storm environment. >> it came down quickly. >> started going up sharply, as soon as some action. the fundamentals in the economy are strong. so i think we're -- >> all right, good. chris? >> i'd like to see fed normalize interest rates. keep things down for 2016? >> thank you. >> happy labor day. >> have a great long weekend. join us on tuesday. "squawk on the street" begins right now. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with kelly evans of the new york stock exchange along with mike santoli, senior columnist at yahoo! finance. faber and cramer are turning this weekend into a five-day weekend for david. good for them. futures like any great actor are asking what's my motivation today as likelihood of a strike on syria still very unclear. personal spending, barely rising. we're going the close out the month of august today thankfully barring a massive advance.

it will be the worst month since may of 2012. europe still in the red as well after german retail sales unexpectedly dropped. road map begins with markets in a holding pattern on this last trading day of the month. while deliberations by the u.s. and allies over intervention in syria stretch on. meantime, a new nbc news poll finds roughly half of americans are against military action. they are kicking off that iphone trade i told you about earlier. and ge reportedly set to spin off its consumer lending business. we'll talk more about that, too. futures pointing to a slightly higher open on the last trading day of the month as fears of imminent military action in syria ease. the uk voting against joining any military action. the white house says the president will decide on a response based only on u.s. interest and nbc news poll shows 50% of americans believe that the u.s. should not intervene in syria. never the less, guys, all the papers this morning, the journal, the times, the ft,

saying that the u.s. is prepared to go it alone if that's what they think they need to do. >> yeah. it looks like to me the take-away marketswise is because that's the case it's probably more likely to be eliminated, more likely not to be a two-month bombing campaign. i doubt if investors are going to be talking about syria as a swing factor in a big way one way or the other month from now. >> that said, we have to get into september which is -- historically the worst month but also an incredibly volatile month. not since 2005 has it had a sub2% move in either direction. >> wow. >> this year you have many excuses why it might still be jumpy. what i take calm for the is the market attitude, the psychology has gone a long way towards kind of coming to terms with that. we're seeing the volatility index has not backed off even on up days the last couple of days. you're welling up the -- clinching up in advance of all of that. doesn't mean it's not going to be -- continue to be jumpy but i do think that everyone is on the lookout for it at this point. >> it does seem to be the case

when you can identify the risks out there it's probably not the risks that have identified. there's a little bit of this. t it has to be priced in, carl. >> all months, you know, the dig dow stocks kind of let us down. they were for sale all month. emerging markets to me is the thing that is not predictable. there's not a date that says here's when it's going to be figured out or not figured out or a decision is going to be announced. >> headlines this morning that -- >> a story from reuters saying that there are about 12 currencies or so countries who are struggling with people's trading basically out of their surns currencies. india may be trying to rally support with all of these different countries, why don't we act together. this is going to be one to watch. volume today will be interesting, especially after we get into the middle of the day. we'll get chicago pmi and michigan. there's some stuff going on. i just wonder if there's people around to trade on it. >> we already had some

interesting reports this morning. this july consumption report is an important one. people want to know what the third quarter is going to look like. we had better news in the second quarter. are we still in a period where good news in one quarter sets the bar higher for the next -- >> no, the threshold of surprise goes up a little bit. i do think right now the market doesn't want to see real soft data even though it's now being july consumptionwise was not great. there's a expectation that the fed wants to do less in september. almost certainly than you want them to be doing it because they're reacting truly to better data and not just because. >> yeah. as we said, the dow is on track for the worst month for more than a year. how syria and the latest impact data. michael jones, chief invest ms officer with riverfront investment group and westbury. good to see both of you. are you ready for september? do we need to buckle up? >> i don't think we really need to buckle up too much, carl.

i think we're living with a case of almost hypocon degrkocohypoc. there's always been things to worry about. yes, there's been things to worry about but pretty consistently we've come through this with the stock market up and the economy growing, 2% growth, roughly. and i expect that to continue. in fact, i expect the economy to accelerate as we get toward the end of the year. so, sure, it could be a little bumpy but i think investors should look through that and be investors. the stock market is still cheap. and just hold on and everything will be okay. >> but, michael, it's precisely that acceleration which has alluded us here. why do you think that now, if you think that now is going to be a turning point, the second half will finally see, you know, what has so far not happened, which is couple of quarters back to back where we get upwards of a 3% print in gdp. >> keep in mind how much damage the economy has absorbed from

washington this year. we started off with big tax increases. then we went right into sequestration budget cuts. the third quarter, you know, hour's work i believe is coming down because employers are adjusting hours work to avoid obamacare, that 30-hour thresho threshold. off had something pretty big coming out of washington that has impeded economic growth. as we move into the fourth quarter you're finally kind of unshackling the private sector from what washington has been doing to it. i think that's where you see the acceleration. >> curious, as well. you're talking effectively about a policy that's coming out of washington, obamacare, et cetera, that could be having an impact. i don't know if people are focused enough on how much of a fiscal drag there is out there. if you were to take that out of the picture, the growth that we've seen so far might look a little bit better. unfortunately it doesn't look like there's going to be any end in sight for that. doesn't that argue, again, for a little bit more caution here among investors? >> i really don't think so. i think with that we've absorbed

the higher social security taxes. we're getting used to what's happened with sequestration and it wasn't the disaster that some were predicting. and we're now adapting on the private sector to obamacare. we're getting hours work where employers feel good about what their health care costs are going to look like. all of those adjustments are happening and have happened. i think as we move through the fourth quarter here you're going to see the real underlying strength in the private sector. remember, it's miraculous when you think about it, that we've gone b from trillion dollar deficits as far as what the eye can see at the beginning of the year to now the cbo is saying the deficit is going to be less than 2% in 18 months. we've made that transition. still growing at 1 1/2%, 2%. that's really a testament to the strength of the underlying economy. >> brian, you mentioned that stocks still look cheap. if they look cheap in the early in the year when you sad sub 2% treasuries and junk bonds under 5%. are they still observably cheap now now that you have a lift in

rates? >> yeah, i think they are, mike. and the reason is pretty simple. and that is if you look at corporate prompts and we just got a great report on corporate profits for the second quarter. corporate profits alone justify higher stock prices. even at current multiples. and in our models, we've already incorporated a higher interest rate. we always have. for the last couple of years, when we put the ten-year treasury into our models we've been putting in a 4 1/2% ten-year treasury. we did that even when the tre treasury was 1.6. we're doing it today when it's 2.8. we believe the market can absorb these higher rates. to michael's point, i go back and look at the last couple of years, gdp has been running about 2% but if you take out government, if you just look at the private sector, private business investment, housing, consumption, we've been growing closer to 3%. so this economy has been doing

better than most people think. and you can see it in these profit numbers. >> guys, on that note, we'll see how we fair throughout the month of september and certainly today. thanks a lot, guys. see you later. >> thank you. meantime, apple is a story today kicking off an iphone trading program at select stores today. john ford is live at one of the stores with more on that story. hey, jon. >> hey, carl. good morning. i'm here at broadway and 67th. the apple store here. they opened up just about ten minutes ago. i called them before they open. they said you can come in with the iphone. they'll check the serial number, the physical condition of the phone and give you a credit toward a new one. there have been rumors about a program like this floating around for a while now. it's not clear how long until apple launch these widely or if it just is a storely store thing. one way or the other, old phones are kind of the new thing. based on the fact that

smartphone saturation has just become really high in this market at this point. and if you can trade in your phone and get a discount toward the new one, a lot of folks are thinking you will be more likely to buy the new one. best buy also launching a program this weekend where you can come in with an older phone and get a discount toward an ipho iphone5. i don't know how much that is worth when apple is probably going to be announcing a new phone or multiple new phones in less than two weeks. so what is the older phone worth and what did you pay for them? what would you pay for them right now? the iphone 4s is worth $450 at this point. the, i phone5, $550. a new iphone, $650. historically that's where it's been. you're probably to probably get a little less than half of this trading these things in. kind of the car dealership model. carriers launching new options for early upgrades based on the idea that you turn in your old phone. they like to resell these things

into corporate accounts. that could boost margins for carriers, guys. >> i'm curious because pricing is going to be so important for what consumers do here. do you have any sense of how much they're going to give you for these devices? >> totally depends on the condition of your phone and which model you have. so it's sort of the car model that we've all gone through and you into the dealership. you want to see the new models they have. they walk around your car and get a price. you probably won't get as good a price as if you sold this yourself on craigslist or ebay. but it's convenient. if you're in there to buy the phone, they think you will take the money and go. >> jon on the upper west side. may be selling them his own iphone. we'll see, jon, thanks very much. true, you probably can get a little bit more if you do it person to person but there's the hassle. other news, general electric is planning to spin off the consumer lending unit of the ge capital division. ge would reportedly get an ipo

and it could come early next year. big story. >> a continued decon glomization op ge. it's probably not a bad time actually to go out and get a value on this type of business. if you look at how, you know, the discover testimonies and can't tpital ones have done, th knit it together and made it upscale. i do think it's probably one of the things that's easily kind of sellable as one unit. >> i had a lot of discussion about, for ge, they have their own reasons to do that they try to unwind part of what jack welch put in place. but others say it would park the end of sort of this three decade long consumer boom and what does that portend for the consumers in this country down the road? >> i see it a little more through the ge prism. although the idea that ge no longer qualifies as a long-term growth business that probably does speak to that issue. >> ge used to get a higher multiple back in the boon because of ge financial which

was contributing the le ing thi share profit of the company. >> consumers were acting different back then if you recall. >> back then, ge was a aaa credit and could borrow cheaply and made it work, the math. >> it's a discussion of whether they find a buyer or spin it off. finding buyers though has been a challenge for ge on a number of units. >> by the way, if it does an ipo, keep an eye on the index. corporate spinoffs have been a bright spot in this market and so has the etf. we'll try to get a chart up. >> ge has been hanging in there. >> might be csd. >> still hanging around 23.40 or so. when we come back, tensions still high in syria as u.n. inspectors help to finish their investigation. when we come back, a live report from the area where w. the latest. later on, the ceo of a company which was started in syria to see how his business is

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as the u.s. debates wlorcht to take military action against syria, questions are arising about israel's involvement. nbc is joining us now live from tel aviv with the latest there. hi, atia. >> hi, there kelly. well, the israelis are preparing as well as best as they can for a possible attack by the syrians in retaliation to any kind of u.s. air strike. that being said, the israelis officials here do not feel that there will be a retaliation by the syrians but they're preparing. they called 1,000 reservists to duty up in the north where that border with syria is. they also deployed various iron dome antimissile batteries up in the country, including in the north and including two here in tel aviv where we've seen missile t attacks before, primarily from gaza back in november. also israeli citizens are in a bit of a panic right now. they've been going to various distribution centers throughout the country trying to get their

government issued gas masks because they feel if the syrians -- syrian government does attack israel in response to the u.s., possible u.s. air strikes they may attack with unconventional weapons including gas and chemical weapons as we've seen being used in syria. but that being said, israelis had polls in various newspapers. 66% of israelis say that they support u.s. and european air strikes against syria but if they don't happen, 77% of israelis say that israel should not intervene. kelly? >> atia in tel aviv for us this morning. atia, thank very much. the dow is on track for its worst month in more than a year. how do you set up your portfolio before the long pol holliday weekend? futures here, a lot and more on the way. chicago pmi in less than half an hour. today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution,

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welcome back to the last trading session of the month. so far it hasn't been a pretty month. it's shaping up to be one of the worst ones for the dow and the year. joining us here at post nine, art, good morning. >> good morning. >> i want to start off by asking you what kind of action do you see in markets relating it to syria? >> well, i think when it looked like we were going hit the pause button, markets began to react. again, the viewers should try to connect the different markets. oil, eased back down. gold, eased back down.

you didn't see any major flight to safety in treasuries. you've got to play detective here and put all of the pieces together and see if it makes one complete story. i think what happened late yesterday dlfs some anxiety. while it didn't get wide coverage he said some important things. first, the labor market had met the condition for tapering but far more important, he said we're going to taper the first thing we should do is end the mortgage-backed supports. with the housing looking like it might be getting weak, it troubled the market. what hit me over the head like a two by four is he said his view of future growth was no better than 2% for the foreseeable future. and that's just above stall speed. so it's going to be dangerous to start tapering if you're going to be just above stall speed. >> it seems like, if you want to

get behind why the market seems to fear tapering. this is about all we can do or this is as good as it might get under this plan. >> and the other thing is, while you haven't heard directly from bernanke on this, although he is somewhat of a lame duck, the other fed governors when asked about the emerging markets and what's going on in the currencies, said, let her mother worry. you know. that's their problem. so that does not reassure markets. that's why we're a little volatile. >> obviously emerging market is going to have two sessions after today before we get back. >> amen. >> right. >> we were just talking about september seasonality. but also the events we got to get through over the next five weeks, the fiscal year end, obviously. obamacare enrollment, debt ceiling, taper, if there's going to be one, german elections. >> yes. >> luckily we get an iphone introduction in there somewhere. it's at new orleaot all bad. >> i think you said earlier while it leans toward the

negative in september what we've seen recently is it leans toward the volatile. and you know, we had 2% or greater moves either way. so this is the time to keep your seat belt on as we go into the misnamed month of september, which means the seventh month of the year. >> interesting. you know, what people still chatter about though is the number of ipos that are supposedly on the way. word about pot belly today. chatter about amc entertainment. you see a lot on the docket? >> yes, i do, but i think that's the idea, people trying to not seize the day but seize the dollar. this is my chance. the market is moving along before things really weaken. let me get my firm public. >> seize the dollar. >> seize the dollar. >> seize the weekend. >> thank you. >> art cashin, thank you very much. have a good one. how will the markets finish up the week and the month? we're back after a quick break. in a world that's changing faster than ever,

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the opening bell set to ring in just a few moments here as we close out the month of august and a lot of people, believe me, are glad to do just that. the only things really positive for the month to date, the vix, the nasdaq 100, thanks to some names like apple, silver, gold, oil. only one dow component is positive for the month. that is microsoft. and that's -- yeah, that sort of says a lot. worst performer, hp. >> it says there was a fair amount of pent up selling coming into august. for me internally t it looked like it was getting sketchy at the beginning of the month. i don't necessarily feel like you have to back off that much from here stockwise, doesn't mean it won't. >> you say anxiety is not deep enough to create a fat pitch. >> people have been pointing out that even though the vix is elevated and people flock to these vix futures whenever things look a little dicey. the put/call ratio, a lot has not lined up.

still saw inflows in the last week. it seems to me not that you have to have an out right panic before the market stops going down. three times earlier this year you had pullbacks. i don't think you had outright panic. but you know, unless the news flow cooperates i think it's -- i think you're going to be able to buy the s&p with a 15 handle on it at some point. >> interesting. >> it would imply more weakness. i wonder as well if you look at the out performer tons nasdaq, facebook e it , netflix, do the winners here get narrower and narrower? >> they have. i faltered a little bit. i think you have a growth starved economy. and you kind of funneling into these same names who seem like category killers and they work. anything that smells like social meetia people are trying to get in a very small door to get exposure to it. >> we're seeing names like

zillow and yelp. netflix. best buy, the names that have managed to hold on to their gains, the cult stock, the teslas. >> there's the opening bell and the s&p. big board tallgrass energy partners. trading under the ticker symbol tep. over at the nasdaq, the tennis channel celebrating the year's u.s. open. the action in flushing has just been incredible over the past couple of days. >> depending on what happens with cbs and time warner, the tennis channel may be where they catch the action. >> new york post today suggests the dispute could go well into week one of the nfl. and at which point time warner will gauge how many customers are switching to other users, cutting the chord completely. >> it's remarkable how little i seem to hear about this from friends, people who live in the

city, just no one's talking about it. and that can't be a great sign. >> bond fire of the cable business. at least it might save me from having to watch the jets. >> i don't know weathhether to h or weep. 10% move getting up to almost $48. rbc raises the tarkt up to 57. revenue beats. they raise the full-year forecast. talking about stronger corporate customers. churned down for the 16th sfrait straight quarter. there's a sense it's becoming more critical to the clients than it was before. >> there were some concerns about sales force going into this quarter. i think that's partly why you're seeing such a big response because people were starting to worry about the growth drivers and managed to come out and shake that off. >> they are on track for the first $1 billion revenue quarter. acquisition is a big help. take a listen to this. >> we have r. number one now in sales. that is our sales product is

number one in marketplace. and that is a huge and critical market in enterprise software. we're also number one in service. so in customer service solutions we're number one. we bought exact target last quarter which makes us number one in marketing. >> cramer, of course, knows the company very well. knows benioff very well. revenue growth, 30%. 39% in europe where we continue to we see some companies leveraging. >> not a lot of top line there. >> the bold case is that it's actually growing into this towering valuation. really, the stock has done barely anything before today this year. it's underperformed the major indexes going back two years. obviously you had this big front-loaded bit of returns and now proving it out. >> 1% move on ge is nothing to sneeze at on a day like today. spinning off that consumer lending unit. >> just, i think, the general

idea that let's just, you know, narrow the strategy and get more focus on that benefit. another another stock that is underowned. >> i do find it interesting. part of the bear story on ge is that it was being wrong -- not wrongfully but that it was being punished for having the sizable financing business. might expect a bigger move. many people would expect to ultimate will do this. 1%, not a huge pop. >> well, on a name that big. i mean, that's something. it's statistically significant. big lots, 31 cents does beat by seven cents. they lower their full-year outlook. same-store sales down 1.9. down 2.2 in the u.s. looking for 2.80 versus 2.35 in the prior year. you couple that, even though the stock is getting a move up today, spending and income this morning was nothing to write home about. >> seemed like kind of a consumer stall in july. i mean, the one thing you do get out of it, you didn't have the

savings rate go down anymore. people had been pointing to that. how much exactly is still in the well for the con sumzer. >> they don't give quarterly guidance like they normally do and they say there's some difficulty in moving the high margin segments like furniture which sort of flies in the face of what we heard from other housing related names like a restoration or whirlpool. >> i wonder there is some competitive pressure that's hurting at big lots but it might just be a question, again, of consumer preference. if people are choosing now to invest in furniture they may be going for that big ticket item at restoration hardware. >> gold is down nearly $20. a lot of discussion about what that means, whether or not it really signals the market does not believe a strike is going to happen in syria. september though historically the single best month to old gone. mike? >> flip side of everything else. risk assetwise, right? i think the emerging markets' nervousness is probably underappreciated factor in how gold has gotten this bear market rally going.

just because the currencies obviously under assault and seems as if it might be one of the beneficiaries of that as well. >> all right. seeing a lot of miners move here downward after having a nice bounce as gold got back above 1400, back in bull market territory. talk about names that were not beloved for most of the year, mike. they needed a little tlc. >> more than a year. the whole story has been even when gold was near the highs the gold miners did not participate fully. >> all right. let's get to bob pisani and see what else is moving on the floor. hey, bob. >> we've got energy stocks moving to the upside, carl. industrials moving up. salesforce.com at a historic high. i want to look at 2013 and the summer of 2013 because i've been pretty impressed by what we've been doing here overall. here's a key point. going in to memorial day, i'm going way back to may 24th, s&p 500 was up 15% on the year. and since then, memorial day to labor day, we have done nothing.

we are precisely flat today essentially. i know some are disappointed we're flat here. i don't think that's bad considering the fact we were up 15% going into labor day and look at what we have had to deal with in the summer of 2013. the short list. the fed taper warning coming on. we had abenomics in japan and the tempering of those expectations. emerging market outflows and currency crisis. we're still dealing with that, particularly in india. other ones, egypt and syria causing problems overall. put up that list again. uneven growth in china. t that's been a major problem. u.s. joe growth here in the second half of the year. considering that, i think the up in bers have been pretty good overall. now, if you would have given me that on may 24th i would have given you a laundry list and said this is what we're going to deal with in summer of 2013, you wow have predicted that we would be flat? i think most people and the ones i talked to this morning as i put together this list came out and said, no, i would have

thought we would have been down for the summer of 2013. okay. so where do we go for the rest of the year, conduct some informal -- obviously nobody things we' thinks we're going to get gains but some people think we can eke out some numbers. 5% gain from here, about 17.19 on the s&p 500. that's where it would get you. bottom line is, that's not a bad number, 17.19. 17.09, by the way, guys, is the historic high we had on the s&p 500. that was, what, august 2nd or so? the one big problem i do think you can have, carl, is you're not going to be able to argue for much of a multiple expansion anymore. not with rates going up like this. i do think it's going to be hard. we're going to be stuck with maybe 15 times forward earnings. guys, back to you. >> bob, thank you very much. let's kick it uptown and get a check on things at the nasdaq with seema mody. >> a lot of big movers in tech. nuance communications.

carl icahn upping his stake in nuance to 16.9%. another big mover on our radar, arm holdings up 0.08%. deutsche bank upgrading from buy to hold, writing that fears of the company losing market to intel are overblown. other big movers. salesforce.com. one of the big movers in tech, earnings and revenue beat street consensus. it is the last trading day here in august. the winners, facebook shares up. netflix, apple. those three stocks the big movers on the nasdaq 100. >> seema, thank you very much. bonds and the big dollar, currencies. rick santelli at the cme group in chicago. rick? >> yeah, you know, to counter intuitive because the dollar seems to throw on the after burners at times many don't expect. let's start at the fixed income. two-day charts starting with the five-year and moving down the curve. fives, tens, 30ss. look at how we're getting choice

to testing yesterday's lows. five-year already getting below there. the further down on the curve you go the less damage with respect to enter effect issing towards yesterday's lows. so there's a lot of curve wiggles. but the biggest wiggle we want to pay attention to outside of the holiday market move is the fives to tens. affectionately known as the fight on the store. look at the chart since the big run-up started may 1st. it doesn't take a rocket scientist to see when the curve flattens the rates go hot. might not always be that way but technically keep on eye on the fives for your signal to tell 10s and 30s. dollar index, we were talking about that. look at these two-day charts. really starting to move. as a matter of fact, open the chart up month to date on the last trading day of august, how cool is it that this looks like to be the first day we're going to set with an 82 handle because the last time we did that was the very first of the month. kelly, kelly, kelly, back to you. >> thank you, mr. santelli. now, we want to check on energy and commodities back here

with jackie deangeles at the nymex. >> we're watching oil prices closely. they are easing a bit after the news that the british parliament struck downey involvement in syria. that means the u.s. would have to go it alone at this point if president obama wants to take action. the threat of that right now seems to be lessening a little bit. plus, of course, it is a friday before a holiday weekend so things are going to typically be quiet here. traders say before everybody gets back next week and the news flow really starts again. now, what's interesting though is we are seeing a little bit of a shift. the positive data out of the united states. that gdp number is keeping the dollar near a four-week high against the major currencies. of course, we are watching gold prices while we are under 1400, that critical level still hasn't been a bad month for gold. the second b consecutive month that we are going to see a gain for it. kelly, back to you. >> all right, jackie. thanks very much for that. straight ahead, big lots seeing some big gains this week and spiking after reporting earnings are the big box

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looks like the nice day outside the wrigley building. rick? >> it's a much nicer day in the cme building. of course, we have alice which means chicago purchasing manager survey day. we're 40 seconds away from her sharing it with me sharing it with you. i guess what i'm most interested in is the employment index. still can't get it out of my brain that it wasn't that many months ago that we were under 50. >> right. >> i look at that and think, if we were under 50 and in a couple of months we move much higher.

can't we move back under 50? i'd like to see these things trending. and the fact that i have an anchor my mind to a sub-50 level to me is a very difficult thing to deal with trying to get optimistic. now, here we are. eight seconds away. i want to make a big deal because, of course, we're going to do it exactly on the dot. three, two, one, and the survey says. all right. here we go. chicago barometer is up .7 to 53. expectations nailed it. new order, 57.2. up 3.3. my favorite, employment index, 54.. minus 1.8. interpret for me, great alice. >> sew with have this .7 gain for the month. that is exactly the gain we got last month. the big deal is is that that's the second month in a row of gains. we have noted a had back to back gains in 2 1/2 years. i kind of took that as positive even though the month-over-month changed what we already know,

slow mo growth. >> is there any questions or special issues like inflation? >> well, let's back up here a little bit, rick. the new orders component was the one that carried the barometer higher this month. even though order backlogs were up 3.6. the fact of the matter is that new orders have a heavier weight in our barometer. we are getting word from the manufacturing sector that new orders continue to come in but, in fact, it is the backlogs that are carrying companies forward. now now, in terms of server ise i have talked to a lot of them this month. the gist was that they were hit hard. you remember the beginning part of august was rainy and cool. wheth weather had a lot to do with that. they got stuck with inventory. sports related, food, all those kinds of things that didn't happen because the weather left them with inventory. >> let me throw you a curveball. shipments on the durable goods

number had a couple of months in a row negative. so we don't see that in this report. they seem to be at odds with each other. quickly, your thoughts? >> well, we're hear that lead times are length thenning out. reason being we're having trouble with transportation. it's lent thgthening out the backlogs. >> alyce, isn't she terrific? when it comes to the survey, i follow it. in the end, inventories raise gdp. huge topic to pay attention to. >> important detail there, rick and alyce. thank you this morning. we turn now to more good news in the discount retail space. big lots trading higher after second quarter earnings beat estimates. they did lower the full-year earnings outlook. matthew boss joining us now. $32 price target. matt, good morning. >> good morning. thanks for having me. >> thanks for joining us. what did you learn from the quarter, firstly? >> i think the main thing here it was ceo, really first real call. and he talked about some of the

forward looking initiatives. the cooler tests which are in 75 stores appears to be off to an encouraging start. they have a furniture financing test which also seems to be competing plans. the story here is about the next couple of years and can they stabilize the ship. >> right. there's a question about this strategy, i guess, matt. they're going to move more into the furniture space, is that right? how did that space perform for them in the quarter? >> the space performed very well in the quarter. they were up mid single digits. the real story here is the consumables. what they're looking to do over the next two years is drive in the food stamp customer to give them really an underlying driver of traffic. volatility in the model has really been the construction of their issues. what they're trying to do is level out the top line to drive a sustainable traffic driver and stabilize the earnings here. if they can do that over the next two years, it could be a pretty interesting story, especially with the stock very cheap on next year's numbers. >> they obviously bring in some

guidance from their may levels. they do talk about some more challenging conditions on the high margin segments. how much of that is a concern? >> there's definite concerns here. you know, i think the biggest thing is the big lots has a bit larger stores than some of their competitors. they have struggled again with the top line volatility. i think the most important thing to watch here is these test initiatives and how they play out over the next couple of quarters. we upgraded the stock on monday after seeing some of these initiatives in stores and they do seem encouraging. they did talk about it today. but again, i think it's too early to make that -- to make the full call whether they're going to be successful or not. but there does seem to be some stability at the low end. you've seen it from dollar tree. i think we'll see it next week from dollar general. so there does seem to be -- it does seem to be the right space to be? >> at the same time, if they're going after the consumable space, in other words, doing a lot of the food and beverage and household items that might keep

people coming back to the stores, that's where we've seen the dollar chains doing well and stealing share from walmart. how the big lots going to compete in what is becoming a very crowded space? >> yeah, it's a great question. what big lots offers is similar to what dollar tree does. that's the treasure hunt spend. then the real key to it and what they talked about this morning is being able to locate key items in adjacent seats so that customer just doesn't come in and pick a lower item of the of the cooler but they cross shop the store and the entire store gets the halo. that's the part that is too early to call right now. we're going to have to see how it plays out over the next year. if they're successful i think they will stabilize the ship. but if not, you're going to have a structural gross margin decline and i think that would be the flip side. >> matt, we got word from walmart that they'rele radioing back prices on smartphones, tablets, televisions, i mean, apple, iphone 5 with a contract, $129 to $98. ipad, $50 off all ipads.

big screen tvs, samsung, 60-inch goes for $1149 to $998. is that a market share grab or are we looking at a consumer setting up to be weak in the back half? >> i think the competition just remains very fierce. consumer electronics, big lots talked about a download double digit this morning. that area is extremely fierce from the competitive standpoint. i think the back half of the year will be competitive. i think pricing is going to be key. you have six fewer days between thanksgiving and christmas this year. i think the retailers are going to be gunning for that share of wallet. >> that's an interesting point. six fewer days. i'll have to explore that one next week. matthew, thanks for your thoughts on big lots. thank you. >> thank you. coming up, krispy kreme not so sweet today. the shares are dropping sharply after the company's quarterly results. look at that. down 12%. krispy kreme's ceo is live with his firstry action will bit later on.

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interesting day setting up. we just got through chicago pmi. first back-to-back gains in a couple years. new orders was a nice component. >> i'm looking to see if the dow can turn positive. just about less than a point away from that. >> yeah. not the only data point, too. university of michigan here. rick santelli, take us away. >> yeah, we're looking for our final read for -- 82.1. i have number spotters. 82.1. the final read for university of michigan sentiment survey. it's preliminary read was 80. so 2.1 of improvement. and it beats expectations. so i guess if we do it tombstone on both of these numbers, purchasing managers survey and confidence were good. fly in the ointment of purchasing managers survey as alyce was telling us, inventory issue. it was in the 30s with respect to inventories that jumped up 7.3 to 45. the key is, when we see third

quarter, all these widgets that help boost second quarter gdp, will they be purchased? that is the key. back to you guys and gals. >> yep. rick santelli, thank you very much. carl, just going to say it's interesting that we see that improvement in the last couple of weeks despite the additional concerns we've had. the lift in gas prices as well over the last couple of days. that's going to continue. so consumer still stalwart. >> see what it means in the days ahead. speaking of days, it's a big birthday today for warren buffett, he turns 83 today. born in 1930. gives us a good chance to look at buffett names. the one that is -- that gets talked most about these days, michael, is ibm. and to what degree he has patience with the name that has lost some steam. >> totally. and in many ways didn't really fit the profile of the buffett stock in the first place. new ceo in there and how long a runway does she have. >> we know the nice coupon he's getting out of a naik name like

bank of america and his relationship with brian. very much committed to the housing growth story with, i think, wells is probably still the biggest hold-up. >> single biggest holding. went up at last report a little bit. so i do think he obviously is looking through a lot of the noise and feels like, you know, america is in relatively decent footing. where do you get a buy for the $50 million for his birthday? >> big cake. >> bridge cards. something he can use. always good to have you. sticking around? >> they tell me no. >> all right. it's good to see you, as always. >> thank you. >> have a great weekend. a look at what is coming up in the next hour. >> food morning, kelly. we're going to take very different business perspectives. a businessman who fled syria as a result of what was going on. take his -- we'll have his take on the potential of military action over the weekend. we are also going to talk to the ceo of krispy kreme. we've been talking about this. if that wasn't enough we're going to look at the business of

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welcome back to "squawk on the street." the dow and the s&p on track for the biggest monthly drop since may of 2012 amid concerns of possible intervention in syria. >> meanwhile, apple is piloting an iphone trade-in program this morning in select new york stores. we'll go live to one of those locations to see how it's kicking off. meantime, the department of justice saying it will not challenge colorado and washington's marijuana laws. we'll find out what that could mean for the state and purveyors. also ahead, perhaps on appropriate transition shares of krispy kreme falling this morning after annings missed expectations. we'll find out why when we talk to jim morgan the chairman and ceo of krispy kreme in the first on cnbc interview. in the meantime, the dow is on track for its worst month in more than a year. in fact, the dow is down roughly over 4%. john merrill is the founder and cio of tanglewood wealth

management. thank you. >> thank you. >> what do you think it will trade in september because september is oftentimes a rough month for the markets. what do we take through from this month into the next? >> well, you're exactly right. historically september and october are the most volatile for the markets. and typically that doesn't mean that we're going to take any action. but this year as we go into the fall we think there are some specific reasons to be cautious and so we've raised a little cash. the biggest one of those is simply the rise in the market itself since the fall of 2011. a 45% rise in the market without a 10% correction along the way is fairly rare. if it were to go up another 10% from here without a meaningful correction that would be almost unprecedented. so we think there's good odds that we will see a correction before we see a significant advance vance in the market. >> john, it's a great point because as we move through the rally, the rebound here that we've had in stocks, it does become more and more remarkable

from a historical point of view. i woender what you think about this with the fed not looking at that with almost a little bit of concern here. >> it certainly could be. i think the fed has so many things on its plate, so many people is trying to please, but obviously the effect of what they've done for the markets is, they've caused a jolt in the race and seeing how so many assets are priced off treasury bonds that the market's reaction is to reprise basically all the assets. you've seen sovereign bonds around the world where their yields have gone up and prices are gone down. but it really is affecting the whole yield structure. i mean, take reits or mlps. they're in the middle of a reprising, too. and once that gets started you really just don't know where it's going to end. another reason for caution going into september and october. >> john, i want to bring in david sieberg here, head of sales and trading.

joins us. just changed the tenor of the conversation and talk about how the market is likely to react to the possibility that the white house or president obama actually does order strikes on syria. i know in the week, david, you e-mailed kenny and myself. you have quite strong views on this. >> yeah, i mean, i do. back up a little bit on the volume perspective. we've had extremely light volume. feels like the entire world is on vacation on wall street. i think that, you mow know, the flow that we've seen is 50/50 buy and sales. there hasn't ban real difference as far as order flow that we've seen. the hedge fund volume is definitely up. what's interesting the is the amount of short orders we're seeing is definitely down. so, you know, another thing on our options desk they indicated there's really no downside protection. if there were something to come out newswise, i would say that the fact that there's really no downside protection in place, there's really not that short covering bid in place, there's a good chance that this market unlike volume could actually

slide down a lot more than people anticipate. >> interesting. because i thought that you were more focused on the fact that usually when conflict is announced and you cite the 1991 strike on baghdad that there's actually a strong rally in the markets. you've obviously reconsidered that position. >> right. i mean, i really believe that, you know, look, we're in a position right now where we've seen a nice move in the market again with light volumes that there's a really good chance that if there were bad news that we would see -- we would see a pull back. i think the buyers and the dip would probably be best apt to work those orders down and sort of take a little bit more of a slower approach to taking those positions, being more aggressive. >> okay. >> again, the pullback could be a lot more drastic. >> john, deutsche bank did some analysis of the 12 significant post-cold war air strikes since 1985. it concluded the afternoon pull back, it was a correction, was officially a direction but a pull back was 5.9% from the prior three-month high. it's worth noting, john, we've

already fallen 5%. i wonder to the extent to which that may already be factored in to where we've traded given the remarks that you made earlier. >> that's just one factor. i think you have to take the whole collage of factors into play. i think there's a lot, you know, for the market to digest here. you know, one that we haven't talked about is emerging markets. they've been going down all year long. every time they try and rally it's quickly -- the concern to me is that it was the emerging market decline that led us into the 1988 bear market. also a decline in merging markets that led the 2008 financial crisis. it's very hard in this world today to stay that decoupled where major markets like the emerge ing markets can go down strongly and sdefy the odds. >> it's labor day weekend. enjoy the time off. thank you. >> thank you very much. meantime, a new nbc poll out

this morning finds that 50% of americans oppose the u.s. taking military action in syria. nbc joins us live from the region in beirut. aym ayman, good morning. >> good morning. it's certainly a concern here, including officials i've been speaking to on a government and humanitarian level. one of the major concerns obviously if there is a u.s. strike or international strike of sorts is whether or not it will have any type of legal basis. obviously the u.s. and others that are considering it are making the argument that intervention. they are concerned it could only worse the human teariitarian situation. they have seen an influx of refugees within the last 24 hours. a lot of concerns among syrians. inspector there's have finished or at least are finishing up their last day t in the country. they're expected to leave on saturday before sending some of the samples they gathered to laboratories in europe and

perhaps starting to give their initial findings to the united nations secretary general as early as beginning of next week. but for some that may be a new point. they already believe that it was the syrian government that made the order or gave the order rather for that alleged chemical weapons attack and they feel the syrian government needs to be held to account. but the concern, if, in fact that does happen, is that it could lead to regional wide violence. already some of syria's closest allies including here in iran, hezbollah, have come out and said any conflict would be a disaster for the region. and that it would looead to a regional war. some of egypt's -- some of the u.s.' closest allies including egypt has expressed their reservations about any military strike that doesn't have any international consensus. >> ayman for us this morning. thanks very much. as we get word that secretary of state kerry is expected to make a statement on syria in a little bit, let's continue with our next guest.

he joins us now, steven, good morning. >> good morning. >> so a couple of significant things happening in the last 24 hours. but, you know, what britain said which seseffectively, no, in principle, we don't accept this strike. how much of a setback is that here? >> it certainly is a setback. the uk has been a strong supporter of u.s. action in the middle east in the past for obvious reasons. and it is complicating the effort to cobble together a broader coalition of the willing in order to undertake the military strikes that the administration is currently contempla contemplating. without the british, the united states going it alone or perhaps with the french, although it's hard to imagine the french coming along without the british, is going to isolate the united states and make it just that much more difficult for the united states to respond to what the syrians have done. >> and steven, it doesn't help here that what is spurring this respon

response, the agenda in the first place, the use of chemical weapons. what's not set in stone yet. who it was the uk parliament or even back here at home there are a lot of people wondering if this is still completely determined. i guess we're waiting on the u.n. report. to what extent can we trust or can we know with any certainty that it was assad using the chemical weapons here? >> i think the questions that have been asked in the british parliament and questions being asked here in washington are essentially what 2002 and 2003 brought. the head long rush into war with iraq without clear indication that saddam hussein possessed weapons of mass destruction. that's why people want to wait. but i don't think that there's really any significant doubt in the minds of most american officials that this syrian government did use chemical weapons. they have the capability. something that the free syrian army and rebel factions don't have. and this is something that they had used before. so i think that it will

ultimately be the case that the regime used chemical weapons but i think that the effort is to have as much evidence as possible before contemplating military strike, which has its own unintended and marginally negative consequences. >> the view seems to be, the argument seems to be at the moment that obama needs to demonstrate that, one when the united states lays down the red line it has to be observed. not just for syria but also to signal to iran that is the case. the danger here is if it is only a limited strike, people inside the country that would want to side with america, the secular rebels, if you like, will think, well, that's all ware goie're g get now from the united states. we've got to sort our own positions out and they may side with the extremists. when we talk about unintended consequences this could backfire, some say, quite badly for the policy of this country. would you agree? >> i couldn't agree more. i think that the president will look back on using the term red line with a significant amount

of regret. if he does not follow through, he looks factless. if he does follow through he looks as reckless as george w. bush seemed to be in going to iraq. a limited type of strike that the united states is talking about is unlikely to alter the balance of power on the battlefield and help the pfree syrian army all that much. what it might do is accelerate violence, accelerate the process of syria ripping itself apart. >> steven, just to put a period on it, given the calculus as we know it at this moment, do you think there will be a strike or not? >> i think it is unclear. i think it's 50/50 at this point with the british saying no and others saying that there needs to be international legal writ in order to do it. i'll be interested to see what secretary kerry has to say. of course, the administration is speaking bravely and saying that they have the capability to do it alone, which the united

states certainly does. but just because you have the capability to do something doesn't necessarily mean that you should. >> surely the consequences are clo climbing down at this stage are huge. >> indeed. that's the corner that the administration has painted itself into. now they're going to have to determine whether the cost of climbing down are greater than the likely consequences of even a limited strike in syria. >> all right. steven cook with his views this morning as we head into an important weekend. steven, thanks. >> thank you very much. on that note, dow is off some 35 points. let's get a market flash with dom. >> carl, check out shares of us airways. federal judge says she wants to see a trial sooner than march regarding the justice department's efforts to block the proposed merger between us airways and american airlines. the government has requested that march date but the airlines want the case to be heard in november. the judge did not give a specific proposal but says that

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breaking news on this trade-in program at apple.

jon has details. jon? >> carl, apple just called me moments ago confirming that they are launching this program nationwide today where you can come into an apple store and trade in your used iphone. now, i asked, is this just for previous generation iphones or can somebody come in with an iphone 5 today and trade that in as well? they said, yes, anything from iphone 5 and down, you can trade it in. they will check your serial number. check the physical condition of the phone. much like they do at a car dealership with a used car. and give you a value, a trade-in value based on that. but in order for you to do this, you have to leave the store with a fresh contract. if you are already on contract that means re-upping your two-year contract in some way. if you're not on contract, that means you have to buy a phone on contract. you can't get an off-contract phone under this. now, this is interesting in particular because old phones hold much bigger value right now because smartphone saturation is

so high. what is the likely trade-in value? iphone 4 likely to fetch around 125 bucks. 4s, around $200. the 5, $250. all of this contingent on what apple does the next couple weeks. always affects the value of older phones, of course. carriers are also launching programs trying to get people to reup more lickly. that involves turning in old phones. best buy is launching a program like that. walmart dropping the price on apples a well as the company's products right now. all of this in advance of the biggest launch season for smartphones. guys, back to you. >> jon, stay right there. we want to bring scott kessler into this discussion. scott, good morning p. >> good morning, kelly. >> forgive me because i'm a little bit confused. but what jon seems to be saying that is that you can do this trade-in program with apple but you have to have a new contract.

walmart is going to offer you the iphone 5 at $98 with the 16 gigabyte version with the contract. there's only -- people only have one contract. these things are very difficult to move around. so how much of a sticking point is that going to be for people to take advantage of this new opportunity? >> look, i think there's a lot of interest in the notion of trade-in program in store, right, because, look, apple 4 a couple of years we we think has had a recycling program in place where you could mail a device in to them and you could get some type of credit. you could have actually over the last year or two, i think, also brought an ipad in to -- an ipod into the store and gotten another ipod. so this is basically just apple kay ciaing, look, if you have an iphone you want to trade in, you can physically come into our store. it's going to help drive traffic and we think more transaction activity to the store, which is something that they're looking for. >> what -- let's just say this works and a lot of people say, all right, now is time that i want to take advantage of it. what is this going to mean for

apple's profit margin, scott, and ultimately for top line growth? >> i think the way to think about this is number one, it's going to get more people into the stores. number two, it's going get more people to upgrade to the newest generation of the iphone. those are boths positive for apple in terms of growth and financial performance. and we think overall, especially given the fact that, as jon referenced, it seems like a lot of other companies are going comparable things. this is just apple leveraging one of the biggest strategic assets and that is its over 400 retail space around the world. >> jon, you're views here? >> i think this is particularly important for margins. we don't know how exactly it's going to impact them yet because of this. we need to see how little apple can aford forafford to give he order to get them to to sign up for these new contracts on the

new phone. in between there there's the margin. i talked to a few people on the street here, our producer, brad quick, about what they would expect to get for their older phones and a lot of people really didn't have a good idea. let's just kind of see what i can get for this and what i have to pay for the new phone. chances are that's a pretty good spread for apple. and then they can take that older phone, sell it into emerging markets or into corporate accounts where there's a lot of demand right now for older phones. >> it's a great point. i'm sure a lot of people are going to be doing their homework now on that. thank you for this morning. did he just say corporate accounts? if i get an iphone i could get an iphone that is recycled from cnbc? >> you will get an old one unless you ask for it or get a deal on it. we'll see. when we come back, the business of pop. the u.s. government says it no l. not stop people in washington or colorado from smoking marijuana. what kind of money will these states make on this business? we've got the senior cultivationed for from "high i've b

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the department of justice announced yesterday it would not be challenging colorado and washington's marijuana laws.

joining us now with more on what this could mean for the businesses in that sector, danny danco is the senior cultivation editor of "high times." it seems like a lot of people in your community did not expect this. >> no. to be honest, it's really the first federal acknowledgement of the failed war on marijuana. and so we weren't expecting it and the other alternative was that they were going to sue the states or go through a process by which they would fight the decision of the people in those states spop we're very excited. >> does it mean there aren't federal laws that they still won't enforce? >> oh, no, absolutely. there are eight guidelines they will still enforce state to state trafficking, trafficking to minors, money from sales going to criminal organizations or cartels, and that sort of thing. so, you know, we're hoping as long as the companies in colorado and washington stay within those parameters they will not be attacked by the

federal government. >> we'll talk about some of the business owners in those states in a moment. in terms of other states whom might be on the cusp of following suit, how many are there and which one would you look to first if. >> there's dozen of states that there's -- there's over a dozen that have passed medical and now many looking into passing recreational including massachusetts, i believe oregon is looking into it as well. so the dominos are falling very quickly. >> it would seem the weak economy and pressure on budgets across the states and national government is probably the biggest gift to the pot industry it could have been. is that a big part of this? >> absolutely, kelly. there's a tremendous amount of job creation happening in this industry with these businesses as they grow. there's positions for growers, bud tenders, people who are trimming the pot and drying the pot. there are hundreds of jobs being created in colorado and washington. >> presumably they have to produce locally. >> absolutely. they have to keep the marijuana, the edibles, anything that they

maybe from the cannabis, they have to keep that within the state. >> undermine contract law across the united states, what's legal in one state should be legal elsewhere? produce in california and transport? >> that's what we're hoping for in the end game is a federal rescheduling of marijuana. right now it's in schedule one, no medical value. and in there with some very, very harsh drugs. so we want a rescheduling or even an unscheduling of marijuana off of that list. >> at what point will big business come in, the tobacco companies -- at the moment it's kind of mom and pop. is that the future, do you think? >> absolutely. big business is looking into our industry in a big way because it's such a growth industry right now in the midst of, you know, an economy that's kind of questionable. so, yes, big business is coming in but they are going to need the expertise of the people within our industry. >> the bud pickers.

>> -- to help them. exactly. >> i'm just thinking, if we're talking about, if your gold is a return to interstate commerce, any kind of interstate commerce with regard to marijuana, thinking about how far the policies have already come, do you think you might be getting a little bit greed difficult trying to climb that hill? >> i don't think our goal is interstate commerce. i think each state as it changes its laws can produce the marijuana that its citizens need and voted for. so we're not necessarily looking for california to expand into selling all over the states. we're looking for the government to recognize states' rights in this issue. which is a bipartisan issue, i believe. >> interesting. it's amazing how far it's come in a very short time. danny, thanks for coming in. >> thank you. well, haze to glaze. krispy kreme doughnuts is struggling after the results after the company's ceo a little bit later, ask him what he thinks and what he sees in terms of business. ♪

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about an hour into trading. some of the stories that we're talking about the 10:30 on wall street and more confident in europe. soaring to a two-year high this month. that confidence does not extend to the job though. still sitting at a record high of 12%. consumer spending slowed to 0.1%. below estimates. people are trimming expenses

after spending more earlier in the year. americans are wary of action in syria. according to a new nbc poll almost 80% think president obama should get congressional approval before using force in syria. the poll says 50% favor intervention when it's limited to launching missiles from u.s. navy ships. the turmoil in syria has also taken its toll on businesspeople in the region. quite clearly the next guest was a syrian entrepreneur who fled the country next year on jordan where he raised half a million dollars for his own internet start-up, shop go. we're joined by mo who is the cofounder and ceo of shopgo. moe, welcome to the program. >> hi, how are you? >> i'm very good. we're concerned about what is going on in syria though. remind us of what you were doing in syria. what you attempted to do as a businessman and when. >> basically i've been doing

services for u.s. markets, starting from late 2006 until late 2011 when the revolution started and we started to see short internet and electricity in syria. and that prevented me from being able to deliver my services. and then my partner and i reached the conclusion that there's no time for us to remain in syria and do business. and we had to let everyone go and set up elsewhere as things started to take place for our businesses. >> so you obviously made a decision to leave. what was that like to leave, and what did the other people in the business community around you say to you as you said, you felt that it was time to go? >> it was a very difficult decision back then. things were unclear.

it was pretty much people of the revolution right then. but we didn't know what was going to happen next. it was a very tough decision, to be honest. starting from tomorrow we no longer are doing business and i can't promise them anything. i had to leave the country. we had to leave the office and to start over. from srnding the business, the people curious about what was going to happen but maybe with so many businessmen waiting to see a few months later what was going to happen in the revolution and the market. >> i mean, moe, this weekend there is a momentous decision for the president of the united states to make as to whether or not he orders strikes on syria. what do you think about that decision that he is facing? what are the people, the businesspeople around you in jordan think about that decision and what should happen? >> it's very sad to see that things are getting very bad shape in syria and blood

everywhe everywhere. the regime is everywhere. the revolution is getting more and more violent. and other countries are going to attack the country. i don't see -- i don't see us going anywhere. it's getting worse and worse. and people inside syria -- i know from my friends and other businesses are no longer doing business. we are trying to help them and try to relocate in jordan or lebanon. but for they're t not doing anything. >> moe, it's good to talk to you. thank you for your time. moe ghashiim, ceo and cofounder of shopgo. the financial times this morning says this may be barack obama's trickiest hour if author of that business is the u.s. columnist with the f.t. and he is joining us now. good morning. >> good morning. thanks for having me. >> thank you so much for your

time. really made a lot of people stop and question to what extent the u.s. can and should move forward here. if the uk has said no. what's your view on all of that? >> i think operationally there's no difficulty with the u.s. moving forward without the uk or france. this isn't about military capabilities. that was always going to be 90% or more american. politically and diplomatically this really deepens president obama's loneliness on this issue. we're going to await the u.n. inspectors who come back from syria tomorrow. and then presumably the obama administration is going to have to make a fresher and stronger and more detailed case because the lesson from the uk parliament is the highing governments, trust us, we've seen the evidence. doesn't work in the post-iraq era. i think that's really -- that's really what best explains yesterday's vote in london.

and i think is the challenge facing obama. he needs to present a water-tight, very credible case. and that hasn't yet been made. >> ed, the politics here perhaps haven't been the best. i mean, certainly, but there's also the other issue of what has happened to people in syria. you know, 100,000 deaths. there's still -- or is there still an argument for moral intervention here to kind of separate the two issues with regard to the latter, what should the international community do? >> oh, i think there's a very strong case for moral intervention. having a dictator gas people in his own backyard, is unacceptable in any context. the question is what will be the most effective action, what will be the one that will least split the international community so the action can be sustained and followed up if necessary. and i don't think the obama administration has yet got to that place. i see secretary john kerry, secretary of state is going to

be making a serious statement a couple of hours from now here in washington. so we might learn more then. but the way the administration had been selling these strikes up to the uk vote yesterday as a one-off self-contained punitive measure that would not be followed up necessarily, i think was -- was and is pretty misleading because there's going to be a response, there's going to be a repurr cushion after any strikes are made. and the americans are going to have to respond. >> ed, on the one hand the president is getting criticized for telegraphing his intents -- his intentions too much. assad now has had a week to move his material to a place where he thinks they are less at risk. at the same time, the president does have to sell it as you've argued. what was he supposed to do? >> i think if he is still seems likely going to go ahead with

with tomahawk or cruise attacks on syrian assets, he's got to come clean with the american public and, indeed, with congress that this isn't necessarily self-contained or one-off. this is a potentially dynamic situation. and that if assad, for example, scatters his stockpile of chemical weapons much, much more secretly and widely across syria, then there's going to be a question of whether these become vulnerable to al qaeda taking them or hezbollah taking them and what the american s do then. there's got to be a back-up plan for a more dynamic situation. and i think that's a place the administration hasn't got to. it is this sort of military intervention like following a period of diplomacy. and i fear it's going to get heavy and we need a little bit more -- or quite a lot more explanation from the administration about what it stands ready to do. >> great point.

edward is joining us from the financial times this morning. thanks. >> can i just make one point. william cone was on "power po t point" yesterday. punitive strikes are not allowed. >> such a thorny issue. general electric is prepared to spin off one of the most important financial asset, ge capital. the ge capital unit issues store credit cards for 55 million people including retailers like walmart and banana pep blik. today ge is divesting from the business. dominic chu with more. >> kelly, general electric is looking to get more leaner, more focused. the conglomerate planning on spinning off the retail credit card business. s that according to a "wall street journal" report. citing people familiar with the matter. now, any possible deal could be huge given the size and scope of the consumer lending portfolio. that consumer lending business, simply put, is the part of ge capital that issues the store cards. other than banana republic and

walmart, if you're shop for mattresses, golf smith for a new set of irons, a host of other businesses and you open one of those store credit card accounts, that's ge capital behind the loan. now, their cards are used by 55 million americans out of the $274 billion of outstanding loans that ge capital has overall, $50 billion of that is from the consumer finance business. and the report says the groundwork is being laid to spin off that unit in an ipo but the size hasn't been decided on yet. for general electric, this is the latest in a campaign to get back to its core industrial operations. ceo jeff immelt has been at the helm of the company for 12 years me took over as ceo just days after splerchth terrorist eptem attacks in 2011. ge has fallen by 40%. honeywell have more than doubled. united technologies has tripled

in value. and immelt has been focusing on becoming more of a global infrastructure, energy and transportation type company for ge. he shed noncore businesses like nbc universal, the parent company of this network. overall for ge this could be a big deal if it does come to fruition that consumer lending business, carl, is a huge part of ge capital. >> no question about that, dom. not a sweet quarter for krispy kreme. it's down after a miss in second quarter earnings. we're going to talk to the ceo and ahead of that cueing, what else, a little g and r. back in a moment.

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talk to your doctor about all your symptoms. get the blood tests. change your number. turn it up. androgel 1.62%. ♪ shares of krispy kreme falling this morning after the company reported earnings that did fall a tad short of

estimates. here first on cnbc is jim morgan, chairman and ceo of krispy kreme who has sent some to post nine, much to ochagrin. looking to the quarter, same-store sales up 10%. 19 straight quarters. the sell-off, i guess, sparked a bit by what the stock had already done this year. would you agree? >> carl, i would. i think that the estimates for the quarter had risen this last week or so. the truth is we were pretty excited internally. the july quarter is always our weakest quarter historically and it was the best july quarter we had had in ten years. so i think you're probably right. a combination of the stock had moved up and moearning estimate had moved up. >> what does the -- what is the coming quarter and the rest of the year look like to you? because everything we hear from other players in the restaurant business is that pricing is tough, the consumers discrimina discriminating.

the pressure to create a truly break-through product has never been more fierce. >> carl, my understanding is all that's true. one thing i learned here at my time at crispy cream is we are fairly defensive. we're short of an affordable indulgence. and we really did not -- our consumer and our guests don't move in line with the typical consumer of spending patterns across the board. >> why is that? >> you know, we've tried to figure it out. i mean, i'd love -- i think the product and the brand have a lot to do with it, but i think when things get tough, family of three or four can go sit down at krispy kreme and have a dozen doughnuts for $8 or so and have a family outing and it's probably an inexpensive way to do something that really is a street. >> a lot of people are going to look at the cost structure of your business. general is up 19 mrs. health care expenses unexpectedly higher. what are you going to do to address that going forward? >> kelly, we're going to have to watch it another quarter to see if that's a trend.

we think those one-time rise in there. but we're watching it carefully. we also made some investments in the future. one thing we shared with the street is we're going to continue to invest in the future. year not going to approach this thing quarter by quarter. we believe we're laying a foundation which should result in bottom line double digit growth for many years to come and that's where our focus is. >> you talk about being a defensive kind of player. everybody is talking about these cronuts. i have not had. i know kelly has. >> i haven't tried one. >> no. >> are you -- do you feel like some need to chase these trends in the hopes that they're something more than a passing fad? >> that's a great question. trying to determine what's a fad and is a trend is difficult. i've heard great things. for right now we feel we have plenty of opportunity with our core menu, which is the doughnuts and beverages. we'll keep an eye on that.

ic we're capable of doing that. right now we're satisfied. >> expansion from that core and into the higher cost beverages, smaller stores almost a starbucks like model that is exactly what people are wondering about, if you should be doubling down on that strategy right now. are you going to? >> i think in time we will, kelly. i think right now we are not yet fully taking advantage of the doughnut occasions that we think we can help create. i think that will be a little ways down the road. we have been really busy working on some internal projects such as small store model. i think we'll get to a broadening of the menu but i don't think we need to do that the next couple of years in order to have great performance. >> i'm feeling a donate occasion coming on right now, jim. thanks a lot. good to have you. >> great to be with you. you have a wonderful day. >> jim morgan, chairman and ceo of krispy kreme. >> who knew there was so much to discuss with doughnuts. >> doughnut occasions. >> wow. >> tough august for stocks. dow on track for the worst month in more than a year. but september, of course, the month in prospect is

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breaking news. the president meeting right now with the national security council about syria. at the same time the secretary of state john kerry still scheduled to speak about syria at 12:30 p.m. eastern time, which is just a little more than an hour and a half from now. for the time being market close to the lows of the day, down almost 50 points. let's get to the cme group, rack s -- rick santelli in chicago. >> a nice three-day weekend coming up. i talked to a lot of traders on the floor who are technicians and they're trying to get a handle on these quiet markets on what's going on with interest rates. you heard me talk about the significant set of high yield tops we made on july 5th, whether it was the five year at 1.61 is% or the ten-year at 2.74%. the fact that on the ten-year we took that level out on the 15th. basically it was six weeks. time gets really overlooked. most people look at price.

many people look at volume, open interest, but time and price are linked. well, we're going to oversimplify but you'll get the idea. i was amazed at the six-week time period because the market really hung in there. well, if we go six weeks ought from this, i would think we can consolidate interest rates to the 26th before things get nasty unless the ten-year closes below 363. we have heard of american exceptionalism but what i'm not fond of is american exception-ism. there's a great op-ed in the journal. this one was titled test of gop resolve on obama care. i just have one point. i'm not an authority on obama care because i just can't read

that tall without getting a really big ladder because it stacks up so high but here is the deal. let's say we have tax policy like at the end of the last year that was passed by congress, signed by the president, moved into law. a couple weeks later we get an agency out or the president comes out and said, you know, my staffers really can't afford that tax increase so i think we need to find some money for them, an exception. it's all about exceptions. when it comes to obama care here is what kim wrote. the office of personal management announced with no legal authority that congress could keep receiving its giant subsidies. all i know is i'm tired of exceptions and whether it's the rule of law or how obama care is different for people that aren't hooked in or don't work for the government or don't belong to a union, i think we've had enough exceptions. i also want to know why congress gives its right to the purse string away to agencies and why none of this seems to be challenged by, what, they call

them extreme republicans? well, if they're extreme, why don't they take some of this to the supreme court and find out exactly who is extreme and who isn't. back to you. >> rick santelli this morning fired up. thank you, rick. like markets, it's been a rough couple months for detroit, but superman is on the way. we'll explain what we mean by that when we come back. but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. that's why we partnered with hp to build the new nascar fan and media engagement center. hp's technology helps us turn millions of tweets, posts and stories into real-time business insights that help nascar win with our fans. (announcer) scottrade knows our and invest their own way. 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

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from gotham city to motor city, the is up coming superman/batman movie will be filmed in detroit. production of the movie which will star henry calvill and ben affleck as batman will employ 406 workers. it will begin in the first few months of next year. >> kind of a lot of money, $35 million for 400 jobs. that's getting towards $100,000 a job. which presumably is for about six months. >> exactly. >> we know what some of the film subsidies did for louisiana after hk urricane katrina.

>> i had to google henry cavill. >> don't google ben affleck. >> meantime, dow continues to waver in the red. seeing some pressure -- i see jcpenney at a fresh 12-year low after the walmart price cuts earlier today. there's a look at what's going on. if you're just joining us this morning, here is what you missed earlier on. welcome to "squawk on the street." here is what's happened so far. >> every time the oil price spikes, the economy gets weaker. and that's the real outcome here that the global economy suffers the high price of oil and if we stay on this path, we're not going to have a very good decade. >> increases half expectations, up 0.1. spending up 0.1. that's about a third of what we were looking for. >> there's some stuff going on. just wonder if there's people around to trade on it. >> are we still in a period where good news in one quarter

makes it a little more of -- sets the bar a little higher for the next? >> yeah. the threshold of surprise goes up a little bit. >> i think we're living with a case of almost hypochondria here where if you look back over the past four years, there's always been things to worry about, and, yes, there's things to worry about, but pretty consistently we've come through this with the stock market up and the economy growing. >> there's the opening bell. >> chicago barometer is now up 0.7 to 53. that means expectations nailed it. new orders, 57.2. that's up 3.3. and my favorite, employment index, 54.9. minus 1.8. >> good friday morning ahead of a long weekend. we're live at post 9 at the new york stock exchange keeping an eye on the markets. dow trying to weather some of

this low volume territory. closing out the most of august which has been the most challenging since may of 2012. the dow has lost about 52 points. shares of apache rallying. the energy producer announcing it will sell a minority stake in egypt oil operations to a chinese company hoping to reduce its exposure amid all that political turmoil in egypt. then crm rallying. the business software company beat the street. sales force also raising its full year earnings forecast looking at its first billion dollar revenue quarter in q3. >> it has been a rough month for markets. the dow is on track for its worst performance in more than a year. tensions are also still high in syria. the president meeting with the national security council right now about the united states' next move. we'll get the latest from a live report on the ground. and breaking news in just the last hour. apple rolling out a nationwide iphone trade-in program today.

we'll go live to see how shoppers are responding. also face-to-face just got more expensive. some major banks want to charge customers just to speak to someone in person. we'll tell you where you might have to pay more. first up, the market and the economy. the dow is on track for its worst month in more than a year. want to bring in charlie and diane. happy friday to both of you. >> thanks for having us. >> diane, not a bad chicago pmi number, new orders pretty good on the back of that revised gdp. are people underestimating what we're going to do in the back half? >> i don't think they are. we have had the chicago pmi do better than the national pmi, and part of that is because the auto industry is on track to do better than the overall economy. we've seen actually it was interesting, the july numbers on wages and salaries saw weakness in manufacturing wages despite strength in the auto sector. you really see this breakdown of the auto sector and ex-auto

sector. some of it is hidden losses we're seeing in defense. defense manufacturing activity and defense in general, we're seeing furloughs, unpaid pu furloughs being taken. and that's weighing on the overall salary and wages number. >> it sort of explains the negative attitude we've seen. charlie, you do think perhaps the market is having some trouble getting out of its own way. >> yeah. the answer to your question is we think the economy is going to be better than people think. we think the combination of auto production and energy jobs and housing recovery and a more confident equity investor is going to bring better consumer spending. the consumer confidence levels are at very good numbers. and then, frankly, we think europe is bottoming and there are a lot of companies that have exposure to europe. that's going to be better over the next 12 months. we're looking for gdp in the mid 3s, maybe even 4. >> how nervous are you about things in september we just don't know about yet?

the german elections, whether there's a taper, how the debt ceiling fight is going to go? >> you know, you just mentioned all of those things and the nice thing is we think they're factored in at this point. we think the market is already factoring in a taper. we think the german elections will go fine. so those things don't really bother us very much at all. obviously something can come out of left field that by definition we don't know yet, but right now we think there are a lot of things lining up positively. >> diane, you think a 4% quarter is possible? >> not in the near term. i certainly would like it by the end of 2014, but that's still a long way to wait. in the near term the current quarter looks like about 1.6% with the data we got out today, particularly on consumer outlays which was not terrific. going that the fourth quarter, it still looks like 2%, 2.5%. that's nothing to pop champagne corks over. the housing market has really hit some bumps in the road. not only has affordability taken it on the chin, but investors

are no longer in there playing the role that first-time buyers once g z and that's going to be a critical issue as we move into 2014. still bullish on the housing market but have some caution given what's happened to rates and also the refi boom not giving consumers that extra cash. when they don't have a lot of wages, that's really important. >> the fed 's own house view is closer to what charlie has laid out which is corroborated by what we saw in the figures this morning. if we don't hit a 3.5% rate in the back half, where does that leave them? >> it leaves the fed in a very difficult situation. we know that the fed is sort of split going in about the taper. i do think that tapering is more likely than not, and i think that the markets have priced a lot in. i agree with charlie on that. i think that's important for the fed because they would like to start this process. ben ber thnanke would as a lega move. uncertainty over the fed will be very high, however, not only about who takes over the fed but

also who fills the positions of the people who are leaving on the federal reserve board and federal reserve presidents which had established the core of the fed for a long time. those are all happening in january and february. it leaves a lot of uncertainty for markets going forward. it's something that ben bernanke really needs to try to stake out some certainty about. >> charlie, one last point about september. we were looking back at just how volatile it's been. these are dow stats, percentage gains and losses. last year up 3%. the year before down 6%. the year before that up 8%. the year before that up 3%. it is big swings. you got to go back a long ways before you get a sub 2% move. do you think it's going to be that volatile? >> yeah. we don't tend to spend a lot of time on the monthly issues. i think you can get in a lot of trouble on that stuff. so we tend to take a much longer perspective. but, sure, at this point

anything obviously can happen in september, but at this point there's such a consensus that interest rates are going to go higher, that, frankly, that's a little disconcerting. we have a lot of higher rates built into the market and that gives us a fair amount of comfort that we've got a little margin of safety. >> charlie, diane, good to see you. we'll talk to you later. >> thanks for having us. >> meantime, the president meeting with his national security council at the white house right now. the united states' next move is now unclear after the uk parliament voted against taking military action. ayman mohyeldin joins us this morning from beirut. good morning once again. >> reporter: good morning, carl. as the president has that meeting in washington, syrian inspectors who have been on the ground in damascus, u.n. inspectors remember, who have been inside syria for the past couple days trying to determine exactly what happened, are expected to conclude their findings. they are expected to leave the country tomorrow and head back

to u.s. at some point to present their findings to the u.n. secretary-general as early as monday. now, for some, some are making the argument that's already a moot point. in the case of the u.s., they say they have all the intelligence and evidence they need to confirm that it was the syrian government that carried out that alleged weapons attack. why it's so important is because we are seeing some ripple effects among the international coalition that was as early as this week pushing for possible military strikes. the united kingdom will not be a part of any military operation and that leaves the united states and france to go it along. among the arab countries there are concerns this would only make the humanitarian situation of the syrian people that much more difficult, particularly in countries like lebanon and jordan that have seen an influx of refugees. not only that but the security situation in countries like lebanon here are very much concerned over the spillover effect. this country has already seen some violence as a result of what takes place inside syria. their concern is if there is a military strike on syria, one of

syr syria's closest allies, hezbollah, could retaliate on behalf of the regime. so, too, can iran and that would lead to a regional confrontation that many people don't want to see. it's not a popular discussion point across the middle east. the middle east is very much opposed to the possible idea of another military intervention in an arab country. kelly? >> it's a good point. thanks very much for that. as we await remarks in secretary of state kerry in just over an hour's time, let's bring in bill spindle, the middle east bureau chief with "the wall street journal" and joins us at post 9. good morning. >> good morning. >> how surprised are you by the turn the events have taken over the last 24 hours after britain has come out with a you're going this alone? >> it's been difficult for obama to put together a coalition on this. it's just a really, really tricky challenge he's got to try to send a message that's beyond symbolism but one that doesn't -- that allows them to hold a coalition together and at

the same time i think they really don't want to unleash sort of uncontrolled toppling of the regime in any way as well. it's a really tricky balancing act he's trying to pull off. >> people saying that red line rhetoric once again sort of marks an unforced error. is that view widely held around the world? >> well, he certainly got himself into a box, and in the region, they're looking for the u.s. to do something, but then again they don't want to endorse too much. i think the other really interesting thing that's going on behind the scenes is the way -- there's been a lot of talk of how the opposition has changed from a nonviolent, a religious movement, to a sort of violent where the movers and shakers are often militants. what we haven't talked a lot about is the are jet stream itself has really transformed from a government that was pretty vulnerable in many ways trying to protect its whole country to something really closer to a sectarian militia that's much less vulnerable to

this kind -- >> like hezbollahization of the government? >> in some ways. the government has really transformed itself around its close supporters into a much tighter, cohesive block that's going to be very difficult -- really all they care about is their own survival. how do you send a message that's beyond symbolism to a group like that. >> you're going to be in a plane in a couple hours heading back. what do you think awaits you this weekend? what do you think is the likeliest scenario of what happens? >> i think a lot of that depends on what president obama decides to do here. does he really go for something more than really a symbolic statement, in which case then forces will be unleashed in a lot of ways, and that's what people are really concerned about here -- >> if he only goes for the symbolic statement? >> if he goes beyond that. i think they're try -- everyone is trying to keep this problem contained within syria. that's really the big challenge

here. >> come on. >> but it's already turned into sort of a proxy war with much of the region involved. still taking place inside syria. the big concern is things get out of control, it starts to spill outside of syria in ways that have gone beyond what we have seen. israel gets involved, jordan becomes stabilized. it could even go to the persian gulf if it moved into iraq and down. so there's a lot of ways this could become a much larger problem. >> is the arab league saying, come on, guys, you have to do something? are they pressuring the united states? >> well, you know, they want to condemn this, but on the other hand they don't want to endorse intervention. the arab world is very shy about that sort of thing and very concerned about that sort of thing. they're not willing to call for it publicly even though behind the scenes you see some of the u.s. allies encouraging it to go ahead. >> just a difficult situation, bill. a real quandary. thank you so much and we hope it's all safe for you guys over there, of course. >> thank you. >> bill spindle from the waunl.

big news for the apple faithful today. the company's new trade-in program is launching nationwide. we're going to take you live to an apple store. see how consumers might be responding. first up, rick santelli watching the markets on this friday morning. >> i want to end the week talking about emerging markets, and i want to tap into some of the anger. bank governor augustine carsten basically said secentral banker could not ignore the effects of their policies on the rest of the world. i'm going to channel ira harris to get into the mindset of emerging markets. all at the bottom of the hour. 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

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buy a tempur-pedic mattress set and get a free twin tempur-simplicity mattress. find a store near you at tempurpedic.com. some breaking news in the last hour. apple rolling out this nationwide iphone trade-in program. jon fortt is live outside an apple store in new york with more. good morning, jon. >> morning, carl. it's big news because this is an absolutely huge market in smartphones, and apple is in effect legitimizing kind of a newer market in used phones. this is launching nationwide today at apple stores. the iphone, of course, is apple's highest margin device. so this isn't something to just be messed with. analysts peg iphone gross margins in the 40%-plus range. what are the pluses and minuses here? well, this program could be a win for apple if, a, iphone

users upgrade sooner because they know they can turn in their old phone and get the new one even if they have to move in on a carrier contract and take a little bit of a hit. perhaps the used phone can cushion the blow. if the used iphones go to people who would have bought android phones otherwise. it's a loss for apple, however, if the used phones end up going to people who would have bought new iphones. i tried to go into that apple store and get them to value my iphone. but they saw me out here on tv and said, no soup for you, press policy. now that the cat is out of the bag, i can go back in and see if they'll tell me how much this thing is worth. >> i just have to ask as well, the strategy, i'm used to apple announcing new initiatives with power point presentation and fancy graphics and the ceo on stage, and this one almost seems to have been a secret that we accidentally discovered. is that strange in your view? >> not really that strange. apple likes to announce products

from the stage. when they're announcing a retail policy or something like this, often we do get it in a kind of release or rolled out in a soft way. i think they really want the crowds of people coming when they've got a new product to sell because what they really want you to do is sign up for a fresh contract, renew a used phone here, buy your new phone here. that's when they get the most margin. >> i guess it's not really power point they use. jon, thanks very much. really appreciate it this morning. we'll have to see, carl, if it's a success with the consumer. a big quarter for splung. we'll talk to the company's ceo when we come back. if you're serious about taking your trading to a higher level, tdd#: 1-800-345-2550

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splash. take a look at a chart of splunk today. sharply higher after second quarter earnings beat estimates. the big data company surging 211% since the ipo in april of last year. here for a cnbc exclusive is godfrey sullivan, the president and ceo of splunk. quarter not too bad, guidance not too bad. you have to go back to the ipo to see level this is high. >> good morning. it's a nice place to be. thank you. >> you added some 400 customers in the quarter. i'm not sure how much you have given on the call but can you talk about customer churn and why you see some more enterprise deals in the second half of the year? >> most exciting thing at splunk is we're making machine data sexy. so we used to just index information from servers and networks and things like that. now we're being asked to index information from cars and elevators and this yaur we talked about train sensors, one of the largest north american rail carriers is indexing all

their train sensor information so they can have better controls on speed, safety, and compliance. so it's just an exploding market in terms of the machines of the world got smart and learned how to communicate and we indexed and analyzed that information. every day is a new day. >> you did raise your revenue forecast for the year. i haven't seen any similar forecast raise on earnings. are you giving guidance on profitability? >> yes. we tend to run at about break even on a nongap basis, but with positive cash flow and as long as we can grow at this rate, our investors are very happy with that model. >> speaking of da tashg the amount of it, there have been some glitches with stock exchanges, the nasdaq last week. do you work with exchanges? do you see an opportunity to do so in the future? >> see a big opportunity there. i think the nasdaq needs to buy some splunk. >> what in particular do you think your company can add to what already exists with regard

to how information is traded? >> well, from what i read this morning, it was really a software glitch in terms of them getting a 26 times spike in traffic from one of their partners. and that's something that you probably don't plan for or program for or load balance for, so it's not unusual that they had that kind of a fail. but, you know, now that they know what it is, they can probably plan better for it. but we can work with companies like that because splunk is able to analyze all that network server application log activity and we can usually pinpoint the failure and show them exactly when, where, and why it happened. it's that radios cause analysis that helps them put a fix into place. >> when you start looking out over the next few years, godfrey, you talk about running at a break even model and how investors are happy with that given the growth rate. when does that equation change? when do you start looking to put some money to the bottom line or returning cash to shareholders in some way?

>> last year even though we ran at roughly a break even nongap pace, our cash flow was equal to 24% of revenue. clearly the business is pretty healthy. we added almost $80 million to our balance sheet last year. so business is good. we choose to run the business at that level because our customers need for us to invest heavily in products, in field and services and all that sort. so we will aggressively expand and invest in our business. if the growth rate slowed down, then our investors would expect us to start improving our operating margins. it's a careful balance between growth and profitability. >> you have some big players like vmware interested in data analytics. i wonder if there's a feeling that you have awoken some sleeping giants? >> they're all awake. but generally they're worried about their own stack. so we fully expect for the large players to do is better job of analyzing their own data, and splunk's advantage is we look at everybody's data all across the enterprise and our ability to

index and correlate that and give customers a view of all their stack is really one of our core differentiators. >> obviously the street and investors clearly interested in how you're seeing corporate di mand shape up. we hope you'll come back. thanks so. >> thanks, guys. >> godfrey sullivan of splunk. if you want facetime at your bank, now it might cost you. we'll tell you which banks could start charging you just to talk to your teller in a couple minutes. plus, the bells are about to sound across europe. we saw a lot of red on the map earlier. just a couple minutes left to go. we'll get you details on the close and the impact back here when we come back. we'll get you details on the clients are always learning more

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the european markets are closing now. >> welcome back. it's been a tough month for u.s. markets, also, simon, for european markets. >> obviously there's no public holiday in europe on monday for most of these markets so they have a shorter weekend to shut down for, but it is the end of the month and there's a bit of a catch up on some of the profit taking. you will see the periphery of europe is down much more -- we're down a third of 1% on the dow at the moment. you can see the losses percentagewise are much greater towards the south of europe. overall for the year, year-to-date, actually u.s. equities have done much better. they're up 8% better than european equities. for the month the united states has done worse because you have this better belief of growth in europe which has meant the profit taking on the previous rally is not as austere in europe.

a lot of talk obviously about deals that might be done, vodafone is up 8%, 9% for the week. $130 billion and take it back less the tack. there's some talk if that happens, vodafone could be a takeover target for at&t. carlos slim could walk away from his attempt to take over kpm in the netherlands or alternatively buy it. a 9% move. the brazilian assets of telecom italia. the guy at the helm of l'oreal has been making headlines suggesting it might buy the 29% stake in l'oreal that's owned by nestle in switzerland and they could sell the stake they have in the drug company sanofi-aventis. hermes has done very well in the last five years.

overtaking it's larger partner which has a controversial 23% stake and as regular viewers will know, for hermes, it's all about the bags. the highest priced -- you can help me out. the highest priced bag ever sold was $200,000, a red crocodile bag sold in texas. you probably buy these. i think these older models. >> you'd -- i'd have to promise a first born to get one of these bags. it's not even the price, but often there will be waiting lists for weeks or months to get one of these. >> mrs. quinn tha nhat nkne -- already on the list. >> it's a big deal. >> she's got a big christmas coming. >> right. we'll see you on "power" in a few minutes. let's get a check on energy and

commodities. jackie deangelis is live at the nymex. >> seeing some pressure continue here. down across the board. the declines we're seeing in the crude pits, of course, coming on the back of the uk parliament's rejecti rejection of military action in syria. that would mean the u.s. would have to go alone if we were going to strike there and it seems like the probability of that is declining a bit at this point. now, also keep in mind that we had u.s. inventory numbers out this week. it shows the market is fairly well supplied. so it doesn't seem like prices need to continue to rise. west texas intermediate over $108 a barrel. brent just under $115. some traders are saying you have to keep an eye on opec and libyan protection. opec declining its production because of what we're seeing out of libya. that's something to keep an eye on next week. a quick check on the metals. we saw a stronger dollar pushing gold under $1,400 earlier. we're hovering around those

levels. traders don't want to make too many decisions before the holiday weekend. back to you. >> thanks very much. let's take a closer look at what might be the impact of a more protracted perhaps conflict. >> there's a lot of discussion. i want to note, today is the last trading day of the summer. i pointed this out on the open. we had done pretty well this summer consider ling all the stf we had to deal with. all the gains we have had this year occurred up until memorial day. we were up 15% at memorial day. from memorial day to labor day, we are essentially flat which i think is pretty good considering we had to deal with the fed taper talk, with the issues in the united states. not bad. put up the s&p 500 and i'll show you what i mean. we're basically -- there we go. right like that. that's exactly on the flat line. let's talk about syria. first, the issue is short term versus long term. everybody agrees on what happens on a short-term conflict. you get stocks down, bonds

rally, the dollar rallying and gold rallying. there's universal agreement on what that's going to look like. here is a bigger issue, a protracted conflict. here is what the issue is. cyclical names at this point because there will be worries about global growth going on. you see oil stocks rallies and defensive stocks, health care stocks, utilities, stocks that pay a dividend, they would rally. precious metals would rally. commodity stocks and i mean base metals, the copper, steel group, they would all move to the downside. consumer discretionary stock, retail and home building stocks, they would move to the downside as well. so you can see that the situation gets a lot different if you deal with a short surgical strike and the u.s. is out than if you have a much longer conflict. i think this is what's really worrying the street overall. if you get protracted things,

you have concerned about global growth slowing down. oil goes through the roof. we know what happens to corporate earnings growth. and if it's bad enough, this could even affect the fed taper potentially. i know this is really sticking your neck out a little bit, but the traders are really trying to figure out the protracted one is the hard one. short, surgical, that's easy. the protracted is where everybody is trying to put their bets right now. >> you have a long weekend to figure it out for us. thank you, bob. >> let's get to rick santelli in chicago looking at emerging markets today. rick? >> yes, we are. before we get to emerging markets, ira and decided that barring a double digit nonfarm jobs headline, meaning under 100,000, or negative number, what do we agree on? >> that tapering will start in september. >> we agree the tapering will start in september. now, my question to you is how did you arrive at that conclusion? i know you have a good reason. >> well, as we've talked about,

it's the february 7th speech of jeremy stein, and i think that jeremy stein is a strong enough academic to convince a fellow academic, ben bernanke, that the fed's creation of these $3.5 trillion of reserves has created the risk of financial instability. so they want to pull back for that and get risk somewhat surprised in a normal fashion. i think that the whole purpose of this, nothing more. >> now, that's a perfect segue. let's take the opposite role in this. let's pretend we're an augustine carsten or any of the central bankers around the emerging markets. how would they respond to what jeremy stein said? >> they cried and cried about the fact the fed was creating the reserves. now that they're pulling back and they're seeing the ramifications. i would say they're another vus -- again, this is -- >> they're certainly not help. >> they're hot money flows that have been created, and now you'll see the flows as they get

a little nervous, money gets nervous and starts to return. they're not wrong though because don't forget, ben bernanke still believes that the reason we had a housing bubble was because the chinese people saving too much. >> wait a minute. when it came to this side, he pointed at them. >> right. >> now that the emerging markets are pointed at him, his response pretty much seems to be -- >> you're on your own here. so you can't have it all ways. don coen at jackson hole, and i have a lot of respect for him -- >> a lot of people wanted him to be the next guy. >> right. he said, listen, you guys made your mistakes, you have to sleep in that bed, but they're a little peeved about that because this didn't happen -- you created these excess reserves and there was no investable place to go so it started bleeding out over the international system and now you're pulling back without asking anybody else. this is creating a little heat for us, but i don't think -- first of all, i think you're all judging it wrong anyway. i don't think this is going to be a big deal. right now we have that

correlative effect where everybody runs together. the bricks are all seen as one entity. doesn't exist. it's going to break down and everybody will go their separate ways and those countries that run current account deficits will have to find a way to finance those deficits and those who are running balance current accounts or surpluses -- >> unless somehow the fed changes their mind and they get washed with another spray from the fire hose which i think really hurts their rentatiputat. you said and i think that the next thing viewers and listeners need to watch out for is more information on -- >> this issue of what the new york fed put in the fomc minutes about that special reverse repo desk and the importance it's going to be for the recreation or the need for collateral in the repo market because you can taper, but if you make a lot of collateral that the fed is sitting on now available, you're going to get some velocity. >> all the people that say there's no inflation, maybe they're right. they're just not looking at the right month or year on the cal dwer yet. have a great holiday.

>> thank you. everybody else, too. >> back to you. >> thank you, rick santelli. if you want to talk to your bank in person, well, get ready to pay up for it. coming up, we'll tell you which banks are now charging you to talk to your teller. stay with us on "squawk on the street." my mother made the best toffee in the world. it's delicious. so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love. [ robert ] we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and make your business dream a reality. at legalzoom.com we put the law on your side. i hav

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reaction to his comments. and it may be the worst month for stocks in a year but two tech names are rallying. we'll debate if that momentum can continue. plus three stocks that can help you ride out the volatility. >> it's going to be a busy hour for you, scott. scott mentioned some tech names rallying. look at crm. leading the s&p after reporting strong earnings after the bell last night. raising their full year outlooks. shares hitting all-time highs on that news. mark did speak with cramer last night on "mad money" about what's driving growth. >> we are number one now in sales. that is our sales product is number one in the marketplace, and that is a huge and critical market. we're also number one in service, so in examiner service solutions, customer engagement solutions, we're number one and as you know, we bought exact target last quarter. that makes us number one in

marketing. >> well, you can see market rewarding that performance. if you want to talk to a teller at your bank, if you're a customer at capital one or pnc, now it could cost you. kayla tausche explains back at hq. >> kelly, with branches closing and more people banking online, tellers are becoming a premium service. banks have been rolling out accounts where you don't incur monthly fee as long as you do all your banking by mobile, by web, or at an atm. visiting the branch though, that will cost you. pnc launched its virtual wallet account five years ago. an account that syncs a customer's transaction onli online-oonline and with apps. if the app is down and you want to make a deposit, the website says you can mail it in. capital one inherited the e account from internet bank ing in a merger that closed a year ago. once that is fully integrated,

the account could change. big banks though, they have been really cautious about upcharging consumers for services viewed as a necessity. bank of america was the only big bank to offer one of these accounts but it's pulling its e banking account after only three years. sources say fewer consumers were signing up for it, likely because the bank with the biggest branch network carried an $8.95 charge to walk into one. a spokeswoman for bank of america said, quote, over the past couple years everyone has become an e banker. it's much more behavioral attribute than a product concept. customers said the products did not give them enough options even if they only visit a teller infrequently. i took to twitter to ask people whether they would be asked in an account like that. michael stone said i only need a teller four times a year. chris says, yes, because i rarely need to go inside my bank. and just join a credit union and tell those fee-happy banks to get lost. >> kayla, some bad news for

people who are sick already of bank fees but thanks very much. a little breaking news here on us airways and amr. i think we're looking at a november 25th trial date for amr and u.s. was airways. that merger challenge coming from the department of justice even though we heard talk they're open to gosnegotiating e settlement. cramer said if us airways gets th th this cleared, the stock goes up 50%. think of it as private luxury villas for the 5% as opposed to the 1%. up next, the company that's making exclusive vacation homes a little more accessible relatively speaking. we'll be right back. i've been doing a few things for a while that i really love-- tdd#: 1-800-345-2550

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♪ now you can vacation like the 1% while only spending like the 5%. departing from the traditional industry model, luxury destination club insparado is

making vacation a little more accessible. here is explain is bret handler. he's the founder and ceo. good morning. >> good morning. thank you so much for having me. >> thank you for joining us. just want people who aren't familiar with the concept to know what you guys do. people basically pay these initiation fees of about $17,500, an annual fee in the $3,000 range but then they get access to your portfolio of luxury properties, is that right? >> that's correct. we serve two markets. we have a consumer product that is a membership and we have a business product that really caters to offsite rewards, company meetings, et cetera. on the consumer side it is a membership. folks pay $17,500 one time to join and then it's $3,000 annually and for that they get access to our platform of homes and experiences around the world, and the pricing and the value that they receive is very, very competitive for what they might be able to find on their own, and the service level is

also really bolstered up because of our unique business model. >> i'm curious as well. getting into this business and the way in which you're not just facilitating matching people to these kinds of vacations but actually owning these properties, is that right? >> we don't actually own the properties, so it's very interesting, the business model. we actually long term lease the homes which allows us to manage and control this inventory. so for a member, it's the same as if we owned it because we control them through long term lease and we control about half a billion dollars, just under half a billion dollars of inventory. so in my past life, i was involved in a company where it was really a fractional ownership, and it was hundreds of thousands of dollars in order to get that same benefit, and now we've really democratized that and made it available to a much larger audience for only as we had mentioned, $17,500. >> looking through sort of the

list of destinations and the number of residences in each des t tin nation, some of them you're only looking at one or two. there must be some bottle necking if you want to stay in a place like beaver creek. >> we really have quite a bit of scale. i think we have 22 homes in that market, but there are certain markets like costa rica which we just released last week where we currently only have one residence but we're actively adding new properties on a monthly basis. we really started january 1st, 2011, and have built a portfolio to over half a billion dollars. so we're continually growing that platform and the club runs at an occupancy of only about 44% projected this year. so availability is really not an issue at all. to give you an example, labor day weekend, a big travel weekend, just even in the last couple of days we had members travel to veil and to aspen and to many other places and just to

give you an example of that great value, our veil home, which is worth over $4 million, we have members staying there for only $295 per night. that's not per bedroom or per person. that's per night. it comes with daily housekeeping, a personal concierge. there's really a lot of value in joining and that's why over 4,000 members have chosen to do so. >> but does it come with a birkin bag? >> not to my knowledge. i don't believe so. it probably comes with a really cool amenity, and if you're interested in it, i'd be happy to have you visit one of our homes. >> brent, i am not the 5% or the 1%, but, you know, i'll be thinking of them this weekend tweekend. thank you very much. >> they say money can't buy happiness, but can it buy championships? the l.a. dodgers now have the highest payroll in the league. will spending more money bring the team from worst to first?

jane wells is live at dodgers stadium when we come back. (announcer) at scottrade, our clients trade and invest

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suddenly, faraway places don't seem so...far away. nascar is ab.out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. that's why we partnered with hp to build the new nascar fan and media engagement center. hp's technology helps us turn millions of tweets, posts and stories into real-time business insights that help nascar win with our fans. welcome back to "squawk on the street." i'm phil lebeau with breaking news. a federal judge has set november

25th as the start date for an antitrust hearing as the federal government tries to block the merger of u.s. air and american airlines. this is a win for u.s. air and american airlines because they were pushing for an earlier antitrust hearing. the federal government, the department of justice wanted the hearing to start in march. the judge said waiting to march is way too far in the future. this will begin on november 25th. keep in mind, that's three months away. i would not be surprised if we have a settlement negotiated by both sides before that. >> that's what we're lo on the lookout for. it's one of the oldest questions in sports, if you spend more, will it make you better? for the l.a. dodgers the answer so far is an emphatic yes. the jane wells has more live in los angeles. >> this legendary team hasn't been to the world series in 25 years. don mattingly says dodger fans got embarrassed to wear dodger blue. not anymore. since the guggenheim group along

with magic johnson paid over $2 billion to buy the team, spent hundreds of millions acquiring the team, the team is way out in first. ticket prices have jumped from $40 to 6 p0 bucks. they have the highest payroll, more than $220 million. >> well, it's dramatic. it's never reckless, and it's always thought out, and, again, remember, we're the dodgers, and we play in l.a. we needed to get this franchise back into a great place and do it as fast as possible. >> there's no excuses for sure. i'd rather have it this way than the other way where there's no expectations because we don't have a good team on the field. you know, if we're going to take one or the other, we'd definitely rather have it this way. >> all right. but two months ago it looked like a colossal waste. the dodgers were terrible until puig joined the team. he lit a fire. a lot of players got healthy.

he's young, suddenly rich, likes to enjoy himself. while he may have saved don mattingly's job that hasn't stopped mattingly when necessary from pulling him. >> the game is meant to be played with fun but within that there has to be a structure of we have to be on time, we have to be ready to play, we have to do our work. all those things -- >> you bench players. >> i think we have a responsibility to the fans and to the game itself. >> later on "power lunch," dodger's president will join us to talk money and yankees fan, how does donny baseball feel about wearing dodger blue? >> that is a great live shot, jane. thank you so much. jane wells in los angeles. before we go, do you want to do a little quiz as to what stocks have done the best in the month? best s&p stock? >> best buy? >> very good. up 21%. worst s&p stock? abercrombie. >> i was going to say teens. >> be aer kronl abercrombie & f.

best nasdaq name tesla. >> i think you gave up on me there. >> we're running out of time. see you all on tuesday. let's get back to wapner and "the halftime." carl, thanks. welcome to "the halftime show." right on the wall is where we currently stand on the street. there is the dow down 54. nasdaq and s&p are in the red as well. here is what we're following on the half. syria strike. the secretary of state speaks in washington at the bottom of hour. we go there live for the latest developments. the september question. will the worst month for the dow since 1950 stay true to form or can a pick up in the economy spark a rebound? first, our top story today is the dynamic duo. august may be the worst month for stocks in more than a