>> well, it is fed policy and you have that policy-driven, and now you have the markers identifiable in time, and the fiscal cliff told you that, but it does not last that long. >> see you tomorrow, andrew. >> yes. >> and "squawk on the street" is next, but in the meantime, watch "halftime report with wapner." >> thank you very much. >> thank you very little. good wednesday morning and welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber of the new york stock exchange. after yesterday's bruising, the worst day for the dow in two months, the bulls are trying to hold the line here as we continue to watch for lines of any u.s. action in syria. the spike in oil is very real today. we hit $112 earlier this morning and the highest in more than two years and currently below that level. gold is also near 1420 and closer to 1430 now before

closing below 1400 for the first time since june. markets around the world are holding their cheollective brea as the allies and the u.s. weigh options against syria. >> and such at a tack on syria could send crude surging to $150 barre barrel. >> and jpmorgan is going to settle lawsuits settled from subprime mortgages. the nasdaq and the s&p coming off of the worst levels. and the fears of u.s. may attacking syria in the next few days, stocks are posting the biggest drop in eight weeks on the syria concerns. there is some line of thinking, jim, because today is a big event on the national mall anniversary of the "i have a dream" speech, that the president may not act today and he is overseas and so a window

of thursday and friday where if they are going to dit, they will do it. >> i read the speech again and i have to go listen to it. >> i do, too. >> and we listened to it tomorrow. >> yes. >> it is on youtube and even though it is online, it is not part of the public domain. >> true? >> yes, we can only play selected bites, and it is on youtube if you want the whole thing. >> well, you should do it, and kids should do it. i remember meeting bishop tutu who said that all of the regime changes are pat eterned after that. it seems that the president would not pick this day to do it, and one thing that senator mccain said that we just telegraph everything. this is an act of war, and do you really give the guy the sked? >> well, there are those who are wondering if it is effective in any way, and the largest concern is that if you bomt a couple of places in syria and the reaction and what does it accomplish and

what if they do it again and actually get drawn in, in some way, and even though it is highly unlikely given the case give ten president's intent to remove us from war and has done so many iraq and certainly drawing down in afghanistan and nonetheless, that is the larger concern and wdoes it do to the region and in terms of escalation. >> i was talking to joe in the cross talk. and this is one of the moments where i'm at a loss and how do i gain syria. i can go back in history, and i remember when james baker had drawn the line in the sand with tariq hassij and we knew there was going if be a operation bombing and you knew that the market would go down and i was with karen cramer, and she said, i am going to take three weeks off and the next three weeks are whatever, and she said we will come back after the bombing and make a fortune, because we don't

know what we are doing. it is kind of like collectively the market doesn't know what it is doing. because it doesn't know what it looks like. what does it look like. >> wait. are you saying that the game plan, the potential game plan is to sit, do nothing and then once the bombing begins, go shopping? >> well, that is -- well, no, you look at the scenarios and you say to yourself, wait a second, is this like '91? is this like when gulf port ii olibya wi in libya or like reagan, and in 1991, a lot of people thought we would not beat iraq and that sounds crazy, and the iraq republic crepu republican guard and this is different, or kosovo, but this is not earnings per share, but that said, will the earnings per share be affected on some of the stock stocks? because the emerging markets go

down everyday and system of the numbers, their numbers could be high. >> and the cruise missile wes sent in 1998 to sudan in the pharmaceutical plant when we tried to kill osama, and that was the the end of it. >> and like him, we could go the east hampton, and a saif i were because they are not going to attack him there anyway. >> isn't he in iran? >> we are trying to speculate that on something that everybody in the end, everybody is trying to speculate on, but we don't know much. >> and talking about the oil and the broader consumer impact later on in the year even though gas consumption should decline going into the fall, and that might be one element that sis a little bit of a healing salve, right? >> well, today is the first day that the major international oils are reacting to the higher price. you know what it makes to move

bp from $41 to $43 in a new orleans courtroom given. those stocks in 1991, and 1990, when we were poised, we sold moves in chevrons in that were breathtaking and in the hall burr tons and the-- halliburton they are like getting their own bear market and today, we are seeing action in oils. >> one reason for that is oils that is feeling the effects of syria. west texas crude hit a high of $112 a barrel which is the highest in two years. so it tells you that the socgen writing that brent could spike briefly to $150 if u.s. led attack on syria and sparking more conflict in the middle east, and the two supply disruptions, because syria is not a big producer in any shape or form. >> and 50,000 barrels a day, and

90 billion a day market. >> take out the pennsylvania. >> yes, by the way, this is back to the larger question of independent and fracking and how the middle east is not as nearly important to us geopolitically as it once was because we don't have the rely on it, and it is a global commodity and unrest sends the price higher, but it is not as if they could say in 1974, no mas. >> well, they can't dictate as much as they used to, because you are talking about 2020 being continental independent, and that is -- >> getting closer and closer. 6 1/2 years away. >> and true. and 600,000 barrels a day from eagleford. >> that is an incredible thing, 6 1/2 years from now. >> undeny biablundeniably. >> and then the forget about

the -- >> well, look, it is a crime against humanity versus the production of eagleford. >> and you say anywhere in the world -- >> well, were, and our president seems to think so, but i am not saying yes or no, but we are. that is a big debate that we have not had in the congress t yet. >> how about in this contextt, syria and the president and we don't know who the fed chief is. >> well, we are about to know, larry summers. >> and you have pointed out many times, carl, september is not that good of a month, and the question is to stand pat, sell a little or wait until it comes down to 2 or 3%, and that to me says stand pat and don't take the real action and we are on the precipice here, but i don't believe we are. >> well, financials have had a couple of rough weeks and more trouble for jpmorgan and the big bank may have to pay $6 billion the settle the lawsuits over bonds backed by the subprime

mortgages and according to the feshgs, the, they are this the latest of the string of litigation over the london whale. it is broken down nicely with the fhfa deal, and the looking into the hiring of kids in hong kong and justice looking at the energy trading even after the ferc settlement, and three separate investigations or lawsuits, and they believe that the reasonable losses could be $600 billion above reserves. above reserves. >> this is contested situation for some time and it goes back to the quality of the mortgage securities and certain banks have reached settlements with fannie and freddie for example, and we will see if they get anywhere near the $6 billion, and this is washington mutual and bear stearns that created many of the securities of course bought under duress by in some

ways by jpmorgan, but, hey, if the lawyers didn't figure out a which to get them insulated from the future litigation as a result of the mortgage insecurities, too bad. >> you are reaching ba and they are at the tail end and none of these are new. that is important, none of these are new. the company has been telling people, look out, a stage that there were going to be more shoes to fall, and the shoes to fall now, and it is like the saks fifth avenue shoe floor and how many can fall? e m

emelda marcos for sure. >> and well, i have some consumer practices, and the energy markets and the london whale -- you have got -- you know, foreign corrupt practices stuff, and who knowsk because that sounds ridiculous with the hiring thing, one from theless, it is going on. is it jamie dimon, and is somebody very angry with him? >> well, when you speak to the bank offline, they say it is their time. their time. it was bank of america's time before and now it is one of the moments when i look back at my own career and i realize that i had a choice, goldman sachs coming out of harvard law or paul weiss. i took goldman, but it is a paul weiss moment. law firm. i'm going law firm. >> you covered a lot of this when you talked to jamie here on the very floor a few weeks ago. >> yes. >> take a look at this bite. >> this company did great through the crisis, and we trade around the world and trade tr trillions of dollars everyday. we are a good company with flaws. >> you are used past tense. >> yes, there is some compliance and some mortgage and some industry-wide and some unique to

us, ap when nd when we looked ae said they were accurate complaints. so we acknowledge the faults and we will fix them. we are not denying it, and we will fix them and make the regulators happy with what we are doing. >> look, a lot of blame to go around and a lot of people hate the bankers, and do you read the store ri and say, boy, i feel bad for jpmorgan and dimon, wow, what a shame. no, you don't. they are big targets still. my charitable trust i own jpmorgan and i believe they have done a lot of things that make it obviously culpable, but they are paying for it, and at a certain point, it ends. we are reaching all of the way back now. all of the way back. >> and it has not affected the stock. >> the stock has underperformed the group. >> good point. >> although still performing well. >> yes, it has, but this year, many of the other banks have

done well and it is because of the litigation overhang. >> and we will talk about this mortgage -- >> i mean, don't you think that the senator from the anti-jpmorgan state of massachusetts is recognized. senator? the cool and lipid blue lines. >> i will not do a elizabeth warren imitation. come on. >> i know she has given you some nice eyes. >> stop that! >> there is a backlash there. >> don't you go there, professor. >> and why stocks and bonds and cash are reminding the markets of the 1950s and what it means for the money, and first a look at the changing consumer, and where the shoppers are spending and buying and not buying. take a look at the futures. and again, yesterday, 31 of the s&p names and 500 names 31 positive. the breadth was miserable, but the bulls are trying to dig a line in the sand here. a lot more of "squawk on the street" from post 9 here in a moment. building animatronics is all about getting things to work together.

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speak of "american girl" kelly evans joins us at post 9 and not only american girl, but talk talking about shopping. >> american girl and there has been a lot of focus and following the theme of what is happening in the retail space s

especially after the earnings in the last couple of weeks have n been surprisingly negative across the space with the only few exceptions and a nice note from citi's debra weinstein putting things together what she calls the c.h.e.a.p. consumer and it is not cyclical, but construction habits. and apologize for the acronym, but she says they are spending on cars, housing, e-commerce, appliances and projects for home. we are getting the numbers from the likes of home depot and lowe's and meanwhile, the struggle across the retail space and she says that the retailers she covers are left asking, what about us? look at what is happening in july and seeing the personal income take a dip. if you look at the year-to-date performer performers the premise is to chase the winners and steer clear of the guys underperformed

in the market. look at lumber lick wi quidator 84%, and dollar general and home depot up 20%, and meanwhile target and nordstrom is single digits and we know what has happened in the teen retail space. the interesting thing is that the sort of the wondering about what is happening in light of syria in the last couple of days to tie it together, is that the extent to which there is pressure on the disposable spending from the u.s. consumer has a lot to do with the rising price and of course, oil. one of the side effects is oil that we are seeing rising because if the macro stuff is all great, and it is also rising because of the geopolitical tension, and syria may spoil christmas. >> and remember that the house goes up in value, and you are suddenly willing to spend on the house. and i have to tell you that, is it a frugal consumer or a consumer who says, i want tangible hard goods. >> inthis is a consumer investmt

cycle. and consumer whether it is fashion or homes or the consumers in the mind to buy a bigger ticket item like a car or something to fix up the house -- >> phones cost a fortune. >> yes. >> i wonder about the gas price s. we have increased the economy of a lot of the automobiles over the last five years and they go further on a gallon of gas. we don't have it as often as we used to. >> right. and as often, and it is going to take a significant hit, and not that it is insignificant, but it is not as big of a concern as it used to be. >> and this is the difference of 2008 when we had oil prices that immediately slammed the consumer across the board, and what is happening is quieter and stealthier difference for americans who have to spend more on the items who have less to spend elsewhere and maybe not making the headlines, but it is not doing to help the retailers. >> delinquent mortgage payments and credit card payments are very low by historical

standards. the kconsumers want the ducks i a row and they are not going to be burned a second time. >> and confidence and recovering and it is not all of the sudden confidence is turning, and you know, it is okay, and what that tells you is that people are behaving in the way they want to and maybe longer lasting. >> i have the ceo of noodles on "mad money" last night and it is not expensive place to eat and they are blowing away and -- >> chipotle. >> and starbucks. and you will buy it out of the machine, but kashmir sweater -- >> well, that is the open questi question. >> kelly, we will see you in a few. >> are you going to tjmaxx -- >> well, i don't shop that much except for the things i have to wear for the program, and so it is a variety.

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opening bell on this wednesday. time for the mad dash ahead of trading. no joy in mudville land. >> no, i have not spoke n to mie sutherland yet, and he is a frequent guest on "mad money" and the number was terrific, and the charitable trust, but numbers are terrific and much better than expected, but the backlog which this trades on is horrendous. they announced a huge buyback of $1 billion over e three years which is fabulous, but the after-market orders which is what they are relying on is bad. >> why? >> coal is the principle and in a secular decline in the country and a lot of the miners are going under and that is going on all over the world. and now india is imports coal, and the mining business is terrible. this is -- >> explain to the viewers what

they do. >> remember "mike and the steam shovel" when you were a kid? >> yes. >> this is the steam shovel and not enough mikes. >> not enough mikes. what do they do to change the business model? >> it is a secular decline story, but within it, you have cycles. you think that it goes down and we still produce energy by coal, and china opens up a coal plant every other week, and india using coal, and in europe, because nuclear is coming down, so there is a cyclical upswing and you have to start digging again and the miners have better balance sheets. >> and on this thing, in the charitable trust? >> well, sometimes you have been long, and punting once you talk about frozen, but, no, i will not punt, because it is inexpensive stock, and if it lifts -- this is frustrating story, because mike southerland is a great businessman, but david, coal is in decline in the country, and it is happening

rapidly. >> all right. rapid rapidly as well is going to be -- >> yes. >> and all of the things that we have been talking about the incredible impact of fracking and natural gas that we have been speaking about. we have the opening bell in four minutes from now after a brutal day if you were long in the market yesterday. ment

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from td ameritrade. you are watching "squawk on the street" live from the world's financial market of the world, and this is the third worst day of the nasdaq yesterday, all on better than expect pad volume and people thought that monday's valiolume would be repeated tuesday, but it didn't. >> and you think that the market needed to take advantage of the decline, because nasdaq has been soaring and the same stocks over and over, and tesla, and maybe today, you look at it and tesla is coming up again, and you feel like somebody is going to come out to say, buy, buy, buy, and netflix we had a chartist

talking about that and the concentration of what is winning is genuine. >> and the island is getting smaller for sure. >> yes. >> and the look at the s a&p at the top of the screen and again yesterday 31 of the 500 components were in the green. looking for better breadth today, and today, power secure celebrating the transfer of common stack from the nyc to the nasd nasdaq. we are keeping an eye on the transfers, too, and the current ticker symbol is peao. >> and what about if we lob missiles and if you do itt again, you will -- i am trying to put my head into the buyer this morning wondering what he or she is thinking. what is the buyer thinking? otherwise just waiting. why are people committing today? >> i want to ask you about the vix, a 12% spike yesterday,

highest since june, and if that came in, and how much comfort? >> if that came in and the s&p goes down, it is a buy signal for me working in the last four or five times, because you need the divergence. but things are happening, and i was out last night with a guy who closed on my real estate deal, and he's a lawyer who does all of the many bigger real estate deals in summit -- >> you are keeping busy. very busy. >> and i said, what is the deal with the other lawyers that are a conclave, and look, business stopped. look, business stopped because the 3.5 went to 5 and then 3.3 went to 4.8 and the lock-ins expired and you just said, you know, the inner turmoil on these deals? i am trying to watch the mets and the phillies you know, and the next thing a house of pain all around. >> and the mortgage apps are down for the third week in a row, and the index is down 2 1/2, and the purchase up, but

the re-fis are 60% of overall activity is the lowest since april. >> well, when we taper, and you to get this -- and you know -- >> well, to if you have not refi'ed now. >> well, a lot of people did not re-fi now, because they didn't have the money, and you are a wealthy guy and go out to say that. >> well, my apologies to all of those who cannot refinance. >> keith says to be careful on the home builders and horton and you have the realty on the show the night. >> well, talking to people in real estate, they can talk about multiple bids and cash buyers and i am talking about the loans that they are suddenly paying $400 more a month. that is what the taper talk did. at the same time when we have got the president at war again with the republicans and the taper talk was wrong. the fed blew this. the fed blew this.

>> why? >> because it was too early. you should have been able to see that we would have a debt ceiling fight again. >> oh, wow. >> and if the fed is beholden to congressional strife, we will never taper. >> even bernanke throws his hands up at that one and when he is in front of them. >> 1 in 5 people employed, we will have a another problem, and the gasoline higher and the syrian worries and the health care worries and back and forth on the taxes and obama wants more and we are tapering. perfect. just great. >> well, things could be worse -- you could be in india and watching the currency decline by 4% per day. >> you could be in indonesia and watching a similarly currency going down. >> the rupee. >> yes. and that is a fact. >> and the fact is that the dollar buys more rupees than you can see, whoa!

any time a major currency moves almost 4% in a day, this is of course, the impact that you would expect of making indian exports cheaper which will benefit us, but a consumer-led economy there where they are trying to bring it in is complicated and then bring in a lot of goods and send them in and back out, and the equity markets there have not been performing well. >> and you are, we have not talked enough about the merging markets. >> well, they have been crushed. when you talked about the taper talk or the okay, what happens when, and forget about when qe ends, because it is not that the merging markets will take et the worst, because all they are built on is cheap money, and yet, that is the way that things are going. >> and if you are unilever, and then suddenly the emerging markets are not so hot, you can't go to the safety like you would have normally. that is something to consider. normally buying it low. >> with well, june -- june was

awful when the first taper talk started and then the cias there. >> and the one thing for the market that everybody ingagrees, they hate it. >> and chevron and exxon and anadarco, and conoco, and they are all playing. >> and at $110 people said, elevation to go, chevron at 125 and they are a really good company and they can go to 125 if the oil is elevated here, and one that never gets the due because of the explorer and res research, and lumpeded in with exxon who is stumbling. they are all kind of fly gthe balkan and bought some cheap ass assets, and they are lower with the price of the commodity. >> and apple with a buy-back option at the 250 stores and something that a lot of the

electronics retailers already do, but that is one way to create the draw as some of the new phones come out this fall. >> well, as everything apple does now as we now apple fell out of favor, that is positive and i went in and traded for one of the verizon guys and freestanding guys and i want to trade and trade up and to go to the apples, and i love the apples store. i love it. when you go to the -- oh. >> i have been in an apple store actually. >> and you have been shopping? >> i don't buy anything. >> well, you have gone into the store and maybe even taken the wallet out and bought something? >> well, i have not bought something recently in an apple store, but i did wander around with the stuff. >> and shopping is part of the being american. >> i thought about buying something. >> are you an american? >> what -- that is a good question. some people question that, but as far as i'm concerned. >> i want a mccarthy-like

agreeable. >> well, tiffany's, the downgrade of -- >> well, guys are suddenly not liking the tiffany, but they like the zale, and isn't that a trade down? >> yes. >> david, when you go the buy diamonds for the fabulous wife, you going to tiffany's or zale? >> well, citigroup downgraded on the valuation, and the stock with a good run and the analyst s want to ka-ching, ka-ching, and i got this right. i don't blame them, because tiffany's is amazing. >> but it was not based on the u.s., but china. >> and europe was strong, too, and look at the zale, every kiss begins at zale. >> and today, sonoma about to beat -- >> well, pottery barn and they said to watch out for the restoration hardware and they don't report to september, but restoration hardware is the gold standard and the gatsby

furnitu furniture. i can't fit up with of those sofas in my house, david. >> really? which house is that? >> one of my mexican places. >> oh, i see. i know that the door is smaller down there. let's get to bob pisani to see which one is moving down there, and little more tepid action here in the early going, bob. >> well, it looks like we are flatlining here by and large, but a lot of unease here on the trading floor, and i was listening to unintended fear about syria, and donald rumsfeld famous line, it is not the known unknowns, but the unknown unknowns. and that is the question, can the u.s. and the allies extricate themselves from syria with a 48-hour air strike and no boots on the ground and everybody is saying that, but the concern is that it could spill over to a number of countries in jordan and iraq and the known unknowns and the wider result is that it may not end after 48 hours and a situation where other countries get

involved and it could end up hampering global growth and impact on the fed's decision to taper as we get some economic consequences as a result of that. then you get into the unknown unknown kind of questions involved. that is what got people nervous down here. i don't think that the flat lining in the stock market is particularly reflecting that. you heard the word out of iran reportedly talking about the expanding the uranium enrichment x capacity at the plant there, and so this is an indication of the concern out there. let me move on the talk about the rupee, and i know i mentioned et yesterday, but it is getting a lot of attention. it is collapsing. historic low against the dollar, and at 68 now. and the rue bpee as ha been collapsing in the last two months, but this is really a major currency collapsing is a big global issue overall. we have tiedal waves of money going into and out of the

country and causing problems. they have to focus on the weak currencies and the trade deficits, that i cannot focus on restructuring and improving. it is an economic sinkhole getting a lot of attention from people investing overseas. and also, i would report that zales had an important quarter, and other companies with jewelry and their same-store sells a up. and earnings were in line with express and they raised to $1.52 which is a good number, and the big disappointment is chico's which is reports of weak traffic, and straight ahead women's retailer that is not doing good. that stock is to the downside. back to you. >> i know that every kiss begins with kay, and i watch football

and go the jared, and come on, give me a break. sometimes like to have fun. >> you like to have fun a lot. people need to understand that. >> the last week in august, try to have a little fun, okay? anger management class paying off right here. let's go over to rick santelli over there at the cmas. >> no, not cma, but cme. i will tell you that i'm not expect ean expert on the syria, but i'm an expert on the subsidies in the room. whether it was jim cramer or bob pisani, and everybody is saying what is going on in the middle east, and geopolitically is going to affect the taper, and something is always going to affect the taper. ever that time that everybody in the fed looks at each other and says that the world is a great place and kumbaya and time to take the qe programs down. the market moves all of the time

and in motion, and just like the environment, and look at the 1-day, and the 1-year or the 10s and this is what will jump up. on the 1-day jumping up, and the 2-day, staying equal. so let's not look at the pivot as a point, but look at it as a zone. 71 to 75, and it is certainly going to act like the e selling is getting more aggressive. now let'slet's switch gears to e item, and bob is right, the rupee, there is no reserve currency there, but think of how many people use it, and the restabilization of these types of moves and how they affect billions of people. the dollar index once again holding 81. if this was a pacman point it would be hanging on for dear life. you want to watch the level technically, because it is going to seem that all currencies and cross trades have been hovering for a while now. it is all yours, carl.

>> thank you, rick san ttelli, washington. still ahead, the founder of square is looking for the next big idea in finance and when he finds it, he is going to fund it. we will talk about that new endeavor coming up later. and david reports that the market is losing 10%, and why does that matter you? we have a list of every single s&p company that has expose sure to those markets and you might be surprised. now we go to the dow at 18, and look at the early movers. [ male announcer ] it's time. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse...

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delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪ welcome back to "squawk on the street," i'm courtney reagan at the nymex, as worries of syria continues, there is a continued disruption to oil. looking at brent crude and wti, the crude prices have hit highs overnight, and brent crude hitting six-month highs and wti hitting highs not seen in 27

months, but the prices have fallen since then. and the energy department will release the inventory numbers todate 10:30 eastern a.m. and the traders say it won't move the needle much, because everybody is focused on what is happening in syria and the potential spillover effect and any strike in the neighboring countries. gold prices hitting 3 1/2-month highs and we are retreating as we wait to see what is happening in the middle east. back to you, carl. >> thank you, court. operate glass. well, not yet, because one surgeon is the first to use google glass to streamline an operation. from the wexler medical center, he streamed knee surgery, acl surgery to a group of medical students and colleague consulting from the office according to website live science. in june, a doctor in maine used the google glass to stream gastronomy to the goose l

hangout, and he is to be a game changer for medical education, because it is exactly what the surgeon sees, and when they talked to the surgeon, he said that once we got into the surgery, i forgot it was there and seemed to fit seamlessly and very intuitive. >> and have you seen it? >> yes, i have worn them once. >> and people say, jim, you won't believe it. i want to try them on next. and really, sci-fi. >> and google has talked about them going on sale 2014 for a lot of money, and we will see how many they move. >> i think that google is undervalue and they will have a good mobile transition, and the ad server is going well, but people have stopped ta to talk about them, and -- >> dominant coming to ads? >> yes, 6% to 70ers, and really good company. >> and the stam way as amazon with the retail. >> yes.

>> and the retailers of target and the like to detail how much are you really deriving from the online sales, because they say there are significant gains, but it is unclear what the gains are off of, and where amazon is equal to the 12 top retailers combined. >> remarkable. >> not the mention what they may do. and youtube got a branding refresh, and if you have noe tid the apps on the ipad looking different, and different type face. there is a business that some say could be a $20 billion business in a few years. >> look. don't, and i'm urging people to not take their eye off of the ball for interesting opportunities that will not be impacted by syria, and they will be hit to be in the s&p and maybe that is where you have to go. don't turn us off, and there may be some opportunities burk not yet. >> i like it. here is what is coming up next on "squawk on the street." come up -- are you still in bed? well, you better hurry up and get moving. six stocks in 60 seconds is

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awful lot to talk about with jim here in "6 in 60." >> yes. >> just like tiffany, carl, they rup up big and the analysts want to get off, and that is the new pattern. >> and downgrading of taser. >> yes, a red hot stock and jpmorgan taking the profits and go buy them. >> and upgrade to coal labs. >> well, this is a service supplier that if you think that oil is higher, they will be higher to find out where the oil is. great company. >> and citi, comfortable on the novato. >> well, you go the novato and afraid to walk by so expensive. >> and e com? >> well, they place ads all over the web and hot area, and we know that the web advertising is strong for the highest end. >> and some catalysts here with -- >> no, no, don't lump this in with the teen retailer.

they have been doing good. >> good offerings for the fall and that kind of thing. >> yes. >> and what about tonight? >> well, when i speak to my friends in real estate, i think that the world froze because of the -- the world just froze because of the sudden jump in rates. i know that the rates are not that high, and they will calm down, but the world froze when you are going for a 3.75 and now 4 7/8, and that is too high. i want the talk to my real estate people. >> and apollo has existed their position completely. >> yes, it starts from the top, and still expensive at 19 times the earnings and we have a lot of work to do tonight on that one. >> and guys like john paulson buying the radian and the energies. >> well, jen worth and radian are expensive stocks, but you have to see if the buyers and the banks were overwhelmed, because at the last minute

everybody said, i don't want to miss the rate and they didn't get the deal done in time of the lockup, and people are in obeyance and this is a big rate move and people don't understand, that they were caught up in this. caught up. my friends in real estate and they were just like, holy cow, and we should not of look that. >> and finally, jim, you started the show by saying it is not earnings per share, and in a syria environment, it is risky playing the stocks. >> well, you know, you don't have to be a hero, because you don't know whether you are brave or foolish. we don't have an edge here. i don't have an edge here. if at a certain point the rates come back down, we can do certain things. i am not advocating dumb, but i am saying to advocate talking on the sidelines. i am talking on the sidelines tonight. i was on the sidelines for the eagles' training camp and

deshawn jackson came to me, and belief me sometimes you is to jump outside of the sidelines and he is a little guy, but he could have killed me. >> okay. tonight, 6:00 and 11:00 "mad money." simon? >> well, we are get a piece of data to check with jim's housing theory with the pending sales. we will look at syria and the oil market and could it bounce to $100 a barrel as credit suisse is recommending. we welcome the ceo of square to talk about the financing and banking. that is coming up next on "squawk on the street." to the n opportunity sales event and choose from one of five lexus hybrids that's right for you, including the lexus es and ct hybrids. ♪ this is the pursuit of perfection. and this is my home team. this is my large lecture hall. this is my professor. and also my coach.

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♪ this is the pursuit of perfection. all right. welcome back to "squawk on the street." the dow trying to e recover the losses from yesterday and down 170 points and the worst day since late june yesterday. trying to get some of it back, and 16 points to the upside and led by the big oil companies, and in fact, earlier this morning the s&p and the top of the list, hess, chevron and exxon and some that have lost ground. >> and just as you see the

airlines getting hammered and a lot of the transportation stocks will struggle here if we continue to see the upward pressure on oil. >> and as for case-shiller the housing data continues to flow, and we will get the pending numbers by diana olick in a few minutes and see what this afternoon brings. let's go down to diana olick. >> well, the signing contracts for existing homes is down 3.1% in july month to month according to the national association of realtors which is worse than expected, but not much. the so-called pending home sales which is in august and september are still up 6.7% from a year ago and pending sales have seen annual games for the past 27 months. the realtors are blaming the rising rates for the slowdown, but say it is not concerning. they are hitting higher cost areas more dramatically and the pending sales were down 6.5% in the northeast, and 4.9% in the west, and in the lower cost south, up 2.6%, and in the

midwest down 1%. mortgage rates rose last week to the highest level since april of 2011 according to the mortgage bankers association, and still personal applications rose week to week, and we have to remember even though it is a good sign that historically one-third of all market is all cash, and the re-fi is tanking down week to week, and re-fis are down a whopping 57% from a year ago. back to you. >> diana olick with the pending home sales report. >> thank you. >> for more housing, you have to stay here with jed crowell and jim. how do these numbers jive? >> well, the rising rates are not the only thing affecting the market right now, because

inventory is expanding for months on the existing home side and the new home side. that means that even though more inventory helps to push the prices down, that could expand sales. at the same time mortgage credit seems to be leensing a l ing lo bit. it is still tight, but looser than the recession. and that could give a lift to the mortgage purchase applications up over the last week and over the last year. >> and jed, it is a panel with two people within housing to be more buoyant than perhaps more people in the market, but can we pick up specifically on the type of thing that jim krcramer was saying before the break which is this very accelerated decrease in what people can get for a given salary as a result to the sweet spot closing in housing. housing has been dirt cheap for three or four years and now prices up 12% national ly in a

year, and 25% higher in some markets, and more importantly, you have the driving higher, jed, of the yield of the 30-year to 4.5%, and it is a fact that people cannot get anywhere near what they could one year ago for their money. >> absolutely. affordability is much worse than a year ago both because the prices rup and the -- prices are up and the rate is up. affordability is still better to the long-term low in the u.s. and when looked at what people will do renting versus buying and you calculate out the math that people stay put for seven years, it is looking more than o one-third cheaper than to rent nationally, and buying is looking like a better deal in all of the 100 largest met rose, because the rates are low compared to the historical norms. en last decade the rates were around the 6% range, and prices have still fallen relative to where they were last decade at the same time, rents have been rising. all of that together still makes

buying look affordable relative to renting. >> david, how important to get the first-time buyers back into the market to keep the confidence of the his ttoricall high levels that we have seen from the builders? >> well, we are missing the first-time home buyer and the new home sellers tell us that 20% of the market is sold to first time buyers. that should be around 30%. until they can get credit and it is not really the price of credit right now, but it is the availability of credit. jed is right, there is a small increase in the availability, but it is still much more restrictive than it was even in normal times. forget about the boom period. and so, availability of credit is the real life blood here. and plus, there is the problem with first-time home buyers typically being younger, and not having a sufficient down payment and student debt and jobs that move around egg frequently.

a l -- moving around frequently, and so there are a number of headwinds around besides just the mortgage rates. >> david, curious, to pick up on that, we have a bunch of headwinds and always do, but a sense that people are investing in things to fix up their homes, and this is what is interesting is that even at the same time we are seeing the headline numbers for the housing market slow, people are still investing in their home. so do these two things work together or a sense that people might be fix iing up their currt property instead of buying a new o one. >> yes, the remodeling expenditures continue the rise and some of it is due to the fact that folks have decided to fix up where they live than try to get into the hassle of moving again. so that is taking out another group of home buyers that we haven't seen. that added to the reduced first time home buyer is part of the reason we have seen the slow sales over the past several years. >> all right. we will keep an eye on the space

as well. and again, a 1.3% decline better than perhaps people were expe expecting. thank you, both. >> and meanwhile, the markets are trying to bounce back after all of the sell-off in the volatility as we countdown to military action in syria, and where should the western investors put their money? joining us from the chief strategist of lpl and also the chief financial strategist from janney. >> what everybody is trying to assimilate in what investors are trying to assimilate is what is going to go forward with this crisis? the wogt post has an article in -- the washington post is talking about how the u.s. could be drawn into a prolonged mi military conflict, and they point out that in 1998, afghanistan failed to kill osama

bin laden stirred a hornet's nest, and the bombing in kosovo lasted 198 days. in that environment, what should we do? >> and the stocks momentarily took a dip, and didn't look back, and really a great year despite april, may, involvement in that conflict. and you can look back to many of them that the stock market barely noticed in other events much larger ones such as world war ii or the gulf war, it was a definitive strike of the u.s. that turned the market sentiment around. it is not a big issue for it, market, and it started on domestic concerns and not foreign ones. we have the debt ceiling ahead of us and fed tapering sometimes soon, and those are the issues to be resolved and not the situation in syria. >> all right. the price of oil, and you may be right, and what about the price of oil which is clearly higher and some projections that it could go far higher. >> well, i do agree with jeff, simon, of the lrnlg larger

issues, and a confluence of things that are driving the prices down. we are already begun this notion of buyer's fatigue, but clearly with the oil prices, it is not welcome at this con juncture, and obvious ly, the consumer is so important to driving the economic policy, and with oil prices spiking that will translate at the pump, it is friction spending that could choke off some of the volume on a go forward basis if it is sustained. i don't expect it will be. syria in the output is di min you nous. and we could see the oil prices shocked to what we saw in 2008, $147 per barrel could be problemat problematic. >> well, it is a bigger risk for europe than the u.s., and much

more energy intensive economy is europe, and seeing the signs of the fledgling economies like germany. so as brent continues the move higher that is the big issue that europe rolls back over after we have seen a nice rally in the markets in the last six to eight weeks. that could be at risk here. >> jed jed, doesn't all of the uncertainty push the fed's time line back a tad from when they begin the tapering process, and they are meeting next month. >> yes, kelly. a window the back up a little bit or do a very much lighter tapering and say it is only $5 billion or $10 billion to taper or rather than the full 20 or 25 that had been expected so a light version of the taper than the full version they had previously expected. but you are right, it does lighten it or push it out. >> mark, the rotation from bonds the stocks over? >> well, i don't think so, sighm

sighman. we -- simon. we are very long way to go on that and we are in the nascent stages. and whether it has begun or not, but investors have been tempted by the equities so far, but they have not pushed the chips into the middle of the table on that decision. a long way to go. >> okay. thank you for the reassurance, mark and jed. >> thank you. as sigh mob sai-- simon sai the u.s. is standing ready to strike syria. we will get more from the ground and the latest in a few momens.s 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.

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dow is up some 20 points and we go to donald cm chu for a gl look. >> most of the companies are on the downside despite beating the wall street profit, and the sales estimates and we did maintain the profit forecast for 2013, but it is cautioned that it will be worse next year. joy gets the sale from the coal business and coal business s have been cutting around the world given the prices and supply. a lot of tears this morning for

joy global. >> yes, with caterpillar, and down year to date, kelly. >> one of the worst performers of the year. and with respect to coal, there is an interesting write-up over the weekend of barons and how peabody can do better, because a lot of the grid switches back and forth as the price of natural gas moves back to coal. while it is not longer term, but there is short term benefit. so in the market, that story does not matter on this day like this, because they will look at the slowing emortgaging markets and say, you know, the market is not there for us. >> and meantime, the united states is moving closer to military action in syria. they are preparing military air strikes as soon as the president give gives the greenlight. this morning on "squawk box" john mccain lined out what they would do. >> we would crater out the runways and prevent the air p

power and get the right supplies to the right people, and turn it arou around. it is not difficult. these are good people. i was in syria with them, and to say that we can't get the weapons to the right people, frankly, it is a cop out. >> for more on syria, we will bring in nbc's richard engel live outside of syria, and in antukka, turkey. >> well, a lot of people are trying to make sense of what the united states may do. what senator mccain was talking about is the more maximumist option. not only bombing, but giving the rebels the support. this is the faction that the united states wants to support, but it is not the only rebel faction on the ground, there is the nose ra front and so many other fronts and so will the u.s. carry out limited strikes

or help allies on the ground actually win. then the whole international aspect. is there a legal basis? is do we wait for the u.n. insp inspectors the finish the work? that is what the u.n. thinks should happen, but it does not seem like the u.s. and the other countries want to let this u.n. fully play out. there are u.n. inspectors on the ground today after a 24-hour delay yesterday continuing the work. >> richard, huge concern here with congress not actually in session, and therefore a lack of the for formalized debate as to whether you alluded to this, but whether there is a political plan of what should take place after the strikes have taken place, and you said it would remain to be seen if the white house helps the allies on the ground. who are the white house allies on the ground? >> there is one group commanded by general salim madres and it is a rebel faction that is mo

mostly secular, and it is considered the most legitimate of the different syrian rebel groups, but it is not the only one. in many parts of the country, it is not the most powerful faction, so if the united states took action that started to let, see the regime wobble, and all of the rebel groups started to rush to damascus or rush to whatever syrian base they saw, then the free syrian army is one of many militant groups now that would be charging their way to damascus and charging their way to the military bases. so the united states can either hope that the free syrian army gets there first to establish itself in power and try to help that happen or just weaken assad and see how the waters settle out which would cause more chaos and not clear that the free syrian army would win that race. >> and richard, meantime a lot of people are trying the get into the mind of assad and why would he do this knowing that

his nose would be bloodied. m mistaken by a target or emboldened by lack of previous responses orrer what is your view on that? >> we have spoken to western intelligence officials and to rebel sources, and they lay out a story that goes like this. that it was an act of revenge, personally ordered by bashar al assad after a failed assassination attempt on the presidential convoy in july. it was moving in damascus, and hit by a kt roshgs and he was not in vehicle at the time, but it had a chilling effect. that is one aspect. another aspect, the rebels in the area attacked with chemical weapons on the outskirts of damascus were getting stronger, and so when you combine the rebels getting stronger and the failed assassination attempt, those two things led him to take

drastic action. and his al l allawite community helped with the bedrock of the support. and the international community is not doing much, and we are told that is the story that the u.s. intelligence officials are investigating as a plausible explanation of what has happened. >> thank you, richard engel there on the syrian border in turkey. meanwhile, the emerging markets are seeing the significant losses, and what does that mean for you money? we go to see ma -- seema mody at

the nasdaq. >> some of the declines we have seen over the last week makes their products and services less competitive overseas and sol of the products in currentcy are now going to be worse. some of the companies that could be affected are brazil and monsanto even. and next on the list is pepsico wa and general dynamics who has seen their growth rate slow. and what about india? mosaic, and peabody energy, and american tower are some of the companies that do business in india. and lastly china, and many companies do business in china, but however, winynn resorts and

sad vanced micro and yum brands are dealing with a issue as well as china of the high debt to gdp ratio. and keep in mind with the backdrop, the exposure of these stocks when grouped together are underperforming on a three-month basis. tom lehman is recommending that the companies have low revenue exposure to the emerging markets, and higher expoet sure to europe as the economy na that region improve. some of the companies are gilead sciences, and ak mi -- akamai tech and priceline and biogen. >> thank you, seema. >> the dow is up 25 points after one of the worst sell-offs yesterday in quite some time. as the situation is growing

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. the action in commodities this morning is front and sun ter as the eyes of the world are on syria and the world. we bring in art cashin, from the usb floor. is this broad based? >> well, you are seeing this broad-based. and we have discussed in the past that the market was somewhat impervious to the geopolitical risks out there, and now it is coming home the roo roost. i think that you want to watch both gold and oil, and i have seen a couple of other guests

who seem to think that it is related more toward the tapering and a few other item, and you are not seeing that with the commodities in the gold and the oil. so, it is really a problem. the viewers have to be concer d concerned. we are playing a game of headline roulette here. that is going to be very difficult. you saw a perfect example this morning trying to rally on the opening bell, and that rally ran into a headline that israel was doing a partial call-up of the reserves. that smeared the rally for about 10 minutes and they tried again to get the headline repeated and came back in again. >> so from your experience, art, are the situations like this kind of linear and you can sit there and wait for each event and stay in the market, because there is splis plenty of opport to realize it is getting worse and exit at that point. you don't sit in the beginning of the crisis to guess the end game, because it could be benign or much more complicated?

>> that is what i meant by the roulette, because once this takes place, simon, once they take place, they can accelerate, and that is a real problem. the most beneficial aspect here is maybe if the brits or the others take it into the u.n., and that will give everybody a chance to kind of slow the process down without losing face. and that may give the market a chance to do a sigh of relief rally and see where we go. >> that is a point that just for the record, that is a pointless endeavor, because russia would veto it, and it is a delay after the weekend potential. >> but a delay nevertheless. >> and then a risk for the weekend. >> well, i find it hard to believe they would act on the weekend. it is a long weekend we know, but if it were some particular piece of government news that you would like the hide, nothing better than the three-day weekend, but you can't hide this anywhere. >> thank you very much, art cashin with his thoughts this morning. >> and the markets are moving

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welcome back to "squawk on the street", and i'm courtney reagan at the nymex, and the government's oil inventory numbers hitting the tape. and it looks like a build 3 million barrels of the crude and that is the market expecting a

drawdown of 350,000 gasoline and it is a drawdown of the 600,000 barrels and the market expected a drawdown of 1.5 million and not as much as we expected, but the crude oil prices are not reacting much, and the traders are saying that they don't matter what happens with the inventory report and all eyes are focused on what is happening in the middle east. many traders believe that the price prices will rise until a strike happens if indeed that is what happen happens and then the prices will sell off. simon, back to you. >> okay. the conflict in syria has the commodity market concerned about the impact of oil supply and oil spiking to new highs and wti, west texas crude hitting the highest level in two years. we will bring in john kilduff, and also bringing in a cnbc contributor addison.

if we have military action, addison, it is with the net exporter of crude, and does that change the situation that we can trade at a lower price of oil here in the united states? >> well, i would say that given the reaction in the markets, that really doesn't change anything. but i think that you have a point. and that is that, you know, the u.s. is becoming more self-sufficient, and it is not necessarily as it was in the past to import as much oil from the middle east to the midwest, and so, yes, we would expect that over time that differential would change and i would think that, you know, an event like a military attack in syria that even moved into a wider regional c conflict, i think that you would see the spread between brent and wti move back out to the highs that we saw earlier this year out above $20 a barrel. >> john, we have learned through

the cost that trying to gauge the move of the commodity markets can be everything. it was not so long ago that they built themselves up on a pyramid of buying and frenzy of qe when the fed first embarked on the gold and the cotton and the oil were substantially higher and dissipated to nothing. do you think that they are in the mood to do again, john, irrespective of whether the oil supplies are actually interrupted? >> i don't think so. simon, i think that because the oil market like many of the other markets are concerned that we will lose that pillar of monetary support as the fed ultimately reduces and eliminates the bond purchases of the qe program. also, we had a considerable run up in the speculative length and buying in the past month and it has come down recently, but now, it is starting to build back up, and right now, it is building a crescen crescendo, and action last night when we had the big surge of

above $112 for wti and i wish it had happened in the day today, because we could have called it a blow off top, but now it is difficult to find out what it was. >> addison, many people want to know when destruction sets in, and does it have to move higher for wti, and if, so how much higher? >> well, we haven't seen it in the u.s. related to the gasoline. the pump prices have not moved higher reflecting the latest surge in the crude price, and the driving demand has been good. we are a little taken aback by how good it has been over the summer. and the prices, you know, and the around $3.50 at the pump in the u.s. do not impact the driving behavior, but if we were to have a sustained rally in wti price prices which are, i think that it is very very likely if there is a military attack in syria that we will see the highest prices we have seen since 2008, and gasoline prices would go to

around $4 a barrel, and that is the point to where we have seen demand destruck snun tction in >> and just on brent, we have this forecast that it could spike, and brent is the european benchmark, but it could lead us up to $150 albeit for a short period before the stabilizers kick in. is that possible in your view? >> i think it is entirely possible and not much to get wti to the 2008 levels and up above $120/barrel and up to $147 and if you take the view that brent spread could move out the $20, then it is $150 or $160 point easily. >> and john -- john, how do i make the money here in your view? what is the trade? >> buy now and avoid the rush, simon, but if you want to take a longer term view on this, and say that the situation is a passing and episodic situation,

and we could see that addison is saying to take it out, but i would say position for a pullback and in december $100 puts would pay you if it came back down. you want to pace yourself, because of the production slowing and some of the production issues will resolve later and there is a great argument for the prices coming down as rapidly as it is going up here. >> and i suspect that we will talk many times addison armstrong and john kilduff, thank you. trying to pay it forward one programmer at time, and how co-founder jim mckelvey is talking about a major investment to bring start-ups back to his hometown of st. louis. stay with us.

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the mobile payment company square exploded on to the scene in 2009 and now one of the co-founders want ts to pay it forward. he is starting an accelerated program in st. louis to allow financial tech companies to grow. jim mckelvey is the managing co-founder of square and he joins us this morning. >> good morning. >> i want to talk about the program, but one of the favorite things is the name and what it means. >> well, 630 is the height and the width of the gateway arch which is the landmark here in st. louis. >> anybody who follows you or jack or jack's parents on twitter know about your love for st. louis. what are you trying to accomplish in that city? >> well, what we are trying to do is to take advantage of a natural advantage that we have here in financial services. st. louis is a financial service

hub, and it is really important for the startup companies in financial technology the have big partners. we ran into this at square. it took us three weeks to get the basic technology working and 18 months the get all of the banking licenses and relationships and underwriting that we needed to move the money. and so startups need the partners, and sixthirty is a giant matchmaker. >> and the point is to back four financial services, and a total of eight investments of. 00,000 a year, and is there a big enough engineering talent to support this? >> yes, the engineering talent is here, and we have a simultaneous edition called launch code which is creating more talent. financial technology companies are not technically engineering constrained, but mostly relationship constrained. what these guys need is introductions to the banks and brokerage firms and the players in the space. that's the main value that

sixthir pi provides. >> jim, wasn't it a lack of engineering talent in st. louis that forced you guys out of the city? so isn't there still and issue with getting the right people to come back as opposed to starting at the institutional level? >> well, it is still an issue, and an issue worse worldwide. we have a global engineering shortage and it is bad in the valley and st. louis and bad everywhere. there is another initiative called launch code here to train more engineers, so, we think that problem is not any worse here than anywhere else. >> jim, can i ask you more broadly where you think that you we are on the revolution of financial services? we have seen what social media or online streaming has done to other parts of the economy, and what does square and the things after square mean for the banks? >> well, i mean, we are always going to need banks and big companies, but what is really happening is that a communication is becoming two-way.

in the old days everything was broadcast, and now, you can talk back to the phone and talk back to the people on the other side, and that is fundamentally changing the way everything happens including financial services. >> what does that mean? you used a word disinter mediating where you strip out the banks, can you talk about that? >> well, there were not only banks, but other intermediaries who used to add that value, but no longer do. we see disruptions in the market, and we see it in square and almost any organization that has, you know, traditionally depended upon the middle layer of communiqcators. >> jim, you say that you are pitched a lot from people with ideas and you want to do fewer angel deals, and you are saying less and less polite over time in response to some of the pitches. what works though? what do you want to hear? >> so what i want the hear

personally is somebody who is solving a problem or hear about the exit strategy or hear about how much money they are going to make. i want a real problem for people and a slushgs and then i'm interested. >> financial solutions? >> no, no. we have problems everywhere. and this happened to be an area where i had the expertise and i could offer something. if there's solutions in other areas, i'm certainly interested in that, but one of the top companies right now is doing life sciences work. >> and finally, what happens if one of the start-ups that you back in st. louis becomes a huge, huge hit? i mean, what if they put square to shame. do you own them? do you hope they are bought by somebody else, and could they become a rifle? >> no! i think it is great. this is not a zero sum gain here, because you want the companies to be successful and people to outshine the parents. that is what it is all about. so we want them to grow and we want them to be as successful as possible. that is a win for everybody.

>> jim, something to watch and great to have you here and great to draw attention to st. louis in general. thank you for coming on the program. >> thank you so much. >> jim mckelvey with square. this morning we want to look at some of the safest banks in the world. there is a new article out ranking the long term rates of the credit agencies and the methodologies and the assets as well. the top three are based overseas with germany, the netherlands and switzerland taking the top h honors. so where did the american banks fall on the list? wait for it -- there we go. 31st on the list as you can see on the screen is byn mellon and down from the rest of the banks making it. cobank at 33 and agribank at 34

and agfirst at 39, and u.s. bancorp rounding out the list. >> well, some of the european banks are state-owned and may not have the -- some of them, but not necessarily the ones that you saw, but some may not have the transparencies that you have on the sheets of the american banks. >> and you could also see what role that plays into telling you how healthy they are. >> but we love a list. in particular a global magazine one. >> and see what the strain the banks are under. >> or under the judicial authorities. >> that is true. >> and over to dominic chu. >> well, technologies are headed higher after the company reported earnings in sales that beat the estimates, and forecasted better growth of the current quarter as some of the world's biggest smartphones are

growing. avago technologies with moves to the upside. >> today is the 50th anniversary of a major event in american history, and martin luther king's famous march on washingt washington. as you see on the screen, people are gathering in washington for a celebration that kicks off in 15 minutes. if you want to honor martin luther king's way in some small way, we want to play the "i have a dream" speech. >> when we have it read from every vim laj, -- village, every hamlet, and every street and every city and we will speed up that day when all of god's children, white men and black men and jews and protestants and catholic will join hands and

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let's get to the cme group. rick santelli with the santelli

exchange. hey, rick. >> hi, carl. oh, my gosh, there's so many topics and so many directions. i feel like a spark on a good firework on the fourth of july but we're going to grab two of those embers and we're going to try to relate them to the market in easy ways. well, housing. the more i look at all the housing data, the more i talk to people like mark hanson yesterday, and, boy, he really understands the underpinnings of the mortgage and housing market, just little things that we all take for granted, but when you think about them in clear, concise fashions, things make more sense. for example, you know, when you see some of the case-shiller housing price data points, that in essence when you look at the progression of how you buy a house, you put in a bid, you find a price, and the process moves on. you get financing. that the actual price versus the actual closing of the house, there's so much time that the data that we may be looking at

today purely reflecting prices is really based on old dynamics. but i guess fire and ice best describes housing in my mind being mostly an interest rate person. i remember when we started seeing rates move up in may. impervious to rates, the housing market is hot. why fire and ice? even after the fire goes out, the embers remain hot and after the fridge is broken, i can stul put a couple ice cubes in my mountain dew. i think housing is very similar. the refrigerator is broke because interest rates make a difference. the fire has gone out, but the embers are still hot. the deterioration are correlated to interest rates which correlate to housing and not a force on the planet can change it. also, commodities. i like commodities. i have traded them. i report on them. let's think about two countries involved in the syrian issue, okay? russia and china. of course, they have veto power with regard to what we can do as a coalition. but think of the conflicts of

interest, the unintended consequences, the lack of forethought in certain areas as i look at energy. who is one of the biggest energy producers on the planet? russia. who stands to lose boat loads of those exports should the shale boom in the u.s. continue? should become totally self-reliant on energy? russia. they exported 240 million tons of oil last year. do you think what's going on in syria and its affects on oil is making them really sad? i don't think so. think about china. think about what secretary of state -- previous secretary of state hillary clinton said about three years ago, that the biggest issue we have with national security was how much debt china is holding. you think any of this stuff costs a little or a lot? lobbing missiles, all the brine pow -- brain power to strategize syria, they cost us money.

we go into debt. we're already borrowing from them. it gives them debt leverage and gives them something else. think about the current relationships in the area. we have sanctions in iran but they have a special arrangement with regard to oil with respect to china. look at afghanistan and copper. there's a lot of natural resources there. boy, i'll tell you what, we have to make sure we go into syria eyes open because i guarantee you, there's four sets of eyes that are open, and neither set is really a super big friend of the united states. carl, kelly, back to you. >> okay. thank you very much, rick. it's an interesting take. meanwhile, how long is too long? check this out. pharmacy chain cvs is facing a social media firestorm for its receipt which critics say are long, comically long. we'll at the you how cvs is responding in just a few minutes.

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welcome back. let's send it over to dominic chu for a quick market flash at headquarters. >> hi, kelly. shares of specialty apparel retailer express surging in trading so far today. it reported earnings that were in line but sales that beat wall street estimates. comparable store sales rose by 6%.

express also boosted its full year profit guidance given better sales and customer traffic. carl, so express expressing to the upside if you will. >> very nicely done dom. maybe shorter is actually better. cvs, the country's largest pharmacy chain, announced it will shorten its receipts by 25% this week p.m. comes after they became the butt of a lot of jokes on social media for its gigantic reetz. here is the picture of a receipt for a pack of gum. the user writes saving the word one tree at a time. another to excited to be down to my goal waist of half a cvs receipt. finally, dear cvs, after purchasing who things, why is the receipt 4'6"? cvs responded saying, quote, over the past few days we've been listening to you and we've also seen the very creative uses for your receipts. you asked for all the savings and less paper so we found a way to reduce the size of the extra care portion of yir receipts by

25% while still providing you all the coupons and rewards. >> so three foot long then? >> exactly. 25%, by the way. i have seen this, and there's no way to opt out. if you're at the checkout line, you're just getting one thing -- >> and you tried to opt out. you have tried to do the right thing. >> i don't know if it's the right thing but in that case i just felt like i didn't need all of it. but they're automated checkouts so you have to track someone down and say is there a way to not get a long thing and a lot of people love the coupons. >> in the new social media world, when you get the feedback, it hits you hard. >> do we have time to stop all the direct marketing, all those catalogs coming from crate and barrel and weighing down every postal worker in manhattan. three catalogs a week, really? >> back on the rebound as well, direct mail. it tracks the economy. it's a great gauge.

>> rebound, dow is up 42. we lost a lot more than that yesterday, an we'd we are still looking at some of the components. tiffany's a huge loser. but a lot to watch. we'll talk some europe in a little bit. if you're just joining us this morning, here is what you missed earlier on. >> welcome to "squawk on the street." here is what's happened so far. >> there are economic impacts if this conflict continues to spiral out beyond the borders of syria, and those who think we can contain it within syria, frankly, that's just not what's happening in that part of the world. >> should the question be do you stand pat? do you stel a little? or do you wait until it comes down another 2%, 3% and then take a look? that to me says stand pat. it's like that saks fifth avenue

shoe floor. there's just a ton of shoes. >> signed contracts to buy existing homes down 1.3% in july. >> affordability is much worse than a year ago. both because prices are up and because rates are up. but affordability still looks good relative to the long-term normal in the u.s. this pull back started on domestic concerns, not foreign ones. they're still with us. we still have a debt ceiling ahead of us, still have a fed set on taper some time soon. those issues need to be resolved, not so much this issue in syria. >> st. louis is a financial service hub, and it's really important for startup companies in financial technology to have big partners. good morning. we're live at post 9 at the new

york stock exchange with a check on the markets. we're getting about 44 points back this morning. a lot of it because of what oil is doing which we'll talk more about in a minute. but the dow is up 44, s&p up 6, nasdaq up 18 after the third worst loss the year yesterday. keeping a close eye on commodities. as tensions rise in syria and overseas in the currency market. the rupee seeing it's biggest one day di cleecline in history. we will get a live report from the border of syria with richard engel shortly. oil markets reacting to the situation overseas. brent and crude both hitting new high this is morning. but what if neighboring opec neighbor iran gets involved? could oil spike to $150? we'll have the commodities trade coming up. plus, the smart watch race. it's on. samsung will leave its unveil next week beating apple to the punch.

speaking of which, okay glass, now operate. google glass is finding its way into one operation room in ohio. is this the wave of the future? we'll begin with the top story this morning, that's obviously syria. the white house saying that action could come as early as tomorrow. let's bring in nbc's chief foreign correspondent richard engel for more. richard, we appreciate your time, as always. the markets looking for any clues about timing here. give us your best intelligence where you are. >> reporter: well, i think the best intelligence is that first we have to watch the u.n. process a little bit more. there is today a u.n. security council meeting under way. it seems unlikely that we're going to get a security council resolution because russia opposes any military action against syria. but what we could see is u.s. officials saying, we tried the process, but once again russia is stopping the rest of the international community, and

they'll have to be another justification. we're also likely to see a speech either from the president or some other very senior official outlining to the american public what the intelligence was, why u.s. officials are so convinced that the syrian regime used chemical weapons on a massive scale while the inspectors are skill conducting their research. i don't think we're going to see any kind of military action until that justification is laid out. once you hear that speech, however, i think the clock is very much ticking. >> richard, is it the rest of the world's assumption that the u.s. is going to make the ultimate decision here? >> reporter: probably. it's not just the u.s. there's already been several countries that have expressed outrage and condemnation and a willingness to support a punitive strike against bashar al assad or a series. punitive strikes. turkey, australia, uk, france. all of them say this is a crime against humanity, that it should not be allowed to go unnoticed

and unpunished. >> thank you so much for that. richard eng illinoel joining us outside the syrian border. richard murphy is a former u.s. ambassador to syriaened a he joins us this morning from new york. mr. ambassador, good to have you. >> thank you. >> what would be the optimal result here? >> the optimal result would be to deliver a hard enough slap on syria that they would never resort to any further use of chemical weapons and a slap which would keep the door open to getting these parties back into negotiations. >> we keep hearing that regime change is not necessarily the tactical or the strategic motive here. why do you think that getting the rebels back to the negotiation table would be -- should be part of this?

>> well, first of all, i don't mean to suggest that getting them to the table is going to be easy. they're very divided, very fragmented opposition movement, and that's part of the pattern of history of syrian politics. but while they do agree on one thing, which is the end of the assad regime, they can't -- they have not produced, despite our best efforts over the past two years, to get a coherent, unified political platform. >> and ambassador murphy, there's a lot of people who say that emboldening the syrian opposition here could well come back to haunt the u.s. in a situation where everyone can look at this and say, you know, president assad in his current role is not the answer but neither potentially do we want a vacuum in his absence, what are the good outcomes here? >> well, the best outcome, as i suggest, is that the different opposition elements find a way

to craft a common platform, negotiate with the regime, and work it out. you know, we've had a head on with the russians over the past couple of years in rhetoric almost like it was the cold war back again, but their basic thesis was okay, which was the syrians have to decide who is going to lead syria. >> mr. ambassador, russia aside, we do have the arab league giving some key support, stopping short of endorsing any kind of action. how significant is that and how do you balance it with the fears of what the iranians have said, what the iraqis have said? this notion that doing anything is going to create some kind of conflagration? >> well, i don't think it has to become a conflagration, but this is a risky business, and we have to take into account the very strong position of the iranians, but by the way, the iranians themselves suffered from chemical weapons during the

iran/iraq war, and they were quick to condemn its use again. there may be something to work with there. >> also, you know, a lot is being written about the u.s.'s come say checkered history when it comes to any kind of weapons intelligence. are you convinced that whatever evidence the u.n. inspectors, the u.s. intelligence has gathered, that the due diligence has been done, that we will not be embarrassed down the road? >> i don't know. i'm waiting to hear the president or whoever he designates lay out the case. that will be critical to building support internationally and maintaining it in the united states. >> and just briefly, mr. ambassador, i want to read you a line from chris harmer who back in july had circulated a study showing how the u.s. could potentially use these tomahawk missiles to do a surgical strike on syria, but he says any ship officer can launch 30 or 40 tomahawks, it's not difficult. the difficulty is explaining to planners how this advances u.s.

interests. what would you say to that? >> it's a tough argument. the administration obviously is trying to calibrate just which targets to select that will drive the point home, never again use the use of chemical weapons, and yet not shut the door to political progress which is very, very slow in the case of syria. >> mr. ambassador, thank you so much for your time. obviously a lot of us still waiting for key pieces of news as the story line goes forward. richard murphy is the former u.s. ambassador to syria. thank you very much. 50 years ago today martin luther king delivered his historic "i have a dream" speech on the steps of the lincoln memorial in washington. john harwood joins us live now from washington with more. good morning, john. >> reporter: good morning, kelly. it's several an odd juxtaposition of events as we're talking about the possibility of military strikes against syria, we're commemorating the 50th an

remembe verse ri of this march on washington that dlu 250,000 people to the capital in nonviolent protest for civil rights. martin luther king, of course, gave the "i have a dream" speech, one he had refined at earlier appearances. it's not one of the most memorable pieces of rhetoric in american history. you had selecelebrityingies andy people pouring in to commemorate in this march. interesting political reaction. you had president john f. kennedy in the white house. he kept his distance. he wasn't sure the march has a good idea. he thought it might produce a backlash or potential violence that would setback the cause of civil rights legislation. and that legislation ultimately passed a year later after john f. kennedy had lost his life. now, today we're commemorating that march. america feels a lot differently about it now than they did then. you have some of the echoes of

the 1963 event here. you have got celebrities like forest whitaker and oprah winfrey and bill russell, jamie foxx speaking as well as a series of political figures, including john lewis, the congressman from the state of georgia, who was the youngest speaker at the 1963 event, and it's going to be capped off a day of speeches in midafternoon by addresses from jimmy carter, bill clinton, and finally barack obama who in many ways embodies the fulfillment of at least part of martin luther king's dream by becoming the first african-american president. many things left undone and if you look at the economic and educational achievement gaps between african-americans and white americans, there's still a lot of work to do, but this is a day to celebrate what has been done and the dream that martin luther king evoked, which has become one that americans broadly across the spectrum accept. >> that speech delivered 50 years ago today. john harwood, thank you very much. a reminder that president obama will be speaking at the lincoln

memorial this afternoon. you can catch the speech and our coverage live at 2:00 p.m. on "street signs" right here on cnbc. meantime, crude oil is at $110 a barrel. fresh highs as the situation in syria intensifientensifies. those higher prices are just beginning to be reflected in the oil companies. rick santelli will talk a little gdp later on. >> we're going to kind of talk about the economy, issues like are we in a new normal? if we are, do we have artificially high expectations of the future? do the combination of those two result in bad policy? we're going to talk with an individual who is top of the mount when it comes to research on these topics. rob arnott, you don't want to miss this one, all in about 15 minutes. (announcer) scottrade knows our clients trade and invest their own way.

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if you're paying attention to any timing on a would-be strike in syria, a senior u.s. official tells nbc news this morning that we're past the point of return to use the quote, and u.s. air strikes against syrian targets appear inevitable. those strikes are now expected, quote, within days. according to the official telling nbc news a lot of the speculation argued that missile strikes would not begin until the u.n. inspectors were brought out of the country safely. the senior u.s. officials saying

that is an old conventional way of thinking and the strikes could potentially be carried out without endangering the inspectors even before they leave. >> plenty of traders willing to speculate on whether it happens over the weekend. can't add much more to that. the syrian conflict causing oil prices to spike. u.s. crude hitting a two-year high. what's the impact going to be for oil stocks. joining us a pavel molchanov. good morning. >> good morning. >> initially here we're seeing oil shares outperform. does that outperformance continue? >> well, it certainly depends on what happens in the very near term to oil prices. in the last decade we've seen two instances of this, right? military action against an arab oil producing country, iraq in 2003 and libya in 2011. in both those cases what we've seen is oil prices tend to rally in the run up to the actual

hostilities but after the missiles literally begin dropping, what you see is oil prices roll over just as quickly as they run up ahead of the event. so in other words, the market is fearful of escalation, fearful of the uncertainty. once the missiles begin dropping and the recognition comes this is going to be a limited event and not a major war, oil prices tend to subside. >> and pavel, the context going into this, how much does that matter? because we've seen some of these energy companies like an exxon really get hammered throughout the first part of the month, first two-thirds of the month even. the backdrop here is about the head winds on the u.s. consumer already and what the fed may do. does that alter the historical experience? >> well, it's an interesting question. certainly right now all eyes, as you mentioned earlier, are on syria. the broader economic picture is

decidedly mixed, and what i would say is if oil prices do continue to spike, we're already well into the triple digits, that will, if anything, put more pressure on macroeconomic fundamentals, especially if oil importing countries like the united states, europe, japan, and so that could actually create a worse economic picture heading towards the end of the year and in 2014. >> pavel, we know the saudis are trying to do what they can in terms of boosting production, helping these prices moderate to the greatest degree possible. is the cartel, is opec, do they have any more levers to pull if, in fact, we do see an accelerated breakout? >> well, let's put it in context. saudi arabia is producing less today than they did at the end of last year because, yes, saudi is currently increasing supply, but they actually cut half a million barrels a day last december. let's not forget that. there is a little bit of

capacity in opec, but right now the problem is not a shortfall of oil. there is no oil shortage globally. in fact, we think there could be a physical over supply heading into next year. the only way there would be an actual shortage is if iran retaliates against an attack on its ally syria or taking other physical steps to disrupt production. without that -- is irrelevant. >> just briefly, goldman saying the surplus cushion we have built up has been completely eliminated. >> well, we disagree with that. we actually think that inventories, even though, you know, week to week they can be choppy, we think inventory will be building into next year because, quite simply, global supply, again without taking into account any middle eastern disruption is growing faster than global demands by two to

one. >> a disagreement there but one that will have huge implications for where oil prices go. thank you very much for your views on that. >> thank you. >> want to send it over to dominic chu for a quick market flash. >> check out shares in zale's. the company reported a smaller loss than past quarter, but said that comparable store sales, this is important, rose by more than analysts had thought. those comp store sales gains were led by their flagship stores. it also reported its first profitable fiscal year since 2008. so again, guys, a 20% move to the upside, very blingy for zale's today. >> samsung will unveil the galaxy watch next week but will they win on the innovation front? we'll discuss some winners and losers ahead of a month where we're going to see a lot of new products introduced. we're back in a minute. see, i knew testosterone could affect sex drive,

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let's get to rick santelli with some insight on how to get back to some real growth ahead of that gdp number that's coming. rick? >> yes. and that really is what it's always about, it's about growth and usually growth is very much tethered to jobs. i would like to welcome a special guest, many people keep up with rob arnott. thank you for taking the time to be our best today. in the past i have used many analogies about fed liquidity and how distant geraniums do get a splash. i guess the way you put it i like even better. you're looking at the past growth rates in the country, looking at current growth rates, and looking at our expectations or the fed's expectations and in

your opinion the combination of those two things sometimes results in bad policy. maybe you could put it all in your words, sir. >> sure. well, i would liken quantitative easing and deficit spending to open fire hydrants at curbside. they drain resources from the neighborhood, from the broad macroeconomy, and anyone who has buckets close to the fire hydrants do just fine. for deficit spending, that means public sector and those who provide goods and services to the public sector do fine. for quantitative easing, those in the financial services arena do fine and the broad macroeconomy just has its resources drained dry. that's most unproductive, and a lot of it is driven by totally unrealistic growth expectations and the misguided efforts to meet those expectations through misguided policies. >> what do you think in your opinion the real growth rate of

the country will be over the next three to five years, just broad lly speaking? >> i think the structural growth rate over the next 20 to 30 years is closer to 1% than the 3% that peopleharbor on illusion is normal. over the next three to five years it could be better than that because we have a big output gap and closing the output gap could mean that closing that gap brings faster growth than the 1%, but the structural growth of 1% makes a lot more sense than 3%. if we demand that our policy delivers 3%, it's not going to happen. the 3% has been a myth all along. the last 40 years we've seen 2% growth, not 3%. and as the graph that you have put up on the screen shows, we've had a demographic tailwind. we've had the lowest support ratios in world history. those are being replaced in the years ahead by a shrinking rate of growth of the labor force.

if labor force grows 1% a year slower, there goes 1% of gdp growth taking it from 2% to 1%. as the workforce grows older, older workers are more productive. well, that's wonderful. peak productivity is reached in your 50s, but peak productivity like any other peak is where you stop growing going up and start going down. so your contribution to gdp is at its peak but your contribution to gdp growth when you're at peak productivity is zero. >> rob, i'm going to have to shut us down there because you have a lot of brilliant things to say, but they only a lot me so much time. brilliance aside, but i certainly would like to get you back in a couple weeks to maybe digest how the world looks once we get some of these gdp revisions. thanks for taking the time today. >> thank you so much. >> carl, back to you. >> rick, thank you. that productivity paradox, an important one. we'll let you follow up with that shortly. right now we're going to look at

what's been happening across europe. the bells are about to sound. we'll get you the details and the impact it's having here when we come back in two. nascar is ab.out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media

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the european markets are closing now. >> it was a rough day across europe yesterday. today simon, some relief. >> yes, we've had a sharp turnaround in europe today. it was much worse than this a few hours ago. partly because, of course, here in the united states the dow is reversing in part that 170 point

loss. we've also had a super dovish first speech from the new governor of the bank of england. if you look at the periphery of europe, you will see that actually what was a 1.2% decline in spain has been reversed here on the charts and, in fact, italy has gained 1%. quite a sharp turnaround really based at the periphery of europe. still those sector that is were moving big time at the start of trade on syria like the oils are still substantially higher. thank you. and the reverse of that, of course, the airlines which might be concerned about international tourism or business travel or more importantly because they're a proxy as you know to play oil on the stock market, they are still in negative territory. mark carney, new guy at the bank of england over from canada, gave a super dovish first speech today in which he said that the bank of england might embark on

qe again. it could keep rates super low beyond the fall to 7% on unemployment and it will take a long time to get to 7% unemployment, and at the same time he's going to loosen up some of the capital requirements on the top eight banks and building societies in the uk which means they will have to hold somewhere in the region of $140 billion less. once they've reached a 7% capital reserve to try to encourage lending into the uk economy. we knew that he would be dovish, but he's been super dovish today. back to you. >> and has been. thank you very much, simon. what a day to get a check on energy and commodities. sharon epperson -- no, it's courtney reagan. a blockbuster day at the nymex. >> yeah, that's exactly right. you know it's inventory day, but actually that surprise build in crude oil stocks and the smaller than expected draw in gasoline really did little no move the needle and that's sort of what traders expected because the focus down here as you might

expect is on syria, but more specifically the potential spillover effect into the more significant oil exporting nations that are nearby. now, we do know that overnight west texas intermedia crude did spike to $112 a barrel. it has since retreated. that $112 mark was on over two-year high. brent also moving higher but again retreating. west texas intermediate hovering around $110 today for most of the session. andy lippow points out the reason traders are so focused on syria are not syria itself but the neighboring countries. any attack that could spill over into other nearby regions, that koim packet supply and demand potentially disrupting oil there and that's really the focus. we kind of sit and wait to see exactly what happens. but he also joins the chorus of traders that believes oil prices will continue to run up until or if there is a strike and after that point believes that oil prices will, in fact, retreat. sort of a sell on the news

impact. if we take a look at gold, gold actually moving a bit lower on the session. we know that it moved higher overnight to hit 3 1/2 month highs but that also retreating a little bit as traders sort of weigh exactly what's going on with syria and how much of that fear trade they want to play ahead of time. kelly? >> courtney reagan, thanks very much. keeping an eye on all of that for us. >> it's bring in bob pisani. >> we're rallying. well, not a big rally, but stocks are up, gold is down, and considering the concerns in sear yashtion it's interesting we're having such a stable morning overall. there's an explanation for this. the bulls are trying to give an explanation for it and it's pretty simple and it's almost buy on the event, buy going into the event. that's been a lot of studies about the geopolitical events and the markets move 2%, 3%, 4%, and then tend to move back again. you sell off going into the risk and then you buy essentially on the event to the extent that everyone believes an event is going to happen in the next 24

hours. now, this is a reason why we may be stabilizing today. i don't think it's necessarily a great reason, an obvious reason we're stabilizing, we've been very oversold for a long time. oil is at a new high. they've been a major factor in why the market is up. you have exxon and chevron. that's what's happening move the dow. some of the other ones in the oil group are also to the upside. bear that in mind overall. also, we've got what's going on with the s&p 500. here is another argument some of the bulls are trying to make. look what's happened. this is a one month of the s&p 500. half of this decline we have seen so far in the month has been largely due to fundamental concerns and the other parts down here, this other half that we've been seeing has been due to syria. so half of the decline may be syria, half is fundamental concerns. the argument for the bulls now is if you can get some kind of event that only lasts a few days and there's not a lot of spillover, that's a big if, then you've already got a significant market correction that's gone on, 3% or 4%, and that will help the argument that even though we

have weak data right now, we certainly do, the market has already accounted for much of that weakness. unfortunately, we're continuing to get the weak data today, the pending home sales number. it was just an outright disappointment. now we have new homes and pending home sales disappointment. if you look at some of the home builders, they're to the down side. they were stabilizing for a while, for a couple weeks. now they're showing some renewed weakness. here is the catch 22 that we're in right now for the markets here. we get weak data, we get earnings concerns. we get strong data, we have tapering concerns, and the market is trying to work through this, and i think, guys, the only good news is the fact that we're down 3% so far this month gives you a little cushion to argue there's already a little bit of a correction going on. i think the big worry is they don't know how to control the syrian thing and as i mentioned this morning, as rumsfeld famously said, it's the unknown unknowns that worry us, the things we haven't even thought about that could be

consequential to these kinds -- >> we don't know what we don't know. absolutely. >> it's a great line. rumsfeld's most famous line. >> and well deserved. thank you very much for running us through the action. we want to turn to the conflict in syria. a senior u.s. official telling nbc news we're past the point of return and u.s. air strikes against syrian targets appear inevitable. the strikes are expected within days. let's get some insight now on whether the u.s. should intervene and the impact from douglas ollivant from the new american foundation and david gordon head of research with the ewe ray sha group. >> good morning. >> douglas, should the u.s. intervene here? >> you have to parse that question. should the united states take military action to punish chemical weapons use and enforce the international norm of nonuse of weapons of mass destruction? yes, absolutely. should the u.s. intervene to overthrow the assad regime? that's a separate question and it's good to see the

administration has separated this and we saw jay carney make that pretty clear. >> douglas, let me get this straight. we should do something but we should not force assad out. is that essentially your position? >> we need to think very carefully about the consequences of forcing assad out given the strength that we're now seeing al qaeda and the islamists gain in this state and the fact that they appear to at least have a stake in any future nonassad syrian state. >> david, given those -- first of all, let me just ask you the very same question. should the u.s. intervene here in syria? >> yeah, i think the president's making the right choice, and i actually think that markets have overreacted. i think the risk here is substantially less than markets believe and it's essentially because the president has made it very clear that he doesn't want an escalation here. this isn't libya. this isn't about overthrowing

assad and that for the opponents, for assad regime and especially for iran, they don't want an escalation either. they don't want to internationalize this. so i think this looks like it's heading to a proportionate response that is actually going to have a limited blowback both in the region and more broadly. >> although, david, some argue, for instance, your odds of drowning go up exponentially once you put yourself in water, right? so why do you think there's the ability to bloody his nose without getting caught in something bigger? >> i think it's exactly the point that doug was making about making this very sharp distinction between punishing assad for the use of a substantial chemical weapons attack on the one hand and be the point that the president has made very clearly and that the

top military commanders absolutely support, that the u.s. does not want to get itself involved in the syrian civil war. and so i think that for all of the efforts by the saudis and the other gulf countries and turkey to involve the u.s. militarily in the syrian civil war, i think we're going to stay out. the much bigger stakes here are about the nuclear weapons confrontation with iran. that's what we're focused on. and that's where the action is going to be. i think this -- we're going to look back six months at this as a blip. >> douglas, that said, this is a blip that's supposed to be sending a message to the world, as david indicated, with regards to iran in particular about the use of weapons, chemical or nuclear. is this kind of response one that doesn't force assad out, one that includes missile strikes, going to be the kind that sends a message on that

front? >> well, it's going to send some message. and we would like to think that it's going to be a very limited strike, but i think carl had it exactly right. if you don't want to drown, don't get in a boat. if you don't want to have a conflagration in the middle east, you know, don't lob missiles. the odds are that this is going to be just a blip, as david said, i agree. but something major happening is low probability but extremely high impact if it happens. >> i don't follow. so are you saying we should be more considered and more cautious before we get into this? >> i didn't say more. i said we need to be very, very cautious and we need to understand what we're tiptoeing into. we have these two interests we have to balance. we do have an interest in making it clear that we will not stand for chemical weapons use. that weapons of mass destruction are off the table and if you use them, you're punished. on the other hand, the last thing we want to do is get

involved in yet another conflict in the middle east. >> exactly. that almost brings us back to square one with regard to how to accomplish it but it's an important issue being debated right now. douglas and david sharing their perspectives on that one this morning. thank you. >> thank you. staying overseas, we're going global today on cnbc. china, the second largest economy behind the u.s. impacts our nation's economy policy in many ways. eunice has more on that story. >> reporter: here in china people feel that this country would be relatively immune if the u.s. federal reserve scaled back its easy money policies. china has capital controls, so the money that would be flowing out of the emerging markets to the united states would mainly be coming from other asian nations. but that doesn't mean that china is totally out of the woods. analysts say that the outflow of capital from this part of the world could hurt the economies out here which would in turn depress global demand and china's economy. for cnbc business news, i'm

eunice yun. when we come back, google glass going from vogue magazine to the operating room. a surgeon at ohio state university did just that and he is praising his experience. we'll talk about what he did when we come baright back. out here which would in turn we'll talk about what he did [ male announcer ] it's time. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse...

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now be closer than you think. despite some dour economic news. and groupon goes after amazon. should you go after the stock? a big debate is just ahead. kelly, we'll see you in 15 minutes. >> thank you. operate glass. you might have heard the command. not quite yet but a surgeon in ohio became one of the first to use google glass to live stream video from the operation. the doctor streamed images from a knee surgery to a group of medical students and a colleague who was consulting from his office. this according to the website live science. in june a doctor in maine use d google glass to stream a gasterectomy. >> you're literally looking over the shoulder of the doctor. >> i will be interested to see

what they can do to do the surgeries remotely. >> when we come back, there was a smartphone race and then a tablet race, but brace yourself for the smart watch race. "squawk on the street" back in a couple minutes.

samsung set to release its smart watch, the galaxy gear, on san antonio 4th at an event in berlin. what does that mean for the tech giant to be first to market with a watch and will millennials get in line to buy it? mark and ena join us. good morning to both of you. >> good morning. >> walk me through how big this market is going to be and how much advantage is there for a samsung getting some kind of first strike advantage? >> well, you know, the wearable market, it's pretty small today. it's projected to be huge. the question is not who can be first. they actually have lost that. there's sony, motorola have tried this. the question is can they be first with something that a large number of people actually want to wear? and the value to that is huge. so far most of the products that have been out have been pretty geeky and kind of niche. the question is can they create a category or will someone else create a category of products that are so useful we all want

to give them a place on our wrists. >> mark, what do you need to do that? creating a category? what does a watch need to be? >> yeah, i think in a lot of ways it sort of has to be a smart remote control for your smartphone. i love the fact, for example, something like the pebble i have been playing around with that i can control my music. if i'm in the subway i can fast forward tracks without pulling my phone out of my pocket. in order for samsung to stand out, i think they have to tie into today's biggest trends. one of those is wearable fitness. take a look at companies like fit bit and the flex they have and samsung already has some of that functionality in their smartphones. how can they tap into where the technology industry is going and use that as a way to sell more start phones. >> what is a pebble? who make it is? >> the pebble is actually an independent company and they're a startup that was on kick starter, and it's an eink watch. sort of like a black and white display. very simple. you can go through different watch faces but there's also a

number of apps available for it. what i don't like about devices like that is that there just aren't enough apps out there. i think when samsung comes to market, they will have their own app store on their own phones and you will be able to sync back and forth and i think that it really needs a big company coming into the space to make it take off. >> you have a new piece out, an interview with the broadcom ceo. he says the wearable market is going to be way bigger than just apple and samsung. give us some perspective. how big could this be? >> certainly the market for devices that connect to our phones, pretty much we all have one of these smartphones, at least in rich countries. and so the question now is what devices are going to connect to these and wearables is going to be huge. i think the question is, is it going to be huge in the same way that smartphones are where the bulk of the profits and sales go to one or two companies or is it going to be a collection of mitchs? right now it's a very small collection of niches. there's things like the fit bit or job owns up and things like mark was talking about with the pebble. the question is when an apple or

samsung comes in, do they sosht of grab a huge share of the market or is this more like julgy where we choose it to match our outfit or is it more like niches where raider fans where another and boston commuters have one one that has charlie information. >> maybe one would be like a fuel band thing for when you work out. i'm just thinking outloud. maybe one is just about stocks. >> i think people will look for something that's really diverse in terms of the functionality, at least as far as the sweet spot of the market goes. but i agree that there's going to be plenty of room for differentiation and the segmenttation within the wearables market and let's not forget it's not just about smart watches. it's also about google glass which you were talking about earlier. the wearables market is much bigger than what's going to be on your wrist. i think it's less obtrusive so

stare down like this than staring at someone in the face. apple and samsung might be making a smart move by going there first. it's a baby step to putting a smartphone on your face. >> i would welcome people looking up when they're walking down the sidewalk but maybe that's just me. i'm curious, a lot of these products tend to start out as accessories and then cannibalize the existing space. is that a risk with the new wearable devices, that they cannibalize what's a pretty profitage mobile market. >> it's a small risk. there just isn't room for a big battery on your wrist. you can start and end there. today our phones barely make it through a day. without a major backthrough in batteries. i think it makes sense to have the expensive wireness connection, the powerful one, the one that sucks up a lot of battery in our pocket and i think as mark says, these will be companion devices. the question is over time how powerful they become. again, probably drawing on that smartphone as the wireless

connection. >> it's going to be fun to watch. hopefully we're all the beneficiaries of it. thank you so much for your time, guys. >> thank you. >> meantime, tesla delivered a record number of model ss in the quarter and demand does not seem to be slowing down but what could be keeping elon musk up at night? we'll tell you when we come right back. clients are always learning more to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy.

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the demand for electric car vehicles is growing. more than 40,000 electric cars expected to be sold in the u.s. this year and demand is picking up, but there could be a threat looming. our phil lebeau has more on that. hey, phil. >> actually, i have run some numbers and i talked with some people in the industry and they're starting to bump up, not by a lot, but by a little bit the number of electric vehicles they expect sold in the united states this year. when you look at it, and primarily we're talking about the volt and leaf as well as the tesla model s, the expectation is for greater than 50,000 evs to be sold in the u.s. this year with the majority of those vehicles being sold in california, and we were out in california last week touring the tesla plant where they are now

up to building 500 model s vehicles every week. they're expanding production to 40,000 vehicles next year. they're also working with and having discussion with battery suppliers about increasing cell production. here is tesla ceo elon musk talking about the importance of making sure there are more battery cells being able to be produced in the future. >> we're working with our primary partner, which is panasonic as well as talking to potentially other suppliers like samsung and lg, and then -- but actually even if we were able to use -- even if we use up all of their battery factories, it still limits "uss us to a few hd thousand cars a year. >> and that's worldwide. that's not just tesla, that's all evs. that's why you're starting to see battery production slowly increase here in the united states, but, carl and kelly, the bottom line is this. this is a part of the growing pain that is we're going to see

in the ev industry where more battery cells need to be produced and it's a complex and very precise process. it's not something where you can just flip the switch and it happens. that's one of the things you mentioned, what keeps elon musk up at night, this is one of those things. >> huge challenge for electrical engineers all around the world. thanks so much. let's get over to headquarters. scott wapner and "the halftime." thanks. welcome to the "half time show." a bit of a snap back after yesterday's big sell-off. there are the major averages. dow up 65, s&p is up 9, nasdaq is higher by 2/3 of 1%. call it a crisis. one well-known market watcher is out with a warning for your money. details of what it is strayight ahead. is groupon getting ready to battle amazon? and if so, what could it mean for the stock?