew that the onus was on me by law to be -- full employment, if i'm at 8.1% and i know i'm supposed to get us to full employment, isn't he supposed to try? >> he's supposed to try, but you there isn't any clear way the fed does that. the fed affects the inflation rate. that's what they can control. the fed used to say take when they keep the inflation low, bernanke took this pledge to kind of put the dual mandate together into one piece and broke it apart so that now we have apparently a dilemma, now the fed will be responsible for short term growth, as well.

and the fed can't be responsible for that. so it leads you to these decisions that really aren't good for the economy and that aren't going to be between for the fed and that lead the fed i think to do some questionable things. so what do you do when you're given a mandate to achieve something you can't achieve. >> you do nothing. >> do we look back on this as bernanke as a hero or inspespe t ineffectual? >> this was a man put into the job and he has the background and training to deal with an economy that is unable to create credit. >> viewed favorably or not? >> but the big thing is here if you look at the aggregate amount, the total amount of credit in the system, it grew at roughly 7%, 8% decade after decade. and that's not happening today. and that's why you're getting these very unusual things happening. >> thank you so much. >> coming up, at&t announcing a sales record. so -- tell me again what happened.

i was downstairs making coffee, and we heard it. it just came crashing through the roof, out of nowhere. what is it? it's our ira. any idea what coulda caused this? maybe. i just sorta threw a little money here, a little money there. and i loaded up on something my dentist told me was hot. yeah. ♪ monarch of marketing analysis. with the ability to improve roi through seo all by cob. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. i'm going b-i-g. [ male announcer ] good choice business pro. good choice.

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making headline, at&t set a big time sales railroaded with the iphone making it the fastest selling iphone the companies has ever offered. the wireless provider did not provide the number of devices sold, so we still don't know that, but we may learn that sooner or later.

coming up, your money, your vote. president obama plans to head to ohio to announce a trade fight against china's auto industry. meantime mitt romney makes his economic pitch to the hispanic chamber of commerce. john harwood has the latest from the campaign trail. that's after the break. [ male announcer ] for the dreamers...

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here on cnbc. i'm joe kernen along with andrew ross sorkin. becky is off today on this monday in the year 5771. >> 5773. >> 73? >> i believe 5773. am i wrong? >> i thought you just told me 5771. all right. making -- making headlines -- >> 5773. >> okay. i'm two years behind. anyway, president obama will launch an auto trade complaint today against china. his administration citing what it calls beijing's unfair government -- that's rich. we're citing china's unfair backing of it auto industry.

the president plans to make the announcement during a campaign tour of ohio today. ohio relies heavily on the auto industry and is of course politically important swing state. i thought it was interesting today that we don't want -- gm can't wait to buy back the stock from the government because they hate being government motors. >> hate it. >> and i bought -- my last car was a ford. i'm buying another ford. not because of that necessarily, but i love ford. i love new luove mulally. >> that was an interesting story. would you prefer the government sell general motor, lose $15 billion, or loose a little blos. >> they won't do it now because of the november election. they will not allow -- >> but they will sell aig. >> yes. >> but they won't do it with gm because it will point out that the taxpayer lost $15 billion. even though gm, those guys want

to get out. they didn't want to be government motors. they are not allowed to fly around -- i think corporate executives should be able to fly if they need to, i don't think they -- if they got to go to small towns, go around the world, i think they should have corporate jets and they can't do that. i'd want to get out there under the government. but they can't because if do you it before november, it will show -- >> as a taxpayer, what would you prefer? >> what's the break even, 54? never going to get 54. you know what, i would never buy or sell a stock based on like, oh, my god, i'm going to lose. do i get the tax write-off, do i have to pay taxes. should you never -- how do we know it doesn't go down from here? >> that's the question. >> you you need decide whether it's a good investment or not. >> and the question is do you you want to lose $15 billion or 10 or 5 or 20. >> or how do you know it's going to be less if we sell it in the

future. you don't know it's going up, do you? >> you don't. >> i think we're going to go see john harwood. >> we are. >> john -- >> you can ask him this question. >> we were watching "60 minutes" last night and we both -- scott pelley came on. you remind us of scott pelley. i don't know what it is. it must be the hair or something. but just your overall persona. and he's like a big time anchor of like a major news team. so your future is bright. that's my only point. what do you think about the gm story, john? >> well, i'm thinking that if you got bernanke there -- >> right. i didn't think about that. >> you know it's going to go up. >> if you got bernanke doing your bidding with qe-3, you pretty much know that the stock market's going to go up. you know what, i'm not-i'm not as devious as you.

what else is going on politically? i saw a politico piece about a lot of in-fighting in the romney campaign, the stevens fellow was the one that they're all talking about. that was kind of tasty, wasn't it? >> you know, i'm not too enamoreded with stories about inside back stabbing by people in a campaign. but that's what happens when a campaign gets behind. now, i will say what we've seen in the last few days is the obama convention bounce has faded. this race is getting tighter at least on a national basis. obama still leads in enough swing states to win the election if it were held today. but this thing isn't over. and we've seen the gallup which maxed out. that is now a three point advantage. and the rasmussen thing has changed to different methodology, they have different views of what the electoral will be. but this is a close race.

romney is still in it. we have debates coming up in a couple week. and the turmoil across the middle east spreads at least a little bit of a wild card on the situation because the longer it goes organization the worse it gets. poses at least some potential that people will look at obama and say, hey, he's not able to protect u.s. interests and that would throw foreign policy which hasn't figured in the campaign very much so far back on center stage. >> you talked about the auto complaint about the president. he's tried to go head off romney who has been talking tough on china, declare them a currency manipulator and the presidented trying to cut off that line of attack. >> okay. yeah, tore rihorrific awful wee afghanistan. a lot of time left between now and the election. i see apparently romney is going to now go back to talking about the deficit. and he's going to be the one, that will be front and center.

>> i thought he was going to talk about social issues and also -- i thought the whole krd was gkrd was get away from the economy. >> he's going back to the five elements of his economic plan which we're not terribly flushed out in his convention speech. nevertheless the economy is where his sweet spot is in this election. for the dw-- >> i did like what the speaker said, everybody -- >> she's got big dreams of being speaker again. >> everybody knows that romney's not going to be president. i love that. love that. it was almost as good as when they said do you think maybe there will be any type of challenge to obama care that could make to the supreme court. and she wouldn't entertain that question. she just said are you serious? next. and then did you see how poed scalia was?

>> i didn't see that, but i have to plead guilty and put in another plug, i've done this before, i had an interchange with our late colleague mark haines about this and i underestimated the staying power of that legal claim because mark raised the same question. and anyway, a lot of people were surprised by that. at least i was. >> but now, the mandate was found unconstitutional. it was called a tax. and if it had been called a tax in the first place, it never would have gotten through. so the whole thing, i don't know. everybody's forgotten that. i don't know. we're back to occupy wall street and hating private equity. i mean, they've done a lot of good work framing this thing. the democrats have. over the last 12 months. we for got a lot of stuff that -- >> it's not over. but it's not what people thought. where it could have gone a year

ago and where it is today is completely different. do you agree with that, john? >> i'm sorry, i don't understand the question. >> there was a time back -- >> what doesn't take hold? >> there was time where i think a lot of us, including myself, thought that it was going to become a tea party-like element, it was going to really -- >> are you talking about occupy wall street? >> yes, it was going to change the narrative. and while i think it's changed the discussion, the 99% and 1% concept, i'm not sure it's changing the election. how about that? >> i never thought that. there's no binding power behind the movement. it's sort of like, oh, we're the 99%. who feels part of some part of people who are the 99%. nobody. it's a political talking point that has some umph behind it if you look at what's happening economically in the country. widening income inequality is a

real thing, but i don't think it's something that you can bind together a large group of voters and make some election changing issue. you can -- it's threaded through the democratic economic argument and it's popular, no question about that, but as something with the intensity and the can he heegs of what we saw in 2009, 010, i don't think it's headed there. >> all right. thanks, john. now to the markets. september is off to a strong start. joining us is john kingston, directed to director of news at plats. and john, we usually talk to you about oil. can you explain why we're almost $100? are we truly well supplied globally and demand is weak? >> we're we'll supplied with crude, but not products. and as well as crack spreads are

unbelievable. they're off the charts. >> that's for gas. why is oil at 100? >> because at a certain point, and it's not just gasoline, it's diesel. at a certain point if those markets go up, they'll drag crude along with it and that's what's happening right now. >> but i could overlay a gold chart over the crude chart and it's the same. >> but at the same time, if you also overlaid products, they would have gone up a lot further. >> so it's supply and nademand, not qe-3? >> i didn't say it's not qe-3. but there was a lot of refining knocked off during isaac. it had a lot more impact than i would have thought. that refining capacity will come on and every refineler refinery will want to buy crude. that could take air out of the products balloon. >> so you can actually connect for my dots between when

product -- when refining gets a crack spread that goes up? you can some somehow trace that back to oil? does that make sense? >> yeah, markets are funny. >> not fair. everything leads higher. opec laughs. that's not fair. not logical. >> but i would say this, that right now because of the fact that margins are so good, you are probably going to get a little breaking of this balloon of the products mar duct because everyone will rush to make ro tukts because the margins are so fantastic. and i think you'll find that those inventories which are tight will bliuild somewhat. >> it's a big question in my mind and i don't follow the oil markets as afternoons i do the gold, but there is no question there is qe-3 in here and speculation into the commodities markets this general. you see the response of anticipation of another qe.

>> let's talk gold then. dalio said i can't see any reason why someone wouldn't at least own some gold at this point. which is what's happening with the center bank. >> so many guys are saying that. >> absolutely. look at what's happening with the basel iii. it's to make it even as a reserve asset. and in fact a lot of the european banks from what i understand are actually selling their gold and buying treasuries because gold has a 50% haircut. so they're buying treasuries to bolster their capital accounts. and that's what i think the world -- the biggest problem we have is that we're facing a global deflation, credit deflation that has one way or another, whether qe or not, the debt to gdp ratios around the world have to come down to more normal levels. and i think that's what bernanke is fighting.

i think he has right to be scared about deflation. i don't see the inflation just yet. but you see it here in the commodity markets from time to time, but until you start getting people spending, until you get the velocity of money going, the banks are flush with cash and not lending. this is much like the 1930s. i believe the policies are much like the 1930s. just more so. it didn't work in the thirt abo30s. we didn't question it, it was just that it wasn't perfected about so that this time we'll find out. and qe infinite now we're seeing and god help us. because i think all it does is increases the debt to gdp ratio which is far greater now than at the bottom of the depression 1932 was total debt. i'm not talking government debt, was total debt was something lying 2 like 285%. we've seen a little bit of deleveraging. but if you look at the

historical debt to gdp, we're way out of whack. so that is bullish for gold. most people look at gold as if you just want to own it for inflation, but the real price of gold does extremely well during deflationary periods of time. >> bob, how much do we see equity markets benefit? we got our bang for our buck already or is this a slow steady move higher as the $40 billion a month comes into the market? >> i love the use of qe into that. we've heard it. everyone believe it is. it's a very accurate term. and i think that leaves floor room on the up side on equities. however equities don't go up in a straight line, they go down. and so as you look at the sort of risk-reward metric, it continues to get a little out of whack at these levels. even if right now you're looking down side maybe 1350, up side all-time highs. that's about a 1:1. but once you get up to the

all-time high, target is about 1800 in the s&p, but the down side now extends to about 1100 and the risk-reward gets out of wham. so i'm still bullish equities, but i do have my finger on the sell button. at the time people hold these trades, their duration shortens. you got to be nervous about the risk adjusted returns in equities. still bullish u.s. equities. >> 1800, i'm above 30% for the year. >> that's true. >> so i'm going to get it eventually, right, bob? >> it's an extension, a logical target if we get a weekly close above the all-time highs. but employment is not growing. it's just the stock market rallying. that's it. >> all right, gentlemen, thank you. bob, john and jay. >> when we come back, occupy wall street one year later. kayla tausche will be joining us

from lower manhattan with today's planned events. >> hi, andrew. occupy wall street's movement is regaining momentum about about just for one day to commemorate that one year anniversary. we'll take you to the center of the action on the other side of the break. smart comes with 8 airbags, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. that one year anniversary. ♪

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today marks the one year controversy since the occupy wall street movement began. kayla tausche joins us with more from zuccotti park. >> hi, andrew. we're at the top of wall street where security and police forces are ready for the droves protesters expected to storm wall street or at least attempt to at 7:00 a.m. to commemorate one year since that movement

began. a little bit hard to believe that it was just a year ago go where a small group of protesters gathered in soouf cotity park taking on big issues with wall street. >> why do we protest?represente. >> our country is deeply in debt. >> what we have on wall street is a culture of greed. >> we need jobs. >> and we're looking for change. >> reporter: a year ago today a broad rally call but the mood unmistakable. america's youth was not going to take it anymore. >> we are really upset! >> reporter: the occupy wall street movement as it became known, a backlash against america's banking titans spread like wildfire, at times violently. from oakland to boston, reaching across 82 countries in one month. fueled by social media, a potent

mess annual for system, a punchline for others. >> what is your cause besides wanting more m&m's and trail mix. >> your downtown is about to get occupied. >> reporter: in all, roughly $1 million and backing wasn't enough as cities began the biggest protests, new york, washington, finally the last in london in february 2012. and even as the protests have lost momentum throughout the past year, one thing is for sure and that is even against all of its critics, one thing it did was raise income and equality to the top of the socioeconomic issue list especially we've seen it in this election, the terms 1% and 99%, not going away any time soon. we'll take you to the latest in the center of the action throughout the day as it unfolds. back over to you. >> thanks, kayla.

you were getting all misty watching that, the good old days gone by. >> it was an interesting debate. >> it didn't catch on like you hoped. >> it wasn't that i hoped. i wasn't sure then i thought it was going to catch on. i thought the conversation as i said to you the 99% inequality conversation has clearly caught on. you might be able to make a political argument about where we are in the elections related to this, but i'm not so sure. >> we don't know where we are in the election. coming up, september historically a rough month for the stock market, not so far this year. goldman's jim o'neill makes a case for a rally, at the top of the hour. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more

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steering clear across the markets. guest host barry knapp of barclays is here and he's going to tell you how to put your money to work. then what squawkmaster jim o'neill is seeing around the world that could help pinpoint your investment strategy right here. and riding the rally. we've got the scoop on the hot buys riding under the radar. the second hour of "squawk box" starts right now. i don't understand these things. good morning and welcome to "squawk box" here on cnbc aim is he andrew ross sorkin along with joe kernen. becky has the day off. let's take a quick look at the future this is morning, we've got red arrows across the board. dow jones would be off about 5 points, nasdaq off marginally

and s&p marginally as well. investors will be watching some key earnings data this week as they look to keep this four-day rally alive, the dow up more than 2% last week and up 11% for the year. joe's got -- >> i got 17 on that. >> right. >> a few names reporting on that, gas prices have risen five cents in the past week, average price at the pump $3.87 a gallon, up 16 cents from a month ago and 24 cents from a year ago. anger continuing over the weekend, the u.s. withdrawing staff from sudan, nonessential personnel withdrawing from tunis tunisia. 65 embassies or consuls around the world issued emergency

messages about threats of violence. more on that situation and the spreading protests in just a bit. u.s. stocks logging a four-day rally so far. eurozone fears resurfaced. joining us from london is jim o'neill, chairman of goldman sachs asset management, on camera. great to have you instead of just that voice, although your voice is good, too. >> joe, i got my haircut especially for the occasion. >> i was going to say something about that, the picture that we have of you, you don't look nearly as high and tight as you do right now. i got the same kind of cut so we like the way that looks. it has nothing to do with comments coming out of the eu. i see merkel said that you're going to break our back if we have to take it all upon ourselves, but has anything changed since the last time when you were, you know, you weren't taking a victory lap but a lot of the stuff you were saying

seems to be borne out in recent news. >> the only thing that's changed we've had a big rally and so from that perspective it was a genuine question to say can they keep delivering positive surprises in the way since the late part of july, and almost definitely the answer to that is probably no. i'm just now this tricky issue like is spain going to actually apply for help, how far and how quickly are they genuinely progressing on banking union and we're into all that very important big picture stuff. the scope of perhaps a little bit of disappointment, but what is important in my opinion is the game plan has been clearly set forward, and i suspect as opposed to the mentality for much of the past couple of years

is fade every bit of good news in all of this. we may be moving to a period where fade the bad news because you know there's a clear game plan that's below it, or it feels to me as though that's the sort of certainty of the shift going on. >> we haven't spoken to you since the shock and awe of qe3 and everybody points out central banker bankers it's the lowest common denominator that eventually serve going to follow the leader more or less. we've set a precedent here, i don't know how the euro goes if you guys decide to one up, or not you, you're not part of it. it's beggar thy neighbor and a big rush to the bottom. you see mash farber says that will lead to a complete collapse of the financial system. i know you canndon't believe th but this can't be good. >> i didn't expect the fed to

have said what they've said. i've gotten into the camp whatever the fed did last week wouldn't be that big of a deal given the diminishing marginal impacts of qe but of course they did do the shock and awe. i jokingly described it as qe infinity in the piece i put out over the weekend and that, you know, i can imagine it's very controversial in aspects of the domestic u.s. coverage because the fed almost appears to have changed the balance of the mandate they're self-imposing with a link to the unemployment decline but if they weren't going to do something like that it wasn't obvious they were doing a benefit of qe. that's a big statement for those of us who have been around since the '80s almost bringing back weekly job claims every thursday to the preimminence the money supply numbers used to be out on thursday night and it's a big shift. >> why aren't you more worried? why aren't you, you're like, yeah, wow.

i mean there are people that think that there's consequences here, the benefits are small and the consequences could be large, couldn't he? look how hard -- you mentioned '80s. look how hard we fought to get that under control back then and what we had to go through to break the back of inflation. now it's like we're begging for inflation. >> the thing which is important here, and i imagine despite the statement the fed will be keeping a very close eye on, you look at something like the university of michigan's five-year inflation expectations, it's very stable, and so the fed even though many commentators and many political figures have got judgments about the danger of what they're doing, they have got the benefit of the fact that long-term inflation expectations are very stable and opposed to people either in or comment about financial markets, real people appear to be of the view there is not any great inflationary consequence of what the fed's been doing.

>> they seem to be scared stiff of something and we don't, i'm not scared so they haven't told me whatter this see scared of but there must be something. >> jim, on the front naming of "the new york times" u.s. earnings are beginning to feel the pinch, an article that talks about xerox, talks about fedex, talks about burberry and says earnings are clearly falling. does this change that equation at all in your mind? >> well, i was going to go on to touch on that especially as it relates to europe, all of the news coming around the week, the flash pmis in europe, which will be the early sign of how people are thinking about things in september, given how much european financial conditions have eased since late july, against the background of some hint of stabilization in the peripheries, pmi, last month, they are going to be really interesting to see, because if they were to show some improvement, you could be starting to get a bit of a fresh

theme here. that's clearly the next thing because all these big multinationals are reporting around the world still from the past quarter, it would be no surprise because the data has been so poor around the world but given the dramatic things that have happened, europe related, since late july, that would be the first number where we see any chance of a sign of it. >> jim, do you worry there's going to be, we're just going to come off the sugar high, there will be a moment and i don't know what's going to be the trigger but a month, two months, maybe several weeks from now, whatever, so people say you know what? this isn't working and all of a sudden you see a real fall? >> well, i think as it relates to europe, you got to worry about a number of issues all the time. as i jokingly say to many people often that one of the things i learned in my career is never let a crisis go to waste except when it comes to the europeans, they always do. so here they have a great opportunity following up this

bold, bold leadership of draghi and the ecb but there's a number of important issues that do need to be thrashed out. >> what is the downside n terms of looking at the downside where we are today and where the upside is, how far down could you fall? >> well, the other very fortuitous thing is if you look at equities, and here you have to split between asset classes, european equities are so cheap compared to very conservative long-term indicators like the cyclically adjusted pe, that is quite an advantage in turning on to this discussion. as it relates to interest rates and bonds, the front end of the bond market's two-year area has halved in yield in eight weeks so we've had a huge shift and the market's basically taken out whatever growing risk of a euro breakup there was in the space of that time, and so there's quite a bit of consequence, if

we get to, say, i don't know, the end of october, nobody's applied for help and the spanish haven't done anything about ecb help and there's no real progress on the specifics of banking unification in terms of regulatory things, then we're going to have some material issues back on the table, and we'll be back to aspects of what we've been in the past two years. looks to me as though the momentum behind both of those things is pretty strong and we won't be in that unfortunate position but obviously we've got to keep our eyes and minds alert to all these things as always. >> all right, james, thank you. i know you'll be watching rory. >> doing pretty good there, huh? >> after he won his second major before tiger won his second and he's won both tournaments since then and a big one is coming up so he's on a roll. are you proud over there in. >> fingers crossed. >> are you proud? >> of course. fingers crossed. >> see you later, jim, thank

you. when we return we'll welcome barclays head of u.s. portfolio strategy, barry knapp, one of our favorites, find out where he's putting money to work this morning, and later, a qe play that hasn't had a big run yet, we found the industry and it still has room to run. mary thompson will be bringing us the details. "squawk" is back in a moment. comments? questions? send them to @squawkcnbc on twitter, follow the show and look for updates from andrew, becky, joe and the squawk staff. "squawk box" on cnbc, and on twitter. at optionsxpress we create easy-to-use, powerful

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we're pack this morning. occupy wall street marks its first anniversary and activists plan to descend on downtown new york this morning, a movement spokesperson saying the group will attempt to surround the new york stock exchange and try to disrupt rush hour in the financial district. kayla tausche is monitoring the situation on the ground and will be joining us with more on all of that in the next hour on "squawk box." the markets are trading at multiyear highs while the fed keeps interest rates at historic lows. what is the strategy for investors, run with the bulls or take money off the table. joining us one of our favorites,

barry knapp, head of equity strategy for barclays. >> good morning to you, sir. >> good morning. >> what do do you? >> look, i think what's really telling is the fact that if you consider since qe2 was announced to where we are now the real interest rate, real ten-year rate has fallen a percent and a quarter so they've driven rates down to negative levels. the pe of the s&p is virtually unchanged but within that you've had some interesting dichotomies, all the stocks that act or look like bonds, stocks with high dividend yields have gone up about two pe points in multiple. the cyclical stocks have gone down by a point. so they're not having impact on the real economy but they are making this more and more uncomfortable for bond investors to hold securities. the double b index is yielding 4.5 sort of thing. so they are pushing people into

these stocks that act like bonds. this is the same thing that happened in the late '40s and early '50s when the fed capped interest rates at 2.5%, triggered massive inflation in order to pay off the world war ii debt, so i think although those stocks, the ones that act like bonds, have had a pullback now i think you use that as a re-entry point to get back involved in those names. >> so you're getting back into the dividend paying names. >> right. >> this is not an overcrowded trade anymore. >> it is going to be an overcrowded trade through this whole cycle but it will go through one and two-month pullbacks and like we had in january and february you're supposed to add to your position on the pullbacks. >> is there a way for this to not end badly? >> not that i can think of. i think the outcome is inevitable. if you read reinhardt and rogoff's book the outcome is inevitable, it will lead to inflation. there's just no way and the fed always says -- >> what's the game, playing on

when, read the tea leaves. you'll ride the wave until when. >> ride the wave, i am willing to ride the wave to an extent. i'll say okay, boy the names that act like bonds. i would say buy the energy stocks but i would not touch anything having to do with global growth, industrials, materials, just doesn't make sense. >> would you touch tech? >> tech is a big call on apple and i'll defer to ben reitzes on that. there's such for lack of a better term, bastardization going on in tech where apple is taking market share from all the pc names. the core of tech, enterprise spending, capital investment, is very, very weak. we thought capital spending would be weak this year because of the election, the whole body of academic work that is influenced by that, it's weaker than we thought. we thought tech would hold up, so the ciscos and ibms is a

dicey appropriation because their core business is soft. >> how much did we owe in world war ii? >> we owed 120% of our gdp. >> what are we now? >> just under 100. >> if you add all, we just had a guy saying that if you add all debt, we're above where we were. >> that includes the internal obligations is at 100, so on that level, it's not quite as high but you could look at contingent liabilities being higher because of medicare. >> it's all about paying back in devalued dollars, that's why we want to inflate? >> it's not what i want to do. but i can't come to any other conclusion other than they're so activist and look, john taylor's book "first principles" i thought was great. you look at the periods in time and it's not all republican or all democrat but you look at the periods of time you had an activist fed and activist administration who intervened in the committee. >> that's the greenspan he tells

us he's proven you put an activist fed and activist government together and you don't get any long-term investment. anything that takes longer than ten years there's no investing. >> you can argue that was going through the bush administration as well. he started out saying the same things and next thing the stimulus fiscal plan. >> can we view the fed as keynesian? >> how could you not? >> absolutely. >> he's doing what the government can't. >> this is the way i characterize it. milton friedman advocated stable growth in the money supply so in the threat during the great contraction of getting negative money supply in the great depression, friedman would have said qe1 wasn't a bad day but qe2 operation twist and qe forever with monetary growth at 10% i can't see how he'd ever advocate that.

>> we have qe infinity, a viewer wrote in qei doesn't right but qep, qe perpetual? >> if not infinity? >> because it would be qei. if you use the letter. >> right. qef is not good. >> qep. >> qep works for me. i'll start calling it that in my report. >> barry is going to stick around. coming up, we are going to head to afghanistan for an update on the violence and latest anti-american protests happening throughout the middle east, as we head to break check out the futures at this hour, marginally lower, still up. ♪

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anti-american protests continuing in the middle east and beyond. nbc's atiya abawi joins us from kabul. good day, what can you tell us? >> reporter: hi there, joe and andrew. another day of protests in afghanistan but it's been the most violent day of protests when it comes to the anti-islamist movie that outraged most of the muslim

world. today's protests did turn violent, just outside of kabul in an area where there is a nato base and western compounds primarily private security companies, western security companies, the crowds were in the hundreds, they burnt two police vehicles, they started throwing stones at the police officer including the district police chief here who said he did not want to return fire but their priority was to stop the outrage and stop them before they reached the capital of the city and the u.s. embassy itself but the embassy was protected, afghan police officers in riot gear were trying to protect t embassy and they succeeded. the crowd did not make it that far but today was the first day of violence that we saw here. we have seen protests in the last few days but they all ended peacefully up until today, but it's been a violent weekend otherwise in afghanistan, not just because of the movie but taliban attacks and inside ear tacks when afghan forces turn on their coalition counterparts.

four americans were killed yesterday by afghan police officers and two british soldiers were killed on saturday also by afghan police officers. the nato forces here including the americans have a lot to worry about, more than just the anti-islamic movie that has outraged so much of the world. >> thank you for that report. comments, questions about anything you see here on "squawk," shoot us an e-mail squawk@cnbc.com is the address and follow us on twitter twitter, @squawkcnbc is the handle. coming up, david ignatius and gas prices on the rise, how much more will it cost to fill up? "squawk" returns in two minutes. [ male announcer ] you are a business pro. monarch of marketing analysis.

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welcome back to "squawk box," i'm joe kernen. here are your morning headlines. yahoo!'s new ceo is saying good-bye to the blackberry. marisa meyer sent an e-mail to all of yahoo!'s full time and part-time employees promising them a new apple, samsung, nokia

or htc smartphone, the internal memo says the idea is for yahoo! employees to use the phones that yahoo! users are using. no yahoo! users are using blackberry at this point? >> not as many as they used to. >> clearly. there aren't as many yahoo! users as there used to be either. >> that's true, too. the chicago teachers strike entering week two. union members decided to extend their work stoppage in order to better understand a proposed new contract, after the announcement of the strike extension, chicago mayor rahm emanuel called on the city's attorneys to pursue a court order, wants to force the teachers back to the classroom calling their delay in accepting the proposed new contract, in his words, see, in his words, quote, wrong for the children, unquote, in his words. take a listen. the national hockey league slipped quietly into its third

lockout in 18 years. the deadline for new collective bargaining agreements passed without players and owners reaching a deal over the weekend. gary bettman warned players the league would lock them out if a new agreement wasn't in place. players were to start reporting to training camps later this week. of course the situation in the middle east remains tense today. joining us from washington is david ignatius, the associate editor and a columnist for "the washington post." david, thank you for joining us. >> great to be with you. >> i want to talk about libya and egypt, and all of the rioting and angst for lack of a better word, taking place there. you had a column recently, the most recent column talking about israel, and netanyahu and interestingly at least to me you compared netanyahu in terms of the demands that he's making on the obama administration to john boehner. explain. >> well, one of the things i found really fascinating and my colleague bob woodward's new

book "the price of politics," was his reconstruction of the debate last year over putting together a fiscal package, surrounding the debate over lifting the debt ceiling, and as you remember, one of the issues was whether the extension of the debt ceiling would be short term or somewhat longer term. the republicans were pushing to have the issue come open again right about now, and obama really dug in his heels on this, and said i am absolutely not going to have this issue come up during a political season. it's totally wrong. i want a resolution that carries us through into 2013, and when he was warned by his treasury secretary tim geithner that mr. president, this could lead to inability to get a deal, and breaking the debt ceiling he

said i'm sorry, this is something i'm not going to compromise on. i feel the republicans are trying to leverage this, and according to bob, the discussion was of an effort to blackmail him. well, if you look at what's been going on with the u.s. newsreel, you have prime minister netanyahu saying in the middle of our election campaign that he wants a firm promise, he wants a red line, he wants a specific trigger that when you hit that trigger, it means the u.s. is going to go to war, and the president is saying, no, we don't turn over that kind of decision to another country, and we certainly don't set, draw an artificial line in the sand when it's a matter of american peace and security. we make those decisions ourselves. and there is something about obama, he's sos resent and removed that you forget there's a part of him that's quite steely especially when, as i said in this column, people are trying to jam him, and make him do something or set a deadline that he thinks is against his or

the country's interests, and then he didn't budge. and i think that's what's happening here. >> david, moving to what's going on in libya, the violence, the protests, the anger, how do you see this sending, if at all? >> well, i don't think it's going to end for a long while. the point i've been trying to make with friends in my writing is we're in the middle of a revolution and this revolution is going to roll. it's going to do somersaults. you're going to have periods when relative moderates are in charge, periods when extremists are in charge, you're going to have explosive events. >> you're not talking months or years, sounds like you're talking much longer. >> who's to say? in my judgment, it took, what, 20, 30 years for europe to absorb the french revolution. you can argue that we're still trying to, the french revolution of 1789, we're still trying to absorb the iranian revolution of 1979, so these things take a long time to play out.

the point i would make is that this week in cairo, the government of president mohamed morsi, a muslim brotherhood leader, a man of what we used to think of as muslim extremism realized that he is now responsible for egypt's economic and general success, and that every time a demonstrator climbs the wall at the u.s. embassy, another investor who might invest in egypt, another tourist who might come to egypt and rescue that country's really desperately sagging economy runs away, and in that sense he has a very specific economic interest in reducing violence, and that began to happen in egypt. the simple reason is because morsi knew his authority as president was on the line. >> david clearly this has become politicized here in the u.s., fair in. >> absolutely. you know, let's be honest, it

should be an issue in our presidential campaign. >> and if you are the president right now, is there something that you as a columnist would suggest that the president do? say? >> i said two things last week that i'll repeat them here. first on the question of the u.s. and israel, prime minister netanyahu, our ally, is asking for american red lines. well the president's already drawn a red line back in march. he said the u.s. would act militarily to prevent iran from obtaining a nuclear weapon. he should say that again, he should say it emphatically, maybe at the united nations general assembly in new york later this month but he should speak to that and help netanyahu climb down off the hill he's climbed up and i think he needs a little help, frankly, getting down from it. in terms of this rolling period of protest, i think beyond the condemnations of the tolerance in this video, which i think

have been appropriate, there are legal investigations going on into how this was financed. what is this? how did this come to be? that's appropriate. the u.s. diplomatic facilities and personnel, and if you don't exercise that responsibility, we are going to come in and get them out of there, and so clearly u.s. marines who are responsible for embassy security have been preparing to send new people, if necessary, to evacuate american diplomats from places where the local governments can't protect them, so we don't end up in a situation where u.s. diplomats are hostages. >> okay, david ignatius of "the washington post," thank you very much for joining us this morning. >> thank you. >> appreciate it. coming up next we've got stocks logging a four-day rally, but there's some sectors that

may have missed the profit boat. we'll find out why industrials should be on your radar. i think you'll disagree with this one, barry. at the top of the hour, nobel thoughts from michael spence. "squawk" is back after a quick break. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong.

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industrial stocks haven't seen much of a big run just yet. mary thompson joins us with the risks and rewards of this. i don't think barry knapp really likes them very much either. >> they're not a favorite right now in general. what we tried to do is pick out a couple of industrial stocks investors might want to look at. industrials, joe, so far this year have been mid lane performer at best. we look at the ten sectors we follow they are the seventh best performing sector outperforming those risk offtrades, utilities and consumer staples but underperforming financials and materials. with the group up almost 12% year-to-date, and with the early emerging markets late u.s. cycle playing out jpmorgan analyst steve toussa says the group is less attractive given his belief

the 2013 earnings estimate is too high by 3% to 5% and even though he says some project, we're seeing project activity clearing up or picking up once the u.s. presidential election is behind us and once the leadership transition in china is completed he doesn't see this providing enough of a catalyst to make up or chew the 2013 earnings. within the group he's sticking with the top picks there, ge, as well as spx corporation. ge up 23% year-to-date, says it's in a sweet spot, seeing the best of both worlds, late cycle growth and stability from its services. spx, sees it beaten up badly this year and offers decent valuation. up 14.4% off the june lows, morgan stanley strategist adam parker remains underweight industrials. he believes 2013 earnings estimates for the group are just

too high. he points out more expensive on a price-to-forward ratio than faster growing groups like tech stocks and offer lower dividend and buyback yields in other sectors. he says if you are looking to buy within this sector he recommends the airlines on a price-to-forward earnings ratio. they offer the best value right now. back to you. >> yeah, ge, i didn't know that. >> it's been a really good performer so far this year, up past $21 a share, at one point it was. >> better off than four years ago. >> without a doubt. >> that's where i know i can answer yes to that, that ge is, remember, $6. >> $6. >> $6, yes. >> there it is, 22.11, they've gotten their house in order and getting that dividend back. >> you're at the big board? >> i am at the big board today filling in for pisani. >> kayla is out there, we can

have, we can cover the gamut. >> the whole occupy wall street. when i came n i came in around 6:00 this morning, there were more police cameramen and news cameras. i didn't see any protesters at all. >> a lot more police and photographers than protesters. >> it could change. it's early. they tend to trickle in later, the protesters. >> they have to sleep in. anyway, thanks, mary. let's hear what bar rry kna has to stay about the industrials, this is in line with what you're thinking. >> absolutely. there is a great long-term secular story for the sector. the u.s. has gone through 25 years of wage disinflation, all in productivity, transportation cost adjusted it makes sense to bring manufacturing back to this country so there's been a long-term uptrend in margins for the sector. it is a very good story and when i speak to investors they buy into the whole industrial renaissance but let's face it, the cyclical recovery in the sector was driven by emerging markets where all of the

operating leverage came from. two years ago qe2 and pumped up commodity prices in all it didn't hurt them. it's not there anymore and you talk to our analyst who covers ge and the likes of scott davis downgraded the sector last week because in may they'd given up on a second half recovery in china. now they've given up, there's no visibility in china, things are imploding and this idea they'll do some infrastructure projects if you look at that, first of all i don't believe in industrial policy but beyond that, these infrastructure projects are going to take place from three years out to eight years out. they can't get financing from the banks. there's a big nop-performing loan problem coming in the chinese banks so there's no cyclical story for the sector unless you believe the u.s. is going to somehow miraculously turn around. >> kevin wohrish was talking about on friday instead of planning next year or fiscal cliff we need some long-term stuff to get us back on track

where industrials would be attractive and it's not qe3. >> cut the corporate tax rate, get on a sustainable path and the fed stops monetizing the debt, earliest that could happen is mid 2013. >> it may never happen again. >> i agree, qep. >> getting our fiscal house back in order, getting our policies back in order? november is coming. were you at the romney thing the other day in. >> i was. >> i saw you. >> mary grabbed me on the way out actually. >> if it doesn't happen this november, can it happen four years from now? >> it probably will absolutely happen four years from now. >> is there a point of no return? >> there is a very ugly economic outcome out there for us if we don't get this right, because i could see every time i've talked to mary about this, asks me about all the cash, tons of cash out there. my comment back is the earliest i could possibly see that

getting put to work is in mid 2013, if we settle tax policy, if we get the debt on a sustainable path and if the feds stop monetizing the debt. between now and then that cash is going to build up. we've had non-defense core capital goods orders fall four of the last five months. i can't find an instance where that didn't happen in a recession. the path that we're on with capital goods and cap spending right now is a recession path and if we get things wrong at the beginning of next year and just try to inflate our way out of it, we'll have a recession. it's a question of how deep. so yeah, and then if the fed responds to that and monetizes more, we're right back in an ugly stagflation type of environment. we're at an unbelievably critical juncture. >> i want to continue this conversation. we're going to talk about some headlines when we come back. some news we have to tell you about a this morning, president obama will be launching an auto trade complaint against china today. his administration is citing

what it calls beijing's unfair government backing of its auto industry. president plans to make the announcement during a campaign tour of ohio. ohio relies heavily on the auto industry and of course a politically important squiwing state. republican presidential candidate mitt romney will pledge to fix a troubled u.s. immigration system, he'll speak before the hispanic chamber of commerce today. john harwood was with us earlier, talking about that, and i hope you saw him, because he's not going to join us at 6:20, because it's 7:47. >> it is 7:47, if you missed it we'll give you an update. coming up, parting shots from our guest host barry knapp and a little tease, i want to you give us a little inside the room with romney from last week, maybe you'll do that for us. >> sure. taking over in the next hour, michael spence, nobel laureate in economics, we'll get his take on the markets, jobs and the fed's new round of easing.

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this weekend with the kids saw the seals, who was there? >> flipper? >> phil purcell at the zoo. his grandchild and we were all watching the seals. we didn't have the music but it was fun. central park zoo, i brought my two boys, my parents came, grandparents. we ran into phil purcell. >> have you seen the movie "mr. mom"? >> i have not seen the movie. >> it's funny. the kids run him ragged, too. >> i felt like mr. mom this weekend. >> i know you did. you were abandoned basically so she could be out, god knows what she was doing and you barely made it through. scenes in "raising arizona" one going that way. >> henry running one way and max climbing fences. >> you see how incompetent you are. >> completely. by the way, the hardest job in the world is to take care of the world.

>> breast feeding, i should have told you not to do that, it's not going to work, it will chafe. anything happen? nothing. mcdonald's estimates raised, targetized, piper notes increased confidence in the company's ability to double over time. the target goes from to 100 from 93. under armour. you like it in. >> i do. >> downgrade to hold from buy. look at that, you see that? incredible. legg mason downgraded to hold from buy, target is $30, from jeffries. it hasn't done much but they're downgrading it. wells far yo downgraded to hold from buy by stifel nicklaus. >> and epl is going to buy

hillcorps for $550 million. parting shots from our guest host this hour, barry knapp. you don't have a nobel prize? the inflation and nobel economic prizes, i don't know what those are worth by now but not much. except for michael spence we're peace prize. you wanted to take him somewhere? >> he went to this dinner in the romney room last friday. >> right. >> john mack, ken langone, a number of friends of "squawk" were there. >> mack was at my table. >> i have some colleagues i won't mention where but they are not sure we need to have an election anymore, nancy pelosi says everybody knows in are in are is not going to be president. anyone told them? >> i get these questions -- >> should we still have the election? we could save some money.

>> i ask them okay what else' the history of approval ratings, what is the approval rating correlate to, consumer confidence expectation series, what are the voter turnout numbers look like at the low end, what is the economic backdrop around all this, for example, going back to that consumer expectation series, in the last 40 years, it's fallen that index has fallen to 50 on four occasions the year before the election, 75, 79, 91, and of course 2011. the economic argument is so considerable that it would be a shock. >> if everything was as bad when mccain ran and you had bush, the wars, you had hope and change, he got 46. now any of mccain's guys going to vote for obama? that's probably a no, probably have 46. you're starting with 46 and how many obama people have switched this time around said i'm not going with obama? and how many people don't show that aren't as excited as they were in.

>> those are the voter turnout numbers on the youth side and in the black and hispanic community the registration roles are way down. >> is there anything you heard on friday that we've never heard before? >> what i thought was -- >> if he told you he'd have to kill you. don't tell him. >> what he focused on first, he talked about his five plans was energy and he talked about it very knowledgeably and enthusiastically and i thought that was an interesting perspective. when i talked to investors the story people are most bullish about in the back half of the decade is the energy, going from $300 billion a year deficit to something closer to zero, could change the capital spending environment, he talked enthusiastically around that and the specifics around the small business sector, the tax question at the upper end, the regulatory policy and of course obama care, so he was very tight on those issues. >> when you see the reports over the weekend says there's in-fighting inside the romney

camp, they're anxious, questions about the speechwriter, the report out he may take a tack away from the economy and try to get into social issues and other things, you didn't see any of that? >> not in that speech to be sure and look, i think that's probably inaccurate. the republican party is energized this go around whereas during mccain they were tight. >> you see the other side saying there's been times in recent weeks where democrats were fund-raising, they finally won one, but they'd lost -- >> i look at the economic numbers. >> anybody can write a story. >> that economic story looks powerful. >> you got to write one today? n >> absolutely. >> barry, thanks very much. >> thanks. one hour with michael spence making his way to the "squawk" set as we speak, we're going to ask him about jobs, the economy, and the effects of we're calling it qe3, qep, qe infinity, and

gas prices are back on the rise, the director of motor fuels for the national association of convenience stores joins us to discuss how high they will go, when "squawk" returns. oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.

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debating the impact on question three-on the jobs market. >> i believe strongly there will always be a need for a well articulated debate policy. thank you. >> our guest host michael spence winner of the 2001 nobel prize for economics. >> what happened? >> i blacked out. >> pain at the pump, rising gas prices could create problems for the obama administration ahead of the november election. we'll talk fuel costs with john ikeberger of the national association of convenience stores. >> what are you pumping in gas? >> i don't know, they only got diesel, better go to the next station. plus the one-year anniversary of the occupy wall street movement. we'll bring you a live report from the protests in the financial district. the third hour of "squawk box" begins right now.

welcome back. "squawk box" here on cnbc, first in business worldwide, i'm joe kernen along with andrew ross sorkin. becky quick is off on this first day of 5773 but andrew is here. in our headlines, stocks rallying to multiyear highs, dow reaching its highest level since before the financial crisis, 4% shy of the record high of 14,164 that came october 9th of 2007. u.s. equity futures are indicated down a little worse than before, down 15, now down 25. investigators investigating whether several u.s. major banks failed to monitor transactions properly allowing criminals to launder money. the "new york times" reporting the office of the currency is leading the money laundering investigation. the agency could take action against jpmorgan, the offices said to be investigating bank of

america but a note of caution as the article does as well, this is not like the standard and charter situation. also yahoo!'s new ceo saying good-bye to the blackberry. >> are you talking to your children? >> i don't know. our viewers are not 14 months old. >> businesses insider reports marissa mayer sent an e-mail -- i did spend the weekend with the children. >> good-bye. don't do that. we do want younger viewers. >> she's saying good-bye to the blackberry, sent an e-mail to the employees in the u.s. promising apple, samsung, nokia smartphone. they'll discontinue i.t. support for blackberries, the idea is that yahoo! employees should use the phone yahoo! users are apparently using and the implication yahoo! users are not on the blackberry, may represent

the nobodies on the blackberries but both of us are on the blackberries so i don't know what that says. >> goingle is not a browser, it's a search engine. >> android. >> but is yahoo! a search engine? >> yahoo! is a search engine in media. >> what if marissa says we want our search engine users to use the search engines customers are using. no one would ever use yahoo! again. >> she'd have to say use bing because they're in partner with microsoft. >> no one uses -- i have all my computers switched from that. it was here for a while using that. >> microsoft tries to force to you use bing. >> i don't like it. >> you've gone to chrome or google? >> i guess. our next guest has an hour to tell us how to get the economy back on pritrack. >> he's a nobel prize winner so he should know. >> we're going to break down a lot of different things today but, man, i'm just going to read a paragraph from something you wrote a week ago, not even a

week ago about how tough it is for global growth and how high income countries have major problems with growth in employment which is spilling over to the developing economies which used to be a bright spot, bottom line is, de-leveraging will ensure growth will be modest at best in the short and medium term. if europe deteriorates or if there's gridlock, a major downturn becomes more likely. our best case is it's weak because of de-leveraging for the medium turn even, worst case worse. not optimistic at all near term? >> no, i'm not, not on the growth front. the developing countries with china in the lead are slowing down largely because of the major slowdown in europe. >> that's where the de-leveraging is in europe and here. >> absolutely the de-leveraging is in europe with lots of macro risk and here much less macro

risk but a de-leveraging process that frankly leaves us demand short on the non-traded side of the economy. >> what do you mean by that? >> any economy, any advanced economy is about two-thirds government health care construction, retail and so on, non-traded for the most part, and then there's a sector where manufacturing and financial services and so on reside where we have domestic demand and we have foreign demand because we can sell to other people and they can sell to us, so that the knob-traded sector depends on domestic demand, there's no alternative, no place to hide, when you're de-leveraging we're short of that, the fiscal stimulus people are right about that now, you can disagree with them, that maybe it's too risky to do the stimulus, but basically you got to delever and restore that demand. and the american economy unlike say a small economy like sweden is more dependent given the evolution of our economy on that non-traded sector especially for employment. so that one's just got to heal,

and then on the traded side of the american economy, we had domestic demand which was short, we're a big economy so that part is important. we make cars and we sell them to ourselves, and we could sell electronics and stuff to other people, too, and we were relying on the one growth engine in the world, which was the emerging economies coming out of the crisis and now they've slowed down because of the hit they've taken primarily from europe so as barry said a few minutes ago, you're starting to see top line growth falter there, and that won't help us either. we've got basically a coordinated slowdown under way. >> and the fed who has nothing left but they're going to tell us they do. what did you make of what they did? we used to think if you're pushing our string don't try. these guys don't know not to try. they'll keep pushing. is that about right? >> it's a bit of a mystery to me. i think the fed, first of all, let's be fair.

bernanke has been consistent in saying they do not have all of the policy instruments to take care of the problem. >> not going to stop them from trying. >> maybe they believe that they can, by knocking down long-term interest rates accelerate the de-leveraging process especially on the side, make it easier to service your debt. it's marginal. >> there's been some progress made on the average u.s. household. >> when looking for bright spots if you have restrained wage growth there's progress on the traded side in manufacturing exports, in competitiveness and stuff like that. >> if you were king of the world and the president and spencenomics, there's things you would do right now? >> i'm a little bit on the side

that the range of discussion on fiscal consolidation has two characteristics, it's too fast at least on the right side of the equation i don't think we have to go that fast and kick the leg side of the demand out on the economy and that's one and clarity would help. if you emerged with a congress and administration that somehow got together, we're going to do this over five years. >> so you knew what was going to happen so you could plan for it. >> you don't want to kick the legs out but would you spend more now or no? >> yeah, i think i would. >> how much more? >> i would call it a moderate. i wouldn't cut the deficit too fast i think is what i would say. >> is there a stimulus, is there a stimulus package in this as well or no? >> no, it's more a matter of not, of avoiding the cuts that are well under way. >> would you raise taxes? >> well, now that's a separate

question. my answer to that is yes but probably wouldn't appeal to a lot of people. >> that's as bad as cutting spending. >> it is in terms of deficits. you've got to have a plan. the second issue is that i talked about in that thing you quoted is really whether we'll delever first and investing in -- >> private sector, public sector, individuals, everything? >> private sector investment there's reason, there's demand, something like that, and the public sector has been short on investment for a while or we wouldn't be talking about all of this infrastructure and some real effectiveness problems in the education system that rahm emanuel and others are tackling now. >> rahm wants to spend less. >> $11,000 per child on

education. >> it's not the amount we're spending. >> that's right. >> if you had a tax increase it would be a deal with the american growth we do it now so we don't do it later. >> talking about tax reform, we need a larger tax reform package. does that ultimately mean the rate comes down? getting rid of the tax system -- >> are we talking about individuals and corporations? >> i think so. >> what does the spence plan look like? >> i would have a very simple, first of all i think we ought to consider a value-added tax.

some version of that. i think you probably want to lower the corporate tax, you know, we should take seriously the competitive issues. i think we ought to harmonize our tax system insofar as it affects foreign operations so we act like other people and don't create perverse incentives. >> you cannot put this guy in any one camp at all. >> no, absolutely not. >> because you talk about investment and he's talking about government investment which a lot of people on the right go i've heard that before. then you want lower tax rates, a higher base and lower marginal rates. >> it makes sense. >> most people want to get, as long as we go back to 39.6 for a

little while, just give me a month of it and then we can talk -- i got to get back to 39.6, we got to, and then we can lower for everyone. we got to get rid of those. we got to get rid of the tax cuts. do that and we can cut for everybody. you'll stay with us? >> absolutely. >> and we will have more through with professor spence? >> mike. >> nobel winner. >> there you go. this video into the newsroom moments ago a few people arrested in new york's financial doctorate the occupy wall street protests, protesters gathered to mark the one-year anniversary of the start of that movement. coming up we've reached the end of summer driving season but commuters and businesses are still feeling the effects of high gas prices. aaa says the average price for a gallon of regular now $3.87,

it's up five cents in the last week and up 24 cents from a year ago, coming up next talk to the head of the national association of convenience stores. [ male announcer ] if you believe the mayan calendar, on december 21st polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd, and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now mayans?

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welcome back to "squawk box." futures all morning have been lower, down 25 points a so but one thing that is not lower, gasoline prices, which are higher. andrew? >> apparently, that's what i've heard. >> they are even, in fact saying they're higher. >> i'm saying that's your read. there are near highs for the year. >> i see where you're going with this. i thought you were still reading. >> i wasn't. >> because you were looking down. there it is, it has my name on it. >> what were you looking at? kate middleton again? >> wow. >> you told me you clicked on that. see, i don't click on things. >> you were going to go there, weren't you. ♪ >> see that, goi n.

>> this is not work safe. >> i thought it was blurry. >> because some are blurred out. there were sites to go to. >> gosh. gasoline prices are near highs for the year and the pain at the pump is being felt beyond consumers. you are so mean but i love you. john ikeberger, vice president of government relations and director of motor fuels at the national association of convenience stores. >> director of gouging at the -- >> that's unfair. that's unfair. >> he loves that one, look at him. >> here we go again, joe. >> but john, here is a question i have and this gets political. in the notes here, i have a note here that says that you were apparently told by one gas convenience store owner that the uncertainty of the presidential election is hurting his business. how is that possible? >> i don't know if i'd characterize it quite like that. the comment was the economic

consumers, consumer confidence seems down, a beginning of the economy and leading into a presidential election leads to uncertainty. >> if you need to drive to work, you drive to work. if you can't, you can't. i don't know. >> you do have to drive to work and to an extent gasoline demand is priced elastic however could be suconsumer confidence affect what they do inside the store. across the country in-store sales are down compared to last year and earlier this year and combine that with high prices and lower retail margins, retail everies are feeling the pinch and consumers not having a great time. >> what does the margin compression issue look like? >> since the low turnaround the last week of june we're about 45% below margins where we were at that point. and it takes about 17 cents to sell a gallon of gasoline and the average margin is sitting down around 13 or 14 dmnow.

>> the real money sin side. the money, not that the gas is not a lost leader but the coca-cola and the bottle of water selling it for $1 million. >> $1 million, that's what we price that. we make a lot more money inside the store items, you buy a cup of coffee, that's a high margin item. gasoline, however, is the price point at which consumers use to shop for which store they'll go to and that price has to be competitive and unfortunately that competition results in prices that don't always provide the retailer with any type of positive return. >> what is your sense, look out a month, two, three, where does this story go? >> it depends what happened with crude oil. the disturbances in the middle east could have an effect on the price of crude oil. if you take a look over the last ten years even you can plot crude oil movements a week or two later you may see wholesale movements move and a week or two later see retail movements.

it depends on what happens to crude oil, it's 75%, 80% of the retail price of gasoline. as that international crude oil market moves retail prices are going to respond within a couple of weeks. >> john, we have a nobel prize winner on the set and he has a question for you. >> john is the situation in the middle east and protests and attacks on the american embassies and the syrian thing, how will that play out and is it relevant to what we're talking about here? >> i think it is relevant. we don't see necessarily a change in physical supply of crude oil in the market. we know when there's any disturbance in the oil regions the market reacts based upon anticipated concerns about future supply disturbances or even future disturbances in the market in general, that can always lead to a change in crude oil prices. we don't necessarily need to have a change in supply. that doesn't necessarily have to happen for crude oil prices to

move and that really frustrates a lot of retailers because we need some certainty, we need some consistency and stability in the market. when that kroid aisle price moves $3, $4, $10 a day it plays havoc on the retail market. >> john i know you can't play favorites but is there one convenience store retailer that's killing it, figured it out that others haven't? i know these are all your children but i'm curious about the business. >> probably the one that you frequent most often, joe. >> that was me, andrew. >> sorry. >> my question is what is the maximum age that wieners, the hotdogs, is it the same one no one buys? what is the half life on that thing? >> you're funny. >> you started it, because it was andrew asking you the question and you won't give him, you thought it was me with the smart ass question. i said i'll give you a smart ass question if you want one.

no, do you have a favorite convenience chain in. >> there are certain chains out there that have consistently performed higher than others. i can't name names at this point but there are some you could take a look around different markets. you can see who the market leaders are. >> john, can you feel the economy, on a scale of one to ten, where do you give the consumer? you go into a convenience store for the convenience you're not going to get the cheapest price around. >> where do i see consumers in terms of confidence in. >> one to ten, are we in, i have people telling us we're back in a recession, we had locke talking about that again. does it feel recession-like or very slow? >> it slowed down a lot in the first quarter this year, we saw quite a bit of uptick in end store sales which is surprising. gasoline prices were higher the first quarter than they usually are at that time of year but we have seen things slow down a little bit when you talk to the merchants because margins sore much lower, consumers aren't spending as much inside the

store. there is a perception we may be hitting another lull. what is the effect of that? i don't know. but we need to figure out a way to get that thing going back in the right direction because consumer confidence, we see it day-to-day at the convenience store, at the fuel pump, if that continues to wane, that will have a long-term effect from what we're trying to accomplish here. >> john we'll leave it there. >> john, i go every morning just to let you know i'm a big supporter of convenience stores, i buy a coffee every monrning. >> i'm going to go buy a hotdog. you think that's a good idea? >> absolutely. >> john, when is the last time you bought one of those hotdogs. >> last night. >> you're such a liar. >> absolutely. >> thanks for playing along. the burritos. they're wrapped. those other ones, i don't know. much more still ahead from our guest host, nobel prize winning economist michael spence. in the next half hour protesters gathering in new york's financial district for the one-year vrls of the occupy wall

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coming up the iphone 5 generating a lot of buzz but money talks. apple expected to release preorder numbers for the new iphone later this morning, at&t by the way already out saying it was their biggest weekend selling the iphone yet and get ready for the week ahead, we're

going to take a trip down to chicago, a trip across chicago to find out where traders are watching and "squawk" will return in two minutes.

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welcome back. making some headlines today, tyco shareholders approving a breakup of the company into three pieces, the number of people of people applying for mba programs down 22% in 2012 after a 10% decline last year. economic uncertainty said to be leaving students nervous about the significant investment required for a full two-year full time program and where it will get you. the winklevoss twins putting $1 million into sum zero, an investment website founded by a fellow harvard alum. >> a social network. >> the three classmates joined us on the "squawk" set in april as part of our bit runner series, best known for being in that movie, losing that fight with mark zuckerberg, still getting rich in the meantime and i've heard from an old friend of

the show, andrew. >> who is that? >> chef james. >> yes. >> about wiener hold times, how long you can hold a wiener on one of those -- >> conveyor belts. >> griller hold. at any of these, at 7-eleven, casey's, i've got all the names. >> is this going to be who areiblare horrible. >> four hours that's it. >> the holding temperature must be maintained at 145 degrees fahrenheit, 145 degrees fahrenheit. girthy sausage, four hours. taqito only four hours. >> oftentimes you walk into the gas station and they have like a dozen of them rolling. >> i know. >> and you think they're replacing them every four hours? >> do you honestly think they're replacing them every four hours? do you think they're replacing them every day? are they replacing them every

week? >> this is a bad conversation. >> but four hours is the maximum but that was hence the question. i really wonder if you're not there watching. there should be a hidden camera, this is something we should do investigatively, focus on the wiener and see how long -- >> joe kernen reports. >> somehow you have to mark the wiener so you know if it's the same one you see the next day and the day after. >> new series, joe kernen reports and you could do a documentary. >> you'd like a chris what's his face thing with the peds. >> the pedophiles. let's get into it with the hotdogs. >> yeah. >> that sounded horrible. get a check on the markets. who is this guy, alan, are you new, joins us from the cme, chief trading adviser, one stop option our guest host is michael spence. al, where did you come from? you been on the show before? >> i get around, i come and go so i must have said something -- >> you said something good at some point.

anyway, is it qep, that's for perpetual. will that take stocks higher? >> the week was fun for some but we're looking to see what follow-through we get. things are quiet. you were talking about hotdogs which are commodities, just kind of grown up a bit. looking at the markets in chicago we're not even at the 50% retracement of the 2008 to 2009 move that we saw whereas the stock market's recovered 100%. we'll see more asset reflation here possibly a little bit stronger than you're seeing in the stock market because the stock market's had a big move. >> normally you wouldn't expect that type of asset inflation in a world that's not growing, right, in such a slow growth world so it's all central bank initiated? >> well i think a lot of it is because of the dollar. the dollar was unsustainably high, up 15% a couple of weeks back before the downward turn so a lot of the safety money coming

out of dollars and bonds is looking for investment and that will spill over not only into the equities markets but spill over into the markets here looking for a better return that you can get in treasuries, even though treasuries have bounced a little bit. i still see good solid upside in gold. gold's been up 10% in a month whereas crude rallied 30% in the last couple months so there's a lag behind and the high price of crude shows a strong ability to pay, it's a better indicator from my standpoint as a trader of growth is not as slow as some people priced in, and the price action is telling us something different than the asset, than the demand depression demise. >> michael, people in the past brought up the stagflation word, we haven't had it for a long time, it's like the worst of both worlds, hideous when we get it. is it possible this time? >> i think it's unlikely, joe. >> because of the inflation part? where we have the stag, just not initi inflati inflation. >> you can see the end of it.

it's just -- >> short term to medium term. what is medium term for you? >> medium term is three to five years. >> slow growth three to five years? >> we could have that with the combination of the de-leveraging and the structural adjustment. >> fine for guys that are andrew like 35 years old. i don't want to wait five years before things start going again, do you? >> no, i don't, but you know, most of the time when an economy recovers faster than that, the rest of the global economy is more supportive than it is now. >> it's not right now. so it is what it is. >> yes. >> alan, thank you, and mike will be with us for the rest of the show. we have a little bit of apple news, apple announcing preorders for the iphone 5 topping 2 million in the first 24 hours of sales, joining us now, cnbc's john fortt has more. >> after a while the number cease to have meaning.

years ago they did a million in the first 24 hours of the 4s and that was a lot, and keep in mind at&t about three hours ago announcing this was their strongest iphone launch and thus their strongest phone launch ever in terms of preorders. last year they said they did 200,000 units in the first 12 hours so of course now this puts in perspective this launch at least in terms of the popularity. you got to think okay, two years ago the iphone 4 launch was a radical new design, first two full quarters of the iphone 4, apple moved roughly 30 million units, a lot of the people are done with their two-year contracts, expect some are reupping on their contracts and putting preorders for the iphone 5. that could mean strong u.s. launch for this throughout the quarter, though a lot of people suggested that this market is almost saturated, and you've also got to consider apple is launching this phone faster than it has launched any other. 22 more countries coming online

after the initial nine coming online this friday so we'll get nine this friday, we'll get 22 more a week later, all of that gets included in the september quarter, so a critical period for apple, 2 million is a lot of preorders, they seem to be doing well with the iphone 5, guys. >> john, don't go anywhere. i have a question, excuse the pun let's go apples for apples. you look at where we were a year ago, 1 million sales, and now 2 million sales, how much of that is a function of new international sales. when you talk about the nine countries and the 21 countries, how much of it is just an expansion of the pie in terms of availability? >> this almost none of it is a matter of an expansion of the pie so they are launching in nine countries this first wave. >> this is all u.s. >> well no it's not all u.s. they're launching in nine countries, preorders in most but not all of them. they did seven countries in their initial launch a year ago. the big surprise as far as the speed of the launch has to do

with doing another 22 just a week later. that's where that bump comes in, that's where they're managing to fit those more than 30 countries just in the september quarter, in terms of a launch. so this first week, not much of a difference in terms of the number of countries launching the number of preorders that apple is taking and they're not taking preorders in all nine countries. they're not taking preorders in singapore and hong kong, for instance, not sure how many they're taking in japan. so this is pretty much apples to apples. >> john, one last question, which is when you think about apple, there were a number of analysts last week who said the way apple sales are moving, there's a huge bump early on but it's unclear whether it has legs. it goes up real quick but then it may come down gradually, but increasingly quicker on the way down. when you look at sort of a ramp-up like this, out of the gate, is this like a blockbuster movie, the first week or couple weekends are really great but

then it tails off or do you think this has legs? >> well, it could be, but i think you got to keep in mind that 30 million number for the first two quarters of iphone 4 two years ago and remember iphone 4 when it launched two years ago it launched in the june/july time frame. lot of those people are already off contract. if they haven't reupped and gotten a competitor's phone and you have to think many of them probably haven't because they knew this phone was coming those people are eligible to upgrade to this phone so aside from expanding and trying to take blackberry market share, apple is trying to reup on its install base. if they're successful at that and marketing with this phone, announcing this a few days after preorders start as part of their marketing strategy, then they could get a lot of those people, they could sustain this into the holiday season. >> okay. jon thank you for that, appreciate it very much. >> half a point of gdp. >> half a point of gdp. >> is that possible? >> sure. >> thank ben bernanke for that

or thank -- >> this is something i'm going to expand your mind here, because you have no idea how much -- >> still on hotdogs? >> how many do they sell in a day. >> how many hotdogs does a convenience store -- >> of those on the rack how many? >> i was going to say not a lot. >> 1,500 to 1,800, biggest times 11:00 to 2:00, 4:00 to 7:00 and 1:00 a.m. >> 1,800 -- >> 1,500 to 1,800. >> how many convenience stores are out there, there are definitely over 1,000 convenience stores in the country. >> no, each store sells them. what do you think i'm talking about. >> each store is selling 1,500. >> no the entire country they sell 1,500 n the entire country. >> i don't know where you're getting this information. >> in the entire country. read the -- i'm not going to try to expand your mind anymore. >> you're telling me hold on every convenience store, no way.

i just don't even buy it. >> read it. >> i was going to say like a dozen. >> go ahead. coming up when more from our guest host, nobel prize winning economist, michael spence, i can't talk to him about hotdogs, he's too high class for that. after that, occupy wall street protesters gathering in the financial district for the one-year anniversary of the movement. we'll bring you a live report coming up next.

i still can't get over that. >> it's a big number. i should have a second source, i probably should have gotten a second source. we're talking about hotdogs and how many. anyway the occupy wall street movement marking its one-year anniversary. cnbc's kayla tausche joins us from the new york financial district there. we saw a lot of police, a lot of photographers and a lot of reporters, they've got a few more protesters, kayla, at this point? >> reporter: joe, i think the ratio of media and police to the protesters is probably about 1:1. the nypd ready for this, knew what to expect. they've been here before and behind me there are hundreds of policemen guarding the top of wall street, so it's about business as usual after a big protest landed here just before 8:00 this morning. you can still get into work if you need to. there's a long line to get in. after a strong police barricade here at wall and broadway, protesters moved else where,

went to pine and nassau street, built what they're calling the people's wall, they stood up, made a barricade around the one-block radius of the new york stock exchange. police said if you're standing up you're eligible to be arrested. text message blast led protesters else where. now the part of the day we're getting to, 99 revolution, sit-ins, in the lobbies of corporations and bank branches and if you take a look at the flyer they're handing out today you can see all the various zones that they're planning to sit in, if you will, brown brothers harriman, new york fed, aig, chase manhattan plaza and ironically u.s. bankruptcy court as well as where they're going right now, but police are there before them, i'm told there are clusters of police at 55 water street at standard & poor's and all of these places already. i guess that's the problem when you lay out where you're going is that the police can be there before you but we're hearing the familiar chants, seeing some familiar faces and definitely

feels like even if it's just for one more day there is momentum here in lower manhattan. >> kayla, appreciate that very much. we'll keep our eyes on what's going on today. more from our guest host, 2001 nobel laureate in economics, mike expense. let's talk about occupy wall street, i'm curious what you think about the movement, the issues. >> i think in any country the political system holds together, you know, with something that the europeans call social cohesion, and that depends on you know, things that we don't talk about a lot, distributional things, so we've got a middle class that's been struggling in terms of income for a long time, we've had a big crisis that people blame on the financial system, right or wrong, we've got large unemployment, youth unemployment. i think we do have some issues in the area of inclusiveness to deal with. so i take this as kind of a cry

for an addition to the agenda. >> and do you think it has, it's been added to the agenda? i look at other people like joe stiglets in the image when you won the award. we've had him on the show, who says the inequality issue is going to be the end of us. >> certainly, that's a strong statement and joe may be right, but i guess i'd put it slightly differently but the idea is that if you leave these things unattended, you know, inequality, quality access to services and especially education, inner generational mobility, expanding opportunity rather than declining for a subset of the population, and then you're playing with fire. >> joe? you have nothing to say? i thought on occupy withst this would be wall street, this would be -- >> i want one thing, equal opportunity. when we try to somehow fix

outcomes for people that's where we get messed up and try to fix outcomes for people in a lot of parts of europe and you can't do that. if you're not going to fix outcome and have this utopian society you need to make sure you're right on the opportunity side and that's where education comes into it. earlier we were talking about education and we want better education and want to do whatever we need to do but you pointed out it's not a money issue. what is it, 11,000 per student? >> that's the last number i saw. >> high in the country, high in the world probably, some of the worst outcomes. where do we look for where the problems are and how do we do it, and that's the, to get income inequality and fairness and opportunity and a meritocratic fairness, not an outcome fairness. i think rahm emanuel is trying to do it and yet i read an editorial in "the daily news" cheering on just how fat cats and corporate people have been trying to bash teachers all

along and finally they're standing up for themselves in chicago and that's not the take i have on what's happening in chicago right now, when you have private sector, the average wage is $47,000 and the teachers are $71,000 before benefits, nine months a year, and you can't get fired. and there's no accountability and no testing. >> what do you ascribe, do you think there's an upward mobility issue in this country that's shifted over the past 30, 40 years, what do you ascribe that to? >> i ascribe it to what joe is talking about, a describe is descri mainly a failure of the education system. >> is it the failure of the education system itself, people often say it's a problem at home, i mean that the social structure has shifted and changed and made the education part that much harder?

>> yeah, i think you can't deny that there's a bad spiral that goes back and forth in neighborhoods where there's difficulties with family formation and stability. and then feeds into the schools system and doesn't make it an easy problem. i think it partly lies in that area. so you've got to work on what you can work on. and generally, sectors that aren't subject to competition require a special effort in order to make them perform. you know, that's true of a lot of government. and sometimes we can make them perform, and sometimes we can't. but it's true of education. and part of the reforms that rahm emanuel's going for and many people, you know, actually across the spectrum are talking about is having a little more competition. sfwroo what we >> what were you going to say? >> and choice. >> you honestly want to know? >> honestly.

>> that 7-eleven in a year sells 100 million hot dogs in a year. >> hot dog. >> just 7-eleven. >> that's amazing. >> no, just 7-eleven. >> i'm impressed and scared at the same time. poor country. >> you're afraid of hot dogs in. >> i am afraid. still more to come from mike at spence. coming up, stocks on the move. we'll go down to the stock exchange. only one stock can be the stock of the day. we'll find out what it is when we return. [ male announcer ] at scottrade,

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we're back. i'm going to cry from laughter, joe, i'm sorry. he won a nobel prize in economics. when we come back, we'll get some parting shots from our guest host, michael spence. and tomorrow on "squawk," dallas fed president richard fisher. he's going to be our special guest. he's going to join us on the set to talk about the latest round of qe, the economy, the election, too-big-to-fail banks, all sorts of things. tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else.

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>> 1500 to 1800 hot dogs a day. >> maybe in a really good one. anyway, let's get our guest host -- are you hungry now all after this? >> absolutely. >> so your point that we just made off camera again is everybody wants equal opportunity and fairness in the united states. it's just when that breaks down and you don't think it's fair. and you know what else plays into it? is corporate cronyism and the kablt ability to succeed but not to fail. we talk about these things in a perfect world. and it's not perfect. and that's when we get things that need to be rectified and people feel like they're getting screwed, basically. >> no, there's a feeling, and the feeling is enhanced in a downturn, a bubbly economy is when people feel better. i have to add these problems may seem, you know, to be challenges for us. they're big challenges in other

places. >> worse than here. >> oh, yeah. india has had momentum stall and a loss of investor confidence from some really dumb stuff. >> you think we can get our mojo back, mike? >> oh, yeah. >> you do? >> yeah, i think so. partly because there's so many parts of the economy on the private sector side that are dynamic and functioning fine. i think people will get motivated and get back in the game. the real question marks frankly on our side are, you know, whether our government functions. you know, at this point, it doesn't really matter whether it's a little bit to the right or a little bit to the left. as long as it's doing something. and then if it makes mistakes, correcting them. it's just going back into pragmatic mode, i guess, joe. >> and, i mean, is there precedence for being this dysfunctional? i guess there is. >> i'm not a good