he's going to do it unless the data is strong enough to support that decision. >> they don't want to start and have to backtrack. >> you don't want to backtrack. you want to be at a point you can comfortably start the taper. maybe september's off the table but december in play. >> we'll be fine by then. >> phil orlando, thank you. "squawk on the street" begins right now. ♪ >> good morning. welcome to "squawk on the street." i'm david faber with jim cramer and brian sullivan, live from the new york stock exchange. carl quintanilla on assignment. he will be joining us later in the broadcast. a look at futures. we are setting up for well might be a up opening, we'll see. the durable goods number was not good at all. dow jones future, it's a relatively quiet day. what does everything play off of? the ten-year yield, we might reach 3% last week, didn't do it. now 2.804.

over to europe. worries in italy, that was leading the pack there. take a look at continent. largely red, though germany does seem to have had a reasonably little bit of a turn there. road map, where do we start? amgen buying onyx pharmaceutical for over $10 billion to reinvigorate product pipeline. >> gold, pushing up to its highest level in three months, shy of entering now bull market territory. >> dueling dollar stores, try to say that fast ten times. deutsche bank upgrading dollar tree but downgrades family dollar. >> tesla outselling, get this, porsche, land rover and even volvo in california. >> there you go. >> one-fifth of the country. >> yeah. >> over 30 million people. >> economy that's come back. >> and birthplace of me.

so three things it's got going for it. first 15 years of my life in california. >> a new brian sullivan fact i did not know. >> that's why i'm frequently seen in a beret. >> let's start off with a deal. it's been in the works for some time. a lot of ink spilled about it already. decent amount of talk as well. talking about amgen, it did strike a deal to buy onyx pharmaceutical. the purchase price $10.4 billion, $125 a share. looking to get a stronger footing in the market for cancer drugs. expecting to close the deal by the start of the fourth quarter. that's a quick close. everything looks tight here in terms of those things that you look at, now that the deal is done. there was a bit of intrigue, as we got to the finish point. >> right. >> 120 is where amgen privately said we wanted to buy you. then a leak. both sides aused the other of having been behind that look of

it. but onyx came out and said we're putting ourselves up for sale. not clear anybody showed up in a robust way during a process that did take place. there was a merger agreement at 130, it dgot down to 125. a $10.4 billion deal. the multiples are fairly high for anybody who wants to talk about the rest of the industry which can -- i'm looking at it here, 10.4, 16 times this year's earnings, 11 times next year. 47% premium over the unaffected stock price, 33% of the 30 day. not bad. >> this is one of those situations, if you talk to people off the desk, everyone likes amgen, the people there, if you talk to them off the desk, biotech guys say hasn't had a winner in ages. no real pipeline. now, i'm sure amgen says they have pipeline which is the

perception, which is why they're up. think about these, david, amgen, gill add, genzyme, they kept invi invi innovating and then left behind. >> 125 million now in terms of sales. >> could be 2 billion. >> right. as it gets more -- >> that is their legacy drug, a few billion bucks. >> that's a great drug for -- look, pancreatic, kidney, nothing for those. this is one of those things where amgen is back by paying the price. >> amgen trades at discount to pfizer. they are supposed to be biotech, biotech should command higher premium than old school pharmaceutical companies. they should be described as biotech. it's a pharmaceutical company. they're trying to buy growth with the deal which is --

>> what we're seeing. cancer franchise, oncology franchises become more and more important and are growing part of the overall market for pharmaceuticals, i think behind one class of drugs, otherwise it is oncology. they've always had a franchise with the drugs that you take to combat the evil effects of chemotherapy. >> everybody has to recognize, when you hear blockbuster, people think this could have multiple uses. remember, celgene, they have revelment. it was -- but they kept being used for more and more and still is being used more and more. the drugs that are their own personal pipelines. we see that with allergen and botox. when you see it, you don't say, it's a niche medication. it means i think you can go along many lines. i agree with them. these drugs ten to be powerful and are used for other labels.

remember, the diseases are fatal. >> yeah. >> these are fatal diseases. these are not well, you know what, rheumatoid art rite where it sure does hurt, people are desperate to put trials along with drugs and it's good. a smart move for amgen. >> the stocks, bats global markets and direct edge agree to merger. >> they agree? >> yes. agreed to a deal. >> that reduces the number of what exchanges from 13 now down to the manageable number of 12. still something like 40 -- >> they were terrific as a backup to the nasdaq, weren't they? >> exactly helpful. >> who knows how many things go wrong. >> a lot of the markets, exchanges, you know, they seem like they're almost equivalent of usfl in a way. >> i like that. 30 for 30 was good. >> baltimore stars, baby, never forget. right here. here's the thing -- >> california, a place you're not from, west virginia, is there anywhere you're not from. >> you keep saying west virginia

to poke me, no offense to the great state, it's almost heaven. >> virginia. >> no, west virginia. >> i can't keep track of where you've lived. >> i've moved. >> move around. >> i don't move around. i get chased out. a big difference. keep an eye on the markets. you're only as strong as your weakest link. we don't know what the connectivity was. some guy with a jack hammer hit a fiber-optic line, somebody hit the wrong switch. >> i listen to nasdaq. do you have a right to ask that? do you have a right to find out? >> i understand your point. >> what is your right to find out. >> i sit next to jim cramer for this morning. i feel like it's not really our job to find out. >> it's a good yes. it's a good question. >> just a dash of sarcasm. >> did you hear the ceo of ubs this morning? >> snarky. part of the show. >> ten minutes in, you're already a little sarcasm.

>> i was with you at desk begging someone from nasdaq to call us. reading the web, cnbc feel likes it has a right to know. >> only the worldwide leader in business news. >> they feel like they have a right to know, who are they? we're the press, we do that. that's our job. our job's to find out. >> it is. >> by the way, we've got to go to the markets. i have something you're going to buy later today. it's a tease. something you will bid on at least i presume. >> blue suit to go with the great suit? >> it's like three middle age men in gray suits. >> thank you for calling me middle age. >> futures pointing to lower open as uncertainty surrounding the fed continues. i'm not saying the word. >> don't say it. >> china stocks outperforming other asian marks as the state's statistics bureau says the economy is showing clear signs of stabilization by the seashore, she said. helped by policy support and

improvements in global demand. gold close to bull market territory again. pushed above the key 1400 level today to its highest level in three months. i guess goal is back. for how long, we shall see. >> remember seasonal, india buyers of gold, also the essential -- >> what's go on in india? >> don't you love the arguments. india's the single biggest buy or of physical gold. two minutes later, india in's in economic free fall. >> people get in married in india, that's what you do. >> india will save the gold market? >> they buy gold, it's a wedding thing. whatever! but remember what happens happened central banks bang out the dollar position, what they've been doing, they seem to hit bids every day, a lot buy gold. >> yep. >> a story, a thesis there. >> in terms of the markets, i'm talking equity markets which are still it would seem taking cue

from the fixed income markets. last week, august, 3% down for the month, roughly. still up 15%. let's call it broadly speaking on the s&p, the dow. >> right. >> how do you play a like week this week, given a lot of people on vacation, volumes going to continue to be extraordinarily low. >> we listened to the chinese central bank, with their analysis, europe there was profit taking, europe. we have to in an absence of data or data that is horrendous as the date from durable goods take your cue from markets that are growing, and that's europe and china. it's the industrials i like. everybody person in the home building industry comes on, it says it's terrific. the mortgage applications are way down. okay. theyfantastic. building is many or there's a glut. in the meantime, europe is making a comeback. china's making a comeback. that says look at the industrials. >> right.

>> they could have wind at their back with the dollar. look at boeing. goodrich, united technologies, unites technologies made the acquisition of goodrich. the airspace is on fire in the country. you default to that that's an international market that must be based here. like united technology, it's a smart company. >> street research, not too much this week. the deutsche bank upgrading dollar tree to buy to hold. sales incrementally positive on the dollar stores. you not only follow the stores you manage to get into one or two every weekend. >> i do prefer dollar tree. if you ever bought candy the a cvs or walgreens, you're a sucker. >> is that significant? >> if you buy readers, i can't see a thing, you're playing full

praise. you go there, they're a fraction. >> the stock's up so much. what could happen there? >> the board is all up, you've got a standstill expiring or expiring. there's continued chatter, could you see, could you try to force a deal between family dollar and dollar tree. >> dollar tree had good numbers last week. >> dollar general. >> dollar general, frankly a buyback king. they have -- they spin -- >> walmart have any interest? >> walmart? >> i'm not saying anything going on. >> walmart, you throw out walmart and think i'm going to not pick up on that? >> i assumed you would. i know you listen. >> walmart? you think walmart might buy a dollar store chain? >> i'm repeating idle chatter of those who follow. >> those in montauk. >> no, those who i speak to on the phone with some regularity, put investment dollars to work. >> too many dollar stores. i'd like the five dollar niche,

five below. but that's not a cold weather store. it's five below, you shop there. it's not recreational equipment. >> ten pound back of mike and ike's for two. >> mike and ike had a terrible falling out. >> five below, fantastic store. part of tjx? >> no. >> yeah. >> i see five below next to home goods which is part of tjx. >> as is all of the -- when you have too much inventory eight major department store you tell to tjx. you don't mind buying winter clothes the wrong season, summer -- you can buy speedos there, david. >> i don't believe they have those. i wear the longer ones. i didn't want to embarrass anyone. >> you wear the baggy ones. >> the rumor i heard from people in the know is that fruit of the loom is coming out with a solid gold line of men's underwear, but yet to be confirmed. >> could be. do you know the run on powder

blue sweaters from j. crew? >> no. i can't wear j. crew, xl is built for dudes that are 150. >> you didn't watch "breaking bad"? >> a cameo last night, a blue j. crew sweater, looked fabulous. he was at the car wash. i don't know if he got the full chamois shine. he got a run. >> spot on? >> exactly as he was with you in northern italy buying fabric. >> so much fun. >> i have no idea what you are talking about. >> next, california has a new favorite sports car. we'll have the details on who's pulling ahead. former hbco carly fiorina on the next ceo of microsoft. another look at futures as we get started to roll it out on monday morning, despite an absolutely miserable durable goods number. problems in italy, concerns all around about housing. guess what? u.s. stock futures are higher. i'll say it again. no bad news when you have the

fed. "squawk on the street" returns after this. ♪ make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you start using active trader pro today.

if you can believe it, there's more good news for elan must. tesla outselling porsche, volvo

and land rover. capturing 12% of the luxury sports car market in the first half of the year, surpassing the audi a6 and the lexus gs. tesla is a status symbol in california. i was at a conference, 20 sitting there all looking for a charger. >> a fantastic piece in the "new york times," he was a guest on friday, he goes into a dealership, a gallery, okay, and basically, the guy says, listen, might not be for you. i mean, that's a reverse psychology thing. it might not be for you because you can't use it to go to your country house, can't use it in the city, yet it made it more compelling. >> bringing up a good point because the biggest threat to tesla might be states that are pushing back against tesla's sales model. texas, north carolina, other states, have said, listen, you're not a dealer. so therefore you can't sell cars. tesla's saying we don't have a car dealership. we have a gallery.

>> martin lawrence/tesla. >> that's something tesla investors are need to watch. you have to move the product. >> look, you have to more charging stations. we have a charging station at the inn that we own. they urge you to give them the information on the charging station because there isn't enough to crisscross the country. however, there is, without a doubt, a love for the car that concedes. >> isn't california -- >> 21,000, i don't know if that's yo versus delorian or others james mentioned, the tucker, thinking 5,000 in asia, 10,000 in europe. the price of gasoline in europe is twice what it is here. >> the market in europe could be gigantic. >> thank you. >> socialized spending on infrastructure product. france could build up the charging stations rather than lying by state by state decisions. you want to drive your car between new york and pennsylvania. we might have it this area, you

go to allentown, where am i going to charge up? the. >> tesla will take europe by storm, one of the reasons the stock -- it's a cold stock. it's overvalued, 20 billion. >> if you value it per car. >> 850,000 per car. >> frunk, the front trunk. >> like a porsche. >> i don't know. >> or engine. >> tucker. tucker. >> outselling sucker. >> also, tesla, by the way, a gorgeous car, too. >> so gorgeous. >> you buy it because it's an emotional response. >> it's a chick magnet, may i say that? >> say it. >> i don't like to hang around small chickens. >> it's the beginning of a new trading week. where should you be putting your money? jim's got ideas. "mad dash" next. as we count you down to the open, first one on the new week, futures indicating perhaps a mixed open, slightly higher for the s&p. slightly lower for the dow.

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>> anadarko, one of the great explorers, okay, they are considered to be maybe the finest finder of oil around the globe, big company, selling one of its -- just a piece of -- >> they own some of it. >> 2.64 billion. what's most important, that ognc, this money's going back into the united states. it's going into the permian, it's going into the eagleford. a couple of these special shale plays. permian is an oil field. because of new technology they're finding oil in it. incredible. for how hani years did we think there's no oil in this country? you have to go over the place, it's mozambique, it's not exactly texas. >> no, no, it's not texas but more stable than many countries in the middle east. >> yes. >> which also -- so much of this has a geopolitical bent to it. >> yes. there's -- >> i mean all of these things are less important than they

might have been in the past, because of what you're talking about, back here in the good old us of a, whatever it is. >> ubs, wells, i think they thought it would be up more. my travel trust owns this. >> they still own 26%. but it was a nice number, 2.64 billion in cash. and gives a nice value to overall mozambique assets. >> right. a very good article about transferring oil by rail because there's -- again, when you look at where this eagleford is located, it's just impossible to get -- >> eog. >> eog is the play in eagleford and they've developed rail to get to the gulf. these areas are such boomtown areas we don't talk about them enough. whether it be eagleford. eog has delaware basin in the permian, may be more oil than any other place.

>> i agree. transformation until so many ba ways. opening bell about, well, beginning of the week here, right? monday. straight ahead. "squawk on the street" right back. [ marco ] i'm a student at devry university.

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welcome back, everybody. you're watching cnbc's "squawk on the street." live from the financial capital of the world, opening bell set to ring in a couple 0 of minutes here, 90 seconds to be specific. a cool day here, jim. italy's back in the news today. greece action. durable goods stunk. >> i'm still focuses on the turn. the turn in china, i think, is very real. a lot of quiet stimulus there. we kept writing about see-through buildings but a lot of infrastructure stimulus. there's a sense that china, while it's not going back to 8-9 is done going down. >> deliver 7-5. >> that's pretty good. i think our industrials are all helped by that. watching caterpillar, because of that interview with -- so far

caterpillar -- it's down two from when he did the interview but that's not the home run. >> speaking of home runs, opening bell rung by rory mcilroy today. there you go. look at that. [ bell ringing ] >> the weekend was at barclay as ross the river, won by adam scott, with his soon-to-be illegal putter. kicking off the pga championship, norton, massachusetts, coming up. also at nasdaq, cal amp ringing the opening buzzer. happy things are buzzing in trading on a monday, given what happened last week with the unknown cause of the flash freeze. >> interesting backlash i keep getting that we don't have a right to know, it wasn't important they told us. >> of course we have a right to know. >> i remember the nfl, and i regard as gold standard xwrand when they had that outage, we're doing everything we can.

okay. we're trying to figure it out. of course it was a breaker problem it wasn't the nfl's problem, it was between two different utilities trying to get it right. but all times the nfl was transparent and once again, what is the most valued brand in the country? who wants to affiliate with that brand? billions of dollars worth of companies, they're transparent. they're a quality company. >> we talked about smart crisis management. this is not a crisis. if your product is unavailabler for three hours, that's a crisis. i'm sorry if you disagree. if your product is unavailable for multiple hours worldwide, that is a crisis. if all mcdonald's shut down for three hours at lunchtime, that's a crisis. >> i happen to have more of a social weekend than i do, i met -- i would say over a couple hundred people, i'm not kidding -- >> that is social. >> that is very social. >> too social. >> a couple hundred. >> yeah. >> standing in a receiving line? >> not really. look, i'm a magnet for people who want to talk about the

market. and i had -- this was the last straw the words i kept hearing. last straw, i'm done with this, they didn't tell us what's the mart, they don't know, it's for the rich people. of course all of these people are rich. it's for the huber rich, the hedge funds and people are disgusted. they're disgusted! >> i flew to chicago friday, drove -- i picked up a car, drove home from chicago saturday, 12 1/2 hours, used the app ways. genius app but the rest stops on the ohio turnpike are doing just fine. just want to throw that out there. that's all i've got to contribute to the show. >> ground breaking. >> i'd never drive 12 1/2 hour dp s. third time i've done. old "mad money" episode on sirius, radio classics. >> look at amgen, up 5.5%. the theme throughout this year and certainly one that will be pounded into every ceo's conscious by any banks are out there, acquirers stocks go up

when they do deals and no exception here. amgen up 5.5% after the deal to acquire onyx pharmaceuticals $10.4 billion, $125 a share in cash. they're going to close this quickly. in fact but that's not enough to have this year become a year where we have seen even a modicum of deal. >> the corporate bond market. what are brokers going to do to make money? >> amgen is financing this at incredibly low rates at a cash deal. these things can be a key to so much more. i don't know what the answer -- >> corporate bond issuance, low. m&a, low. trading ground to a hal. what is the secret how goldman and morgue will make big quarters? what are they going to do? >> trade around a lot of stuff. >> true. >> we've seen this environment but last quarter not a bad one

on fixed income for either. >> why should corporations issue debt when kicking off record amounts of cash flow? >> do it now, you'll never get an opportunity. if you've done it in may the way apple did -- >> david, no matter what the rate i'm borrowing is, it's st. lou it's still more than not borrowing. >> companies have a lot of cash trapped overseas are borrowing, apple here in the states, low rates using that money to buy back stock, having it been acreative to cash flow, not just earnings. we've seen it time and again this year. rates are starting to move up. so will that come to an end? >> i don't know. we think of apple as a computer company, a company that does cell phones. they're a timer of the market. >> a cash generating -- >> tim cook's probably got -- he's got a terminal, looking at bonds and marveling but they also are in that computer

business which is not that great right now. >> incredibly well timed. >> you think they call gary cohen at goldman and say look at the bond work we do at apple. >> you short them and go, that's a great call. >> talk about, for a second, i had a conversation with a trade, having a couple of beers and barbecuing and he was saying there's a story we were going to do for the "wall street journal" but there's which flash freeze about short sellers soaring this year. jim, why some of the most heavily shorted names have gone the opposite way. my theory was, it could be complete garbage, because of all of the social media now in stocks, right, whether it's -- >> zillow -- >> no. >> i meant the most highly valued. >> we're almost seeing -- we always pick on bill ackman --

the retail investor has the able to go after stocks that are shorted en masse together in a way that they've never had before. >> they don't know there's a -- they don't know there's 25% tesla short, right? they just like tesla, right? >> if an article comes out -- i'm making a name -- the second highest short on the market and all investors are share that idea rapidly, right, online. >> right. >> they all start buying it. they create their own short squeeze. >> that -- >> maybe it's garbage. it's the first time in history the retail investor have a power to force a short squeeze on big-time ininstitutional investor like ackman or anybody else. >> i wouldn't discount it. >> why the shorts have done terribly? >> companies in stock, you have do it with a catalyst, either doing it because the company's going to miss earnings in a

significant way or be found be a. what's happened where people expecting the catalyst to come, they're getting squeezes, they're getting killed limitless downside. >> herbalife you need investigations per share, much higher. better than expected investigations. bti, instead of better than expected earnings. herbalife, as long -- look, ackman's letter was about, listen, it's percolating, investigations are coming, investigations are coming. if you don't get the investigations people say i've got icahn in there. >> radio shack, for example, one of the most heavily shorted stocks up 48% year-to-date. the shorts have gotten slaughtered -- best buy was shorted. >> that's true. >> more than double this year. >> they made the numbers, they executed. >> they executed. this is the hard goods revolution. >> the retail investor may be

more powerful than any time in history. >> i'll keep that thought in mind. >> retail investors are superpowerful. bob pisani on the floor. >> the important thing is, we're down four points on the dow, which is surprising because we had a terrible july durable goods number. i mean, it was much weaker than expects on every metric, not only the main number, but transportation numbers weak. our stock market is anemic today. it's not moving. the bond market, what everybody's watching, did move down. the second day in a row. friday we had a disappointing july new home sales report. so the data points for the last few of them have been coming in, particularly on july, have not been very good. now this puts a lot of pressure on the nonfarm payroll for the for august. that will be out next week, on friday. that's a lot of pressure now. consensus is around 166,000. there are people down here

talking about it needs to be strong. it needs to be close to 200,000 for the fed to consider tapering or they're not going to do it. that's the discussion going on down here. it's a serious issue. we've got a rare merger in the exchange space. four exchanges, stock, nasdaq, nyse, direct edge, two merging today. we talked about it friday. direct edge and bats are merging. one of the major reasons the trading business is difficult. it's a low margin, low profit business. other the reason, gain market share. 23%. but you but direct edge and bats together, 2 1% of the market share. nyse, direct edge/bats and nasdaq there. a couple of other thoughts, my own, and i talked about this on friday and a trader talk note why this makes a lot of sense and people supports the idea, one of the main reasons to break into the listing duopoly.

one ones that have listing here. another one that's strong might compete for listings as well. might be an effective competitor in the options space, bats might tiblg able to do. >> muriel see bert first woman to own a seat at new york stock exchange. she came here many years. favorite story, there was no ladies room here when she got on the floor of the new york stock exchange. she got one upstairs in the luncheon room when she insisted on having one there. guys, they had to build the ladies room through the phone booths upstairs. art cashin likes to say she had to go through phone booth 5 to get to the ladies room. shades of "get smart" a wonderful woman. >> great pie owe near. thank you. muri muriel siebert. something we haven't talked about today, that would be airline merger that is in some

jeopardy. great deal of jeopardy as a result of the department of justice saying we don't want you to do it, talking about amr, us airways going to court they hope as soon as november. we shall see. we did hear from amr in terms of earnings. it's still in bankruptcy. reports earnings or financial results every month and it looks as though july was a good month, in fact, for amr. it will at least, to those who say this is not going to survive out of bankrupt and it can't merge with us airways, look at passenger revenues 1.49 billion, regional affiliates 270 million. cargo, all of it adding up to revenue of $2.48 billion in july. and let's not forgot, it made -- what did they make? $352 million. >> wow. >> for the month. that's a record for any month in the company's history, jim.

in july. >> one of the things -- i didn't -- >> net income in july alone better than the entire second quart of 2013. >> what's interesting, one of the rationals behind the merger with us airways, people saying it wouldn't be able to survive without this, i mean, obviously it can thrive. >> i think what amr's trying to do of course, make sure people understand we are not as debilitated as you might think if we were to have to emerge from bankruptcy without the partner in us airways that we hope for. in a letter, tom horton says we are still focus on completing that merger with usairways. we're seeking a november trial date. american team is standing strong together with us airways to get this merger closed. say together public and creditors and everybody else, we're going to be fine if we don't do the deal. of course we still want to.

we'll see. it's going to be very difficult for them to win. >> right. >> $500 round trip coach to cleveland to new york and pack planes and lines. >> 1,000-round trip to dayton, ohio. >> ohio they've lost a lot of service. a few months ago, you've made a big switch, i remember, four, five months ago you said for the first time in your career you are recommending -- a great call. look at charts. every stock's up. i wonder how you feel. >> as soon as i saw the blog, it's not as good as i like going forward. it's crucial that deal occur. i thought the justice was going to let this -- going to rubber stamp, because they rubber stamps all of the others, they didn't this one. i called on the group. it was shocking to me. we have to shift to bonds and the dollar. rick santelli at the cme group in chicago. >> if you avoid looking at stocks, everything tends to make a lot of sense. remember the data points, okay?

8:30 data point today, 10:00 on friday in the form of new home sales, both exceptionally week. today was durables. intraday chart, see the response. two-day chart, you can see the response to weak new home sales as well. look the bund oversaeshgz it came down after friday's data, today it responded normally. the two-day chart shows it's a lofty yield on friday. now if we open this chart to a five-year and everything hinges on five-year, durable goods brought us down under the pivot of ten-year at 2.81. five year it's at 1.61. you can see the key tops at 161. remember, a pivot during the session is one thing. it's where it closes that matter. friday both markets still closed on a yield high enough to bring in more selling. let's see what it looks like at the end of the day. dollar index, one or two day, hitting all of the points. week data, dollar's going down.

open the chart up, it's solid at a nervous level. looks like it's about to challenge that 80 level again, pay close attention. sully, good morning. back to you. >> santelli, thank you very much, sir. kelly evans now, finally. some class and intelligence. >> welcome. joining her post nine. what's on the radar? a lot of things highlighted. also a big puerto rican flag. >> talk puerto rico. >> no offense -- >> come on. >> a year-old story. >> this is a story that hasn't started yet. a look at cover of barron's over the weekend. puerto rico in trouble. if you want to know why, just to walk you through it a territory, u.s. territory, with $53 billion worth of debt. that's tax-supported debt. you can add another $17 billion other debt. $30 billion for pension liabilities. $53 billion the third highest debt load of any state. california, number one, new

york, number two. not talking proportionally. talking period, in dollar terms. 53 billion. works out to $14,000 per capita. a massive debt load. puerto rico has triple relief when it comes to debt load. most people oenlts get the tax break if you live in the state. not the case with our caribbean island friend. anywhere you live -- >> triple tax freeze. how many did i sell? >> i cannot wait to talk to you about this. look at muni bond portfolios because if you -- because of the tax breaks, every muni fund holds puerto rican debt. it's not a huge part of the holdings in a lot of cases. different story if you're oppenheimer funds, barron's talks about the managers, a disproportionate amount invested. 14.8%, that's the weight for oppenheimer funds.

guys, point is this, it's one thing to have a high debt load. another thing to have a high debt load and not growing. there's not a major industry to speak of that has tax breaks to help draw pharma companies. but those have gone by the way side. they're having to raise taxes. where have we hear this before? greece. >> a long time they had drug companies, opening manufacturing facilities there because they gave them tax breaks. i spent holidays in puerto rico, i tell you, tourism business can be fabulous. >> i've got family going there tomorrow. i want eyes on the ground perspective. >> let's not forget about puerto rico, colleges with the highest student loan default rates are in puerto rico. >> that's right. >> many federal loans where you've got colleges, not just there, but everywhere, but puerto rico a lot of people highlighted the problem, default rate is higher than graduation rate. >> yes. brian -- >> puerto rico is a debt time bomb. kate long of reuters on the

story for a while. >> this -- >> now maybe some attention caused by this. >> this is not a surprise to people in muni space but a surprise to retail investors. >> if you're in a municipal bond, try to get holdings, look through, see if they have a lot of puerto rico, pull back, why not? >> oppenheimer's saying maybe we like the 7%. talking about double digit return. >> reaching for yield is never a great strategy. >> we'll get the story from both sides. >> coming up, home builds are taking a beating after the dismal new home sales number. are rising mortgage rates taking their toll on housing? how to play the home building stocks. early morning movers. aeropostale moving, big lots. dollar tree upgraded. amgen, buyer of onyx, soaring,

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welcome back to "squawk on the street." take a look at gold prices here. hardly unchanged from where we ended the day on friday. however, gold prices did cross over that 1400 a barrel mark in overnight trade, trading as high as 1407. moving on the dollar, on speculation, that the fed will not taper in september. if you look at oil prices, slightly lower but traders don't expect things to move in the negative direction. supported by the -- traders think oil prices are only heading up from here. >> thank you very much. here's what's next on "squawk on the street."

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it's that time, "6 in 60." emerson. >> about to do m&a. they could be growing again. >> hasbro gets upgrades. >> when you go sell to buy, i want to know more. that sounds like a transaction. >> i have heard nothing there other than maybe the fundamentals are improving. alliance tech systems. >> i thought that this is -- a stock not here long ago. amaker of bullets. stock has had a big move. >> altera. >> chinese wireless buildout. china's has a lot of infrastructure to win out. >> 3-d printers, dvd, loved by retail. have we shorted by institutions. >> what about con if. >> a hard goods moment.

reports september 5th. it's a best buy. >> hard goods ala home depot? in other words, what's go on in retail, we've got this division between soft and hard. >> yes. i think that what's happening in the economy is that people see tremendous value in hard goods buying for homes and they're not spending on apparel. nothing. no matter how good the apparel is, people aren't buying. >> interesting. coming up tonight? >> we're having a smackdown on cybersecurity. david, you did a fabulous special on cybersecurity. when you speak to people, they don't want to say it. they don't want to say how hacked they are and how so far behind the bad guys. they're afraid you'll lose confidence in the system. but it's everywhere. >> a huge issue. >> people who can stop it, at least some israeli companies are in demand. >> great. we did that last july. >> my daughter loved that special. >> thank you. straight ahead, former hp ceo,

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welcome back to "squawk on the street." our road map starts with the federal reserve. symposi symposium, comes and goes and the question of the taper remains. find out if investors may be missing the big picture. more twists in the ballmer drama. carly fiorina will offer her insight 0 on the shakeup at microsoft. >> home builders taking a beating on the back of dismal data. a setback or something worse? we'll take a closer look. >> even as summer's drawing to a close, will consumers keep spending on vacations as the year progresses? we'll pose that the ceo and founder of kayak. stocks are higher. the debate over fed tapering weighs. chief market strategist and a senior equity strategist with wells fargo advisers. good morning. >> good morning. nick, let me start with you.

durable goods number landed with a thud. follows disappointing home sales friday. >> that really is how strong is the economy in truth and how does the fed perceive it? we didn't debt any colorado jackson hole about this. >> hang on. >> jobs number. >> we lost you there for a second. let me switch to scott and ask whether 2.8% on ten-year, that is fair value? will people look at bond and say things are looking rocky? >> well i tell you i think that the bonds are overdone here. it wouldn't surprise me to see bonds rally, yields fall a bit in here because i think the market is -- the market's anticipating maybe a little bit better economic recovery than we're going to have. it's no longer the armageddon scenario but we're not back in the saddle with 1.7% gdp and

probably 2% for the entire year. >> nick, one thing that's interesting, i guess, now, we're going to start to figure out the extent to which the fed is eager to exit though the data hasn't been that great. there's something in the rhetoric and the way the summer has progressed that would suggest there's an interest in being done with this program that perhaps they see the risk as being more so than the benefits of it at this point and that you know, if they don't immediately, when we hear from them later this week, if we don't start to hear more dovish commentary that tells us they'd like to wind it down. >> absolutely right. it does seem like the fed does want to wind this down. you have to give some -- bernanke wanting to wind it down in the closing days of his tenure as fed chairman it seems like the fed's serious of taking liquidity priming out of the system and seeing if markets can respond accordingly and more naturally over time. >> nick, do you think that they have -- do you think if they were to float this as a trial balloon going back to may, for

example, and look at what's happening in markets since, would they be right to think we're going to be okay with them beginning to taper or is the message that, no, that it is a tantamount to tightening of policy? >> i think the fed's got to be looking at both side of the fixed income and equity markets. i don't think there's a clear signal that the markets are coming down strongly one way or the other. equity markets are concerned about earnings power next year. if rates are going up, you better hope and pray for better earnings power over time to keep equities rallying. >> scott, do you believe the valuation of the current stock market reflects the opportunities for earnings going forward? maybe they're a little bit stretched right now? >> i think that we're in a 5% to 6% earnings growth environment this year, that's where we're going to be there for next year.

valuations are reasonable and maybe slightly below the long-term average. i think the market's well priced in what's going on. our target range for the end of the year is 1650 to 1700, so we're right in there. i'd love to see a little more pull back because i think it's an opportunity because i think the market, over the next year and a half, has more upside. >> if we're -- if you're right we get another 1500 to 2,000 points on the dow, scott, who is going to lead us inside the dow? >> i think you need to look at cyclical sectors. we're going to see better news out of the emerging markets. we're seeing better news out of europe. our growth's going to be better. you want to be in consumer discretionary sector, technology, things that will benefit from continuation and acceleration in the global economy. >> nick, your best picks here? >> i'd say if you want to like the market, financial is the place to look. that has to rally to lead the

market higher. >> thank you. weiss ki as we kick things off with the durable goods report. >> in a note this morning, perhaps it's a good thing. i can't say it. >> can't say the word. >> i promised -- starts with "t" rhymes with aper. i promised viewers i wouldn't say it. if the economy gets weaker, perhaps the idea of a greater fed reduction in bond buy, there you go, is off the table. thus the no bad news market, kelly. >> from the stock market's point of view. i think the stock market's point of view is one lenses to look at developments here. the real economy maybe being the other? >> surgeonidetails regarding st baller's exit from microsoft. his departure may have been more sudden and acrimonious than portrayed bit company and bill gates. carly fiorina, former ceo of

hewlett-packard. were you surprised by the news of ballmer's retirement. >> some ways yes, some ways, no. he's been in the chair for 12 years. it's a long time. he's been at the company for three decades, and as the company has said, they are now attempting an extremely difficult transition to a services and devices company, and i take him at his word, that he concluded that it was better to have a leader at the beginning of that transition who would see it all wait through than for him to go halfway and get out halfway. >> did ballmer do a good job? >> i think ballmer did do a good job. this is what always happens when a ceo leaves, the press, either they were perfect or they were terrible. i think ballmer did a good job under very difficult circumstances. of course, he's faces the classic innovators dill lem mark a big, profitable successful

company trying to protect its franchises while innovating at the same time. it's a very difficult balancing act. and in retrospect it's clear there were innovations they passes by they shouldn't have. on the other hand, the thing that microsoft has that's a complication they have he hard ware supplier whose are pearer ins and the hard ware suppliers whether under huge pressure to go with others like anal and microsoft needed to keep those players happy. it's not an easy thing for microsoft to say, guess what? we're going to get into the devices business because they have all of the profitable relationships they need to worry about. >> last week, on street signs, an analyst on from citi group suggests the value of the parts it's greater than the whole. should microsoft be broken up? >> at a time of transition like this for a company, every strategic option should be on the table. i don't necessarily believe that

breaking up the company makes logical sense at this point, and i am against moves that are made simply for financial purposes. they have to have an operational component to them that improves competitive position or the cost structure. on the ore hand, when a company is facing a very difficult transition, it has to be clear eyed and consider all strategic options. so my guess is, my hope is, that -- i've said this with regards to hewlett-packard and other companies as well -- the board during this transition period is going to look at all of their options and consider that one among many. >> if you're on the board, what kind of a person are you looking for here to take over as ceo? >> well, i think you need someone who is going to have fairly instantaneous credibility with the employees. so to me that says you need someone who comes from inside the technology industry. i think you need someone who has

the experience with a very large complex company. you know, big complicated companies like microsoft are different in kind than smaller companies or start-ups. it's a little bit like because you can drive a jet ski doesn't mean you can power an ocean liner. they need someone who understands big companies and someone who is going to be strategic but who will understand as well that this is a very difficult emotional turn for this company. to go from the pc kcenters software company to services and devices is not just an innovation challenge, it's a cultural and emotional challenge for that company. >> right. isn't it that hard if that makeup to find somebody willing to take risks not undertaken under the previous regime? >> you're right. risk taking is difficult. on the other hand this is all

about risk taking now. it's about prudent risk taking, strategic risk taking. this transition is fraught with risk. what i think has been demonstrated clearly over the last couple of years, standing still is fraught with risk as well. the good news, this is a company with huge amounts of cash. they have the assets to do what they want to do, and to do what they need to do. but we shouldn't be diluted. this is a really tough turn. >> yeah. carly fiorina, thank you for joining us on cnbc news line. take care. >> my pleasure. j. crew ceo mixy drexler making his small screen debut in a cameo appearance on "breaking bad" this sunday. a retail ceo, of course, of j. crew, played a customer at the car wash. there he is. that brings us to the squawk on the tweet. a squawk casting call. which ceo would you cast in what show, and why?

we'll air your responses throughout the morning. >> open-ended one. >> that is. gives a lot of leeway. >> steve ballmer in "game of thrones." which house? which house. >> all of those names. lannister, why not? >> if you think about it, between the facebook movie, apple movie we just had out, the google movie. these guys -- >> there's a google movie. >> intern. >> that's not a google movie. vehicle as they say in hollywood, right. >> vehicle. >> i don't think -- >> highlight comedic talents. >> i missed that one. >> people seem to miss that one. good morning. >> good morning. i'm trying to think of ceos and movies right now. shares of t ms international higher after the company agrees to be taken over for $690 million. tms is a company that provides outsource services to steel

mills. shareholders will get $17.50 a share in cash from pritzker organization llc. the family of chicago best known for control, brian, of hyatt hotels. >> certainly are. dominic, thank you. trouble for donald trump. new york attorney general eric schneiderman accusing trump university of defrauding students and scamming new yorkers. schneiderman will give us his side of the story coming up live on "squawk on the street." interview you do not want to miss. here at fidelity, we give you the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

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following firefighters in california. the fire has reaches the gej of yosemite national park. scott cohn has the very latest. good morning. >> reporter: good morning. the tv pictures don't quite do justice to it but there's deaf n definitely a thick haze over the air. to the ridge to the right to the east in yosemite, there's a thick plume of smoke that the sun is rising. a sense where you are. we have a map of the fire that has burns an area the size of the city of chicago. you can see that about 170 miles to the west is the city of san francisco. that's relevant because inside yosemite is the reservoir that provides much of the water supply for the city as well as the hydroelectric power and so, that is a concern.

but also of concern is some 4500 structures, particularly populated areas to the north and the west, and really they are dealing with multiple challenges here. protecting lives and property, trying to contain this fire which officials say, basically, house financial services committee a mind of its own, jumping some very wide fire lines at this point. and also they're dealing with the fact that as is the case throughout this part of the country, the rural areas and the developed areas are ever more intertwined. >> here in california, statewide, we have a wild land urban interface. we see homes moving closer to our wild land area. we ask residents, 100-foot defensible space, residents are educated how to clear their property, be prepared, have an evacuation plan. we ask residents in that area to provide the offense. >> reporter: but it is more and more challenging, of course, and another challenge that they are dealing with particularly with

this so-called rim fire is the terrain and the fact that this is what they call a crowning fire that jumps from tree top to tree top. the aerial drops are all the more important at a time of stretched resources. 11 states have wildfires burning and this fire season is lighter, to some degree, than last year. nonetheless, the government has spent a billion dollars, the federal government, on this. the fire suppression budget is exhausted at this point and borrowing from other areas in this time of tight budget resources and a very, very challenging fire. back to you. >> scott, that aspect of the story's not getting enough attention. what they're going to do if they need to draw more upon resources. reminders of the federal resources that our player, scott cone in california. thanks. next, some are calling it a double dip in housing. others saying not so fast. you can see the index in fair market territory since its highs

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welcome back. donald trump is firing back after new york attorney general eric schneiderman filed a $40 million lawsuit against trump university. schneiderman says the school defrauded more than 5,000 students who were looking to learn real estate investing techniques and teachers hand-picked by him as well. trump called schneiderman a lightweight on twitter and had this to say to carl on the "today" show. >> we're dealing with an attorney general who everyone in new york knows is a total lightweight, unpopular. lets jon corzine take 1.4, something, disappear, $1.4 billion, and doesn't do a thing.

he lets wall street and everybody else rape everybody, doesn't do a anything. they goes after donald trump school that has 98% approval rating. >> wow, strong language from trump. new york a.g. schneiderman will give us his side of the story coming up in a couple of minutes on "squawk on the street." july new home sales dropped 13.4% while the median home price was $7500 higher in june. are home prices getting too pricey for some buyers? ladies, good morning. >> good morning. >> sherry, just, first of all, with you, one report does not yet make a trend, but do you suspect, as the flow of housing reports starts to pick up this week, we'll see more evidence of a weakening in the market? >> yeah, absolutely. i wouldn't necessarily characterize it as a weakening, though. it's more of a normalizing because we've got to keep things in perspective. these home prices and sales going up and looking healthy are

coming from historic lows, so when we say things like, we're still -- prices are 25% below the peak, that's okay. we don't want them to get there that fast. and they have been getting there quickly, driven by, in large part, artificial drivers like investors and low inventory. seeing a coalition of new indicators like offers or buyer as tending open houses or multiple bids that seem to be indicating that's going to be slowing down. of course inventory has gone up slightly the last two months in a row, which are all good signs. >> tanya, this would be an important test of the recovery that we've seen in the housing market, the extent which there is a real foundation there. what's your view? >> sure, i agree with most of what she said. except for the artificial buyers. investors are still very real buyers. we have to look at that. existing home sales at the highest levels since 2009. which means that homes are -- housing is still a driving force to the economy.

though new home sales are down and people are quick to blame that on the interest rates, we have to look at the other factors. new home sales pa need ready to build lots. so that has to go through a process, that has to go through plotting and permits and get ready to build. and builders had an excess inventory of where they're in buy mode again. >> it's brian sullivan. there's been a group of people out there suggested 4.5% mortgages will destroy the housing market, because people stretched so mightily. are you seeing that? are we seeing people say 3.5 i afford, 4.5% i'm out? >> there are concerns moving forward, especially starting next year. i think the interest rates are a problem. but they have to reach 6%, 7% to be considered unaffordable. a bigger issue january 10, 2014, which is my birthday, when the new qualified mortgages kick in under the dodd/frank act. it's going to get tougher for

average folks, 20%, 50% of average americans are not going to qualify the way the rules are written. so they keep getting tweaked. the issue now, with the prices, is that investors have been driving up prices based on what they can get for rental north carolina -- income. we need home prices based on income. and the problem that we've got with the overall economy is that, wages and jobs are less healthy than they were before the bubble. we've got 9 million people without jobs, and we've got average americans working americans earning less money than before. home prices should be lower than they were before. instead, driven higher mostly by investors on rental income. >> people have been looking at adjustment in rates over the last, what do we call it, couple of months since their peak in may. the fact that the american homes for rent are under pressure, how do you play the space, given all that we've been discussing? >> that spike in interest rates

is psychological. looking at $260,000 purchase, half a percent spike from 4 about-to-to 4.5 rescind yours buyers. it's i psychological barrier to move past. this week we'll see prices going up, absolutely. they're going to start to level off. we don't want to see huge upswings. we don't want to see downturns. but we want to see stabilization. and that's the key word for housing right now, stabilization. good numbers and mediocre numbers are okay because it's showing that the market is stabilizing. >> all right. got to leave it there. ladies, thanks for your time this morning. as we tray to figure out what's next for the housing market. >> one thing, pending home salespeople watch that, think they it fell, we're doomed it's largely dependent on inventory.

if inventory's dropped, the availability of homes to guy goes down. >> supply problem, not a demand problem? >> it's both. but i don't think it's a problem, as you well know. next, the man behind the lawsuit against donald trump's for-profit university. eric schneiderman will join us live and address the comments after the break. r: wherean an ir be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: scottrade- proud to be ranked "best overall client experience."

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one hour into trading. happy monday. it's 7:30 on west coast. mergeer. monday continues. the bats global market and dr direct edge holding agreeing to merge, the second largest stock exchange in america. terms of the deal not disclosed but expected to close the first half of next year. it's a bad year for ipos in the country especially technology. according to the "wall street journal," just 16% of ipos this year have been from tech firms. that's the second worst showing since 1993. according to the latest sales numbers, tesla is now outselling porsche, volvo and land rover in california. tesla captured 12% of california's luxury sports car market in the first half of the year, selling, just remember, one model of car, the tesla model s. >> gold pushing towards 1400 this morning, close to bull market territory, about a 20%

move since the summer. all this as the fed tapering debate on the minds of investors. on that note, let's bring in art carbon wish carbon. is the move telling us something here? >> goal has a cyclical pattern. in june and july it's the weakest. then it tends to pick up as time wears on. and of course, the weak data that we've gotten, particularly the housing on friday, hints that tapering may be held back or may not be a factor. so, a lot of the propose point e proponents are looking for inflationary and a lot is soft money. >> inflation has been the bug ga boo people have been calling for to no avail, officially, of course. >> no, no. but the problem is that people -- a lot of the big hedge funds have had trouble making

money because they bet on the macro side and they've said, gee, the fed is printing money like crazy, that's got to be inflationary. ordinarily it has been. analogy, bernanke flies over your house, drops 1 million, you nervous you put it in the garagen that's what's happening in the banking system. banking system has excess free reserve. >> bridge water fund saying inflation is an asset class that should benefit but they and others holding the secures until the summer when we started to see gold turn, have gotten hammered this year. >> consequences that many expects have not shown up and it's difficult. >> any history we can follow given the anomalies we're seeing over the last five years. >> some of the history is shown

in the period either early '30s, they -- the fed did some of the same things we're talking about now. they got pushed by the white house, they pumped money into the system. the money backed up and stayed in the banking system. they then interpreted that incorrectly and said, money must be very easy. >> they screwed and raised interest rate in '33 and they realized it was a mistake. >> he hasn't made the mistake they made there always a quiet one for the markets this week. but it seems more quiet perhaps than usual. what are we seeing? what has been low volume weeks already. >> we're an hour into trading and we haven't done 100 million on the floor yet. that does not bode well. the slowest day of the year, this year, as i recall, was slightly under 500 back in

february. that's nyse volume. we run the risk of doing that again. the other thing that you know very well, david, is that when they're slow like this, markets get very thin and can be subject to volatility. so any surprise could make a move in the market. viewers have to be aware of that. >> can we ask you about muriel siebert? >> i became a member in '64, mickey came down in '67. she had a successful brokerage business before that. she bought a seat, she never actively worked it. she came down whenever part of a big deal, an ipo, something like that. she was a very strong character. a little bit different from the times while lots of women walking around with white gloves on, mickey could spice up the conversation in a salty fashion and she would get her point

across always. terrific at it. got a lot of respect in the industry. >> art cashin, sharing some of his remembrances this morning. thank you for that and everything else. keep an eye on the market. i do up 17 points. booking a long vacation can be tough but kayak trying to make your life easier. looking to cut the time you spend planning your vacation in half. the company's ceo will explain next.

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welcome back to "squawk on the street." shares of tesla are still racing along in high gear. shares are at another record high. the stock is up a whopping 395%, just so far in 2013. so for all of you numbers geeks, tesla's gained $16 billion in market value just this year and for some perspective, $16 billion boost in market value is worth more than half of the companies in the large cap s&p

500 index. tesla motoring along. >> thank you. donald trump firing back after being slapped with a $40 million lawsuit brought by new york state attorney general eric schneiderman. the suit alleges trump university engaged in illegal business practices promising to make students rich but instead, resulting in expensive and useless seminars. trump refuted the allegations on the "today" show this morning. listen. >> i think that the students that enrolled knew exactly what they were doing and what they were getting. after the seminars and after they finished the courses, they were given an application to sign or like a report card on us, what do you think of the job that they did? what do you think of the instructors? we had a 98% approval. >> new york a.g. eric schneiderman now joins us live.

attorney general schneiderman, thank you for joining us. donald trump with harsh words saying why are you going after me? why are you going after donald trump and trump university? >> from start to fin irk, they never registers as university, weren't allowed to call them university. they kept lying to the new york state department of education about their status, they never got teachers certified. trump said people are going to be taught insider secret business hand-picked experts and given access to confidential list of lends are so they don't have to go to banks. everything a lie. the former president of trump u has testified -- we have his testimony -- that trump never hand-picked experts. it wasn't his secrets. the lender list they gave them was xeroxs aut ofout of a popul magazine and students weren't taught anything other than being victims of a bait and switch. instructions to the teachers of

trump university making clear what they were supposed to do at first free seminar was sell folk $1500 seminar, at the 1500 seminar they were told every one of you, anyone who deviates from the path, will cause problems, has to convince the students three days isn't enough. they have to sign up for dts 10,000 programs, students in 2007, '08, as 09 in hard economic times. they had year-long mentorships, those weren't real. they supposedly had a 1-800 number to call six days a week, that wasn't real. it was a fraud starting with the programs and ending with the phony mentorship. >> one of the accusations trump is firing back soliciting campaign contributions from people who he works with at the same time pursuing a settlement in this case. what can you tell us about that?

>> prosecutors are all used to people who refuse to deal with allegations of a complaint, making wild allegations to distract from it. mr. trump supported someone against me in 2010, after i won the democratic primary, he gave me one check that was it. this is all stuff to distract from the merits of the case. >> you were not asking for campaign contributions while at the sometimer. suing this case? >> no, we have general solicitations for campaign contributions that go out al the ti time. i wasn't asking him for contributions. this has nothing to do with the merits of the case. you can't defraud 5,000 people out of $40 million and then distract things by saying things this is a conspiracy between me and president obama or i was soliciting money from people who had some affiliation with him. the documentary evidence is overwhelming. he committed fraud on an ongoing basis. he fleeced people who couldn't afford the money out of $40

million. maybe the most despicable thing his instructors told students, you have to raise your credit limits. call your credit card companies, get more credit if you want to succeed in real estate and folks used that increased limit to pay more money to trump and went further into debt. despicable scheme and he's going to pay for it now. >> any other name than trump, this story doesn't get any pick-up, nobody notices it. to those who say it's an opportunity for you to increase your public profile and that of your office, how do you respond? >> i'm responding to him. i mean he went in the newspapers on saturday and started talking about it. and making crazy accusations against me. so, we're not going to sit down and let him make fall accusations and lie what the case is about. this is a classic bait and switch scheme. you have to sent a message, no matter how powerful people are, aggressive they are about suing people who sue them -- which is something they does frequently -- they're not

the law. one set of rules for everyone. that's an important message to send. >> trump also said, listen, pointed to the corzine example that jon corzine still walking free and implied these are small potatoes type stuff, do you believe there will be a time, attorney general schneiderman, where the state of new york goes after some on wall street, criminally, maybe not corzine, maybe others? >> i don't want to talk about any other ongoing investigations. i think it's well known that i have been the most aggressive person about pursuing banks for the mortgage-backed securities fraud that blew up the american economy, got the president to set up a federal task force that i co-chaired to investigate it. trump is trying to distract from the facts of this case. we have submitted his play book which tells instructors what to do, we have got the testimony of the former president of trump u admitting these things.

he has to face justice. he doesn't like doing that. >> you are calling for restitution. why not call for it to be shut down? >> it is shut down. it has been shut down. >> already? >> they started get too much heat from regulators and complaints, so they shut it down a few year ago. now we're going for restitution. we want these people paid back money they were fleeced out of by this scam. >> all right. >> new york attorney general eric schneiderman. thank you very much for joining us. >> glad to be here. >> tune into "power lunch" today. donald trump will give his response to this interview live. donald trump responding to what eric schneiderman said, responding to trump, responding to schneiderman. i don't know it had been shut down. it shut down a few years ago, you wonder why now. a good battle. kayak, different news, rolling out a new feature. search results include an aggregator analyze ratings and revies from a number of leading travel sites. steve hafner ceo of kayak.

welcome to "squawk on the street" and cnbc. what exactly are you rolling out now? why does it matter? why do we care? >> good morning, brian. you know kayak's mission is to be the best place to travel worldwide. we've always done a great job of comparing prices across hundreds of travel sites. today for the first time we do the same thing for holtz reviews. consumer comes to kayak, does a hotel search, will find not just prices from expedia, travelocity, booking.com and others, they also have the review content. so for those of you who are looking for you know what's the best hotel for me, is this hotel have great service? does it have a spa? you can see reviews from people who have stayed there in the past on kayak, without having to visit the other third party sites. >> steve, if i could, i want to read a list of the start-ups in the travel space. they include tripit, zap travel, trip tease, many time viable peak, u-trip, tons of

competition now in this space. what are you going to do to draw e people to the services that you offer and differentiate yourself from the offering? >> travel's a huge category. it's beth bigger than any other e-commerce, bigger than books, et cetera. you'll have new entrants. what makes kayak special and makes us the leader in the spaces our commitment to innovation, to the user experience. we want to have the content from every other travel site. we want to have capabilities the new entrants are seeking to build. at kayak we focus on making the product great and we focus on marking to consumers and making them aware of services. i think we'll do just fine. >> by the way, priceline shares showing there. how is that going now under the guise of priceline? that is making a difference the amount of investment, expansion that you can do to this kind of rollout? >> yeah. now we're delighted to be part of the priceline group the

world's large effort online travel company. and that combination has allowed us to do a couple of things. i can focus back on the product. the second is priceline is in more marks than kayak. if kayak today, we're in 18 countries, the priceline group is in over 50. so international expansion is something that we're working very hard on. and the last bit is priceline's very good at customer service at completing bookings. that's something we're historically kayak was great to search on, not great to buy from. leveraging their knowledge to get better at that. >> we'll see if it works in the latest endeavor. thank you steve hafner, co-found somewhere ceo of kayak. thank you, sir. have you ever wanted to live in a 13-bedroom home where your closest neighbors would be kid rock and michael jordan? who wouldn't. taking a look at it, the mansion for you in that case.

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welcome to monday's

rendition of the santelli exchange. i was off friday. we had an obviously weak new home sales and now it is followed by a weak gel durable goods. let's dig down into the number a bit, especially it wasn't only the minus 7.3 headline on durables, really in many ways non-seasonably adjusted was a softer set of data points and one area i want to focus on in particular are the shipments. capital goods orders, the shipments, non-defense ex aircraft and here is the last four months. in may up 2% and april down 2.1 and 9/10 in june and currently minus 1.5. many out there that seem to be spending particularly close attention looking at this and not only are they of course thinking gdp that we get a revision on second quarter, second look, may be impacted softer because of second quarter

july numbers but think about shipments. think about how you have to be forward-looking. there are many that continue to take this and extrapolate even now looking to claim that third quarter gdp may be pressured under 2%. back to the marketplace. i love the markets. keep it easy. between new home sales and weak durables we have now slipped under the important 161 and right now if you're looking and trying to track the treasure are i market from a technical vantage point, you want to pay particularly close attention to the five year that did close at the 161 level on friday. if it closes below here, look for the entire curve to slip a bit, especially the 10s. 175 would be the good support, 275 the good support underneath. kelly, back to you. >> rick santelli with levels to watch. thank you very much, sir. now her heart may go on but her time in her florida mansion apparently won't. celine dion putting her expansive flores state up for sale and robert frank takes you inside for a look around next.

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the orange me, singer celine dion is putting her extravagant florida mansion up for sale.

robert frank has an inside look. >> celine dion is selling two properties with a combined price of more than $100 million. she just listed the compound in jupiter, florida, and the asking price $72 million. her broker tells me she also has an accepted offer on her private estate near montreal listed last year and the ask is 28.2 million. dion's broker in quebec tells me she simply is not using these properties much because she is spending most of her time in vegas. she recently reupped her contract there until 2019 and she has been in montreal only once in the past two years. the florida house is really more like a private resort t cost her more than $80 million to buy and build and it has a 10,000 square foot main house and eight bedroom guest mansion and a pool house and a tennis cottage and asorted other buildings totaling an additional 8,000 square feet or more and also a personal water park since dion and her family would be mobbed if she

tried to take the kids to a public amusement park. my favorite feature is the closet which is more like a clothing warehouse with an automated clothing rack and revolving shoe carousel. both properties, the place in quebec back to that for a second, 24,000 square foot french door man chateau and both properties have maximum security with heavy cameras and security guards everywhere, so maybe a russian buyer can get a two for one or maybe another celebrity. back to you. >> big properties, robert frank, incredible. >> no thank you. >> kelly, will you tell america the story you told me at the commercial break about your dion reference? >> do tell. >> you will drag this out of her. you can do it. you want to hear this one. >> it may have 1r068d an eighth grade talent show. that's all i am saying. can i talk past that and mention this -- >> the rotating shoe thing? >> robert frank, get to the

bottom of the story. >> i am on it. i am on it. i am looking at youtube already. >> mercifully nowhere to be found there. 70 million dollars with a private water park, did anyone else see larry david's movie on hbo a week or two ago that involves a plot with martha's vineyard and he takes down the -- we'll leave it there. i don't think anyone. clear history. thank you. let's get to it. here is what you may have missed. >> welcome to squawk on the street. here is what's happened so farment. >> durable goods down, a whopping 7 approximate the 3. >> this is right sizing the industry. so gdp and capacity, those are the issues, the macro issues. >> are you in support of the transaction? >> i think we win either way, whether it goes through or whether it doesn't go through. >> that is the legacy drug a few billion. >> that's a great drug for

pancreatic and kidney, nothing for those so this is one of those things amgen suddenly is back. >> that's global markets and agreed to a merger which i know came up last week. they agreed to a deal. >> you buy it and emotional response. >> it is a chick magnet, may i say that? shall i say that? >> i don't like to hang around small chickens. >> should i say it? >> i think bomber did a good job under difficult circumstances. of course he faced the classic innovators dilemma, a big profitable successful company trying to protect its franchises while innovating at the same time. it is a difficult balancing act. >> the case speaks for itself. the documentary evidence is overwhelming. he committed fraud on an on going basis and fleeced people that couldn't afosford the mone out of $40 million.

>> good monday morning. we're live and let's get a check on the markets as the dow kicks off the new week of trading despite soft durables this morning, gains, up about 30 points on the dow and s&p adding five and shares of tesla rallying after the modelesque was named the top selling sports car in california out selling portia and jaguar. tesla up 400% so far this year and gained 16 billion in market cap during that time, more than the total market cap of half of the s&p 500 names. tyson foods tradesing to the downside, downgraded to neutral and target price cut to $32 a share. another conflict looming in the middle east, the u.s. is considering taking military action in syria after a potential chemical weapons attack was reported late last week. we have the latest details and the implications for the market. >> and the search is on. microsoft searching for the next ceo after steve balmer announced he will be retiring. we'll take a closer look how

changes could impact your investment. >> and the biggest bubble of them all is the bubble in central banking. strong words from vince reinhart, the chief economist with morgan stanley and vince is here to tell us what he means. >> first, massive wildfires raging out west. california's rim fire is covering about 200 square miles and could be one of the worst fires in state history. scott cohn has more live in california. over to you, scott. >> hi, kelly. the size only begins to tell you the multiple challenges that they face here trying to fight this fire which is so big it actually creates its own weather patterns. that make it is difficult to predict. that's one challenge. take a look at the map of where we are. it gives you a sense of the other challenges. you have got yosemite national park and all of the national treasures there including the giant sequoias they're trying to protect and the reservoir that

supplies hydroelectric power to san francisco 170 miles away and the heavily populated areas or the populated areas to the north and west and that's where we are where this is one of the areas that they are trying to protect. again, it is to the west of the fire, so you would think with the prevailing winds that would make this relatively safe. because the weather patterns and the winds are so unpredictable, you can get a sense of the smoke in the air here and everything they're dealing with and a big fire presence trying to protect structures and make sure they're there in case the fire takes any unexpected turns. one official telling us the fire seems to have a mind of its own and it is certainly not a typical august for the city. students would normally be going back to school. jordan is not only dealing with that, but also worrying about her father who is out on the front lines. >> last i heard from him was yesterday. i don't know if he is actually out there fighting the fire or

if he is just out there watching and helping the fire fighters telling them where to go and what to do. i am worried about him all the time. >> the if fire fighters here are heroes. you see signs all over the place, thank you, fire fighters, we love the fire fighters, and it stands to reason because they are doing a whole lot of work working 24 hour shifts to protect all that is out here. guys, back to you. >> it is hard to even imagine how hard some of those fire fighters are working, scott. thank you so much. meantime, more tension in the middle east. the white house is considering military action in syria after reports last week chemical weapons were used by the syrian government. john harwood has the latest out of washington today. >> the latest this morning is that u.n. weapons inspectors have returned to their hotel in damascus having inspected the site of the suspected chemical weapons attack last week, and

now that is limited utility because of the way that evidence degrades the inspectors were not supposed to try to assign responsibility for who launched the chemical weapons but increasingly there is a sense both in washington and abroad that the question is not if we strike syria militarily, but when. >> the response is imminent. i talked last evening with the situation room, and i think obviously we're building support with nato allies and our assets are in place, and i don't think there is any question in our administration's mind that chemical warfare has been used. >> now, two questions remaining about exactly how this gets rolled out. one is what is the legal justification given russia's objection to action by the sanction of the united nations. that is not likely to be where the united states gets legal justification. may look to nato allies, britain, france, other countries, the arab league, potentially turkey and the other question will be how do you limit this involvement?

one former obama national security official told me yesterday once you dip your toe in the water the odds of getting pulled underneath go up exponentially. richard haas, the former bush state department official also on "morning joe" said the key thing for the president is to make clear this is a punitive response because of syria's use of weapons of mass destruction and not an open end commitment to getting involve in the civil war. >> thank you for that. >> joining us for more on the complications is jerry sai of the wall street journal washington bureau chief. great to have you. >> thanks. happy to be with you. >> that lot of people thinking through the relevance and importance of what's happening and also across the middle east. what would you say to people saying well, looks like markets are taking it in stride? >> well, look, i think that the reality as john indicated is there will be some kind of action. i would be surprised if there weren't. i think people have been able to absorb that. what it is is an open question

and i think the real request he is how extensive is it and how much can the u.s. do which is limit its involvement in the broader conflict. i think you have to look at this in a couple of different levels. the first instance, the reason to act at all is simply to make a point that using chemical weapons comes at a price. cruise missile strike for example would say this is the price you pa i for crossing that line. the second question then bblgz if you're a super power and engaged militarily are you expected to prevail and that's one of the concerns the administration has had, even if you do limited military intervention, once you are involved in a place like syria, you own the problem. >> and, jerry, to that end, if you are trying to make it as john said punitive, we keep hearing the word surgical, proportional, is that something that we can or will do on our own? what is the bar to get cooperation from the international community? >> well, i think there is going to be cooperation from the international community. the question is what retaliation

do you put up with? the syrians may decide they have an interest in escalating the fight. you're not in control of that if you are in the united states position, the syrians have some ability to escalate things further and that may be in their interests. you have to worry about things like terrorism and response. it is not in the control of president obama obviously. the question who decides where it goes from here is not a unilateral american decision. that's one of the reasons you think hard before you undertake this sort of thing. >> want to read you this quote from william hague, britain's foreign secretary and he says what is happening in the middle east is the most important event so far of the 21st century, even compared to the financial crisis we have been living through and its impact on world affairs. do you share that view? >> i think there is something to that. you cannot see it as just a civil car. it is the proxy war for everybody in the middle east. have you on one side syria and iran and hezbollah and the

russians all lined occupy one side and on the other side you have the syrian opposition and saudi arabia, israel to some extent and the u.s. at least in a limited way and essentially everybody else in the middle east. it has become a proxy war that is being fought out between sunnis and shiites and the two axises that exist in the middle east and if you think about it as a place that a conflict can explode and affect the whole world, it is important on a global scale and i think that's where we're at on syria. >> yeah. important implications for that. jerry, thank you so much. >> sure. happy to be with you. >> now to microsoft. the future uncertain there of course after long time ceo steve balmer said last week he would step down and we'll tell what you it means for the tech portfolio with alpha one dan niles that made smart calls and rick santelli, you are talking health care today, right? >> i tell you, i didn't want to talk health care.

it is with dan the man and he is up here. will you have to tune in in ten minutes. i don't know what he wants to defend on this 160 economy. what, are you crazy? which side are you taking on this? >> the other side of you, rick. >> it is all right. it will be awhile. when you want to come back in ten minutes. >> ultimately it will be close zim glad he doesn't have a mic. ♪ make it happen with the all-new fidelity active trader pro.

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welcome back to "squawk on the street." shares of best buy heading higher again in trading, up about 2 or 3%, the strong upside momentum continues and shares are up 200% in 2013 alone. that's a two year high. this best buy stock was the second worst performing stock in the s&p 500 last year. a nice 2013 rebound if you will for the best buy approved shares over at best buy. >> talk about a reversal of fortune. thank you very much, tom. incredible. new reports are surfacing that steve balmer's exit from microsoft was earlier than planned. sources tell all things d that the timeline was moved up drastically and backed by the board. wall street welcomed the exit and shares did surge last week and the question is is this the beginning of a turn around for microsoft. dan niles is the chief investment officer for alpha one capital and joins us on the phone. dan, you said something on friday with us that still rings in my ears.

you said there is no way balmer would be gone unless bill gates wanted him gone, and that is clearly the conventional wisdom this morning. >> i think when you think microsoft, obviously bill gates founded the company, and steve balmers there since 2000, and they have miss add lot of big important transitions during that period of time, the sw itch to smartphones and move to tablets and the growth in search, and i think as a certain point you have to maybe think you need a new leadership in place. >> now that you have had the weekend to sort of let it sink in, is there a feeling that for you at least everything is on the table, not just with balmer's departure, whether it is returning cash, exiting businesses, that it is open season now? >> yeah. i think it is. if you look at the last 13 years or so of his reign, they have been opposed to some of the things you just mentioned and so i think any new leader coming in is going to think about a lot of different things including

potentially splitting up the businesses. you want to do that, don't you want to do that? what is your cash return policy, et cetera. microsoft no matter who comes in still has a lot of issues, and the new leader will have their hands full trying to fix it. >> dan, facebook is your biggest holding as i understand and one that you are long last fall when it was a good time to start to get long those shares, what about microsoft? what do you do with them and how do you view them as an investment? >> on friday i said that, look, this is just a short-term -- i think it will go up because you have catalysts coming and so you have a buyback that actually ends for them this september, $40 billion buy back that started in 2008 and ends in september and i expect a big increase in that. microsoft had 61 billion in cash on the balance sheet and 25 billion in cash flow, free cash flow last year, so you would expect that to move up. dividend at 2.8% should move up

as well. those are good things. the financial analyst dates september 19th and typically increase the dividend in september, so i think those are all positive and you have the xbox launch. as i said on friday, i think they will miss the board. i don't think that the pc business is that great. so i think if you are an investor in this stock you have catalysts, but i certainly don't want to be there when they have to report the september quarter and guide for december because i think pc demand is really poor. >> dan, a lot of names. people have said, look, this wiyou can see the names thrown out there. ray ossie and hastings and do any of those seem more credible than the others? >> we can play this. there is like 20 different names you can pick in there. it really in my opinion is going to come down to who bill gates in particular feels most

comfortable with and leading this company forward, and what the vision is. obviously bill gates is not going to come back as ceo, and so it is really going to come down to the successor. i think at this point it is a little early to try to get who the next ceo is. the one thing i think i would say is that i would sincerely hope they bring in somebody from the outside because i think if they bring somebody from the inside, people are going to be very unhappy and you will see it in the stock price reaction. >> interesting. >> a sentiment from people including jim cramer. thanks very much for your insight there. tweet time. mickey drexler making his small screen debut on "breaking bad" yesterday. the retail ceo played a customer at the car wash. that brings us to the squawk on the tweet. it is a squawk casting call. which ceo would you cast and what show and why? tweet us your responses and we'll hear them and the best ones about the morning. [ male announcer ] come to the golden opportunity sales event

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the battle over defunding obama care is heating up as exchanges set to go in place october 1st. it doesn't leave much time for the republicans in the fight. >> no. i guess that's why dan is here, kelly. i mostly agree with dan, but this time he has taken the department of motor vehicles health division on, i guess, and he is the pro guy and here is all i am going to say. you have the sequester tied in with the debt ceiling tied in with obama care and a speaker of the house that can't bring the sides together and my interpretation is it will probably die on its own because if it was put up for referendum i don't think it would pass. >> right.

>> the problem is that to stay politically more relevant versus having the country have a bad policy, i hate when it comes down to that. tell me your thoughts. >> this is what i got you going before. i came down and i said i think it is wrong to try defunding this. ultimately the goal is the same. this will collapse under its own weight. >> my goal is to have better health care. >> okay. that's alternate goal. i agree with you. we have to figure out a way of doing it. a general going into war looks at the different battles he has to fight and he knows he can't win a specific battle he will go just to win the war f we start challenging this and defunding it and doing whatever it will only provide an issue for the demz to use against the republicans in 2014. if that's the case we do not win the war. we have to win the war. >> i can't put a we into this. one way or the other it will work itself out. i am not important in the

equation. what is important is my question. if this one in front of the country is a national referendum, do you think it would pass? >> no, absolutely it wn't pass. we're not going to be allowed to do that. >> why do the people sent to congress and the house of representatives specifically by the way that gave them the majority section and that was mostly those conservatives elected under the microscope here, why are we better off not being represented in a way that would represent the referendum of the country? >> ultimately we do. if you remember back to 2010 had this came about, one of the big reasons we had a sea change in congress is because they ram rodded things through without public support f we give them an issue to say it is the republicans tault and they're shutting down the government and being obstructionists, we lose again. we to want win again. i am talking collectively. i am not talking about we the republican party. i am talking about we the country. >> my final question, how is all of this going to impact the markets when it starts to get

nasty? you know it will start to get nasty. nobody does their homework in washington other than all-nighters. >> we have seen what's happened when we have been pushed to the brink of shutdown. >> rates up or down when this gets nasty? >> i think rates go down and the market goes down and everything will get bad on this one when it gets nasty. >> listen, we have come to no agreement and doesn't look like congress has come to agreement. one thing we know for sure, anybody with any major work done in the health care system, it is lacking. i throw my hands up in the air. back to you. >> before we go to break we want to mark the passing of a wall street legend, the first person to purchase a seat on the new york stock exchange and why duncan issue this had statement today. the community is sattened at the passing of muriel see better and a true pioneer and made history as the first woman to become a member of the new york stock

exchange. we extend our deepest condolences to muhr he will's loved ones, friends and colleagues. loyal viewers will remember her from her numerous appearances on cnbc and the participation in the i am cnbc promotional campaign. >> i wanted to be baited equally and i said what large firm can i go to i will get credit on the business i am doing? he said don't be ridiculous, you won't. work for yourself. buy a seat. work for yourself. i said to jerry, don't you be ridiculous. he said i don't think there is a law against it. i took the constitution of the new york stock exchange home and i studied it, and i felt that i qualified. i realized that that was an historic application. >> mickey did a lot more women and financial literacy in the country, too, and died saturday

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markets are closing across europe. indexes weighed down largely by italian stocks and germany, france, spain finishing near the flat line and italy slowed about 2%. worries about a government collapse was pushing the market down and still the party is now

openly warning it could can bring daown the government. over in germany meanwhile a technical glitch in the company's eurex and futures trading was halted as markets hoped and trading resumed at 8:30 a.m. and looking at a small rally. speaking of london, the ftse closed for a public holiday. switching to the new york stock exchange, bob is joining with us details on the direct edge merger so quickly from rumor to fact. >> friday we were talking about it and now four exchanges then and now to three exchanges and the combined company would create the second largest new york stock exchange by volume and direct edge ceo bill o'brien joining us on the phone to talk about that deal and thanks very much for joining us. appreciate it. >> you're welcome. >> what's the i am approximate he tus? what's driving the merger?

>> it is really a focus on the customer. these are two organizations that have done well over the past six or seven years and in complimentary ways and by coming together we can help our customers brokers and their customers, investors, navigate this new market environment and i think more effectively with a broader variety of choices and greater efficiency. >> i think the bottom line here is the stock trading business is pretty tough right now, bill. you and i would agree on that, right? margins are thin and the volumes are down rather notably and getting market share makes a lot of sense. put up the screen here. we to want show everybody how much more market share they have and right now the nyc is the biggest market share with about 23% of all the volume and the stock market business and this is stocks. you put direct edge and bats together, 21% and you're right on the heels and number two right behind nyc and ahead of nasdaq. >> that's right. it is a tough environment. customers really count on exchanges to really help them navigate this environment.

what we're doing with this transaction by taking the best of what each company has to offer and bringing together as well as bringing together the shareholders many of which are among the largest trading firms out there and we'll really be able to do something to help them navigate the environment in a way that works for them and more importantly works to are their customers and investors. >> i have asked whether you will shut any of the exchanges down. you run two exchanges on your own. bats runs two exchanges. that's four. are you going to close any of them or keep them running? >> not at all. we have long been a believer that by having multiple exchanges and ultimate i am platforms or brands if you will, kek be more things to more people. not every trader is the same. not every trading business is the same. whether it is the retail brokerage firms where our exchange does as well and the other exchange out there or the market making or the proprietary traders, having the different exchanges will allow us to be more things to more people and have a product targeted for a

broker's particular needs. >> what about breaking into the listing? they will have big problems with their own ipo and created problems breaking into the listings business. will you be able to do this or be a real competitor to nasdaq and the new york stock exchange for the very lucrative listings business? >> i think over time it is possible. it is a very rough business to break into having been in the business at nasdaq. i can attest to that. when you take together a company that is almost the number one exchange in the united states and combined with the number one exchange operator in europe and the value we can bring in trading and in market data, i feel like we're just getting started and anything is possible over the years and decades to come. >> let me ask you a forward question. new york stock exchange and there is a merger going on right now with the ice and the new york stock exchange completed in a month or two. suppose two years from now speculating that the business of stock trading, the floor of the

new york stock exchange and the business of stock trading going to be spun off by the new york stock exchange/ice. would direct edge be a buyer that far? >> i think for us when you look at any potential m&a opportunity down the road, it is can it help us make customer lives better? if it is, we are strongly interested in it and if it is not, we probably would look elsewhere. >> bill o'brien, thanks very much for joining us. appreciate it. that's a little forward question. >> where did that come from? >> down here on the floor of the new york stock exchange when that deal was announced, it wasn't that merger that was interesting, it was what might happen to years down the road everybody is talking about. >> looking forward. thank you, bob. a check on energy and commodities as well. courtney reagan is live at the nymex. >> good morning. gold still hovering near that $1400 level and did crossover and move as high as 1407 in over night trading. since then it has been a very range bound trade here. the traders sort of contemplating whether or not the fed will or will not taper as

the rest of the market does question for traders down here believe it is not going to happen in september. sort of sitting on the sidelines until they hear more positive news or negative news about the direction of the taper. if you look at silver prices, these, this is the market really that's been moving more on the manufacturing data out of both china and the eurozone. some traders speculate increasing demand just around the corner for silver as part of the industrial process and we should note volume continues to be low and especially so today because of london being closed for the precious metals trading do u to a bank holiday. if you switch over and take a look at what's going on in the energy market, crude oil also very, very range bound and both today and over the course of the last week. traders again looking at the economic data, believing that the taper is not around the corner here. of course what's going on in the middle east is providing somewhat of a floor to those prices. a lot of questions remain about what could happen in syria. back to you. >> courtney, thanks very much for that. no nuclear signals coming out of jackson hole over the weekend

regarding tapering or the possible fed chair. vincent reinhart, the chief u.s. economist for morgan stanley and the head of the monetary affairs division says he is seeing the signs of asset purchase trimming, tapering as you might notice it. >> thanks for having me. >> i wonder if it is not so much about the rhetoric at jackson hole as the data just this morning that might suggest that perhaps september is no sure thing. >> it is not a sure thing. the fed is serious when it says it is data dependent. the data that really matters, what they have used to gear the path for the qe is employment. the data point that really matters between now and next fomc meeting is next friday, employment. >> that's what's so interesting. if you look at employment, if you look at the fact that core inflation is frankly almost i think lower now than when bernanke warned about it a decade ago, by the conventional

accounts the fed doesn't necessarily need to be in a hurry which tells us the reaction is changing and they're concerned about asset bubbles. >> that's why i was wrong at the beginning of the year. we had a forecast for inflation coming down and we thought that the fed wouldn't be any rush to begin slowing its asset purchases exactly for the reason you identified. we have listened to them since and what they have sensed is they have been ignoring the low level of inflation. they only gujingly admitted that and that tells me they really do want to get to the business of tapering. now the question is why do they want to do it? there i think the message is they're just not confident they get that much more benefits out of treasury purchases anymore, so it is not like they're ending an accommodative policy, they don't think they get the value of that from that policy. >> so when people say, well, you would rather stick around a little too long than leave the party too early, you think that argument really isn't relevant at this point, vince, because

the benefits have sort of eroded? >> yeah. that was part of the one of the papers presented. once you take into account the signal associated from the act of purchase, there is not much effect on other markets other than treasuries, so they just don't see the benefit associated from it. here interesting supply side issue here. people are pointing to the deficit next year which could be in the range of $550 billion and saying if the fed keeps doing qe at the current pace it will basically absorb all of that treasury might be supplying, so again if that is the view, the request he just becomes is this a massive policy error? should the fed be looking at other ways to be accommodative, especially if the data flow starts to weaken? >> what they're banking on is the thresholds that provide guidance on the path to rates. chairman or then governor bernanke and i wrote a couple papers about unconventional policy ten years ago arguing the zero bound wasn't as scary as

people thought. in the environment when you are at zero, you convince people will you stay at zero for longer. so the first line of the defense from the fed will be talking about their thresholds, talking about how they can be keep at the zero lower bound for even longer than people currently think. >> wow. it is an important one as well, vincent, and especially with all the personnel changes. we hope to bring you back to discuss the succession of ben bernanke over there at the fed. >> and great profile of bernanke in the times over the weekend points to all of that. the enterprise computing and cloud services space in tech heating up. the competition is fierce. john ford joins us from the vm world conference in san francisco with more. john, good morning. >> good morning. just talked to the ceo, his only broadcast interview before the keynote starting pretty soon, 22,000 attendees expected here and of course vmware's specialty

is taking margin away from specialized hardware players in the data center, take a look at the chart. they have been on the up swing lately. today he is going to talk about networking and storage and how they hope to do to those what they did to servers. take a listen. >> just like the server virtualization ushered in a new era of agility and innovation, we see the same thing happening with network virtualization. yes, it will change networking, but it will also create huge opportunities for networking services. >> what he also wants to do is partner with some data center providers in a new sort of go to market model where it will be more like a franchise, partnering to sell through them and sell a hybrid cloud services, especially in international markets. listen. >> it is powerful as it will allow to us to grow faster and

reach geographies and allow us to go internationally. >> now, there are implications for lots of different players if vmware is successful here, particularly in networking. think check point and sysco, if they're able to take the high margin appliances out and do what they do in software and cheaper at higher margin, there is big growth potential. of course it is hard taking margin away from cisco as juniper can tell you. it is not necessarily as easy as it was in the server markets and another piece of news, vmware and pat gel singer hired the good morninger microsoft cio here, another executive from a big software player they hired away and sanjay punin hired away earlier this month. >> we'll watch for more later today. the cost of college continues to sky rocket. everything doesn't have to be so expensive. one company is looking to make

one aspect a heck after lot cheaper and it is textbooks. remember how much they cost? >> we're going to tell you how you this works when we come back. [ male announcer ] this is claira. to prove to you that aleve is the better choice for her, she's agreed to give it up. that's today? [ male announcer ] we'll be with her all day to see how it goes. [ claira ] after the deliveries, i was okay. now the ciabatta is done and the pain is starting again. more pills? seriously? seriously.

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now could be the time to tune out the taper noise and raising rates and it is ugly for retailers but will tiffany deliver on tomorrow's earnings?

two traders and one debate ahead and we'll see you at the top of the hour. >> scott, thanks. looking forward to it. send it to dominic for a quick market flash. >> oil and gas company anadarko is heading higher in trading after they announced a deal to set a stake in the natural gas deal off the coast of africa to oil and gas corporate india for $2.6 billion in cash. anadarko will retain a 26.5% stake in the field and stay on as the operator of the those assets, the company will use proceeds from the sale to fund other projects in the portfolio and the deal is expected to close by the end of the year. back over to you. >> thanks so much. our next guest is hoping to disrupt the traditional textbook market by offering textbook rentals as alternative and campus book rentals is offering students a platform to rent the school textbooks for every customer that checks it out the student makes money back. allen martin is the ceo and

joins us this morning at post nine. good to have you. is this model new per se or has this been done for a while? >> rental model only been here since 2007. obviously 2007 is when it hit the market and since then it has exploded, 25% of students that rent the textbooks, a quarter of all book that is go through the market are rented instead of purchased. >> walk me through the newer twists. what is rent back? >> rent back is a model where in we put students in the business of textbooks and in other words we take students that own textbooks already and let them send those textbooks. >> no matter what school. >> no matter what school they are in, they send them for free and we went them to another student and another and another. every time the book is rented we give the proceeds of those rentals to the original student owner which means you buy the book and you get all the value. >> they retain control the entire time. >> and get the books back when they're done. you can keep your library. >> it is a textbook annuity. a lot of people thinking through an income stream here they may not otherwise capture and taking advantage of how expensive they

are and what's interesting is i know amazon and this is where the ifren shags is important. amazon will let you rent a book instead of buying it and a lot of the you online marketplaces mr. how does a company like yours go up against amazon. >> we allow students programs like rent back that amazon don't have and we put the technology inside college book stores. we work with over 250 book store as cross the country we have the technology in there. we walk out for amazon prices at the book store level and amazon does not touch the instore. >> how do you make money? >> you do make money. are you profitable. >> we're profitable. we have been profitable since 2009. we started the business on $250,000 in credit cards and had to learn how to be profitable fast and we have since 2009. it is basically this. we buy a book once and rent it several times and sell it. as long as we can rent it enough times to get our money back and in the black we're profitable. >> you have big rivals as kelly

mentioned amazon and shag too, is that the next step. >> we're focused on being profitable and delivering value to students and we don't think we need to go public in order to deliver value to students. we have done so well so far and it isn't necessarily in the cards and doesn't need to be in the cards. >> they feel like the book stores are protected by the schools themselves like a closed system. is that true or letting your technology in? >> it has taken awhile to come along. we have been the rival for a long time now. they have seen the light of day. they were losing foot traffic for a long time and now saying folk that is can do this bring technology to us and let us serve the customer and our belief is the book store has the most opportunity to serve them. they're on campus. they get the books immediately. there is no waiting for the book. they can deliver the most value if had he have the technology and that's what they provide. >> you launched august 2007. talk about a start up during a recession. >> it was wild. we couldn't have predicted a year from then but people went

back to school and wanted to save money and we were there to serve them t worked out well. >> thanks, allen. thanks for coming in. donald trump firing back after being slapped with a $40 million lawsuit brought by the new york attorney general. the institute alleges trump's for-profit investment school trump university engaged in illegal business practices promising to make students rich and instead resulting in expensive and mostly useless seminars. we spoke to trump earlier this morning on "the today show" and here is what he had to say. >> i think that the students that enrolled knew exactly what they were doing and what they were getting and after the seminars and after they finished the courses, they were given an apple skaication to sign or rep card on us. what did you think of the job? what did you think of the instructors? we had a 98% approval. >> just about an hour ago new york ag eric schneiderman joined squawk on the street with his rebuttal. >> they never registered as a

university. this he weren't allowed to call themselves a university. part of the fra you had is they kept lying to the new york state department of education about the stat us and never got the teachers certified and trurch in all the promotional videos said people would be taught insider secrets by a group of hand picked experts and given access to a confidential list of lenders so 24e didn't have to go to banks and everything was a lie. >> be sure to tune into power lunch later today where trump will give his response to that response. one thing is if you sue the donald, kel, it is going to go public. be prepared for a long and public battle. >> absolutely. he has proven that time and again. >> yes. >> the pet business is booming. americans are expected to spend almost $60 billion on their pets this year alone. coming up next, we'll take you live to a luxury pet resort to i understand too out how people are spending their money and i think we're looking at how dogs are enjoying their time there now as well. squawk on the street will be right back. clients are always learning more

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>> the pet business is booming. squawk on the street will be

you probably know pet business is big business. americans are expected to spend $56 billion on their pets this year. the number is only going up. josh lipton has more live from a luxury pet resort in morristown, new jersey. good morning, josh. >> reporter: hey, there. with two out of three u.s. households owning a pet, there is a huge market for pet products and services. just take a look at spending.

it has doubled in the past decade and the category that is growing fast is pet services like grooming and boarding and walter morris that owns morris animal inn says his competition increased over the past few years as more people realize how recession proof the business really is. 20 years ago he says he was the only game in town and now he faces competition from pet smart and websites like dog vacay.com and his 24 howe square foot fa set over head costs are enormous like zoning variances and a payroll and a monthly utility bill in the thousands and the could he to maintain margins is diversification. he offers manners training and aqua therapy and nature walks and bedtime stories. yes, it may sound excessive but moore says he stayed in business for 35 years by giving clients what they want. >> years ago a lot of the pets were kept in the backyard and maybe on a chain and a dog house

and occasionally allowed into the house. now they're sleeping in bed with mom and dad. so they have elevated the status of the pet in the home. because of that, the public is demanding and looking for a more call it what you may, upscale, luxe urgs combinations. >> now, it can cost anywhere between $35 a night and several hundred dollars depending on the services you want. business is brisk. revenues were up 8% versus last year. that's as we head into the busy labor day weekend. guys, back to you. >> do you want to take this one? >> look, i am so in the tank for my dog, i can't even approach this story with an unbiased -- >> are there bedtime stories for

the dog? >> yeah, of course, kidding me? it gets lonely. >> aqua size? >> i am not sure i would take him to the pool but it is a big, huge business, no doubt. >> i know. thanks very much for that. stay out of the pool. keep the tweets coming. drexler making a small screen debut in "breaking bad" on sunday. the retail ceo played a customer at a car wash and we're asking which ceo would you cast in what show and why? tweet us at squawk street ask approximate we'll air your answers next. ♪

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it's time. everybody will feel safe in america. >> peace. >> now is your chance 20 share your dream. >> j. crew's ceo making a cameo in "breaking bad" on sunday. he played a customer at a car wash and long time dream of his, he is obsessed with the show and brings us to squawk on the tweet. it is a squawk casting call. which ceo would you cast in what show and why? maribeth writes meg whitman on girls. and elon musk on "big bang theory" to show them not all genius are tiny and wimpy people and wall street writes mike ullman in the walking head. i thought marissa mayer on gossip girl would be nice.

do you have one or two. >> walking dead popped up a couple times. i like the one suggesting balmer on the prophet at cnbc. >> snarky and classy. we continue to hang onto gains here on slow volume. let's get to headquarters. wapner is back. let's get to the halftime. >> thanks so much. welcome to the halftime show. four hours to go until the close right there the wall is where we stand on the street as karl said, volumes light and so are the gains. we'll take it. 28 points for the dow. here is what we're following on the half. double dip, housing guru diana olick on what the backup in yields means to recovery and whether it is in jeopardy. inside the blue box, tiffany shares up 45% year-to-date and a buy with earnings looming and one stock, two traders in a halftime throwdown. first, our top story, it is all about the markets and how even in the face of