good morning. welcome to "squawk box" on cnbc. i'm andrew ross sorkin with joe kernen, becky quick will be returning from vacation next week. so you can stop with all those e-mails. we have some headlines for you, and, yes, joe, my heart rate is up this morning. vodafone confirming it is in discussions with verizon about a buyout of the uk company stake in their wireless joint venture. vodafone has a 45% stake in verizon wireless. reports say the u.s. group is looking for more than, i'll repeat this number, two times, $100 billion for the stake. when you talk about big m&a deals, this would be the return if it happens. also, it is a official this morning, bill ackman through with the jcpenney stake. he has sold that entire 18% stake for the retailer. the price tag, only $12.60 a share for it. he had paid almost double.

and that's nearly half the average 25 shares he paid when he first invested and that investment was originally made in 2010. u.s. government and swiss banks near tax probe deal. the goj expects to announce a new program within days. the program would allow some swiss banks to avoid or at least defer prosecution under a probe of offshore tax dodging by americans, but it will exclude 14 swiss banks that are already under investigation. joe, i don't know where that leaves you with your account. >> i have a bank that is, like, owned by a swiss bank, but it makes me feel like i have a swiss bank account. but all the way back to ge's purchase of remember long ago, we can trace it all the way -- you said you would say it twice but you only said it once. >> $100 billion. >> you only said it once. >> i need to feel my pulse. >> we need to talk about that. like these two, they both waited because they thought -- didn't verizon thought it could get

cheaper. >> but now the taper. this is one of those transactions that has frankly in terms of the timing has less to do with the -- with the economy in some ways or the business than it has to do with ben bernanke. >> i want to hear that. >> interest rates are going up. time is running out. >> what is the cheapest they have could have gotten it four that they thought at the time was too expensive? like 50, right? they don't want to do 50 because it was too much. and now -- >> now 100. >> amazing. come over here. >> i'm coming over. >> who are we most like, rhone and martin, smothers brothers. you don't see the two-man teams anymore really. they always -- it always has got to be, you know, regis and kathie lee or michael and kelly or joe and mika. it is never -- it is almost like -- >> never two guys hanging out. >> like gender discrimination that we can't -- we're going to -- we're going to change that. we're going to change that.

none of those people, penn and teller, brewer and shipley. >> hanity and combs. >> that works for me. he was so ineffectual. he looked look a martian, didn't he? >> are you -- well. >> i don't want to be -- i'm cold. american airlines, us airways and think of some more, and the justice department, say they're open to settling a court fight over whether the two companies should be allowed to merge. bern and ernie. there is no sign of an imminent agreement. we'll talk it an airline analyst in the next half hour. and retail news, guess who is reporting better than -- let me start again. guess is reporting -- that's confusing. >> it is. >> guess is reporting -- don't guess. it is guess is reporting better than expected quarterly sales driven by north american operations. the company also offering upbeat

full year guidance and shares rose sharply on the new -- whoa. that is a big move in guess. 17%. >> what happens if you work at guess an you call somebody up and they say where are you calling from and you say guess? >> it is confusing. but it does -- you remember, and it is notable that they -- i think it is a good name. toyota says the next generation prius will offer improved fuel economy. the automaker appoints the smaller, lighter, critical parts. the next prius is expected in 2015. i have a loaner. i had a loaner for the past two or three days. >> also it is a hybrid. you went from porsche to hybrid. >> it is a porsche hybrid, but i'm driving it. >> the loaner is not -- >> the loaner is not a prius. it is a cayenne. >> i like that. >> you do? >> a chili pepper. >> it is hot. it is a hybrid. i feel -- i feel -- i feel

better about myself. >> do you? >> i do. i feel a little better about myself. my footprint is smaller. i'm about a size 6 now. i'm usually 13 1/2. 28.49 on the dow jones. managed to go up to 48 yesterday. up more than that. but as long as the war drones are beating, but did you notice that -- >> wait for the u.n., it may take a while. >> i know. menendez, absolutely got to do it. liesman, absolutely have to do it. where are we? where are you? >> i think i might be with the brits. >> wait for the u.n. >> then we see cover. >> wouldn't it be good if we were going to do it -- wouldn't it be good if we had something in mind that we were trying to accomplish? instead of just a punitive -- >> our first guest, if you remember the 6:00 hour yesterday, said you have to have a -- has to be a goal. >> richard engel will be on. >> he's a favorite that is a legitimate favorite.

>> that's true. you've cheapened the term. you have to say, i mean it this time. that's bad. you call other people favorites and don't mean it and then you call richard engel a favorite, he is actually a favorite. >> a friend and a favorite. ross westgate, i think, got a haircut, standing by in london. saw him earlier, looked high and tight. is that true? >> i had it when i started the week. >> we talked about that -- somebody else said that yesterday. every day it looks different, which is true a lot of times. we try different things and end up looking the same. that's a rod stewart song. >> just whatever happens when you get up in the morning. talking about the morning here, we are -- equities are up. we're about 6 to 3. ratio of 2 to 1. ftse 100 boosted by the vodafone story, up about a third.

auction this morning, they raised the maximum they wanted on five and ten year. but yields are up. look at the sectors. telecoms in the spotlight up 3.2%. oil and gas best performer yesterday was weaker. british parliament says we'll wait for a vote post the inspection. vodafone, this stock up 8%. up nearly 9% already this morning. and here is the thing, investors and some brokerages are saying the shareholders for vodafone are looking for a price tag of not 100 billion. that's why they say vodafone management should be focusing their discussions. if they do that, if they can agree, that's a big if, of course, they're talking about an up-front 20 billion special dividend to investors. vodafone would consolidate more on internet and telecoms play in europe. the other stock up 3.7% today.

global revenue up 7%. strong growth in u.s. and uk upsetting europe. the argument for vodafone, 120 a price tag they're talking about. back to you. >> okay, thank you for that report. we'll see where that transaction goes. big news in the uk and this side of the pond. the u.n. chief saying that inspectors in syria will continue their investigations until tomorrow. and nbc's amin mohyeldin joins us with more. >> a lot of moving developments across the region. among them, ban ki-moon saying it was imperative to give time to u.n. weapons inspectors on the ground inside damascus. the time they need to finish their reports. they headed out to that part of the damascus to determine whether or not chemical weapons were used on august 21st. they're continuing interviews with eyewitnesses, some patients, collecting samples.

they say they need until friday to conclude findings and submit that to the united nations. a lot of calls are growing that the united states and allies should wait until the findings of that report are made clear. at least made public. the u.s. rejected that saying it has the intelligence and has the evidence it needs to make sure that it was the syrian government that ordered the use of these,cal weapons. but the region remains very tense. here in beirut and lebanon, more than 6,000 syrians fled in the past 24 hours, crossing the border. many people are anticipating a strike. some countries nearby have come out with statements. iran, one of syria's closest allies. the senior military commander has come out and said he predicts if in fact the u.s. attacks syria, it would be the second vietnam for the united states and the beginning of the end of the israeli state. you can see the rhetoric is being ratcheted up. one of the u.s.' closest allies

egypt has come out and rejected any type of foreign military intervention in syria. they say the international community should punish the syrian regime if they did use chemical weapons but force was not the way to do it. >> thank you for that report. we'll come back to you in the next coming days and maybe even hours depending how things turn out. >> joining us now, jack jacobs, an nbc news military an rift. and colonel jacobs, great to have you on this morning. i'm looking at some of your comments which are worrisome. you heard the term lose-lose. is there any way the u.s. can come out of this and accomplish something? the best we can hope for is some type of, i don't know, symbolic move where it is a neutral and hope nothing worse happens from it. >> the president painted us into a corner when he said publicly

that the use of chemical weapons by syria would be a line they shouldn't cross. and so that puts us on the collision course with our own decision. it makes it extremely difficult. we reduced our flexibility and optionality and now we're stuck with having to have to react in some way. you're right, it is lose-lose. we're in bad shape if we do launch an attack, but we have to figure up what the objective is and what vehicles we're going to use and all the rest of that. and all the ancillary problems result from it and we're in bad shape if we don't. because we said we would. lousy diplomacy, i'm afraid. >> the point you make is maybe we won't get the u.n., we can't get russia. >> definitely won't get the u.n. because of russia. >> we get another alliance, nato or a bunch of people involved

with us. will be our missiles as you point out, mostly us, but since there is really no -- since public opinion here does not want us and nobody wants us to get another protracted confrontation, obviously. we're entering into it knowing it is going to be, you know, fairly small and not really do that much, which begs the question. you said it yourself, why wouldn't assad then test us again knowing that we don't want to be drawn into something? >> he certainly would. there is an ancillary problem too no one is talking about. there are plenty of russian advisers in and around targets that we would shoot at. notably air fields and other delivery systems.

if we launch the surgical strikes with cruise missiles, and not airplanes, we still have the problem of collateral damage, including dead russians. not good. and ahead of that, by the way, the russians have sent some ships in the area. >> what -- is it more likely that he launches another chemical attack if we don't do anything? or if we in fact do something? what do you think -- is it the same? what if we didn't do anything and said, look, i guess we look silly if we say next time we're really going to do something. >> we're really going to do it then. >> instead of the symbolic thing for two or three days where we say, seriously, but then i can hear myself saying how ridiculous it sounds. what is the greater likelihood if we don't do anything that he does it again, or that if we do something for two or three days and you say that that will make him do it again too?

>> i think marginally he's more likely to use chemical weapons if we don't do anything. only marginally. >> it worked for them, right? he's not getting the kind of results that he wants on the battlefield, and this actually is a way for him to stay in power if he just scares the heck out all of the people back in the rebels. >> his biggest problem is that the longer this goes on, the more both sides get drained, but becomes extremely difficult for the syrian government, so using weapons of mass destruction like this in his mind may shorten the conflict. i don't think it matters to him whether we launch an attack or don't. the big problem is what is going to happen to destabilize the region, make it much more difficult, drive prices up, which they already have and they'll continue to go up as long as there is a specter of a wider conflict in the region. >> colonel, a question on

timing. there was an expectation we could be days away from this. if we have to wait on the brits and the brits have to wait on the u.n. report, if not the u.n., which we don't believe is coming along completely, what kind of timeline should we be thinking about? >> a week at least and probably more. the plans are already in place to do it and they have been in place for a long, long time. we have standing plans to do all manner of uses of the military, instrument of power. including a punitive strike on syria for using chemical weapons. they have been in place for a long, long time. that's not the problem. we don't have to gear up anything. we got it ready to go. the problem son the political front. consultation with colleagues, with allies, with russia. and also consideration of what happens when we do make the strike, what happens to the -- what is the reaction in all of that. >> how many countries do you think we have to go in with to have a -- some level of moral

authority on this issue, meaning there seems to be a view we can't go in alone, if we just go in with the uk, is that enough? >> no. we may go in with uk and france and say that's nato and that will be good enough. and they'll probably be some participation with -- there may be some participation with saudi arabia because they -- they want to see the outcome to be the overturning of assad. but we just need to say it is nato and that's good enough. all the awacs will be ours. the french will be involved, the brits will be involved and that's probably all that is required. >> colonel jacobs, thank you for your time. >> my great pleasure. coming up, why fast food workers are organizing a nationwide strike today. we'll talk about it. plus, news of a breakup of one of silicon valley's most profile couples. has a lot of investors talking about it. a little gossipy story on

silicon valley. let's check on the national weather forecast with reynolds wolf. >> look who's here. >> okay, cool kids, let's look at the forecast today. we'll see some rain again, possibly storms through parts of the eastern seaboard to the carolinas. rain and storms still hot for you in parts of the north and central plains. monsoonal rains in the four corners, not much hope for the fires, especially in parts of california. the rim fire still burning out of control. 30% contained. they're work hard on it. in terms of delays, you mooight see backups in minneapolis, miami, from sea breeze and thunderstorms. new york for now, not expecting any delays. if we get showers into the afternoon, maybe a short-tethun you may see some backups at the big three. more "squawk box" coming up around the corner. sit tight. 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.

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time now for the executive edge, our daily segment focused on giving business leaders a leg up. a special edition. we're together, usually somebody is standing aside. >> we'll share reading the thing to respond to. you'll read one. i'll respond and you read -- this is where we got -- people have come up with some other -- someone wrote in dumb and dumber. >> lovely. >> jim carrey and -- >> i said woodward and bernstein. you didn't think that was

appropriate. >> no. no, i didn't. too serious. >> i'm still back to bert and ernie. >> i like dumb and dumber. >> let's do the news. >> i want to be jim carrey. i can do this really annoying sound at the end of this. >> producers want us to do the news. >> that's the most annoying sound to me. fft food workers across the country are expected to stage a strike today. it is part of an almost year long campaign to raise wages in the service sector. workers are demanding the federal minimum wage be raised from $7.25. they want to form unions. that would be doubling -- more than doubling the price. but in an op-ed in today's wall street journal, the chairman of the national restaurant association warns that raising the minimum wage will mean losing jobs. both part time and full time positions make the restaurant industry a versatile career option for a variety of workers from underemployed or hard to employ workers to college graduates.

the industry provides a pathway to the middle class and often the -- >> he represents daddy war bucks and the restaurant association. what he's saying is going to immediately be dismissed as talking his own book. if you just think about it, we got this huge pool of people that can't find work, there is a price in the market place that they will say yes. give that to me. if you set it where it is too high, the restaurant themselves will hire fewer people because it is what they do. if it got to a point where the margins were so slim, that they weren't able to -- there is no growth, stock prices, you know, stay stagnant, doesn't -- you need to grow and there has -- there is a certain amount the market will bear among competition that sets the price. when you set an artificial price, everything gets messed up. fewer people work for $15 an

hour, but plenty of people who say, yeah, i'll take it for nine that will be sitting at home. >> i don't disagree with you at all. not at all. i wonder about the larger issue of what do we do with the middle class -- these jobs, a lot of the jobs were starter jobs. people did this them for a couple of years. and in the economy that we're living in today, they're not. a lot of people in their mid-30s -- >> is it because do we need to do some of this, so the whole jobs picture gets better, we get to 5% and wages start going up. >> don't think we're in a position to raise the wages. it will hurt the economy -- >> there is too much slack. and you saw what did walmart say, 75% of the people in management now initially were at the starter level. >> same story, 40% of their management started literally in

the trucks at u.p.s. >> i started writing winners and losers for ron insana and kathleen campion. i was riding one, eight times a day, i would write winners ands doers. >> i started off xerox and stapling. >> a new report finds home values are rising, but millions are still drowning in debt. online real estate company zillow says more than 3 million u.s. borrows are now above where their mortgages were. so -- but, due it home appreciation, it is pointed out in the piece, just getting back to even or a little bit above doesn't allow you really to feel like you should sell. you just don't do it. now, the people that are really

below are still way below. 24% of home owners with a mortgage of more than their homes are worth still and more than half of those underwater are more than 20% or more. those are the places where they bought right at the top and some of these hot areas and down so much. so roughly 1 in 7 owes more than twice what their home is worth and no way -- >> the question then is not only do you not sell -- do you let it go? >> right. depends how much help i count on. >> moral hazard of -- >> the government has to decide how much to get involved, because the more you get involved with i don't want to call them deadbeat, the more you get involved there, the more they say why am i breaking. >> the flip side i was reading about, we talked about on the show, which is that somehow if you could actually get those homes into the marketplace, have willing sellers, that changes --

that helps everybody. >> so you were born for this. you were born -- >> it is a little -- >> you knew they were married. >> i knew they were married. i remember -- >> i remember the 23. >> let's talk about it, who they are. i met them, i met their children. news of a split of one of silicon's most powerful couples, sergi brin and anne -- >> you met their children but you can't say their name? >> wojcicki. they're apart. brin has become romantically involved with another google employee. >> previously involved with somebody else. >> previously involved with somebody else and we should note that her sister, this is his wife's sister is a big deal at google. >> joint business. >> that will be hard to unwind.

a pare apparently they have a good prenup. >> how do you feel about the ceo dating employees. >> you know what, it happens so much that i would like to say in a perfect world, probably isn't great, but people work together 20 hours a day or whatever. and stuff happens, doesn't it? >> the question is at the ceo level does it send a message to the rest of the -- >> i don't know. >> you think it is okay? >> yeah. i'm not saying it is okay i just don't think you can stop it. i don't want to -- >> you have the -- this one is complicated, the sister when works there. >> don't do ceos do more than the average employee? absolute power. >> little less time. >> little less time, but more hubris and more money to stay in place. >> sergi brin -- >> you met the kids.

>> i met their family years ago. it is sad. it is a sad story. but a story that -- >> i hate it when you get sad about stories like this. >> coming up -- i know him. >> you said you're sad. >> i don't know if he's happy or sad about it. we'll find ow. coming up, hedge fund shutting down after 13 years. we have the details when we return. alert.

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good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin. this is not serious. some people referring to us as the cheech and chong of financial journalism. i got to tell you about one i can't read aloud. you know which one i'm talking about. >> i read of turner and hooch. what is it -- >> no, we'll do it -- >> all right. because there arer is use thins going on in the world, i never

know -- this is according to a sad story. >> i'm not sure what he's doing. >> michael karsh, hedge fund manager, shutting down karsh capital manage. says it is time to think about the next stage of his career. 95% of the fund's 1.8 billion assets will be returned to investors by the end of next month and the next 5% returned in january after the fund's audit. and the chairman of the zurich insurance group has resigned on this news just three days after the death of the company's cfo who was found dead at home. the police believe that he committed suicide. the zurich chairman says he was shocked by the death and says the family believes he should take a share of responsibility. but he notes any allegations are unfounded. you don't know anything about this, do you? >> i don't know -- >> this is another thing i figured you might --

>> something in the water. >> that's bizarre. >> bizarre. >> he was under pressure. he was -- >> i don't know if he was cooking the books. >> whenever you hear cfo and -- wherever a cfo kills himself, you immediately sell the stock. i would. >> wouldn't you. >> and now if the family comes out and says -- >> its chairman bears responsibility. remember our buddy chairman of health south, remember that guy? he hired like eight bad cfos. just can't find -- wasn't him. he wasn't even in collusion. it was like he found eight of them and they all turned out to be rotten. you wonder, though. >> yeah. let's talk about the geopolitical story moving markets this morning. the british parliament returning for a special session during the summer recession to debate appropriate measures in response to syria's alleged chemical weapons attack. joining us from london this morning is our own scott cohn.

good morning. >> the hope was this would be a decisive step on a unified march toward military action against syria but will not be that way. the british parliament when it meets about three ours or so from now is going to be talking about a resolution that essentially defers to the u.n. waits for those u.n.,cal weapo s inspectors to finish their report. this then they would take another vote to authorize military action. but the opposition party, the labor party that was opposing the decisive blank check for prime minister david cameron at this point has indicated that even that toned down resolution could face some opposition and might not pass today. what we expect is there some lengthy and loud debate in the house of commons as they decide whether to do this and really this country perhaps more than the u.s. is haunted by 2003 and

the situation in iraq and don't want to repeat that again. you hear that over and over again this we want to learn the lessons from iraq and that's why they want to proceed with caution in syria. it diffused things somewhat and made room for some spirited debate likely in parliament today. >> scott, thank you. did you go straight from the west coast to -- did you stop back here or go straight over there? >> i stopped very briefly, looked at my desk, checked my messages. all quiet so i went on. went on, continued to the east. >> all right. what you do. and we appreciate it. thank you. we'll stay on the global theme and head now to beijing. eunice yoon. eunice? eunice yoon brings us the story of a man that some are -- >> yeah. >> some are calling this guy the bernie madoff of china. we don't know about this,

eunice. tell us. >> well, guys, this case has gotten nationwide attention. and it is really raising a lot of questions here about how the chinese government authorities are going to be handling shadow banking. this man is shown as the bernie madoff of china, like the americans, he was found guilty of defrauding investors in a massive ponzi scheme. unlike madoff, he was executed by firing squad. zeng's death is raising questions, was he a perpetrator or a pawn of a flawed financial system that has become a threat to china and the world? china's financial sector has long been controlled by the government can state-owned companies getting cash whenever while private companies are largely cut off. >> basically a small company needs financing. you have shadow banking developing. it is as simple as that. >> he built 57 developments

using money borrowed from the community, a common practice in china. nearly all of these buildings were built by zeng. he was an influential figure that this road was supposed to be named after him. he offered returns of 24 to 80%, attracting investors like this retired math teacher who didn't want to show his face for fear of reprisal by government authorities. >> more than 90% of families were engaged in the shadow financing. you would be a fool not to do it. people here have almost no way to invest. >> his lawyer admits to pay out the returns, z eeng used income investor money. he insists he intended on paying everyone back in full n 2008, he says new officials took over and ordered a crackdown on shadow finance. he was accused of defrauding investors out of half a billion dollars, was jailed, his assets sold off. this summer he was executed. his family not informed until he

was dead. >> translator: it feels as though he's still alive because i never saw his body. >> his daughter blogged about the case, sparking a public uproar. begging the question, was he a con man or a victim of a shadowy financial world? and this case is really sending shock waves throughout the community of entrepreneurs here because the fact of the matter is that the way that zeng financed his business is not unusual at all in china. so there are a lot of people wondering if this is a sign of a bigger crackdown to come. guys? >> eunice, before you go, wasn't to take a right turn with you on another story making a lot of news on this side of the world, but i imagine also where you are, which is the story about jpmorgan, the department of justice, and s.e.c. looking at whether they hired the relatives, sons and daughters of some of the big ceos and news this morning, i think bloomberg one of the first to report that

apparently there is now a spreadsheet that shows a hire -- hiring son or daughter and transaction that was linked to it. you can call that great accountability and great business to be able to have it on a sheet, but also creating some waves. what is the view over there? >> well, what is interesting about the view over here is that there is actually a lot of disappointment among the chinese public about this particular case. because they look to wall street, and american firms as companies that operate at a higher standard. so there is a lot of discussion here in china about how it is really disappointing to see a wall street firm succumb to what is viewed here as corrupt practices. on the other side, there is a lot of people wondering, i know, you might find that funny -- >> no. >> what i'm talking about here is the level of detail. because here in china, and throughout asia, you know, the

common -- the practice of political connections or personal connections is really a normal way of business. people are looking for the details in this investigation. >> that's why i was -- it is like what is the -- they were looking for a higher standard and disappointed they're not different than what the way business is done there all the time. >> just so we're clear, this is how business is done over there, does this come as a surprise? you probably know a lot of these people in these positions. are these people getting hired and going on vacation and just on the payroll or people who actually have a legitimate real job and are qualified to have these jobs? >> well, it really all depends on the nature of what actually, you know what actually happened in each individual case. because when i first heard that story, i dhithink a lot of peop here didn't think it was entirely unusual. it makes a lot of sense you

would see these personal connections made, business deals going down because you have, you know, there is so many different relationships between business and government. one other thing, though that was pretty interesting, i thought here was that because of the overarching feeling in this country, that the government authorities are going after corruption. there is still some skepticism about the way the chinese government is going after corruption. there are a lot of people who are commenting online saying, if the chinese government can't do it, the americans can come in and clean up this place. >> eunice yoon in beijing this morning. we appreciate your report on the madoff of china and your comments on the jpmorgan story. coming up, we'll talk about the latest of the fight over that big airline merger. will the deal between american airlines and usair fly? we'll ask an industry watcher when we return. when we made our commitment to the gulf, bp had two big goals:

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welcome back to "squawk box." american airlines, us airways and the justice department are all now saying they're open to settling the case which pits the doj against the proposed merger of the two airlines. joining us to discuss it, kevin stark, senior analyst at crg capital group. good morning to you. i don't know what to think of this. how is it possible that everybody -- i understand why american and usair would be open to a settlement, i don't understand how the doj comes out with this big case, they say the whole thing is horrific and horrible for everybody and now they say, maybe we'll settle? >> i think if you read the court docket, it says they're open to a settlement, but in reality they're not listening to each other. so really -- >> there is a lot of smoke here,

nothing real? >> yeah. >> what happens? >> they're going into bankruptcy court today and there is a possibility the judge and the bankruptcy court will confirm the plan. that doesn't mean the merger can go effective. you have to wait to see what the judge in the district court and the district of columbia says about it. there is a hearing on schedule tomorrow. >> your expectation, is there a transaction that actually gets done or not? >> i'm at about 40%. and i seem to be on the optimistic end among my client base, distressed investors who are involved in the american airlines structure. >> and what happens if this deal doesn't take place? what happens to america? how long does it take for them to get out of bankruptcy? >> this resets the clock for them by probably at least 7 or 8 months and probably more like a year to get out of bankruptcy and the stand alone plan. >> what does that mean for the customer? while america is in -- is there any distinction or difference between them being in bankruptcy and not being in bankruptcy if you're a customer? do you care? >> you don't. if you ask customers, they

wouldn't know that america was in bankruptcy. >> right now, right. >> what america has done, while in bankruptcy, has been very good for the airline and very good for the employees and very good for customers. >> so tom horton, did he mack a mistake by trying to do this deal while still in bankruptcy? >> i don't think it was a mistake. he didn't go in trying to do this. it was sort of forced upon him by labor and creditors. the mistake may have come from the usair side where they were too cavalier about getting doj approval. >> what happens if this deal doesn't happen? >> usair is the airline where long-term viability is probably more at stake than -- >> people think that doug parker is a great ceo. >> they do. but they remain the fighting brand, the underdog who is always going to be nipping at the heels of the big three. >> last question. how important from a competitive standpoint do you believe they need to do this deal -- i'm talking about customers now. i don't care about how competitive the companies are. do you believe what the doj says

what you suggest, usair nipping at heels of everybody. or do you argue you need a third strong competitor in there go up against delta and united because that's what will keep prices down. >> i think you do need a third strong competitor. you have a due openly with a couple of other also brands. american will do okay on its own. the airlines together would do a lot better and compete better with united and delta. >> we'll leave the conversation there. kevin, thank you for coming in this morning. appreciate it very much. coming up, cnbc goes shopping with some teenagers in an atempt to get a true read on retail. days after the vmas, which -- oh, okay, the vmas, twerking, twerking, i'm twerping. >> you are. >> the online world is still buzzing about miley cyrus, what she wanted. she -- wow, that was a huge success for her, obviously.

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the back to school shopping season is almost done. courtney reagan hit the mall with a pack of teenagers to check out their thick old buying habits. nobody twerked, also, did they? >> no. no one did any of that. we were just shopping. you know, joe, the national retail federation has forecast lower back-to-school spending this year than last year. few have tracked it so far t. team retailers seem to be bearing the brunt of the pain. some of the sale will come soon. others not so sure. join them on a mall shopping trip to new jersey this week to see where and when teams are shopping for back-to-school. analysts say all hope isn't lost

yet for retailers back-to-school sales. expectations are consumers plan to shop closer to me after kids are already back in class. and the teens in our shopping riding along are any indication, some retailers will see a back-to-school pop in september. none have started back to school clothing shopping yet. >> you guys say you have not done back to school shopping. why not? >> yoevenlt i always play on it. my textbooks cost so much. i was planning on techbook, then focusing on clothes afterwards. i have clothes, i need my box. >> reporter: the girls are holdth out on purchases has more to do with trend watching. >> it's cool, wait to see what we're wearing forle 62. >> reporter: so it's a wait. you want to see what everybody else is wearing. what if everybody waits? >> you will find one that starts the trend. >> reporter: don't forget good

old teenage procrastination either. >> i didn't want to. >> reporter: are you going to do it? >> if i have to. >> reporter: you know, the shopping trip is quite an education for me t. other big lessons, teens are brand loyal, but they're turned off by the big labels on the clothing. they don't shop or browse online. it's the--store experience, very, very important for them. i hope the retailers are listening. >> all right. courtney, thanks. courtney is a huge country fan. >> reporter: i am. >> i will play something now. coming up, two key economic reports and weekly jobless claims. votaphone surging on verizon wireless. this is 1970, briar and shipley. someone said you thought this was a law firm. it's one toke over the line. what do you think the toke was? any idea? >> bowler. >> we'll be right back. [ male announcer ] it's time.

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. >> good morning, welcome back to "squawk box" here on cnbc. i'm here with joe kernen, it is just the boys. in the meantime, we take a quick look at the futures, see how things are setting themselves up. we have green aarrow the dow looking like it will open higher t. s&p 1.5 points higher. the nasdaq a little over 67 points. let's take a look at oil. is the statistic everybody wants to look at. wti crude right now. 109.31. that's worth keeping an eye on

as things progress or don't progress in syria and what's happening with the u.k. and the u.n.. we will talk all about that. of course, you can look at currencies as well, this morning. really, this thing to pay attention to this morning may be the euro. you know what, it's all marginal across the board right now. let's look at the ten-year note at this hour, you can see there, 97.53, also the yield perhaps more important right now 2.785. joe. >> votaphone confirming it is in talks with verizon on a stakes of verizon wireless. it could cost them in excess of $100 billion. the largest transaction of all time. votaphone is surging on the news, meek am price was an ad advisor on the metro t-mobile deal and many other telecom deals wind chill le talk to the ceo of t.w. telecom, a leading

provider of the ether net business to say they're in talks. you f'ing they have been on and off for how long, these are real talks. >> this has been going on for i don't know six or seven months. verizon was perhaps the most aggressive about it. they were somewhat public in their attempt to bully votaphone into doing a transaction. this is the first time they have come out publicly and said they are if talks. mean, frankly thatry in talks. before i think they were. they tried to deny it as much as they could. the big issues we talked about in the last hour, to me is the most interesting part. this is not driven by the telecom industry or the economy. this is driven by the taper, ben bernanke, to do this transaction, they have to raise $50 billion in debt. how much is that going to cost you and what is the interest rate going to be on all of that? that's the reason why the window, to the extent there is a window, may be closeing, why people may be moving quicker

than people anticipated. in any event. let's talk about the big geopolitical story of the morning. the team is conducting a third day of investigation noose an apparent chemicals attack in syria. the team arrived in the eastern suburb to examine the sites where witnesses say rockets exploded with chemical weapons. it also has run more tests with the wounded. joining sus james philips, a senior research fellow at the heritage foundation. good morning to you. >> good morning. >> yams, so, help us just to understand this, i keep trying to figure out the timing of when we might move, if we move. there now seems to be hesitation that worry going to have to wait for the u.k. to catch up with us. the u.k. wants to wait for a report from the u.n. when do you think all that happens? >> well, the u.n. previously had scheduled the inspections up to friday and secretary general

said the inspectors would report to him on saturday. then he would issue a statement, but now the syrian government has thrown a number of monkey wrenches in the works by asking inspectors to investigate three additional chemical weapons attacks, with i they claim were by the opposition. this comes after months of them dragging their feet on any u.n. inspection. >> what do you think we should be doing? meaning, do you you think -- go ahead. >> well, i think it's important to get to the very bottom and get the facts out. but i think we have to recognize here that russia is playing a delaying game at the u.n. security council trying to stretch out this crisis. the longer it stretches out the more economic impact it will have in terms of nervous oil markets. >> and, but, i go es the question then becomes, do you disregard what the u.n. the doing with their report? do you need that as cover to go

in, if are you going to go in? and what do you think the end dole should ultimately be? is it sending a signal or is it more than that? >> well, i think it should be more than sending a signal. it makes me very nervous when the administration talks about military force to enforce international norms. because as we know, international norms are broken in syria every day, not just with chemical weapons, with bombardments, with civilian population and i think the syrian government working with russia and possibly china is seeking to prolong the crisis and kind of muddy the waters by suggesting the opposition is also involved. written for political reasons with the labor party, opposition to the conservative ruling government of david camm ron is getting skittish and postponing their vote until after the u.n. inspection report. so i think this crisis is leakly to bubble along a little longer

than people originally expected. . >> i was looking lou the snoets notes, you said a missile attack would only make president obama look weaker. why? >> if it's just a missile attack to signal open session to chemical weapons and assad goes ahead with future chemical weapons attacks, then that makes the u.s. look irrelevant. so it has to be strong enough to deter a future use, strong enough to send a signal not only to damascus but to iran that red lines, once they're made and, you know, we can discuss the wisdom of making a red line before you no ewhat you will do to enforce it, but once the red lean is out there, it's important not only in terms of the syrian crisis but in terms of the looming iran nuclear standoff. >> so what are you advocating exactly then? if missiles are not going to be strong enough, what would be? >> i think it has to be, well,

the administration has boxed itself in on this attack. but this attack only makes sense if it's a part of a broader strategy to act sell rate the fall of assad, to strengthen moderate opposition groups within the opposition coalition, because it doesn't make sense to overthrow assad if al qaeda affiliated groups are going to come to power. so the u.s. has to be working on many different fronts, not just kind of cruise missile, you know, chuck and duck strategies. >> james, i ask this of a guest we had in the 6:00 hour, would you be willing for us to go in alone? meaning the u.k. doesn't come with us, france doesn't come with us. others do not come. >> i think if it's deemed in the u.n. national interest, we shouldn't allow the inhibitions of allies or, you know the technicalities of the u.n. security council where russia, china, can veto any action.

we shouldn't let them have veto power over our military. however, it's better to go in with allies, that itself for sure. >> thank you, james. we will be talking with richard engel in a bit. we should get more from mr. engel who has news on the ground. in other headlines, let's talk about them. blackstone has settled an investor lawsuit. it will be paying $85 million to settle claims that it did not disclose certain blackstone investments declined in value prior to that ipo. blackstone continues to deny any wrongdoing in the matter. implications for detroit, a judge ruled the city of san bernardino is okayed for chapter 9. the biggest issue is pension costs, accounting for about 80% of its annual budget. at a nationwide strike of fast food workers is set for today. workers calling for higher wages.

that's what this strike is all about. organizers are pushing for pay of $15 an hour, that's more than double the federal men mum wage of $7.25. joe. >> if you then said, okay, a third, we'll do that, but 40% of you will no longer have that. >> we're talking about. >> down that will work? if you said, okay, we'll do that, but only 40% of you will no longer have the job. >> i think they will be very unhappy. >> they'd say no, never mind. up next, currency itself, a rare studio appearance by bori boris schlassberg. it would be weird that someone mentioned we could be ike and tina. >> i was trying to keep that off if shelf. >> what investors can expect in september. "squawk box" will be right back. announcer: where can an investor

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>> you are right. the dow making back some of the ground it lost on tuesday, nowhere near making back the ground we lost in this most recent i don't know what you'd call it. let get someone who is in a position to call it something. chief investment officer for growth. for guys leak you to know all about what the market is going to do, it doesn't help your case very much. since you are a stock guy, a stock pecker. we wouldn't need you. so many times i know, i asked you about the markets. you don't want to talk about it. because you look for undervalued situations that has very little to do with the market. >> we are not market. >> after saying all that, we

have an opinion. >> by the way, boris schlassberg is here. there was a time when we had you on when there was a female we found named natasha. >> there was. >> by coincidence. unless you allow us to call you are natasha. >> we won't do that. >> you can do currencies, the whole yen thing, think about your answer for why does syria causet that to surge? don't answer that. start out with you. what about the markets, down about, what? >> down about 5 morris from the early august all time high. >> what do you expect it to be down by the time people should be ready to buy? can we go to 10? i know it is not your thing is this syria, tapering, anything else? >> anything can happen because we're not market timers. we don't believe in that kind of

precision forecasting. so let me set it for you like this. we are down 5% from the all time high in early august. we are 4% above the 2007 peak in the market. earnings this year will be about 27% higher than in 2007 and the ten-year treasury today which is at a, you know, two-something was 5% in 2007 nearly double what it is today. so there is opportunity in stocks -- >> it is coming down, not going up. >> 17, if you put a 15 multiple on current expectations for next year's earnings are going to be around 1.16, 1.17. you get about 17.40 on the s&p as a year-end target. >> any stocks you might like the overall position in the market wouldn't preclude you from buying them in the market today. >> there are some stocks we wouldn't want to buy today. there are opportunities in this

market. yes, absolutely. >> you will tell me why the yen surges on syria? >> the dwren surges on syria because of dollars declining. people are afraid of a couple of things. number one, they're afraid if they do go through with syria, that is obviously going to delay the fed taper. that's negative, u.s. yields will go down t. fed will worry about. imagine you have military escalation, business freezes up, the fed basically, you know, becomes much more cautious and generally begins to, you know, to be more conservative than aggressive at this point. there is no reason for them to stop accommodation if we have some kind of -- >> at the end of the day. now it looks like a delay. >> what is happening? the delay, in the meantime, what this is doing is driving economics. it's wreaking havoc in japan. >> why? >> he needs to replate his economy. the end result of this, he is an

unintended victim of all of this. the yen gets stronger, that hurts japanese exporters. hurts his plans for free inflation and hurts growth. we have a lot of ripple effects. >> we need japan to come back finally from the walking dead. >> boris, from the -- >> which is coming back in september? isn't it? >> i can't wait. >> one of the people better than bech affleck for batman was if guy len conplays. >> andrew lincoln who plays rick on "walking dead.". >> i have to get up to speed. >> you are not up to speed. it's hard for me to have any respect for someone that hasn't seen any of the "walking dead." i'm sorry. >> it's haror me to have respect for people in the first season. >> i'm in the second season, sixth episode. >> i saw skinny pete last night get -- >> don't say it. >> on land and i'm praying that

time warner and cbs. >> that needs to get settled. >> howard, you haven't seen any of these? because you are up? >> you are up at night carting. >> not charting. >> and taking calls from mario. >> always. but i have to say, i'm not really up to speed on these shows. >> that's okay. go back to. >> i like the nfl. you know, monday night football, sunday fight football. thursday night football. >> monday night is better sunday night is better than monday night. >> the first sunday night game with the giants and dallas is going to be a big game. >> awesome. >> go giants. >> we will come back to these guys, andrew. we will talk to richard engel. >> we are, in a second. >> coming up, we will head to turkey-syria border. nbc's rich engel will give us the latest intel, later, we will the latest intel, later, we will talk votaphone and

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. >> nbc's richard engel joins us from turkey along the syria border. richard, thanks for joining us again. i want to go back.

hopefully, people, this is episode ec. some of our conversations with you. hopefully, they remember what you thought would be the most effective way to do this. it would be, i don't think there is any chance that it happens that we actually tried to tip the scales in favor of the syrian freedom rebel group. because i don't think the political will is there. my question today is, would it be better to do nothing if you are not going to go in and actually try to accomplish what you thought would work? is it better to do nothing or better to do the symbolic three-day strike even if you get allies along with you? >> it's a hard decision to make. i think it already it is getting harder be i the day, because the u.n. now says it wants to complete its investigations. there has been a revolt in the u.k. and the british now want to have a vote, in principle, today, if they can do any kind of military action and then only

have another vote next week, perhaps tuesday to actually authorize military action. the arab league is refuseing to call for direct military strikes. so if the united states were to do this, it would have to be doing it alone. as we said yesterday, if the united states really wants to improve the situation in syria, it would have to be an enormous commitment. it would have to book the rebel group it likes the pre-syrian army. it would have to consistently degrade the army and eliminate all of the militant groups the terrorist groups that are operating in there aligned to al qaeda. there are a lot of them. so we'd be talking about a no-fly zone, droneing, supplying weapons to the grown-up that we like and an attack on bashar al-assad's military. so you are left with the options, you do a symbolic strike, which already is

increasingly difficult because of the reactions of the arab league, the u.n., countries like the u.k., even now getting cold feet. or do you do absolutely nothing at all? doing nothing at all is also a choice. you've decided then to look the other way, effectively, or have the world look the other way while an alleged war crime has taken place on a massive scale that has been videotaped by so many survivors and witnesses. that's a horrible position to be in. >> if we assume that assad was, you know, knew full well and decided to do this, we can see that he doesn't have the same notions about gassing his own people. and you can see, people have different ideas about, you know, if it's a bullet, if it's gas, some people have trouble parsing that. but my question is, is it more likely that he uses it again if we don't do anything or if we say, you know, we're really

worried about getting in over our heads, so we do a quick one and then he immediately says, you know what, i'm going to push them to do more. i know they don't want to. he does it again. so what's more likely, he uses them if we don't do anything or he uses them if we do do something? >> i really wish i had the answer to that. there is no magic dose of miliryto tip him over, just eno punish him and say, don't ever use chemical weapons again, not so much that you push him to actually use chemical weapons to defend himself, if nothing happens, assad will certainly feel he got away with it and might be tempted once again to use chemical weapons. it's hard enough itself. it's hard to know. if you do nothing, if you ask the rebels this question, they say they think assad can only conclude he got awhich with it and will be tempted to use them again and again. then what does the u.s. do the next time? >> but you don't have to worry about any of the destabilizing stuff that might happen if it hits the fan when we do

something. i guess you can't decide on what to do based on threats, but at least you wouldn't be dealing with the possible, go ahead, andrew. >> richard, my question for you if you topple the regime, you get state collapse. then we have ten years of war in syria, in lebanon, in iraq. the poem who are fighting in syria right now, the militants, not the fsa. like i said, it's a small sliver of the pie the u.s. has supported but never backed militarily, which is a problem i think now on the ground. but all of these other groups don't think about fighting in syria. they're fighting to restore the fight. they're fighting to restore a region under their own sort of taliban-like rule. >> richard, what is the man on the street in the middle east, not just in syria, across the board actually think of what's going on here. i asked the question first, we had a guest on yesterday who suggested that we, the u.s., actually didn't have the moral

authority to come in and do anything. because they didn't believe half the news reports that we are talking about right now. >> reporter: there is a great hypocrisy on the stance in the arab world. having lived and loved the region for the last 18 years or. so when the united states intervenes, it's the u.s. trying to police the world and bully people and support israel and set up a foreign agenda. now, when the united states is talking about intervening to help a people who suffered a massive atrocious attack the arab world is saying the united states is not doing if you have, that the u.s. needs to act strongly. president obama is a weakling. so it's very difficult to win in this part of the world. then you enter into the consper race theory, which a lot of people see. that is that the united states actually is the one that started the whole war in syria to begin

with and that this whole conflict, the civil war is an american and israeli conspiracy to keep the middle east and keep islam down. don't underestimate how many people actually believe. wow. all right. thanks again. and we'll check back with you. i go back and forth. now you got me thinking. okay. you can't just, you know, you can't just pull in your horns an not do anything. richard, we've got all the experiences in iraq and afghanistan. >> a whole dilemma. we got our own issues. we can't act on any of this in a vacuum. we got so much that's happened over the past ten years. anyway, we appreciate it. stay safe as always. richard engel. >> truly one of our favorites. >> if you have comments, questions, anything you see on "squawk box," shoot us an e-mail, you can follow us on twitter.

coming up next, we will give you a check on the oil markets, especially given how the geopolitical landscape is affecting trading. "squawk box" returns right after this quick break. what's in your ear? oooo! a quarter! check for more! well, i guess i can double check... my watch! [ male announcer ] it pays to double check, with state farm.

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. >> welcome back to "squawk box." let's get you the morning headlines, which are about an hour away from two key economic reports t. second estimate will be out in an hour. economists there looking for an annual growth rate of 2.2%, up from estimates of 1.7%. we are getting the labor department's weekly jobless initial jobless claims. consensus forecast is calling for 330,000 new claims down from 336,000 the prior week. also, pershing squares bill ackman gets confirmed now. he is officially out of his investment at j.c. penney. we talked about this before. now it's on the tape after declareing his intentions to sell earlier in the week. sec timeings showing ackman sold more than 39 million shares to citigroup for $12.60 per share. ackman had bought the shares for an average of $25 each. >> it was two weeks ago your

friends said stop talking about j.c. penney. we heard he sold earlier. we found out he did sell. next week will you come back and say he still sold. he is still out. this is it. you promise? >> in total, he decides to go after the next retailer. >> let's get more on crude oil as mounting trndz in syria push things higher. the director of global energy and natural resources at your asia group. -- euroasia group. senator mccain said things are not going to happen from this. can you connect some dots that would cause oil to spike to $200 a barrel. could it happen from this conflict? how would that happen? >> i think it's pretty unlikely t. suez canal is well guarded by the egyptian military. things have quieted down there if recent weeks. when you think through the likelihood of this streak which is going to be limited, which is

going to not really aim to undermine the assad regime fundamentally. we are the knock-on effects from that. it will potentially spill over into iraq. when you look at northern iraq, the jihad pipe lean runs, that is already off line. it has blown up repeatedly in recent weeks. it is only about 270,000 barrels a way. in southern iraq, it's a lot different and a lot less vulnerable for a number of reasons. we also think it's unlikely that iran is going to lash out as a result of this. it certainly stocks up u.s.-iran tensions with the likelihood of iran doing anything that would affect volumes. >> do the people that control the beg money in this in speculating here, do they know all the things that you just said? and does it matter anyway? people buy it because of what's happening? they don't connect the dots, right? >> absolute. well, i think people connect the

dots. people are willing to buy into a rally with momentum and sell on the news. and i think that's exactly what this is. >> so the longer it takes to happen, is the higher does it go? >> the momentum is ebbed a little bit. you see it's been hovering at 116 in overnight trading. i think you would need some sort of catalyst for it to move much higher than this. you'd probably get a little more when you actually get the news of the strike commencing. but i think when the smoke clears from this. it's going to be pretty clear that, you know, you don't have additional oil volumes taken offline. >> what about libya, i started reading on it. by no means am i an expert. i read that libya isn't producing to capacity. is the much beggar problem in the middle east. is that going to weigh and continuously press the oil price higher in. >> absolutely. what's going on in libya is complicated. it's not a strike action by one labor union or anything. it's a number of local groups, which have taken control of oil

terminals, pipelines and infrastructure. basically, trying to extract benefits from the central government and shaky them down for money. one terminal will come back on. another one goes off. the numbers around the volumes change dailyment we think that this is probably on a trajectory to somewhat better production levels if you look at say a month from now. some of these people are bought off and these situations are resolved. but we also think it's going to remain unstable. when you think about the question mark on volumes in front of the market, libya is probably a much more important unknown right now than what would go on in the lamont or the gulf over a strike on syria. >> have you been on before, greg, with us in. >> yeah, actually, a couple years ago. >> a couple years ago. you know a lot of stuff. we may not, most of the oil people we have on, i don't know if you can come back.

they usually are shooting, you know, aren't hay? most of the team? >> there is a lot of facts. >> our niche in the company is the geopolitical risk angle. >> you want to be toast tomorrow morning. is that harry potter, eurasia group. >> oh, that's -- >> what's his name? >> he's the best. don't even try it. brenner's firm. >> brenner. >> great. >> greg where do you this i the price of oil would be ab sent the geopolitical risk? >> probably $10 a barrel lower. >> it's not a pejorative that kid daniel what's his name? anyway, greg, thank you. we appreciate it. yeah, one of our favorites. >> not yet, but it could be soon. okay. i'm getting a little laugh in the ear. thank you. coming up, we will talk verizon,

votaphone, ever corps's michael price. the ceo joins us next. "squawk box" insurance to i joins us right after this. .

. >> we fried to get back the last two days. now it looks like when is syria going to happen? >> take another week, it's over. >> some people say the a.p. reported that the intelligence on the chemical weapons is not a slam dunk, too. you know, i don't know. >> that's why the u.k. wants the u.n. to recover. >> you see france changed their tone. it was shocking to begin with that they actually were confrontational. now they're saying, whoa. >> exactly. >> we will talk a little telecom news. we will turn right now to the business of technology, nearly

10% of all computeing is done in the cloud. it's only expected to grow and grow quickly. here is michael price the senior manager of evercorps partners and marissa herda, champl and ceo. she said it. >> when you see a name herda it can be so many other things. it can be herda or herda or herda or, you just don't know. what else would it be? >> i was looking at your hair. it's very complicated. >> 90 seconds street? don't they teach the basic stuff? herda. >> i'm only worried now about my children. before we -- i want to talk about the cloud, because we have michael here one second, we have been working, talking about this

votaphone-verizon deal are you mr. telecom, are you not in this deal? >> correct. >> do you know water driving this? >> for votaphone, it is a when-win reaction should it occur. they don't control the stake. it unlocks shareholder value as the recent cable deal in germany showed, they have the ability to deploy capital on growth initiative. the european wireless community is seemingly opened to consolidation with the eplus germany deal t. investment 4g is starting if europe. gives votaphone a reason to do it. it has been a stumbling block. verizon has wanted them to do this foreverment for verizon, people need to present what a business verizon wireless is. it's a $35 bill ebitda. it matches up against any

business in america. >> shouldn't this have happened five years ago, they have been holding out. there was a period verizon was holding out. they could have had this for half the price? >> should have, could of, would of. you could look back in history. i think now interest rates are attractive. the cash flow will help verizon's dividend coverage. it makes a lot of sense for both parties. >> let's turn to the cloud. that's what you do. explain. >> if he does. >> actually, we enable the cloud. so there is no cloud without the network and we're a network provider. we built massive fiber infrastructure in major metropolitan areas across the country. we cannot connect off 450 data centers. that's where the cloud resides and data centers as well. so what we're doing is creating bit of a revolution in the

telecom industry. those two words don't generally go together. that's what we're doing. we have a history of doing. that we have been in history 20 twreers. >> so i understand, the enterprise cloud, clouds like an amazon cloud? >> when you are linking up, we sell to enterprise customers. they look at cloud computing and the way people are getting to the cloud today is via the internet. that's more of a science experiment for them. because they want security and reliability and internet is really best efforts. and so what we're doing is providing -- >> why do you say internet is best interest? >> think about the world today, have you hacking attack, via the internet. there are security issues. if something happens with syria. i guarantee you there will be a lot of websites like cnbc's website that will get a lot of traffic and slow things down, if you have mission businesses, you want a dedicated connection.

that's what we provide. but enterprise customers are frustrated because to get those connections, it generally takes 30, 60, 90, 120 days to get that. we are turning that into a minute. >> how susceptible are we to hackers and to all of these issues of things going down? forget about the hacking. in your times, 26th, everything went down the past couple days, there was a hack attack. but last week, amazon, which has the services cloud behind things like air b & br, net flicks, so many other things. also went down. >> again, the difference between accessing services via the internet which is great for ubique whichty, not good for services. having a dedicated infrastructure versus an ether net connection verizon the cloud. >> how do your customersing a access it if not through the internet. >> you have both, you have access through the internet. the main access for the

corporation is to act says the actual cloud application via a dedicated ether net keth e connection. >> for the end user, they have space through the internet. >> they can do both. if it's a branch location, that business has, they can have dedicated connections into it as well. >> you think of it as quality of service, you apt vr want an enhanced product. if you want a secure, reliable security-based product. >> okay. michael, help us with this. are you the banker here. what happens to a company like this. does this company ultimately get taken over and bought by a big telecom company? what is the future? >> it's clearly a consolidateing industry. what tw has done over its 20-year history is innovate. it used to be you just connected fiber at one location to another location and now what t.w. has done is come out with a new generation of products, which is on par or better than anything

else in the industry. so, you know, there are two strategies in this world, scale and niche. pick one. and -- >> and we're a disruptor. so we started disrupting back in iran 2001 when we became the first company, the first network company to provide national ether net platform and we dragged the incoming carriers kicking and screaming into it. today we're number 3 in the country behind two of the largest corporations in the world who have $150 billion market caps compared to our 4.2. >> do you know who your except? >> the large income carriers. i can't even say it. >> can you bring yourself to say it? >> those large incumbents, at&t and verizon. >> just this last piece. i feel like i don't understand, maybe you were trying to get at it. on the security front, ideally, these things not going down, why is yours not going down an everybody else's? that's what i miss in all this. >> it's how do you create a secure, private connection.

so the idea behind what we are doing is trying to make it feel like the enterprise customer is using the speed of the internet, so you had the quick connection, you know, to the application, but it's not as morous porous. when you have a private connection, it's a lot harder to infiltrate. michael, before we go, if we have this deal that i'm going back to verizon for a second. verizon votaphone, dlib maybe $140 billion. what's the next domino after that? >> you have the airline guy on here early whier, who missed what i thought he should have said is these airlines have not been through chapter 11. they have been through chapter 22 and 33 and, but the government -- >> and 44. >> but the government has said, no, we can't have that airline deal happen. the airline deal is a pretty telling signal to what the government will sayant a sprint

temo dealle, so, therefore, i think we are in a perd now where sprint is rebuilding, where temo is rebuilding. at&t is consolidateing and building out a network that's equal to verizon. >> but we won't be able see, there is no more major transactions to be done in the telecom space? >> there is plenty. every 84, with estart the year. we say, what are we going to do for our business at evercore, in telecom, we say to ourselves, gee, it's all dompblt it's amazing how it is never all done. >> is there a method to the madness of not letting the two airlines get together that you can see? >> i'm not an expert on it. it make nos sense to me personally. >> that's what i mean. >> do have you any idea what votaphone will do? >> i think my guess is they will do a little of everything. returns to shareholders, hold some, invest some. buy some. >> they have to buy something, don't they? >> they don't have a lot --

>> there is plenty of cable companies to buy. there is more console takes that should happen intramarket? >> do you think they should do it. they think it's peak exit time. there may be valuation and margins and the wireless? >> i don't know the motivations, but that's what makes the market. >> the at&t, t-mobile deal, is the justice department living in the past of that crazy formula? does that make sense, too, in your view? i never asked you about that? >> no, i will not answer that one right now either. >> you, you are a son of an anti-trust law enforcement i almost said something else. all these things make sense, the justice department shouldn't exist for its own stake to enforce things that aren't god for the world, should it? >> if you read some of these anti-trust complaints, they're pretty stark. they really have their strong opinions. >> stupid. all right. we will leave it there. thank you,gys. >> appreciate it. coming up, a big decision coming from the united states on syria. we will teke e speak to the

center for defense information, see your advisory larry corb at the top of the hour. . >> up next on "squawk box," don't start the day without the names that has your money. joe has rain shower list of stocks to watch right after the break. ♪ the world is changing faster than ever, creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, our flexible, collaborative approach helps forward-looking companies not only run better,

but run different... to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because now more than ever, the future belongs to those who challenge the present.

. >> let's take a look at stocks to watch, andrew, do you want to

guess who we are starting with? >> no, who? >> guess reported second quarter profit of 52 cents per share for the second quarter. 16 cents, how does that happen? 16 cents above estimates? >> i got a guess. >> the way we do it. are the analysts guessing literally or did they stock the stores with something that really worked? i never understand how to do retailing, especially with teens, because things go in an out so quickly. you never know the retailer, also, though, projected current quarter profit below analysts forecasts. obviously, investors are focusing on the second quarter. you can see it did come down recently and this is kind of a retracement of half of that sell-off. fresh market matched estimated with second quarter profits of 32 cents per share. it cut its full 84 guidance, lifting same store sales outlet. that will be a big mover.

altera improved a buy back program. it can go up to 13% of its stairs. urban outfitters authorized a stock buy back of 10 million shares. coming up, ford is hiring, ceo alan mulally will joan us. check out the report. ford is up 73 percent over the past year. find out if the company can keep it up. .

>> making a case for sirria. analysis from middle east experts. the spike in the crude energy stocks. which sectors are poised to gain. >> ford adding jobs in michigan. ceo alan mulally joins us on a "squawk" economic call. >> breaking economic data. second quarter gdp and jobless claims hitting the tape at 8:30 a.m. eastern. >> it's thursday, august 29, 2013 t. third hour of "squawk box" begins right now.

welcome back to "squawk box" here on cnbc, first on business world wide, i'm joe kernen along with andrew ross sorkin. becky quick is off today. we have a couple guest hosts, one, howard ward, chief officer at the gabelli fund and boris schlassberg, a managing director at bk asset management. more from howard and borbor us up in just a second. first, though, we have headlines this morning. we are looking for a positive open to add to yesterday's gains that still have us down about 5% from recent highs. still a lot of angst about the taper. now syria and what our action is going to be and woo kind of action it would result. in europe, they are trading on the same thing, what happens here as well as the prospects look like for military action. it's up about, can you see the

footsies going the best, they're up a number of percent. the big news actually comes sort of partly from there and partly from here. >> it does. we'll call it merger thursday. this morning, votaphone confirming it is in discussion with verizon for a buyout of the u.s. wireless joint venture. they currently have a 45% steak in verizon wireless. the dell could cost verizon in excess of $100 billion with a b and be one of the largest corporate transactions of all time. also, we will be watching for comments from two fed presidents. jim bullard will be speaking in memphis today. also, richmond fed president jeff laquer, he will be given an address in newport news, virginia at 2:00 p.m. we should note the indian rupe down from a record low rallying 3.5% in the single day gains since 1998. among the catalysts late

yesterday, the central bank announcing a special window to sell dollars to oil companies. the goal is to remove a major source of dollar demand from the spot market and reduce downward pressure on the indian currency. india's prime minister will address parliament on the economy tomorrow. also the united states and allies weighing options for a military intervention in syria. here is president obama last night on pbs' news hour. >> i have not made a decision. i have gotten options from our military, had extensive discussions with our national security team. i have also concluded is that direct military engagement involvement in the civil war and syria would not help the situation on the ground. >> and nbc's amy modine joins us from new york. good morning. >> reporter: good morning, andrew, it's a tense situation all across the area. felt here in lebanon, given in the last 24 hours there has been

at lowest 10,000 refugees that have crossed over from syria into lebanon. it gives you the sense of the fear that has gripped the sir syrian people in anticipation of this military action. meanwhile, it's not the humanitarian. a senior iranian military commander warns the united states it would be the second vietnam for the american government. more importantly, he said it would be the beginning of the end of this state of israel. so it is an indication that perhaps across the region levels are rising, slowly temperatures are rising slowly. meanwhile, countries like jordan say they will not give any u.s. or any countries permission to use its territory to attack syria and one of the u.s. closest allies in the region egypt says it opposes any type of foreign military intervention. there is a little diplomatic shuffling taking place. inside syria, the inspectors have been out to the site of the alleged chemical weapons attack. they have carried out more

interviews and samples of individuals and soil. they say they need at lowest another few days to finish their reports. they are expected to leave syria on saturday and to possibly present their findings as early as sunday or early next week for the united nations, joe, back to you. >> ayman, we will see you again soon and hopefully talk more about this. joining us now with more on the latest in syria is lawrence korb, senior fellow for american progress. it's been a while. >> yeah, it sure has. >> i don't forget. i remember how you were i would say in hindsight had some really important and a lot of people weren't saying about iraq within it was occurring and when you used to come on the show. so now i'm interesting in what you think we should do here. because you are very, very hesitantt about that whole operation, because if you break it, you own it. we ended up breaking it. we ended up owning it. it is affecting what we are able to do right now.

yet you seem to think we need to do something here. >> yeah. it's much different. in iraq, we not only try to get rid of saddam hussein. we try to remake the iraqi society. what president obama is contemplating here is nothing like that. he wants to have a limited strike against those assets in syria who had responsibility for using the chemical weapons to send a signal that, hey, i made a red line. you crossed it. we have an international norm against using chemical weapons. they're trainees. it turns out assad has used them. he can be brought before the international criminal court like little soovich. >> -- like milosovich. >> there are people that seem to be tip toeing around regem change. if a guy uses them, we know he did. shouldn't that mean regime change wouldn't be the borest thing in the world?

is it too hard to pick sides over there? is the side fighting assad too fragmented to peck one where the weapons won't come back to haunt you some day from al qaeda? >> that's the problem. general dempsey, the chairman of the joint chiefs of staff said no matter who wins, it's not good for us, the best solution would be a negotiated solution at the international community, including the russians gets involved n. but there is no way in which we have the wherewithal all as powerful as we are to get in there and make that come out the way we would like. unless we want to occupy the place for another 20 or 30 years. that's why i think it's important. you are talking about, we are trying to send you a signal. don't do this. it's a violation of international law. by the way the other thing the president made a mistake about iron i iran, with i is syria's chief backer saying don't get nuclear weapons. well, if we don't do anything now, it is clear what we have done this underlies its

credibility with the iranians. >> lawrence, was it a mistake to declare a red line? would we be having this conversation about attacking it, if, in fact, he hadn't made that statement? >> yeah, i think it was. this is not the first use of chemical weapons. a couple months ago lrp smaller incidents. don't make a statement, unless you are willing to back it up. yeah, he has put himself in a box by doing that. i'm sure that plays in to the reaction that will occur here. >> lawrence, isn't that also an enormous amount of risk in doing a missile strike that could go awry in a sense that we could have collateral damage. then we would look like the bad guys that kill innocence. isn't it much more intelligent to do what you were proposing initially, with i is maybe prosecute this judiciary, by treating him a as a war criminal, creating all sorts of evidence against him and trying him, instead of military action without any military consequence

at the end and a huge amount of risk up front? >> well, there is obvious a risk. but cruise missile strikes, basically, there is a minimal amount of risk. they're smart weapons, basically, put the gps in before they go. i think, this is why they are careful a. lot of people say you should blow up the dmal weapons sites. no, you don't want to do that. that would create havoc in the place. you want to target the headquarters. the communications facilities of the people involved in this. yes, there is a risk. it's minimal using the cruise missiles back, they are smart weapons. >> do you think, lawrence, that it would be possible to make it harder to use them in the future? do you think we could do enough where if we did command centers or tried to figure out who did it in the first place, it would make it harder for him to launch a -- you would hopefully get something out of it? isn't there something in the notion, sense he knows it will

be so limited. he knows we don't want to get so involved, once he did this, he'd do it again just to force our hand in do wack we don't want to do? >> well, of course, if you do it right and he pays a price, which undermins his ability to conduct this conflict, i think that would send a message. obviously, there is nothing perfect. but my own rue is, he did eight little bit. nothing happened so he went further. if you look at the way he's not this war. he keeps escalating what he is using. in the beginning, they were sort of using rifles against the troops. then it was rockets and planes and chemical weapons. i think, we say, you know, this is a red line. you can't cross it. possibly, there is no germany tee that, will make it clear that they have to come to some sort of negotiated solution because he has no more weapons if you will to escalate this thing. >> we keep talking. i thought andrew might jump in. we keep talking about the arab street is not going to like us no matter what we do. they're not even sure if they

don't believe that chemical weapons were used, or if they don't believe that you can definitely distinguish between rebel versus assad and that, you know, i saw some of assad here yesterday saying, you know, that there are some of assad troops still in the hospital from chemical weapons that had been used by elements of the rebels. that's al qaeda elements that have had aing says to that. so it just seems like, we're never going to look leak the good guys in what we're doing. so we should accomplish something since we're going to get tarnished anyway. >> that's right. if you look at the situation in egypt, both sides are blaming. we stayedwith morsi. should have stayedwith mubarak, we're not going, people will blame us. the real question here, i think, is the whole long-term thrust of international law. look, nixon was the one that started, you know, getting rid of nuclear, chemical weapons. we have an international treaty.

and i think this is really the key issue. this transcends what is actually happening in the, in syria and the middle east. >> laurnts, is establishing a no-fly zone over syria a valid option for the united states? >> no, it isn't. because they have very sophisticated air defenses. and the last thing you want is to have american planes flying over there and get a man or a woman shot down. then have you them as a prisoner. no, i don't. again gets you into the slippery slope. then what do you do? it's very interesting. yesterday, we talked about the 50th anniversary of the march on walk. if you go back in 1964 the year later, remember we just had an air streak t. next thing you know, we kept going and going. so i think you know you just don't want to do that. >> lawrence, it sounds like all of our options are limited basically to blow up a couple of buildings. i don't know if that's going to be enough. maybe their command and control structure. he's certainly going to be aware of it. it just doesn't sound very

satisfactoriry as a policy. >> well, again, there are no perfect solutions here, but what you are doing is you are making assad and his people pay a price for, you know, stepping over this red line and they're going to have to think if they do it again, we always have a couple destroyers in the mediterranean who each of whom has about 25 cruise missiles on there, so they could do it again. >> hey, larry, 1980. i mean, you were a reagan-bumpblt you were a part of the people that, some of the people that elected reagan and bush the first time around. now you are at the center for american progress. how did that work? was it iraq? sore it you? >> well, i think, i worked for reagan. i didn't work for the sec bush, if you will. but what has happened is the republican party has changed. you know, with reagan, we got out of lebanon when it looked bad, when we tried and it didn't

work, we got out. but when you had, you know the younger bush come in, they went into iraq and kept going and going. >> it took a lot of money, too. >> that was a big difference. >> they didn't pay for some stuff. yes, it has changed. all right. >> one quick question. what would ronald reagan do in this situation? >> remember, he attacked gadhafi. had one attack to send a message, gadhafi was messing around with our aircraft in the area. i think that's exactly what he would do. send the cruise missiles in, send a signal. gadhafi got the message back then, too. >> lawrence, korb. good to see you. >> coming up, the spike in oil prices lifting energy stocks yesterday. that boosted the major averages. up next, we will talk about the stockmarket winners and losers if they drive oil prices higher. still ahead the "squawk" ceo call is in session this morning. alan mulally will joan us at 8:40 a.m. ♪

.

. >> welcome back to "squawk box," 50 points indicated is it a bac? is it kind of on the back burner? >> you know what, it's at least a week away. a lot of things happen in the

next week. it can push it off. it is more likely it gets pushed off longer than happens sooner. how about that? >> is it good that we look around, if we are going to do something, let's do something that matters and do it right. >> no, hold on, korb just told us. what would reagan do? d itarn you had all your ducks in a row. you thought of the contingency. one of the things people point out, we know how to do this. but we haven't gotten all of our plans together in case something results from this in the region. who knows. >> one of the criticisms is that we don't have a policy towards syria. >> it was also a different time when reagan was there. he was basically a time within they had dictators and control over the region. now as we were talking, the whole region is fracturing every single country.

there is no stable government in asia or syria or in iraq. for the stable government in labia. so you don't have any kind of a centralized control, which you can have some kind -- that's why it seems leak a big mess. >> i hate to be on this unequivocally on the side of the saudis. they seem to be. they want to go secular. they want to go, it's all about business with them. it's all about the economy and oil and can you see where they are if egypt, where they are in syria. i think we can take the coup from them, they hate to be their lackey. they seem to have, what do you think? what do you think? >> they're not public. >> no. >> but they don't want -- they're the last place that wants the theocracy in the middle east. let's talk about the implications for the market. the dow managing to add about 50 points with the cloud over syria hanging over the markets. joining us now from stanford is charles campbell mkm's partner

and director, the guest host howard korb. let's go to stanford for a second. how do you play this, assuming what is right, syria is not on the back burner, a week away from any kind of missile strike if that, it may extend out longer. >> good morning, andrew, thanks for having me. the markets are in a little bit of a risk on or equities and foreign exchange markets because the scale and scope of the military involvement appears to be limited. markets to you, geopolitical conflict largely through the prism of uncertainty, it appearsing to limited and defined, investors take comfort in that. there is no moral or ethical compass. longer-term solution we that may be desirable from a principal standpoint. markets care about the near term uncertainty. part of the response will depend

on what the western powers decide to do. if it proves to be a largely symbolic gesture towards syria and towards the assad rejust a moment and as reported probably will not lead to a regime change, then markets will take a wait and see approach, i would suspect, gold will probably trade similar to where it is now. you won't see it advance significantly. however, if you see that markets are surprised by an aggressive response by western powers, then again probably beyond the 270 yield you saw earlier in the week. gold would advance, crude would advance, spread between 20 and wti would widen out. >> here's the problem or the challenge investor. you got to make the call before it happens. so what do you do? >> well, right now, i think investors are not going to be cowboys, the professionals we talk to they will not be cowboys an commit major amounts through

net long physicians in anticipation what they expect will happen without having clear confirmation of it. i think they will take a very cautious wait and see approach, hedge their strategies, perhaps with options and see how this situation unfolds. there is clearly no obvious solution. it's another country that is in trouble in the middle east. our record, the u.s. record, in will going to remain cautious until this plays out. >> when you get off the set today at 9:00 and call the office, is there anything you are going to tell them to do specifically in relation to what is going on geopolitically? are there any stocks you have seen come down if price? you say, add a little right how? you say, you know what, we should maybe get out of this one. >>drew we are 5% away from the all time high earlier this month. that's not enough incentive to jump in and take advantage of a

swoon. it's not enough of a pullback to create much of an opportunity. we still believe stocks are the only game in town looking out beyond this crisis in the middle east right now. and we don't think it's going to have any lasting impact on the stockmarket based on what we know today and that's why i think what you are seeing is investors are, in fact, buying the dip. in july, we had a record inflow into equity funds. high for the market. but that rotation out of cash and fixed income into stocks has begun. it's going to continue until further notice. the economy, by the way, july 31st, the government came out and revised gdp for last 84 from 2.2 to 2.8. we're expecting a bump up in the gdp estimate today from 1.7 to around a 2.2, 2.3. so the economy is continuing to grow. there is nothing in the exec forecast over the next 12 months that is bearish for stocks, in my opinion. >> syria goes away, we still

have the debt ceiling the negotiations, the uncertainty over the fed chairmanship. there is a lot of uncertainty coming up in september. >> that might create a better buying opportunity than we have today. all of those will do blips on the long-term radar. >> andrew. quoting of senior military british commander, the idea that we can neatly restrict any attack to a short hef term duration punishment with the limits drawn by us is naive. ultimately, your word, one can't help but think these plans are more about restoring u.s. authority than anything about the civil war in syria. so we would be doing things? >> there is a part of me that buys into that. >> you think we should do things like we said redliner will restore our authority? >> that's to me the big issue. dimp what richard engel said and everybody else, it is not so clear to me redo restore

authority. charles, we will leave it there. thank you for your mer smektive on crazy market time right now. >> we got second quarter gdp. >> yep. 8:30. >> the revisions-it the tape at 8:30. then we also get jobless claims, which have been more and more important recently. ent investment objectives, ideas, goals, appetite for risk. you can't say 'one size fits all'. it doesn't. that's crazy. we're all totally different. ishares core. etf building blocks for your personalized portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. the world is changing faster than ever, creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow

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. >> tonight i know alabama is playing, aren't they, real tight? i think they're flying the you according to vivid seats, i saw you look up immediately. you are thinking, you immediately looked up. it's got nothing to do with that. the alabama -- >> why did you think i was looking up about that? it tonight be football. >> the alabama-texas a&m game i prices. the second highest matchup. also between sec teams. lsu versus alabama, $550 a ticket is what they're going for. >> okay. we're vivid, live in color. we're data in just a moment in just a moment.

.

. >> welcome back to "squawk box." second look, second quarter gdp. whopping 2.5, a .7 revision to the upside, better than anticipated. that's why we paid so much attention to that dropping trade

deficit that we recently received. jobless claims, they move d rev 337. so last week, 336, revised to 337, down to 331,000. continuing claims hovering under 2.99 million. let's go through the internals of that gdp. of course, that itself the annualized quarter over quarter. we look at personal consumption, important. pretty much spot-on at 1.8. we look at the price index a. little elevated at .8. last expectations were 4.7. if we look at the personal consumption and expenditure, also up .8 of 1%. it's definitely a much stronger than expected number. now, of course, we have to figure in that age old question that when we receive second look at second quarter, as we're about ready to finish up the month of august, what is the here and now of the equation?

i guess we're going to have to constantly handicap that. we are back over 280 and 10, i think that's significant. it seems like syria is important. a distant memory. back to you, guys. >> i said to steve, i was watching the s&p futures. this is good, gdp is good. now they will taper? you can see each trade. steve, go back and forth. i would like to say, just once and for all, we need to get out some day anything that allows us to get out eventually is good. it's good. it's good. we want to gdp to be good. >> not if you have to get back in. >> i know. i know, sooner or later, we want tod to embrace good numbers. we can't sell the numbers off, steve. we can't, i'm not allowing it. >> joe, you talkedbout the fed tapes. the syria taper. i want the fed out some day, rick. and my biggest concern is if it

doesn't go as planned, where unemployment keeps coming down things improve, they can never get t. i want hnumbers to allow them to go. i'm with you. >> all right. >> $200 billion. >> we can never agree. >> i want. i like the idea of -- >> you are back to september taper now, aren't you? >> i am. i think they want to do it. data support it. >> you are like your mother, your sister. >> you are. >> you are on your way. >> i'm like kerry, joen kerry. >> yeah, yeah, by the way, yeah, i did some more reporting. our secretary of state. >> great. >> he's not important now. >> no problem. >> let's talk about the data a little bit. i'm trying to physical out where the surprise was. it's a big revision. it makes an architect that printing the first print on gdp. it is often revised very heavily. what i see here is a big

increase in structures. the total business investment not so much, housing came down a bit. exports were higher. so and government, be i the way, id you say? >> i said, yeah the trade deficit. >> the trade deficit. >> a b had. >> i'm trying to figure out inventories played a role. it looks like all inventories, exports a little higher. it is interesting the first time the government created this new line in the gdp of the value of splekttual property softway ware. they reported it at minus 0.9. so they're trying to figure out how much all of. that that's hollywood and movies and things like that. >> government down 0.9. that was a negative. some people like to add that back and say, well, if we weren't in the middle of the sequester, what would the economy be doing in this would be the economy well over 3

percentage points. just a quick word on claims, a necessary but not sufficient condition for job growth. right? these numbers are lower. it means will is less firing. it doesn't tell us about hiring. >> it's been a good correlative factor t. lower the flames the higher -- >> actually that's not true. it hasn't been. it's the indicator that economists say is the best one of a lousy bunch. but in general, you've had the high claims at 380 or 400. you had 400,000 job growth. you had lower claims. >> i'm sorry. that's job growth. against stocks going up. >> stocks, sure. stook stocks leak this. >> the other thing i'm looking for. >> don't you want to reserve judgment before you completely commit to the taper? like, done you want to wait until friday? >> my point is that the fed wants to do this if the data is there. there is a predeliction.

thing up mentioned they don't want to have to double back if they don't have to. but what i heard is this is the plan it's a part of the agreement between the doves and the hawks. they want this thing to happen. so if they can handle the gdp growth, they will taper in september and start on the road down that path. and there is a lot of concern about the effect of syria, the deficit debate, but oil prices, i think they want to reduce it. they'd say, hey, we were doing 85. now we are doing say sky. it's not as big a deal as the market wants to make it out to be. but from jackson hole, what was clear, they don't have a handle on the mechanisms and the magnitude of the effects of quantitative easing on the economy. they want to debate. >> they don't have any kind of shock to the system? >> absolutely.

they want to avoid what they call the cliff ef. maybe right p your angle there, boris, the concern about the effects on emerging markets and one thing we did hear a lot of, what rick thinks about this, the notion that the emerging market companies may have to put crall controls on to slow the exit of money from countries when the carry trade unwinds tachlt are also should have had capital controls coming into the country. having, you know, missed that opportunity, there is a kind of like a weak in a knot, it's okay now. it used to be in the kind of jackson hole consensus, not allowed to do that. now it's like even the imf director is saying that is okay. >> policy makers have learned that currency markets are incredibly sentimental. sentiment markets overshoot. >> we got to go. >> so you knew there would be a day where you would qualify whether a much better gdp number

is a good thing or not forcount? in that position? >> you are quality, youho happy. >> they are good. >> joe, i have been on the good fuse is good fuse band wagon. i don't believe -- >> now you are changing. >> more people. >> now that i'm with you, you are changing. >> how can you finally see the light of better growth? >> good, i want out. >> i want out. >> you can't get out. the godfather. >> now the girlfriend, a g good story. check it out. i do. i have been reading it. coming up, the jaux "squawk" ceo call is in session. ceo alan mulally joins us next. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help.

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>> get right to phil lebeau of flat rock, michigan outside of detroit with a special "squawk" ceo called, he always looks younger than last time with mulally. >> you know, he doesn't have an ifb. he didn't hear you, joe said you look younger than ever. he paid you a complement. >> welling thank you, joe. >> this is a big day for ford. you are adding a second shift here. 1,400 jobs. you are beginning production of the fusion here at the flat rock plant. how critical is it in terms of

meeting that demand out there? >> it's really critical. our sales rep up another 13%. so this is going to add 30% more production capability for the fusion. so it's almost at the right time for the customer interest. >> are you leading some sales out the table? because you are so tight on supply. it's 10, 12, 15 days. >> oh, absolutely t. demand is very pruction in advance. even though we missed a little bit. we will catch up quickly with this development here. >> you now have, by the end of this year, according to ihs automotive, the big three, half, half of what you build in the united states will come from plants that are running on three shifts. you don't have much capacity left. do you? >> we don't have a lot of capacity left. it is pretty much sized to what we think demanding will longer term. we think the u.s. will come in around 16 million units. maybe up to 17. the neatest thing is the pent-up

demand. the average age is 11-years-old. we have room on the second and third shifts around the united states to be able to pete that demand. >> you talk about the consumer. yet, at the same time, we are getting mixed signals. any worries at all that the consumer is slowing down when it comes to the auto market? >> no, we don't see that now, phil. clearly, what you raise is an important issue. it starts with the economy, clearly, we are growing around 2%. we all believe it ought to be a higher growth rate. we are encouraging everybody to look through the lens of economic development so we get economic growth going. the automobile business, that average age of over 11-years-old, every one of our new vehicles report you can economically obsolete your vehicles. right now, we gradually increase our production for all of our vehicles to support the demand. >> let me ask you about the japanese yet. >> sure. >> you have expressed they are manipulating the japanese government. as a result, that is starting to

have an impact on your business. are you noticing, maybe not here in the united states, but in parts of the world where it's creeping in. it's helping them reduce the price of their product and hurting your business. >> yes, we, are phil. it's really an important consideration. because we are in -- owe. >> where is that happening, by the way? >> a little in the united states. we are seeing a lot more in asia pacific. but to your point, the most important thing in a global economy is we follow global trading rules, both for currencies and pretrade agreement themselves, so we are very encouraged the leaders around the world understand that. they are working towing. i think the next action will be the tpp agreement, whether they allow japan to join that or not. they need a restrike to be able to do that. they need to restructure their industry. they are sized to make over 10 billion vehicles a year. their domestic demand is around 3 billion. they need to restructure that industry. i think the governments understand that. the leaders are talking about it. in a global marketplace, we need

to follow global trading rules. >> let me ask you about ford stock. because you have been posting solid earnings, growing earnings, quarter after quarter. yet, when you look at the multiple of ford or other auto makers, you continue to hear wall street say, give them a nine or a ten multiple. at what point do you deserve to see your multiple expanded? >> i think we are learning in ford's case the multiple started to move up. >> not much, though. >> they are looking for consistency of earnings over time. so for four years in a row now, we have delivered over $8 billion of operating profit. the other thing they are looking at. not only your revenue growth, your margin expansion. on both of those, we are growing the top line and the efficiency. if we keep doing that the stock price will reflect that. >> when do you see that go up to 11, 12, 13? >> it's not my job to predict that. what i can control is that revenue growth and that efficiency expansion. that's exactly the plan we are

on, of course. >> one last question. the fusion will be in demand in california. you are seeing strong sales there. you are within .1 of 1% of ford brand catching honda, something you couldn't paj mpb. >> could you say that one more time? >>eers here's my question, does the new fusion supply put you beyond honda? >> the neatest thing the answer is the consumers will decide. to your point, that fusion family of petro, the ecoboost engine, the hybrid, that's probably the finest lineup for that nameplate we have ever had or anybody else has. it's very gratifying to see the east coast and west coast really adopting to ford brand. >> ford ceo alan mulally on a day, guys, they ramp up the fusion jobs. >> joe and becky going forward with ford. >> see, he's still selling. >> he is. he knows not to tell me. because. >> you don't have a car.

>> right. >> you drive stick. >> it's all complicated. thanks for that report, phil. coming up, the stocks you should be watching ahead of the opening bell, two mad minutes with jim cramer after the break. ♪ ts a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

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. >> welcome back to "squawk." take a look at the futures. the dow opened 50 points higher. the nasdaq close to 10 points, making headlines, this is the talker of the morning. news of a split for one of silicone valleys high profile couples, google's co-founder sergey brin. brin reportedly has become romantically involved with a google employee, dee reporting there as well as gawker. the girlfriend apparently compa. she hadded a a relationship. and this is what is is making it interesting. she had a relationship with another googler who had run the devices department. i don't know if we want to name everybody. w you can go online and find it. >> he got in trouble for dating her. >> might have. >> she does the google glass thing, doesn't she?

>> he always have them on. they both wear them all the time? >> the google glasses all the time. that's what's going on. plus his wife's sister is a big deal at google. so she has a big job. so there's a lot going on. but there is a pre-nup. this whole thing -- pre-nup worth $22 billion. >> it's complicated. >> i've seen you devour other stories, mergers, things like that but never to this extent. i tried to talk to you. right? your head is -- >> he's consumed. >> you're buried. >> it's very interesting. >> what's the investment implication? >> the investment implication, i don't know. >> a lot. >> anyway. >> business, we look for things to make it a little bit exciting. okay? work with us here, will ya? you want to talk about the claims number again? work with us. >> implications? i'm sure things are going to happen. there's going to be distractions at the company. >> yeah. >> if my nose is in this

computer you have to know that everybody else's is, too. >> we don't do that. let's get down to the new york stock exchange and see what jim cramer has to say about this story and others. mr. cramer. he doesn't want to touch it. >> i was writing verizon vodafone. i think google is an inexpensive stock. that's as close as i want to to that one. >> what you dow make of the verizon vodafone situation? >> i think verizon takes it up this must have. it's absurd. that's going to be a great idea. come tomorrow when you come in, there's nothing new. i do believe, look, this is verizon, it could be able -- you can get rid of its land mine business if you wanted to. high mobile growth business. i just don't think that it matters that much to verizon as much as it matters to vodafone. it's a good deal for vodafone. >> if you're verizon, what do you do? >> i think you want to be able to get it so that you own the other 45% of what is a very rapid business versus the business of landlines.

which is maybe a plus one, minus one. i think it makes sense to be able to consolidate. the guys who buy it up three, i don't know. this is like microsoft buying it at 36 on steve ballmer. in the end you're stuck with the fundamentals. if there's no deal who goes right back. offers stockton deal, it goes right back. people are just looking for something to do. it's just very slow so it's like hedge funds to say, i'll play this one. >> you mentioned the stock element, though. my understanding of this transactions from the sources i talked to is that it would be a cash-in stock view. does that change your view? >> you want to own verizon once they consolidate it. one of the reasons why this is problematic is that there's revitalized sprint with a lot of capital. t-mobile has come on strong. this business has gotten so that there's -- instead of a great duopoly there's a competitive

olygopoly. they should remember when the yield on the ten-year gets bigger people sell verizon. if you want to think that you should pay 50 with the idea that someone is going to come in and pay 52, i get the greater fool theory but i think you ought to be careful if you're buying verizon at 50 and 51. >> where are you on siri right now now that -- i don't want to say it's on the back burner at all but to the extent it was going to be a missile attack or something in the next couple of days, that seems to be off the table. >> the best work that was done on that was what history has to say and adam shell piece in "usa today" where they look at the -- all the air strikes since 1985. get initial pullback of the s&p, it's the average pullback is 5.9. it does come back because there's actual little implications. i think it's -- oil was headed down before syria. right now it's all consumer getting hurt because of higher gasoline prices and the unknown which has kept the stock prices down. people seem to forget the

ten-year is not going down. the yields are not going down. it's not a great implication for a lot of what i'm seeing. >> i drew my red line today. i will never again embrace crappy news because it delays the taper. i want out. i want out. i want them out. i want good news. i want things to work. and i want them to be able -- >> you have jobless claims good. gdp good. >> that's what i mean. i don't want to watch the futures start to go down a little when people say, oh, no, september. i'm tired of it. we can't keep putting it off. we have to eventually extricate the fed, they need to extricate themselves from the market. they need to. >> look, wouldn't hurt to put it off one month to be able to see what they do in washington. look, i am still reeling from the interview you guys did with jack lew where he said there's going to be no negotiations. it's going to be basicallify fiat. that is going to slow down. every time we have one of these wranglings in washington, it slows down job growth.

>> it blew your mind when they announced 85 a month. didn't it? how can we now feel like it's so norm small. >> look, i want out of taper, too. i want out of the story. i do think that i want -- want job growth. the only thing that stands in the way of job growth is washington. it's not bernanke. it's the congress and the president. they kill small business. they kill confidence. i think they're going to take another run at it. >> hopefully -- >> i'm really nervous about this. forget about syria. jim, thank you. we'll see you in just a few minutes on "squawk on the street." >> thank you. coming up, our guest host this morning, the only other person is ralph fosting, i have to do it, i have to wait. it's hard for me. get the last word when we return. ♪

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actively seeking employment had careers in their field in 6 months. join the 90%. learn how at devry.edu. let's get back to our guest hosts for the last word. gentlemen, what kind of silver lining in the cloud can you leave us? >> the data looks pretty good. if we can just get a good mfp, i

think the bounce of power will turn towards a taper and positive u.s. growth. hopefully good times keep rolling. >> time to look towards 2014 earnings. they should be up 7%, 8%, 9%, better than this year. we are accelerating, not decelerating. a little bit of a bump with syria but beyond that -- >> you would go in right now? >> stock specific. >> stock specific. >> i would be someone -- i would wait until next friday. >> watch the google situation. it's pulled back. maybe it pulls back on this news today. >> i doubt it. thank you, guys. thanks a lot. i'm sure everyone will now spend their time on gawker to spend more time on this. >> we've got to go. make sure you join us tomorrow. "squawk on the street" is next. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim

cramer. david is off today. bulls may have some material to work with this morning. q2 gdp revised up to 2.5. big time m and a in telecom. for the moment we have both futures and yields on the rise. the ten-year at 285. don't forget u.s. strike still appears to be in the works. europe in the green as well.