i'm becky quick. joe is on vacation. brian sullivan is joining us this morning. thank you for being here. >> i didn't want to be here. >> you are. >> i was told to come in. >> you're so thrilled to be here. so glad on a monday morning to be here. >> the good music helps. lumineers. >> i love this. politico's ben white of morning money fame. barry knapp. barclays head of u.s. equity portfolio strategy. having trouble talking this morning. we do have a lot to talk about with all of these folks today. first a roundup of some of the top stories. the obama administration has overturn add u.s. trade panel's ban on the sale of some older iphones and ipads. this move reverses a ruling that had favored samsung over apple in that long running patent battle. the u.s. trade representative says that the decision was based in part on the effect of the competitive conditions in the u.s. economy and the effect on u.s. consumers. this is big news, though. shares of samsung were actually down overnight. just about 1%. apple shares, if you want to

take a look at where things stand at least right now, up just barely. again, this is some pretty significant news. we will continue to watch those stocks today. also, the london metal exchange and goldman sachs are being sued over alleged anti-competitive and monopolistic behavior when it comes to aluminum storage. the lme's owner says it will fight the class action lawsuit. we have been talking in recent weeks about this. wall street banks facing increased scrutiny in their involvement in the business for storing and transporting commodities like oil and aluminum. u.s. equity funds saw a record inflow of about $40.3 billion in july. this was happening at the same time that investors actually pulled $21.1 billion out of debt mutual funds and etfs. this comes after record bond outflows of $69 billion back in june. trim tab reports that more of the money that has come out of those bonds is being held in cash rather than being invested in the equity market. barry, this is pretty interesting story to watch as investors continue to figure out what's happening with qe-3. and what bernanke is up to.

>> right, right. well, you know, our view all along had been that the so-called great rotation could never occur until the fed started the exit strategy process. the whole idea was, you know, go back to all these prior cycles. money will, you know, will eventually go from bonds to stocks. it will stop at cash on the way as you have the almost inevitable correction that occurs when the fed starts normalizing policy. but then, you know, when you get to the middle of the business cycle and all that uncertainty associated with massively easing monetary policy starts to dissipate, then the money will start to go more towards investment. >> june was a really surprising 69 billion that flowed out. do you think that was the big dislocation or do you think there are more dislocations to come? >> no. i think that there's one more move down for equities. the way all of these cycles have worked, 83, 94, 04, there's been sort of two stages to it. the first stage is, the bond market sells off sharply.

as it becomes clear that the economy is getting better. it's always driven by the labor market, not inflation data. then you have all the interest rate sensitive parts of the stock market sell off first. so for the first month or so utilities. all the high yielders go down. you have a little bit of a recovery where people think, okay. well, the economy is getting better so small caps, discretionary, all the domestically sensitive sectors, financials rally. then you have the final leg where people think, oh, no. the fed is pulling away the punch bowl too soon. which they never really are. then you have those sectors go down. that's the end of the correction. so we think as you go towards september, as you get closer to that what we think will be taper wk then you'll have one more leg down. then it'll be over. >> we'll talk more about this in just a moment. meantime, a check on your markets this monday morning. good morning, everybody. futures not setting up for a huge move. implied down maybe one point or so in the s&p 500. meager six points in the dow

jones industrial average. to barry's point, got to watch out going forward. everybody may be rotating now for the planned end of qe at some point in time. it will come, we're just not sure when. let's check the european markets as well. they are lightly higher, ftse, cac and dax in germany all up. about .2%. overnight in asia, there you go. shanghai composite up about 1%. hang seng up slightly. nikkei 225 in japan fell 1.4%. the commodity markets, again, watch oil. oil though down a little bit this morning, still elevated. 106.38 for wti. gasoline and natural gas still down as well. still elevated from where they were a couple months ago. 10-year treasury note. down slightly. what about the dollar? we're not seeing huge moves on any real commodity this morning. that could certainly change. another big data heavy week. dollar/yen at 9 #.33. euro/dollar 1.3281.

checking gold. i know how many of you out there love to talk about gold. gold is up but not much. not even a buck. 1310.90. comex gold. >> the smallest up move you could almost have. >> i try to play it up a little bit. it's hard at this hour. >> a lot of media news happened over the weekend. millions of time warner cable subscribers in new york including myself, los angeles and dallas still without cbs programming this morning. analysts say this could continue for several weeks. it's amazing if you get to that screen. >> you didn't get to watch tiger. >> you hit channel 2. a nice little screen explains what the problem is. >> ario tv. it's a little bit slow. gives you the buffering problem. you sort of hear the flak from the golf club five seconds before you actually see him hit it. it allowed me to watch tiger woods which is all that matter zbld but the tournament was over. >> it was. nine strokes ahead. that kind of takes the drama out. >> tournament was over friday afternoon, barry. >> that's right.

>> this debate between time warner and cbs is now several weeks in the making. companies appear no closer to settling what is a fee dispute. on saturday, though, directv sided with time warner, commending the cable provider's decision to drop cbs programs. digital only media companies. before i go there, the other thing that's out, showtime. it's not just cbs. for those who are -- that was hurting me on another score. >> what do you watch? >> if "homeland" was on now that would be a big problem. >> i wanted to do showtime on demand. there are a couple things where you can do it. you can get there. the problem is you can get to the channel. you think you can do the demand. you really can't. >> that's devastating. >> who do you blame? cbs or time warner? who are you mad at. as a user? >> as your attorney i give you the right to take the fifth on this question. >> that's the problem with the story. it's impossible to tell. >> i don't know who's trying -- well, the problem is i'm paying -- here's what i want, though. i want to get a rebate at the end of the month. >> from time warner.

>> i believe that time warner cable, whatever my monthly bill, which is 200-some-odd dollars, it should be $10 less. >> you are paying for programming you're not getting. >> i'm contractually -- i believe there's an obligation to provide that programming. >> i bet they can change the stations and channels. >> spend a weekend reading the fine print. did you see the article in the "wall street journal." rare interview with jim dolan of cable vision. >> yes. >> he said the future of cable may not include television. it may just be -- you wonder if he's just doing that as kind of a pushback. >> baron's actually laid out this argument, too. some of the companies -- they don't have broadband to fall back on. they think that companies like viacom and comcast, they said comcast has room for 20% gain because of some of these issues. some of the ones that don't have broad band don't. >> we talked to rich greenfield last week about this. it's a higher margin business to provide broadband solely and not provide this content.

>> content is expensive. >> content is expensive. >> broadband is just the garden state parkway. >> utility. >> if you're just utility there's also a problem. there's this balance every cable provider is trying to figure out. how do you provide that low margin utility without becoming a completely low margin player. >> do we know what cbs is charging? time warner is saying it's an outr r outrageous sum. >> they said it was 500% more. >> the number is hard to come by. >> listening to the arguments back and forth. >> are useless until you know exactly what the numbers are which i don't. "newsweek." i don't know if you know this company. ibt media is buying income income from iac interactive. barry diller's firm took over "newsweek" back in 2010. it stopped that print edition under tina brown. relaunched it as a digital only magazine earlier this year. "newsweek" and the daily beast combined themselves. this deal does not include online news and commentary. site the beast. we should say that. you remember when barry said,

came out and said the whole deal was a mistake. from day one. remember sidney harmon? sidney harmon, barry diller coming together. other news, my other employer, "the new york times" is selling the boston globe to the owner of the red sox. john henry going to pay $70 million in cash. the times paid $1.1 billion for the newspaper 20 years ago. doesn't look like it was such a great deal after all. >> they keep the pension. >> and they keep the pension liabilities. ultimately according to some analysts the deal is worth a negative $40 million. >> $150 million in pension liability minus the $70 million in cash. >> thank you, ben. not a good deal. maybe relative to now it's a fine deal. on a relative basis to 20 years ago -- >> i will say this, though. it was tun funny. a few years ago we talked about payrolls. having to pay to get digital access. all the pundits. especially the blogesphere said it's over. journalism is over. no one's going to pay. nobody's going to pay.

nobody's going to pay. guess what? payroll numbers are not bad. i think the industry is starting to figure it out. >> the good news "the wall street journal" especially is that people will pay. switch it around and go to a regional player like the boston globe, 39,000 subscribers online. it's just -- we're talking hundreds of thousands at "the new york times." close to a million at "the wall street journal" now. >> "wall street journal" has been charges for -- since 1996 or '97. >> that's content you can't get anywhere else. people will pay for the journal and times. elsewhere, regional journals, not the case. movie news. the weinstein company has reportedly held preliminary talks with miramax about a possible deal. the tieup could create one of the most powerful independent film players. weinstein brothers founded miramax. a reverse ironic thing. they later sold the company to disney. disney owned miramax films until 2010. >> i'm completely confused.

>> there's miramax which was sold by disney. now independent though owned by -- we know him. tom bar rack. collin callal over here. then the weinstein brothers. the conversation is whether you can put those companies back together. now, one little quick note. nikki fink who i read and believe religiously perhaps on most everything. she's a deadline hollywood.com. she says not so fast. that's what her blog says. when nikki fink speaks, i listen. so that's -- >> maybe yes, maybe no. >> maybe yes, maybe no. >> the debate continues. will janet yellin or larry summers be replacing ben bernanke? will ben bernanke actually vacate the fed seat? joining us now to talk more about this and more, our guest host for the next two hours, ben white is politico's chief economic correspondent and a cnbc contributor. barry knapp is the head of u.s. equity portfolio strategy at barclays. guys, we've been talking already this morning. ben, you've been doing some reporting yourself. you're getting the sense that this is a decision he will be making maybe later this month?

>> yeah. i talked to somebody last night. he hasn't made up his mind. that's what we know. leaning strongly towards larry summers. doesn't mean it's a done deal. the person i talked to last night who knows him well, the president pretty well, says he'll take time over his vacation. going to martha's vineyard later this month. mull it over. >> as he should. >> maybe make a final call at that point. don't expect an announcement before september. renominated bernanke in august. that's not going to happen this time around. it'll come in september. i think unless something changes in his mind between now and then, it's going to be larry summers. i don't think he's been moved much by the criticism out there in the marketplace. particularly among liberals that larry summers is is too centrist, too in line with wall street, all that kind of stuff. he likes him, trusts him, trusts him on the financial collapse. >> the president must perceive summers to be so good he's willing to go through albeit some difficult criticism over the selection. >> he's willing to take the heat. he thinks a lot of the heat is unwarranted and unfair. he believes senate democrats will eventually come around and

be uniformly supportive of larry summe summers. that some of the noise between now and then is just that. some would rather see janet yellin. if it comes down to the president says this is my guy for the fed, get in line behind it, they're going to do that. >> he supports the people he believes and trusts like susan rice. not going to step back on that. >> he's not. the idea is that this is a guy the president knows and trusts. janet yellin is not something he knows so well. >> there's been a lot of controversial appointments this year. the only one, rice at no time go through. mel watts, looking like that one's hanging in limbo. for the rest of them he's managed to get them through. summers doesn't quite get to the mel watt sort of -- >> there's not the policy disagreements that republicans have with mel watt on housing reform. they obviously block him to the end of the day. that won't be the case on summers, i don't think. i think republicans would be equally, you know, likely to block a yellen as they would a summers. i don't think the white house thinks they'll get any more republican opposition to

summers. >> what about the far left? >> the far left is going to be loud and has been loud and will continue to be loud. i don't think it's loud enough to stop it. >> senate democrats are the big swing factor. >> they're the big swing factor. there's probably three or four who ultimately would vote fwens him because they think he's too hawkish or too in line with wall street. most of them, even the ones signing this letter we like yellen are not going to vote against summers. >> what do you think of the report tim geithner is advising the president on this? >> i think that's accurate that's he's talked to tim geithner about it. i don't know if he's gone so far as to ask him will you be fed chair. he loves tim geithner. he did sound him out about the possibility of taking the job. tim geithner is not interested in taking this job right now. just moved back to new york. a lot of high dollar contracts he just signed. >> did you read the story about the dmv? >> he had some trouble with his driver's license. >> such a sad story. he's at the dmv in westchester. >> geithner. >> geithner. with his wife. he's waiting in line. they don't -- the bar code on the back of his driver's license from baltimore, whatever it is,

you can't scan it properly. they're giving him a hard time. literally for, like, hours. there's a reporter that just happens to be at the dmv and the wife is giving an interview about how awful the dmv is. they have no idea who he is. anyway. >> just goes to show a lot of people in the real world don't pay attention to this stuff. >> the key question you sort of brushed by, would larry summers be tougher on regulation and the regulatory environment than janet yellen? this is a key issue. when i look at the whole financial sector, there's a pretty bad precedent for the 1950s. in essence return on equity was capped in the banking system at 10% for a 15-year period. banks were horrible performers in the '50s because the regulatory environment was so tight. this question about what happens to the regulatory environment is critical going forward. >> i don't think he'll be any less tough than janet yellen. >> in some ways he might be tougher. in the book "confidence man" he was the guy who was going to

shut down citi bank and geithner prevented that. >> in terms of bank capital he would be just as tough on i implements it. time for your global markets report on monday. ross westgate standing by in london. ross, what's happening on your side of the ocean? >> hi, brian. fwood to see you. we are up this morning for european equities. advancers outpace decliners by a ratio of about 7-3. a little more on the stock. ftse last week up 1.4% for the week. it fell half percent on friday. slim gains this morning for european equities. let me show you. ftse up .2%. name for xetra tax. ibex up .3%. one stock today is a standout. europe's biggest bank. hsbc. standout for the wrong reasons. down 4% today. profits on the pretax side up 10% to $14.1 billion. but earnings falling short of

expectations due to a fall in revenue. revenue down 7% for hsbc. it said growth muted in western europe, that's hurting. also growth in china and asia flowing while regulatory reform adding costs for banks as well. stock down 4%. better news generally across the piece for the european economy today. first of all, composite pmis for the eurozone. they hit 50.5. it's the first time we've been above 50 since january 2012. mild expansion. that helped us a little bit firmer on the equities. it actually also meant an implication for bonds. we saw gilt yields rising after strong services pmi out of the uk. hit 56.9. composite pmis for the uk best since the series began back in 1998. back to you guys.

>> very cool. ross, thank you for that. let's talk about other global news. new zealand's fonterra saying it found an ingredient in some of its dairy products contained a strain of bacteria which can cause botulism. this prompted china to recall affected products. eunice yoon joins us from beijing where she has more on this story this morning. eunice? >> reporter: hey, guys. well, fonterra is in full on damage control mode. this is after exactly what you said. there was a bacteria that could potentially cause botulism that was detected in some of the products, some of the protein powder that's actually used for baby formula in this country. we saw the ceo personally come out to try to handle this food safety scare. he held a press conference today. at that press conference, he said that he was deeply apologetic for what had happened. he said he understood very well that parents here are sensitive about the safety of baby formula. of course, china is a very important market for fonterra. in fact, he also pointed out

that the chinese authorities did not, in fact, impose a blanket ban on new zealand milk products as had been previously reported. >> there is no ban. there is no ban on milk products from new zealand. there is a restriction at the moment on whey products, whey powders and base powders for infant nutrition. whole milk powder, skim milk powder, butter, all those milk products are not under a ban. >> reporter: coca-cola and dannon have used that protein powder in some of the drinks for this market. they have since recalled those products. in fact, fonterra said that already 90% of the contaminated products have been pulled off of the shelves and that they expect the rest will be pulled off the shelves in the next 24 to 48 hours. >> is that creating shortages, though? i read something like 90% of the

imports from china from these milk products are the powder milk products come from new zealand? >> reporter: not yet. but that's the fear. because already people are very sensitive about the quality of formula in this country. so they take great efforts traveling to different countries, going across the border to hong kong. there's limits on how many baby formula canisters you can actually bring back. depending on, you know, where you're coming from. so there are concerns here that there will be shortages. but at this stage, you know, hopefully it's too early to tell. >> all right. eunice, thank you. eunice yoon. when we return, jetblue about to put more pressure on the competition. the strategy shift that may raise the stakes in the air fare wars. and check out these indian motorcycles. we have them all over the studio today. lucky us. the ceo of polaris will tell us how he's taking on harley davidson in the next half hour. i'm not a motorcycle rider, but

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welcome back, everybody. it is time for the executive edge. this is a new segment we're debuting today. it's focused on giving business leaders a leg up. our goal is to highlight some interesting stories that go beyond the morning's top headlines. we're going to be starting with a well known low cost carrier that's trying to go a little higher class.

jetblue plans to add premium seats to some of its plaines. seats will convert into lie flat beds. jetblue says some of the so-called suites will be walled off from the aisle by sliding doors. the seats will first be available next spring on flights from los angeles and san francisco to new york. of course a different step for somebody that started out as a low cost carrier competing on cost. >> here's nmy question about th. do we believe consumers are going to pay -- they're not going to pay the united fare. right? the business class fare. it's going to be somewhere in this middle ground. are you still going to be willing to pay 2,000, 3,000, maybe more dollars to get to l.a. on a lie flat on a jetblue. >> depends on who's paying. >> to becky's point, i hear what you're saying about it being a consumer airline. this is going to have to be the business traveler as well. jetblue clearly going after that. not going to be brian sullivan and family flying business class

to california for three grand a seat. it ain't going to happen. i'll take the greyhound before i do that. but they need brian sullivan the cnbc employee. that's who they need. >> i will tell you, those seats are very nice seats. i don't know if you saw. >> they looked nice. >> in the lie flat. there's two problems, though. no aisle access. you have to jump over the other person who's lying down. that's a real issue. plus the cabin situation. it's only one seat. virgin. i remember years ago richard branson wanted them to create cabins with two seats. he wanted some stuff to happen. >> yuck. >> you know what i'm talking about. >> what are you talking about? i don't know what you're talking about. >> mile high. >> like denver stadium? can you go into specifics? >> anyway, this cabin i just want to be clear, only has one seat. >> well. there we go. now that you've taken us there. >> for me and my size, it's all about the seat. the most pitch gets my business. period. >> got it. >> guys, let me tell you about a story that is trending this morning. mayor league baseball has told the new york yankees that alex rodriguez will be suspended

today likely through next season. but he will be allowed to play while he appeals that decision. a-rod and 13 other players will be suspended as part of baseball's latest drug investigation. guys, does he go the way of pete rose on this? what do you think happens? >> i think it's interesting baseball's not invoking what they call the best interest of baseball clause which would allow them to basically get rid of him and fine him or suspend him for the rest of his life or ban him from baseball. they're giving him the ability to appeal. i don't think we're near the end of this just yet. obviously, listen, a-rod is a huge distraction to the yankees. the majority of yankees fans according to surveys say they just kind of hope a-rod goes away. >> the appeal is on the fast track. it's supposed to happen in the next three weeks. >> is that the fast track? >> yeah. three weeks. three weeks. >> that's the baseball fast track. >> i just want to read you faye vincent. "usa today." former commissioner. i hope he throws rodriguez out for life. there are a lot of similarities between this and rose. they were very delusional. they lied. they misbehaved. baseball has to stand for things. it just can't have these drugs.

if the chemists win, baseball is finished. >> yeah. did you stee the article of how this whole thing evolved over the weekend? $4,000 business dispute between the guy who runs biogenesis and his business partner. four grand. >> the clinic. >> the clinic. the guy over four grand threw the biogenesis founder under the bus. started talking to reporters. had full access to documentation. over $4,000. cost of a jetblue flight to california, maybe. >> that's right. let me tell you guys about an under the radar story this morning. could this be the future of banking? they are talking about human tellers and atms. new interactive teller technology from ncr that lets customers talk to a teller on a video monitor remotely controlling those machines. if you lose or forget your atm card you can prove your identity by showing the teller your driver's license. the teller would also be able to do things like deal with requests for giving a withdrawal in smaller bills. 350 of the interactive teller machines in service right now. one credit union in raleigh has eliminated tellers at its 15

branchs. bank of america has begun installing atms with tell r assist that allows the machines to do 80% to 90% of what a teller inside the branch can. i don't know. maybe they can't count your change for you. short of that, they may be able to take over a lot of the responsibilities. >> this just means you're not going to see any humans anymore. the other problem they're going to be sitting at some call center somewhere. >> i was thinking do it from home. think about the cost side of banks. right? if you're a bank you got a teller in, say, a philadelphia branch. now you can employee three or four remote workers in their home in north dakota. >> skype in. >> exactly. pay for their high speed internet at home. pay them half what you're going to pay the teller somewhere else. it's just sort of another downgrade in wages unfortunately, i think. >> an interesting take. gentlemen, this story caught my eye this morning. rich are saving cash at a record pace. check out robert frank's piece on cnbc.com. it finds those making $750,000 or more say the number one thing they wish they did differently

during the financial crisis was saved more. since then the wealthy have become the nation's top cash hoarders. savings rate of the wealthiest 1% soared to 37% in the second quarter. more than three types their savings rates back in 2007. so this is a lesson that is still sticking around. >> are you saving more? you're saving less? >> man, i finally started doing work around my house. for seven years i haven't done anything. the roof is falling in. bathrooms were original from 1972. i've started to put a little money back into my home. >> i'm actually surprised of that number. i would have thought it would have not reversed, but i didn't think it was going to get better. >> if you have business on the west coast today, california governor jerry brown has averted a strike of san francisco bay's area rapid transit system. a contract dispute threatened to shut down the nation's fifth largest rail system. now there's a seven-day inquiry into the matter. if you're waking up this morning

you've got that going for you if you're going to work. >> there was a four-day strike in july. people i talked to out there, news reports said it was a total nightmare. anything they can do to avert a strike. a local tv station out there did a survey over the weekend that showed the public basically favors b.a.r.t. the subway system 2-1 over the workers. now, that's probably not that unusual. but i know the strikes don't win for anybody. they got to figure this thing out. they've already got some road issues out there. anybody that drives out there knows. it took me two hours once to go from san ramon to san francisco. i'll never forfwget that. i should have walked. >> sounds like new york city. >> that's when you do walk. >> you've been trying to get one block. >> i don't think walking over the bay bridge would have worked for me. probably would have been picked up as a vagrant. that would have gotten me to san frn cisco faster. >> that's your executive edge this morn ing. time to slip in a quick break. coming up, death watch. are the suburbs soon to be a thing of the past? an interesting new book from

fortune's lee gallagher. that's right after this. right now, 7 years of music is being streamed.

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and more americans are choosinging urban living over the suburbs. the trend so profound it's causing mall operators to change business models. lee gallagher, assistant managing editor of fortune magazi magazine. author of "the end of the suburbs: where the american dream is moving." i was a suburban boy. i grew up in the suburbs. now live in the city. what's happening? >> most of us grew up in the suburbs. one of the things i found in doing the research for this book, a lot of people our age or older have this tremendous amount of nostalgia for the suburbs. going outside. playing until 6:00 when it was time for dinner. having tons of kids around. that is sort of no more. that's one of many shifts. >> this is supposed to be the american dream. >> it was. it was for many years. it's not really working anymore. i found just a tremendous amount of, you know, data and anecdotes and proof of this thesis that really shocked me. so, you know, what i'm finding

is is that that's not working for a number of reasons. you know, ranging from health to, you know, it costs a lot of money to get to and from your job in these crazy kinds of commutes that people are doing these days. and it's just not fulfilling what people thought it was going to fulfill for them. >> you suggest in this book this is a positive trend. why is that? if we're leaving behind "leave it to beaver" why is that a good thing? >> we left "leave it to beaver" behind a long time ago. we're not having as many children. the traditional family structure. someone from pulte homes told me this is the majority. we're moving towards communities that are going to be healthier and happier and bring people together and make people a little more satisfied with their lives. >> what does that mean? >> we just spread ourselves so far apart. even before the housing boom, i talked to a lot of people who really never -- haven't gotten to know their neighbors. that's what you think about in the suburbs. you know your neighbors. i talked to one woman who really is downsizing from a 6,000 square foot mansion outside of

chicago into a much -- community where houses are built right next to each other. she said to me what did it for her, she said, i went toward this new community in libertyville, illinois. she said i realized then, she had a conversation with somebody in their kitchen. it's been ten years in my community with a big house. in ten years i've never stood in anybody else's kitchen. that really is -- >> it's almost like the metamorphosis of the suburbs. they're still out in a way. they're building closer and have a sense of community in downtown. >> an urban center. i talked to another family who -- this i found as very emblematic. there's a community in new jersey, actually, where for trick-or-treating for halloween, houses were so far apart from each other nobody wanted their kids to trick-or-treat, you would get exhausted. wouldn't get as much candy. parents drove to the k-8 school. parked their car in tailgate

formation. kids trick-or-treat car to car. they liked it. it workfoed for them. not that density is the answer. >> there's one thing that really has probably destroyed the suburbs more than anything else which is -- it's not just cars. i agree with that. it's the lack of sidewalks. >> that drives me crazy. >> a lot of building communities wanted to maximize the size of the lot. they eliminated sidewalk. you didn't want your -- if your kid wants to go to your neighbor's house he or she has got to get on a bike. everybody's got to wear helmets. instead of riding on the sidewalk, that ruined a lot of places. you've got to have a sidewalk to have safe passage to your neighbor's house. >> there's got to be a tax element to this, too. my wife and i have our third child to go to college in another two years. we say maybe we'd move back to new york and pay new york city taxes? it's bad already in jersey. but then you're going to move to new york and the tax situation is that much worse. >> what is the answer for you, then? >> denver. you know, i mean, there's

certain cities where -- >> that's a great point. if people do move back into the cities and they are to leigh's point, what's that going to do to the tax base in all these towns? you're going to have to be wealthier. i thought about moving into new york city. i look. it's 1.5 million tlrs f$1.5 mil two-bedroom. >> don't look at me. i live in the city. i unfortunately know about those numbers. what is the answer, though? both on real estate prices in the burbs and on taxes for municipalities. >> the tax issue is interesting. one of the things in addition to people leaving and moving into the cities which is happening. you're seeing actually rise in poverty levels in the suburbs as well which i get into in the book. one of the things people say, oh, it's the schools. what are we going to do about the schools? the traditional family structure is really changing. this is on the cover of "time" magazine this week. i'll plug my brethren at "time." we're not having as many children anymore. that has a dramatic impact on the suburbs. i write in the book about how my father grew up in a suburb

outside of philadelphia. 41 kids on the block. irish catholic family. the whole deal. there are now less than -- fewer than 15 children on that very same block. that's happening all over the place. the taxpayer base in the suburbs is going to change. this is just starting to happen. this is going to get incredibly accelerated. you now have more senior citizens than baby boomers in the suburbs than young families. those taxpayers are going to want readable traffic signs. different things -- >> not paying so much for the school systems. >> it's all going to change. it's really in the middle of this really incredible transformation. >> we got to leave it there. thank you. congratulations. the end of the suburbs is the name of the book. coming up, the cable tv war that has gone from bad to worse. millions of time warner is subscribers missing a big win by tiger woods over the weekend. how much more will they miss when the nfl and fall tv season right around the corner. are cbs and time warner going to figure this thing out? we'll hit the story, coming up.

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welcome back, everybody. cbs and time warner cable are facing off and millions of people around the country are missing out on cbs and showtime right now. julia boorstin joins us now with the latest in this ongoing dispute. julia? >> becky, time warner cable and cbs are at an impasse in their negotiations over fees. talks have stopped and 3.5 million time warner cable subscribers in new york, los angeles and dallas have lost access to programming. cbs went dark friday night in these areas leaving consumers without sunday morning talk shows and sports events, including tiger woods' playing in the bridgestone invitational and all of time warner cable subscribers to showtime nationwide lost that channel as well as some of cbs's other cable channels. cbs issuing a statement sunday afternoon saying, quote, we ask

time warner cable to continue the negotiation while our programming was still on the air in consideration for our viewers. they rejected this request and told us they'd have more leverage against us if they took us off the service. this is hardly a sign that they care about their customers as they claim. we remain ready to negotiate in good faith when they are. time warner cable responding with a statement saying, quote, we regret the inconvenience to our customers and their viewers and look forward to resolving the situation as soon as possible. satellite tv giant directv has thrown its support behind time warner cable. just a year ago when it had a negotiating impasse with viacom it had a ten day black out of channels including mtv and nickelodeon. and the fcc has weighed in saying, quote, our primary concern remains with consumers and viewers in the affected markets. we urge all parties involved to resolve the situation as soon as possible. it's hard to put an exact dollar amount on the increase cbs is looking for from time warner cable since it's likely

different in each of the markets. but some analysts estimate time warner cable is paying about 88 cents per subscriber. now cbs is asking for about $2. we'll have to keep you posted on when those negotiations start up again. >> that doesn't sound like 600%, though. >> doesn't sound like 600%. sounds more like a doubling. cbs doesn't confirm those numbers. they say it's very hard to put an exact dollar value on it because it's so different in each market. it does not sound like 600%. >> julia, who should we blame? i'm in new york. i'm on time warner cable in new york. i don't know who i'm supposed to be angry with. i'm angry at something but i don't know who. >> you should probably be angry at both companies for not being able to work it out. this is business here. they have to come to some sort of a compromise. look, cbs is the top rated network. they think they should be adequately compensated for all the eyeballs they have. they're one of the top 10 or 15 top viewed cham channels on time

warner cable. >> how does the 88 cents compare to what abc gets, nbc gets? >> i don't know that comparison. it's a lot less than what espn gets. espn and some of those sports channels are the highest paid channels on the dial. >> abc is able to wrap itself up with that. >> cbs says look at how much you're paying for espn. why should we be paid so much less and people watch us more. >> they're not negotiating anymore. does that mean there's no end in sight and this could continue till football season? >> i mean, look. i think they have to strike a deal eventually. i think -- i would be surprised if they didn't start negotiating again this week. if not today. >> where's the fcc? can they not force time warner cable, for example, to keep running cbs? is there any hand that the government plays in all of this? >> i think that's the question. when they issue a strongly worded statement like the one they did yesterday or i believe actually that statement came out on friday, i think it's indicating that they do have some muscle there. but it's unclear exactly how and

when they could -- they could begin, you know, implementing that. but, i mean, presumably the fcc is supposed to protect consumers. consumers are losing out here. remember, a year ago we had a ten day blackout of dora the explorer and other big nickelodeon and mtv shows. this type of thing has happened before. a ten day blackout would not be unusual. >> can we get to the real issue here, though? which is that that was a live report by julia boorstin in los angeles. 3:45 in the morning. did you wake up, julia, or did you just stay up? >> i believe in going to sleep. even if it's for a short amount of time. you have to go to sleep. >> that's dedication and loyalty. bringing the story to our squawk box viewers at this hour in the morning. thank you. >> julia boorstin. in the meantime get your motor running. indian motorcycles have made it to the set. ceo of po laris industries is going to tell us about taking on the hog. we're going to check out these very cool rides when we return. f-f-f-f-f-f-f. lac-lac-lac.

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. >> this bike right here is called the classic. it is one of the new three indian motorcycle lines from polaris. you got the classic here t. chiefton, another one out in the main cnbc studio. pa lorries known mostly for atvs and off road equipment is going to the heart of harley-davidson. they rolled them out to sturgis

in south carolina t.ceo, good boy like myself. good to see you, scott. >> great to be here. >> why these bikes, why now? why did you decide to revive the indian brand and go after harley-davidson? >> you know, polaris was the individual snowmobile manufacturer, right up the road if springfield, massachusetts, it is a wonderful branld. it hasn't had a great parent. with our experience with victory, we know how to build bikes and distribution. we are breathing if you life into this iconic brand. the world's fastest motorcycle burt monroe said it's the world's greatest motorcycle. >> new york times gave it a good review. apparently the "time's" talked at a tv ad, are you a harley-davidson owner putting a for sale sign on the motorcycle. sell me this bike versus a

harley-davidson, how do you sell this? >> first of all, we are going up, an 800-pound gorilla. we got everything i think american motorcyclists want. we got a comeback brand, an underdog. we got great motorcycles, the push boughttons start, the incredible torque. the engine, the iconic styleing with the deep drawn fenders. it's a wonderful motorcycle to look and ride. >> we got to get on this, it's a push boughtton start? >> it is. >> probably we will blow the studio doors off, this kind of torque, so water the entry point, price point for these bikes? that is the one at the high end, correct? >> a high end. this is the first touring model. this is the entry level bike, a cruiser, it hits the meat of the market. it hits the market with great technology, everything polaris does is with a great ride. >> is that a normal price point? >> that is about the average for a classic cruiser, it is.

>> i'm still thinking $7, $8,000. >> mid--size bikes, we don't make yet. this is the heart of the market for the cruisers biotics. >> so how do you take on harley-davidson? how do you sell this bike? if i go into a studio, a showroom, how do uconn vert me from a harley guy? >> first of all, it's got to look great, when you walk in the show room, it is a wonderful looking motorcycle. most importantly, it rides phenomenally well. with the indian badge, it gives people an iconic name to be associated with. >> these bikes obviously beautiful. you run a big company, how is the economy doing? how is your coming seumer doing? how is polaris doing? >> sales were up 11%, earnings up 20. july was a strong month for us. with a lot of new products, with you introduced the new aizor, our off road vehicle business, we expect to have a good second half. >> are you putting skels goals

or let the marketplace play out? >> we will let the marketplace pay out. we will be probably constrained the first year or so. >> romming out three new indian motorcycles, great looking, the blue one is my favorite. the nice leather bags. >> that's the one i ordered. >> that's the one you got, scott, thanks so much. if you are listening on the radio, i'm sure can you go to cnbc.com. check these bikes out, coming up, another week, another round of tests for the markets. we talk about the earnings, who may next lead the feds unless i take off on one of these bikes, we are back right after this. and experience the connectivity of the available lexus enform, .

. good morning, welcome to "squawk box" here on cnbc. also brian sullivan is in the house, joe is off today. take a look at futures. see how the market is setting itself up. it hasn't had a huge budge the dow is off 12 points. s&p off 2 points t. nasdaq, we can call it, it was just green, turned red, should say, by the way, given the reports over the weekend about the embassy's closing and news that there could be some kind of impending terrorist attack, though, nobody knows what it pay be. it's very vague. i had thought the markets might be off even more, but how could you see that they are not. in the meantime, let's get you caught up on the morning headlines, time warner cable customers in, no, l.a., other markets are still without cbs stations and showtime cable network. those cable channels were pulled when they were unable to come to

an agreement over fees. such disputes, by the way, may disappear in the future. at least that's the future envisioned by james do lan. he told the wall street journal eventually they may abandon tv altogether, make broad bandz its primary product. samsung lost capital after the white house reversed an international trade commission decision. this is a very big deal. that bands certain sales of older apple iphones and apple ipads, the original ruling had said those products violated samsung cabinets. brian. meantime, hsbc shares slipping as the bank's profits dulles appoint, revenue fell 37%. the bank said growth if coin and asia was slowing. the regulatory reforms added costs for the banks, the pain european line this morning. as andrew was mentioning, the markets will have an eye around the globe this morning. the state department extending

the closing of some u.s. embassies over american interest overseas. some two dozen embassies and consulates remain closed t. consensus seems to be the threat is very real, but it's the targets that appear to be anyone's guess, that's why a warning around the world remains in effect for americans abroad. the president is getting briefing on that threat. the markets seem to be taking it all if stride. let's get more on what the marks are thinking. joining us right now is the chief investment strategist at raymond james financial. still with us our guest hosts this mohr, barny knapp and ben white at politico and cnbc contributor. jeff, a tf numbers we saw on friday, people are starting to wonder if this will be a scenario where the economy is not strong enough to make the fed taper? is that a goldilocks scenario,

with the feds hanging in and the economy slowly recoverying. >> i said this before, i find myself in agreeing with norm rabini in that i don't think the fed will do anything between now and year end, the economy will be fast fast slow slow. kroeng they will taper. >> would it have been a different scenario if there were 185 jobs that had come in? >> i think it would be different if there was 300,000 jobs that came in, which is my national fears. >> barry, do you agee with that? it seems the feds wants to get out the numbers on friday. not necessarily giving them that bush u 'ush they may need. >> if you believe it is the cumulative trend in the data. we have avlged 200,000 pay roms in the last six months or. so one standard deviation moved is 100,000 jobs. missing is statistical noise, so it shouldn't matter. we think they're on track for a

september weakenning of the portfolio balance can el, a tapering and we don't think the friday number matters all that much. quite frankly, i think the numbers through the course of the week were more significant. we obviously had a huge drop. more importantly, for me, what gdp told us, there were accounting changes nonetheless, what you saw is consumers in much better rate tan we thought. gdp is much lower than we thought. the whole narrative that the u.s. has been underinvesting in capital. when we change the way wek for research and development and intellectual property, all of a sudden the u.s. is investing a bigger percentage of gdp than germany is, a couple of a percent. the u.s. looks like it's investing more. the consumer is in better shape, business confidence is improving and it's time for the fed to start weakening this portfolio balance. >> can i ask jeff a quick

question? if the fed, indeed, says it has this target for unemployment rate where it would like to see when it wine out qe. we are on that track, probably get to where the fed hopes for by 2015, doesn't that argue for starting the tapener september. they got to start some time about the time the unemployment rate gets to their target? >> eventually the taper hack has to go their way. i think barry's point is right on track. i have been talking about intangible capital for the past three years, ever since the federal reserve issued a report that said corporations in this country accumulate $1.5 trillion a year in intangible capital. ourking system doesn't account for it. the economy is doing better than the surface figures show. i think intangible capital has a lot to do with that. >> the unemployment level is still one of the fed's two mandates. the unemployment level isn't necessarily going to be affected by that, people are desperately seeking jobs. >> i think that's absolutely the point.

>> you know, jeff, the lead story on cnbc.com right now, trim tabs the data research service showing there was a record inflow of investor money into stocks in july, something more than $40 billion, nearly $70 billion going out of bonds. you know, it's always funny here on tv,ever, we talked for a long time. we are always looking for a sophisticated way to say the stocks are going up or down, are you a little worried, though, about this big sort of casing return by retail investors? >> i think that has just started. i think the big rotation started back in november with around the world people looking to mover otd of non-u.s. equities into u.s. equities. i think the margin you will get rotation out of bonds into stocks in this country. i don't think it started at a great dee degree as of yet.

all that said, i have targeted the mid-july to mid-august as the first window of a potential vulnerability in the equity markets in the first meaningful decline of the year. is far, that call has been wrong fooded. we have to see in the next two weeks if it plays out that way. >> how much room does that issue have to run? mean figure you think there is a great rotation happening, how much more money you expect to see come into the mark? >> oh, i think the odds that we're in a new secular bull mark remain pretty high. i've maintained that stance ever since last december. we broke out of the 66 to 82 broad based market. professional money didn't startomy brace stocks until '85, '86. the retail investor did to the come in until '87 after the s&p was up 13% in one month. so the fact that we're four years into this already is no great surprise. i think the odds are pretty high that beer if a new sec you laer bull mark and very few people

believe it. >> barry, you do think there is another leg down for equities before we get through what the fed is doing with tapering. >> yeah, if we're correct and they're going to taper in september, if you go back and look at all these past cycle, it doesn't really matter how aggressive the fed is in terms of policy tightening. 83, 94, 04 were completely different cycles, excuse me the equity market reaction was the same, roifly 7 half to 9% under this whole guise the fed is taking awhat way the punch bowl too soon. after that, the equity market trades in a range, the middle is typically better, so this idea we might be in a new bull mark is entirely plausible. but i think between now and say the first quarter of next year, we have to get through this process of, you know, the fed starting a normal policy. >> you would tell people to buy if there was a 5 to 6% drop? >> oh, absolutely.

>> how bag risk if we're having the fed tapering at the same time we have two fiscal crises in washington. you got the continuing resolution, you need to fund past october. ten you have a debt zeal ceiling coming in okay. the confirmation of a new fed chairman. that seems like a lot of risk inherent. >> it does, do my earlier point, in 1983, paul soekrngs faul voe didn't tell anyone he was raising the rate. >> they destroyed bond market in the process. >> the stockmarket went down 9% over the course of two months. the last 2.5% corrects occurred on the rate hike in november. that was the last 2.5% correction for ten months. >> that's a great point, jeff, quickly, because we often in the media, we make this mistake. we assume it's a binary relationship, what's bad for one must be good for the other, vice-versa, simply not the case, is it? >> i think barry's.is the spot

on. paul voelker came in in 1979 and raised the interest rates. had a smooth move. stocks quickly followed. it was off to the races on the upside. he is spot on with his analysis. >> final line, we got to go. this scary news over the weekend about the embassy closings and maybe some kind of threat out there, vague. we don't know what it is. how do you think about that when you sort of set up your week in terms of the market? >> they don't call them surprises because you expect them. i lived in beltway washington, d.c. beltway for a long time. i don't think they should have been as opened with this world wide alert as they should have. i think they should have hardened the embassies and gone on about business as usual. all the terrorists would have to do now is postpone it by a week or otwo. i think it's a big mistake. >> jeff, thank you for joining us this morning. >> you bet. >> we will have more from barry an ben throughout the hour. >> do have you any comments?

any questions about anything you see or hear on "squawk box"? e-mail us at squawk@cnbc.com. follow us on twitter that is our handle. keep everything nice. it's early on a monday morning. up next the personal reform on why larry summers is the right person to lead the fed. as we head into break, let's get a check on your futures. we are not seeing a big move. it's early, a big week again, like last one, s&p indicated the dow down about 12 points, but it's early. a lot of news. stick around, you are watching "squawk box" on cnbc. carpools.. polly wants to know if we can pick her up. yeah, we can make room. yeah. [ male announcer ] ...office space. .

. >> all right welcome back to "squawk box," everybody. we were having a di bait on what may move the markets this morning. we were talking and describing how much that might matter to investor sentiment. >> by the way, given where the futures are right now. >> the futures is down a little bit, though. the big story on cnbc.com is $40 billion went into equity funds in july. is the most ever according to research from trim tabs. are you concerned america e america about terror tax? would you sell stocks if we had large coordinated attack. hit us up on 26th. zeal we'll see how people feel about it. an airline made its name on discount travel is going upscale. with retalking about jet blue.

they will unveil premium seats on some fliechlts among the amenities offered, live flat seats, hot meals, free drinks and for some, a walled off suite, private cabin. >> a private cabin. >> one suite only, not two. >> it's not really walled off. you can look over the side. >> close enough. >> it gets more interesting. >> emirates has this, right, in 1st class, then business class. >> i want to know. >> i wouldn't know, either. i just saw when i walked through the plane quick going back. the new service will be unveiled next spring. the first offer on flights from l.a. to san francisco to and from new york. that is the number one most lucrative market in america. competition heating up in air travel, it's cool. people's express, braniff and a smiley face on the front.

>> the other big question of the morning, who is going to be the next fed chairman? president obama is going to have to make this big decision when it comes to replacing ben bernanke, joining us to talk about the field of candidates is michael baar also a cnbc contributor, michael, thank you for joining us. >> my pleasure. >> i believe are you a larry summers fan. everybody seems to have a horse. everybody has decided, yellen, i saw steve bratner over the weekend. in favor of summers. make your case, sir. >> well, i think that the president is blessed with some trick choices, highly talented individuals. i think larry brings a lot of experience to the job. it will be terrific. larry, i came into government under president obama and i think was absolutely instrumental in bringing greater

financial system and bringing financial reforms that i think will make the system safer in the future. so i think it will be a good choice. i think it's up to the president. he has a terrific group of candidates to choose among who are extremely well qualified for this job. >> i will channel ben white over here. he's got four arguments in a piece he wrote last week against summers. at least these are the issues raised. summers issed be for women, that's one of the arguments, summers would be too hard to confirm. that's another argument. economic policy unknown or wrong. he helped the economy with deriglation, what are your thoughts on those issues? >> i think larry has a clear record of supporting highly talented, highly successful women, you know, starting with cheryl sandberg, now the coo of facebook. so i think that really isn't the case. there is a strong record in putting in place the reforms that were absolutely essential in the wake of the financial crisis. you can go back you know 13

years ago to the work that he did fighting abusive and predatory lending back in 2000. so he has a strong i think record on doing what it takes to fix the problems in the financial sector. he was absolutely critical in bringing financial stability to the country and i think, you know, i'm not a political procrastinator. i don't know what the senate would do in any political case. i think larry can get confirm as easily or as difficultly as any of the other candidates. i think it's up to the senate to do that job. >> right. michael, just on that piece that i wrote, the biggest pushback i got from it is on that section from the regulatory record of larry summers. it was his actions in 1998 around brookesly borns proposals for derivatives. i have to say he blocked regulation that could have stopped the financial crisis had you had stronger derivatives.

you have a different view. i'd be interested to hear your view on summers and derivatives. >> i think it's clear on the lead up to the financial crisis mpgs we had a disaster. the market changed dramatically in the 2,000s. it became much more dangerous. i think when the financial crisis hit, derivatives tarp traded in the shadows definitely a few of the fire increased risk in this system. we recognize that. that's why we came in, if you look at the record in 2009, larry, tim geithner, the president pushed through a very, very tough strong plan on derivatives that is now the law of the land. it's being implemented by the cftc, the sec, the fed. we have a much stronger system in place going forward. i think that's the right answer. it was a part of a set of things you know were deeply broken in the financial system leading up to 2008. derivative sector, securetization, way too little capital in the system, horrible

mortgage practices across the financial sector. a range of a basic buildup of rick in the system that was fundamentally flawed. i think larry recognized that, acted on it, got the dodd-frank act done. i think that's critical going forward. >> barry, a question for you. ben bernanke has spent his entire time kind of building a more opened federal reserve, with under that you know that's coming. one he is trying to send clear signals, make a very open process there. do you think larry summers would do the same thing? do you think the markets? how do you think they would react? >> i think that is one of the, from a equity, a markets perspective, the concern about summers would be, you know. >> he's not the type of guy who follows the setup. >> tended to make an offhand comment that might get an undue market reaction. he is definitely prone to just speaking his mind quite frankly. now, i have to say, i don't

think that the transparency move him, if you will, by ben bernanke has been all that successful. >> right. >> the transparency is fine when you know where you are going, when you don't, you may have a lot of misinformation. so that doesn't really bother me one way or another. to me the bigger broader issue about larry summers or janet yellen for that matter is almost the, what i would describe as misinterpretation of what canes was trying to say. these are canesians to the point where he is still talking about, you know, infrastructure spending and stimulus at fitch years after the crisis occurred. he is talking about doing that into a black hole when demand collapses in the private sector. the public sector can fill that gap. summers is still talking about infrastructure spending driven by the government five years after the crisis. to me doesn't -- >> i think there is still a strong case for good infrastructure spending today. i think if you look at the

crumbling roads and new investment and technology, will is a very strong case to be made for additional spending on those issues. >> not the point. my point is -- >> bringing down the deficit. in the short term, i think there is a strong goal for increased infrastructures. >> michael, thank you for joining us. i'd love to have you back as this debate continues. we may not know the final answer at least for another month. we appreciate your time this morning. when we come back, major league baseball ready to hand out suspensions to dozens of players, including yankee star alex rodriguez. plus, football in america is back. the cowboys and the dolphins kicking off pre-season football. "squawk box" will be back with those stories and more right after a quick break. . a-a-a. f-f-f-f-f-f-f.

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. >> all right. a stock uptate in a minute. joffre, higher small demand. downgraded by piper jaffre. all right, suspensions expected later today for controversial baseball star alex rodriguez and other players using performance-enhancing drugs. the controversy could potentially end a. rod's career. rodriguez says he would appeal any suspension. he plans to be on the field to play the walks tonight. he is expected to file a grievance if he is not allowed to take the field. new yorkers say it all. you are listening on the radio, a giant picture of a. rod's face with the words "just go.".

they kicked off the 2013 nfl season kind of. both seems at the time up players for caution as they start the 2013 campaign. that's why i said kind of. people are trying to make the team. but it's football. >> it's nfl football. >> that's right. it's great. football in america. sunday night. there it is. >> coming up next, the monday morning trade, oil and gold and where prices are headed. then build it and will they come? or they will come. you never know, minority owner of the brooklyn nets, we will have bruce ratner here. a look at the ten-year note, "squawk box," come back right after this.

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. >> welcome back to "squawk box." we have encouraging news out of china, particularly in the country services sector, they expanded in july t. companies still find themselves unable to raise prices because of weak demand. we will see how the u.s. is

doing in that area later this morning. the institute of supply and management, we will see what happens. also the london metal exchange and gold man sax, they are now co-defendants in a class action lawsuit. we talked about this before. the two are accused of monopolistic behavior. they say it's without merit. it comes after goldman saks has alluminum stored in its warehouses, hard to see what's going on there. brian over to you. >> an true, thank you very much, let's get a check on gold an energy prices, joining us to talk to us from i'll an gas, matt schmidt, peter, first to you, you and i have spoken in the past. thanks for getting up early for us. you think there is a long-term

erroneous gold, people have gotten in for the long-term, short-term. give us your long-term take given what has happened in the dpold market in the last year or so. >> i think recently a lot of shorts have come into the markets. a lot of spec la live longs based on three false narratives. with under the economic recovery is gathering momentum. i think the reverse is true. i think we are relapsing back into recession. i think a more honest read of the gdp or reporting by the deposit would reveal the session never ended. knob two, the fed is tapering off. i think it's the opposite. i think the fed is preparing to increase the monthly size of qe. then three, people say inflation is not a concern. in fact, i think it's a big problem. i think it's going to get a lot worse. i think when the speculators realize how long they have it and try to reverse those positions, i think a lot of the gold they sold on the way down

is not going to be viable for sale on the way

. >> a lot of people think bernanke is a hero for what he did if 2008. i know you had problems with quantitative easing. >> not even close, becky. >> a lot of people do. >> history will not look kindly on ben bernanke. >> you think he should have done

nothing in 28? >> no, i think he should have done the right thing. he should have recognized the problems of alan greenspan, which was money was too cheap, interest rates were too low too long. the fed was too big a backdrop the greenspan put because of the fed, there was so much risk-taking on wall street. there was too much borrowing, too much spending on main street, all because the fed kept interest rates too low for political purposes. it's just like a. rod, he wanted to hit more home runs. >> i can't understand the debate over 2008. i'm sorry, we're going to unfortunately leave it there. >> you still don't understand the problem. that's y. >> well, we're going to try to, we got the makings of another future segment. >> thank you both very much. good morning, everybody, by the way, all right. i tried to -- i'm the rational one, that's a problem zblb well. >> i have to bring it in. >> i'm surprised he thought so

highly of arthur burns, the fed chairman during the great inflation of the '70s. >> when we return on "squawk box," a major long island landmark is about to undergo a facelift. we have one of the finalists for the job. real estate developer and minority owner of the brooklyn nets bruce ratner will join us after this joining us at the top of the hour, glen hubbard will join us. "squawk box" will be right back. .

. >> welcome back. we have seen small minor mofls. dow futures down 17 points. s&p futures down by just about two. we'll see what happens as we get closer to the opening bell. >> let's talk sports coliseums. two finalists will talk about who will revamp the aging coliseum. that deadline was pushed to july 15 to give sides time to execute the contracts. with us is bruce ratner, founder and executive chairman, a new york-based real estate development company and majority

owner of the barclays center. one of the most beautiful, if not. i think it may be the most beautiful arena i have been in ever. have you been in there? >> i know you have been recently. >> it's awesome. have you not been eitherer? . >> no. >> you are missing out. >> i live in new jersey. getting to brock lynn is not easy for me. >> he stole the nets. >> didn't you do that in law school? >> i did get to see plans. i'd like to go. >> you are right. it is beautiful. >> let's talk about the pass the saw coliseum. what will you do with it? >> first of all, the executive had an amazing vision, with i is to redo it. we worked with him on it. first of all, it will be beautiful like the barclays center. sec, it will have a huge number of events. the whole deal is content, content. we will have 300 events there, 200 are already booked. that's been the strength of our barclays center. a combination of booking, good customer service.

>> are you worried about running out of content. i this about it you have the garden, the barclays center. the meadowlands, now have you this. nassau has always suffered at some level from being sort of the stepchild to all of these others coliseums. >> what we know now is it turns out almost over in overlap from barclays with ve 5 to 10% of our customers come from long island. long island is very strong. it's 3 million people t. county is the third richest colony in the country. so it's different, completely different demographics and the same kind of content that we have at barclays will be at pass the saw. it's a different audience. it's a tremendously strong market. i cannot emphasize how strong that market is. >> what kind of subsidy? >> how much is the government going to have to put forward? >> this is one of those opposites, wooer giving the municipality money, not a nickel

from the municipality, all privately financed, privately done, we will make lot of money. in terms of economic impact and rent. >> road, to him, nothing. >> one of the grangs i great things is surrounded by a huge number of roads. there's millions of people that go by every day. after all, it was a coliseum before and it is now, no additional roads and so on. so, actually, it's ready to be done. it is centrally located. i cannot emphasize what kind of incredible location it is. >> one other question ben's got one. do you buy the argument that these arenas can actually create and build local economies around them? because in some areas, it's worked. in some areas, it hasn't. >> obviously, i can talk about brooklyn the most. >> brooklyn has been a success. >> both in terms of what it is and in terms of local business, yes, yes, yes, it does. i have to add something, will is the intangible the content provides, making citizens feel

proud of their place, entertainment. it has an intangible cal clarks aside from the economic. if we build an opera house, everyone says, great, great, great, it's wonderful. now, we're building an arena, which provides everything from concerts to family shows to boxing to sports. there is an intangible element that i think is often missed about content and arenas. people only look as at it economically. >> what about the competitor on the other side? >> it's a good company also, with ledo a great job an a better job. msg is a good company. i have to tell you something. what we have done with barclays so many events. we are number one in the united states for revenue and ticket kaels. number two in the world, with respect to revenue and number three with respect to ticket sales in the world world. we have done a good job, i'm proud of it. >> what's the mix when the sports an entertainment? barclays, you have a hot team these days who will occupy

nassau and what's the mix between concerts and sports? >> we'll have an american hockey league team, bring the islanders back six games, there will be family shows, concerts. i think the mix will be up 300 events, my guess is 50 or 60 will be sports, about skibt will be concerts, the rest family shows, college sports, college basketball. we got it all figured out, 200 events already boxed. >> is there a synergy between this and brooklyn as the way msg to be owning this coliseum as well? >> i think both r. we obviously have a good booking department t. same booking department will bring the same shows again, many of them to the coliseum, a different audience. >> can i ask about the pressing issue of the day, paul pearson, kevin garnett. >> net's basketball team, you are bringing if guys as old as me, this a win now by the nets? fantastic players.

they are not spring chickens. you gave up a lot. >> a couple 1st round picks. >> that's okay. we're likely to be in a winning position. so i'm not sewer what those picks are like so much. the first thing is we had a very good team this year. we won 49 games. we went in the 7th game, now you add knows three players, what you do have? the answer is you are right, they are older, the difference between you and them, they're a really good basketball players. >> tea rally are. >> how important is it to partner, have a celebrity partner. you have jay zee at the net. dodgers have magic johnson. everybody is trying to attach to somebody. >> we started ten years ago. i met jay sooechl. jay zee. he is a business person, a great marketer. it's been hugely additive to have jay zee. is it critical? obviously not.

for us, it was critical. >> to have him in that front row is a lot. >> critical. >> can we bring that graphic of jay zee back up? i think i noticed a typo, jay-z dropped the hyphen. >> you are ahead of me. i didn't know that. >> he dropped me, that's what i read over the week the hyphen is gone. programs i am wrong. i don't know. >> could you ever get the islanders back full time? >> they're at barclays, that's where they want to be. it's not back in a minute for professionals. i must say it's not only jayz. like nation is our partner. rock nation, jayz, so on. we got a great team. i call it a dream team. >> good luck can it. >> thanks, guys. appreciate it. coming up, where you should be putting your money to work as earnings season begins to wind down.

er with up about 230% this year on the dow jones industrial average. where is the value? we will try to find out. glen hubbard, the tax code the fed, our special ghost 8:00 eastern, stick around. there he is in the green room, getting set, ready for a fight. we are back on "squawk box" right after this. ♪ this summer was definitely worth the wait. . lease this all-new cadillac xts for around $399 per month or purchase for 0% apr for 60 months. come in now for the best offers of the model year. i've been doing a few things for playing this and trading.ove-- tdd#: 1-800-345-2550 and the better i am at them, the more i enjoy them. tdd#: 1-800-345-2550 so i'm always looking to take them up a notch or two. tdd#: 1-800-345-2550 and schwab really helps me step up my trading. tdd#: 1-800-345-2550

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. >> welcome back. everybody. barry knapp and ben white chief

economic correspondent and politico and cnbc contributor. barry, what's the next big mover that markets have to brace for? >> well, we titled our report this week cold feet. just with the idea we'll see if we get the round of fed speakers post-fomc meeting, are they getting cold feet on tapering or not. that's one issue to be sure. >> if they are, what happens to the markets? you would think the equity market goes up on that, q ehangs around longer? >> that's probably right at this point. if you look at the reaction on thursday, it looked very similar to the beginning of may where we got what looked like a slightly dovish fed meeting. then you got strong claims, it was followed up in that case with strong payrolls. the stockmarket initially rallied, then sold off when it realized there were monetary policy implications. so i do think the economy is getting substantially better and friday's payroll report was statistical noise.

it was a little blip along the path towards growth acceleration in the second half. they're on track to do it. and, you know, what comes out of that from our perspective, anyway, was, earlier in the year, we were telling people stay in the sweet spot of monetary policy, that meant a buy stocks, high dividend payers. worked incredibly well back in the '40s and '50s wren the fed was explicitly capping rates. it worked incredibly well, this year. the four best sectors were the defensive sectors. once they normalized policy, our idea was to move towards more economically sensitive cyclical sectors like industrial, enterprise tech is acting much better. so that's what we think you should be doing during the correction is get out of the dividend payers and into the more economically sensitive sectors. >> ben, what are you watching in terms of what washington is doing. how this will impact wall

street? >> i think the most important things are what happens when congress comes back in september. i think it's more dysfunctional now. >> is it de ja vu all over again? >> yes. >> i think they will be worse, actually. you see how fractured the republican party is now. you have primary challenges to people willing to negotiate, mitch mcconnell, lindsey graham, they face tacey party challenges, house republicans totally split on how much to try to defund obamacare as part of a deal to fund the government. >> what about can tore putting out that olive branch? >> it's an olive bran were. he is saying i am willing to sequester. do we generally make deals at the 11th hour? yes, we do. do i see a path to getting that deal? i don't. >> by the way, this is a key issue for us, we thought unlike the last three years, public policy uncertainty would fall as opposed ospikeing mid-year.

it's at its lowest level since precrisis. business confidence improved in the second quarter this years ago unlike the last three, it started to plunge as we went into these various fiscal flights. if we were to have a big flare-up. would be a negative for the business investment environment. i'm not so sure that happens. you are more of a political expert than i. but that would derail some of that economic outlook. >> the one ting that washington is very good at now, it's good at very few things, screwing up all that stuff, knocking off business confidence, people's incentive to invest an investing in uncertainty. >> have americans become more confident bus of or inspite of d.c.? >> in spite of. >> let them fight in the beltway the rest of the world will go on. >> unfaurntly, we wish that were the case, it's not the case. >> can i kind of like joe. >> you have a joe to can el? >> i will try on tax reform.

can you say it was a joke. >> it is a joke. >> the prospects for it actually happening? >> not even that. just trying, saying it aloud. >> it's pretty much a joke. he is right about that. the idea that will you get a grand bargain that includes tax reform between now and the end of the year will never happen. >> how about the piece? sample the piece will not happen either, there will not be an agreement t. rate the corporate rate, everybody seems to think is a good idea the republicans want to use it for other purposes, pay down the debt. will is no agreement on the revenue. >> it's a fascinating argue in the sense that individual tax rates have big constituencies, if you eliminate the tax incentives, will is $1.2 trillion in the total of all deductions. you look at mortgage interest deduction. try and do the same thing on the corporate level. >> difficult to do. >> talk about strong lock -- >> people make their livings

protecting that, working on the type of stuff. exactly. >> thank you so much for joining us this morning. we'll see you back here again soon. >> a lot of fun. coming up next, glen hubbard will sound off on the tax code. the federal reserve an much, much more. she our special guest starting at 8:00 a.m. eastern. stick around for that. take a look at futures as we head for a break. we have a lot more squawk coming up ahead. .

>> following the money, investors flocking in stock funds. it's the economy. we will talk jobs, the fed, much more with economic adviser cramer glen hubbard. >> a cbs blackout for time warner cable customers. a win. the final hour of "squawk box" begins right now. [ music playing ] . >> welcome to "squawk box" here on cnbc. brian sullivan is in trying to do his best imitation of joe

kernen. a little channeling? >> no, man, north at all. no. just because i sit here when the dude is out does not necessarily mean we share the same views. >> well, anyways. >> i wear a jacket. i'm taller. >> you do wear a jack. that's true. >> am i supposed to say more handsome? >> can you if you like. you are perfectly welcome on a mon morning. i'm not feeling so hot. >> we are joins on the set, let's get you up to speed on the day's top stories. a big one a third of the u.s. diplomatic posts temporarily closed due to a serious al qaeda attack have now reopened today, officials extended close years at 15 others through saturday and shut four more. the state department saying this is due to an abundance of caution. we will be watching the market this morning to see how it reacts to this news, millions of time warner cable subscribers, l.a. and dallas, they're without cbs programming this morning.

analysts saying this could continue, the two companies appear or don't appear closer to settling a fee dispute. on saturday, directv sided with time warner commending the decision to drop cbs programming. the obama administration has overturned a u.s. trade patterns ban on a sale of older iphones and ipads. the move reverses a ruling that had favored samsung over apple. u.s. trade representatives saying the decision was based, in part, on the effective competitive decisions of the u.s. economy and the effect on u.s. consumers and shares of samsung are down in asia overnight, apple shares will be trading up, they are, let's call it marginal. >> there was an article in this morning's "wall street journal" that says patent strategies are likelying to affected by the veto of the ruling against apple. one academic tells the paper the obama administration made it more difficult to the decisions

they hold. the decision may make companies less likely to two to the itc with their disputes. in earnings news, shares under pressure this morning after the bank's profit disappoint analysts, growth in china and asia was slowing down. regulatory reforms added costs, tyson foods beating the street. revenue topping estimates, they saw record results in its chicken segment. i had that last night. they were delicious, by the way. >> chicken segments? >> i'm not sure what they were. in deal news, digital only company ibgt is buying "nikkei nikkei" in a battle of thing a acronyms. they stopped the print edition and relaunched it earlier this year. it does not include commentary in "the daily beast." john henry will pay just 7, hold

your ears andrew $70 million in cash. the time's paid $1.1 billion for the newspaper 20 years ago. i think it's not unfair to editorialize that as a really bad deal. >> hold on. >> no. >> the new york time's stock looks like it will be up this morning. as a result of this. >> well, it's still $70 million bucks. they get the liabilities off the board. i'm not sure anybody cares about the price. when you remove a liability, right, that's what they're doing. i'm not saying the possibilities are a great taper. the economic liability of a fairly sizable staff. >> oh, very true. >> they are in preliminary talks with miramax, weinstein brothers sold it to miramax and then they sold it to disney, i own this i sold it to you, you sold it to

smblts, i may buy it back for less. >> i want to repeat, on this story, she says that weinstein was just hanging out with tom barrack. >> from colony capital. >> they are working on a film toeng. maybe not a full blown merger wind chill ve a federal doums released by the government to the associated press now show tag regulators have permitted fracking in the pacific ocean at least 12 times since the late 1990s. a new process is approved. investigators are investigating whether they should be subject to stricter review t. santa barbara channel is the site of a 1969 oil spill that prompted a moratorium on new drill leases. reuters has a piece out looking at the trans-canada plan to build one of the world's longest oil pipelines and how it could change trade dynamics.

the 127-mile pipeline if approved will bring crude from the energy capital in alberto to refineries on the east coast. it has the potential to change north atlanta oil change and revitalizeing once ailing refineries. brian. >> all right. let's get a check on your markets. trim tabs is saying that $40 billion went into u.s. equity funds in july the most ever. people starting to get these 401k pamphlets in the mail, looking at the returns, that makes me a little nervous by the way. >> the rotation out of the bond funds, people have been waiting an waiting an waiting for that. barry knapp, you had to see some tapering start to look like it will happen. >> we know the waiting is the hardest part. overseas in asia. >> top heavy. >> tom petty. all right. overseas in asia. you saw mostly high trading. japan down 1.4%.

europe, the european markets, well, they turned around a little bit. that's what i get for saying anything. frangs pack 40 is out, up .2 of 1%. i think i speak for joe in his absence when i say viva la france. >> paris is a nice place. it is. our guest host this hour is glen hubbard, the dean of columbia business school and economic adviser's chairman under president's george w. bush. glen, it is great to have you here today. >> pleasure. >> i think back about your book, balance the economics of great powers from ancient rome to modern america. thousands of years of civilizations that have gotten into trouble. in detroit, people are wondering, do we have the same problems that crop up here? >> we are. we can fix them. basically what happens to a great power when it stumbles, its politics don't keep up with economics. it was true in rome and china,

otoman empire. true today, our problem is the debt crisis. >> the debt crisis and some people would say entitlements. you have to look at that. republicans are saying that. >> at the federal level. itself the core of it. the nation is on an unsustainable path. with key fix this. we request get our mojo back, growth back, tomorrow, not today. >> what do we have to do? >> we need to get on a glide path to slow entitlement programs and bring down government spending and debt overtime. with decan do it in a way that's aggressive or gradual. we have to start now. >> i look at what was happening in detroit. is this a situation when you don't take action, this is where you wind up? are there other municipalities set up in a similar way or is detroit unique because of the huge numbers of people who have left? >> well, detroit is certainly an outlier because of a deep population of detroit on top of that fiscal policy in detroit. but sadly, it's not the only municipality in trouble. a lot of state and local

governments have too much debt, too generous public pensions. we need a national conversation on how to fix this. >> how do we do it without being completely heartless, though, leaving people promised things for decades and decades, that this would be here for them? how do do you that without reneging on every social promise? >> one is promises to tax services, with sun retirees an employees the other to bond holders. all of these are promises. when we promise more than we can deliver, we have to renegotiate. at the federal level, we need policies to encourage state and local governments, so you don't lie about the future. >> then the picture will look lot worse, based on what i have seen, a lot of articles written recently about what will show up when we do correct the accounting that's been glossing things over for a long time. >> yes, it's not an impossible situation. if we had more reasonable economic growth in the country, many of these local governments would be okay. not all, many. >> is it too much to expect

those the school of thought, robert gordon and economists, the idea in south america not that great long term? it panes me you suggest that? that our growth periods came from small periods of time, which skews the mean and the reality is, not just in america, the u.k. for hundreds of years, quality of life didn't get any better for centuries, it's these small bursts that sort of take you up, do you discount that? >> these small bursts are the electricity and the industrial revolution. that's true. if economists are appropriately modest, we don't know when day will come. i see nothing in the record to tell me not to be optimistic about productivity in the country. you talk to business leaders, they are very optimistic. with respect, i disagree with bob. >> the problem has been when you -- >> we had offices. >> i didn't know you knew much for years. >> when you have productivity gains, you don't have more jobs that come through. that's been the big thing plagueing them. >> be careful.

in the short term, is it a matter of aright met tick? over the long term, countries generate jobs, think of the 1990s, high productivity growth. >> do you know when the next thing is coming? >> a lot of people talk about energy. they say that is the next big gain we could see in the united states. >> i think the sectors more likely to generate that are energy, health care, if we are serious about getting costs down, my own sector in education, where we have disastrously low activity. all of those sectors are right for reform. >> fortunately, you will be here the rest of the program. >> okay. we will continue that conversation coming up, we will give you the week winners at the box officer. we will invite a couple more voices to the fed and the markets. we will be welcoming colin moore. we head to a break. check out the futures. "squawk box" is coming book with these gentlemen and a lot more.

>> welcome black to "squawk box," universal's "2 guns" taking top spot. rival agents brought in there are 25 million. "wolverines" came in second place and coming in third sony's "spurfes 2". our next guests, i'm going to start with the irishman, born and raised if belfast, you probably heard our conversation here. we'll save that for another time, i guess. europe seems to be coming back a bit. a bit. there was an article this weekend about how people were starting to invest in europe again. people were sniffing around. do you believe it? is europe back? >> it's not getting worse. >> it's hardly a ringing endorsement. >> i came back. i flew in last night. it's evidence to me, it's not

gettings worse. the u.k. is getting stronger, the pmi was quite strong. interesting, the european pmis are at least not getting worse for investors, one of the highest correlations is with the pmi industry. so i think it's at least not getting worse. similar to the u.s. the panicked discount rate begins to disappear in that rate. >> even if the european economy is not necessarily getting better doesn't mean there are not good investable opportunities there. >> that big point. we do tend to throw the beb out with the bath water and are there good stocks? yes. is bmw a european company? or is it a play on the u.s. middle class or the chinese middle class. there's lots of areas like that. i think what is intriguing most, brian, if you start to believe some recovery in europe, should you now be looking at european companies as opposed to global companies based if europe.

>> charles, what's your take on the market? the nasdaq is up 21% i think this year. small caps, mid-caps, large caps. no caps, baseball cams, they're all up, right? when you look around the world, i think in our own 401k plans, what looks interesting? ? brian, what's going on here is a transition. investors increasingly see an improving result in the united states. we see this entering a few trading range, s&p getting comfortable as investors realize this new trading range reflects good economic data. last week, payroll report was weaker. initial claims, new cycle ism manufacturing, stronger tan expected. >> consumer sentiment was higher. >> mostly, we lean to the positive. we see that in the treasury crew. we see how rates are getting higher, market is comfortable with that. >> it was interesting, the treasury yield last week

whipsawed back and forth. on thursday, you saw that big move up. gave a lot of it back. we're uncertain with whether this is for real or not. this is real economic gains. >> that's right. they allude to this on friday when they said one of the questions is to decide the issue of tapering. do we look at unemployment rate and payroll or a broader set of data? the picture is more cautious. if we look at the payroll data, it's decidedly gotten better since last december. if you remember, do they look at the past data, the bird in the hand, or do they look at what the forecasts are for the future? >> can i ask this, i don't know how we are doing on twitter. we are talking about the news over the weekend, the closings of these embassies what that means, whether it will have an impact on the market? does that make you any more cautious? do you say, it's built in, i have been thinking this way the past ten years, more since 9-11?

>> here's what i say about that. the london bombing about seven years ago, you had the classic risk off and the knee jerk bark as we saw somewhat contained. we had a number of terrorist incidents since then. with eeach further one, we had further evidence these are temporary effects on marks and we bounce back t. cruise liners, travel industry gets hit the most. the terrorist problem hasn't gone away. >> it will not go away. now it's sort of andrew and i's discussion, colin. you grew up in belfast, northern ireland. when i think about london and what they went lou for the better part of three decades with sinn fein, department shore building, whatever it was, you just i would imagine, i don't know how to say liquidity, for me, the expectation is to be there. >> you hear in washington over the weekend, there are credible threats. this is on a scale that they are

hearing for the first time. >> i don't need what ug to tell me there is a terror threat for the rest of my life because i perceive my own existence, there is going to be a terror threat is there i think down to the scale point. if it is an isolated incident, i agree, it tend to create a big flare and excitement. if it's persistent, if it's broadly based, then i think it has a different impact. then i think you will see impacts on the energy markets, et cetera. i think generally risk premiums will rise. >> it seems to me the market on the warnings, you think it discounts the warnings? the only true reaction will be to the extent that there is an event. okay, we hope there is not. >> you get used to the warnings, for the first time, it's a massive shock. it's a bit like a bouncing baum. the energy you feel from each ascent set of warnings ebbs. it takes an actual event to start it all up again. we noticed that again and again,

brian mentioned growing up in ireland, that is true. people adjust their lifestyle and expectation around that. it ebbs away until an actual event occurs. >> karlsson, what's your biggest single worry right now? as somebody paid to manage mine? >> going into the fall, what the administration tries to do in terms of the debt ceiling and the budget for fiscal year beginning october 1 and the administration increasingly taking a got it alone, we're going to do this for the sake of the middle class ruling as opposed to governing. >> then one of the politicos said this morning, we are liable to be there again. >> history will be worse this time around. >> preferably. >> that's good. you guys take a couple months off, on "squawk box" last year, just changed the numbers on the dow. we had the same fights. >> it's economic uncertainty the markets don't like. >> and evaluations moved

assuming optimism. so, therefore, any uncertainty like that i think could have a bigger impact, where a year ago, we were pessimistic in the implied valuations. >> colin, charles, thank you very much. coming up, bill ackman taking his fight to the next level. we will tell you about it. jet blue making a big bet on first class. we twot the details on both of those stories when "squawk box" returns. easy-to-use platform. no, thank you. we know you're always looking for the best fill price. .

. >> welcome back to "squawk" chances are you heard about the battle with herbal life. now a complaint against the family fund and unidentified co-conspirators. ackman is allegeing they broke insider trading rules, tipping hedge funds about the shares in the multi-level marketing company. he sent a letter to the fc saying soros has been orchestrating a short squeeze against the $1 billion herbal life short debt of the pershing square hedge fund which he runs. also, jet blue plans to add premium seats to its planes, complete with hot meals, free alcoholic drinks. the seats will convert into flat beds.

jet blue says some so-called sweets will be walled off from the dwrafl by sliding doors. they will first be available next spring on flights to l.a. and san francisco, from new york. jet blue ceo will be joining "fast money" at 5:00 eastern time. coming up, it's been two years since uncle sam cut the debt rating. washington is facing deadlines, what has changed and remains the same right after this. [ kitt ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪

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. >> welcome back to "squawk box," everybody. let's look at the stocks to watch, tyson foods is looking at a profit of 69ents a share, that was 9 cents better than the street was expecting. the company came in with revenue that beat consensus. that stock is up by better than 3% this morning. also, kraft foods has been downgraded to hold from buying from jeffreys, both with valuation concerns and increased competition and qualcomm was downgraded to neutral. piper jaffre is pressing concern. nasdaq down by about 10prd and a

percent. ayman javers is joining us with the latest debt struggles. that was the downdprad that sent shock waves throughout the world. here we are, two years later, the dow and stockmarket much, much higher, things seemingly getting better. it's a big anniversary. >> things are seemingly getting better. the question is, are things in washington getting better? remember the s&p downgraded the united states because of the gridlock here in washington. we're heading for another series of legislative battles in september. later on in the fall that could be just as bruiseing as what we seen, starting with the end of the fiscal year at the end of september, the u.s. government is going to run out of funding, in order to avoid a government shutdown, a cr or continuing resolution. but to do that, there is a big fight about whether republicans would put in a cr poison pill

that would defund obamacare. a lot of republicans think that will be a good idea. other republicans, particularly governors across the country say in the new york tiles, they don't think it's a good idea. it won't apply in the senate. then after that, sometime later in the fall, we don't know exactly when, we got the whole question about whether the united states will hit the debt ceiling or not. will be another bruiseing battle. so, brian, if you look at this, you know, the s&p was right about the dysfunctioning gridlock in washington. will is no real clear solution to these problems here, the question is whether republicans and democrats can do anything together. they haven't been able to produce a bhoel whole lot of legislation this year. the republican leadership have been stumbling and bumling, it does not look goodge in into september. >> like the same fights we had last year the year before, trading barbs over sound bytes in front of media cameras. >> it feels like ground hog day

covering this. this fight won't end, every time they get to a clam us the deadline, -- ka lam us the deadline, they kick the can down the road. >> i will write in bill murray or punxsutawney phil. they would be equally effective. >> thank you, very much. in his latest book, glen hubbard says when politics don't keep up with economics, growth stumblings -- stubl stumbles. "the balance from an ven shent rome to modern america. i want to get back to you, the great debate over who should be the next fed chairman, whether it be janet yellen or larry summers, there seems to be a movement afoot, at least a campaign to get larry summers in that job. where do you stand? >> i think the first question is what before who? what do you want the next fed

chairman to be? it needs to be somebody who understands the economy and financial markets and can lead a consensus-based organization. i think it's unfortunate the president is leaking trial balloons and making this into a political circus. he's got good names to kooz from. i haven't heard the what. >> you debated with larry over many, many years, would you be happy, unhappy, if he was our fed chairman? >> this is one president's choice, president obama. larry summers is an excellent economist. the president has an excellent number to pick from. he needs to pick. he nodes to tell the american people what he is looking for in a fed chairman. the does that choice match those characteristics. >> let's flip this around, if you were the president, you had to pick somebody right now, who would it be and why? >> i'm not sure i would pick the names on the president's list. i have a different.on the list, he has the right short list. i don't think economists ought to be giving the president advice on specific names.

he has a good short list, he needs to pick. >> one last peels to this. is there a specific thing you think, a talent that you think this economist needs to have, meaning, do you say to yourself, i expect to be some crisis, for example, over the next four or five years? i want to have somebody with crisis experience in there and then does that -- >> to be able to saw a woman in half, take a rabbit out of the hat, right. >> there is a lot of rights. >> we do need crisis experience and the good fuse is a number of the people that the president is looking at have that experience. you also need someone who can listen, listen to business people, listen to financial market participants. listen to colleagues. that's absolutely vital. you know, the fed chairman is not a dictator. he or she is a consensus builder of policy. >> one final one. i'll leave it along. there is an argument in slate, arguing the fed would be better off. becky, maybe you have better views on this, with a woman in charge. it was an arc, not necessarily. it was very interesting.

>> i think bernanke did a great job. >> i'm not suggesting he did this. it was an interesting piece that suggested you want to get outside of the old boy's network and old boys club, got a different person in there. would change the dynamic of the board. >> i think you need to look at the quality of the board. i think janet yellen is a great consensus builder. she is great enough. she's a woman. >> there has been a conversation about sex in this? >> well, i think so. >> they get janet yellen's, i think she is a strong candidate the idea saying she is a him who, you should consider her as a woman diminishes everything she's done. >> we need to depoliticize this discussion. when your newspaper put an endorsement. this is a technocrat job. not somebody working for this. this is the first time i seen a political fan. >> same situation.

where you have sort of campaigns taking place, right? the larry summers campaign? >> there is always a short list of people, never this kind of -- >> who cares, man, woman, alien, whatever, that has some grounding if actual huh pan life. right. all this fed chairman, regardless, all the discussion we are having, no offense professor, columbia, stamford, berkeley. and they're very smart people. that's great. we need smart people. but harvard. it's these elite universities that just seem to trade players like the yankees, you know and -- as opposed to. do these people go to the grocery store, shop for themself, fill up their own tank of gas? when is the last time they visited a lower income household in st. louis? >> i have known ben for 30 years. we are old friends, i can assure you he has done those things. >> i'm not talking bernanke. he grew up in a small town in

south carolina. his dad is a pharmacy owner. it's the same ten people all over the country. i just worry that sometimes there is a little out of touch nature. >> it doesn't matter what political party you are in. >> i don't know. i think the president will get confirmed from every nominee, too serious a job. the bicker question for the president is who can do this job. i think their choice is clear. >> let's go back to issues in walk. i want to talk tack taxes, the president coming out with this tax proposal, which everybody seems to be suggesting is a joke. is it a joke? >> i wish the president were serious and had an actual proposal when mitt romney campaigned on the same rate, the president deck gocked. >> that's what i don't understand. i'm surprised. he comes down to the rate that romney picked and advertised. yet the pushback has come from republicans as much as any democrat. >> well, i think part of this is

not being specific and the issue of what you are going to spined the revenue on, all of a sudden this is a debate over raising refer knew, not about -- revenue, not about tax reform. remember, a lot of businesses don't pay taxes at the c-crore rate. this is a bicker discussion. unfortunately, this is theater. >> because it's improbable, andrew to sell politically the idea, people here, most people think they pay a lot more in taxes than they do. >> i'm surprised how republicans and democrats haven't said this is a first step, let's try to physical out a way-to-make this work, as opposed to saying talk to the hand. >> they should. what the economy needs is a jolt. some surprise about getting the long term right. entitlement reform. that's a great discussion. that's not going to happen this year. competent tax reform is a bite size, a jolt the company needs. >> what would be a jolt then. >> a jolt would be something like lower, radically lower

marginal tax rates on business incomes, base broadening, higher growth to pay for it. i think that would shock business people into investing and hiring. >> gasoline stay with you are. we are come back, try to raise some money and pay taxes. >> we will talk not only with glen hubbard, we also be heading to the trades pits in chicago. "squawk box" will be right back after a quick break. and 900 m changing hands online. that's why hp built a new kind of server. one that's 80% smaller. uses 89% less energy. and costs 77% less. it's called hp moonshot. and it's giving the internet the room it needs to grow. this&is gonna be big. hp moonshot. it's time to build a better enterprise. together. time to have new experiences with a familiar keyboard. to update our status without opening an app.

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welcome back to "squawk box," becomeaire investor joe louis' latest play is not bitcoined. a wall street article this week said louis was investing $2 million in a company that makes servers that create the cyrtual currency. louis now telling the ynbc the report is completely untrue and he's never heard of the fund the story said he was spearheading. he said he does think it is a good investment. he is short, what he thinks is a good investment, he is short the euro vs. the mexican peso. i wonder how that story got turned around. >> i don't know. let's get to the marks right now. rick santelli is at the cme group in chicago. we looked in june, $69 million was pulled out of bond, etfs and mutual funds. it was $21 billion the last month. this morning, have you the "wall street journal" out with a story

on the front section saying bond investors, you have been warned. i guess i just wonder what that means in the bond market. this is stuff you have been knowing for some time. does it change when the retailer starts to pick up and pay attention to it? >> oh, i think it would. i don't suspect that it has. i think the issue has been totally gained by the equity boys. this isn't a question of whether you want your money in or out of fixed income. it's a question of whether you want your money in or out of the riskier investments, theentties like the fed and the treasurer are trying to force investors into. like equities and the perfect explaination or the way to demystify this is to look at money markets. money markets are really the recipient of the dislodged or newly vacated bond investors. you know, it's 2.7 trillion or darn close. if we look at the last several weeks, a couple of billion moving out of bond, taxable bond

funds, it was the exact amount that moved into money markets. so i think when you frame it that way, it looks a bit different. >> so people are nervous, but they're not ready to go wadeing into equities is your point? >> exactly. you talk about should it be summers, yellen? first of all, to throw gender or race or religion into this i think is shameful, a, b, maybe we need a non-canesian approach, within i think stimulus, why does have it to go from farmer to b? that is a huge prize indeed. that is a free parking of monumental levels. so why do we get into the psyche of investors and do it the old fashioned way and entice them to do what they want to do and have the government and the investors notions and strategies on the same road. >> you are right, though, that is what the fed has been trying to do is push that confidence and push them no those types of things, what itself the way to do it? >> i don't think the way to do

it is say, okay, let me thinks, i'm down in the pools, let's do corporate reform, that's a buzz word, it ends up being re-arranging the deck cares on the horrible corporate tax titanic. then making it really an issue of spending. oi'll do it, but i want the money, i'd like to see real tax reform without 18 e any strings and in terms of the spending side, keep saying $2.6 trillion. that will do a lot of positive things for the economy. >> rick. thank you. we'll see you tomorrow. okay. coming up, the cable fight that has consumers in new york, l.a. and dallas very upset this morning. we will have the latest on this huge fight, one that is growing and has a lot of people ticked off. that's coming up right after this. stick around. to experience the precision handling of the lexus performance vehicles, .

. >> good morning. welcome back to "squawk box." 8:48 in the east. making headlines today, the powerball is up to another $4 million bucks an it is climbing. no weekend winner. the next drawing is wednesday. time warner cable and cbs battle. it's not going anywhere.

battle over fees. neither came out a winner. consumers are the only ones losing out. we are joined with more on this epic battle. julia. >> andrew, time warner cable and cbs negotiations, the two companies contracts expired on friday night at 5:00 p.m. 3.5 million time warner cable subscribers in new york, los angeles and dallas lost access to cbs programming. it was so subscribers lost the premium cable channel. cbs announceing talks are close. we asked time warner to continue the negotiations. consideration for our viewers. they rejected this request and told us they have more leverage against us if they took us off their service. this is hardly a sign they care about their customers as they claim. we remain ready to negotiate if good faith when they are. time warner cable responding quote, we regret the inconvenience to our customers and their viewers, we look

forward to resolving this situation as soon as possible. with customers like you, andrew, are getting annoyed, frustrated they missed out on sunday morning talks shows and sports events, including the tiring woots invitational. many subscribers are on the cab others are checking out alternatives time warner recommended including streaming tv service. directv has royced support for time warner cable in standing up to cbs. a year ago they had ten-day blackout. there's no hard number on the price increase cbs is looking for. some analysts say media giant wants to double its fees to $2 per subscriber. >> all right. thank you. when we come back, a final thought from glenn hubbard, the three sectors he says are poised to drive stronger productivity here in the united states. "squawk box" will be right back. ♪

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to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] welcome back to "squawk box." it's time for the stock of the

day. >> stock of the day, new legs and thighs. tyson foods, there you go, earnings beating street by nine cents a share. what's that? >> wasn't for the radio listeners. >> i could have went with something else. went with legs and thighs. revenues topping estimates. every team i say chicken i want to break out laughing. chickens, what -- i'm the vp of the chicken segment. kind of cool. fowl job. >> we don't have a symbol. >> your wing man. >> trying. >> sound effects, i like that. >> guest host, glenn hubbard. you started off talking at beginning of the or how you think there are three sectors we can drive productivity, that might be the things that juice the economy. you pointed out energy. ones that i think are great ones are health care, education. why doesnn't we talk about that >> energy, north america and be

energy independent over the next 20 years if we allow the right investment. a huge boom for our economy and jobs. health care, if we had more market oriented health care reform, it would bring down costs, revitalize i.t., delivery of health care, and improve wages. education, we have a ridiculously high cost of educational system. we could improve productivity a lot. that's not just a story about primary and secondary. it's a story by my sector, college. we could do better and lower costs. >> you're a dean. why is it so difficult to reform the education sector? >> because at the moment the education sector doesn't face the pressures most businesses do when they need to reform. when people say, we've got to get costs down and provide alternatives for education, that's when it's going to happen. it's started to happen at the edges of higher education. it needs to happen more. >> college can cost upwars $50,000 a year. why is not the point where it pushes back and people say we

can't pay this? >> you're starting to see that. that's pressure for technology in education, different ways of delivering and cutting costs. >> anywhere it's being done well? some process. >> you are starting to see us asks, with mitch daniels at perdue a major president of a university saying why can't we get costs down? why isn't this a part of our job? it's a great university. you'll see this happen all over the country. >> the biggest school, do you think you'll see it at columbia, harvard or is it lower down the rung. >> it will start where people feel pressure fastest, lower down the rung. but you're going it see the best schools in the country, columbias and harvards of the world have to make a change. i think it's an opportunity for us. we should want to deliver the highest quality product at the lowest price. >> what year will we see $100,000 year college? can you pick a year? >> you know, i don't think

you're going -- >> it's coming. >> well, here's the thing. i think the pressure's to lower costs will hit before that unless the fed delivers more inflation than i think. >> i'll make your job really difficult. where are the costs too high in the system? >> just the way we deliver it. the fact that we're still delivering higher ed the same we did 50, 100 years ago, we could be using technology more, team teaching more, more collaboration to lower costs. >> the ten biggest endowments of universities more than $100 billion. upwards close to $200 billion, professor. universities have become economic monsters of their own right. >> i think we're economic community. we do give a lot of financial aid, higher ed, which is valuable. can we do a better job at it? the answer is yes. >> if you look at the budget of columbia, for example, what percentage is teachers? what percentage is plant and equip snnt what percentage is maintenance? how do you -- if you're to break

that down for those in the business, in the business world, you try to understand, where are the costs? where can you shave those costs, right? >> we're in the knowledge business. so almost all of our costs or any institution of higher education's costs are people, faculty, staff who work with students. the question is not do we not want those people. of course we do they're great quality. the question is can we organize they'll better and use them better? we have certainly improved the use of physical facilities in higher ed over the past decade. can we improve our use of people. >> having them teach online course where they're teaching to a few thousand people or even -- >> for a school like columbia, it's not that so much as using online to deliver supplement of what we do. part online, part physical is a lot cheaper. >> one other question. in your professor hat or -- in that students now coming out of business school, the percentage going into wall street and

finance seems to have gone down but i have heard anecdotally this year it may actually start trending up again. does that make sense to you? >> it has gone down for us but it's also quite different. the big finance recruiters are likely to be asset managers than bankers. what's tripled is number of students going into entrepreneurship, starting their own businesses or working in emerging companies that's true of top business schools. an interest in students in entrepreneurship and that's healthy. >> a lot of people leave the country to go pursue these entrepreneurial efforts. i hear stories of people going off to dubai. >> sure, we've got more nonamerican students. >> it's not just americans who come here and go back -- >> cholumbia could charge $100,000 a year and you'd have no drop-off in education, my guess. >> thank you. >> credit's available.

>> the goal is not to maximize revenue the goal is to deliver the best possible experience. >> thank you for being here. >> pleasure. >> a lot of fun. >> thank you for being here, too, brian. >> here most of the week. >> tomorrow is the only day you're not. >> where are you going? >> what do you mean? going nowhere. >> join us tomorrow. "squawk on the street" begins right now. ♪ >> good monday morning. welcome to "squawk on the street." i'm carl quintanilla with kelly evan as the new york stock exchange. cramer and faber are off. joining us, dennis berman at the "wall street journal." thanks for coming in. we open the week up with the dow up six consecutive weeks. that's the longest stretch since 2011. best percentage game so far since 2003. ten-year might bounce this week as we have fed speakers on the docket today,