andrew ross sorkin and brian sullivan who is in for joe. he's still on vacation this week. coming up, the best day in two weeks. the dow closing higher yesterday for the first time in five sessions. this morning, if you check out the futures, they are slightly lower. dow futures down by about 26 points below fair value. s&p futures are off by 3.5 points and the nasdaq is down close to 10 points. for the markets today, another round of earnings. before the bell, we'll hear from adm, liberty media or coach. this afternoon, disney, take-two interactive and more. july ism manufacturing is expected to tick up. june factory orders are expected to rise, as well. >> thank you, becky. and welcome back, by the way. in corporate news, remember the boeing battery problem that grounded the dream 787 dream

liner for more than three months? a japanese paper out reporting cold winter temperatures were a factor in the meltdown of the lithium ion batteries which caused at least one of the boeing 737 dream liners to make an emergency landing in japan. meantime, in alternatings news out of japan, it was a big quarter for toyota has the highlander is hot. toyota posted a better than expected 3.4% increase in quarterly profits and the automaker raising the outlook for the year. >> can we move back to the battery? the battery thing, people don't have battery -- hybrid cars and things like that in cold places simple will ily because of the weather. batteries don't do well in cold. that's the whole thing. we had a guy -- the guy from toyota who lives in michigan who won't have a hybrid car in

michigan because it's too cold for the battery to actually do its thing. i would think this the plane is going -- it's freezing up there every day. i'm not a -- >> is that good news for boeing? does it signal simply just a battery issue which -- >> no, because they're going places constantly. >> but aren't these batteries kept inside, like in the part of the cabin where everything is pressurized? >> i would think. i don't know. >> the reaction might be to boeing. >> i have not flown in a 787. i would tomorrow. i think it's a spectacular piece of technology. >> would you, becky, if you got the ticket? >> yeah, i think i would, yeah. >> would you? >> i don't know. i think i would be a little -- >> japan airlines, if you're out there, i'll go. i'll fly over to tokyo and come back on a mileage run. is that what they call it? cars.com for nearly $2 billion, gannett could possibly

acquire it. a final deal could be announced as early as today. gap making the economy more prone to boom bust cycles? advisers against using the tax code to try to narrow the gap. the agency arguing the higher taxes on the wealthy hurt jobs. the answers are suggested they have to do with access to education. it's kind of an easy out for them, sort of. >> why? >> just saying education is sort of like a very -- >> yeah. nobody agrees it's education. the question is how do you fix it? how do you get there? >> the education thing is generational. >> but i think it's an important one. it's one that needs to be addressed. and i think these things have put pressure on taking a closer look at that education system. let's get a look at the markets this morning. we showed you the futures

yesterday. we know yesterday was the best day in two weeks for the dow, the s&p 500 and the nasdaq. there are some red arrows, but these are modest declines at this point. if you take a look at crude oil, yesterday it was up 41 cents. it snapped a five-day losing streak. this morning, there are additional gains for wti, up 68 cents to 98.45. the ten-year note looks like it is yielding to 2.48%. take your eye off that for a day. also, the dollar, at least at this point, looks like it is up against the euro. it's down against the pound, up against the yen. euro is trading at 1.33911. dollar/yen, 102.66. gold prices, up slightly, $1,293 an ounce. today, the second american to contract ebola in west africa will be flown back to the united states for treatment. concerns are still running rampant of the outbreak here in the united states. joining us now with his take on

the situation and to tell us we're going to see a vaccine in the near future, dr. anthony fouchi is here with us. he's the director of the institute of allergy and diseases. before we even get to whether we're going to get a vaccine, tell us the state of where we are. there was a report out earlier this morning that a man went into mt. sinai in new york city and wanted to get tested for ebola. how worried should we be? >> the we shouldn't be. the outbreak we're hearing about in africa is due to and founded on the complete lack of a health care system to handle those types of patients. that's the reason why we're seeing the infection from patients to the people that are taking care of them to family members because they don't have the capability of violating patients, of using protected equipment to prevent spreads. so we should not be worried. a person could get on a plane from west africa, getting infected there, and then by the time they get here, get sick.

but we have the capabilities of handling that, so the american public should not be concerned about an outbreak in the united states. >> dr. fauchi, there was a doctor, an american doctor in west africa who was infected himself. and this is a person who knew very well about how to protect himself, had the capability of doing all those things. how did he get infected? >> because the conditions under which he was working were not optimum at all. those are very courageous health care workers that were there. the conditions here in our ability to use isolation wards and to be able to have the personal protected equipment is overwhelmingly different than the situation that we have there. he was taking care of many patients under difficult conditions. >> but dr. fauchi, just to drill down on this, from an economic standpoint, is and brian made the suggestion, if one person had been in a mall anywhere in the united states with ebola, your view i think yesterday, brian, was nobody would be going

to the mall. in terms of the economic impact -- and dr. fauchi is absolutely correct. the spread has to be due to prolonged exposure to bodily fluids. a lot of the burial ceremonies in africa have to do with touching the dead. the fear level of what people should actually fear, you're saying it sounds like they shouldn't fear much. >> no, not at all. they shouldn't. in fact, even if someone comes here and is infected, i can it will take the general public a very short time to see that that infection is very well contained just the way right now that dr. brantley is already there and nancy is going to be coming today to the emory hospital. and they're there, they're very well taken care of. >> what do you think your chances of survival are if you're in the united states relative to being in africa? you see survival rates anywhere between 50% and 90% in some of the independent numbers i've seen. but that's a big spread.

>> well, it is a big spread. right now in africa, the survival of all the three countries that are involved is between 50% and 60%. there's no doubt that if you get into good medical care early and get fluid replacement, which is the main thing you need because people die in shock and organ system failure because they move fluid from diarrhea and from vomiting. if you can get that, you can probably chip away at the mortality rate significantly. no matter what, under the best of circumstances, you're going to get a 50% to 40% mortality. under the worst circumstances, it's going to be 90%. >> doctor, again, i know that the fear factor looms large. and just to show you today's tablo tabloids, i don't know if you can see this or not, but the front of the new york post, ebola, man tested for disease in new york city. you know more about how this spreads than we do. but if you were somebody who was sitting next to the man on a plane that came in, if you were

sitting next to him waiting for the treatment, what kind of risk is it? how do you catch it? >> it's essentially no risk. it is contracted by direct contact with bodily fluids like blood, feesy cease feeces when get very, very sick. >> doctor, can you -- go ahead. >> i was saying, it is and it's not a -- if they cough on the, and the secretion of saliva. the risk is somebody boards a plane and on that flight from west africa or maybe they connect to london, they start to show more signs and they cough or sneeze or whatever, that would be -- that would be the risk, would it not? >> well, again, it's not. i mean, we can get hypotheticals that are fear or we can look at evidence based. the people who have been taking

care of ebola patients since 1976 when it was first determined to be a disease that was recognized in 1976, it's very clear that there's no evidence whatsoever that it's transmitted by the respiratory route. so people can surmise at that, but the reality is there is no evidence that it spreads that way. >> doctor, can you tell us, where are we on a vaccine? >> the vaccine research is coming along very well. a few vaccine candidates, the one that's probably the most advanced is the one we're working on at the nih is one that we've shown effective in monkeys. we're going to start phase one trials in normal volunteers here in the states in september and it will take probably until around january to see if it's safe and if it does induce that

kind of response we're looking for. if it does, we scale up, probably sometime in mid to late september we'll have enough early dose toes be able to vaccinate, for example, health care workers who put themselves at the greatest risk -- >> a year from now, 2015? >> right, right. >> by the way, what would the cost of that vaccine be and who would be making that? >> first ooh all, we have to partner with a pharmaceutical company. right now interesting on this program that when you talk about ee boll la, there has been very little interest of pharmaceutical companies to get together and partner with us and the federal government who do the research. now with all this public publicity about ebola, there's a lot more interest in pharmaceutical companies to get involved is it then, doctor, just quickly because we're talking about the economic impact and maybe the fear levels being higher than the actual threat level, is it irresponsible to show this or put it on the front page of a newspaper? even the concern about it?

>> well, that's just what happens. i've been dealing with these kinds of things for a long time. i wouldn't say it's irresponsible. it's just the way the press is. that big front page that you show, it is certainly a scare thing. there are people walking into emergency room else all the time with diarrhea or got off a plane and that's one case that you showed on the front page there. but, you know, within the last few days, there have been a dozen or more people who have done that. >> right. okay, doctor, thank you for joining us this morning and helping us understand what's going on here. >> good to be with you. >> appreciate it. we've been talking about the ebola epidemic. nbc's jay gray is outside the hospital in atlanta where the second infected patient is expected to arrive later today. jay, what can you tell us? >> nancy right now is expected to land in the atlanta area around noon. she'll be immediately transported here to emory

hospital. she will share a special isolation unit with her colleagues. fellow missionary kent brantley. to tell you more about this facility, it has been 12 years that they've been preparing this. it was initially created to help take care of doctors who may get sick or infected working at the centers for disease control here in atlanta. for ten years, the staff here has been preparing for an ebola case and now they are carrying that out with the two patients here. each patient will have their own room, houbl, inside this special unit and be able to visit with family members through a thick glass partition. all of the air in the unit, it is filtered, it is contained. there's been a lot of concern about the possible spread of this dead lie virus. doctors don't think there is any possibility of that lab tests getting done inside any of the materials used are cleaned of

the virus and then they're burned, they're incinerated. doctors dress in their protective gear in a separate room, as well. so they're taking every precaution necessary to make sure this is contained and to make sure that these patients receive the best possible care. the prognosis right now, very guarded but good. the specialists tell me the next few days will be critical for both of the missionaries. >> jay, thank you so much. and again, we were trying to highlight the fear of the virus. i was just going through our stack of papers. the word "ebola" highlighted more in the "new york times" talks about it, the lack of quarentine. >> nothing on the judicial. >> nothing on the journal or the ft. there's something on the ft

sidebars. "the washington post" americans receive -- the point is, people seeing this and saying, you know what? because they don't understand it, saying i'm not going to go to the mall or i'm not going to do this. >> what would it take right now for you to go to mt. sinai to be treated for something? >> hold on, you wouldn't go to the hospital -- >> i would go to a different hospital. >> really? >> yeah. if i was pregnant and expecting a baby, you're crazy when you start getting into the care of your kids and -- i'd be more -- >> hospitals in new york city, so are you going -- >> listen, look at what -- we're cnbc, right? economics. look what happens to the chinese economy when the czars feared -- i understand sars and bird flu which are more airborne distributed, but the chinese economy went like this. then it rebounded, but there was a lot of fear. >> and i will admit there's not a reason.

i understand what the doctor said. i get that we shouldn't expect that this is transmitted by coughing on someone. but i would be panicked if someone i sat next to on a plane or in an er room wound up thinking they had ebola and they were tested and not sure for a couple of days. >> i don't believe most people are going to say it's only transmitted through deep prolonged contact with bodily fluids and therefore i'm not going to worry about it. the word itself -- fatality rate, 90%. >> right. the word itself may be enough to scare people. hopefully not. from going into -- you know -- >> wait a second. you wouldn't ride on a boeing 787 dream liner, but you would go to the hospital with a buy who has ebola? >> i'd go to a hospital where somebody was being treated for ebola, yes. >> but you have no -- that wouldn't concern you at all, but you would be anxious about getting on a boeing -- >> you know me examine planes. i'm not acting rationally, but --

>> and i'll admit i'm not acting rationally, either. >> people act in their own best self-interests. >> i'm not saying that it's the right way to act. i'm just saying that i would be concerned and i was thinking about that on the way in. i'm just saying if i had a sick child would i take them there. coming up, obamacare is complemented. we're going to talk more about the em mications when "squawk box" returns. ♪ [ 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. ♪

welcome back, everybody. right now it's time for the executive edge. "the wall street journal" has the information on patients that have rushed to use hospital services. it's meant big costs for insurers. as we heard last week when talking with the ceo of aetna, a lot of people out there with illnesses who hadn't been seeking medical attention in the past now are because they have insurance. >> this is my issue. specifically, i use every last bit of insurance possible. i copay, but we were talking about -- i was saying i could fought be a good customer for you because the kids at the drop of a hat will do whatever it takes and now you have insurance, that's what i imagine it's going to happen, right.? sort of the natural -- >> sure. and some of the things that they're doing are back surgeries, maybe things that have been put off for a long time. not necessarily cheap care or something that has to be down.

but now that you're covered, if you pay for the insurance, you'll be using it. >> i don't understand why there's not more of these quick care centers. i had to go to the emergency room last year because i had something in my eye. i didn't need to go to the emergency room, but i had no place to go. go to a quick care center, flush it out, boom, that's done. i don't understand why that's not available. >> i just went to a quick care center at mt. sinai with max. would you have done that? >> i'm talking about the same facility. i'm sorry. i don't know what other people think about this. i would choose a different hospital. in america, we're fortunate enough to have that choice. if i knew that there was an infectious outbreak or anything else, a potential outbreak, i wouldn't go do that hospital. >> good question. let's ask that on twitter. would you go to a hospital -- at mt. sinai, the guy probably doesn't, thankfully, but would

you go to that hospital for basic care? apparently in the next hour, they're going to run that poll. >> and we'll be talking more about this newly insured tenants health care. last wooem week we talked to aetna about it's costing more. this is about companies making more money as a result. road warriors, precheck security allows travelers to go through security without taking off shoes or light outer wear. they don't have to take laptops out or liquid carries on from their bags. the tsa plans to limit those who enroll and pay up. until now, the agency has been giving precheck clearances to nonenroll passengers. the cost to enroll is $85. andrew, are you -- >> i'm precheck. i'm a big precheck complainer, actually. i'm happy they're doing this because i actually didn't want

precheck to be that -- you don't want precheck to be that successful. what's happened unfortunately for those of us who go on in precheck and i'm a global entry precheck. >> as am i. >> that's how i got hooked intiet. as a result of so many people that now have it, it's like going through the same line -- >> no, i'm not. i was at o'hare -- >> i was at o'hare yet and the precheck line was great. i don't think you're going to get any relief in some of those lines because the goal is to have 25% of people using the tsa precheck. there weren't that misdemeanor that signed up, so that's why they're allowing other people to go through. >> so are you going to sign up right now, becky? >> no. >> you're not? >> nope. >> why not? >> don't you have to go out to the airport and -- you do. you have to go out to the airport, fingerprints, the whole thing. >> no.

>> i'm often traveling with other people because i travel with my dad, i travel with my son, i have other people i'm traveling with and it does me no good to be a precheck. >> under 12 they go through with you. >> oh, really? >> yes. now i shouldn't have said that on national television. more people will sign up now. sorry, andrew. guys, i should tell but the washington redskins. arguably, they have the most controversial name in professional sports. the team southern says the talked about the name is all about the media trying to get internet cliques. he schedule that's why he started that across the country. the redskins natives he visited are fans of his teams and other teams, as well. i think he pointed out the

braves. >> i think this goes to daniel snyder's view of the value of the redskins name. whatever you think of it, he's clearly fighting to save this name. my wife went to miami university of ohio. they used to be the redskins. they changed their name to the red hawks a couple of years ago under pressure. >> i love dan. but my question is, the charity that he's doing, is that truly charitable -- >> i hate to question anything related to charity, but is that truly charitable or is that to even the controversy of the name? >> thank you, becky. >> sorry, guys. >> okay. coming up, becky gets a new set. >> there we go. when we come back, the bulls battling back. why shares of a looming question are overblown. and then how about investing in race horses? we're going to take you to the track in saratoga. first of all, as we head to a break, take a look at yesterday's winners & losers.

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during the cadillac summer's best event, lease this all new 2014 cts for around $459 a month or purchase with 0% apr and make this the summer of style. . good morning and welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with becky quick. making headlines, let's get you caught off. shares of aig getting caught up

in after hours trading. results will help by strong performance across major businesses in the sale of its former aircraft leasing unit. also, we should tell you what's going on with goldman sachs. "the wall street journal" reporting that goldman sachs is rethinking the services its providing hedge funds these days. this has to do with the new regulations in capital. the firm is said to be getting rid of less profitable clients, it's increasing fees on others. goldman is reportedly pulling its own cash out of its largest internal hedge funds. this eliminates how banks invest their money and is something that has whole numbers. we've been hearing about this number of hedge funds, not so happy because we're sort of deciding who the winners and losers really are in terms of who can actually use goldman sachs's services. >> we should tell you about

american airlines. they are now saying they'll be dropping for premium passengers on certain flights. the airline will offer snacks to business class passengers on most flights under two hours and 45 memberships. but some flights will continue to get a three-course meal. we've been in united when you're sitting in business class and they pass around snack bags instead of a meal. >> can i add to this what you call rpp, the itch people problem. if you're flying business class, i apologize, they will allow you to reserve -- they give you the menu online in advance and you actually -- >> to reserve the meal you want? >> you pick your meal. >> oh. a future technology thing. i know i'm not getting any sympathy for the viewers, but i thought i'd throw that out there. >> we're eventually going to go to this. didn't somebody try to patent --

maybe it was ryan air standing up to planes. >> yeah. we've been the ceo, he admits the whole thing was a publicity stunt. >> why even -- let's just stack them in, baby. stack them in. >> it's like a submarine for naval workers. let's check on the markets this morning here. by the way, happy tuesday. the futures indicating a slight down open. we had a rebound yesterday end ago four or five-day losing streak. indicating a bit of a lore low. europe, not a big move either way. italy is down. but germany, france and the uk are higher. overnight in the asian markets, we saw the japanese nikkei lose exactly 1%. but the hang seng in hon congress was up 0.2%. oil, still under $is 00 a barrel. that's good news. 98.50 is the benchmark on wti crude. 10-year interest rates, 2.49%.

realtors st. louis like that. . the u.s. dollar against the euro, the dollar has been strengthening a bit, 1.3388. in the gold market, still below $1,300 an ounce of $1291. >> are the bulls really in control or wall street or is a correction looming as some have been suggesting? joining us now is david joy, chief market strategist at american financial. pnc has $130 million in asset management. gentlemen, what do you think about this? did the bulls dodge a bullet and did we see the mini correction? is it already done? >> well, i think it may be done in the short-term, probably an overreaction to whatever the catalyst was with the fed, the growth scare, maybe sanctions imposed on russia last week. but i think there was a little bit of an overreaction. we got a nice bounce back

yesterday. and i think we're probably going to be in a narrow trading range, quite frankly. you have low volumes here for the rest ft on year. fed is out of the picture now until the september meeting. i think it's going to be awfully hard for this market to gain traction one way or the other. but i think also that the upside is very limited here to the rest of the year as we get closer to a change in fed policy. >> jim, how about you? do you agree with that? >> well, i intentionally do, becky. we had a deluge of information last week. but we go in this silent period here for the next couple of weeks and i think the market got a little tired in mid-july. i think we'll have a little nervousness. but supported by the economics. so likely we'll tread wart here until we get further data coming out of jackson hole. september employment, more data. for august, i think we'll tread water for the balance here until

we get into a season why we get more information and some more clarity around forward guidance by the feds heading into fall and early next year. >> jim, what happens when you see a sell-off like we saw just in two days? do you hear from lots of your clients, is there concern? is there panic or do people just let it ride? >> i think it's placed into two camps, those who see that as an opportunity and they're looking for some opportunities here to invest in the market. there are those who are nervous at these levels. so we have the nervous polls and those that are looking for some opportunities. so i would sit them into two camps and really in these periods we have a lot of communication with our clients to determine exactly what their objectives are. as you know, becky, new two clients are alike. there are differing points of view around these data points. >> david, what are you telling investors at this point? >> well, i think the one thing you want to be aware of is that we've had the s&p 500 rise 200%

in the last five years. so you may end up with a portfolio that's out of balance, overrated in equities. and so your risk exposure may be out of walk. i think at the very least, you want to trim that back. for those who are on the risk averse side of what jim just talked about, don't be afraid to raise some cash here. i think the upside is somewhat limited here. i think you're going to get a bigger correction, maybe towards the fourth quarter, and you'll be happy to have some cash -- >> but that's interesting. you're not telling people to go into bonds or to go into some other asset class. you're saying if you take money out of stocks, keep it in cash? >> yeah. i don't like bonds at all. i've been in the camp expecting rates to rise. would have been waiting for a long time, but i still think it's going to happen. so i think bonds are a losing proposition here. i'd rather see you in cash. >> when you say correction, is that what you're talking about? you're talking about 5ers%? what is the down side from here? >> i think it's more in my mind

5%. i think we can support this market around the 200-day moving average. right now, that's at 1860 on the s&p. i think that's about all we need here because the economy is strong. earnings have been good. and there's still some slack in this economy, so i think we can extend the expansion. so i don't think we need a big correction here. just a little pullback and wash out some of the enthusiasm. >> jim, when you look at the best performing stocks over the past month, they seemingly have nothing in common, under armour, facebook, even alcoa. is buying that sector ets dead strategy money right now? >> certainly the single strategy, single stock to performance that we've talked about, brian, just some uncorrelated. i think you can still -- for those looking at those particular sectors, i think the sector etf will get you some exposure. as this market broadens out here, it has been a little narrow. i think to those sectors will still give you an opportunity.

in the single stock piece, very difficult to pick the right one at the right time. although we see those headlines, i think investors can be happy, if you will, to get the sector performance that contributes -- that has contributed to by some of those individual names. so i wouldn't shy away from sectors in here. >> jim and dave, thank you both for joining us. >> you bet. >> thank you. coming up, playing the ponies and investing in the next triple crown contender. northan will join us from saratoga springs. morgan. >> good morning. take a look at the horse behind me. this horse could sell at auction tonight anywhere from hundreds of thousands of dollars to millions of dollars all in the hope of having the next racing champion. we will have that whole story wind these sales when we get back from the break.

welcome back. it is 6:40 a.m. time now for your quack planner. on the economic front, july ism nonmanufacturing and june factory orders will be out at 10:00 eastern time. another big morning for quarterly results. you've got adm, coach, inerty media and cablevision all set to point their numbers before the opening bell. we'll bring them to you when they roll out. and sports lovers, take note. we are now two years away from the summer olympics in rio. let's hope that the certain people from cnbc get to go to that one. and that's all for today's squawk planner, andrew. back to you. now to saratoga springs and the start of a major auction. morgan brennan joins us now with more on that. morgan. >> thanks. last night kicked off basic system's two-day saratoga sale. this is one of the biggest

thoroughbred actions in the world and it's focused on yearlings, basically 1-year-old horses that come from championship stock but that are virtdally untrained and unproven. this auction basically comes from a long line of races to come from this auction. everyone from totalist all the way back to man of wars which is arguably the most successful race horse. last night, 64 horses traded for a total of $18 million. the largest buyer, sheikh mohammed of dubai, spend $6 million on seven horses. this auction is a who's who of the business world. while horse racing is a passion for everyone here, it's also looked at as a very serious business, one that's high risk and high reward. george balkman, he says the key

to all of this is still having enough horses to pull in multiple revenue streams, everything from breeding to racing to training. operations include 60 horses. while many don't pay for themselves, the ones that do tend to do so in multiples. for example, three years ago, he bought a philly here called ma gistic river. she just won the molly pitcher. she has won more than five times what he paid for her. everybody is looking for the next champion race horse and they are spending a lot of money and a lot of resources to do that. guys, back to you. >> thank you very much, morgan. when we come back this morning, would bill ackman be to clever to be legal? that's the topic of andrew's column this morning. we'll talk about that when "squawk box" returns.

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welcome back to "squawk box." we are in the chairs this morning looking at the articles interesting to us. there's an article by a guy i know in the "new york times" right down here. i don't know if you know him -- >> that's your clever way of saying it would be you. >> that would be me. that would be my column. and the story that interested me

this morning -- >> your own column? >> my own column. >> good for you. >> is this piece about bill ackman. it's this story about bill ackman and this ai had lergan loss. friday, allergan sued bill ackman and argued for the first time that what he did originally when they made this proposal was engaged in insider trading. we're sort of long had questions about -- >> yeah, is this insider trading? >> how is it possible that the ceo called you, you go buy shares and somehow that's all legitimate? and originally, they argued that it was legitimate because they effectively were forming a partnership and therefore there was no iffiduciary violation. the s.e.c. rules make sense. it is not illegal in a fiduciary

standpoint. however, if you commence a tinder offer, it is illegal. so allergan has argued that actually from the very beginning, they always planned to commence a of valeant who said we always thought we'd have to go direct to the shareholders. >> suggests a tender offer. >> mike pearson's people would tell you it's being misconstrued. we always knew we were going to have to communicate directly with shareholders. >> to do what, though? to convince them -- >> to persuade them to put pressure onto the board. so here we are, i -- i don't know what's legal or what's not but i think from a public policy -- excuse me from a public policy perspective, irrespective of what is or isn't, it shouldn't be because it undermines the credibility -- >> i'm not a practicing attorney but i do have a law degree. it is legal technically. however my point is it stinks. it doesn't -- >> thank you. >> it doesn't pass the smell test. >> thank you. you put it much more colorfully. >> people look at this. average mom and pop investors.

look at this, the game is rigged again. hedge fund guy calls ceo, buys stock. perfectly legal but mom and pop are sitting at home going this is just another example of how i get shafted. >> what i will say in ackman's defense when he was here he told us he had hired robert kuzami, the s.e.c. enforcement director and ran it by him. >> ran it by him. there's a hundred different lawyers who told him in advance -- by the way, he's doing this out in public. it's not this isn't in secret -- >> there's nothing wrong with it. my point is do you think mom and pop are calling up harvey pitt or arthur leavitt and saying, hey, can i do this? who the hell is this? >> now that this lawsuit is out there the s.e.c. may have to step in and either change the rules. which i think is probably more likely. or do you actually try on this specific point about this tender to go back and get all the e-mails and figure out did they ever use the word tender. >> seems like it would be a difficult case. i would think that attorneys would be reluctant to take it on

on the risk that you lose it and it was a difficult case and you could lose it. i think it's much more likely that the s.e.c. does change the rules after the fact because we have other guys like carl icahn saying this sounds pretty interesting and pretty smart. we may think of doing something like that. >> between this and herbalife, job security, ackman lawyer. >> unclear whether the s.e.c. from an administrative perspective can change the law straight up. you might actually need congress might actually have to enact the law -- >> when congress stops insider trading themselves. >> right. >> by the way -- >> we should clarify just the most important because we talk about insider trading. insider trading unto itself is traditionally a criminal act. this is not that. this is a civil issue and to the extent any rules have been violated, and we don't know if they have been, it is strictly a civil act. >> also rules, the insider trading rules are very vague. they're very difficult to prove. >> this isn't 10-b-5. this is 14-e-3. >> did you really throw out the

14-e-3? >> that's hot. >> i wasn't excited until just now. >> all right. let me talk about another story from "the new york times." story on the front of the business day section talking about this cold shoulder. time warner, it's hard-line on the merger may be just a ploy. andrew i wanted to get your opinion on this. what's going on here? the conventional wisdom has been when rupert murdoch sets his mind on something he will eventually get that target. it may take some time, may play out over awhile. >> i think we're still in the dance. we're going to get earnings this week. we're still in the dance. we'll see how the earnings are and how much pressure really is applied to time warner or not over the next couple of weeks. >> by their own shareholders. >> i don't think the shareholders will put any real pressure on them until rupert murdoch comes back. >> with a higher bid. >> he's got to come back with a higher bid. if he goes to $90 does that put enough pressure on him? can he get to 100. do you go to 95 and -- >> he can go to 100 with the

scale of bskyb. >> he can. and it becomes complicated. and after -- >> name something that -- murdoch has gone off that he hasn't gotten. >> after $100 it's -- >> in the first year of the deal? >> i believe in the first year. >> do you go to -- >> do you go to 95 bucks and then tip the waiter at the end with five extra bucks? what is the actual number that gets you to the table? >> the thing that's so interesting about this is the shareholder base, as you pointed out in the past, is very similar. there are a lot of people who own both stocks. if you are a shareholder in time warner you want to get the best price. but if you're a shareholder in fox you don't want them paying too much to get that stock. >> there's also an argument to be made that culturally these companies are so different that it's possible you could combine them just the way aol and time warner did and you have such a culture clash that both companies get completely and utterly screwed up. so there is, you know, there is that. and that's sort of an -- >> you're dialled in to these things a lot more than i am. let me ask you a question, andrew. >> yes, sir. >> what happens to cnn?

if the deal gets done, who buys it? >> i think the conventional wisdom is les moonves gets it at cbs. makes the most sense. >> i know it's a guess. i'm just curious. >> cbs has wanted it for a very long time. they've done this dance for over ten years. i've even reported recently les has been trying to figure out what he would do. but i also imagine bob iger would take a look. i do think cbs would be the sort of natural buyer. >> my story is a lot softer than either of yours. it's early in the morning. so why not? i just want to send a hokey -- i went to virginia effect, a hochee nation outshould to david wilson, 23-year-old running back for the new york giants first round draft pick, great guy was told yesterday that his playing career is over. he had some serious neck and spinal issues. doctors basically said if you continue to play you could be paralyzed for the rest of your life. so david wilson never really getting a shot to prove what he had. but the guy showed such grace and poise, basically saying i

got to, you know, instead of complaining about it, he said i got to fulfill my dream. how many people get to do that? i played in the nfl. went out with his head held high. david wilson from me and everybody else out there that might be the virginia tech hokie nation you are a model and good luck. you're going to have a big life regardless if it's in the nfl or not. kind of a shame to see that happen. i know people tend to not feel sorry for athletes. these guys at this level work their whole life for one goal. >> you are a sweetheart. >> no one's ever said that to me before. >> our newsmaker of the morning coming up, neel kashkari from tarp to pimco now running for governor of california. plus the ebola in africa and fears of that virus spreading around the world as the second infected pec answer rives in the u.s. today. would you go to a hospital where someone is being treated for the virus? stay tuned for details on how you can vote in our snap poll. "squawk box" returns in just a moment. what if there was a credit card where the reward was that new car smell and the freedom of the open road?

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good morning. a global health scare. an ebola epidemic in africa sending shockwaves throughout the world. can an experimental cocktail work? drugmakers rushing to find answers. a world of worry. israelis and palestinians enter a 72-hour gaza truce. unrest in iraq. questions about ukraine. the markets hit geopolitical concerns left and right. plus he ran the t.a.r.p. program and helped save the country from financial ruin. >> it's not more welfare. it's not more food stamps. it's jobs. >> now neel kashkari says he has a plan for the nation's biggest state economy. >> we as californians just have to demand that our leaders in sacramento make big changes. and that's exactly what i'm going to do. >> second hour of "squawk box" begins, right now.

good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin and brian sullivan. joe is off this week. our guest host this morning is kneel kashkari. he is a former u.s. treasury official where he helped create and then run t.a.r.p. he's now running for governor of california. neel, it's great to have you here this morning. >> thanks for having me. it's always one to be with you guys. >> why don't we take a look at the futures. right now there are some red arrows. yesterday the dow, s&p and nasdaq turned in their best performance quite awhile. turning around the slide. this morning dow futures are down about 30 points, below fair value the s&p futures are off about 4 points. the ten-year bond at this point looks like it is the -- the ten-year note is yielding 2.49%. just below 2.5% once again. some additional pressure on the

yields. in our headlines this morning, we should make note of several notable economic reports that are coming up on the agenda for today. both of them are at 10:00 a.m. eastern time. the ism's nonmanufacturing index. a measure of the u.s. services economy. it's expected to be virtually unchanged for july compared to june. also the government is out with june factory orders. those are expected to be up half a percent. that would reverse a decline of the same size that we saw back in may. two significant announcements from gwinette this morning. it will be spinning off its publishing service to shareholders, keeping broadcasting and digital businesses. it's also announced a business to buy 73% of cars.com that it didn't already own for $1.8 billion. and toyota reporting better than expected profit for its fiscal first quarter. helped by a 45% increase in north america. the automaker is cutting its global sales forecast for the year, though, by 110,000 vehicles to about 10.2 million. but it's also raised its north american sales target. >> in other news this morning

the largest outbreak of the deadly ebola virus continues in africa. close to 900 people have now died. 1600 have been infected including two american missionaries. dr. kent brantly is receiving treatment at emory hospital in atlanta. and his colleague nancy writebol is expected to arrive there today, after being evacuated from liberia overnight. now ebola is on the cover of many newspapers this morning, guys. i know that we talk about it and people say well, you're fear mongering, typical media, it's nearly impossible to transmit without prolonged exposure to fluids. we get that. but i'll show you a few of the headlines. i just checked enthusiast for turning me on to the newseum site. on the chicago tribune. "the new york post." also on the cover of "the new york times" in different fashions. some talk about cures. some talk about vaccines. but the point is, the word is on the front pages of many newspapers around the country. people are being confronted with it. we know and we had that doctor on at the top of the 6:00 how hard it is.

i don't want to say impossible, but difficult to transmit but one wonders from an economic perspective. people don't always act rationly. they don't think don't worry honey, it's difficult to transmit. that's not the way we have proven that we think. there other geopolitical stories there is a cease-fire in gaza today. israel and hamas accepted the proposal to halt their month-long war. egyptian negotiators will host talks to work out a longer-term truce over the next three days. the biggest buzz stories on wall street so far this week, president obama's harsh words for the country's ceos. >> 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. >> and the president making those comments in an interview with the economist magazine. our guest host this morning says the president has no fundamental understanding of how the private economy -- private sector economy works and he should listen to our ceos. here to tell us why our guest host all morning neel kashkari, a former u.s. treasury official

currently running for governor of california. great to see you. >> great to see you, andrew. >> i think the more fun part -- we didn't take the clip, is when he says oftentimes you'll hear some hedge fund managers say oh, he's just trying to stir class resentment. no, feel free to keep your houses in the hamptons and your corporate jets, et cetera et cetera, i'm not concerned about how you're living. >> well, i'm not -- >> where are you on the hamptons and the private jet? >> i can tell you this, i'm not at all concerned. i don't have a private jet. i'm not at all concerned about how the private jet class is living. but what president obama fails to appreciate is when the ceos are talking about pro-growth economic policy, it's so they can grow their companies and they can hire more workers. at the end of the day, it's not the government that creates jobs. it's the private sector that creates jobs. the government can create conditions where the private seconder can thrive. and that's where the disconnect is. >> and you think the government has not done that? you look at employment report last week, you look at where we are in terms of gdp, and you say what? >> i say that in spite of

washington's best efforts to keep the u.s. economy down, you know the u.s. economy has a natural vibrancy and energy that we're starting to see break through. the question is not are we better off than we were a month ago or six months ago, it's where could we have been if we had the right policies coming out of washington? who would argue that washington has adopted fundamental pro-growth economic policy over the past five years? i don't know anybody who would argue that. even the president. >> talking about the hamptons and corporate jets. you've taken sort of the opposite approach in your campaign, which is, i think originally you actually tried to appeal to business people and maybe even today you appeal to business people on "squawk box," but you ran a campaign where you became, or you became a homeless person effectively. >> that's right. >> for six nights, seven days. >> correct. >> and you videotaped it. >> that's correct. >> and it went viral. i don't know if we can show a little bit of it. but how did this happen? what happened? what were these six days like? >> the back story is this. jerry brown, our governor, my opponent in the election, says

that california's back. he's declared it the california comeback. yet the data shows that one out of four californians lives in poverty today. so who's right? is jerry brown right that we're back? or that 24% of californians living in poverty. i wanted to see firsthand. i got in a bus in los angeles, with $40 in my pocket. i went to fresno in the center part of the state and i said i wanted to see what it looks like. and i tried to get a job for seven days i went door-to-door to small businesses, to restaurants, to hardware stores, and i said hey, i'll work. i'll wash dishes, i'll mop floors, i'll pack boxes, anything. nobody was hiring. and over seven days i literally slept homeless for six nights. i ran out of money about halfway through. >> how much money did you start with. >> $40. homeless men on the streets said there's a homeless services shelter you can turn to for food. you can at least get a place to eat. what i found is it was a godsend that that shelter was there, now my job search got so much harder because i had to walk from that shelter to the job search, and

back in time for my next meal. so my search area narrowed. and this notion that california's back, it just rang hl low. you know in the entire city that i walked. i walked miles and miles in 100 degree heat i did not see a hinkle help wanted sign. but i saw that all the fast food joints are now accepting food stamps. those signs are in their windows. >> did anybody stop you and realize who you were? >> a few times. >> and you had cameras with you. >> well, i had an undercover -- i had a hidden camera in my back pack when i would apply for jobs. i had a video grafr. when i was sleeping on a park bench, one was sleeping on the bench next to me. five out of six times i was awakened in the middle of the night told either by police or private security you've got to move along. one of them recognized me. >> what did you think was going to happen? >> i didn't know. maybe i'll get a low end job and i'll wash dishes for three days and it would be like undercover boss. i really did not know what i would find. and people ask me well why fresno? it's in the central part of the state, often gets overlooked.

it's affected by the drought. highest unemployment rate of any big city in california around 10%. but i didn't know. and people said well why this corner of fresno? that's where the greyhound bus dropped me off. and i said okay, this is where greyhound dropped me off, i'm going to go look for a job. >> i'm sure it's already been called a publicity stunt by your opponents. >> sure. jerry brown doesn't want to talk about poverty, he doesn't want to talk about unemployment, he doesn't want to talk about our failing schools and the last thing he wants to do is debate me. so i'm having the debate right now. without him. because we as a country are now talking about poverty. we're talking about homelessness. and he's nowhere. >> you can look at tax revenues for the state and say, maybe there is a comeback here. but so much of the tax revenues are concentrated in that silicon valley area, right? you get the huge benefit from these ipos. the success of stocks. the capital gains. that fills california's coffers. there are really, as a california kid, there are three californias. southern california, northern california, and the central valley, where you were. and they're very different

economies. they're very different in so many -- politically, even. >> sure. >> how do you solve the problems of fresno, but also please the people in hollywood, and in silicon valley, who have the dough? >> sure. well first of all you're right. the budget surplus right now is temporary. it's because the stock market rocketed up last year, capital gains is high. my jobs plan is about reforming regulation. not eliminating all regulations, but making smart regulations. that will benefit businesses all around the state. it's bringing manufacturing back to california. silicon valley designs great products. and then we always build them somewhere else. well why don't we build them in california? it's tapping in our oil and gas reserves the way other states have done. >> that's not going to create jobs, necessarily, for guys who are wandering around fresno homeless. so what do you do for the people who are there? >> well, it's interesting. what i found in fresno, there's the very lower -- lower end worker, the minimum wage worker who i was emulating in a sense. but there are also the guys, the men and women working fast food who are college graduates. who are saying look, i didn't go to college to end up serving

coffee. but this is the best job i can get right now. >> so you think that there is a trickle-down effect where people get pushed into jobs below their abilities? >> oh, well i don't know if you'd call it trickle-down. i think it affects people up and down the education spectrum when there are just a lack of jobs. people talk why don't you raise the minimum wage? when i was walking in fresno and i could not get a job the last thing i wanted you to do is raise the minimum wage because it would have made it harder for me to get a job. so there's a lot that we can do to help everyone get ahead. >> let me pursue the publicity stunt angle for one more second. >> sure. >> is there an argument to be made that you went to fresno knowing that it would be very, very challenging in that specific area, on that specific koorner where you started to get a job, what would have happened look, if on day one you had gotten a job and you had filmed it, it wouldn't -- it wouldn't have gone viral necessarily. i'm not sure you would have released it. i'm not sure we'd be sitting here talking about it. >> i don't know. is the honest answer. there's also an equal risk after a day or two, i might have

thrown in the towel. >> did you ever want to throw in the towel? did you ever feel you were in danger? did you ever feel hungry? >> there were times, sure. the thing is a lot of these cities not only do they have an unemployment problem because of a lack of jobs, there's also a serious drug problem in many cities across california. >> did you see that in fresno? >> absolutely. i came across many people who i didn't know if they had mental disease or they were high on something. and at midnight someone comes and wakes you up and they're not of right mind, you know, it's pretty startling. it's pretty alarming. and so i didn't know. i thought maybe after a day or two i might just say i can't continue for the whole week. >> you think we should legalize marijuana federally? >> you know, i don't. i think we should decriminalize and look at elements of that. i don't see how more and more drugs in our society is going to solve a lot of our problems. but we can't keep locking people up for minor drug crimes. what we're doing right now is not working. but i don't think it's a binary choice of legalized versus -- >> why don't you want to make it a state's rights issue? >> it could be. i'm just saying in california i don't think that going to full

legalization right now is the right next step we need to take. >> okay. neel is going to be with us for the next two hours. thank you for playing. >> thanks for having me. >> when we come back this morning, dow component disney is set to post quarterly results from the movie business to the theme parks, is the media giant strategy working? first, as we head to a break, check out smars of coach. the luxury retailer earning 59 cents a share. when you strip out ex-items, some of the other issues that is a beat of six cents. revenue also topping consensus. "squawk box" will be right back.

welcome back to "squawk box" everybody. we've been watching the futures this morning. after market gains yesterday, you do see some givebacks today. the dow futures are down by about 44 points below fair value. s&p futures down by just about six points. nasdaq off by about 13. cbs getting a boost in early trading this morning. earnings and revenue topping consensus. the company is raising its full-year profit guidance. stock is up about 2.3%. >> disney set to post their quarterly numbers after the bell tonight. joining us with his outlook is anthony declemente. anthony how big is the world cup going to be for disney's espn? >> it's really hard to predict. i mean, the u.s. portugal game more than doubled the previous peak in terms of ratings for the world cup and fifa on espn. so in terms of capitalizing on

u.s. interests in the fifa world cup i mean it's really hard to know how much upside to espn ad revenue we're going to see. we tweaked our estimate up ahead of the quarter. but you look at the nba playoffs in the early part of the quarter and then fifa world cup and that should be just one driver of upside for the disney this afternoon. the other two being theme parks upside and then of course studio entertainment and consumer products. those are kind of the three areas investors will focus on today. >> you're expecting a big quarter? >> yeah, at nomura our estimate is ten cents above the street. and we think the investments in my magic plus at the parks has sustainable effects in terms after howing guests to plan their stay, increasing per capita spend, having a positive impact on occupancy. so the parks are really on fire here. so we expect that to be sustainable in the quarter. and then the other pieces, of course the studio. you have to talk about frozen and things this summer. captain america marvel has really had a successful streak of properties. guardians of the galaxy

obliterating the box office over the weekend. when you look at those things the only question to ask on disney is are they going to become, in terms of a one-year investment, a victim of their own success in terms of creating difficulty year over year comparisons into next year. right? so when we look to november of this year, we're comping against frozen and does disney have a movie lineup that could match up to that. i think investors and analysts will be curious as to will it be a frozen sequel. everyone knows the avengers in the spring and star wars at the end of 2015 will be the huge banner releases, but -- >> what's your answer? the stock's up 14% this year. up 32% over the past 12 months. all these things have gone well. is it still worth new money right now, anthony? >> i think it is. the main reason i'll point you to would be valuation. the reason that mutual funds don't elect to put new money into disney is because the stock's been so successful. if you look at it on traditional

multiple, the stock still trades at a very modest premium to the media sector multiple. so you know, if -- i would challenge skeptics to look at the valuation and compare that to the ten year historical premium that disney's traded at. it's still even despite the run, because a lot of the upside has been in earnings and free cash flow, it doesn't look that expensive -- doesn't look expensive on the multiple. >> anthony, can you weigh in on the 21st century time warner transaction, and whether you -- i mean the only other player that could ever really buy time warner and bite that off would be disney. >> yeah. >> is it possible that they come? and is that something that bob iger does as a last hurrah? >> i think it's pretty darn unlikely. disney is strategically complete in terms of its array of cable networks, brands, content, theme parks, et cetera. and i don't think they need to do it. >> fwhat about the cnn piece? we were just talking about whether that goes to les mon invest at cbs or whether that's something abc would want.

abc a unit of disney. >> i think, you know, i could make the argument around the industrial logic of eliminating costs if you were to merge abc news and cnn in terms of the bureau's worldwide that could be made redundant and that could be the logic. but, i think if you look at bob iger, and disney's track record in terms of m&a, the types of acquisitions disney has made marvel pixar, lucasfilm. they've been in the category of brands in ip and content. they have not -- since the acquisition of fox family from fox in 2001, disney has not made a significant acquisition in the cable network space. and when you look at the value of time warner, andrew, so much of that value is in the turner networks, tnt and tbs. general entertainment cable networks that i'm not sure if bob and jay would like to double down on that business. >> question for the potential governor of the state of california, where many of these studios are based. would you supportive of a transaction between 21st century

fox and time warner, given that invariably an argument could be made that lots of jobs might get lost? >> i, my philosophy is let the -- let these companies sort it out. and what i want to do is make california more economically competitive so that all of our industries and all of our companies can thrive. and then let the company sort it out. >> there's going to be a lot of people in the industry who are not going to be happy about it. >> if we can improve the overall economic climate of california, they're going to be happy because a lot more jobs are going to be coming to california. i don't think the governor should be picking well this company gets to buy that company or not. >> okay. >> anthony it was a real pleasure. thanks very much. it's going to be a long night. >> thanks, guys. >> all right. coming up we're going to have a live report from atlanta where that second american infected with ebola expected to arrive today for treatment. plus, a look at how some of the nation's newspapers outside the new york area are dealing with ebola. that story in their headlines this morning. "squawk box" returns in just a moment. over 20 million kids everyday in our country

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financial noise financial noise financial noise welcome back, everybody. as we've been discussing all morning the second american infected with ebola issics pebted to arrive in atlanta today for treatment. that's where we find nbc's jay gray. jay, good morning again. >> hey there, good morning to you, becky, brian and andrew, as well.

look you're right, nancy writebol, the second missionary on her way here to atlanta in a specially outfitted jet that includes an isolation pod. she's expected to land sometime around noon. will be immediately transferred here to emory hospital, and she will share an isolation unit here with one of their missionary colleagues, dr. kent brantly. he has been here for a couple of days. his condition said to be improving, as is hers. now doctors warn while she is stable right now, they are cautiously optimistic. there is still a long way to go in this treatment, and they say the next few days will be crucial for both of these patients. one thing they will get to see, and one thing the specialists believe will help their recovery is their relatives. they are in isolation, but there is a thick paned glass partition with a speaker there, so they can see them. they can speak to them. and hopefully that will help to boost them as they continue what doctors here say will be a couple of weeks of treatment and

recovery. they're confident they can reach a full recovery, but again, they're cautiously optimistic at this point as they continue to move forward. >> jay, i realize that the hospital there has a special setup for this. it's prepared because it's so close to the cdc. >> yeah. >> there is another case here in new york city where a man's being tested for ebola at mount sinai hospital in the upper east side of manhattan. and the tabloids here have been talking to people in the neighborhood who say that they're worried, they're concerned about some of these things. is it the same situation there? >> yeah, there are people who are concerned. they created this specialized unit 12 years ago to deal with sickness, and infection of doctors working at the centers for disease control here in atlanta. it is one of four units that is capable of doing what they do here. and let me explain what's happening inside. it is an isolation unit. each of the patients will have their own room. all of the air in the unit is

filtered, and it's contained. it's not released. also lab tests are done inside. anything, any of the material that may be contaminated is first cleaned of the virus, then it's burned. it's incinerated. doctors, of course, and anyone attending to the patients wear special protective gear. they do all of that in another room. and then that is properly disposed of, as well. so they are very confident here that there will be no spread of the virus. and they continue to say even in a ordinary hospital following the rigorous procedures, and guidelines, that they should be able to contain this virus. so they're trying to educate the public, in saying there should be no concern. the problem in africa is they don't have the same guidelines. they don't have the same opportunities, and that's why it spread. >> jay, thank you so much. again, nbc's jay gray. when we return, we'll have stocks on the move.

welcome back to "squawk box," everybody. in our headlines this morning, cbs getting a boost in early trading. earnings and revenue topping

consensus. the company is raising its full-year profit guidance. the stock is up about 2.3%. also coach, another early winner this morning. the luxury retailer earning 59 cents a share ex items. revenue also topped consensus and that stock is up 7%. we have a different story at motorola solutions. earnings and revenue falling short. shares falling on that news. they're down by about 6.4%. when two american missionaries in liberia contracted ebola last week they took an experimental drug which appears to have saved their lives. the drug, z-map, has not been approved by the fda. but the patients were able to get it through a system called compassionate use. our own meg tirrell spent the last few months working on a series of special roars about this issue and she joins us now to explain how compassionate use works and why it is also at the center of much controversy. good morning. >> good morning. that's right. compassionate use is an avenue of last resort for the terminally ill and other patients who've run out of options among medicines on the market and are willing to take

desperate measures in the hopes of finding something that works. >> go! >> natalie trawler is determined to succeed. whether on the soccer field or training her dog, missy. >> good girl. >> now she's tackling the challenge of her life. two years ago natalie was diagnosed with a rare form of cancer. >> i started getting these really bad headaches. and they were a lot worse than normal. and so my mom took me to the doctor one day, and they were doing some x-rays and stuff, and eventually found that i had a large tumor in my chest. >> the cancer had already spread to natalie's brain. since then she's been through ten surgeries, radiation, and multiple medicines. some with difficult side effects. >> none of them really seemed to have a good effect on my cancer. >> natalie's doctors at oregon health and science university's

knight cancer institute have identified a new class of drugs they think may work for her. immunotherapies. they harness the immune system to fight cancer but they're not yet approved and natalie doesn't qualify for ongoing clinical trials. she's three years too young. >> we were hoping maybe there could be an age exception made, or some sort of provision so that she could try, you know, some medicine's best ideas. we just kept finding that, that that door was closed. >> they're in a position countless others have been before. they're out of options among approved drugs or those available through clinical trials and natalie's running out of time. so they turned to compassionate use. a system designed to act as a last resort. >> compassionate use is a way for people to get access to promising new therapies outside of the context of a clinical trial. >> brian druker, director of knight cancer institute has adopted natalie's cause. >> with some promising new therapies we may exclude somebody for sometimes a relatively trivial reason. in natalie's case it's her age.

and if we understand that she has the right characteristics where i think she might respond we might want to provide access to her for that medication. >> patients applying for compassionate use need the support of their physician, an okay from the fda and a drugmaker willing to supply the medicine. that's where natalie and many others have gotten stuck. the electoralers and their doctors have asked jengenentech bristol myers and merck for access to their immunotherapies. they all say no. the companies say a number of decisions play into their decisions. including having enough supply of the medicines for clinical trials and how thoroughly the drugs have been tested. but pressure is mounting on drugmakers not just for natalie but for many other patients and their families that turn to social media with their pleas. but it's a complicated issue. >> two or three out of hundreds have seen any benefit. some nice people say to me what's the difference if you're dying why not take the shot? new drugs can kill you faster. new drugs can make you sicker. >> natalie's dad says they understand the risks. >> what we do know for sure is we know exactly what natalie's

disease does when it's unchecked. and it's excruciating pain. it's things that limit her. and with some of these new medicines actually the risk is less than other medicines in the past. >> so there are no firm numbers on how many patients apply for compassionate use and are denied. but genentech told us it's received more than 100 requests for experimental immunotherapy that natalie's requested. >> it's a heartbreaking story, craig. we want to bring in natalie's father nathan who joins us now. good morning to you, nathan. before we even begin -- >> good morning. >> tell us how is natalie doing? >> well, you know, over the last 12 hours i've been in touch with natalie's doctor, and we've been working to control some pain that's been pretty tough in her shoulder. i opted not for her to come in this morning, even though i think natalie usually speaks the best for herself, better than i can, even, sometimes.

but, it's been a tough stretch. >> meg did this terrific piece which we just watched and it is heartbreaking. when you have gotten the rejection letters from the companies have you had communications with them? what do they tell you? >> you know, to be honest, there's always been a lot of kind words. and we hear things like, you know, we're limited by our supply. or, you know, we want to be safe or we want to know sort of the risk/benefits. or we don't have data for pediatric patients, or -- and sometimes some of these can be pretty frustrated because there's a reason that there's not data. there's this age limit. it's not set in science. there's not a scientific reason why 18 needs to be there. it's based just sort of in our systems of drug development and what's the fastest path. and there's some problems, and

it's showing, especially in natalie's case. >> how do you feel about the prospect, and meg interviewed one person who was just on the air explaining that, you know, potentially sometimes these drugs have side effects which are unintended or even unexpected that can make the situation even worse than it is. >> that is a very -- we understand that. that situation. when you're -- when you're dealing with a rare cancer, clinical trials are one of your chief weapons. and it is true that there can be -- there can be unknown side effects. however, if you look at cancer medicines on the whole, we're dealing with a realm that -- this is tough stuff. to be honest, some of the newer medicines are actually less devastating to the body than our previous chemotherapies. and anyone in oncology will tell you that the new stuff is actually better. so we don't take those decisions

lightly. but as i said before, we know exactly what the progression of her disease does. and we've done our research on this class of drugs. >> mr. trallor we've been turned down by three drug companies. i just wonder how many other drug companies offer therapies like this? or is the hope that you get one of those who's already said no to turn around and accept natalie? >> that's a good question. this is a -- this is a realm of therapy that a number of companies are trying to get involved with. and there are some other companies that -- that are working towards these medicines. however they're not as far along in their clinical trials, and so they're in less of a position to sort of offer a drug. a lot of the medicines that we've been requesting are in phase three testing, and a lot of the known issues of adverse

events have already kind of been understood so that they can be avoided. so really, there is -- there's plenty of opportunities, it just needs to happen for natalie relatively soon. >> mr. traller, public policy question. i consider you an expert now that you've been dealing with this, and i wish you weren't. of course the drug companies say, you know, there's legal issues, indemnification issues, they say how do we decide who we're going to choose to be part of these experiments. how should they approach this? not just for natalie, but more broadly? >> yeah. you know compassionate use is always supposed to be a case by case basis. and you know, since we've sort of arrived on the scene we've discovered it, at least with this class of therapies, it seems like it's essentially broken.

we've arrived at a time where the sort of moral safety valve for a situation just like natalie's seems to be locked up and not in play, unfortunately. and i think, you know, we're just trying to follow the science, and natalie's tumor type indicates that it would be a good indicate for this therapy. and i think a case by case sort of basis on what has benefit for the patient is still probably the safest way to go. i think there's a lot that needs to be done about, you know, obviously the system is stuck. i think incentives need to be in place for companies. i'm not sure what incentive they have to provide competition it use. >> well, mr. traller, we appreciate you joining us this morning. we wish natalie all the best. and frankly i hope somebody who is watching this finds a way to get in touch with you. >> thank you. >> we appreciate you being with us this morning. and to read and watch more about this issue, an important issue, you can check out our extended

coverage on our website. you can also hear more of natalie's story in her own words, and to read in-depth about compassionate use go to cnbc.com, and i think i'm reading your -- >> that's all right. i'll have a lot more throughout the day here on cnbc, including why drugmakers sometimes make the heart wrenching decision to say no. but first coming up later on "squawk," ali will look at a tool that's giving patients a more powerful voice. >> i hope you'll bring us updates as well. let us know what happens. >> i want to thank the traller family for spending so much time with me. i got to know them well and they're great people. >> we're all rooting for her and the family. meg, thank you very much. when we return our debate over compassionate use drugs continues. dr. scott gottlieb of aei and a practicing physician, and exhibitive director of friends of cancer research will join us after the break. "squawk box" will be right back.

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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. welcome back, everyone. we'd like to continue our discuss about compassionate use. the drug approval process of drugmakers and the fda. right now we'd like to bring in dr. scott gottlieb, resident fellow at the american enterprise institute, also a practicing physician and jeff allen who is the executive director of the friends of cancer research. gentlemen, welcome to both of you. i'm assuming you both heard

natalie's story. scott i'd like to get your thoughts on this, what's happening here, where the system works, and where it doesn't. >> well, unfortunately this is all too common. the companies are legitimately supply constrained in these types of circumstances because the production stage facilities to make these drugs usually aren't online until the time of approval. so they only have a limited supply of drug and they set up medical review committees internally to try to give out that limited supply to the patients that they deem most likely to respond. so this is a real problem. i think there's more we can do to make drugs available on a compassionate use basis and frankly there's more we can do to make drugs available earlier to get the fda approval earlier so the drug is available to everyone. >> jeff, that sounds like a big part of the issue is getting approval for some of these drugs. are there situations or a way of streamlining that process particularly for people who are facing no other options? >> mr. traller raised a very good point in new cancer drugs oftentimes are demonstrating a much higher rate of efficacy very early on in their

development programs. and there have been tools set up at the fda recently, passed by congress, that we worked with to develop new breakthrough therapies designation for situations like this in order to expedite the clinical development process. it's a long and lengthy process but one that is really necessary to continue to demonstrate the safety and efficacy of new medicines before they become widely available on the market and to patients who really need them. >> it is often the case. i mean it is often the case that it's not a question of safety that's holding up the approval of these drugs. it's usually a question of efficacy and comes down to a determination of how certain the fda wants to be that the magnitude of the benefit that they're observing in a clinical trial actually reflects the true benefit that the drug's going to ultimately deliver. so if you're going to require very long and lengthy trial to be 100% certain that the magnitude of the benefit is, in facts the real benefit of the drug that's going to delay the drug to the market. i think we need for patients like this who have no other options we need to accept a little bit more uncertainty when it comes to the benefit question.

>> guys, what is the legal, the true legal ramifications? i imagine that somebody in the traller's case would have to offer some type of indemnification of some sort but would -- is part of this an anxiety that there's going -- there would be lawsuits potentially? >> no there really aren't legal issues here. you're going to have to sign a lot of documents for certain. companies do worry that some of the data that gets surfaced in these uncontrolled settings when they do give drugs away on compassionate use basis could come back to impinge on the approval process. if something gets surfaced in that kind of a setting, that fda ultimately wants more information about it, could delay the approval. so they do worry about that. but in many cases with a drug like this you're dealing with a biologic, supply is an issue. and with this particular drug you have to deliver a very large volume of the drug to the patient. so the companies are legitimately supply constrained. >> jeff, how many patients like this, how many people are caught in this trap? >> unfortunately i think it's a pretty large number.

the fda receives thousands of requests each year. and it's important to note that they approve most of them. and like scott said, it's really falls into a delicate balance of the companies face in deciding where they're going to prioritize their drug supply. because they all have ongoing clinical trials for which limited drug is available to. and they're trying to conduct the appropriate test to speed these drugs to market for a large majority of patients. >> gentlemen, i understand what you're both saying. you bring up very valid points. but i can also understand what mr. traller was just saying is you hear a lot of nice words and then nobody does anything. scott, how do we actually fix this? or is it possible? >> it is possible to fix it with long-term policy changes. i think in the near-term these ultimately reflect rules made by people in a policy context. they're not laws of nature and rules made by people can be changed. they're subject to policy pressures. >> do they understand that people are dying? you know when you talk about efficacy rates. >> look, i think that in a lot of people's minds, and i don't agree with this, but i think in the minds of some people in

these regulatory agencies they feel the long-term interests of patients are better served by trying to conduct these long and rigorous trials to surface more information that's going to ultimately guide better use of these drugs in the long run. and unfortunately -- >> agreed, but for many people who are suffering, including my best friend five years ago who died of glee yo glostoma brain cancer and was fighting for drugs everywhere he went because he was just getting turned down. they don't have a long-term outlook. >> absolutely. right. i mean there's two different kinds of cancer patients. those who need something right now because they face very bad odds of a successful outcome and those who have cancers that are curable and want better information to guide the use of the available drugs. i think for the patients who face long odds we don't serve them very well because they need access to these drugs. >> another interesting point is the situation is natalie's 15. there isn't a lot of reserve out there that tells you how any of these drugs act on children. because, it's not tested. you would think that this would almost provide an opportunity to see how those drugs act on

someone who's not yet an adult. >> well that's one of the issues here. we could be collecting a lot more information in the context of making drugs available on a compassionate use basis and let drug companies use that information in their drug labels so we can do things like simple large safety trials where you collect information on example patient reported outcomes and you let the companies make claims based on that information at the time of approval. that would be a big incentive to expanding how many patients have these drugs available to them on a compassionate use basis. >> all right. scott, jeff, want to thank you both for joining us today. >> thanks a lot. >> thank you. >> when we come back the ceo of tenet health care on the company's quarterly results. and the state of health care in america. check out futures this morning. we have seen some red arrows. dow futures down close to 50 points right now. a little bit weaker than this morning. s&p futures down by about 6.5. stick with us on "squawk box." we've got the premarket info you need before you make your trades. stocks to watch are coming up next. state, we're changing the way we do business, with startup ny.

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welcome back. take a look at some of the stocks you need to watch today. coach, their earnings and revenue beat the street. results were helped by strength in the international markets. drug store chain cvs posting better than expected results, better sales, improved profit margins. and archer daniels midland, adm, earnings beat the street but revenue was shy of analyst forecasts. >> coming up, could the market bulls being back in action or

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the bears case for stocks. could a correction be around the corner? we've got one fund manager who says beware of a market fall in the fall. >> a healthy outlook from tenet health care ceo trevor fetter joins us to talk quarterly results and how the affordable care act is boosting results. >> and a battle brewing in the rental market. >> we have shortly coming the emperor and empress of japan, of course princess charles and di when they were together used to frequent the hotel constantly. >> we'll take it. >> the ceo of online rental giant homeaway on how it plans on winning the fight against air

bnb. reaction to the company's latest blowout quarter. the final hour of "squawk box" begins right now. good morning again, everybody. welcome back to "squawk box" here on cnbc. first in business worldwide. i'm becky quick along with andrew ross sorkin and brian sullivan, who is in for joe. joe's on vacation this week. our guest host this morning is neel kashkari the former u.s. treasury official. that's where he helped create and then run t.a.r.p. he is now running for governor of california. and we have a lot to talk about with him this morning. we should point out that the futures have been getting weaker through the morning. right now, after a positive day yesterday, you'll see the dow futures are down by over 50 points right now. looks like we'd be opening down by over a decline of over seven points for the s&p 500. the nasdaq off by 15. stocks we should note are coming off their best day in two weeks. >> tell you what's going on with

gannett this morning. because one of the big headlines. two pieces of significant news involving gannett. it's now spinning off its publishing business to shareholders. into a separate publicly traded company. it will be keeping its broadcast in digital businesses. gannett also announcing it's now bought the 73% of cars.com that it didn't already own. price tag $1.8 billion. it had co-owned the auto sales website with four other companies. that's a big move for that company really going to change the dynamic of what it ultimately is. in other corporate news today. remember the boeing battery problem last year that grounded their global fleet of the 787 dreamliner more than three months? well japanese newspaper reports that winter temperatures may have been a factor in the meltdown of the lithium-ion batteries which caused at least one boeing 787 to make an emergency landing in japan. that incident followed one in boston two weeks earlier when a battery on a parked japan airlines dreamliner overheated and let off some white gases. in other news the largest

outbreak of the deadly ebola virus continues in africa. close to 900 people have now died. 1600 more have been infected. including two american missionaries. dr. kent brantly is receiving treatment at emory hospital in atlanta and his colleague dr. nancy writebol is expected to arrive there today after being evacuated from liberia overnight. now we have been talking all morning about the fear factor that has gone along with this. and earlier on the show dr. anthony fauci the director of the national institute of allergy and infectious diseases tried to calm our concerns. >> we should not be worried. a person could get on a plane from west africa, getting infected there, and then by the time they get here, get sick. but we have the capabilities of handling that. so the american public should not be concerned about an outbreak in the united states. >> well, look at this. the new york tabloids are playing up the fear a bit because somebody got checked into a hospital and may or may not have had ebola. but some of the other nation's papers are playing it down a

little bit. it is mentioned but on the cover of many papers like the "l.a. times," the "denver post," others. although most mention experiments, treatment, et cetera. a different level in new york. we're dealing with our own thing around the country they are talking about it. we'll have to wait and see whether guys just the mention of the word on the cover gets people nervous. doctor fauci said no you should not be nervous. it's extremely difficult to transmit. >> we talked about rational acting and whether or not all of those things go through your head when you're dealing with it. >> and you know what? when you're dealing with someone that has unfortunate a 90% fa l fatality rate you can't expect people to act rationally. >> but i think people also remember bird flu, avian flu -- >> which are much easier to transmit and a bigger threat. >> and i think people got through it and people were rational. >> we'll get more on that in just a bit. right now we've got to go to israel. israel hamas cease-fire is in effect setting the stage for talks in egypt aimed at reaching a broader deal on a sustainable

truce. nbc's jim maceda joining us now from tell aviv. jim. >> good morning, brian. so far so good. it's been just over seven hours since the cease-fire began, and despite a stabbing we've learned of outside a settlement near jerusalem, and a last-minute barrage of dozens of rockets fired into israel, as far away as jerusalem, and beth la hem, but with no reported injuries, hamas calling these revenge for israeli massacres, it has been quiet. no hamas or other militant rocket attacks, no israeli fire. in fact the only israeli movement we've seen has been the pullout of israeli troops, and now tanks out of the gaza strip. let's remember this is not the beginning of peace in our time. this is just the beginning of a 72-hour unconditional cease-fire. the same one essentially that was brokered by egypt and rejected by hamas three weeks ago. now whether it will last beyond

these 72 hours will depend entirely, i'd say, on two things. first of all, sustained quiet is the first one. israel says it will only -- it's only pulled out to defensive positions. it's very close to the gaza border still and it will respond, it says to any breach of the truce. and hamas still reportedly has some 3,000 rockets but it can certainly use in response to what it sees as israeli aggression. even more critical is how the cairo talks go. israel is set to send the delegation to cairo to negotiate a long-term truce, and an agreement with the palestinians that will bring some extended peace. but that's the goal. there are cavernous gaps between the two sides. hamas is demanding an end to the israeli egyptian blockade. it's been in place since 2007. and also opening the border crossings. israel demands that hamas give up its rocket and tunnel building, indeed that gaza become demilitarized. and much like the i.r.a.'s

resistance to decommissioning its weapons, this is still a major red line for hamas. so, the sides are pursuing what they're calling a tactic of sustain and expand. sustain the negotiations, 72 hours, then try to expand them another 72. and another 72 and so on. but it must be said, there's very, very little optimism, and a tremendously bad track record in the eyes of most people. israelis and palestinians. that this is going to change any time soon. back to you. >> all right, jim, thank you very much. back here in the united states, we're watching what's been coming in on business and we can tell you right now some breaking news. target is just out with some preliminary guidance for second quarter expenses. it looks like there are going to be higher than expected initially more costs for the data breach than they had originally expected. they are now expecting gross expenses of $148 million. they say that's partially offset by a $38 million insurance receivable. probably insurance money they're getting for that. but they do expect that the vast

majority of actual and potential breach related claims will be a little more than they had originally anticipated. that's not all that is in this news. you can see the stock is down by 3.2% this morning. they give you an update on the guidance. they say for the second quarter they're expecting something like 78 cents compared with the guidance they had given earlier of 85 cents to a dollar. that's not just because of increased expenses. they also point out that the u.s. segment same-store sales are essentially flat. they have lower than expected ebitda margin because of promotional markdowns offering big sales to get people back into the store and get traffic going there. they say guests continue to spend cautiously and focus on value in the current segment. they also talk about canada and canada was the big problem for target originally. they say somewhat softer than expected sales combined with the impact of continued investments to clear excess inventory. all of those things adding up to a worse than expected quarter for target. now again offering guidance of 78 cents versus the 85 cents to a dollar they talked about before and that stock is down by

just over 3%. >> these are not good numbers for target. >> no. they're not. >> yeah. >> no way to put it other than that. looks like the data breach, $110 million net cost minus the revenue from the insurance side. maybe also impacted -- one wonders how much of the sales miss -- >> and that's -- >> is related to the data breach. >> the entire release. they do not break it down on how much is poor sales or worse than expected sales and how much are higher -- >> i don't know how they would know that though. they can't poll -- maybe they could. say why didn't you come in this month, you were here last month. well i don't trust you anymore. you wonder if the data breach is going to take a long lasting toll, or will be -- 78 cents. >> probably some of the sales they've been offering to try and get consveumers to come back in. so they are -- >> think of it this way their previous guidance was 85 to a dollar a share. coming in at 78 cents, you could say that it was 20-plus plus worse than foreseen.

20% worse than foreseen. that's a big miss. >> it is. let's also talk about the markets overall. wharton finance professor jeremy siegel doesn't see a correction in the near future. >> 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. >> that was jeremy yesterday on "squawk box." but the bears are not so sure. joining us right now is dan alpert, westwood's managing capital director. >> good to be here. >> what do you see happening? you've described this year as a real battleground. >> it's a battleground between the cyclicalists, people like siegel and others, who really do believe we're seeing signs of business cycle reviving the virtuous circle of job creation and event ummly going to highway job creation and expansion.

then there's the secularists, larry summers for example, who are looking at the advanced economies and saying something's really wrong here. we're not enjoying the type of robust recovery we could be or should be after such a crisis. >> so, what will eventually tell us who's winning this? >> the battle is being really illustrated so clearly by the difference between the bond and the equity markets, right? you're looking at a bond market that's actually, you know, during the taper tantrum back in 2013 that's a tongue twister, back in 2013, that market sold off like crazy, yields went up over 3%, and you know we're back down over 50 basis points from there, and quite frankly there doesn't seem to be any upward pressure on rates given the fact that there's just way too much capital out there relative to the demand for capital. >> when did you first get worried about this? because the argument that the bulls will point out is people who were listening to them have made a lot of money over the last few years. >> of course. of course. you have all the classic signs right now. you've got declining market

breadth, you've got low volume, you've got really high p/e ratios on a current basis. super high p/e ratios on a schiller p/e basis. you're saying there's got to be a correction. unfortunately, the age-old question, which has been driven the equity markets and certainly has driven the housing markets is with cheap money, with zero interest rate policy, how do you actually get to price discovery? how do you actually know what stuff is worth? because if you take your money out of the equity market, you're earning nothing, right? so there's a certain buffer that low interest rates create, not only in terms of cheap money, and you know, the ability of businesses to lower their borrowing costs, but since they're not really expanding all that much, that affect has already been felt. but when you actually take that to the next step and say, well if the market were to sell off, how far would it sell off, you have to actually imagine yourself in an environment where rates are dropping, too, because it's very unlikely -- >> what are the numbers? >> well i think you could get down in to the, you know, the

1850s with a minor sort of episode -- >> as a blip as a quick comeback or are we sitting there for six months or a year, play it out for us? >> i think the big issue is whether you break through 1850, 1840 something like that and you decline down because the next level really is a level that brings you to p/es that are more normalized. where people can be more comfortable for a sustained period of time. if we get to that reason -- region rather, i think we're at the point where people have actually said you know what? these valuations were way too high. and you're seeing it all over the place. you're seeing it, people are throwing money in to tech plays, all sorts of other things where they're doing it simply because they just don't have any alternatives, and those are things -- >> i think tech everyone could argue is overvalued. you think the entire market broadly? >> you know, again, just look at the schiller p/e ratio. you're talking about a level that we haven't seen other than -- >> but the schiller p/e ratio includes some very erratic, strange years. >> it does. >> 2008, 2009, 2010.

do you even take -- >> when you look at what can sustain growth at the end of the day the macro economic factors are key. we are not experiencing the kind of wage growth and the growth of disposable income that we need in order to foster incremental consumption to action push up earnings. we're in a low inflation environment, which is not a good thing if you're actually trying to price goods. right. or services. >> so where is dan alpert's money right now? >> oh, god cash. the answer is it's very hard for a guy like me to go in to equities at this point. you know long-term holdings and bonds, and that's about it. i mean the truth is, of course, i've missed a bunch of bumps but the bottom line is that going forward, i think you can make money by not losing it. >> all right. dan, thank you very much. >> hey just a quick update on target. stock is trading down 3.2%. the estimate was 91 cents. so they came in -- >> that's where the street was. >> that's why i was lining over here. 91 cents, 78 so target looks to

be a tough day today. >> when we return the ceo of tenet health care the hospital operator seeing a bump up in its business thanks to the affordable care act. that exclusive interview. as we head to a break take a look at the "squawk box" market indicator. we're back in a moment. greenline do for you?t cay just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own. helping you find new ways to plan for retirement. and save on taxes where you can. so you can invest in the life that you want today. tap into the full power of your fidelity greenline. call or come in today for a free one-on-one review.

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welcome back to "squawk box" everyone. we've been watching the futures this morning and you have seen quite a few red arrows along the way. right now the dow futures are indicated down by 66 points. they've lost ground throughout most of this morning. s&p futures down by about nine points. coming after the best performance in quite awhile for the markets yesterday. >> tenet health care reporting quarterly results last night after the bell. the hospital giant posting earnings that beat the street on an adjusted basis citing higher admissions and positive synergies from its vanguard acquisition. also raised its full year outlook. joining us is trevor fetter, president and ceo of tenet health care. looks like obamacare gave you a nice little boost here. so my question is, from a policy perspective, is this your gain and our loss or how should we think about this? >> well, it -- thank you, andrew. you know, it's about a third of the volume increase in the

quarter, and about a quarter of our earnings growth was due to the affordable care act. two-thirds and three quarters were due to strategies that we've had in place, investments we've made, and a strengthening, you know, economy. and we've really had a great quarter. it's the best one i can remember. >> and how much of this is a function of the vanguard transaction? >> well, that's -- those statistics i quoted are, you know, as though we had owned all of these hospitals last year. so, in addition to those effects, you know, we had synergies from the vanguard acquisition. we've now increased our estimate of the benefits of that transaction for the second time. so that's going very well. the integration has been a real success, and you know one of our important new markets is detroit and our fastest growing hospital in the second quarter was one of the hospitals in detroit. i'm very pleased with the acquisition. >> i have a sort of larger question about the hospital business right now. which is, what happens to hospitals if innovation and technology, and even active

managed care intervention continue to move patients out of beds, away from hospitals? how do you think about that issue? >> well, we think about it a lot. it's been happening, you know, over 30 years. if you look at a graph of in-patient admissions it's been declining steadily. over decades. and outpatient visits have been increasing. so our, you know, formula for dealing with that has been to increase our investment in outpatient centers. we've quadrupled the number of outpatient centers that we have from six years ago and we have them in all types from physician offices to urgent care, to free-standing emergency departments, surgery departments, and that's among our fastest growing segment of our business, with visits up nearly 8%. >> what's the margin on that kind of business relative to in-hospital? >> it's higher. it's a much higher margin. probably double. that's because you're not open 24/7. you don't have all of the complex equipment and people standing by to take care of traumatic injuries in the middle of the night. it's a more convenient solution

for patients. it's lower cost and higher margin so everybody wins in that transition. >> never, it's kneel kashkari. given how much of your business is tied directly to obama care how do you look at all the litigation, all of the appeals that are going on back and forth? there's a lot of uncertainty. how do you deal with that as a ceo? >> there's been a tremendous amount of uncertainty. and it's been -- it's nothing new. it's been going for four years. this latest one probably doesn't get settled for a couple of years in the supreme court. but we just keep going. in a state like california, which is a big state for us, in fact we just acquired another hospital in california last week, you know, the state has a robust exchange for selling, you know, these individual policies. expanded medicaid is very positive state for us. and so, you know, we do our best under the circumstances, there is a lot of uncertainty. but it hasn't stopped us from making new investments. >> trevor, we're always asking about how to pay for health care. can we flip a little bit? >> sure. >> why is the united states so

sick? why do we live more unwell, and shorter than many other rich nations? why do we consume so much health care? why are we always talking about the effect, paying, and not the cause? >> how much time do you have, brian? >> we've got like 30 seconds. >> it's demographics, it's diet, it's lifestyle, it's also, you know, we have a tremendous amount of technology treatment facilities, et cetera in this country. and, you know, people expect to be treated immediately, they expect to be treated at all times of day. they expect for hospitals and other providers to be capable of treating almost any condition, and they don't want to wait. and they, you know, don't particularly want to pay for it. so you have some dynamics in this country that are very different than other countries. >> trevor, we were talking earlier in the broadcast, a number of the front pages of the papers today talk about a person who apparently went into a mount

sinai hospital in new york wanting to be tested for ebola with some symptoms. has anybody come into one of your hospitals? and how should we think about the potential threat of ebola? >> nobody has come into one of our hospitals. it's very unlikely. i did watch your coverage earlier in the morning. it was very thorough. on the topic. you know, hospitals, many hospitals, are equipped with isolation wards. the hospital industry has put a great amount of imfast us into treating infectious diseases and being extremely cautious about how to do that. hospitals are very safe places and i think whether it was bird flu or sars or now this crisis in africa, hospitals in the united states are very unlikely to get these cases. but, if they do, or if there's some other infectious disease they're well equipped to take care of it. >> trevor the other issue i wanted to get your thoughts on this morning. i don't know if you had a chance to see it in the 7:00 hour, we did a piece on the issue of compassionate use by the traller

family on. heartbreaking story. >> it was. i saw it right before i left my house this morning. >> how do you think about that from a public policy perspective as the ceo of a health care company? >> it's a really tough issue. it's not really a hospital issue. so this issue plays out between patients, and physicians, and pharmaceutical companies. it was a very sympathetic, you know, piece that you have on. i am of course very sympathetic with the family. it's just not something that's really in the realm of what we do in our company. >> okay. fair enough. trevor, we want to thank you for coming on this morning. >> m.i.a. pleasure. >> on the earnings report. ceo of tenet health care. see you soon. >> all right. coming up, is bill gross losing his crown as the bond king? another rough month of outflows there. plus shares of target are trading down 3% today. company warning its expenses tied to last december's data breach will be more than expected. an industry insider joins us who says there is only room for one

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welcome back to "squawk box." pimco's total return fund suffering 15th month of outflows to the tune of $830 million. in one bit of good news for bill gross the amount of money investors took from the fund was substantially smaller than previous months.

this was the first time the fund's monthly outflow was less than a billion dollars and more than a year. we have a gubernatorial candidate here but also a former pimco man. what do you make of what's going on over there? >> pimco is a great firm. i'm a good friend of bill. i think bill is a fantastic investor. don't bet against bill gross. >> he's already a politician. he hasn't been elected yet but he's figured out how to do it. >> when we return we have the story of target. shares of the retailer trading lower after the company updated its guidance, talked a little bit about how much it's going to be costing it for that data breach but also what's been happening in terms of same-store sale s in the u.s. and canada. coming up the summer rental season is in full swing. >> this is great! >> from castles to condos, to cabins. homeaway supplies a place for you to stay in 190 countries. >> sit down, relax. >> the company's ceo joins us to talk rental trends, and how they

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your big corporate story this morning fast becoming target. just a few minutes ago they

updated their expenses related to the december data breach and basically cut forecasts. seeing earnings at 78 cents. wall street had them at 91 cents a share. stock is down more than 3%. joining us, jan rogers nippon ceo of rogers nippon worldwide. jan, i mean, target just continues to mess things up. >> yeah, i mean the headlines that came out on this was target lowers earnings due to the data breach. that's not what happened. target lowered earnings because of bad sales, bad gross margin due to promotional markdowns, and a continuing train wreck in the canadian segment. on top of that they told us the data breach cost them more than they expected. i don't think anybody cares so much about what the data breach is costing them except for the sales it might be costing them. so -- >> you know, i love you buddy, but how do you know that the data breach was not the cause of the slow sales? >> you don't. you care about that. that's my point. nobody cares what the cost that they're going to incur is on

this data breach unless it would bankrupt the company, which it won't. it's a side show. but, yes, we care a lot about why their sales aren't good. we don't know if it's a data breach. we don't know if it's something else. their sales weren't that good before the data breach. my contention is, target's not operating the way target used to operate. they've just become another discounter. and in america you can't be just another discounter, because if you are, you have to compete every day with walmart. and people who compete with walmart in the discount business tend to fail. >> target, okay, jan, i'm going to push back again. target stock is now down 4.5% so the selling accelerating. >> they agree with me, not you. >> right now they do, buddy. but target has, and i'm not some target defender, but they've competed very well with walmart in the past. this could take some time. how could we be sure in a year from now, two years from now, five years from now, target doesn't only recover but prospers? it could take quarters but why

years? >> you know it's hard to say that a guy who does $70 million, $80 million bucks a year competing with a guy who does $335 billion a year in the united states is competing well. i mean yes, they've looked better in the past because they were an upscale discounter. they've been cooler. they've been able to use that to drive business. that cool has gone away. the customers not thrilled with them anymore. now they're competing on price. and competing on price with walmart, and competing in the grocery business with walmart is a losing proposition. >> if you're going to advise them to do one thing to turn it around, one thing, jan, what would it be? >> it would have been to hire a guy to run the place -- >> not would have been. what now? starting right now. >> my advice to the guy now running the place is get a strong merchant in there who can bring back the cool factor of the things they did, like shabby chic, to bring back stronger

advertising, to bring back the cool factor in their advertising. which is what they were the best at in 2006. and to be what they used to be, which is the premium price point dealing with a higher end customer than walmart. not competing on price with walmart. but competing by having a better offering of very cool product, and man that's hard to do. but that's what they were doing so well up to 2006. >> but it's more than just like cool advertising, right, jan? they were really good at bringing in designers. people like a michael graves. isaac mizrahi, and getting the cool factor kind of circulating that way, by having these designers in house that people wouldn't have expected from a discount retailer. >> yes the delivery matched the marketing and the advertising, exactly. they had the product in the store. they were able to generate that excitement. that hasn't been target for a long time now. i contend they peaked in 2006. and it's been downhill from

there on the cool factor and being able to convince the customer that you should come here because we are a more entertaining, fun, interesting place to shop than just coming here for price. >> okay. jan, thank you. great talking to you. >> you, too. >> and the stock has been flat to down since 2007. so it's been gone money for seven years. >> we should also tell you about the second american health care worker infected with ebola is expected to arrive in atlanta later today for treatment. health officials reported more deaths in cases worldwide. 887 are now dead in west africa. nbc's jay gray is in atlanta outside emory hospital. he joins us with the latest. jay? >> nancy writebol the missionary that you're talking about is back in the u.s. at this point. the specialized medical jet that she is flying in that includes an isolation pack, has landed in bangor, maine, within the last few minutes. it will clear customs there and refuel before getting back in the air, and heading here to

atlanta. expect it to land around noon, and then she'll be immediately transferred here to emory hospital where she will share an isolation unit with a fellow missionary, dr. kent brantly, who is also being treated for ebola and who arrived just a couple of days ago. both are said to be in stable condition, and doctors are cautiously optimistic right now about their prognosis. they say there's still a long way to go and of course the next couple of days will be critical for both of the patients but they seem to be responding well to treatment, including a special experimental drug that they've both had two doses of that really seemed to turn things around. dr. brantly had taken a turn for the worse on thursday right before he was about to fly. in fact the doctors in africa said he was near death. got a dose of this experimental drug, z-map which is manufactured in california, and they say within 45 minutes to an hour, his respiration changed

dramatically. the symptoms started to digress a little bit. and so they called it nearly a miracle, and followed that with another dose here in atlanta just a couple of days ago. as miss writebol, she's had two doses as well in africa. now the specialist here won't say if that experimental medicine will continue to be a part of their treatment protocol. what they do say is that they want every available option, every weapon at their access as they continue to fight against the deadly virus. >> jay, i know that that -- the vaccination or the serum that they were given has not been tested in people before. but do you have any idea its efficacy of when it's been tested on animals? it's been very effective. in just early testing, understand that no human had ever had this as you talk about until this two missionaries did. they're trying to ramp up production right now. it was my understanding as of early this morning there were

only three vials of the medicine available at all. so they're trying to, again, ramp up production. get things going. get these tests moving as well, and there are other drug manufacturers, obviously, do the same thing. the thought within the community is that they could have some type of medicine, some type of vaccine available worldwide by next year. that would be a quick turnaround and something obviously that's desperately needed after what's happening in africa. >> jay, thank you so much. again, nbc's jay gray joining us from atlanta. right back here we want to talk about the economy, and the fed with our guest host today, neel kashkari. i know you've been focusing on california. but what's the sense you get about what's happening around the country? where are we? how much progress have we made since 2008? >> i think we've made a little bit of progress again we mentioned this earlier where i feel like the u.s. economy is a pretty amazing thing. and it's hard to hold it down. and frankly, washington's poor policies have almost been trying to hold it down and the u.s. economy is not giving up. and so it's -- it's trying to

dig its way out, so to speak. but you know we talked about it with the guest earlier, we're still at record low interest rates. >> right. >> this is still the morphine economy. we're still living large on morphine, and where's the real fundamental economic growth going to come from? we've seen it in the energy sector. that's real. where else are we seeing it? we're seeing it in the tech sector. so we're seeing it in pockets. but until we transition to real, sustained economic growth and until we start exporting goods and services around the world, hard to get overly confident. >> you know the further we get from 2008, i think the more revisionist history takes place. there are a lot of people who question t.a.r.p., whether we ever needed it. does that tick you off? >> that's a high-class problem. that we can all sit here and today and say we didn't need it and it all would have been fine and look where we are today. i will take this over the alternative of what we faced back in 2008 all day long. so happy to -- guilty as charged. so be it. >> when you look at what the fed's doing right now, trying to

extricate itself from this incredibly easy policy. trying to just wean us off of what we've been used to for some time, what do you think about how they're doing? what do you think about how the economy will react in regards to that? >> you know, i think they're doing a pretty fasterful job. they've had some fits and starts where they leaned forward and the markets reacted. now they've got their communications down well it seems like and they're signaling what they're doing in the markets are absorbing it, you know, pretty well. but we need to give the fed some help. because their transition, if they're easing their easy money so to speak backing away into a fundamental growth economy, it's going to be a much easier transition than if there's no real economic growth. >> i don't want to relitigate history but just a question for you. >> you wrote the book. >> do you give more -- >> i was there when you wrote the book. >> do you give more credit to t.a.r.p. for where we are today or to the fed? >> different medicines for different things. so the tarp was arresting the

heart attack. and the fed was trying to resuscitate the patient once we arrested the heart attack. both were absolutely necessary, but different medicines. >> you got some viewers in california probably now, it's 5:38 out there. >> please wake up, everybody. >> give them hope for a job. because california seems to be sort of low wage workers, those in the service industry, as well. >> right. >> and multimillionaires. 40% of all home sales in the san francisco metro region were now for more than $1 million. if you're a teacher, if you're a cop, right, if you're a hotel clerk, how do you live anywhere close to where you work? if you're a teacher in palo alto, unless, you know, how, you got to live in fresno and commute because homes are $800,000. fix that. >> 30 seconds, these are problems of our own making. we've created poverty in california. california is number one in america for poverty. 24%. it's man-made poverty. so home prices we restrict supply. it's a combination of nimbism,

environmental overregulation. saying no i got my house. i don't want anybody else to build any more homes near me. and everyone's prices then go up and it's the working family that gets hurt by this. and so part of what i'm trying to do is open people's eyes that these well intentioned policies actually hurt the very people they're designed to help. and that means if we rein some of this back -- >> how much would you give tesla to bring their battery factory to california? because it's a race between new mexico, arizona, texas, nevada and california. >> i agree. >> and they're tripping over themselves. >> this is jerry brown's whack-a-mole economic policy. if you have a company that gets media attention and you have high priced lobbyists jerry brown will give you a special deal. i want to improve california's overall economic climate so that all of our businesses, big and small, can compete and do well and grow in california. no special deals for those one-off companies. >> angels or dodgers? don't answer that. >> dodgers. >> wow. >> oh. >> as an angels fan i'm

offended. >> won some votes and lost some votes at the same time. >> i don't vote there anymore. >> it is neel kashkari. >> okay, coming up next homeaway is aching on air bb in the vacation rental marketplace. the company's ceo is going to talk midsummer deals and the sharing economy. but before ee go to break, take a look at markets at this hour. we do have some red arrows, dow likely would open off about 70 points off. s&p 500 off as well close to ten points off and the nasdaq off about 20 points. "squawk box" returns in just a moment. e

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welcome back to "squawk box." with summer in full swing let's get a read on the short-term summer rental and business -- rental business. the latest travel trends across the globe, homeaway is the world's largest marketplace for vacation rentals representing roughly 1 million paid listings across 190 countries. joining us now with brian sharples, the co-founder and co-ceo of homeaway. good morning to you. we compare you to airbnb. i know you don't like that comparison. but just help us understand where the consumer is this summer and then i want to get in some of the issues around the sharing economy, if you will, brian. >> yeah, sure. i mean we're a bit of a different company than airbnb in that our business is primarily vacations, primarily families going on vacations. in the u.s. right now it's been a very good year. i mean traffic is way up. in particular, we see as we do every summer people going out to the beaches, one of the things locally for you guys is that

actually our fastest growing market for travelers this year, believe it or not, is the jersey shore. which had about 210% traveler growth over last year. pretty nice recovery from sandy a couple years ago. >> is there a shift away from hotels towards homes? or is this just, you know, the tide's lifting all the boats? >> you know, there actually is third party data that suggests there's a bit of a shift. when we started this business back in 2005, about 7% of families traveling were staying in houses. that number is about 14% today. and that 7% share has come from hotels, certainly. >> let's talk a little bit about the sharing economy. because during the break, before you got on, we were talking about some of the regulatory issues, both from a sort of security perspective, we've heard a number of stories. more around airbnb, not your company at least that i know of, you know, where people are setting up all sorts of events at people's homes. let's call it. to be polite about it. then there's also the tax issue. for example do you submit tax

forms or receipts on behalf of me if you broker my deal? >> well, we have -- so we have a different business model than airbnb. they're what's called a merchant of record which means they actually collect money on behalf of owners and then they remit it so they have a responsibility to pay taxes. in the case of home away we're more of an ad venue where people list on our sites. we do have a payment platform but like ebay's paypoll those payments go directly to the owners. so the owners are responsible. now that said we're big supporters of people paying their taxes and we have lots of tools on our sites and lots of messaging on our sites to make sure that our owners are aware of that and we encourage them to pay and believe the majority of them do. >> so, neel kashkari. in california if you think about the ride shiring, ubers and lyfts and whatnot of the world the taxi cab companies are trying to stop them and kill them. and i equate it back to the wagon vendors when hen try ford came out with the model-t they

said we've got to preserve our business model. are folks coming out to get you? are the hotel operators saying we're going to put you out of business and coming up with all sorts of excuses why you need to be overregulated? >> no, i don't think so. again, we support regulation. i think it's a good idea. and i understand why there's controversy about things like uber and lyft. we're really not as much part of the sharing economy, i have to distinguish, because most of our stuff is in vacation markets that are so dependent economically on vacation rentals that those laws and regulations have been worked out many, many years ago. the controversy now is in cities because airbnb has come into cities in a very strong way and most of what they're doing is allowing people to rent the primary home they live in. which is different than what we do. and so those laws -- >> brian, what percentage of your -- of your clients or customers are renting a home that they do commercially, effectively this is a home that they rent, you know, routinely, all year round, or are people leaving their home for you know a weekend or a week or a month or what have you?

>> virtually all of them are doing commercially. so our customers are second homeowners, who are renting on average have 32 weeks available a year to rent. >> although, brian, you said earlier that third party data suggests that people are now renting homes instead of going to hotels like they used to. and that means municipalities are losing money in terms of the taxes that they would have been making before from a hotel sale. >> again most of that in our case is in vacation markets like destin and orlando and other places like that where the hotel economy is still very, very vibrant. it's just that, over the years, because of companies like homeaway it's just easier to find and book a vacation rental. and that's the reason more people are doing it. >> okay. we're going to leave the conversation there. brian, thank you for joining us this morning. enjoy the rest of the summer. >> thank you. >> when we come back, jim cramer will join us live from the new york stock exchange. plus, much more from our guest host neel kashkari. right now check out the futures. you're going to see red arrows still. dow futures down by 70 points below fair value.

"squawk box" will be right back. tomorrow on "squawk box," the governor of south dakota on business success in the mount rushmore state. aol chairman and ceo tim armstrong on why online content is king. plus, reaction to time warner earnings. and the future of media, with rich greenfield of btig. "squawk box" starting at 6:00 a.m. eastern time. right here on cnbc. 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. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

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and welcome back to "squawk box," good morning, california, 5:50 out there. indications, not much of a change, a decline for the dow at the open, four down days, a rebound yesterday, maybe resume those today. watch target, the stock story, coming out, cutting forecasts, highlighting the data breach in december, down 4.6%, 58 bucks, could be an ugly day. >> jim cramer joins us. what do you think about target? you are a retailing expert. >> yeah, well, thank you. i don't know, target lost its way. right talking about in in that

basically it's just a yield play at this point. there's not much to it. watch what management does. when with we go to targets, they don't look the way they used to, not fresh, companies competing. move on. just wait. also, canada, i mean, just take the charge and move on. disappointing, a lot of retailers okay. kohl's is doing okay. dillards doing well and target bad. what does that say? >> it is a head scratcher. a long time since we've seen that. how do you feel about the markets overall, into august, vacations, people taking the eye off the ball. is that safe to do this august? >> august not a great month, september not a great month. i think the issue's russia, basically saying, listen, the russian sales are going to be hurt badly.

there's a division lined up to the east of ukraine, and, you know, russians have a division. they have 17 battalions, but if you see more than one division, you have to believe they are going to take military action. if they do that, the market's vulnerable. >> i saw it tweeted earlier today about how some russian general is ordering some coats with winter lining, you know, heavy winter lining, if that's the case, they plan to stay there for quite a while. that's a concern. >> they had winter lining in 194 and surprised people in the german army. you don't want to hear this stuff. it's driving things. talk about the fed endlessly and not take the eye off the ball. what happens is cuts from russia, there's a hidden issue that we just, you know, default to a cbs, which was good, but there may not be enough around. >> thank you. jim, thank you. see you in a few minutes. immigration reform, talking

about that in a second, and stick around for squawk on the street. the special guest after the news about the spin and much, much more. back in a moment. are you ready for the stock of the day? it's coming upright here on "squawk box." we started zya with the thought

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stock of the day today, target, the retailer lowering the its outlook partly due to the expenses. the data breach, larger than expected in the second quarter, but target says it was hurt by promotional markdowns, stocks down by 4.6%. >> okay. let's get back to the guest host. immigration. >> yes. >> everyone in washington's gone home. nothing's going to happen anyway. where are you relative to the rest of the gop on immigration? >> i'm on the side of immigrants. they add tremendous value to the country. we have to be proimmigration. i look at the border and i'm horrified at the scene of tens of thousands of kids. all we can do is send them back home to their home countries, change the law to send them home quickly. the only way we stop the next

wave of kids from the dangerous journey is if they see the kids who left last month are back. >> it's gangs, not safe there, i seek asylum. >> i understand. my heart goes out. there's human tragedies all around the world, and we can't have an open border and say, look, we welcome everybody from around the world. we need to update our laws, be proimmigrati proimmigration, be smart about it, use foreign policy to improve conditions worldwide, but it's not just letting everybody come here in an uncontrolled manner. that's not rational policy. >> brian, you're making faces. >> politicians are legislated by what they are going to get. can we have a rational conversation? >> we did. >> i know what i'm talking about. >> i'm a republican, pro-choice, proimmigration reform, and i'm progay marriage, but focused on economic issues, and i won the primary, and now i'm talking the fight to the third round. >> i hope that's a sign of the

gop to come. >> i think so. >> there was a rant about this a month ago. >> that's you, i think. we need to thank the guest hosts all morning, gubernatorial candidate, ames follow-up. >> thank you for having me. >> we'll see you, hopefully, very soon. >> thank you very much. that's all for us today. join us tomorrow, and right now, it's time for "squawk on the street." good morning, and welcome to "squawk on the street," i'm with jim cramer live from the new york stock exchange, carl quintanilla and david faber both off today. the dow off 60 points, nasdaq 7 17, s&p 7. we saw similar pressure on markets yesterday for a late day rally. we'll see what happens today. watching the ten-year closely in that regard, punches above the.5 level. not a