the dow, s&p 500 and nasdaq ended lower. volatility picking up the so-called fear gauge. that's the vix that jumped more than 35% for the week largely on friday due to concerns over the health of one of portugal's biggest banks. we'll get to that story in a second, but futures for this morning are solidly into the green if they were to open right now. the s&p would open by six. the dow would open by 36 points. and the nasdaq would be up 11 1/2 points. in global news, portugal is rescuing banco espirito santo. it's a 6.6 billion bailout. the troubled financial giant will be split into a good bank and a bad bank. the major european averages in early trading on the back of the news have been mixed. they were sharply higher when the news was first unveiled late last night. the ftse, the major averages in

france and italy are positive. the dax in germany lower by a fraction of 1%. in asia, major markets are mixed at this hour among the headlines out of the region. growth in chinese services sector slipping to a six-month low in july. the non-manufacturing pmi showed new orders rose at the weakest rate in at least a year. brian, the nikkei is down slightly but the rest of the major averages across asia are slightly higher. kayla, thank you very much. folks do think it's a slow summer week. you better think again because another big round of earnings are coming your way. among the companies set to post numbers this week, aig, disney, time warner, aol, fox, cbs, wendy's and hundreds more. the wall street journal reporting overall revenue in s&p 500 companies seat to rise 4.3% from last year's second quarter. and that, folks, marks the fastest growth since the fourth quarter of 2013. the article also notes other

companies that have already reported their earnings. two-thirds have beat the sales targets. beyond news of the earnings and the economy, geopolitical events continue to be a concern for the markets. israel announced a seven-hour cease-fire saying that it would unilaterally hold fire on most of the gaza strip. this video shows units of the israeli army re-deploying out of gaza but hamas already charged that israel broke the truce. >> nobody believes it could be seven hours, that's what they are worried about. in iraq islamic state fighters seize control of iraq's biggest dam, oil field and three more towns yesterday. they pushed through the kurdish region in june and yesterday's capture of the mosul dam could give sunni militants the ability to flood major iraqi cities. go back to bed. >> go back to bed is right. this may not let you go back to

bed. some ceos who watch our program will not be happy as president obama has stern words for the nation's ceo. he says quit your complaining. in an interview, the president says that corporate america has done well under his economic policies. he said, quote, if you look at what's happened over the last four or five years, the folks who don't have a right to complain are the folks at the top. i would take the complaints of the corporate community with a grape of salt. they always complain about regulation. that's their job. we have mike jackson on later who has made those complaints over the years, so we should talk to him about that. >> interesting to see the comments made to the economist, well-regarded publication in-depth article on those comments. he's continuing to tap this same message. >> meantime, the market is going to do what it wants. >> by the way, talking about that, the emerging deal you're talking about is the situation

with intercontinental, which has been up for grabs for a little bit. on the inversion front, if you take a look, am i right here in this column? an inverted view of u.s. corporate tax spike, we keep talking how everyone needs to leave because the corporate tax rates are too high. this piece here says profits were taxed at just 14.4% in america on corporate profits. overall. so even though we have this great sort of rate on the tax bill, the actual published rate, the real rate is not -- by the way, that rate is not including the territorial -- everything that's abroad. >> you're talking about the effective tax rate, right? but remember, there's also -- a lot of companies pay very low amounts, lower than that single digits, but there's also an amount of accelerated depreciation allowed, so there's some things that have lowered that that the government has pushed for because they want you to buy stuff during the height

of the recession. well, you can accelerate -- if we are talking about aversions at 6:04 in the morning, we have a serious problem. >> i'm going to continue the problem for a moment because u.s. companies aren't the only ones looking at tax inversions. activist firms are also joining the push. this is the piece that brian was referring to, the paper said this is an exam-of the $3 billion activist fund. the fund is now hiring an investment bank to stir them. >> this is low hanging fruit of sorts. when you know, i believe it was reported that wyndham worldwide made the offer for intercontinental earlier this year in the range of $10 billion, for hedge fund to say, this is a u.k. company that may already be in play, who else can we get to buy this company and drum up the interest by using

the carrot of the inversion. >> that's my point about the market going to do what it wants. james carhill said i want to come back with the bond market because the bond market has the ability to push around the government if it wants to in terms of rates. one wonders if the market will force them to act here by having so many inversions or discussions that congress may finally be forced to do something. >> congress is on vacation for the next five weeks. >> doesn't the government have over -- >> i don't mean before -- >> people rightfully argue that corporate tax rates are not 25%, they are 14% or that maybe corporations should stop wiping, but here's the reality, if the company is going to offer you another 5%, it's hard to compete with that. let's not forget proctor & gamble wants to dispense their brands. >> 100 brands. >> they moved their beauty headquarters to singapore a few

years ago that slipped under the radar. this is been happening a while. >> doesn't the government have other chips to play, they have so many other miscellaneous tax breaks, couldn't the government threaten to take that away? why not just do that instead of using rhetoric? >> they could. carl levin says, if you want to invert your drug company, we won't mess with you. kit be done. >> i'm not defending corporate tax rates but saying if other countries offer you a better deal, corporations are going to look at the deals. and 30 years ago when we go back to corporate tax rates from the '70s, they were much higher. but you didn't have to compete with moving to dub lip sing lynn or singapore. >> and the small companies end up paying the tax rate. anyway, another story on the

radar, half a million people in toledo, ohio, are still without water. the area is in a water emergency. unsafe levels of a toxin have seeped into the water. the national guard is giving out bottled water. we keep hearing of stories like this, it was west virginia recently and now toledo, ohio. hopefully that situation ends up being rectified some time soon. and also, fears about ebola spreading after the worst outbreak in history. an infected doctor arriving at an atlanta hospital this weekend. the outbreak is putting pressure on u.s. regulators to speed the development of treatments for the deadly virus. it has killed more than 700 people since february. the fda says it, "stands ready" to work with companies developing ebola drugs. the hospital in atlanta, emory university, they are working in

conjunction with the centers for disease control, and that's one of the major ebola stories. >> two notes, the other story scaring people is there was a woman who flew from sierra leone to logton this morning, literally dropped dead this morning. the story is being published this morning. apparently she virtually dropped dead and now there's the question of did she have ebola and was she on the plane. people keep forgetting, i can't tell you how many people over the weekend talked about ebola. it is not an airborne illness. you have to literally touch each other. people seem to forget what's happening. if it is in the united states, we don't know about the doctor but -- >> nehe was in liberia in very close contact with the virus. >> i don't think they are going to europe -- we have some friends going to africa this

summer, not there, but elsewhere. and they are like, should we go or not go? >> you might change your mind. >> am i going to be scared? >> i'm not saying to be scared but understand that this spreads rapidly. because it is exponentially. any doctor needs to come on to say everything is going to be okay. >> let's talk about the s&p 500 this morning. >> i'm surprised kayla's alarm is going off so late. it should have been going off at 3:00 a.m. >> first off, you are still using a blackberry, that's bad. >> this doesn't even have a back. i still have the motorola razor. >> jerry jones has a flip-phone. there are a couple high-level phones at cnbc that still carry a flip-phone. i want to be that important one day.

i go back to a flip phone. >> you have somebody who will read the e-mail to you. the s&p had the worst weekly decline in over two years. we'll get more on the week ahead, joining me is kevin cumins and john luskin who is a cnbc contributor. good morning to both of you. we'll start with you here at the table, what do we have, what are we in for? >> economic calendar is light this week relative to last week's storm of data. i think the key report will be the non-manufacturing ism survey we get. it's likely to suggest that the economy has some pretty good momentum. >> but tell me about the market, what's going to happen? i need to know with the crystal ball here. we had a thursday -- friday was not as horrific as it could have been. >> yeah, the job report in totality was a bit weaker than expected but it still showed a healthy enough base of job

creation to keep putting pressure on the unemployment rate, which will eventually get the fed to raise rates. so i think we're likely to see that sort of occur. >> are we in for correction? help me here, what's happening? i feel like i'm having to pull. >> well, i think the economic background is healthy enough that the s&p and stocks should recover a bit. and outperform the interest rate market. the fed will be hiking rates into the middle of next year. >> what do you think? >> look, we are in a correction. we are in it. it's been 75 days since the s&p had a 3% correction. so we are into that. that's 75 days to highs in the bull market that began in march of 2009. the last time we had a 75-day without a correction, we had a 22% correction. that was the one that set in starting in april of 2012. so we are probably going to be in it for a little while, but

it's a buying opportunity. your other guest has it basically right. the economy is in a great position to start accelerating. >> when you say correction, how far? >> well, that's 10% by default, right? >> i think that's a good starting point. >> that's a good starting point, does that mean a starting point suggests -- >> i don't mean starting point like 10 or the way to 20, we are down 4% so we'll start with the assumption, the strategic planning assumption, there's a number between 8 and 10 out there and look for the catalyst to turn this thing around to restore confidence. who knows, you never know what is going to make the market go up and never know what is going to make it go down. you have to watch cnbc to find out what the thought contagen is to move the market. all these people in all the years of we have been looking for the next black swan, they all have the same black swan, empty cities and all that jazz. who knew bringing people with ebola to the united states would set off the market correction.

>> we should all be looking for the next gray goose, it is the summer. >> i had my grey goose last night. >> exactly. what is so frustrating is we have had one of the best investment seasons of all team. sales numbers generally with the exception of inventory can't be changed but now we are down 3% over the past month. was this earnings season so anticipated it was bought six months ago? >> i think that's part of it and people are a little worried about the outlook for what the fed is going to be doing. the data certainly has turned that it is bringing the fed rate hike to the table now. it's something that has been talked about, but i think the improvement in the overall economy is suggesting the fed will be -- >> but that's not going away any time soon. that's just coming at you. so in terms of the market being able to digest that and to figure out what that ultimately means. >> right. the qe is pretty much set to expire in the end of october.

and now we know that from the fed. everybody kind of guessed that leading up to the last few minutes. >> does that mean we have a cloud that hangs over until, i don't know, november or december? i mean, when does that actually go, oh, we understand what that feels like now? >> there's probably a lot of volatility going into next year because the fed balance sheet is so large. everyone expects the fed to give out grades, but will it be an easy exit as i think the market under appreciates right now is probably the question for 2014. >> kevin, there's the idea that the fed will decide how it will exit at the september meeting and that once we're done with taper in october that that will be fully communicated. do you think that the market after that is communicated can finally start to look at the healing economy and say, okay, things are getting better and the bull market continues? >> i do think that it's a favorable backdrop for the

overall economy. but as i said, the exit strategy probably isn't going to be as smooth as the fed right now at least believes. we haven't really heard too much about the kind of sequence of events and how they normalize their balance sheet. we know they are not selling assets, but outside of that the game plan is still very unconcern. we should be getting communication from the fed already on this, but it doesn't seem like it's going to happen until the end of the year. >> john, given what kevin just said, and i know you're expecting some kind of correction but also i imagine some point of a snapback, where are you at the end of this year or does this sort of hang or linger for six months based on everything you said? >> i think it will take another couple months to work this out. i think by the end of the year we'll be at new highs, but the market has a form of syndrome

where you fall in love with your kidnappers. there are horrible market distortions, but after a few months you fall in love with them. this is about the banks realizing in the world of zero interest rate, if you are a bank, you can earn 25 basis points by leaving them on the fed's balance sheet. that advantage is about to go away. so it's like you're going to be released from captivity and oh, my god, i got used to captivity and have to reengineer my income statement. there's risk in this, it's a very good thing, but there's risk in regime change. even going from bad to good there's risk. >> don, you talked about the grey swan or goose, if you had to look into your crystal ball, which of these events would cause you most concern, russia, ukraine, gaza? is it potentially ebola? >> hi favorite is what is going

on in iraq. most people don't realize this, but oil prices on the inflation adjusted basis right here right now are at the all-time high on a five and ten-year moving average basis and have been for the last four years. so we are already at a tipping point in oil prices. so if anything were to happen now that would significantly shut off marginal supply from the middle east. iraq produces $3 billion a day. if they break that dam in mosul and flood all the oil fields, we could -- we are right at the tipping point on an oil crisis. and i think that's the black swan. i'm not saying it's going to happen, but i think that's the risk that is most posed to be really damaging. >> okay, thank you for leaving us with that thought this morning, don. a nice way to start august. don, thank you. kevin, thank you. you mentioned the syndrome for interest rate depreciation, we are covering it all at 6:15 this morning. >> go back to bed. when we come back, what has the chinese government taking

shots at microsoft. plus the search for dur vooifrs after a deadly quake in china claims hundreds of lives. an update on that after this break. and tensions mounting in eastern ukraine. how the hot spots are impacting the global market. that's when "squawk box" returns in a moment. e financial noise financial noise financial noise financial noise thank ythank you for defendiyour sacrifice. and thank you for your bravery. thank you colonel.

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welcome back. the death toll from the earthquake that hit china climbing to more than 400 more. 12,000 homes destroyed. search teams are looking for survivors today. in other news out of china, the government urging microsoft not to obstruct the anti-trust probe by regulators. they were looking into anti-trust rules and raided four of their offices. we reported it live on the air last week. it is an interesting situation. i don't know what that means to obstruct the case, but the authorities are saying please don't obstruct, i don't know what that is about. >> there are questions about what the investigation was into, bundling of some of its products, pricing, just the idea that they didn't like what the u.s. government was doing in terms of investigating hacking into other countries. >> microsoft doesn't like the fact that 90% of their window installs are counterfeit. >> do you know something about

that? >> they should work on that. we are talking about geopolitical tensions. israel declaring a seven-hour cease-fire allowing humanitarian aid into gaza. joining us is the director of peace building and rights program and also a cnbc contributor, david, good early monday morning to you. we want to start with the situation in gaza that has been going on for a month at the heightened levels and for a long time. the markets really didn't digest the news when it first started escalating because they thought this is more of the same, but how are you judging the situation given the seven-hour cease-fire that already seems shaky this morning? >> first, it's a terrible tragedy so many people have died, but the greater tragedy for the palestinian people is that hamas has used them as human shields, they have launched rockets from mosques,

hospitals and schools when there was a cease-fire some days ago. within hours hamas broke the cease-fire. it's hard to have a credible negotiation with hamas when they show so little commitment to political dialogue and to talks. >> david, i have a question for you, i did bill maur's show on friday night and made the human shield argument and was told basically i was wrong. they said, look at the amnesty international report, where apparently they came in and sort of looked at the whole situation and said they are not using them as human shields. i don't know if i believe this or not, do you have a take on it? >> of course they are used as human shields. they have a densely populated area and hamas has deliberately tried to put civilians out in front as a way of incuring civilian casualties and incuring favor and support from the international community. >> when you think about what's

happened over the weekend there, too, there was also israeli rocket that hit a u.n. protected school. what would lead you to say there needs to be increased involvement from either the west or any other nation to put an end or at least temper how deadly this situation has been very recently? is there anything you can say, okay, now it's gone too far. >> last week there were three reports of u.n. schools being used as storage facilities for rockets. there's no intent by the israeli defense forces to target civilians or to hit u.n. schools. but if there are terrorists in the vicinity or rockets launched nearby, of course they are going to respond. there is no long-term security solution to the crisis. there needs to be a political dialogue. that's going to require fatah in the west bank to become involved and to marginalize hamas. it's a complicated relationship

among palestinians, but we have to move from the current state of conflict into a stage of negotiations. before that can happen the palestinians need to get their act together. >> did you see the a.m. p. report over the weekend. benjamin netanyahu said the u.s. should never second guess me again. what do you think about the relationship we have with him right now? >> well, his relationship with president obama was icy from the start. so what he's really saying is that the obama administration shouldn't be second-guessing him. the u.s. has always been israel's great defender and supporter. regardless of whether there's a republican or a democrat in the white house. mr. netanyahu shouldn't be issuing ultimatums. he should be dealing with the internal crisis and working with the international community, including the u.s. >> what should we be doing? >> well, we played an

indispensable role in mediating the cease-fire last week and should continue to be engaged, but we have to work through egypt, qatar and turkey. they are supporting hamas. we have to neutralize their support. the u.s. and the u.n. need to stay involved. >> it was a short-lived cease-fire as it were. what are your thoughts in ukraine? stepped up military involvement in the eastern part of the country, do you get a sense that the conflict is escalating now that there are further sanctions on the table? putin seems to not be flinching give the scrutiny of the new sanctions. do you think that situation is evolving or is it status quo? >> so russia has mass troops along the russia/ukraine border. there are reports of anti-russian missiles being launched from that side of the border, so this whole crisis was

planned by russia. the downing of the malaysian airplane as a war crime. the rome statue is intended to target policymakers. sanctions won't deter mr. putin's behavior. an investigation by the war crimes tribune -- >> at some point will sanctions deter the behavior call it six months from now? >> the russian people seem to have rallied around mr. putin. his calculus needs to change. it will change when the investigator of the criminal court announces a public investigation of mr. putin for war crimes. >> a lot of developments this morning. david phillips of columbia, thank you for joining us early. we'll go back to the markets. we have volatility nearing the highest level since april. is this a trend you can expect to see for the rest of the summer? plus, once it was unheard of, now it's a reality. mainstream advertising for marijuana. the ceo of privateer holding

will tell us about a new ad in "the new york times." and heading to break on this monday morning, we'll look at last week's winners or losers. ♪ ♪

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here on cnbc. i'm andrew ross-sorkin. becky and joe are off today. in the headlines this morning, investment bank evercore partners is buying isi and that deal could be rough ly worth a lot. the wall street firms are looking for an alternative to the widely used bloomberg messaging service. this is one way for them to do that. i wonder given there's so many different firms trying to sign up, whether there's an anti-trust issue. if you have all of the firms -- they are all deciding on their own they want to use a different service. i don't know what that means. >> it is not anti-trust because they don't put it in the marketplace for sale. >> that's true. but it is for sale in that it is -- >> they will buy the service and integrate it into their own

platforms. >> but you think it would remain proprietary to the five or six institutions. >> i don't think goldman sachs wants to be in the software sales business. i would be surprised if they put it for sale. >> but what if they open it up for everybody. it only works -- >> perzo would be bought by the banks. so perzo would be gone. the story is that the banks would buy perzo. it would be renamed. >> the service only works when everybody is using it. there's sort of a social networking element to it. and so you have to open it up. and therefore -- anyway. >> i have not used perzo before but one of the value propositions of the bloomberg terminal is your messages are in the same place as all your financial data. and every price quote that you could need in the market. there's a reason why yahoo! messenger, aol messenger, all the other platforms traders used

didn't take off. >> i worked at bloomberg for 12 years. >> and i worked there for a year. >> the trading platform, you can trade over the instant messaging system. bloomberg is a brokered dealer. those are records of trades. it's a wonky story for the 800 people on wall street still trading. the dow dropped 3% put it slightly negative for the year. not the vix, though. the volatility index is at the highest level since mid-april standing at nearly 17 to start the week. ted greenman, partner at innovation llc. ted, the biggest jump, it was 40 a couple years ago, it is not a concern, what does this mean? >> not much. if you look at the volatility in vix, look to economic volatility, industrial

production, those sort of numbers become much more volatile. leading indicators in the company become much more volatile. last week was all about the fed and the market continues to be all about the fed. there was a survey done very recently when they queried investors and said what are your biggest fears? over 50% said it was fed bank policy, that became gaza and ukraine around 14% to 15% perspectively. the market still continues to be all about the fed, their policy and what they are going to do. if you look at the move last week, we got the move as a result of wednesday's fed decisions that they made. it was nice to see the market held in towards the end. we are very much in the bottom dips. the vix spiked primarily because investors were underhedged.

i would expect the vix to come in higher to the 15 to 14 area over the next couple of days. >> the vix has been a lagging indicator. many traders say i would rather be in the ten-year if there's volatility because it moves before the vix responds to some of the movements. i mean, how do you defend putting money in the vix when it moves after the market does? >> i wouldn't necessarily defend putting money into the vix but the vix on a short-term basis will give you a fairly good idea of where clients are hedged if they hedged which will determine the risk tolerances on the tactical basis. two discussions, are we talking tactical in what will happen in the short-term. the vix is low if we look at regime changes over a longer period of time. but the fed will play a major role in how the vix and market will trade longer term. evaluations in the s&p 500 and other asset classes are here right now because of the fed. as the fed reduces liquidity, it

will be interesting to see how the economy works. and the sort of numbers we get out of the economy and how companies are able to make money. >> what i don't get is we know that's going to happen. >> right. >> why do i care if it's a couple months before or after the expected date? >> which is exactly the way the market is trading now. investors are basically forced to be net long. there's nothing they can do about it. they are going to wind up attacking the problem when it happens because decay, et cetera, they have to be invested. and that's the problem that they can't get out of. >> yeah, i'm not going to worry about the stock market until i worry about interest rates on the ten-year going to 3.5%. >> and talk about percentage changes. >> when a ten-year yield is above the s&p's average dividend yield, we'll have a conversation. >> exactly. and we can talk about percentage increases from the levels. we are dealing at such absolute low levels in so many different asset classes right now, a large percent of the changes don't mean a whole lot.

>> okay. tim, thanks. >> appreciate it. when questiwe come back, th government could be close to banning in-flight dialing. that's a positive development. we have that story next. and disney has a bona fide hit to add to their collection. a big hit there. and a check on the european markets mostly to the green as you can see. "squawk box" will be right back. in new york state, we're changing the way we do business, with startup ny. we've created tax free zones throughout the state. and startup ny companies will be investing hundreds of millions of dollars in jobs and infrastructure. thanks to startup ny, businesses can operate tax free for 10 years. no property tax. no business tax. and no sales tax.

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welcome back. u.s. equity futures are opening

up 44 points for dow. the nasdaq is slightly in the green as well largely on the back of the news that portugal is rescuing the largest publicly listed bank. the markets were down over the weekend over concern of the bank's health. this is seen as a positive development in a global economy. also, a big weekend for disney at the box office. "guardians of the galaxy" part of the marvel universe bringing in $94 million. this is the august box office weekend. and we thought it was a quiet weekend. >> it is not on my list but okay. the department of transportation reportedly now planning to take steps to bar in-flight cell phone calls. meantime, the major airlines say the final decision should be left to them, the airlines, that is. the wall street journal reports that they will lay out rejections to passengers making and receiving calls and you have

until early next year to comment on the rules. last year regulators loose upped restrictions to let passengers use electronics during the gate to gate period. i will make my comments now. as you know, i don't like lots of talking on the plane. whether it's by children or adults. therefore, i'm very happy if they restrict this, though i'm okay as you know with a special section for those that talk and also for potentially a quiet cabin. maybe a phone booth on the plane. you can pay. >> here's a question, let's say the decision is left up to the airlines. and on the airline by airline basis. >> it's a market. >> would you choose an airline based on whether you can make calls? >> 100%. if there was a plane where i knew i had to do a lot of work and knew i had to do calls, i would go on that flight. if there was a plane where i knew i needed to sleep, i would go on that plane and would love

it. >> i think this is inappropriate for 6:40 a.m. on a monday morning. >> we are already there. the use of cell phones and the etiquette is out of control. there are people who have full-blown conversations in the bathroom on their phones. and so i just don't trust people to use phones in the right manner. so i'm for the ban. what do our viewers think, i would love to know? people have full-blown conversations while in the bathroom. and it's like, you have to give people -- you have to give people a courtesy notice. before we continue this conversation, i want to let you know, i'm in the bathroom. >> we'll do a poll. just one comment, i don't know if you're that guy, but i occasionally turn the phone on when i'm not supposed to when in the air to see if i get reception. i get hardly any reception up there. >> that sounds like an addiction for which you need treatment. coming up, "the new york times" made a controversial move by putting its support behind legalized pot and now another milestone.

mainstream advertising for marijuana. the ceo that placed that ad is going to join us right after the break. also, yrc worldwide turning itself around. the path to profits. plus the firsthand account at how to deal with safety on the roads. "squawk box" returns in just a moment. [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪

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this, i didn't know this until i read the piece, but marijuana is a scheduled drug with heroin and meth and coke are scheduled, too. >> it's ridiculous. >> it's >> and you wonder why two-thirds of prisoners are drug related. >> on the prison thing, so we have 5% of the population in the globe. we have 25% of all the people in prison right here in the united states. >> right. >> see that's the number you got to work on. that was me. on bill maher over the weekend. but it's a nice little segue to our next segment because readers of this weekend's "new york times" may have noticed a first for the gray lady. marijuana information company placing a full page ad in "the new york times." the company is working to raise support for medical marijuana use. of course "the new york times" with that editorial just a week ago in support of marijuana and legalizing marijuana. brendan kennedy is the ceo of that company. we should say it is -- the company is called privateer

holdings. they are the parent company of leafly. good morning to you. we saw this ad, i think we should show the ad on the screen. a little hard, oddly enough for us to research a lot about your company here at nbc universal because when you go to your website, and i imagine this may be true of a lot of companies, it's blocked, actually, by our parent company here, brendan. so, a little tough, but tell me about this ad. tell me about how it happened. >> it's unfortunate that our site is blocked within your company. i feel sorry for the medical cannabis patients who don't have access to the site. we started working on this ad about 12 months ago. we wanted to -- it was an exercise to see what the first mainstream ad from the cannabis industry would look like and we were thrilled when new york passed the compassionate care act because we knew that that was the right time. and then, of course, when "the new york times" editorial board came out in favor of repealing prohibition, we knew that we had

to run it. and so we made that decision last weekend. >> brendan, two questions. have you tried other publications first and been rejected? >> we had not. we had been inside of industry magazines before, and other advertising campaigns. but this was our first mainstream ad. >> how much did it cost you? >> i'll tell you that the list price is approximately $180,000. >> are you suggesting you got a special deal because of the content? >> i am suggesting that we're really good at negotiating. >> tell me about the actual ad itself. it has a woman running. and also then a man on a brownstone. there's something -- it seems very healthy. i mean this is one of those ads, it's almost, if you didn't know what it was for, you would think it's not for pot. >> that's exactly right. so cannabis, medical cannabis it's a mainstream product. 86% of americans believe that medical cannabis should be available if it's prescribed by

a doctor. one of the things we've learned while we've been in this industry for the last four years is that it's a mainstream product consumed by mainstream americans like you, and like me. >> you suggest it should be used for medical purposes. should it be used for recreational purposes, as well? >> well, we're in favor of -- those are two different issues. we're in favor of legalizing medical cannabis. and we're in favor of repealing prohibition. you know, as you were mentioning it's a schedule one narcotic. it's grouped hair one and lsd. and eight out of ten americans think that's crazy and it's time for politicians and bureaucrats to catch up with the rest of america. >> brendan, leafly has been described as a yelp for weed. it's a site that as far as my research goes, basically recommends the type of marijuana to the person who is searching. i'm wondering how closely do the people in the ad, athletic, young, healthy, but maybe afflicted by an illness of

sorts, how closely does that represent leafly's main user? >> for us, it's spot-on. when we look at the demographics that use, it's a wide range from people in their 20 and 30s to soccer moms in their 40s and 50s. and then retired people, who are older americans who are looking for additional sources for -- to solve their medical problems. >> in terms of just your revenue model, it's advertising for the most part? >> yes, it is. so there's two parts of leafly. the first part is helping patients identifying the right strain for them, the right strain for their particular symptoms, and then the second part is we tell them which dispensaries in the u.s. have that specific strain in stock. and so, the advertising comes from about 1500 dispensaries in the medical cannabis states in the u.s. and then around the world. we have a lot of dispensaries in other countries.

>> truth in advertising question, there are -- these pictures of individuals in the ads, it says ian shows a certain type of cannabis to relieve a strain of m.s. and then there's a woman, molly, are those real people? or are they actors? >> they are -- they are actors. >> actors, models. i figured i should ask because people will raise that question, and i don't know if this woman spokes pot or uses it either recreationally or otherwise. >> how much different, brendan, is the dope of today from the dope of our parents' generation? you hear it's so much stronger. >> i think when you look at medical cannabis it's grown in a cleaner environment. it's free of mold and mildew and pesticides and other contaminants. so patients are getting a safer, purer product, and typically that means that it's higher in either thc or cbd. >> and don't eat the entire chocolate bar, right? i mean that's bad.

>> that's -- that's exactly right. start off very slowly. >> nibble. >> and wait, you know, wait 90 minutes before taking another nibble. >> all right. >> you still call it dope? >> yeah, i think you can. you couldn't find any actors who use -- any actors or models who actually use -- >> there's no models or actors that use illegal or even legal narcotics. you know that. >> they could test it. >> note my sarcasm. >> i do. brendan kennedy, thank you for joining us this morning. >> thanks for having me. >> all right. when we return the next market mission. where you should focus your attention on stocks following the jobs report. and the residents of toledo, ohio, are still without fresh water for a second straight day. that means no drinking, no showers, no nothing. an update on the severe water crisis afflicting northeast ohio coming up. ♪ [ woman ] if you have moderate to severe rheumatoid arthritis like me, and you're talking to your rheumatologist about a biologic... this is humira. this is humira helping to relieve my pain.

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summertime on wall street. with the jobs report and the fed meeting out of the way, what will the bulls focus on next? should investors expect a correction during the dog days of august? autonation about to rom out its monthly sales. the ceo of the nation's biggest car seller, mike jackson, gives us the numbers first right here on cnbc. >> on the road with yrc worldwide's ceo. the new course to profitability and how the company keeps its trucks safe. the second hour of "squawk box" begins right now. >> love this. >> frozen. >> where have you been? >> not at the movie theater. >> one of the great songs of summer.

>> if by great you mean torturous and -- >> it's wonderful. good morning and welcome olav to "squawk box" on cnbc. i'm andrew ross sorkin along with kayla tausche, brian sullivan is here. our guest host harry wilson, founder chairman and ceo of the mayva group. we're going to have much more with him. if i was joe i would ask if you brought us diamonds. the harry winston -- that's the joke and that's -- that's the point. >> you've got to carry on the tradition. >> first, though, let's get you caught up on some of the market action. futures right now, see how things have set themselves up after the weekend. dow looks like it would open up higher about 69 points higher. s&p 500 up close to six points higher and the nasdaq up a little bit, as well. 12 points. if you take a look at the ten-year you can see there 2.493 is the number. also tell you about some of the headlines, mcdonald's planning to restore its full menu in beijing and some other china cities this week. it had to scale back its menu following a food safety scandal involving one of its key meat

suppliers. the scandal is also affecting other u.s. restaurant companies operating in china such as kfc parent company yum brands. also samsung will be back in the courtroom once again but this time its opponent is not frequent foe apple. instead, samsung is being sued by microsoft. the software giant claiming samsung refused to make royalty payments for patent licenses after microsoft announced it was buying nokia's hand set business. samsung has argued the nokia deal breached its prior agreement with microsoft. and also warren buffett, frequent guest and viewer of this program berkshire hathaway among the stocks that we're watching this morning because mr. buffett's firm beat estimates with the latest revenue and profits earnings up 41% from a year earlier on gains in both the company's businesses and its investment performance. a water ban in northwest entering its third day leaving half a million people in the toledo area without a basic

need. unsafe toxins seeped into the water supply. the national guard is giving out bottled water. meantime, fears of ebola spreading after the worst outbreak in history has killed more than 700 people since february. infected doctor arriving at an atlanta hop this weekend, putting pressure on u.s. regulators, to speed treatments for ebola. the fda stands ready to work with companies to develop anti-ebola drugs. among the stories wall street is buzzing about, president obama telling the nation's ceos to quit complaining in an interview with the economist magazine. the president says corporate america has done well under his economic policies. he said in part, quote, if you look at what's happened over the last four or five years the folks who don't have a right to complain are the folks at the top. as for its criticism of his administration's populist measures obama says quote oftentimes you'll hear some hedge fund manager say oh, he's just trying to stir class resentment. no, feel free to keep your house in the hamptons and your corporate jet, et cetera, i'm

not concerned about how you're living. those are quotes to the economist magazine. >> we'll be talking about that. >> yes, we will. not will not die quietly. jeff immelt says chloeing the ex-im back would hurt africa trade. he said a closure would mean that the u.s. is quote basically making a statement as a country that we do not think exports are important. there is a major summit in washington this week nearly 50 african leaders in attendance. of course that was supposed to be, brian, about stirring up trade between u.s. and africa. but now, of course, the focus will probably be on ebola. >> yeah, two leaders backing out. meantime portugal unveiling a rescue plan for the nation's second biggest bank. michelle caruso-cabrera joining us now. what's happening with this bank nobody heard of three weeks ago. >> we're going to run through some of the facts and some of the key questions that american investors are asking right now. so they're going to split this

bang up into a good bank and bad bank, classic setup we've seen in the past. equity holders, subordinated debt you're going to get funished, probably get absolutely zippo at this point you're going to get stuck with a bad bank which is going to be rolled off. what's going in the bad bank? loans that were related to the family business, which maybe should not have been done and also the angola subsidiary. which had a loan to deposit ratio of more than 200%. the average in the united states is, you know, good solid bank is like 90%. and then there's going to be 4.9 billion euros or $6.6 billion injected to the good bank, which is where all the deposits go. et cetera. it's going to be left standing. you will hear the bank of portugal say this is not a taxpayer funded bailout. yet he will also hear that that money i told you about is coming from the troika, the imf, the eu, which is taxpayer money. how do they square that? stay with me here it's actually pretty easy.

but portugal says we are going to use the money from their equivalent of the fdic insurance fund. just like we have here, right? banks put money into a fund then they bail out banks. they have one of those in portugal except it's really new so there's not that much money in it yet. so they're going to borrow money from the state to put in the fund to bail out the bank. where does the state get the money? they're going to use leftover money from the troika. it's all going to get paid back when they sell the new bank which, if you've seen this process before, is actually quite feasible if, indeed, the good bank is sellable. so, is it taxpayer money? yes. it's still, though, not like waiting for a greek union to accept a wage cut in order to get paid back. is there any spill over? >> that's my next -- >> you want to know is it systemic? >> that's all i care about -- >> only two reasons to care about portugal economically -- >> otherwise this bank means nothing to me.

is it systemic? no. to portugal it's probably systemic. >> portugal's gdp half that of north carolina. >> in terms of size, no. is it emblematic of something larger in europe? maybe. a lot of analysts who have been looking at europe for a long time say they have not come to their day of reckoning when it comes to bad assets on banks in europe. we are getting to that point because they're going through an asset quality review where we're likely going to discover there's other banco espiritos out there. that's an issue. is it a regulatory failure? people are saying how did this bank exist when you look at the relationships all over the place between this family when you read the bank of portugal releases they come close to saying fraud although they don't use the actual word. how did this bank exist? there are going to be questions about whether there are others like it. i will tell you, regulators in europe absolutely believe there are other banks out there like this. this is why they are trying to

go from countries regulating their own banks which start to get politically interconnected, and then having the ecb take over so they can take a firm he stand against banks that probably shouldn't exist. >> but is this a good test case or a scare for regulators in europe to figure out that they actually need to figure out how to bail out some of the bigger banks? >> this is them showing the world that if you are an equity holder and you're a junior debt holder you're going to get hammered. remember there were times in europe if you held debt in a bank it didn't matter what happened. you were always bailed out. come january 1, if you are a senior debt holder, the law changes, and then you're also going to get hammered. right? the lesson here is, you can't just invest willy-nilly in the banks. you have to make a choice as an investor. which you didn't have to do for a very long time. >> thank you, michelle. >> all right. >> harry wilson is going to be leaving the set now to fly to europe because he's got some business, restructuring business in >> long time coming. we also want to get a broader check on the markets and the economy following friday's jobs

report. joining ining bob daal and bob. the two bobs with us on this monday morning. i'll start with you, because you're on set with us, we saw a fairly good jobs number. not enough to stoke more fears that the economy was too healthy. not so bad that we thought that qe would be extended even longer. but when you think about the market, up marginally, at the point where we're at and many people calling for a correction, do you share those views? >> i don't know about, i think all of the geopolitical intrigue is for real. you hear a lot about that and it matters. i think you couldn't have gotten a more delicious report than you got on friday. seven month average of 230,000 from payrolls. nothing going on on the wage front. and the unemployment rate ticked up because you got a bit of a return to the workforce. that's about as sort of sweet as it gets in terms of not too hot, not too cold.

>> bob dahl when you think about the fact that even a bank as small as the one that we're talking about in portugal could be enough over the last month to rattle the markets, do you think that that tells you that the market is just ready for some sort of sell-off? that it's gotten overheated? >> look, i think the markets acted very, very well until the month of july when it started getting sloppy. for years it feels like we've been asking the fed to get a little more gdp, a few more jobs, and a little more inflation. and guess what? we're getting all three. i think the markets said okay, what's next. i don't think you have big downside that would require down earnings/recession. we're not going to get that but a period of sloppiness is probably in front of us. >> even if volatility isn't apparent across the board, bob, i'm just wondering, we are seeing several asset classes rebalancing. we're seeing money flow out of high yield, we're seeing a lot

of money going into investment great large cap u.s. equities. is that the safe place to be right now? >> the answer is probably yes. that group has been neglected as the groups you've mentioned have led the say so they're playing some catch-up, they are safe for the ones that do have more global perspectives, multinational companies so i think there's some catch-up and as a result we're going to be watching where the earnings come from. this is going to move to a stock selectors market. if you produce the earnings your stock will be okay. if not your stock will struggle. >> what's your biggest worry now? >> the geopolitics. >> we had a guest on earlier who said i offered about four things and he picked the fifth which was isis and what they're doing in iraq. if you go from syria to iraq to gaza to the ukraine there's a lot of things to worry about. i'm saying if you take the economic backdrop you step away

from the geopolitics. actually looks quite good. we were just talking about the portuguese bank. we did replace trichet withdrawing i go and draghi very quietly has done everything trichet said you weren't allowed 20 do. the day of reckoning that we talked about, the new ltro that draghi has put in is extraordinary. the old ltro said you can borrow money for four years and pay the average of the overnight interest rate over the next four years. this one says you can borrow money for four years, and you pay today's overnight interest rate. you get four-year money for 25 basis points. that's supposed to actually postpone day of reckoning because you make it easy for banks to make money in europe. if you say putin's going to get rougher and tougher and you have sanctions that begin to hit europe that's going to matter. >> bob, economic data we had a busy week last week, there's not

much on the calendar this week but earnings have looked strong when you look at the companies that are reporting and the ones that have reported already, what do you think are the most telltale companies about what's going on in the economy right now. >> it's the revenue story, four to five percent for the second quarter, nine to ten percent for earnings growth. that's the best quarter we've seen in quite some time. i think the revenue growth is key. the profit margins aren't going to go up a lot from here. so i want those companies that are benefiting for -- from this part of the economic cycle, which i think are the mid cyclicals, call it energy technology industrials. >> hopefully that's sustainable with more than half of the s&p having reported already. for now we'll leave it there to the bobs. thanks for joining us. >> thanks guys. coming up next, auto sales are red hot. is the turnaround over for the auto sector? we're going to put that question to harry wilson. plus yrc worldwide ceo on the company's turnaround strategy plus thoughts on improving highway safety.

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fund was set up by the automaker to pay for deaths and injuries caused by the cars and trucks. victims have until december 31st to file that claim. our guest host has a good read on the auto industry. restructuring guru harry wilson is founder, chairman and ceo of the maven group. also a former senior adviser to president obama's automotive task force and for the u.s. treasury department and the nonpartisan group save our states. >> good morning. >> help us with a couple things. on gm, just because we talked about it, are you impressed, unimpressed, do you have a view on how this whole recall situation, which has tripled out in, i would argue, in some of the worst ways, how do you grade what's going on here? >> i think in general, they've done a pretty good job. i remember we were on here a few months ago and talked about mary needing to take responsibility for this. even though it all happened before her watch and she wasn't involved, she was the face of the company -- >> and you didn't know anything. >> no. >> nobody in the sought toe task force -- >> nor anyone in senior leadership from anything that's

been demonstrated so far at gm. but mary was both the face of the company and had to take responsibility for it. and she did. and that created uncomfortable moments before congress but at the end of the day it was the only choice she had. i think that the way she came forward and embraced the need for the recall, and i think probably overdid it. i think they've done everything possible on the recall side, anything that may have been a trip wire they went after. one to clean up the past, and two because it was the right thing to do. and so i think all that, despite the dribble that came out i think was ultimately the right thing. >> let me ask you about something else. you were part of the obama administration to some degree. you like to say that you're not political to some degree, as well. but i want to tell you what president obama said in the economist over the weekend. he was asked we see a lot of business people, and they complain about regulation. i think you complain about regulation. >> yes. >> he said, this is the president now, they always complain about regulation, that's their job. let's look at the track record, let's look at the facts, since

coming to office there's almost no economic metric by which you couldn't say that the u.s. economy is better and corporate bottom lines are better. he then goes on to make some other comments around people being rich and how he's not worried about this class, if you will. what do you make of those comments? >> frankly, i think they're totally irresponsible. i think it's wrong for the president of the united states to single out a group of people. whether it's by ethnic group, socioeconomic class or any other mesh u. doing that in that interview he showed an irresponsibility and the tone deafness on the substance of the matter of people complaining about regulation, i think by any measure the level of regulation of the economy is at an all-time high. and people across the political divide would agree with that. >> do you give him credit for that or is that despite what he's done? >> the level of regulation being at an all-time high -- >> no, i thought you were also saying that the economy -- >> the level of regulation. the economy itself, look the economy is pretty mediocre, 2.5-ish percent growth plus or minus. off the worst recession in the last 70 years.

so take credit for cyclical rebound which i think some good things were done by the government at the trough of the recession, but to take full credit and say there's no right to complain is wrong. >> do you think we're on the cusp? you are seeing the participation in the job market going up. you are seeing wages finally starting to rise. you're seeing revenue growth as we've been talking about all morning starting to ride, too. it does feel like there's several data points that are finally getting to the point where we've been waiting for them to get to. >> let's separate out two issues. where are we on the macro economy? i think we are starting to see a modest acceleration to 3-ish percent growth. that's good. that's the second point which is how do we feel about the level of work that's been done over that period of time? i think you have to say it's been mediocre. >> it is one of the slowest bouncebacks post-recession in economic history. >> i think the slowest. >> here's the interesting point and goes to your statement. federal ideal. if you look at the fastest growing states by population, half of them, more than half of them, are states with no income

tax. sensesy, well, that's almost no income tax, texas, wyoming -- >> florida. >> right, florida. so people take advantage of that. american citizens choose to live in a state where maybe there's less regulation and fewer state income taxes. why do we criticize companies for doing the same thing? >> right, it's exactly right. people will do the economically rational thing generally speaking, whether they're corporations or actual individuals. and i think this whole inversion debate misses the point. which is we've been down this road before. we've had anti-inversion legislation two or three times in the last 30 years and it's never worked because people find a way around it. in 2004 they enacted this 20% threshold that exists today. since that time 44 of the fortune 500 companies have left the united states. so it hasn't worked. >> the point, stat i gave earlier in the commercial break, was that the u.s. tax code is about 75,000 pages long. 75,000 pages. hong kong has a lot of problems, i'm not saying it's a model. hong kong's tax code, 400 pages. >> right. >> 75,000 pages.

400 pages. flat tax and much lower rate. >> yep. >> if you're a corporation, i'm not -- and listen i hate inversions. but if you're a corporation, you could -- you could cut a lot of regulatory staff, people that are just employed to simply manage these tax regulations. >> it's self-defeating. we did some analysis on this. if you look at the deals over the last couple of years that were inversion driven or tax driven like converting to reits for example when they were a real estate business, the taxable income of those companies is about $100 billion. it's massive. and it's growing every time a deal gets announced. >> we have to run. but just say this what is the tax rate? what's the number have to be to be competitive? >> i think we should be below the ocb average, better than average. and it's around 25%. we should be in the 20 to 25% range. >> that would do the trick? >> the effective tax rate -- >> we do it by eliminating loopholes. because now you have some businesses that benefit at the expense of others. >> once you're rid of -- get rid

of loopholes but the contest to do that is going to be complicated. >> yeah. and a million jobs. >> you've got to do it in one fell swoop. >> much more from harry throughout the program. >> thank you. all right. coming up, believe it or not, bre season nfl football kicked off last night. let's all join in a yay. giants playing the buffalo bills the hall of fame game. plus microsoft tablets were apparently on the field on the sidelines. we're going to find out why. ght that the kid on the back of the bus might have a song that he has in his head but he just can't get out. with the technology of cloud, we change all that. i can sing something into my device, up to the cloud it goes, back down it comes, sounding better. we break down the walls of creation and we give music creation for the masses. ♪ ♪ unlock the creativity in anyone. with the ibm cloud. the ibm cloud is the cloud for business.

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welcome back to "squawk box." the value of u.s. farmland rising about 8% in the past year. the northern plains seeing the biggest jump. among the catalysts, grain prices hitting record highs. data are a key indicator of the health of the u.s. agricultural economy. the chinese government is urging microsoft to not obstruct an antitrust investigation by chinese regulators. china announced last week that it was formally investigating the tech giant for breach of antitrust rules. that is a situation that is currently developing. we're also watching shares of michael kors this morning. the company's earnings beating the street by ten cents. same-store sales rising 24% in the quarter. they have not had a quarter of same-store sales less than 20% since december 2011 when the company went public. all the analysts that keep

saying this engine will slow, it has not. >> great american success story. >> up 5.5% now. time now to take the pulse of a industry that may also be a great leading indicator for the entire american economy, trucking. yrc worldwide is mon the world's biggest transportation providers. you know their trucks, formerly yellow and roadway, thus the yrc. the stock was down sharply on friday the company posting results missed analyst estimates the losses did narrow, revenue was up from a year ago. joining us now, jim welch, ceo of yrc worldwide. still with us our guest host from maeva group, chairman and ceo harry wilson. what happened last quart ir? >> we had that couple of unusual events that occurred that caused us to miss consensus. the good and positive news was our revenues up between 5% and 6% for operating companies and we saw that as a good sign moving forward. we made a lot of progress as a company the past few years but had a couple hiccups in the quarter. >> such as. >> work comp and cargo claims

issues that were a little bit unusual. we think we're set up for a good second half. >> so they weren't up -- that doesn't sound like operational -- >> they were not. >> one timers then? >> right. and the positive thing again was the fact that we were finally able to start growing our revenue. this is a company that had been through some difficult times over the last three years with our turnaround and to get the revenue growing was a very positive sign that our customers are showing renewed confidence -- >> how is the economy from your point of view? >> we think it's pretty solid. you see some mixed signals month to month, whether it's housing or imports but if you think about what happens in the economy on a supply distribution process, trucks haul a good portion of america's economy. we think it's pretty solid. >> i was going to go to safety. i don't know if been seeing eamonafterers has been doing these reports at cnbc around truck safety. last time he was on he talked about the new technology that we can get into trucks but he said it's costly, costs a lot of money to retro fit these trucks. how far are we away from you

deciding i'm going to invest and put cameras around the trucks and do all sorts of things? >> we can all agree that one consistent is too many in our industry. but to combat that and to take action we're looking at a lot of different things from cameras to the cabs to eye sensory -- >> that look at the driver the entire time and if their eyes are closed more than five or ten seconds. >> alarm sounds. >> are truck drivers pushing back on that? >> not really. i mean, no truck driver wants to have an accident. >> right. no truck driver wants a camera staring at their face the whole time that you the big boss maybe can see what's happening -- >> i'll defend the industry a little bit. i got a good friend of mine that's a truck driver and he's saying that texting and driving by cars is out of control. that truckers are, i mean, we -- you don't -- when you move that thing, when you have to swerve to -- because mom is on her facebook account or whatever it might be, weaving down the new jersey turnpike you don't just bring it back into the lane. i mean the physics behind the truck. and texting and driving by cars

is a massive problem for truckers. because they can't stop like you can. >> that's a great point. and 70% of all truck accidents are caused by a vehicle. >> 70% are caused by cars. >> right. and if you think about the fatality rate it's less than 2012, than it was in 2002 yet there's 2.7 more trucks on the road. so definitely the distraction that's going on in automobiles is a big deal. >> so what has to happen from your perspective? >> well obviously we need to be more careful as drivers, and whether it's a car, or truck, and observing what's around us. but, somehow we've got to get a hold of what's going on in these cars. i mean, you look at videos, and movies and everything going down the road, that our drivers have to deal with. not saying that drivers are perfect. but certainly, you know, we've got to put automation in a cab. >> obviously modern well-fitted vehicles have a lot to do with that. you have a newer truck, that's

more agile and can respond more quickly to some of these incidents. there was a report from the department of transportation just a couple of weeks ago that found that roughly 72% of the trucks on the road were in better condition than yrc's. and i'm just wondering do you feel that that is hurting your ability to stop some of these consistents? and how do you combat that? >> vehicle maintenance is critical. we have the highest safety standard when you add up all nine lines of the safety measurement. we take safety very seriously. one thing that we would like to see in our industry is the modernization of the fleet. we would love to run twin 33-foot trailers and you think about oh, my goodness. that's longer than what we handle today. but our drivers are very comfortable pulling longer length haul trailers. fedex has been testing -- >> and what has to happen for that to become a reality? >> we need to work through chairman stroouster's transportation and infrastructure committee in washington. we have a very good lobbying group. all the carriers are in favor --

>> is that safer or less safe? >> it would move about 600 million miles a year off the road, we would have save 600 million gallons of fuel and we think we'd have 600 to 1,000 less accidents. >> where are you on gas right now, price, oil? >> it's about $3.20 a gallon. >> but you follow, i assume the oil market is your market? >> absolutely. >> every single morning. >> and we have a fuel surcharge that we use to measure our what we charge our customers. >> you know it's amazing. on the infrastructure geek in-house jim and i've been screaming about the roads forever, probably because i've got a long commute and we talk about who's going to pay. gas tax increase apparently is going nowhere. people scream i don't want to pay anymore. of course they don't. make the trucks pay. you guys destroy the roads. you should pay. but i also see that you pay $75 to cross the george -- you know that, that's the toll for a truck? >> tolls are brutal. >> $75. >> i cross it every day. >> you're a tractor trailer

truck it's 75 bucks. >> no matter what size? >> that's just the bridge. there's no tolls. that's not the turnpike. just the bridge. point is where do you see the balance? are you guys paying -- you're going to say you pay too much. american public would say you pay too little. >> obviously we pay a lot. but if you think about our business and infrastructure is key to what we do. but it's also key to this country's economy. and if you look at the deterioration of the interstates, the high quays, the intracity roads, this is something this country eventually has to face head-on and yet we've got temporary relief with the highway trust fund of $11 billion through next marge but eventually the country has got to face up that our infrastructure is deteriorating and that's how the economy moves in this country. >> all you have to do is you don't even have to do that, just drive across i-80. go from the delaware water gap to youngstown, ohio, and you will see not picking on pennsylvania, but my gosh. >> we got to go. >> are you a boone pickens fan? >> i do. we're testing natural gas trucks as we speak. i think it's the future. not sure when we'll get there

but that's something that's coming our way. >> okay. come on again. we could have a longer conversation. >> absolutely. enjoyed it. >> you bet. >> all right. and for more on our collision course that series that andrew mentioned eamon javers did some excellent reporting on that. check out investigationsinc.cnbc.com and please do not text and drive. >> coming up we're continuing the auto conversation because sales data is out from autonation. mike jackson joins us with the latest numbers. he's going to talk some overall sector trends when we return. tomorrow on "squawk box," california gubernatorial candidate and former pimco managing director kneel kashkari. the ceo of tenet health care on quarterly results. and how homeaway is taking on air bnb. squawk box starting at 6:00 a.m. eastern time right here on cnbc. on progressive direct s and other car insurance companies? yes. but you're progressive and they're them. -yes. -but they're here.

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welcome back to "squawk box" on this monday morning. making headlines today, walmart wants to improve consumers' online shopping experience, as it tries to better compete with amazon. the retailer is changing its website to personalize the

e-commerce experience now suggesting items based on previous purchases. users will also see the home page personalized with local information like weather and events. will be interesting to see more of a landing page, rather than just a shopping experience. andrew? >> let's talk auto making. automakers posted near double digit sales increases over the last year in july though they were short of analyst estimates. joining us now to talk auto sales, mike jackson, chairman and ceo of autonation. and still with us our guest host harry wilson from the may have group. always great to see you, mike. help us here and just explain, you missed estimates, but the growth was still tremendous. well, they weren't my estimates. we're projecting sales increases for the year of 3% to 5%? and we're on the high end of that range year-to-date plus 5 frs for the overall industry. auto nation had an excellent month of retailing 27,500 new vehicles. that's plus 8% year to date. but if i look at the july numbers for the industry there's

certainly nothing to complain about. it is the 5th month in a row of 16.4. a very strong mix. 52% of the vehicles sold were trucks. trucks were up 13% for the month of july. and trucks were up 9% year-to-date. which means the american consumer overall is very confident about the economy, and where they are. because trucks have a higher transaction price. and it also means the industry has a solution on fuel economy. that we're not asking american people to go slower. >> right. >> or downsize in order to get better fuel economy. so overall, it can't be a more positive report for the industry in the month of screw. >> tell us what's happening with gm specifically in terms of what you're seeing customers coming through the door looking at gm vehicles. there was a story out a couple weeks back that actually suggested that because of all these recalls, more people are coming through stores because they actually have to check

their vehicle. >> well i think there's some truth to that. i don't think that's the answer as to why gm sales remain excellent. you know, the american consumer has clearly made a bifurcation between the old gm and the new gm. and they really don't think much of the old gm. and think it was appropriate that it went into bankruptcy and had to make major changes, and they really blame this tragedy of recalls and fiasco on the old gm. and as harry talked about earlier, mary has really stepped in to the breach, met with the victims of some of these tragedies, which had to be incredibly difficult, unleashed the report that was a stinging indictment of the old gm and brought in kenneth feinberg to say we're going to put a compensation fund in place. now they still have a ways to go. we still have millions of vehicles to repair, and they can

still make missteps. but at this point the american consumer says the new gm, and their exciting new products, particularly the large suvs which were just launched, are receiving enthusiastic reception. >> right. >> the american consumer continues to make a bifurcation. >> we were talking about sales and they've been strong across the board. i just want to ask you, are sales booming at the expense of consumer credit? what are you seeing in subprime? should we really be worried? >> i don't think we should be worried at all. i saw that story in "the new york times." and i had a tough time relating to it. let's do some numbers real quick. total outstanding loans on autos is 900 billion. mortgages, you know, back then were approaching $15 trillion. and the default rate on mortgages at one time i think was 30% overall for autos it's 0.03 on delinquencies.

let me repeat that 0.03. >> what? that's it? >> if you look at the subprime -- >> that's it? 0.03 is it? "the new york times" article makes like it was a national crisis. >> no, brian this is at an all-time low. now, let's say of the 900 billion, let's say 300 billion are subprime. they have a 60-day delinquency of between 3% and 6%. depending on the lender. but the idea that $300 billion of auto loans are systemic risk to the economy, i disagree with. and here's the most interesting fact. when we sell 1,000 vehicles new and used here at auto nation 5% of those sales are facilitated by a subprime finance contract and let me give you another interesting statistics. why everybody talks about the term is pushing out in total to 63, 64 months, people pay off auto loans very quickly. the average auto loan is paid off in 36 months. >> mike, before we let you go,

the president out today complaining about those who complained about him. you have been one of those people in the corporate community who have complained about him and some of the regulation. i want to tell you what he says. he says if you take those complaints from the corporate community with a grain of salt this coming from an interview he did with the economist. he says oftentimes, you hear some hedge fund manager saying oh, he's just trying to stir class resentment. no, feel free to keep your house in the hamptons and corporate jet, et cetera, i'm not concerned about how you're living. you want to respond? >> yeah. well a house in the hamptons is not even on my bucket list. but i think what business leaders are talking about is that with this anemic growth in this recovery, it's done tremendous damage to the middle class. it's really hurt the middle class, and if this administration in the early years when they had both the house and the senate and the white house had focused on this economic crisis, and passed bipartisan regulation reform,

tax reform, immigration reform, entitlement reform, there would be several million more jobs today in the middle class. and i think business leaders have a responsibility to speak up and say, look at washington, d.c. you have the federal reserve bending over backwards because you have a dysfunctional fiscal side, and that's led to the circumstance. and the president's statement unfortunately just confirms he still doesn't get it. >> mike, we're going to leave it there. we appreciate it. we of course will talk to you very soon. and of course we'll have harry throughout the rest of the program. when we come back after the worst weekly drop for the s&p in nearly two years, is it a buying opportunity? we speak to market historian and "squawk" market master jeremy siegel. and then cell phones on a plane? necessity or nuisance? we'll ask you to chime in on two countries about that topic right after the break go to cnbc.com/vote, tell us what you think. we'll discuss it in just a bit.

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yyyup. with xfinity internet soyour family can use all their devices at once. works anywhere in the house. even in the garage. max what's going on? we're doing a tech startup. we're streamlining an algorithm. what's grandpa doing? hi... sssh, grandpa you don't want to be an intern forever. sorry dad, we have to get back to work, we have a deadline. we're going public! [cheering] the fastest in-home wifi for your entire family. the x-1 entertainment operating system. only from xfinity. all right, let's take a look at some stocks to watch. cardinal health, earnings and revenues beat the street even as the drug whole saler was hurt by the expiration of a contract with walgreens. michael kors posting better than

expected 43% increase in quarterly revenue. results were helped by strong sales of hand bags and watches here in north america. the department of transportation reportedly plans to take steps to bar in-flight cell phone calls. nothing on children just yet. but meantime the major airlines say the final -- >> what does that mean? ban children? >> you know. >> you know -- >> you've been watching "squawk box"? you're in the front -- anyway we're not going to go there. >> look at that graphic which i'm told was made by a viewer. >> this was made by a viewer. the final decision should be left to them. that's what the airlines say, not to the government. "the wall street journal" reporting the government will lay out its objections to passengers making and receiving calls. travelers, airlines, and others will then have until early next year to comment on the proposed rules before final decision is made last year regulatoregulato course, had loosened restrictions to let passengers use electronics during the so-called gate-to-gate period. so here we got it this morning. question number one, if you're on facebook right now, do you

use your cell phone on a plane? voting is now open. you have one minute. and then we're going to do another question, which is do people who use their cell phone on a plane annoy you? and you're going to have another minute, as well. you can see right down there cnbc.com/vote. right now we have 57 -- it's about 50/50, about whether you should be able to use a cell phone on a plane at all. >> the question is do you use your cell phone. >> this is do you. >> do they mean like do you log in to gogo and access e-mail when you're flying. so you can't talk on the phone. what are they doing exactly? >> i'm just going to change it up. i don't know if i'm going to confuse people. do you use your cell phone from e-mail gate-to-gate -- not gate-to-gate. do you turn it on when you're not supposed to. >> i do. i like to live on the edge. i don't -- >> now that we've changed the question a little bit the yes and no is coming back. now let's go to the second question. can we flip the question, guys in the control room? we have 20 more seconds. >> do you use your cell phone. but what do they mean?

>> what do we mean? >> do you use your cell phone. >> how? >> i guess the poll means do you check e-mail. >> do you check e-mail on it when you're not supposed to. >> why would the question be any different than a tablet or pc? >> you're not supposed to use your phone. you can't get e-mail -- i'm not talking about -- >> yes you can, just put it on airplane mode. >> you can't get internet on airplane mode. >> you just turn off cellular data and use wi-fi. i do that all the time. >> that's not what we're talking about. >> the question doesn't make any sense. >> i think most people responded to that question saying no they do not use their phones. >> because it's illegal. it's scofflaws. >> i'm raising my hand. i'm one of them. now do people use their cell phones on a plane, does that annoy you? let's go with that. does it annoy you to use -- to -- >> think about how many conference calls you would have to overhear, preparations of tps reports. and as reporters we might like

that. >> look at this. >> if we could change the question do other people on a plane annoy you? in any form or fashion. yes. >> the answer is yes. >> i would prefer to be on the plane by myself. it will never happen. but that will be the question. so yes this question is lowed. do you get annoyed when people use a cell phone on the plane? i get annoyed when someone sits down next to me. >> we're also asking on a monday morning first thing. >> 40% seem to be just fine with that. >> really? >> yeah. >> i find that hard to believe. >> maybe the next hour in the control room we can do, do children annoy you if they're sitting next to you on a plane. >> you are just digging yourself a deeper and deeper hole. >> i'm the most annoying guy to sit next to because i'm tall, i'm loud -- >> and do you talk? do you start asking the person questions? you introduce yourself. >> i sat next to cheryl tiegs on a flight a couple years ago. yes. if i sat next to andrew ross sorkin i'd probably peek at your computer. >> polls closed by the way. 66% say they get annoyed by cell phone on a plane.

although on the plane i was on, a guy who was an entourage. >> adrian -- >> yeah, he was on my flight. nobody said a word to him. >> wow, what's he doing back in coach? >> we weren't in coach. we weren't in coach. >> mm-hmm. >> coming up, rpp. >> rich people's problems. >> jeremy siegel with his latest on the market and the recent pullback. and then later, ebola has no known cure but two americans who contracted the deadly disease in liberia could change that. they've been administered an experimental serum as the medical community looks to stop that outbreak ravaging africa. kid: hey dad, who was that man? dad: he's our broker. he helps looks after all our money. kid: do you pay him? dad: of course. kid: how much? dad: i don't know exactly. kid: what if you're not happy?

does he have to pay you back? dad: nope. kid: why not? dad: it doesn't work that way. kid: why not? vo: are you asking enough questions about the way your wealth is managed? wealth management at charles schwab weit's not justt we'd be fabuilding jobs here,. it's helping our community. siemens location here has just received a major order of wind turbines. it puts a huge smile on my face. cause i'm like, 'this is what we do.' the fact that iowa is leading the way in wind energy, i'm so proud, like, it's just amazing.

is caused by people looking for parking. in a city that's remarkable that so much energy is, is wasted. streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years. we wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then there's a mesh network that takes this information, sends it over the internet so you can go find exactly where those open parking spots are. the collaboration with citi was important for providing us the necessary financing; allow this small start up to go provide a service to municipalities. citi has been an incredible source of advice,

how to engage with municipalities, how to structure deals, and as we think about internationally citi is there every step of the way. so the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge. the bears are growling. >> can you dig it? >> what investors will need to watch, and is there more bear in the air? "squawk" market master jeremy siegel is here to tell us if now is the time to buy. >> the ebola outbreak coming to u.s. soil. the medical community trying to save two american lives as an outbreak in west africa worsens.

is there a real threat of the deadly virus reaching our borders without the government's knowledge? >> and disney's hoping frozen snowball effect wins over investors. >> bring back summer! >> the house that the mouse built ready to report this week along with cbs, time warner and other media giants. we're going to preview earnings talk merger buzz, and more as the final hour of "squawk box" begins right now. welcome back to "squawk box" right here on cnbc first in business worldwide. i'm andrew ross sorkin along with kayla tausche and brian sullivan. joe and becky are off. brian doesn't seem to understand this music. this is from frozen. >> i have a 10-year-old daughter and she can't stand this song. >> my apologies. this lives in my life every single day. >> andrew loved it. >> you need to change your life my friend.

>> you don't follow my on spotify do you? b.t. sullivan. i make the play list. >> i'm hanging with olav. our guest host this morning is turnaround specialist also diamond specialist gary wilson, founder and ceo of the maeva group. let's talk about one of our top stories. wall street and corporate america returning from the weekend to hear some pretty harsh comments from president obama in an interview with the economist magazine, the president says corporate america has done well under his economic policies and the nation's ceos should quit complaining. here's what he -- >> i would take the complaints of the corporate community with a grain of salt. if you look at what our policies have been, they have generally been friendly towards business, while at the same time recognizing there are certain core interests, fiscal interests, if you look at what's happened over the last four or five years, the folks who don't

have a right to complain are the folks at the top. where we have made less progress than i would like. >> i'm going to add to that. the other comment he said was, you know, people think that we're trying to stir up class resentment. he said no feel free to keep your house in the hamptons and your corporate jet, et cetera, et cetera, i'm not concerned about how you're living. what do the nation's ceos make of all these comments? we asked autonation boss mike jackson about it. >> i think business leaders have a responsibility to speak up and say look at washington, d.c. you have the federal reserve bending over backwards because you have a dysfunctional fiscal side, and that's led to the circumstance. and the president's statement, unfortunately, just confirms he still doesn't get it. >> in other washington news this morning, major u.s. companies aren't the only ones looking at tax inversions. "the wall street journal" reporting that activist firms are also joining the push. painer citing that mercado capital management is an

example. the hedge fund owns about 4% stake in intercontinental the hotel company and the paper says the fund has hired an investment bank to try to stir up interest from u.s. hotel companies looking to cut down on their tax bill by buying a uk based company. this company put into play earlier this year by wyndham. >> i believe so. made an unsolicited offer for that company. another other headlines, a water ban in northwest ohio entering its third day. leaving half a million people in the toledo area still without that basic need. unsafe levels of a toxin called microcystin seeped into the city's water supply. it can cause diarrhea, vomiting and affected liver. the national guard is giving out bottled water to alleviate that situation as best you can on day three of such a startling situation. >> it is. but it's also important to note, i mean we hear, and you look at that watt, it's disgusting. this is natural. this is the oldest living organism on earth this type ofal

ji. a type of plankton caused by oxygen depletion. >> but in 2014 shouldn't you have the tracking systems in place -- >> i think when you look at this story, there's a lot of causes scientifically but this is also at its core an infrastructure story about being able to maintain these water supplies. this is natural. hopefully it will go away naturally. but it's scary for the folks in toledo. >> we're also watching scares of ebola spreading after the worst outbreak in history. the virus has killed more than 700 people since february. an infected doctor arriving at an atlanta hospital this weekend the outbreak putting pressure on u.s. regulators to speed the development of treatments for the deadly virus. the fda saying it stands ready to work with companies developing drugs to combat ebola. we'll talk more about the scare with a doctor in just about 15 minutes. brian? >> let's get a check on your markets to begin this week u.s. equity futures not a huge move. which is probably a good thing for a lot of people watching the markets after what we saw thursday and friday. in fact the dow has implied up

about 42 points. the fact we ended with such high volume downside to upside on thursday and friday ending on some lows of the day spooked a lot of people going into monday. but today, not too bad of a view. let's check the overseas markets in asia, what they're doing. the japanese nikkei down 0.3%. but shanghai and hong kong were higher. europe is still trading to begin the week here a few more hours left in their session. and all of them the ftse the france cac, the dax in germany and the italian market are all higher. >> joining us now a "squawk" market master, one of our favorite professors, jeremy siegel, professor of finance at the university of pennsylvania's wharton school of business. helping us through trying to understand what's going to happen in the market. we had a crazy or felt like a see saw last week. thursday was particularly tough. friday, okay. but, a lot of people, we've had them on the show, who think we are in correction territory. where are we? >> well, it is absolutely true. it has been a long time since

we've had a correction. nobody can tell when it will come. >> are we there? are we in it? are we in the beginning of it? >> no, i mean -- perhaps. but the bull market is definitely not over. remember, we had a fed spasm on wednesday and thursday. remember, when i was on in may of 2013, just after the panic when bernanke mentioned maybe we're going to start the tapering, and i said, if you look at history, the bull market do not end when the fed starts raising interest rates. bull markets will go on for another nine months to two years. and you know, we're talking about raising interest rates, maybe it will be march, or april, instead of june or july. that should not matter at all in terms of the big picture. i still think the big bull is

taking control of this market. i don't think he's going to give up. surely there might be a correction -- we always have corrections in a bull market. i actually don't think this is going to be one of them. but if it does happen i think it's going to be a great buying opportunity for investors. >> it's harry wilson. i guess some questions, the value of the fed as a forecasting gauge given a lot of people think the fed is behind the curve. how worried are you about margins being at all-time highs and what implications it might have for earnings over the next 12 to 24 months? >> margins are at highs. i've looked at the sources of those high margins. a lot of them have to do with the fact that the s&p deviefs over 40% of its profits from foreign sales. and we all know what all this discussion about the corporate tax. corporate taxes are lower abroad than the u.s. so, as long as they don't repatriate them, they have a lower tax rate, and a higher margin. also, very low leverage of

corporations, they've locked in low interest rates on financing. that increases the leverage. when i look at the basic factors causing high margins today, i don't see anything that i think is going to reverse this year or next year. i think we're actually in an era of higher margins than we had in the '70s and '80s when the interest rates were so much higher. >> jeremy, you talk about refinancing. last week we got data showing that the amount of cripple-c rated, so very low rated junk bond companies were refinancing at year-to-date levels that were the highest on record. even as a billion and a half dollars came out of the junk bond indices. i'm just wondering, why is that not a sign that there are cracks in this bull market? >> well, people were reaching for yields. we've had such periods before. certainly what happened -- look what happened last may, when

bernanke first hinted that we were going to have tightening coming, boy the junk bond yields soared at that particular juncture. you know, actually, technically, you can look to that. i'm a little bit disturbed the small stock russell 2,000 index has been very weak. if it breaks below the low that's another technical indicator. but again, if it goes down another %, 9%, that's what we need to go into correction territory. i still think that's a buy. i'm still projecting 18,000 by year end for the dow. so, you know, even in the short-term, i think that this will be a buying opportunity. >> professor, real quick. question coming in from doug siegel, a -- doug kass, why did i say siegel, graduate of wharton 1972. he says with the exception of one year, 1999 you have been bullish. what conditions would change your bullish view, and at what

point are low rates a negative for stocks? well, if you're going to a depression, low rates are very negative for stocks. you know, clearly everything is going down, including profits. do we see a horizon? look at the labor market growth. 200,000 plus for six months. we're really not to exhausting the labor pool. yes, i want to see the participation rise. yes, there's a few things we can see in the labor market. but as long as there's no recession on the horizon, it's much more likely it is only going to be a mild correction, not the end of a bull market. >> professor we're going to leave it there. we appreciate it. we'll get more from harry in just a bit. >> up next on "squawk box," the medical community looking to stop an outbreak of ebola in south africa. two americans contracting the deadly virus. one has been transported to atlanta. a second expected to arrive tomorrow. we discuss their conditions and

chances of finding a cure when we come back. and as we head to break, check out the "squawk box" market indicator at this hour. market's going to open in just about an hour and a half. but right now, futures are solidly in the green, commodity complex is seeing some red this morning. we never thought we'd be farming wind out here. it's not just building jobs here, it's helping our community. siemens location here has just received a major order of wind turbines. it puts a huge smile on my face. cause i'm like, 'this is what we do.' the fact that iowa is leading the way in wind energy, i'm so proud, like, it's just amazing. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past.

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the ebola outbreak continues in west africa as international leaders and health organizations struggle to help those suffering from the deadly virus. joining us now with more on the challenges of containing the outbreak is dr. frank esper with the university hospital's case medical center of cleveland. doctor, welcome to the program. wish it was on better terms, certainly. ebola is deadly, and -- but thankfully it's hard to pass along. you have to have prolonged exposure with generally with fluids from the body. how much do americans right now, before we get into west africa, how much do americans need to worry about this? >> you know, i think that from the virus standpoint. the virus is for the most part contained to those areas that are very close to west africa, and into the african continent itself. there really has not been ever an epidemic outside those particular areas. we believe because the vector,

because the reservoir for this virus is some sort of animal within that -- within that geographic region. so we do not believe that we actually have the animal reservoir to actually provide ebola here, noreen if we brought people who have ebola to this country would it be able to become established. >> are you surprised by the rapidity of the spread of ebola in west africa? >> ebola is a very, very dangerous germ. it is something that while there is a bit of a window where people are okay he the infection becomes established people get very, very sick, very, very quick. i think the problem right now is that the reason it is spreading as much as it is because even in these remote areas, over the last several decades, these remote areas are become ing areas where people are able to move from one place to another with much greater speed and much greater distance than they had in the past and that's one of the reasons why we're seeing it

spread as far as it is. >> we want these doctors, these u.s. aid workers that have been brought back to emory hospital to get better. do you support, as difficult as it is, that decision to bring them here for treatment, putting ebola on u.s. shores? >> i do. i believe that this is something that is very extraordinary. because it just shows, as a people, as a nation here, we are not so risk averse that we are going to let those americans stay in an area where we cannot provide them the adequate care that we are able to do here in america. and so we have the protocols, we have the facilities, already established just for this kind of event. and we have the ability to go in and extract those americans and bring them here. it just tells us that, as a medical community and as a nation that we are up for the challenge. and we are not going to let them, you know, stay, you know,

overseas because we are too scared that we are not able to contain this virus. we have very strict protocols, and those protocols are established before these patients arrive, while they're here, and then even after the resolution of their infection. we are going to have all these protocols all set from the most physicians to the nursing staff to the people who take the garbage out of their -- of those rooms. everyone's going to be on the same page in controlling and containing this infection. >> and hopefully learn more about it to finding a permanent cure for this disease. doctor, it was a pleasure. thank you. >> very good to be here. >> coming up, planes, cell phones and kids. also apparently sitting next to me on a plane. get ready to vote in our "squawk" poll. it's coming up. everybody's got an opinion about this kind of stuff. go to cnbc.com/vote to give us your opinion. then cbs betting on a big bang when it comes to earnings this week. the company, along with disney

and others in the media, ready to report their quarterly results. we're going to preview a big week for media earnings coming up "squawk box" 8:17 here in the east. we'll be back right after this. at humana, we believe the gap will close when healthcare gets simpler. when frustration and paperwork decrease. when grandparents get to live at home instead of in a home. so let's do it. let's simplify healthcare. let's close the gap between people and care.

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get live squawks right in your trading platform with thinkorswim from td ameritrade. welcome back to "squawk box." a story we've been discussing all morning long, the department of transportation reportedly planning to take steps to bar in-flight cell phone calls. now major airlines say the final decision on this should be left to them.

"the wall street journal" reporting the government will lay out its objections to passengers making and receiving calls. travelers and airlines and others are going to have until early next year to comment on these proposed rules. we've been commenting already this morning before the final decision is made. we've got a poll going on this morning. it's more a poll about a comment i've been making for the past month and a half, very unpopularly thus far. unpopularly a word? should kids be allowed in first class? we were discussing whether you want -- you know, someone talking to next to you. this is somebody talking next to you, just not on a telephone. this is right here, you can vote cnbc.com/vote. look at this. >> pretty astounding result right there. >> thank you! thank you. to the viewership. >> 90% roughly saying no. >> god bless. this is -- >> you're steadily losing ground. >> because i clapped. now they're voting against me. >> you started at almost 100 to zero. >> it's true. >> i think it's interesting that you have children and you

dislike them -- >> i love my children. i love my family. we travel together and when we do we sit in the back of the plane. my argument over and over again is if you're flying on business and paying the premium, you're either doing it because you want to be able to work or you want to be able to sleep and it becomes more complicated when you have -- >> but if the family pays the premium, why not? >> how old are the kids? first of all i'm not going to try to be a braggart. my kid has always been good on a plane. she's not a crier. she's not a screamer. she's better than many adults. if you have a brat. how old? what's your cutoff? because you can't control the behavior of a 2-year-old that well. what about 9? >> i'd say 5, 6, something like that. >> so the sorkin rule is like the mendoza line, you've got a cutoff? 5, 5 1/2? >> i don't know, 5, 6, 7. >> the second question. >> we got a second question now. >> would you like to sit next to brian sullivan on a plane. >> this is a personal attack. >> this is personal. >> and it's almost unfair. >> i just awant to tell people

out there that the answer to this question should be 100% no. because i'm 6'4". i got meaty arms. i like to do this. i'm loud. >> forget your arm rest. that's gone. >> i don't shower that much. >> you were offended during the commercial break because you said i got your travel outfit all wrong. >> you told me -- >> i said hawaiian -- >> i wear cowboy boots and jeans. i only own one pair of jeans. about a third of the people, they'd like to spend some time with you -- >> who are those third? i would like to meet them? >> or would you? >> so would we? >> let's have a meetup of people willing to travel with me. we'll rent a mega bus, drive around manhattan. >> we will say good-bye to you forever. >> yeah, right. exactly. >> okay. they don't have good intentions and they're just trying to sit next to me. >> that's for voting everybody. >> that's not nice. a big week for media stocks on wall street. a look at the sector. and as we head to break, take a look at u.s. equity futures.

they've come down a little bit. still indicating a higher open based on fair value. dow jones coming back a little bit here. we'll see what happens after a big week. vote yes you would sit next to me. i'm huggable. we're back after this. we never thought we'd be farming wind out here. it's not just building jobs here, it's helping our community. siemens location here has just received a major order of wind turbines. it puts a huge smile on my face. cause i'm like, 'this is what we do.' the fact that iowa is leading the way in wind energy, i'm so proud, like, it's just amazing.

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welcome back to "squawk box." take a look at some stocks to watch during today's trading. michael kors quarterly profit of 91 cents a share. revenue also came in well above consensus. however the luxury goods retailer projecting current quarter profit below street estimates. cardinal health beat analyst forecasts by two cents, with quarterly profit of 83 cents per share. the drug whole saler says it is pleased with its performance in what's been a year of transition for the industry as a whole. watching shares of biotech giant amgen. they reported some positive news this morning saying a new cancer drug improved survival rates in a late-stage trial. so, all good. all good. we are going to you, sir. >> yeah, i believe we're going to go to break. but the only way i'm going to make -- the only way i'm going to toss to break on this show is if you stop playing the frozen

music. let's think about that. i want to get your comments on earnings -- ♪ ♪ let it go >> let it go, man. >> let it go. >> stocks -- i'm just going to get louder. stocks are supposed to be a future measure of earnings. now everything, geopolitical, the fed, everything's mixed and muddled. what an equity at its core is supposed to be. we forget that, right? hopefully one day it will go back to that. if it were to, is the stock market fairly valued in your mind given what you've seen from earnings? >> personally i think it's on the high end of reasonable at this point. >> high end of reasonable? >> meaning risks are poised to the downside. there's still room for improvement, because a lot of times the market is well above reasonable. i don't think we're in that territory yet. i think you look at earnings by all measures, both historical highs. margins are high. i don't necessarily buy the jeremy siegel explanation for that. so as a result multiples based on where rates are make sense. but rates are officially depressed because of the fed. >> i just tweeted i showed it to you and it came from a guy that

started charts i tweeted it out a chart of ten year bond yields and corporate profits and summarize the chart for our viewers. they go like this. in other words the bond market/the fed has been goosing mom and pop love low rates. lower mortgage rates, whatever. corporations love low rates probably even more. >> that's right. returns on capital have been extravagantly high as a result of that. >> which means if you take it, i guess, flip it over theoretically based on this chart which is 30 or 40 years if interest rates do start to tick up then woo we see a tick down in corporate profits? >> pressure on it both -- on the one hand it's a sign the economy is improving. on the other hand it's pressure on profits and net income. >> okay. >> all right well friday jobs report always means a number of crunching economists over the weekend. and this time was no exception. steve liesman joining us now with a wrap-up of gdp revisions. we had a ton of economic data including the fed itself. what happened in your world over the weekend? >> i went fishing. i played a gig and then --

>> celebrate jerry garcia's birthday. >> which we couldn't talk about. we also spent a little time with my spreadsheets. and our folks over at moody's analytics have our first look at the third quarter tracking survey. what this is, we start off with a base number as data come in. we input it into the tracking survey. we have eight to ten economists on any given day that are doing this for us. we do this with moody's analytics and the number is 3%. so we're coming off of 4, we're going to do with 3. the range is 2.2 to 3.5. and the two quarter average would be 3.5, the best since the fourth quarter of 2013. and the second best since 2006 if we put these two quarters to the as forecast. here's deutsche bank at 3.5, on the high side for quite awhile and he nailed the number last quarter. goldman sachs in the middle at 3%. moody's analytics which calculates the survey at 2.6. morgan stanley bringing up the rear so to speak, 2.2%. he says he does not see the

momentum yet. credit suisse writing in a report over the weekend with fed asset purchases set to end in october, and full employment now in sight, for the first time since the great recession, the period of u.s. monetary policy certainty is coming to an end. we can talk about that in a minute. that may mean more volatility but mike england over at economics wrote the caveat there's still significant slack in the labor market confirmed policymakers are still at a walking pace. you've been talking about this this morning. there were two scenarios that are competing. there's the consensus, qe ends in october. rate hikes, july 2015. we end the fed funds year at 1 3rs. in 2015. and then there's the more tight the tighter scenario rapid unemployment declines, rising unnation, and wages rate hikes come perhaps in that first quarter. i don't think it's possible to happen any sooner. we had richard fisher on the desk talking about an earlier rate hike maybe the beginning of the year and that would end the fed funds at 1.5% to 2% and i

want to ask harry what that means for corporate debt. if that were the case, if they were to go. so what would happen, say you get the first one, call it march. you get a quarter so you're at 50 call it. depending upon how they do it. so you could get to what? 1.5% by the end of the year. what would that mean for corporate debt? >> i think you'll see an interesting sell-off, probably the high yield market. so see -- >> junk would sell off? >> yes, exactly. particularly lower rated junk in particular. >> lowest rated junk. >> so i think that's kind of the first effect. the question becomes what's the second order of expect? a little more risk aversion as you should and you probably won't see the repeat of the record issuances in debt you're seeing this year. >> one credit suisse also writing over the weekend there is a huge demand for duration out there and that this is going to keep a lid on long paper. and long-term yields. saying that just because the fed is hiking rates, especially if

the stock market stays down here. they see a period of lower yields when it comes to corporate -- when it comes to treasury bonds. >> yeah, it's a tough call. i think that argument has some merit. it's hard to really know because we're in unprecedented territory. but you have, particularly in the pension fund world where you've seen a lot of funds, particularly on the private side, increasingly so on the public side, derisk portfolio and move more to fixed income away from equities and that need to match their duration of their liabilities with their assets is pushing for more duration on the end on the yield curve. >> i want to underscore this notion of what credit suisse was saying about the period of certainty coming to an end. you should appreciate what we've been living through the last several months. we have known almost precisely with very, very little debate what the federal reserve was going to do. this october end has been baked in and we've had incredible consistency in our surveys. that's ending, and so that's going to help explain, i think, what lapped thursday and friday.

and you could go the other way monday and tuesday, and the end result of this will be what the traders have been clamoring for all along. >> more volatility as we go back and forth between these two scenarios. oh, they're going to be tighter. >> they couldn't have less. >> no. >> no. >> because it's zero -- >> you couldn't have less volatility so it's nowhere to go but up. >> i had a neighbor who was a trader who accosts me every time he sees me, and begs me for more volatility. that's probably what's going to happen. i think because, this whole scenario situation of is it first quarter, is it second quarter, it's going to go up and down and we're going to be watching much more closely the inflation and wage data than we ever did before. >> let's hope we see some of that wage inflation start to go up. not all inflation is bad. i'd like to see a little wage inflation, wouldn't you? >> i don't want to see inflation i want to see wages rise. i don't want to see wages rise -- >> that's what i mean. >> with productivity and growth in a way that is noninflationary. that's what i want to see. i just use that word inflation advisedly for a fed reporter.

>> fair enough. >> inflation is bad. >> not wage inflation -- >> wages going up is good. >> yeah, so it's all about the sell. >> right. exactly. >> steve, thank you. when we come back, we've been playing this -- are we going to play more? >> no. >> disney is hoping that frozen can produce a snowball -- thank you, frozen effect -- snowball effect for investors. many media names set to report quarterly results this week. disney, the company has another bona fide hit to add to its collection. a big weekend for guardians of the galaxy, part of the marvel universe raking in $94 million. analysts were expecting $70 million. we're back in a moment. chocolate is very individual.

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welcome back to "squawk box." in media news "the wall street journal" reporting hbo's considering more web tv services overseas. now the company has had a service to provide its content online to nontv subscribers since 2012. other possible markets, though, are said to include japan and turkey. "the wall street journal" noting those countries have good broad band infrastructure. the other factor, hbo doesn't generate a lot of revenue from licensing its programming there. hbo is one of time warner's most attractive assets and of great interest, of course, in the 21st century fox bid for that company. let's continue the conversation, because a slew of big cap media names set to report quarterly results this week, including disney, time warner, 21st century fox, and cbs. let's get a preview of the week ahead and what it all means.

david bank is the equity research analyst at rbs capital markets. i imagine in the grand scheme of this chess match dance going on between time warner and 21st century, those are the earnings that everyone's really paying attention to. what should we expect and look for? >> i always tell people, or investors when we first start talking about these big cap media companies at the core they're really just cable channel companies. no matter, you know, we associate them with their studios or other products. disney is espn, as goes espn goes disney. for example. so, i think we're looking at pretty lackluster overall advertising revenues for the quarter, and television, and because affiliate feeds are so predictable probably not a lot of surprises. and for that reason, it's probably fairly muted, and i think the focus will be on the m&a front. >> fairly muted. one of the things that happens traditionally in one of these battles is everybody tries to gab whatever cash they possibly can to show a good -- this is

one of those quarters, this is a show-me quarter. especially if you're time warner. you've got to eke out whatever you can to try to keep the pressure off. where do you think the pressure is right now? is there pressure on the company to actually engage with 21st century fox? give us the sort of lay of the land. >> it's a good question. i don't think you can, you know, i don't think this is like a software company where you try and pull forward the sales or something. i think at the end of the day, the advertising revenues are what they are. so it's going to be a more a strategic perspective on -- >> in terms of what you hear on the call? >> what you hear on the call in terms of initiatives. what ultimately will you do with hbo. are you going to move more aggressively toward an over-the-top distribution strategy? may or may not be the -- may or may not be something like that. but those are the kinds of things. strategic initiatives, are they moving faster? >> my understanding has been that thus far the time warner board doesn't feel too much pressure. i'm not sure how much you're going to hear on this call. >> i think you should hear

nothing unless fox responds. >> and therefore my question is, what do you think fox does? how high can they go? or do they come back at all? do you think that they disappear? >> i think -- do i think they disappear? i don't think they're going to disappear. i think they're going to come back with at least one bid why shouldn't they they're clearly -- >> is time warner an independent company twelve months from now? >> 50/50. >> and, is it 50/50 that it -- is it -- is 21st century the only real buyer? >> there was a piece talked about how cbs is a better match made in heaven, therefore you have to do a bit of a reverse merger, it's complicated. >> ultimately could be like a pac man thing where time warner will essentially buy cbs. that to me the industrial logic for that transaction is so much better because you have a -- the complement of a broadcast network, with cable channels, and a fantastic tv studio. i just -- it just seems to me to put it together owe quickly so defensively is going to be a

little difficult to sell at this moment. over 12 months. >> and again, cbs is, i mean, you know, time warner is 2.5 times as big as cbs so it would have to be a cbs deal. >> yep. >> that's an interesting point -- >> you meantime warner buying cbs. >> yeah, exactly. if i wasn't clear. >> discovery communications you cover them. >> i do, indeed. >> there's been some discussion if time warner does not want to be bought, one way to prevent that is to get too big to eat. so they would be the buyer, maybe cbs would time warner be interested in buying discovery communications? >> i think it, at the end of the day, the business that you probably are less likely to want to double down in to is in the domestic cable business and want to get more a piece of is the international cable business. and discovery is probably the biggest player on the planet except for fox in that respect. so that would make it an interesting asset. but again, would they be a natural buyer of discovery just to get bigger. >> discovery is up -- the reason i ask is discovery is up 12%

quarter to date while most media names are down. so somebody is betting on something. >> that's true. but you know what? there's an argument out there that the logical partner for discovery is skrips. just might be scripps because if you pair two, i don't want to say subscale but smaller scale domestic cable distributors and you give them that kind of scale all of a sudden they become a much more powerful company domestically. >> give us a sense on digsny? do they play? do they care? do you see them say i want to buy time warner? do i want to buy cnn? >> i was going to say, long long shot, right, people don't really -- people think i think more of cbs as the buyer for cnn if it's spun out. and i kind of wonder why nobody talks about the qataris also for cnn. but potentially disney think how that folds into the bundle really well, for sports, and kids. so potentially that would be interesting. i don't think they need to buy everything. i think of everybody you know they've got for this quarter if you believe in the sizing in the

quarter the world cup, frozen, they're going to sound pretty good coming -- >> they don't need to do anything? >> i don't think anybody needs -- i've never been a believer that anybody needs -- >> there's one thing they don't have, disney. >> what's that? >> the pipes. >> well, that's a story for a different day. >> i'd rather own the content. i'd rather own the bullets than the guns all day long. i don't think fox needs to do this deal. that's why i think it's a 50/50 chance they go away. there is a industrial logic you don't need to do it. this is rupert wanting to control as much content as he humanly can, on the eve of the sort of change of the content ecosystem. >> is there anything in rupert's dna that would lead you to think he would go away? i mean that's totally. >> the pre-hacking ruper and the host-hacking rupert. the pre-hacking rupert i would never think would go away. and the post-hacking rupert really has been an incredibly, responsible, disciplined al low indicator of capital.

and i think wouldn't go over what would make sense. >> what do you make of this hbo news? >> you know, i think it's -- i think it is interesting in the context of the transaction, right? maybe a little bit more accelerated. who knows. than we might have expected. but italy it's the solution. it's what the consumer wants. >> what is that -- do you think they can pull that off in the united states in a meaningful way without cannibalizing the business? >> i don't think it's an issue of cannibalizing the business. i'm a believer, if you think about the percent of households that have cable but don't have hbo it's like you have 30 million hbo subs in a world that has 90 million cable suppliers. and there's probably another 10 million homes or 5 to 10 million homes that don't have came but have broadband. where do you really want to focus more of your efforts? probably in upselling hbo. >> where does that put the netflix valuation? is netflix way overvalued or is

hbo way undervalued? >> what i would say is, it makes you think that hbo has maybe a lot more global potential than we thought if they start to explore different distribution mechanisms. >> okay. okay. >> they're big in -- >> david, thank you. >> 100%. >> appreciate it very, very much. when we come back, jim cramer is going to join u.s. live from the new york stock exchange on what investors can expect in the weak in the markets. take a look at futures right now. green arrows across the board with the dow looking like it will open higher. higher s&p 500 up about five points and the nasdaq up a little over 14 points. we are coming right back in just a moment. tomorrow on "squawk box," california gubernatorial candidate and former pimco managing director kneel kashkari. the ceo of tenet on quarterly results and how homeaway is taking on air bnb.

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events this week as part of an african leaders summit with nearly 50 leaders in attendance. did you see there was a report over the weekend also from der spiegel that said that israel had spied on john had spied on john kerry when he was making phone calls when he was trying to mediate all of that. crazy story. >> i did not see that. right now, though, let's go to jim cramer. i know you've got a big show because you're also doing something cool on twitter. >> what? that i'm providing cnbc with my information before i can provide twitter? >> no, cramer q. respect you doing a q & a session at 10:00 a.m.? didn't i just see that? >> that could be someone lying about what i'm going to do. >> am i crazy? is it 1972? >> well, i used to do them with yahoo! in the early -- well, early '90s. but i'll be back and doing it again if you think i should.

i hope i just didn't force you into something. >> whatever. >> if you are not doing that, what are you doing? >> i'm looking at coors and i don't like the inventory picture, the gross margin picture going forward and i think when you see something like that, why do you trade off the headlines, why can't you wait to see what the company says and the answer is, because people are stupid. that's okay. there's nothing in the constitution that says you can't be stupid. >> yes, jim, that is very true. >> you're allowed to be mediocre. anything goes. >> all right. so i do have a question for you, sir. >> uh-huh. >> "street signs" at 2:00, we're going to do the number one performing stock over the past five years. >> wow. >> yeah. any ideas? you probably know because you know everything about the stock market but any clue? it's based in and around

chicago. if you know it, don't say it. but i'm sure you know it. e-mail me. >> it wouldn't be abbott labs. >> no. but -- >> baxter? >> no, close. abbott has been fantastic. >> abbott has been amazing. >> every two years it becomes amazing. >> right. if you can count that, that would be pretty incredible. >> anyway, i'm not crazy. i see the "street" tv. that's what i got. there's abbott labs. >> there's a one minute twitter thing that i do for the "street." i did not think i was doing a q & a. absolutely. thank you very much. i was thinking of something that i was doing for cnbc. that's the other company that i work for. >> i don't know if the viewers can see, but you probably had the sweat coming down. >> i'm thinking, what am i doing with kr with cnbc on twitter? i do a street.com thing. >> this is why i'm just a

fill-in. >> it's absolutely fine. i was two masters. the street.com. and i'm doing a twitter q & a with them. >> we look forward to seeing you, jim. >> thank you. later on "squawk on the street," berkshire's earnings are in focus. jay gelb and the author jeff matthews is going to join the gang on "squawk on the street." "squawk box" returns right after this.

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misleading. in these debates, how far can you go? >> because it's the right thing to do and it ultimately comes out. the blackrocks of the world do their homework and it's clear if you made misleading statements, they will figure it out. if the facts of the case are strong enough, you lay out the case. >> you've aligned yourself, in certain instances, with activists. ultimately, is activism a bad or good thing? this h ecerbalife thing, there e been times where it hasn't worked and so what is the investor supposed to do? >> i think activism, when done well, is a superior form of investing. all those things happen in capitalism. when it is done well, trying to identify problems in a company and then work to exert influence

and improve a problem, that's the right thing for investors to do. that's why the strategy has had so much success. >> do you care if you're going long or short? does it matter? >> so my expertise and focus has been going long. that's my background. i don't know that it makes a material difference going long or short. at the end of the day, it's a case of laying out your case. it's fundamentally a different approach. you see a lot less of it, obviously. >> it's a different approach because in one case, if you're going long, you say, i love you and i love you even more if you did x, y, and z. >> or i love your business and not you personally, mr. management. >> right. the other is, i hate you and if i can put you out of business, i'll make a fortune.

it's a fundamentally different premise. >> it could be i like you but i think your valuation is all screwed up. >> but the activist is acting like the catalyst. it's not just, i'm making a bed and i'm going to sit and watch on the sidelines. it's, i'm going to try and make the stock go lower by arguing to the public that the company is worse less than it is. >> do reoverstate the intellect of most executives? >>. >> they are hand-picked and they don't fight back.

it's ridiculous. >> it's former ceos. >> thank you for being here. "squawk on the street" begins now. good morning and welcome to "squawk on the street." i'm kelly evans live this morning with jim cramer and carl quintanilla and david faber are out today. we're watching to see whether it can hold up as geopolitical tensions hurt themselves. that could show up in the ten-year yield note. in the bid for treasuries, pushing that bid, even this