>> good morning, welcome to "squawk box." i'm andrew ross-sorkin along with joe kernan and michelle caruso-cabrera is here in for becky quick. ukraine is looking to hand over the investigation of the crash to international partners. the bodies were loaded into refrigerator crews. people wearing gas masks and gloves moved bodies in body bags into train cars in a town near the crash site. international outrage of course is growing. this australian prime minister tony abbott had this to say about it. >> it is an absolute shambolic situation. it does look more like a garden cleanup than a forensic

investigation. >> and today the u.n. security council is expected to vote on a resolution calling for full access to the crash site and an international investigation. we'll check in with our nbc colleagues in russia in a couple minutes. also, we are closely following the situation in the middle east. israeli air strikes pounding gaza again today. officials say more than 500 palestinians have been killed since the beginning of the offensive. yesterday was the deadliest day. 20 israelis have been killed including 13 soldiers who died during heavy fighting yesterday. and the u.n. security general and u.s. secretary john kerry are headed to egypt for talks on the crisis. >> israel has every right in the world to defend itself, but we're hopeful, very hopeful that we can quickly try to find a way forward to put a cease-fire in place so that the underlying issues, so that we can get to the questions, but you cannot

reward terrorism. there can't be a set of precondition demands that are going to be met. so we support the egyptian initiative joined in by israel and others to have an immediate cease-fire. >> we're going to have a live report from our nbc colleagues on the ground in gaza in just a couple minutes. so it's been a tough weekend, to say the least. we'll check on the markets this morning. europe is lower this morning. we'll see if it is falling over the u.s. futures after the big rally we saw on friday or the recovery rally we saw on friday. the s&p opens lower by three points and the dow is lower by 23 with the nasdaq down by 3. in europe there's talk of the new ultimate tim to putin whether we have sanctions from europe. the ftss lower by 19 points. germany is lower by 61 points. big sell-off in italy lower by 186 points near .90%. here's what happens in asia,

japan is closed. so we are not showing you what happens there. hang seng and hong kong lower by 67 points. shanghai is lower by 4.5 points. oil despite the disruption, no big rise in the price. nymex is at 103 dollars a barrel. ice brent is lower as well. the yield is still below 2.5% as we saw the stock market rally. the ten-year sold off a bit but the yield never got to 2.5% as we saw people moving into equities. as for the dollar this morning, stronger against the pound and the euro, weaker against the yen. the pound is going to cost you $1.70 and the euro is $1.30. this morning gold is higher at 1315. thank you, michelle.

>> the holding company has filed for protection. right. >> i thought we were worried about that in the world markets. was this not the worst they were wondering would happen? >> when it comes to portugal or europe? >> that was the bank we were worried about. >> right. we were. well, the bank itself, are you saying that the bank is -- >> no, the holding company. >> no, but it was the bank that everybody was confused about or concerned about because they were worried it was the beginning of the european banking crisis renewed. but as people look more and more at that situation, it looks like a situation of really very bad governance of latin america in the 1980s and the 1970s, so they are thinking it is isolateisola. and portuguese debt was the biggest rally of last week. >> that's good. we'll go to moscow now to join jim maceda there for us. one of the top stories, the

international debate over the plane crash site in ukraine. and nbc's jim maceda is joining us from moscow. saw you last week. hello again, jim. >> reporter: hi, there. we have heard some remarkably angry comments today from the likes of the australian and dutch prime ministers, not to mention the unsurprising bitterness coming from the ukrainian prime minister. but none of this, joe, seems to have swayed putin to cut ties with the rebels. there's been a lot of talk over the past few days about the crash of malaysian flight 17 being a game-changer. but what we have seen is that so far the game in ukraine hasn't changed. the war is still raging on there. there are reports of fighting going on today inside donetsk, the city of 1 million people with tanks reportedly now in the city center. so what we are seeing is, i think, putin paying lip service

once again to peace but using his proxies to defend his very specific interest. so there's no doubt that putin is facing the biggest crisis of his presidency because of this plane crash. putin, the former kgb lieutenant colonel, bust know what did or did not happening to the boeing 777. the united states thinks it knows but he really must know. and if there is a direct russian connection to the crime, analysts here are telling us that putin will do absolutely everything that he can to hide it, to drag out any investigation so that he can continue to kind of plausibly deny everything. and he just waits things out. he's still believing that he can win that battle. that europe will not have the stomach for the tough secretarial sanctions that might hurt him. and by the way, he has an 83% approval rating from russians here to back him. back to you.

all right. jim maceda, we appreciate your reporting. and it is -- at this point, it's all going to be recriminations and cleaning up the site, the whole thing is unfortunate. i don't know what we'll finally hear. eventually you would think that you would hear i'm sorry or something. >> then they would have to admit they were involved and i'm not sure they want to admit that. >> from putin or the rebels? >> no. >> haven't we got a pretty good idea what likely happened overall. they initially shot one down a couple days before that. they were kind of happy. then it is like, oh, no, we made a mistake. so it's just awful. >> i think the question now is, does europe finally do something very significant when it comes to sanctions? we have been asking and asking and they have been talking and talking. >> what about china?

>> does china do anything about this? >> they could, but i think that's one bridge way too far. oh, yeah. >> it prompted a war in ukraine all year. that was the point over the weekend. we kept emphasizing that it became a european conflict at that point because so many europeans were on board. joining us now to discuss the situation in the middle east and russia is ben white, chief economic correspondent of politico and cnbc contributor. we wouldn't bring you in here to talk about your expertise on the ukraine/crimea region. but we will bring you in to talk about the beltway's response. so that's what we are talking about. >> i can talk to you about that. what was interesting over the weekend is republicans hit the president very hard over the series of international crises that don't seem to be improving under his watch. they want to see a lot more tough response to putin on this, in particular, sanctions on him and perhaps sending nato troops

to try to secure the site there. what i find interesting, politico has a new poll out this morning on domestic political attitudes towards international entanglements, and 17% said the united states should be more involve maryland the situation in ukraine. that was before the plane was shut down, so the numbers will probably go up after this, but the americans are increasingly not wanting us to play a much bigger role in ukraine. while republicans are very critical of the president, and rightly so, but the national opinion on him getting involved in the international crisis is very low. and republicans like rand paul tend to move in line with -- >> what does that put us in our place in the world if we do nothing? >> it probably doesn't help our national standing, but the

question is, what do we do? after a war in iraq and afghanistan, getting involved in the area where there doesn't seem to be a solution in the middle east where we see the same thing happen over and over. >> in gaza it is hard. i wouldn't say it's the typical lines drawn between where people are, but there are those that would say, look, if we had rockets landing here, we would do the same. but then kerry, you heard the hot mike where he said sarcastically, the outrage in paris and other european countries, many times it seems like there's a lot of empathy with hamas really and with the situation. >> and the civilian palestinians, not really hamas. but the battle lines are drawn there as well. >> it is dangerous american politics to be seen as anything other than very strong in

israel. >> i think people are very willing to say what is israel doing. i've seen people say, because the rockets fired by hamas usually don't hit anything, and because when israel responds, there are more casualties. somehow that puts israel in the wrong. >> that's the prison of the american media for sure. >> that's what i'm talking about. >> i think it is interesting, why is john kerry in cairo when hamas obviously rejected the idea of talking to egypt about a cease-fire. michelle, you know more about this than me, but it seems like he's in the wrong place right now. >> would that be the first time he was -- nevermind. >> it strikes me as odd he's going to a capital where hamas is not interested in talking to egypt and their brokering of a cease-fire. if you want a cease-fire, where is it going to come from? >> did anyone notice complete failure of iran over the weekend? that's the one thing that is

amazing because of ukraine and because of gaza, nobody has talked about the fact that by the way we have not really gone anywhere on that front either. >> well, there's not a lot of successes that this administration can point to in terms of foreign policy. >> the u.s. gets four more months to dress up concessions to iran. >> but then the question, does this play into the 2014 midterm elections and do democrats get hit as soft on foreign policy? maybe they do, but americans don't seem that concerned. >> i know americans do not want another entanglement, but it is different when, it's a different level when president obama, the minute he becomes president announces in the middle east, we're not the same country anymore. don't worry about it. syria, redline, no, right? those -- if we have maintained a strong stance, sometimes that means you don't have to get

militarily involved in the first place because people see you as strong and know that you would do something. >> putin obviously does not view us that way. >> and rightly so. >> i agree with you. >> explain this, ben, in morning money you have a piece that says russian billionaires freak out. i'm wondering why given the fact it seems we are as timid as we think we may be. the article that you quote from says russia's businessmen are increasingly frantic that this will lead to crippling concessions and are too scared to say so publicly. >> as jim maceda reported earlier, people say this is the tipping point changing moment for sanctions on ukraine. i mean, on russia. i don't think that's necessarily true. it depends on the germans, are they willing to get tougher, i doubt it. this doesn't seem like the moment where the sanctions bite, but they are freaking out that their assets get frozen and putin pushed it too far. >> and the next question is, does putin even care?

if they go that far? does he care? >> he may care much more -- he may care much more about his own expansionary policies and the geopolitics on the ground. his desire for expansion. much more so than the billionaires with their assets frozen. >> we'll go to israel to get the latest on the middle east. amman is joining us from gaza. amman? >> reporter: good morning, guys. you're talking about the issues facing the people here and no doubt accord on the united nations, gaza is facing a humanitarian crisis. look at the number of misplaced people. they are responsible for 80,000 palestinians sheltered at 61 different u.n. schools. they have to make sure they have food and basic me testies. in addition to that, the health

officials are overwhelmed by the risiing casualty toll including 80 people killed in one neighborhood. and disturbing news from the southern part of the the territory. and israeli strike killing 27 other people including women and children. now, when you put all of that together, human rights organizations say it is a disproportionate use of force that israel is using against the civilian population. we have heard time and time again israel saying they are using surgical strikes to target hamas members, but the reality on the ground tells a different picture. we are seeing neighborhoods destroyed and entire buildings collapsed. it doesn't seem surgical according to the palestinian and medical officials trying to recover the bodies as they have been over the past 48 hours. but for its part, the palestinian group hamas is still fighting strongly and firing rocketed. and yesterday the single deadliest attack on israeli soldiers. 13 soldiers were killed when

they entered this neighborhood in east gaza and came in close contact with hamas fighters who apparently launched a pretty bold attack on the soldiers killing 13 and injuring dozens more. so a very intense day of fighting yesterday. one that does not show any signs of slowing down today. we have been hearing over the course of the past half hour or so dozens of shells landing in the eastern part of gaza. air strikes that we saw a short while ago with palestinian rocket fire into israel. so it does raise questions as to who is winning and how this comes to an wednesday the diplomatic efforts underway with q qatar and others that could bring about an to end the violence. back to you. >> you can even hear with ayman, you can't help but think, wow, the force is assymetric, but hamas must know that this is

going to happen that way and the palestinian people get hurt and hamas keeps pushing and pushing and then they know they are going to have opinions sway their way. it will help to stop shooting rockets. >> that's what you ask yourself, can the force, if you are not the one instigating that hamas would say israel by the existence is instigating, but if you are not instigating in terms of offensive moves and just being subjective to it and respond, do you measure that response in a way that doesn't include that you were the one that wasn't instigating it in the first place? >> if you want to stop that up city investigati instigation from hamas, i don't know if it works, but israel has to have a disproportionate response from having this happen in the future. but it is hard when you're being

bombed. >> then women and children in all the conflicts are being used as shields. >> which is disgraceful. >> so the rest of the world watches. joining us is the professor of the international affairs program at the new school university. nina, what i'm getting from your comments is that what we were talking about earlier and was written over the weekend that suddenly there are so many different nationalities on board the plane that all of europe is now drawn in to what had been a conflict in ukraine. this could fundamentally change the ability to get tougher sanctions signed off on by a lot of europe, is that how you see it? >> absolutely. i think it is really the time for vladimir putin to face the moment of truth because before that it could be dismissed, not dismissed but at least explain a way as a local conflict. now it really is a conflict and russia looks to the world as a

mass murderer who doesn't want to accept responsibility. vladimir putin last night moscow time at night, who addresses a tragedy like that at night? who are you speaking to? so he issued a very short address on the kremlin website saying, well, ukraine is to blame and we want international investigation and nobody should use this for their advantage. so there are momentarily three problematic issues with this statement right away. and first of all, russia doesn't accept responsibility and hampers the investigation because it has been four days and he finally calls for international investigation and wants it to be fair. that really shows how hypocrite call this regime is. and i think earlier there was a comment that putin may not care that his billionaires are very scared. well, maybe, but he pushes the international community to see how far it can go with the sanctions. let's push putin and see how

squared or not scared he can get with the international community going that far. >> what if there's retribution. what he if he says the gas you get from me in the winter you don't get. >> this conflict is not going anywhere unless putin -- >> do they have the stomach to do it? do you think western europe can take the stand to be self-punishing? >> well, western europe needs to decide whether it can take the stomach to do it or it actually wants to bring the violence home. because we know a lot of the headlines are really condemning putin and russia with that, so the countries need to decide what's more important to them. as i said, this conflict is not going away and this is just -- if it is not going away and putin has not stopped with this, this is just the first disaster that only happens.

so i guess i cannot be responsible for saying what the government should do, but they certainly should try much more than just a conversation and condemning putin in private conversations. >> so nina, we watch this unfold over the past six months, and there were times when we thought, wow, he's not going to stop with crimea. he's going all the way. but then it looked like the troop build-up, it looked like he almost was appeasing the west to some extent or lulled us into a false sense of security. but meanwhile, do you think he was in there sort of getting ready to -- still causing trouble, still funding the rebels, still exacerbating the situation, but could it be now that he's been thwarted, this really kind of, i don't want to use the term blew up in his face, but if this wasn't planned and all of a sudden we are focused on all the things he's been doing where he really

hasn't been honoring the commitments to not doing anything, to not make things worse, he has been all along and now it almost seems like this could be where he got caught. and now maybe it ends up being a positive because we all know what he's been doing all along. >> absolutely. i think it is a school of thought that before the international community was willing to take him at his word, although of course understanding at the same time that they may not, they shouldn't be doing this, but they were doing it anyway because it's true, i mean, what's the alternative? but yes, he's caught red-handed. i think there's going to be a u.n. resolution today and it does seem that russia is thinking maybe it should sign it, the resolution, on opening the crash site to the international forces. i mean, that in itself already is suspect. why would they be even considering that? it should have been done four

days ago. one school of thought -- >> they were going to get control of the black boxes, basically. >> and the bodies. do the civilized thing, which is to give the bodies to the families. so that's one school of thought. but i've been studying putin for 15 years and it always seems that is what he does, he pushes as far as he can and then sort of pretends that things are going to get better. but he still sees how much he can get away with really being an international spoiler than having his own way. because what i absolutely know for a fact, he does not back off. >> do you think -- you studied him for 15 years. >> yes, i have. >> do you think he ever plans to step down? >> no. i think the reason he's so tough is he's really trying to speak not only to his own nation to sort of foster this kind of nationalistic movement in the russian minds saying, wow, we are always -- the west is always

out to get us, so we have to band together. but also speaking to some parts of the international community that are very often sensed by the united states' imperfections. and he strategically plays this very well. >> the reason i ask is a lot of people believe that he's stolen a lot of money. and the minute he's no longer the leader of the country, he now becomes open to sanctions, to being jailed, et cetera. >> absolutely. >> he faces every day a threat. he must remain the leader of this country or else he likely goes to prison. is that his calculus? >> that was my sort of next point is to make, that he really plans, like all authority leaders, he really plans his leadership for as long as it can last. absolutely. he cannot leave power. because he knows what happened to gadhafi and saddam hussein, to others in soviet history, he

cannot leave power and that's why he's playing various games to make sure his next ten years, because that's how constitutionally he's supposed to be in power, the next ten years he's still there and then he'll be a man in his 70s and god knows what. >> he's a good judge of us, too. because even when he appears to pull back but still continues doing all these things, we are willing to -- we want to believe, we don't want another cop flikt. the europeans don't want another c conflict. >> they are looking to an off-ramp of de-escalation. are you kidding me? >> that will take care of everything, the u.n. resolution. >> it was great to have you, nina. when we return, another food scandal in china. this time both kfc and mcdonald's caught up in it. details from beijing.

but first, "squawk" sports news with rory mclroy capturing his first british open. the 25-year-old picked up the third leg of a career grand slam. he only has the masters left. if he wins a green jacket, he could become the sixth player to win all four of golf's majors. >> is this more proof that it's bet tore be single when playing in the majors? okay, does it bother anybody else that the mime is talking? frrreeeeaky! [ male announcer ] savings worth talking about. state farm.

welcome back to "squawk box." a supplier sold kfc and mcdonald's expired chicken. eunice yang is here with more. eunice? >> reporter: hay, michelle. it's a bad situation. just when you thought young brands was starting to recover from a food safety scandal from two years ago, it and mcdonald's are now the target of a new food safety scandal. just as michelle mentioned, both of them used a supplier that was targeted in an investigative report by chinese state tv. in that report a reporter went undercover for two months and said he found unhygienic conditions and expired beef and chicken which was sold to both of the fast food companies and could end up in their restaurants. now, this as you can imagine has outraged many chinese consumers and is the talk of the country today. also, it's very bad news for both of the companies who want

to dominate this market to help offset sales in the united states. now, china is young brand's biggest market. it's also mcdonald's fastest growing market. in terms of young brands that owns kfc and pizza hut, it started to see a tun-around in the business in the second quarter. a lot of good news last week when we saw sales jump by 50%. but today is a different story. both companies are now in full-on damage control mode. both of them have issued statements saying they stopped using the shanghai supplier, a local unit of an illinois-based company called osi. both have also taken their meat off the shelves and are conducting a thorough investigation. they say they are also cooperating with local authorities. the most importantly of all, they are apologizing over and over to the chinese consumers who are still very angry about this scandal. guys? >> okay. eunice, thank you. >> wow.

young had just gotten over the last chicken issue. and it is so much more important to them compared to mcdonald's because it is so much more of their revenue. >> not good. i haven't really eaten today. coming up, a busy week for earnings. plus, why hasbro is partnering with a 3-d printer. that story when "squawk box" comes right back. ♪ collection is here. ♪

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♪ good morning. welcome back to "squawk box" here on cnbc. i'm joe kernan along with andrew ross-sorkin and michelle caruso-cabrera sitting in for becky quick. the wall street journal is reporting the investor plans to spin off its vmware unit. a couple people have been talking about that. and verizon is now boosting the upload speeds of nearly all its fios connections to match the download speeds. this is amazing for those of you who use internet service at home. it will shorten the time it takes subscribers to send videos

and back up their files. you can get faster download speeds and upload stuff. but in this era where we the user have become creators changes the dynamic of how this works. >> what do you mean? i don't like change. we are moving and everything, so temporarily we have fios, and i just think it's awful. awful. >> it's not faster? >> no. i don't know how to work any of the stuff. there are times when it is not working and you have to hit the men y menu button. and it has to reattach and takes a minute before it comes back. what do you have? >> i am still on time warner cable. i will take fios. >> have you had xfinity? >> i want xfinity. as a consumer i'm a huge beneficiary. >> i hate this. >> i would love better upload speeds. >> are you uploading images?

>> i make scrapbooks on my computer and it can take an hour to upload. print it like ai book. >> i'm talking about tv. xfinify is superior. >> some day we'll learn. >> i've seen it, it's amazing. >> have you been to paris? >> i have been to paris. in other news this morning, hasbr sorks pa hasbro is partnering with the 3-d printer shapeways to sell my little pony art. it's a thing. >> i did not know that. >> it's a thing. >> i know all of them.

minty, because my daughter -- >> i thought you know men who liked the ponies. >> maybe i do, maybe i don't. >> he doesn't want to -- >> we had all of them. raspberry. >> you know all the names. >> he's been printing the ponies out all weekend on his new 3-d printer. >> there are 14 now, so it hasn't been that long. time flies. "the new york times" says hasbro hopes to expand it to other materials. joe and his ponies, over to you. >> she was very cute, my daughter, because she couldn't say r's. try to say that. we have a big week ahead with dow components set to report tomorrow. joining us is jeff south, chief investment strategist who is the

chief investment strategist at januaryi janning montgomery. kind of interesting, because janet yellen noticed something in social networking and biotech stocks. anything social media or cloud related or biotech is an example of the frothy part of the market, which might say things about the market in general, right? >> yeah, i mean, you've got evaluations especially in the small cap complex. i think the russell 2000 is trading at 26 times forward, 12-month earnings, while the s&p is trading about 16.6 times forward earnings. so you have the valuation concerns. you have had a price divergence whereby the s&p and some of the largest cap indexes are continuing to move higher while the smaller ones didn't. and last week you got what they call a breath negative divergence with the s&p and dow

making new all-time highs on the intraday basis along with the new high gain. so i think it's a time to be cautious. i've been bullish since march of '09 on your show, called for a couple pull-backs, but basically we are in a bull market with years left to run. but we are due for some kind of pullback. >> but i also saw the third biggest bubble ever, i don't know how you measure that, but there are people who don't think this is just a 10% pullback but that the bull itself is waning. but at -- when you say 16 or 17 times earnings, that usually doesn't indicate the euphoric end of the secular bull to me, but i could be wrong, obviously. >> at the end of the secular bull, you will see what happened in the late 1990s. you will see the individual investors calling up their financial adviser and telling

their financial adviser which stocks to buy. just like they did with tech and t telcom in the late '90s. >> is that your view? because that sounds so pat. we know history doesn't repeat it, it only rhymes, so if we could know for sure to wait for individuals to call up their financial advisers, that would be the top -- we wouldn't know when the top was. do you think it is that simple to figure out? >> i like to think it could be that easy. that could be a factor because jeff said that's a leading indicator for topping this in the equity markets when everybody pushes their chips all into the middle of the table. but given the fact that as jeff mentioned we are at 16 times forward, which is certainly at the richer end of full valuations. we still think equities are much more attractive than bonds or cash, but exceedbingly vulnerabe to geopolitical despite a spike in oil prices. as this begins to shift monetary

policy, we start to talk about more when it may adjust the fund market rate and the markets are pulling forward if we continue to get better than expected payroll numbers. all of these factors could trip up the equity market. i worry a little bit there's so much consensus with a 10% to 15% correction that suggests to me it will be 5% or perhaps 15% to 20%. >> and then you just said it, because we know that at some point we are going to have a rate increase in fed funds. i don't know what it will be. there's one school of thought that says the minute that happens, you aught to at least lighten up because that's the trouble side. and then there are other people who say, we are so low that historically you can find a lot of precedent where the market can continue to go higher as rates go up because it was indicating a stronger economy and so it went up. it's like 50/50 on what strategists say, jeff, so which is it?

>> rich bernstein just recently said a two-step in front of a couple different people. if earnings go up at a faster rate and the stock market can still do well, he thinks this is the biggest secular bull market of his career. >> and martin? >> well, i don't know if we are necessarily defining it as a cyclical or secular bull market. we think we are in the midst of a bull market regardless and any correction should be bought as opposed to contributed to sinister. >> rates going up, the fed increasing funds, is that bullish or bearish once that starts happening? >> well, three steps and a stumble. usually it takes three rate hikes before the market gets uneasy with regard to not only the direction but perhaps the height of the fed fund rate acting as friction on earnings and profit growth. as a consequence, we are not unnerved unless the fed is caught flat-fooded with the rate

hike starting at zero percent. >> gentlemen, it's coming. late this year or maybe mid next year, who knows. that's something a lot of people say as they -- it could be that simple. when that starts, it's obviously what has the market where it is. and if that goes the other way, maybe it makes sense. i don't know. but then you don't get back in. anyway, jeff and mark, thank you. >> we'll find out, though. >> we are. we'll be living through it, hopefully. >> knock on wood. coming up, a three-day workweek? why one billionaire is calling for it. >> that's amazing, right? you know him. >> he told me once a four-day workweek and thought that was crazy. it's a tease. >> why does he work at all? as we head to break, a quick check of what's happening in european markets right now,

weaker across the board. e financial noise financial noise financial noise financial noise

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welcome back. carlos slim is calling for the introduction of a three-day workweek. he suggests this will produce a healthier and more productive workforce. this is to the tune of a 10 to 11-hour workweek. then later a longer retirement, so you work longer. >> work less but longer over time. he can afford to do it. i'm not sure everybody else can.

>> he works like crazy despite supposedly being retired. when we come back, we have a number of q reports out this week on the housing industry. we'll get a preview of that next. then at the top of the hour, we'll welcome mohamed el-erian. "squawk box" is back after this. yosave at the pump. get our multi-point inspection with a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup only at your ford dealer. thank ythank you for defendiyour sacrifice. and thank you for your bravery. thank you colonel. thank you daddy.

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box." some recent concerns about the -- nine months this week investors will get a stronger sense of the industry when dr horton report quarterly results. horton report quarterly results. we're also going to get when you run a business, you can't settle for slow. that's why i always choose the fastest intern. the fastest printer. the fastest lunch. turkey club. the fastest pencil sharpener. the fastest elevator. the fastest speed dial. the fastest office plant. so why wouldn't i choose the fastest wifi? i would. switch to comcast business internet and get the fastest wifi included. comcast business. built for business.

that's why it's important to focus on the overall trends. because was it weather in the south, what was going on in the midwest, with 97% strength. so it's important to step back, look at year over year trends and realize that, like you said before, it's been about ten months of slowdown. >> if you were king for a day what would you do about it from a policy perspective? >> that's a good question. you know, i think at the end of the day you have to lower credit standards a little bit. you have to get off of -- >> you want to lower credit? i read an article this weekend in "the new york times" about lowering credit standards in the auto industry, everyone said the whole thing is going to blow up. you think we can do that? >> that's true. there are smart ways to go about it. i think there are a lot of people who are credit worthy who got hurt in the financial crisis who could make monthly payments

if there was a little bit more subjectivity to bank lending. >> what kind of fico score do you want or how far down the specific twrum are you willing to go? >> actually if you look at the data housing loans are down about 90% to fico scores in the 600s. which i think is just an overcorrection from the massive recession in 2008-2009. >> what's your number then? you're saying anything in the 600s is okay? >> low to mid 60s, yeah. but again i think there needs to be subjectivity to it. that's going back to more of an objective standard of just one number. i think you have to look at more than fico. i think it has to be a little bit more of a narrative. it has to be a little bit of individual learning. >> so what are we saying about janet yellen? is this strategy not working? is that what this all suggests? >> i just think at the end of the day when we had 30-year fixed mortgages below 4% we saw massive increases in housing. the slope, the trend was very high. since the correction in may 2013, we very much slowed down. so, i mean, holding down

interest rates absolutely stimulates housing. but, when 3.5% is considered the low, and stimulative and 4.5% thwarts the housing market, then we need to look to other things, which is the labor market. >> but if interest rates go up, where does this put us? i mean if you were to sort of map out how this goes? >> absolutely. i think if interest rates even remain where they're at the only solution is going to be to loosen credit standards. if interest rates go higher i think we have a flat housing market for the next several years. >> jay loosening credit standards. it's not a bad tag line. thank you, appreciate it. >> absolutely. thanks for having me. >> coming up the latest geopolitical stories that have the attention of global investors then we'll welcome "squawk" market master mohamed el-erian and ask him to weigh in on the big stories of the day.

a world of worry. another deadly day of fighting in gaza. >> it is an absolutely shambolic situation. >> we picked up the imagery of this launch. >> and an international crisis brewing over the plane crash site in ukraine. >> earnings in the economy. the flood of corporate reports due in the coming days. plus key reads on the economy including a look at second quarter gdp. >> and our newsmaker of the hower, we'll welcome mohamed el-erian as the second hour of "squawk box" begins right now.

good morning, and welcome back to "squawk box" on cnbc. i'm joe kernen along with andrew ross sorkin. we're having some things you just saw boards again and again, because master control unable to run -- and not just us, i think. >> across the nbc network. >> maybe nbc. so with that in mind, you probably didn't see the latest thing about if you put something in your ear, have you seen -- you go ow! like that. so buy this thing -- i'm going to do my own commercials. this is like -- you stick it in and it actually sucks out the wax. the wax thing. >> i don't know if those guys -- >> but wait, there's more! >> so do not do -- like pretend like this is a q-tip. oh! don't do that. okay so now i've earned -- they can still pay us for that commercial.

>> you know the name of the company? >> no. >> product. >> how many times have you seen the ad? >> 100,000 times. >> you don't know the name? >> do you? i don't. >> no, but i just know that it goes in and goes -- and -- >> don't you want them to still fiezing? >> yeah, i just did a free advertisement for them, did i not? because we were unable to -- >> you forgot to provide the 800 number. >> no. no. >> or the website. >> let's get some of this info -- you know what, i was wracking my brains to think of another commercial and couldn't come up with one. >> mercedes. >> lincoln. >> high end cars. >> all right our guest host this morning, you know, i don't know how many mercedes he has or how many drivers, mohamed el-erian, former pimco ceo, now the economic adviser to allianz. if you're working three days a week, that's probably -- we're probably overestimating now that you're sort of just a big muckatety muck retirey. are you still working hard?

you're not running pimco. >> i'm working hard but working differently and a lot more time to spend with my daughter. >> see. that's nice, isn't it? >> it is. >> that's like working less. >> you get a new dog, you still got -- is everything okay dogwise? >> we've got two dogs. >> i know we both have had, you know, if you have dogs. >> issues. >> you do have issues. >> as investors watch the latest developments out of russia, ukraine, the middle east, and futures, we have the ten-year. that's what we're looking at down 39 points today. we closed on the dow at 17,100. almost exactly 248 on the ten-year. which has so many different things going into that yield at this point. it really is almost a global yield. you throw in the fed and the extraordinary actions that they've taken over the past five years. add it all together and it's 2.48. i don't know whaf the that is orchestrated. >> it's 2.5% on friday even after we saw the really strong

equity rally. i would have thought getting above 2.5%, but it didn't. >> because it's a global bond market now. i think it's not just the fed. it's what happens in europe, and ecb and everything else. >> the chinese. all right we're closely following the situation in the middle east. israeli air strikes pounding gaza again today. officials now say more than 500 palestinians have been killed since the beginning of the offensive. 20 israelis have been killed, including 13 soldiers who died during heavy fighting yesterday. u.n. secretary-general ban ki-moon and u.s. secretary of state john kerry are headed to egypt for talks on the crisis. martin fletcher joins us now from tel aviv. is anybody going to listen to what happens in egypt, martin? >> michelle, no, at this moment, no. everybody's hoping there's going to be some progress towards bringing together the two peace proposals that appear to be in the making. one is the egyptian one and the fact that both of those people are going to cairo makes it the dominant one and there's also the turkish, qatar track which

favors hamas. the egyptian proposal favors israel. so kerry's work, and the secretary-general of the united nations, their role is going to be to try somehow to bring those two proposals closer together, make them more acceptable to hamas and israel, present them, and then see what happens. but in the short term, fighting is only getting more intense. i wouldn't say eyes are on cairo to see what's happening with the proposals. eyes are more on gaza to see what's happening with the fighting. as i say, becoming more intense this morning, there was an infiltration by palestinian fighters inside israel. they came up to a tunnel, came out inside israel, split up into two groups to attack two civilian settlements nearby but they were spotted one from the air, israel hit one group with the rocket and israel says killed them all. there was a gun fight on the ground with another group. so the israelis say they killed ten palestinian fighters this morning. and apparently there are also israeli casualties but no numbers have been announced yet. at the same time, of course, the

fighting in those northern suburbs of gaza, where there was such heavy fighting yesterday, that ended in those high casualty numbers, that's continuing. israel still going house to house looking for weapons stockpiles, looking for rocket launchers. the civilians still caught in the middle, one assumes by now most of the civilians, if not all, will have got out of there, hopefully, but when we haven't heard yet what the civilian death toll is today, the fighting intense in the northern suburbs of gaza, israel continuing to hunt for those tunnels which they say they're not going to leave gaza until they've exposed the entire secret tunnel network, and destroyed it, but that could take some days, and so, if the cease-fire proposals become serious, now we'll have to see who accepts it, israel and/or hamas. michelle? >> all right. martin, thank you so much. joining us from tel aviv. >> okay. we got some breaking corporate news to bring you this morning in the soap opera that is the

valea valeant/allergan, bill ackman i don't know what you would describe it as -- >> no frowning allowed. >> here's what's going on. sources telling us that valeant pharmaceuticals and bill ackman's personing square have now gone to the s.e.c. to make complaints over claims that allergan has been misleading investors by making statements about the company, including a statement on friday claiming that valiant has stagnant or declining sales in its bausch & lomb business on its pharmaceutical sales side, we should say. the complaint actually coming, this is kind of interesting, robert kuzami who used to be the head of enforcement for the s.e.c. now working for valeant, and bill ackman's personing square. so they have gone to the s.e.c. to make these claims. we should also tell you that sources are telling us that they have separately gone to the regulators in quebec. now interestingly, the regulators in quebec have historically tried to protect canadian companies. this would be the opposite case.

if this transaction were to go forward, quebec, or actually valeant, would become the largest company in all of canada. forget about just quebec. so you could see potentially how this could play out. let me show you what they are upset about, or at least what i'm told they're upset about. this quote came from an s.e.c. filing on friday that allergan had made about a statement that valeant had made. valeant continues to cherry-pick data that fails to provide analyst investors with financial information necessary to truly evaluate bausch & lomb's performance. veil yent's latest attempt to hide the ball appears to involve focusing directors on growth from medical device products rather than on pharmaceutical products that continue to stagnate or decline. it's the stagnate or decline piece of it that valeant appears to be so upset about. we should also tell you one of the reasons that they do seem to be so upset. "the wall street journal" reporting just today that capital research and management has now sold out of its shares in the company, in part after

having meetings with the coo of allergan. so david peot has made certain claims to them and to others so you can really see how this fight is starting to shake out, and this now you go to the regulators. there is a little bit of the kettle -- the kettle calling it black -- >> the pot black. >> because in some cases if you look at what bill ackman has gone in the herbalife debate just the opposite claiming that there have been false allegations -- or herbalife has gone and said that bill ackman has made false claims about it. >> so it's a bit rich. >> the whole thing is rich. but nonetheless, a new claim in what is turning out to be quite a soap opera. >> to add to the richness, i thought president obama was going to stop this revolving door of going from government to then lobbyist, right? >> you're talking about the robert khuzami element. >> uh-huh. >> you can't lobby. that's true. you cannot lobby. >> so this isn't officially lobbying. and i get that. but the spirit of the criticism

is exactly the same. >> right. >> i mean the other question was in the context of a takeover battle, what can you actually say about your competitor, and can you make claims that are, you know, how far can you go with those claims is sort of a larger question. >> what is hyperbole and then damaging lies. >> apparently went up to canada and met with all sorts of different investors, piot, and the valeant people were furious about this because they thought they were making misleading claims to them. now you have a major investor leaving the company. >> so if you add the market caps together it would be canada's biggest company. 40 plus 40 becomes 90. >> you become the biggest company in canada. >> remember what the biggest company? >> used to be a little company called blackberry. >> it's $5 billion -- it was 15 times the price at one point was 150, it's now 10. so 15 times 5 it's at least 80 billion at one point.

amazing. >> the only other question i have about this, does the s.e.c. actually do something about it? do the regular laters in canada do something? and what kind of steps can they take? >> well, in this environment, the s.e.c. would love to do anything possible, right? >> i don't know about that. i don't know about that. >> we will see how this all shakes out, and see if the company makes any comment on either side later today. >> so we do have a lot of earnings but geopolitical stories are definitely on the front burner this morning, eamon javers joins us now from washington. and we led the show with the two that are up front and center, eamon, i guess you'll talk about both. >> yeah, that's right, joe. we start off the day with secretary of state john kerry, who is on his way to cairo, egypt, the united states here hoping to broker some kind of cease-fire or peace deal between the palestinians, and the israeli sides over that violence that we've seen escalating in the gaza strip. here's secretary of state john kerry yesterday on "meet the press."

>> israel has every right in the world to detent itself but we're hopeful, very hopeful, that we could quickly try to find a way forward to put a cease-fire in place so that the underlying issues, so that we can get to the questions, but you cannot reward terrorism. there can't be a set of precondition demands that are going to be met. so we support the egyptian initiative, joined in by israel and others, to have an immediate cease-fire. >> united states walking a tricky balance there. they're saying that support -- the israeli's right to do what they're doing in gaza, but also cautious and urging a limit to any civilian casualties. obviously we've seen a lot of civilian casualties so far in the violence there. also walking a delicate balance as you said in terms of russia and the ukraine. the united states very concerned now about this issue of shooting down the malaysian jet in the ukraine. who was responsible for it over the weekend the u.s. saying it was clearly russian-made weaponry. but not going so far as to blame

vladimir putin himself. and just within the past several hours we've now seen vladimir putin, guys, come out and say that no other foreign leaders ought to try to take political advantage out of the tragedy of shooting down the malaysian plane. so tensions very high in that region, as well, along with reports that some of the bodies and the crash site are being controlled by separatists, not being released to international investigators. so a lot of tension there, as well, guys. a lot to chew over during the course of the week. >> so that i like the cliches that can't reward terrorism. the administration's going to keep going with that expression. even though i don't know, it just -- i hear it now, and i -- after bergdahl and all, it just kind of rings hollow. is that just me, eamon? >> well, look, it's a dicey situation diplomatically for the united states. obviously the u.s. supports israel. but with this unfolding violence it's going to put more pressure on the united states -- >> you didn't catch my question though about now that we traded though about now that we traded five guys --

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doubtful in view of the events that have happened over the past few days. but i think it's very, very important for the united states to make clear that it's very upset and does not appreciate the actions that the russians have been taking towards ukraine. i think in terms of you asking me what kind of advice i would give to the president? i would go back to the table in terms of trying to get the negotiations started between the ukrainian government and the rebels. the ukrainians have said they're willing to have a cease-fire, they're willing to engage in a conversation with the rebels. but i think it's very important while we talk about a cease-fire, that at the same time, parallel to any cease-fire, that it be -- that a sealing of the border between ukraine and russia take place. that no weapons be funneled from russia into ukraine, and that no personnel be funneled from russia into ukraine. at the same time that this border should be viewed by international monitors. i think it's very, very important, because over the past few days -- >> that sounds like a lot of talk and things that have been said all along, and sounds like

doing exactly the same thing that we've been doing. am i hearing you wrong? >> no, no. i understand what you're saying. i think the key point here is to insist upon the russians that while there's a peace negotiation going on the sealing of the border has to take place. >> but insisting does what to putin? nothing. >> let me get to the next point, if the russians do not accept this kind of proposal i think it's very incumbent upon the united states to take two further actions. number one is to examine the broadening of sanctions, and the second thing i think is very important for the united states and the west to consider giving military support to the ukrainian government. when i say military support i'm not talking about boots on the ground, but i'm talking about military equipment. you have to realize that in the last three weeks or so the ukrainian military was making headway against the rebels and it was only at that stage that russia started funneling in the type of heavy military equipment that we've now seen engaged in the frankdy of the malaysian

airliner. >> let me ask you a question, in a month's time when we look back on this, will the tragedy have marked a changing point to de-escalating of tensions, or are we going to see further tensions and more sanctions and more countersanctions? >> i definitely believe this is kind of a game changer in terms of the incident that took place, the tragic incident with the malaysian airliner. i think it's a turning point toward the positive because now there's a lot of international attention on the scene. there's a lot of international concerns. i think the pressure is going to be much broader against russia. so when i say it's a positive, i mean in view of the tragedy that took place there could be a positive development out of it. i firmly believe this is an opportunity to move in a direction to get this issue settled in eastern ukraine. >> doctor stent let me ask you about this, there's a story about ben white and his morning money with the head line russia's billionaires freak out.

russia's businessmen are increasingly frantic that putin's policies in the ukraine will lead to crippling sanctions and are too scared of reprisals to say so publicly. should they be freaking out? >> well i think they should be very concerned. i mean so far our sanctions have had an economic impact on russia. they've also -- we've also banned people from coming to the united states, and from access to their assets. so i think these people, if the story is true, the oligarchs, the billionaires, worry that if mr. putin doesn't compromise, if he isn't willing to take a constructive attitude towards allowing, first of all, immediately international inspectors to come to the crash site, to do what they need to do and secondly as the ambassador said, to end the crisis in ukraine and stop the flow of weapons and men to eastern ukraine as we've seen, if he's not willing to do that, then there will be further sanctions. even though those sanctions might not impact russia's

policies, they might not change what russia's doing at the moment, they will certainly make it harder for these billionaires, for these people who like to -- >> and is that good enough? >> i mean good enough for what? >> the point is to change putin's calculus. >> yeah, well it's -- >> and you're saying that they won't. >> they may not. i mean, i hope that they do. but you have to understand that as far as we know president putin is quite isolated. that he doesn't really listen to these billionaires -- >> exactly. >> yeah, so those affect the limits of our own influence, the west's influence over russia and i think we have to be i mean i hope this is a turning point for the positive but things could get much worse if mr. putin and those around him just want to entrench themselves more and more there, and not do anything to try and defuse this crisis at the moment. >> so that's a key issue. is it a turning point or are things going to get much worse? the ambassador said this is a turning point. do you agree?

>> well, it's a turning point because i think it reminds us that, you know, the situation in eastern ukraine, whereby the russian government has been trying to destabilize ukraine, that we've had this horrible tragedy, this accident. but the question is, is it a turning point from which people will draw some more constructive conclusions? and i would say at the moment, it's too soon to tell. we have had radio silence from the kremlin apart from a few statements that have been put out on the website. and i think they must be trying to figure out what's how they can go forward without incriminating themselves in whatever will come out from this investigation. so, i think it could be a turning point, and i think things could get worse. i hope they get better. >> okay. we're going to leave the conversation there. thank you dr. stent, ambassador we appreciate your time this morning. helping us make sense of some of this to the extent we can. >> before we -- you know, i was a little bit. i didn't like what you were saying about mcilroy -- caroline

wozniacki the jilted person that mcilroy -- she won yesterday. >> right. >> won -- >> they're both single. >> so you're saying it works both -- >> yeah. >> because you mentioned agassi. >> andre agassi -- >> she won 6-1, 6-1 -- >> you can focus more. >> maybe they just weren't good together. thought you were saying some kind of -- >> no. when you're single you can focus more. >> his dad placed a bet almost ten years ago, 500 to 1 -- >> i know that he would -- the father believing in -- >> yeah. over ten year time span. >> and sergio it -- unfortunately it was the third straight tournament where the winner we sort of knew on friday almost, and it doesn't make for a great compelling -- >> it's a bit like the yankees on friday. we knew -- >> you were going to bring that up. >> i was going to bring it up. >> friday, saturday and sunday. you don't even like the yankees. you like the mets. so you got to throw that in my face that they swept the reds. >> i tweeted from there. i was at that game yesterday.

>> -- ninth inning? >> we didn't make -- you know why. >> typical fan. >> i'm not a typical fan. i have a dog cooped up in a room, a german shepherd cooped up in a room. we left at quarter of 12:00, it was 4:00 and we're still there. i have commitments. these pitchers, my god! they're -- watching these guys they took so long. anyway, we'll -- we'll get to mohammed in a second. i wanted to stay but we couldn't. i'm not a typical fan. kind of typical. but anyway. >> all right. we want to get to the ground in ukraine for the latest of what's going on there. keir simmons joins us live. >> michelle, forensic team has just arrived here and they say that they should be able to move the bodies of the victims from a local train station today but even as they arrive, fresh fighting broke out at another train station nearby meaning you got to wonder how the forensic teams and examiners are going to be able to look at wreckage like this, left strewn around this

ukrainian countryside when there is so much conflict, such a volatile atmosphere. one person here said grief like this should bring people together, but instead, the ukrainian government and the pro-russian rebels who are in control of this part of eastern ukraine are blaming each other for getting in the way of the investigation. so a very, very difficult place to work, we are now four full days since the crash. and still most of this wresage is here. no kind of i mean this is a crime scene yet no investigation of that kind has even been able to begin. michelle? >> all right, keir simmons, thank you so much. coming up market moussings from mohamed el-erian and when "squawk box" comes right back. we'll have a lot more. right after this. ♪ ♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track.

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futures suggest the u.s. markets will open slightly lower. the dow would open roughly lower by 34 points, the s&p by 4. the nasdaq lower by 4. don't move, mohamed el-erian will join us when "squawk box" returns. here at optionsxpress our clients really seem to

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welcome back to "squawk box." finally get to our guest host this morning, mohamed el-erian, allianz chief economic adviser, also the former pimco cio, and -- i never mock you. but the mellifluous tones, and you use -- you never use more words than necessary to explain things. i'm looking forward to hearing your analysis in dulcet tones of all these important issues. that's how i'm going to start. because i know you've prepared things.

you've got -- you know exactly what you're going to say. here's my question, with that in mind. both of these situations, can you connect the dots in either one of these situations to financial markets here, and whether there will be an effect? and can i assume it would probably be just oil, or is it possible it could be the dollar that could be affected? or even the bond market? any of these things either ukraine or gaza right now? should we be paying attention to it as investors? >> we should be paying more attention to it than we are. the view in the market -- >> i guess that's how i ask the question. the consensus view is it's not going to affect any of the markets. why? >> one the market believes they are containable. so that while they are tragedies, they do not spill over to borders. >> so this is the consensus thinking of the markets right now, which may not be true? >> and some go further. the ambassador says this is a turning point. a positive turning point for the markets in russia. the second issue is that the

markets say even if the spillover effects, it doesn't matter, earnings are strong and the fed is there. >> is one of the assumptions that europeans and the united states do not do sanctions that are punishing enough? >> correct. i think that there is notable complacency in the market, as to how much worse this can get. but this notable complacency is understandable, and moreover, has been repeatedly rewarded in the past. so investors are conditioned -- >> every geopolitical event has been a buying opportunity. >> correct. correct. >> you look like -- if you sold in to iraq. if you sold into ukraine the last time. every time. >> correct. >> the problem is if you step back, the process is getting worse. and there's two reasons for that. one is it involved nonstate actors which means it's much harder to contain. look how hard it is to get bodies out of a crash site. that's absurd. >> and to assign blame to rebels where you don't even know -- well you know where they got the equipment. but you can't directly put blame on putin, at this point.

so the nonstate actors, you're right. it's hard to hold someone accountable. >> it's presumably because they're a nonstate actor that these yahoos made the mistake in the first place. if it were a real state running this equipment wouldn't have made the same kind of mistake. >> correct. and the second issue is that we live increasingly in what ian bremen is saying called the zero world. unlike the old days there is no outside power that can inform, influence, and impose outcomes. so you get into a situation where lots of things that are uncontrol on occur. now if you step back and you look at it, it's a time series, it's getting worse. but at every point because the fed is standing there behind the markets there's reason to fade any sell-off. >> is the market even more vulnerable if there's an accident when it comes to the situation in gaza? i mean when you read the assessments, the wall street assessments, and they're like israelis, going to wrap this up, this is going to be just like five years ago, i mean horrific the way that it's seen as something that's so routine and yet, if it doesn't become

routine, is the market vulnerable? >> the market's vulnerable there for two reasons. one is that there is nobody addressing the underlying cause of the problem. >> that's been true for 50 years. >> correct. but, therefore, okay, it doesn't get solved. secondly the region itself is much more difficult. this radicalizes people around the region. the minute you start talking about radicalizing people around the region you bring in iraq, you bring in syria, and you bring in other countries. i think stepping back, yes, markets can fade this but fundamentally the trend has been for geopolitical concerns to get higher and higher while risk premiums have been coming down and down. so it is the pricing of these geopolitical issues that is at issue here. >> when does the risk premium go up? >> the risk premium goes up under one of three conditions. one is a policy mistake. we're not going to likely get that. two is a market action the market gets too extended. we are near that point. >> when you say near that what is you said we're not at that

point. what does that point look like? >> that point looks like a lot of what we've been seeing. and think again, the housing -- >> that's why you think we're there. >> i think we're close. we're not there yet because there's a lot of money on the side lines. there's a lot of money on the side lines, willing to engage. but we heard lending standards are going to have to fall yet again. >> right. >> today there's a story in the "financial times" about emerging markets. even yellen -- >> we got all distracted. did you tell me which markets we need to stay most closely -- >> i have a whole series of suggestions when we come back. >> is it mostly oil related or dollar related? where would the tumult be if things did >> i think it's the correlation of markets as the issue. >> i told you you would say things that are just, you know -- if you listen to him -- inform, impose, and influence. you had those -- >> inform, influence and impose. >> oh, sorry. >> that's what you want to do with your friends. >> but if you've written -- if you've written an f.t. piece on this already? because your thoughts were all in order. i knew they would be already.

is this new to us? >> it's hard for me for my thoughts to be in order if i don't know what questions you're going to ask. >> that's how i have to keep you -- keep you on your toes. >> we're going to take a quick break, come back with mohammed. still to come on "squawk box" a check on the situation in gaza. more bombings today and then oil imports on the rise in china geopolitical tensions pushing prices there higher. we're going to talk crude realities in just a bit and find out what it means for your portfolio. we're back in just a moment. it's a complete checkup of the services your vehicle needs. so prepare your car for any road trip by taking it to an expert ford technician. because no matter your destination good maintenance helps you save at the pump. get our multi-point inspection with a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup only at your ford dealer. ♪ "first day of my life" by bright eyes ♪

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welcome back to "squawk box," making head lines this morning, mcdonald's and yum brands issuing apologies to consumers in china. that follows the shutdown of a shanghai meat supplier used by both companies. the supplier was a china based unit of osi group and supplying meat products suspected of being past their expiration dates. more ignition switch related issues for general motors. the company has not come up with a fix for some models of the cadillac cts line. they were among those recalled for faulty ignition switches in which engines can be inadvertently turned off if the driver's knee bumps the ignition key. dealers have been told to stop selling the affected models. hasbro out with quarterly numbers this morning.

hasbro matched estimates with second quarter profits of 36 cents per share with revenue coming up short of consensus. that follows worse than expected results for rival mattel last week. hasbro says its inventory is well positioned for the holiday shopping season. okay. we're going to get to our other -- we have two eamons, spelled differently. we're going to get to ayman mohyeldin. we just spoke to eamon javers. is he good now, greco, or not? yeah. israeli air strikes pounding gaza again today, officials now say more than 500 palestinians have been killed since the beginning of the offensive, 20 israelis have been killed, including 13 soldiers who died during heavy fighting yesterday. ayman mohyeldin, we're told, is good. joins us from gaza beginning this morning. hello again. >> good morning to you guys. actually we lost power here just a few seconds ago.

that's partly because gaza for the better part of the last several days has only been running on electricity for about four hours a day. that's 1.7 million people really with access to electricity just for about four hours of the day in this heat. it gives you a sense of how not only because of that, but how many challenges they're facing. hospitals have also been complaining, running low on supplies, they don't have backup generators, and if they do they're missing spare parts. more importantly they've been overwhelmed by the number of casualties that you were just talking about there. in the past 24 hours alone the single deadliest day in fighting since this conflict began. the israeli military announced it has lost 13 soldiers after its forces pushed into the eastern part of gaza and came under heavy gunfire by hamas fighters. but as a result, the israeli military began shelling the area in and around the eastern part of gaza city. as a result of that, the spike in casualties in that one day alone topped 75 people according to palestinian medical sources. many of them women and children, and this morning we are also

getting word of continued israeli shelling in the southern part of the gaza strip. in one single attack according to palestinian medical sources, 27 people were killed, including 12 women and children, after israel targeted the home of a senior member of hamas' military wing. he was killed in that attack, along with those other civilian individuals. but, as you can probably hear behind me, there's no sign that the shelling is slowing down. the operation is still very much in full swing. 85,000 palestinians have now been displaced from their homes, and they're taking refuge at u.n. schools. that is separate from the palestinians who have been displaced and are taking refuge with either family or friends across the gaza strip. so very tense situation, and one the palestinians describe as a humanitarian catastrophe. guys, back to you. >> okay. ayman, thank you. and sometime we need to talk to you about this, because i mean i see things and it's just tough to figure out, mohamed, people say israel has a right to -- to

protect itself. then others say it's almost like apartheid in certain ways, that people are almost, you know, sort of confined to this area, and it's not -- is it going to be our entire life where this is not solved? >> so i go back to the issue of you need to address the underlying problems. i think for the short-term, what the u.n. secretary-general has said, what president obama has said, what secretary kerry has said, what european leaders have said, is absolutely right. that the israeli response, while it's understandable that they're respo responding, is disproportionate and that the casualties involved of civilians -- >> but how do we address the underlying issues? and can it ever be addressed in a way that both sides somehow feel -- >> you know, there -- northern ireland be an example, south africa, there are many examples where people believe they couldn't be addressed. but if you step back you can address them but it requires compromise and requires a vision to look beyond the immediate

political gains. >> okay. coming up we're going to get a check on currencies and oil. then later media analyst rich greenfield is going to share his thoughts on rupert murdoch's bid for time warner and preview netflix earnings which are out after the bell and tell us why it's all about subscribers. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better

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welcome back. an update on the story we brought you just a couple moments ago. valeant pharmaceutical is confirming what we learned earlier. valeant complained to both the s.e.c. and canadian regulators that allergan is making what they're calling misleading and manipulative statements about its business practices. valeant and investor bill ackman are leading an effort to buy allergan which allergan has rejected. mr. ackman will be on scott wapner's program later today. on the halftime report. he's going to appear at 12:30 eastern time so you're not going to want to miss what he has to say about all this. >> let's get a check now on oil and currency markets in the face of escalating tensions overseas. joining us to talk oil is matt smith of schneider electric. he's an energy analyst and from new york on currencies is bk asset management managing

director. kathy, i -- mohamed might jump in, because i asked him specifically if either one of these geopolitical situations were to affect a market somewhere, what would it be? do you have feelings on this? >> well, i think that the only market that's really affecting are the local markets. because this is not one of those events, or you know, both israel and gaza, as well as the malaysian airlines are not events that will increase volatility historically. and the market are looking at these events very localized events that won't cause significant macro disruptions. we're seeing that in the price action today. we saw that in the price action on friday. so for the most part, i think the only markets that will be feated are the local ones. >> all right. i think we're all talking about, you know, whenever we look for something, matt, we look for oil. is that one that could probably be affected? couldn't even move psychologically without supply disruptions, it can move. >> yeah, that's probably true,

joe. at the moment we're not seeing that. the crude market is looking relatively calm. given the escalating tensions we're seeing. the reality is, even though there's all the concerns between ukraine and russia, we're a ways away from seeing supply disrupted there. we know that russia is reliant on the revenues from europe, sort of 80% of their crude goes in to europe. and also sort of a third of europe's natural gas is reliant on russia and so, there's a symbiotic relationship there. one needs the supplies. one needs the revenues, so this isn't really impacting either of those markets at the moment. >> so, let me ask you a question. had we looked at -- had we put in a conventional model the amount of global economic activity, we'd come up with a oil price well below where it is today. so what is your estimate for the geopolitical premium that's already in the poi price and how stable do you think that premium is? >> sure, mohamed. there's always this premium in prices whether it's $5 to $10.

but the reality is that as one tension eases in one area, say iraq, we see another one pop up. we saw libya production reach 600,000 barrels a day last week. that was the highest level in five months. the market eased lower. we're seeing those supplies drop lower again, as the tripoli international airport is being bombarded there. so it's kind of a game of whack-a-mole where you see these different tensions emerging in different areases. ultimately prices should be $5, $10 lower without tension. but the reality is, that is always present in the market. >> i just want to add in here that the price action we're seeing in oil is very similar to the price action we saw after russia invaded crimea. which is that we have nothing more than a one-day spike in oil prices, at which point oil peaked at $104.92 and then went down to $99 ten days later. we not only see this in oil, we saw it in currencies, equities and treasuries. the same situation is playing out right now because the thinking is the same. which is that the disruption is

going to be minimal, and the international community's response is going to be weak. >> that's a fundamental issue. is it -- is volatility low because, from a bottom-up perspective, things are basically okay? or is it low because they're being repressed because the view you take on the market implication is very different, depending on what you look at. so, what do you think? is it because everything's being repressed, or is it because from a bottom-up perspective everything is fine? >> i think unfortunately -- >> bottom -- >> just quickly, central bankers are worried that they're repressed. but i think from historical perspective, in the past four decades the only major volatility inducing events are financial crises or fed tightening and we're not seeing any of that right now. >> okay. all right. >> thank you. >> for perspective on that can i jump in on the crude perspective? it's a bottom-up thing really because we see the production is irv creasing in these non-opec countries so the market is relatively well balanced.

it's just crude prices are spiking on geopolitical tension. you know. if you take a look at the brent crude contract it's averaged sort of $110 for the last three years. the only time it's really kicked up is because of geopolitical tension there. >> okay. all right. thank you, matt. kathy. we appreciate it. and we're going to go to break. but i'm just going to tease something. when we do hasbro again, it's down $4. >> wow. >> but they're actually called grownies. men who like -- >> men who like little pony. >> they don't specifically like the little ponies. they like the tv series my little pony, because there was a documentary, bronys, the extremely unexpected adult fans of my little ponies. >> the story -- >> it was bros that like ponies. >> just so the viewer doesn't think we're crazy. there's a story that hasbro has teamed up with shapeway --

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welcome back. in just a few years obstacle course racing has emerged as one of the fastest growing sports in the united states in 2013. more than 3 million people crossed the finish line of an obstacle course race. joining us now is the ceo and co-founder of spartan races, and author of spartan up, a take no prisoners guide to overcoming obstacles and achieving peak performance in life. we should also tell you that we have people literally outside doing the spartan race. >> exercising. >> you know, in our parking lot basically. >> we do. >> this is what's going on. we should also tell you by the way that nbc sports is going to be presenting sick spartan races this season, including the world k4r78s. >> awesome. >> the first race airs tuesday night. you don't want to miss it. 11:00 p.m. eastern time on nbc sports network.

how much does it cost to participate in all of this? >> average around $100. it depends when you sign up. if you sign up early it's less expensive. >> what is the chance i will be injured participating in this? >> if our typical race has 8,000 participants i would say you're going to get about 150 ankle sprains, knee sprains and so forth. pretty low percentages. >> spartan brand has become big. when you think about the business how much of it is participants racing in it, versus this whole new push to be a brand in the world of media. i mean you're going to be now on nbc. where does this go? >> we view ourselves a little bit as a media company, we're pushing out so much content on a daily basis. whether it's the blogs, the book, et cetera. but our core business is still racing and participating. >> when do you see it flip to the point where you become a media -- >> i think we're in the middle of that flip right now. i think at our core we're always going to want to get people

healthy and get them out racing. at the end of the day we're a global company and we've got to push out a lot of media -- >> tv network coverage really, right? >> this nbc partnership is changed the game for us. >> who do you think you compete against? iron man? what's the -- >> i would say we're most similar to iron man in that it's such a solid brand iron man. there are iron man competitors, but you can't go to a cocktail party and say i did an iron man competitor. you go and say i did an iron man. i think that's the case with spartan race. >> 431 b.c. -- >> before we go. >> got 20 do it quickly. >> he told us that the thing we have to do -- >> the guy's name. >> burpee. >> we're going to do a burpee today. >> just down here. this is the one exercise -- you do how many of these a day? >> 300 every day. >> religiously. >> so we're going to go up, down, chest all the way down. >> up. back up. >> you don't do a push-up you're pushing back up. >> okay, 300.

you're going to do 300. >> i'm going to do one. >> one. >> but i'm not going to hurt myself. >> thank you very much. coming up we're going to talk market risks and geopolitical tensions with ian bremmer. he's going to join us with mohamed el-erian. plus more russian sanctions could be announced tomorrow. senator ron johnson is going to join us. also quick programming note. tomorrow on "squawk box," coke ceo is going to be our very special guest. we're going to speak to him in an interview you can only get on "squawk box." thank ythank you for defendiyour sacrifice. and thank you for your bravery. thank you colonel. thank you daddy. military families are uniquely thankful for many things, the legacy of usaa auto insurance can be one of them.

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welcome back to "squawk box" here on cnbc. first in business worldwide. i'm joe kernen along with michelle caruso-cabrera, and andrew ross sorkin. mohamed el-erian. >> you're out. you need a third name. >> joseph richard kernen. >> jrk. >> joseph richard robert kernen. i have a confirmation name. checking the futures -- i have four names. >> well i also have a confirmation name. >> you have about six. >> anyway down 44. >> you don't have a

confirmation -- >> well, el haron would be my -- >> it's not a confirmation. >> well i was confirmed, though, but that's a different thing. you can be confirmed when you're jewish after you have the bar mitzvah. >> i didn't know that. >> but it's a different type of confirmation. >> okay. >> you see the futures are down after that big -- >> after the sell-off the day before. >> yeah. >> all right we're going to get to the latest on the situation in gaza and ukraine. but first here's some of the top business stories. mcdonald's and kfc in china are facing a new food safety share. a shanghai tv station reported they sold expired beef and chicken. the company said they immediately stopped using meet from the company. shares of bb&t trading lower. results were mixed. ceo kelly king says core results were strong. and attention clark kent. google is working on a plan to use pay phone locations to give new yorkers free wireless internet access.

other companies are also considering proposals bids for the project are due today. >> there aren't any. >> i was going to say, there's very few telephone booths left in the city, aren't there? >> yeah. >> i can't remember the last time i saw one. >> a better superhero is the one that spins around and comes out in uniform. because clark has nowhere -- i mean, superman is in need -- >> of places to change. >> i have been told by the way that they've removed the pay telephones from the courthouse down in new york city. i have jury duty, by the way on thursday. i'll be on the show -- >> and now apparently you can actually use your cell phone in the building. this is new york state -- >> you have jury duty? >> yeah, thursday. thursday. >> just one day? >> well, i mean, we'll see. >> you don't know. >> if they put me on a case. >> did you get excused once already? >> i have not used my excuse. you think i should? in the summer -- anyway. but i'll be here on the program. anyway ukraine's prime minister says that kiev is willing to hand over coordination of an

investigation into the malaysia airlines crash to international partners. the bodies of victims were low loaded into refrigerated train cars by pro-russian rebels. a russian tv crew was filming as people wearing gas masks and gloves moved bodies in body bags onto train cars. international outrage, of course, is growing and nbc's jim maceda joins us from moscow with a lot more on where things stand. jim? >> hi, andrew. well, if that anger and outrage is not being felt by most russians here in moscow, and beyond, it's because vladimir putin has a -- quite a formidable weapon. not just missile launchers, but a propaganda machine, and his network of state-run television channels. that propaganda machine has been in overdrive for two or three days now. we have seen expert after expert appearing on state-run tv trying to shoot holes through every

single piece of evidence that both ukraine and u.s. intelligence have been putting forward, and which, of course, people like secretary of state john kerry have also been promoting. take the video clip of that buk missile launcher that's supposed to be the one that actually brought down the plane. now u.s. intelligence says it's clearly come from the border and is going back to the border with russia, into russia. but a russian expert claimed on one of these russian tv channels, based on its serial number, that it belonged to a unit inside ukraine. take also that conversation that we've heard now a million times between the -- one of the rebel separatists and his russian handler, where they're discussing, in a very upset way, the fact that the mistake had been made, and what they thought they were taking down turned out to be a passenger plane.

but according to the state-run television, this was not a true single conversation. it was a manufactured conversation based on a number of audio fragments. you have an expert in spectrographic analysis with all kinds of graphs and charts on tv explaining to the public why this had nothing to do with russia, and everything to do with ukraine. so, putin, his machine, has been picking apart the u.s. case as best as he can, and there's certainly no contrition at all to be seen on his part. back to you. >> okay. jim maceda. thank you for that report. let's talk more about the escalating tensions overseas and what it call means for the global markets. joining us, ian bremmer president of eurasian group and still with us our guest host mohamed el-erian chief economic adviser at allianz and former pimco ceo. ian, good morning to you. help us through this. if you are president obama, if you're the united states, what are we supposed to do at this point? >> well, you're clearly supposed

to express outrage. but, you've seen how much willingness there's been on the part of the international community to support significant sanctions over the course of the past months. that has certainly changed if you're the netherlands right now. but the netherlands does not drive foreign policy in europe. the europeans still have the same level of economic concerns of pushing the russians as they did before the mh17 tragedy. and this morning we see the chinese state media, the second largest economy in the world, has a response to the mh17 tragedy that is virtually identical to what you just heard from your colleague that we've been seeing from moscow. something that should concern everybody. when the u.s. says the international community is with us, you know, who's the international community? i don't really see that right now. it's a very difficult position for obama to actually rally broader isolation of the russians at this point. >> so if europe's not with us, as you're suggesting, or at least large parts of europe are not with us, and the chinese as you're suggesting clearly not with us. play out the permutations of

what happens from here? >> i think what's going to happen now today you're going to see a move in the security council to try to push a resolution that will allow for inspectors to go in and take over the actual crash site. putin is happy to negotiate, give something away on that if russia is not blamed himself, and be clear, kerry said a lot of negative things about putin over the last few days. but he hasn't blamed russia directly for striking down the plane. so you might be able to get that resolution. the chinese will be with the russians on negotiating that and that's a distraction. because, of course, the real issue here is not about whether or not there's access to the site, and the americans know that, too. so do the europeans. it's whether or not you're going to be able to get some form of stability in ukraine. and there's been nothing that we've seen over the last few months that should make anyone believe that the russians are going to stop trying to tear apart that country. >> ian, help us with one thing. you advise corporations around the world, when different gee joe political issues come up, they come to you and they say, what should we do? how should we think about this?

you look at the economy globally and look at the markets which have oddly enough held up on a relative basis, what do you think of that? >> well, first of all, i think the markets don't generally know how to price geopolitical risk until it's too late. secondly interest rates are low. there's been a ton of cash over the last few years. now they feel like the economics are looking better. hell it's time to invest. i've got to tell you. two things, first of all, you know, europe is absolutely the loser here. their rebound has been pretty limited so far. they're the ones with all the exposure as the russian economy is in recession. and as further sanctions are going to pile on. we are going to see more sanctions, certainly from the u.s., but even some from the europeans. that hurts the europeans more than anyone else. big winner, china. they're the ones that got the big energy deal with the russians. they're the ones that will have closer integration in terms of trade. closer integration over time in terms of currency. i think those are interesting things from a market perspective. and of course, if you're a bank,

if you are an energy company and you're betting a lot on russia, specifically if you're from the united states, this is a serious problem for you. >> what are the chances that that's where real sanctions go? what are the chances we gsectorl sanctions against energy and banking. those are the two things i hear would be meaningful to russia but would be incredibly damaging to the west and the united states. or certain companies at least for sure. >> it will be much more damaging to the europeans. far more than the united states. and sectoral sanctionses, depends on how you apply them. we've argued that we've put sectoral sanctions on the russians. >> but we haven't. >> obama's going to say we've done it. we're going to do more. i do think on the finance side in particular we're going to start to see meaningful sanctions that will make it much more difficult -- >> the europeans are saying they're coming tomorrow. ultimatum, front page of the f.t. >> oh, sure. that will happen. there's no question. you're going to see additional

sanctions on folks, individuals that are closer to putin. but is this a game changer yet for russia? i do not see the europeans in a unified way being able to put that forward tomorrow or in the fall. i think it's highly unlikely. >> you've said, and i wrote it down, nothing to stop ukraine being torn apart going forward. there is a view, it was expressed an hour ago on the show, by former ambassador, that this was a turning point. that the downing, the tragic downing of the malaysian airline was the turning point. so people who argue that, what don't they understand about the situation on the ground? >> they certainly don't understand what -- they're not in russia watching the media, they're not in the kremlin looking at 83% approval ratings, they're not around the kremlin understanding that ukraine is absolutely their single most important foreign policy priority in the world, and that has absolutely not changed after the mh17 crash. the one place where there may be a change is ukraine itself. it is very hard for president poroshenko, having now directly pointed the finger at terrorists on the ground, as he calls them,

in his own territory, that have knocked down a civilian plane, it's hard for him not to push back harder, against the russian separatists in donetsk, and in luhansk. if he does that, and if he shows some success, it will be very hard for putin to just sit there, and not get more engaged in a more public and more clear way on the ground in southeast ukraine. to the extent this is a tipping point it is largely towards further escalation, not towards a cease-fire. >> we're going to leave the conversation there. mohamed's going to be with us. >> allergan, we talked about earlier, now announcing in its earnings release, it's going to reduce its workforce by approximately 1500 employees, or about 13% of its current global head count. also it's not going to fill 230 vacant positions. the company -- >> it's doing basically what valeant would be doing. >> is this a tacit admission that those criticisms -- >> this is a way to avoid it. >> say we can do this ourselves

without you. >> the company reported $1.51 which was seven sent cents above expectations. the revenue number was $1.86 billion versus $1.77 billion. couldn't help notice there is not a wrinkle on mohamed's face. and not that he ever -- but, even your forehead doesn't even move when you smile. i mean -- >> he's got right here. >> i think it's natural and i don't believe he's a customer of allergans. >> well above expectations. all right. i mean -- >> i'm speechless. >> you're speechless. >> but is it -- >> the outlook is good, too. the outlook for next quarter is i think $1.44 to $1.47. the estimate is $1.45 for the year. the estimate is $5.70 and they're talking $5.74 to $5.80. >> the push was to cut costs. they're spending too much on r&d so here they go cutting employees, cutting costs. >> right. >> yes to prevent the potential takeover but at the same time do

they admit, okay, we can still achieve what we need to achieve with fewer people? that's the core discussion about all of these companies, right? >> when it comes to r&d and everything else. >> they're clearly -- willing to do some of it. >> you got anything? >> no, nothing. >> i'm so speechless on what joe said. that's not mocking. >> no, i know. all right coming up -- do they do the test too? >> i don't think they do latisse. hold on, hold on. let me see who makes latisse. i believe they do. >> i'm right about that because i'm going to say, bill ackman, not tying him to latisse in any way although he's got long, luxurious eyelashes, he's going to be on halftime. >> look at that. >> there's no mascara. there's no nothing. that's all natural on time. he's going to be on with scott wapner who, i mean, he hasn't had any work done but he looks unbelievable. coming up netflix ready to report second quarter results.

we're going to talk subscription numbers and the media landscape. later could more sanctions, just heard about it, be on the va for vladimir putin. >> putin. >> putin. and company. we're going to discuss geopolitical risk, russia in particular. check out the "squawk box" market indicator.

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it's a big week for tech and media earnings with netflix kicking things off after the bell today. analysts are expecting revenue to come in slightly ahead of the company forecast. for this it's all about subscriber growth. i just saw it go by. we do have rich greenfield joining us now, media and technology analyst at btig. someone is getting out ahead of this, rich? i guess i didn't realize it was all the way back where it's trading now but it's already up, like $5 to $4.49 right now. in the premarket. what are you expecting? >> $5 is relatively small move for netflix at this point. i think the question is, less about the subscriber ads in this current quarter. they had a lot of original programming. obviously, i think the tone and

excitement around things like orange is the new black certainly have benefited netflix over the past few months of the second quarter. but i think what investors are really going to be looking for is a way to get comfortable in the international growth. i mean, valuation, and whether you buy or don't buy netflix stock really comes down to just how big and how profitable you believe international can be. you know, they obviously are hitting some pretty big numbers in the u.s. but the question is you've got that whole world out there and just how big, you know, we think they can add 8 million plus subscribers overseas in 2015. i think investors are going to be looking to see whether that could be a way bigger number to get excited about the stock or whether that's a hard number to get to as they launch in france and germany later this year. >> hmm. you know, rich, i guess just thinking about it personally, every time i search for something that i'm trying to watch, they don't have the movie i want. they have one that they say is similar to it, and i always get mad about that.

what do they need to do to not make me mad? they need more content, don't they? >> well, i would say that the experience of trying to watch, and the thing you do want to watch within the existing ecosystem is far from easy, right? finding it, figuring out where that show is, whether it's on hbo go, whether it's on itunes, figuring out where the content you want to watch, and once you get there. we did a demo recently of how poor the tv everywhere experience is in terms of how many ads you had to watch just to watch an episode of something that aired on tv a few weeks ago, i think the experience of tv everywhere is still sufficiently poor that even if netflix doesn't have exactly what you want, they have enough things that are interesting to you -- >> you're right. >> that they actually have you watch something else and you enjoy it. >> it's not that expensive. >> it's not expensive and there's no advertising and every episode is there. so if you want to watch the last five years of, you know, breaking bad, you can do that without advertising, in a binge fashion and it's a very good

experience. >> but we look for risky business, i think, and it gave me ferris bueller or something and we both know ferris bueller is not risky business. >> but it's good. >> valuation of netflix right now about $26 billion. in the context of the 21st century fox proposal to buy time warner, people inside, or people involved in that transaction were suggesting that hbo was valued at $20 billion. does netflix's valuation make sense on a relative basis if that's the way they're thinking about it? >> this has been something we've been fascinated by over the last six months. it seems absurd, right? either hbo is notably undervalued inside of time warner meaning it's worth a lot more than that essentially $20 billion. or netflix is overvalued. it's hard to believe that hbo would be that significantly disadvantaged versus netflix. it has still far better content. you know you were talking about trying to find something you want to watch. hbo still has this incredible

original programming that i think netflix is striving to get to. i mean they're creating more and more originals. and they hope to be thought of in a few years in a -- like hbo. but they're certainly not there yet in terms of the quality of the original programming. i don't think you can put game of thrones next to orange is the new black just yet. i think from their standpoint that's what they're striving for. you're going to see netflix devote more and more energy to creating original programming. >> in the context of this fox time warner proposal do you think a deal gets done? if so at what price? >> i always feel like once these things start they traditionally end unless there's a really good way for the company to block it. and i think in the case of time warner, without a control shareholder, meaning a family member like the rest of the media space, it's hard to imagine. i think this is about price and i think the reality is, this is all about, you know -- >> what's the price? what's the number? >> you know, look, depending on -- it really depends on how much stock ruper wants to give away. this is nonvoting shares.

how much of the combined company does rupert murdoch want to be in time warner shareholders' hands. i don't think the cash component, even if they do this sky europe deal, i don't think the cash component can be above $40 per share. they're offering $32 now. i think $100 certainly is very possible for fox to finance if they do 40 in cash and 60 in stock. the question is, does, you know, time warner want substantially more of the combined company -- >> we got to go. one other quick question. culture. do you think the time warner folks can work in concert with the fox folks? does that actually make sense? we've seen the culture clashes between aol and time warner and what happened there. >> well, you're going to get rid of a substantial number of employees, right? i mean, you're going to substantially slim down time warner. you think about everything in atlanta outside of cnn, which they're looking to sell. but the entire turner facility, you essentially could chain the doors, and move those, all of those facilities into fox on the lot out in california. so, i think you'd see a substantial amount of cost

savings that would certainly not eliminate but certainly would reduce some of the culture conflict changes that you're talking about. >> all right, rich, thank you. thanks for joining us today. >> thanks. >> they all got to go through probably. yesterday at this baseball game there's a blimp, big blimp and it had on the side, directv but it had a screen on the side and you could watch tv on the blimp. >> really? that's cool. >> i think it said directv the future of sports. so that's what directv's hanging its hat on and at&t, that will probably happen. or -- >> all three of these happen. and then other things will happen as a result. >> did you see over the weekend in "the post" they had a picture of brian roberts, his head was on the top of like the incredible hulk. i mean, i just -- "the post" is crazy. but i wonder what does brian think, or people that their head they put -- >> call him during the commercial break. >> i don't think it was him. >> comment. >> he's probably listening right now. >> maybe it wasn't photo hoped. i don't know.

coming up senator ron johnson member of the foreign relations committee. >> what was the hulk? bruce -- banner? >> it was banner. >> bruce banner. >> yeah. anyway, sanctions on russia, the situation in gaza and how this will all play out in washington with senator ron johnson, when we return. just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own. helping you find new ways to plan for retirement. and save on taxes where you can. so you can invest in the life that you want today. tap into the full power of your fidelity greenline. call or come in today for a free one-on-one review. we do? i took the trash out. i know. and thank you so much for that. i think we should get a medicare supplement insurance plan. right now?

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including emc. we've got details after the break. and make sure you stick around because foreign relations committee member senator ron johnson is going to be joining us in just a moment. ♪ when the world moves, futures move first.

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welcome back to "squawk box" this morning. let's take a look at some stocks in the news. shares of data scoreage equipmentmaker emc on the rise in premarket trading because shareholder elliot is pushing them to spin off their stake in vmware. shares of reynolds american and lorillad are under. lorillad being dragged down with the two recently announcing plans to merge. legal experts say the award likely to be rejected or perhaps at least reduced on appeal. we'll see where that goes. and shares of halliburton the oil field services provider, nearly matched estimates with quarterly earnings of 91 cents per share. revenue above forecasts and also

increased its share repurchase authorization. republicans are calling for new sanctions on russia. criticizing the obama administration for not being tough enough. >> president obama's trying to be deliberative. deliberative. it comes off as indecisive. he's trying to be thoughtful. it comes off as weakness. >> joining us now to discuss more about the possibility of sanctions on russia, from both the united states and europe, jason poveto. what do you think is going to happen this week? is the u.s. and europe, are they both going to do something more that, when you read the paper today, they blame that europe's given putin an ultimatum. is something substantive going to happen? >> no matter what they do, europe and the united states are behind putin's getting ready for this. and has been for some time. for sanctions to work and sanctions are tools, they're not policies, and that is a big big problem that we have in this town and in europe. we're trying to use sanctions as

a proxy for vision for europe. putin news this. knew it when the tanks steamrolled into georgia. that's when we should have been focusing our policy and creating a more secure europe. no matter what we do it will not be enough to tame the russian bear. we have to focus not just on sanctions, on a more robust platform. things that push our defense strategy -- >> are you talking boots on the ground? >> no, of course not. i'm talking about supporting our baltic allies, giving ukrained tools it needs to defend itself. think about this for a minute. i hear the secretary of state yesterday on fox news talk about this republic of donetsk as if it's some legitimate organization. that group should be sanctioned as a foreign terrorist organization and by default we should consider seriously designating russia a state sponsor of terrorism. >> like iran. >> just like iran.

we're dancing around very serious issues and the sanctions that have been put in place since march have really not come to the heart of the issue. all we're doing is sanctioning transactions. we're not going up to the meat of these things like sanctioning energy companies, blocking them like blocking exports of oil -- u.s. oil-made technologies and services. that's how we're going to get russia's attention. not by doing this pinpricks on the russian regime. >> in addition to evaluate the probability of more sanctions, they also have to assess not just the impact on the fadals but what will it mean in terms of the way i run my operation? will i have to sell stuff? will i have to change the way i do various trades? how disruptive are these sanctions to the day-to-day operations of investors? and will that, in itself, force selling? >> as you know the overall u.s./russia economic activity is

small compared to other trade partners. so unless you're an investor that's heavily invested in companies that do business in russia that really shouldn't be a factor. there are some industries like in energy, certain companies like weatherford in texas, weatherford international, who by the way has had sanctions issued as late as last year. they were fined by the treasury department for engaging in transactions in iran. unless it's in one of those specific industries, even pepsi could who has been in russia a very long time, coca-cola, boeing even, you know, it's a small really part of the portfolio, vis-a-vis where these companies invest so i think really we have to take a step back, i know this week will be the week in washington where you have politicians trying to either run for political cover because of what's happened, because of the shootdown, and you'll have the markets also trying to assess the reaction by the governments in europe and here. but you know, ultimately, we have to come at this from a concerted front. and i think the confusion in the market has to deal with the fact that the obama administration hasn't really had a policy that

makes much sense. i mean -- >> what are the chances that what you're suggesting actually come about? do you even believe it's a possibility? >> in a comprehensive approach toward russia and stabilizing europe, i think it's remote. i think that starts with vision. think about this for a minute. obama and europe have a map, a landscape, economic and political landscape in europe that ronald reagan did not have during the cold war. yet ronald reagan was able to outfox, outsmart, outspend the russians, and he did it in a very even keeled manner. and what are we doing now? i think that's the message we have to ask ourselves this week. what is europe prepared to do? how far is europe prepared to push the sanctions issue, and then what can we do to help europe fill that gap in a way that makes sense for the markets, and frankly for the entire region? because europe on the eastern side really needs some help. >> one final question, jason. people frequently ask why don't we just sanction putin himself? he's said to be an extremely

wealthy individual. if you start saying to banks around the world, you know, your customer, freeze his assets. why don't we do that? >> that's a political call. i mean i think some folks -- i mean we can target putin but we haven't targeted the grand ayatollah in iran, so i'm not sure we're going to target putin. but that's really -- putin's part of the equation. we have to talk a little bit about what's happening inside of russia, and his polls are through the roof right now and we have to be a little more calibrated in how we individually target him to make him even more popular. we have to give people the tools inside of russia to be able to counter this, especially these oligarchs. if we want to target people, target ceos. target family members so they can't travel to florida and disney land. we do it in the case of cuba, for example. if you're a european company and you're caught trafficking in property in which a u.s. person has a claim on it, you can be banned from the united states as a ceo of a european company. we've done this before. and it trickles down to family

members. those are the type of sanctions we should be imposing on the russian regime, not these pinpricks we've been using. >> thanks so much for joining us this morning. >> thank you for having me. all right. >> coming up next, senator ron johnson on the possibility of more sanctions against russia. maybe you heard this conversation. later what will dominate market moves this week? russia, gaza, it's a bit of earnings and consumer housing data. we'll ask jim cramer who joins us from the new york stock exchange shortly. chocolate is very individual. white chocolate lovers don't like dark chocolate. milk chocolate lovers don't necessarily like dark or white. before we couldn't really allow the consumer to customize their chocolate. we needed a scalable cloud solution allowing them to select what they are looking for. now there is endless opportunity to indulge.

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welcome back to "squawk box," the futures right now continue to trade a little bit lower. let's -- amazing on friday, with everything that was going on, that the bulls did reassert themselves after what could have gotten a little ugly, after the session before. yesterday, on "meet the press," secretary of state john kerry talked about russia's role in the missile attack on a civilian airliner, and the u.s. response. >> there has to be a continued effort to find a way forward. and that's what we're trying to do. but we made it clear, even as we do that, there's no naivete in what president obama has done with respect to these very tough sanctions. and the united states has been working diligently with europe, trying to bring europe along. they've included additional sanctions. we think, frankly, that they may need to be tougher. and it may well be that the

dutch and others will help lead that effort, because this has to be a wake-up call to europe, that this has to change. >> senator ron johnson, member of the foreign relations committee, joins us now from capitol hill with reaction. good morning, senator. >> good morning, joe. how you doing? >> good, thanks. senator we just heard, i heard of secretary kerry and i think, you know, a lot of words. but i got to say, you know, some of your comments, prisonero fiddling, he's got to do something, talking about president obama, like both sides there's a lot of words and a lot of rhetoric, i don't know, really, whether we want -- what you say the president hasn't done anything, what definitively do you think the u.s. should do in terms of punishing putin? >> what we need to do is match strength against strength and what vladimir putin is doing is obviously using his resources to continue to blackmail europe. we need to certainly undermine his monopoly on energy and we've

got to bolster european's and nato's defenses. we certainly need to show our full support with president poroshenko rather than just study the military situation there, we should have had that assessment within a couple weeks and started in a very overt, a very straightforward fashion start re-arming, resupplying, the ukrainian military so those folks can defend themselves. they're brave people, they'll defend their nation. but they need some military equipment. they've been asking for it. all we've done is give them meals ready to eat and sleeping mats and first aid kits. we really need to show russia that we will match their military buildup in eastern ukraine and we'll help ukraine match that so they can defend themselves. >> senator, something we noticed last week, and i brought it up, i think it was the very brief response the president made in the first case, i think it was like 40 seconds and fund-raisers and off to new york for more fund-raisers, and even in texas for fund-raisers, close to the border doesn't visit the border.

so i can see all that and i can see how you might say something. but, you know, the president doesn't need to win another election. he needs to try and keep the senate in 2014. i mean i don't want to be cynical, but isn't that probably what's in the back of his mind, is that he can do more good? these are intractable, seem intractable, these situations. i mean -- i bet republicans would be doing the same thing if they thought that the senate was in jeopardy. >> listen, joe, these are difficult situations. i don't envy the president's task. but he's the president of the united states. and if -- you know, i keep hearing secretary kerry saying this is a wake-up call. well wasn't what happened in syria a wake-up call? wasn't taking over crimea a wake-up call? now it takes the downing of a commercial airliner from 33,000 feet, that's going to be the wake-up call? we've had the wake-up calls. we've drawn the red lines. we have to take action. and action is once again we've got to certainly help poroshenko secure his border. we have the budapest memorandum,

russia is in clear violation of that. nobody's really pointed that out anymore. we are assured ukraine that we would, you know, help them assure their border integrity, and we're not doing that. but we need to do that -- >> it's amazing, senator, when they ask for weapons last time, we didn't provide them, in part because we didn't want to look like we were inflaming the situation, and yet here's russia, absolutely arming the other side. >> do you think putin is sitting here shaking in his boots because we delivered mres? i mean i keep hearing we need to offer putin an off ramp. putin is looking for on ramps. he's looking for other opportunities to continue to expand russia, all based on his ego. this is ball about vladimir putin and i said it when we were in ukraine right before the crimean vote. i said if there's any bloodshed in crimea, there's one person to blame. that's vladimir putin. i think there's one person to blame for this downed airliner. i know he didn't pull the trigger but he's the one providing the weaponry. he's the one enabling the

separatists in ukraine. >> how far do you go? when you talk about for example assisting europe with natural gas, for example, that doesn't solve their problem tomorrow, this week, this winter. that's a longer-term solution. but what about do you tell the oil companies, you can't do business there anymore? >> no. what you need to do is i think it's really more of a military sponsor. i'm not saying combat boots on the ground. i'm saying in a very overt, visible fashion we start re-arming the ukrainian military so they can defend themselves. and we should be putting more nato troops into places like poland. we should certainly reconstitute the missile defense shield that basically president obama unilaterally withdrew. let's have nato buy those ships, let's have france not sell this mist ral ships to russia. let's not have anybody in nato buying arms from russia. we've got to show far greater strength and resolve as the western europe in nato and the united states.

>> what are we going to do, senator, just when these all like so many times i guess, maybe a month or two, these may not be the things that we're talking about, we'll be back to talking about, you know, whether we're ever going to get an economy that goes to 3%, and you know, we're going to be arguing about what policymakers should be doing to try to help job creation. and, it just seems like 2016 is going to roll around, and we're not going to have done anything in terms of helping the economy. >> well, first of all, that's what putin's counting on is we'll turn our attention away from this. he'll just take the next opportunity. like admiral mullen said the greatest threat to our national security is our debt and deficit and this president also is doing nothing. you can say, and i did say this, that he's out to lunch. ee is president, nero fiddling as the world burns but he's also president nero fiddling while the american economy is not recovering. the deficit continues to explode. yeah we cut the deficit in half

but we're still in the path to have far greater deficits over the next 30 years. this president is doing nothing to address that. >> senator it seems like you've got the president fiddling, and congress fiddling while companies are redomiciling to, because of the tax rates that are too high here. >> right. i mean, i'd love to do corporate tax reform. harry reid says the only way you do tax reform is you have to first agree to increase taxes by a trillion dollars. joe, look at our utterly counterproductive that would be. if we're going to do things big in this country it requires presidential leadership and this president isn't leading. he's not doing anything on the debt and deficit. he's not putting forward a plan to make sure that those companies don't leave this country. i mean, again, to me it's pretty obvious you have to make america an attractive place for risk taking, business investment, business expansion. we're not doing any of those things. again it takes presidential leadership and that's why i'm so critical of this president just basically being detached, going on fund-raising trips and not

really dealing with the significant domestic and foreign policy issues facing this country and this world. >> andrew's got a bill written to just outlaw these companies from leaving without really fixing anything. >> that's not true. i would like to fix this -- >> but we're not going to so you want to tell them they can't leave. >> i think in the short-term we have to think about this. i question, senator, and i wonder your view, what do you think of the companies that are taking advantage of this? >> it's natural. i mean, if you're going to locate a manufacturing facility for the north american market, are you going to locate detroit at 15% or detroit at 35% tax rate? people respond to the incentives put there by government in terms of taxation, in terms of regulatory environment. we need to benchmark both of those, you know, our tax system, our regulatory system against world competitors and make ourselves more competitive. >> i don't disagree with anything you said. you take zero umbrage that there are american companies that have received all sorts of tax subsidies from this country, you

can list the things the american companies have benefited from -- >> we've got to talk about -- go ahead, senator. >> well the corporate tax raises about 10% of all revenue. all the lobbyings about the corporate tax and you know who pays the corporate tax? individuals. the workers in terms of benefits, wages and consumers. how about we make the owners pay the corporate tax? i propose -- >> andrew is also and others are worried about a race to zero around the world if we start cutting. why not go to zero and just do it with individuals? and then if you have more individuals -- >> that's what -- >> paying personal taxes, and i keep hearing you say that the almost like the corporations are ungrateful that the government has built these roads and this infrastructure. almost as if the government is some self-funding entity that through its generous largesse allows corporations to use this infrastructure. the government is there to take the money from corporations, from -- create these jobs then people get taxed and then the revenue goes back to the government then they build the roads. but it all -- >> there's one major

complication. >> but why do they got -- why do you take umbrage that like the government did this out of their like the goodness of their heart allowing corporations to use these -- >> so we have no price controls on drugs. >> thank god. >>god. >> if you want to move to the netherlands, great, go and charge us for the drugs the same way you charge the people of the netherland the drugs. >> makes no sense. >> look at individual tax rate in the netherlands by the way. >> go ahead, senator. >> i take -- >> first -- >> uncompetitive. >> senator? >> personally i want life-saving new drugs, i don't mind that pharmaceutical companies make money. there are a number of ways to make owners pay for the corporate tax. llcs, a number of ways to do it, explore that to create incentives for businesses to manufacture close to customer here in america. >> all right. all right. senator ron johnson, appreciate it today. >> have a great day. >> i was thinking about it

allot, everything that the government has built came from private sector jobs created and then you tax those jobs and then pay for the government employees and the infrastructure. >> i want to fix it, too. i am -- frustrated you used to sleep like a champ - then boom...

what happened?

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let get down to the new york stock exchange. jim cramer joins us now. where are you on this valeant/allergan? what are they doing, jim? trying to get leaner and meaner? they do not want to go to valeant, do they? >> look, if david pyatt's numbers are right the stock sells 17 times 2016 earnings after the lay-off, and i don't know exactly what valeant gets for you better than that. i think that valeant's charges about allergan, i had david on "mad money" not that long ago, i don't know, i don't think he's saying anything other than what's true, which is valeant's a rollup and valeant has cut r&d. i think valeant would admit that. i'm surprised it's gotten vitriolic given the fact that pyatt is saying what most journalists would say about valeant. to me that's cricket. >> jim, do you see -- mohammed thinks we may be

understatementing these geopolitic geopolitical situations. i have trouble connecting dots to which market might be affected. i almost think earnings are more important. >> i think he's right. 20% of earnings from international companies are from europe. if we take to some extreme, you'll seal companies like a mastercard or visa, which instantly came out after the crash and said, our businesses are unaffected the point what mohammed's saying, don't want to put words ins his mouth, look, if europe is going to have a slowdown, go back into a slowdown, it's going to hurt the united states. we saw it once before. i don't think it's in the stocks. i'm saying, let's be patient here. >> i guess it has to get worse, probably. >> yes, it does. definitely has to get worse. >> not the ukraine situation but -- i don't know. we'll see you in a couple of minutes. >> coming up, we'll talk about -- talk to mohammed is what we're going to do when we return.

financial noise financial noise financial noise

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welcome back. final thoughts from mohammed el-arien. we talked about geopolitical issues, impact on the market's mac per spec but haven't talked about deal making with

everything else out there. >> there's a ton of m&a coming down the pike and people should realize that. i think corporations will find it very hard to continue holding on to it, and there's a good reason to do it now. that speaks to investors, rather than bet on beta, market wide, you have to be very specific, name-driven and go for event-driven investments. >> deliver alpha. we did that. >> but isn't the m & a late? >> always late. >> a late indicator. >> the companies late, they should have done it two years ago, they could have gotten bet prices. >> there's a late indicator, like other things but as an investor, you reduce exposure to the market as a whole and take advantage of better opportunities. >> they're freaking out or freakin' couldn't tell whether an adjective or a verb. >> vehicling out of their mind. >> who is freaking out?

>> people weren't doing m&a. >> now they should be doing m & a. >> you never disappoint. >> you still didn't react to headlines of the -- >> "squawk on the street" is next. good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. the continued overhang of ukraine and gaza, after a tough weekend there. but earnings seasons does roll on. a quarter of the s&p, half of the dow this week, big names, netflix, apple, facebook, boeing, amazon more on the way. ten year yoeld under 2.48. europe, mild