good morning and welcome to "squawk box" here on cnbc. i'm michelle caruso cabrera along with electricky. steve liesman is joining us, too. two mega deals dropped. rupert murdoch decided to pull the plug on its $80 billion offer to buy time warner. rupert murdoch cited time warner's refusal to come to the bargaining table as one of the reasons. after that announcement, time warner said it is committed to producing long-term value. on reaction to the news, show you what happened to the stocks. 21st century fox climbed, actually, and time warner was lowered by a little more than $9. stocks announcing a $6 billion stock buyback. maybe one of the reasons why we're seeing 21st century fox

rise. less concerned about as may have acquisition. overpaying. >> a lot of the shareholders who own fox are shareholders in time warner. so while you want to high bid for time warner, you don't want fox to overpay if you own both of these stocks. people were expecting strong numbers out of time warner to so it could profits case. how is this for a good morning for you? stocks down just before those earnings come out. >> and at the same time, rupert has a history of overpaying, right? when you look at the write down that he took on the "wall street journal," but ultimately financially he paid a lot of money for it. so shareholders are going to go along with that. >> there's a comment in the newspaper this morning which is the new and improved rupert murdoch that he's learned his lessons from prior battles. >> i doubt it. he had less power. >> he would love to do that. >> the shareholders couldn't call a meeting earlier, that

this was going be something that would drag out over the course of the year. >> into the spring. >> into the spring coming out over this. and immediately announcing that they're going to pay $6 billion potentially in the stock buybacks. >> fox said that. >> fox. >> now, does time warner have to respond with something? >> like i said, that's a good morning for you. so we're going to see it lower today. but there's a key question as to whether rupert woke up everybody to the potential value of time warner and whether or not it holds a lot of the gains that it got simply because of his interest. >> and there was an excellent job of getting that company in prime 145i7, getting into a lot of things that have been dragging the stock. >> there's important distinctions there to the "wall street journal" that make it more vulnerable. that stock, dow jones hadn't moved in 30 years? >> yeah. the dow jones shareholder. they had worked there at the "wall street journal," we know. >> i mean, so -- >> and 18% is the market we came

up with. $76 now versus the 90. so that is the bar that time warner or the directors has to go over to show, you know what? my plan now is better than an 18% gain -- my plan for later is better than an 18% gain in your pocket right now. >> that is tough. exactly. >> all right. later this morning, we are going to be hearing from former time warner chief jerry levin. he will be our special guest starting at 7:00 a.m. eastern time. >> sprint is sprinting away from t-mobile. citing strong regulatory opposition. sprint will appoint a new ceo to replace dan hest. and had made clear, if you want to stick around for the job very long. check out shares of sprint, lower now by more than a dollar. >> do you guys think the market sees individual deals and that

it's falling apart or is there a broader -- the possibility of mergers and acquisitions. >> i think each of these deals is a real reason for why it fell apart. is this a sign at the top where things start to collapse? some of these mega deals that we've been hearing is you can see how much is happening. when those start to collapse, what is that starting to tell you? >> that's a very good point. at the same time, the regulatory hurdles on this mobile deal are going to be so, so tough. and they knew that. they knew that was what they were going to have to overcome. >> certainly in the individual sectors where these deals happen, the other stocks in them trade with a premium based upon the idea that they could also be part of the takeover. so that would be individual -- specific to the sectors. but whether or not there's a broader cast over the market is something we have to watch. >> i do have a question about t th-mobile and its strategy here. part of its strategy has been to

give away essentially the -- >> does the phone work. >> it's cheap. it's very, very cheap pricing. some analysts have speculated the reason they're able to do that is because they are egging somebody on to come buy us, because we're making it so tough for anybody else to do business in this. you always heard gordon say you're only as smart as your dumbest competitor. t-mobile has been the dumbest competitor in terms of its pricing. >> being a consumer of what is the higher end, sprint and at&t. if you combine the four and have better infrastructure and better service, rather than having two at the low end and two at the high end. >> i wonder if regulators would have thought about that going through. >> apparently not. >> i'll tell you what i do know as the father of teenagers,

cheap, all-inclusive plans are very attractive. and when it comes to the teenagers, you don't necessarily need the coverage. they don't chat all over the country. it was one of the things -- exactly. it works while they're watching tv. you have three screen kids. >> wireless in the house? stwl we have wireless in the house, that's right. but basically, the idea, we always have these arguments with the kids, joe, you went over your data thing this month and we argue about it and think about charging them more. but i didn't have to have this discussion with my data. i didn't go over my data plan. >> i had an uncle who got into trouble when he was little because back then at&t, the long distance calls. >> in my neighborhood, foop because half the high school was in a different -- we had to get charged for it. >> dean agers and phones, it never changes. >> that was the whole thing that was attractive about some of

these cheaper plans that were out there. >> oh, yeah. >> another view, walgreens is buying the rest of the european alliance that it doesn't already own but is not planning a so-called tax inversion. the nation's largest chain. walgreens says the new company will be headquartered in the chicago area. it announced a 7.1% dividend increase for shares of walgreen's now on the board. they're up quite a bit, 1.2%. >> you know about the political pressure that came to bear here. you heard from president obama, about how he was talking about inversion, how it was unpatriotic. president obama says he didn't think it was right, even if it was legal. this could have been the biggest reason you saw in there. this was chicago, his hometown. >> interesting theory. >> there were people talking about how this was going to be a

crying shame if -- >> in chicago, the president's hometown. michelle and i might disagree on this, but i think there's a role in moral suasion. i think it's okay for the president to get up and say, you know what? i need you to stay here. that's part of his right, part of his job. the president can get up and say, don't do this. it's not rool right. >> congress is being unpatriotic. one of the key roles of government is to foster government. everything they do makes us less competitive. they are the ones to blame. you can't blame the companies. i'll be shocked if shareholders don't come back and say what? you're going to do this deal and you're not going to invert? are you kidding me? >> yesterday when i first heard about this after hours, i think it was down by about 5%. that was a knee jerk reaction. >> that's the clip there. >> it must have happened before the markets closed.

>> yosemite right there. >> i will kind of take both sides of this. the company could have stood up to investors who are pushing us to do this. but i come down with michelle, we need tax reform. >> i agree with that. but to michelle's point, that drop is shareholders speaking. that's their collective voice, what? >> what i find very frustrating, and you spoke to the president about this and jack lew, they seem to think that politicians can waef wave a magic wand and go to where the agreement should go. i know jack lew knows better. >> i don't know if we have this in one of our readerships, the announcement yesterday the treasury after saying it did not have the tools to stop this said it's looking into things it can do to stop tax inversion.

so that's a new thing that's out there. >> even after walgreens say they wouldn't do it. >> they're looking into it. but hey, it just strikes me that the president has an ability to raise the cost to companies that are doing this. it won't stop it, but it will raise the cost in terms of investment. and when i did a background call with the senior treasury official, they said they were concern about was that something that has stopped this from happening before is reputational risk. people were afraid about the publicity around this. they were concerned if one company does it and another company and a third company, what held it back would go away and all of a sudden they would be an avalanche. what you're seeing now is a stalling tactic, an attempt to stop it while they do something to change that. >> that worked with walgreen's. part of the speculation, the reason they did this is they were worried about people boycotting their stores, not

going into them. that's a serious issue when you're talking about a retailer and a consumer brand. >> but do they, at the same time, steve, based on what you said, cause a flood gate of people saying, oh, my gosh, this could go away. we better do this while we can. >> that was the response of other folks i talked to who responded that you could have that kind of response. let's check out the european markets at this hour. there's some big news out this morning in europe, at well. italy's gdp report says the company unexpected fell back into recession in the second quarter. the italian market, down 2.6% right now. that's having an impact on the rest of the european markets, as well, with the dax and cac down 1.4%. >> this is such bad news for italy. it's the united states, japan and italy when it comes to debt, right? if they don't grow, they will be forced to restructure or default

on their debt at some point. they've passed the goal and they haven't grown in, like, 20 years. >> a decline of 0.2% for the gdp. but if you look long-term, they've done nothing for decades. >> and their youth unemployment rivaled about 40%. >> despite all the help from the ecb, cheap money doesn't stick. it's a bad economy. if you're uncompetitive, that doesn't help necessarily. you've got to do things. the new prime minister has made a lot of advances that they're in trouble. let's take a look at how this is impacting futures here in the united states this morning. if you check things out right now, you'll see there are some red air he ros. these are modest declines here. dow futures down by 32 points. s&p and nasdaq off 4 points. what you saw for the dow, the s&p, both of them closing at their lowest levels since may.

at this point, we're on track for our third week in a row of declines for the markets. should investors start repositioning their portfolios and brace for a correction? joining us is j.j.kennehan and dos kote. let me start with mr. kinnehan out there. listen, you have this correction. if the correction is happening amid stronger earnings and stronger revenue growth. so my question, maybe if yogi berra were here he would say it's too expensive. >> steve, i would say this. we out 1920 last night on the s&p 500. which is good. it wouldn't surprised me to see us go down in 1900 today.

we see the bonds up quite a bit today. one of the things we saw last night out of germany, becky mentioned the italian news. but out of germany, we saw the durable goods orders were down significantly, too. there's a bit of bad overseas news. taking everything back to the u.s., though, as you said, we have had some pretty good earnings. and i think one of the nice things we've seen on changes, you listen to the ceos speak. the ceos are talking about growth for the first time in about eight or ten quarters, not hey, we've got enough expenses, we can get by on a small gdp. they're talking about actual growth in the economy. so i think that's very positive. and it has been a pretty good earnings season. a lot of the earnings have been lost despite the news that come off and usually have a 24 to 48 hour news flight. >> in russia, it looks pretty clear that the news out of russia, the idea, the question

of an invasion sent the market even lower yesterday. >> no. i think you have to be clear on what the main driver is. i don't believe the main driver to russia or israel, the main driver, i believe, st updated market was good economic growth. we have strong nonmanufacturing numbers, really strong, and that raises the prospect of rising rates and the fed pulling back. i don't think it's a geopolitical story. i think it's a rising rates story and financial markets have to adjust to rising rates. but the other side, it's good economic data and that's good for the fundamentals. >> let's talk about what kind of rising rates people have to get used to here. the consensus out there, for what it's worth, is a june/july hike by the fed and a 1% funds rate by the end of next year. what are some possibilities here if the fed were to be tighter? >> no. i think ta that share is -- she's going earlier. she's talking about qe is going

to be done in october. i believe it's going to be probably march time frame. and i don't think the market is expecting an earlier time frame. but the more we get good jobs number, manufacturing number, consumer data, that moves up the timetable. it could even be earlier than that. pay attention to the language of fomc meetings because everyone has talked about janet yellen as the dove. she has been anything but dovish. >> interesting. joe, let me ask you, people out there, if they're afraid, what i've been confused about is where can you run in this market if you're afraid? if you think stocks are overvalued, it could indicate go cash? >> i agree with him longer term. i don't think rates are headed that much higher and i think geopolitical risk takes states to begin with. we is saw the sell-off accelerate yesterday on that news. with that, though, steve, one of

the things that we're seeing is people came for put protection in the spiders, particularly the etf pft there were 2.25 puts purchased for every call. which is unusual. so there are people coming forward. we saw volatility in the vix up 12% yesterday. so with that opening, people are starting to set up overall for that. one of the things that we've seen from the retail side is one of the things they've been doing is buying stocks after they get beaten up. we saw last month people bought whole foods. so i think that, you know, retail and, you know, professional managers do it all the time. when stocks get overdol done or get beaten up, people are being very stock selective. >> you have to admit that it has been a winning play here, not that it will happen again in the future, but buying these dips has been a pretty good strategy. doug? >> i think what you have to do is look at global diversification, you have to

look at what's going on in emerging markets. emerging markets have been up for the past month when large caps and u.s. domestic equity are down. if you want a hedge, look at the loans floating, but broad global diversification, not cash. >> okay, guys, doug, j.j., thank you very much. >> have a good day. still to come this morning, it may be time to change your passwords. a russian gang has stolen more than a billion user names and passwords in one of the largest databases in history. and what magic does disney have to improve in a quarter? we're not letting it go. we have more "squawk box" right after this. ♪ [ 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. ♪ e my mom works at ge. financial noise financial noise financial noise financial noise

more than 500 million e-mail addresses, a discovery made by a wisconsin based firm called hold security. the research company is calling it the largest breach ever. >> this is a group of about a dozen people who just sat around and sent the zombie computers out to go gather all of these. what kills me is this target, we knew what the breach was. we don't know who the companies are, but you can basically assume if you're on the internet, it was you. >> i read this story this morning and i kept reading,

which companies? which companies? and they're not revealing. >> there's only 3 billion people on the internet and this is a billion passwords. that could be a lot of people who have multiple passwords. >> maybe they'll only steal $1 from each password they stole. that's $3 billion. >> that's what i thought, they do it in a way you don't notice. >> like office space and the pennies, they got caught. >> in the earnings, crushing estimates for the third quarter with its highest earnings per share. here is what disney's ceo had to say on closing bell yesterday. >> we had great results. tremendous story, consumer product and, of course, the studio, which has great results from movies like captain

america, maleficent and the effects from frozen which is the highest grossing animated film of all time. >> do you understand there wasn't a single flop this quarter when it come to the studios? >> studio is fine. the biggest thing is they're building new franchises. guardians of the galaxy, that marvell franchise, you've got star wars, pixar. >> let me ask you this, movie, you have have a great movie, great actor was b but the secret sauce is missing. have they finally institutionalized the process or are they just lucky? >> i'd like to say if everybody could make hits, they will. but the most important thing for disney isn't really what happens on the studio. hits do they develop a franchise and does it go into a video game and theme parks. >> so i asked that question because i wonder, how do you put

a multiple on those profits? if you look at wall street firms, the multiple on trading profits is one. they never know if you can replicate it quarter to quarter. what do you do with this? >> i think when you look at the stock's reaction to last night, what on the surface are really good numbers, you see the studio did drive a lot of that. but on the tv side of the business, which is still 60% of the value there, there's some choppiness. one of the things, for instance, to be neutral on the stock is the rising cost of sports. >> i was going to ask you about that. let's talk about the costs of sports acquisitions. espn was the one weakness. we've all figured out between rupert murdoch and nbc and everything else that everybody wants sports because nobody will fast forward through the commercials. so comcast acquisitions has gotten very, very expensive. have we seen their profitability hurt. >> markets? >> i think the bigger issue is how do you transition into these new contract terms?

the nfl kicks in the terms and there's about a 45% increase. putting that into perspective, you could see costs going up 500 to 800 million, but you can't raise your fees to comcast and others by that commensurate amount right away. at the same time, the ad market isn't exactly healthy right now. >> so if they can have this incredible quarter and the stock is selling off in the premarket because of this issue at espn and the cost of sports? >> i think sports is an underappreciated near term risk, but long-term they're set up well. >> consolidation, there's more likely to be a buyer, i would think, no? >> yes. buying inside the tv industry, there's so many variables that can make or break it, but it's better to buy the asset that are sold rern ta ones that might be buy right now. >> can we talk about what's going on with fox, whats going on with time warner? were you surprised?

>> there's a good argument on both sides. but at the same time, if you were interested, you would probably do what fox did. you raise the price here, you get a little bit more pressure to the time warner shareholders and you're forcing them to basically talk about it. >> you don't think that they're out? because my favorite thought was, wow, maybe this gets the shareholders back involved and he says he's going to use the extra money for share buybacks, but he has a year to do that. >> and the timing is suspicious, as well. they have to talk about this. i think there's some valid issues on both sides of the table. if you were blocked, this is a great way to do so. >> what would you like to see happen? as somebody that covers the stock, what's better for time warner? >> i think you have to have the consolidation. the reason being is these pressures, content cost is going up, ad sales are slipping and there's this fear that it starts to shift over to digital. iger spoke a little bit to that last night on disney.

and everybody is racing to get these affiliated increases, but not everybody can capture enough. >> can i just ask, what is the normal success rate for a movie studio? >> it's hard to measure. you look at operating margins as a way of probably measuring that. and they've been really thin margins. you're talking break even on some studios to say less than 10% for others. >> is that on a normal basis or is it getting back to the question michelle asked, is that a lucky quarter and you should be discounting those kind of returns going forward? >> well, the studio, again, for disney, isn't really where the money centers. we're talking about dreamworks animation, yeah, you have to put a lot of faith in and what do they do auto a hit? think about "cars." it was not a phenomenal movie of the studio, but it's warranted a area in the theme park. >> so this is probably a stupid question, but is the stock already trading on frozen 2,

frozen 3 and frozen 4 had? >> i think a lot of that is what's not is probably the guardians. you can take multiples in a lot broader directions than people appreciate. >> great having you on. thanks for coming.the. coming up, more drama in the media industry. twenty-first century fox pulling its bid for time warner. jerry wynn joins us and says he's not surprised. but first, jobs at historic lows and economic anxiety running high. the results from the nbc "wall street journal" poll coming up next. tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading.

. morning, everybody. welcome back to "squawk box" here on cnbc. i went to a one direction concert last night. this is the song i woke up singing this morning. i'm becky quick along with michelle caruso cabrera and steve liesman. and steve, before you ask, i took the kids. i didn't get home until after 11:30. but the kids had a great time. >> you stay out that late? >> never, never. this was -- the 2-year-old stayed home. matt won. among our top stories this morning, walgreens is buying the rest of the eu, but it is not relocating the headquarters outside the united states. part of that is because of concern about what would happen

with shoppers boycotting. walgreen's announcing a 7.1% dividend increase. that stock, though, down by about 4.5%. federal regulators have a message for the nation's biggest banks. try again. regulators say 11 of the largest banks haven't shown they can collapse without a major fallout. the fed and fdic making comments yesterday about the so-called living will bankruptcy plans. the regulators argued the plans submitted by the banks make unrealistic or inadequately supported assumptions. this was a big deal at fed chair janet yellen's hearing. senator warren raked her over the coals on this issue, pointing out that for all these big subsidiaries, a lot of these banks had a huge number of subsidiaries and partnerships say how can you possibly unwind these banks? and i wonder if something of this response by the fed is a political response to senator warren. >> i don't know that you ever,

ever get an answer. are you ever going to be figure out -- you never know where the next crisis is, right? so it starts to fall apart. and i'm not sure you can -- i don't know. if it possible? i thought it was crazy when they came up with the idea in the first place. >> right. the response would be at least you should be able to solve the last one. >> right. >> you know? and we can't do that now, so we don't know how the dosh the big story is how long it took lehman to unwind, how many subsidiaries they had spread all over the world, the total lack of global cooperation. this is a big -- maybe not the cause of it, but certainly something that made it worse. >> but there were simpler fixes. you went after leverage, right? >> exactly. >> and did a much simpler thinner law. i don't know if that's true, becky. let me explain why. you can have a lower leverage but still have a very sxlikted structure. so the idea being that even a lower leverage, which is by the

way they are reducing leverage. but a lower leverage should make a crisis less likely. but when you get into one, how do you resolve it? >> and there are always runs regardless of the lev raemg, but certainly a more efficient way. >> but janet yellen prefers macro prudential policies which -- >> she's using interest rate policies. >> which is a way to press your leverage, right? >> if you are -- >> exactly. >> fair enough. >> let's talk about a new nbc news "wall street journal" poll this morning. ayman joins us. >> president barack obama hit a new all-time low in an nbc news "wall street journal" poll. take a look at some of the highlights or the low lights. the obama approval hits a low of 40%. congress's approval much worse,

however, 14%. obama's approval on the economy, just 42%. his approval on foreign policy, a meager 36%. now, take a look at some of the bad economic numbers here that talk about american economic pain. someone in their household has lost a job in the past five years, 40% say that. $5,000 in student loan debt for themselves or their children, 27% say that. 20% have more than $2,000 in credit card debt. they're unable to pay off month to month. and 17% say they have a parent or a child over 21 living with them for financial or health reasons. and that all may be part of the reason why 49% of the people surveyed here said they think that the united states is still in a recession even though the recession technically ended a number of years ago, guys. americans are still feeling all that economic pain. >> what do you think it is that they feel the most pain on, eamon? is this that they can't get

loans, they still have high unemployment despite the declines we've seen in unemployment officially? >> i think it's that first stat that a lot of people know in house holds, their own families losing jobs. even if it's not affecting you directly, you see that in your family, you see that in your neighborhood. it's sort of a psychological effect that it has on you. that's part of what we're seeing here and for barack obama, it's a real problem. i wrote on cnbc.com yesterday that the president has really started to try to take credit for the good economic news. you know, corporate profits at record highs, the stock market at record highs. these are things that the white house didn't used to tout even when the numbers are good on those funds because it felt so jarring compared to americans' economic experience generally. but now as we saw on the president's interview with steve liesman and in other places he's started to try to hammer on this point, that the economy is better and you get the sense americans aren't quite registering that and they want

to pound that point home. >> and i just thought it was really interesting. a slightly different take away, when i saw the numbers about the percentage of americans that think the economy has improved, it looks like that improved. and the number -- the percentage who think we're in a recession, that went down. so clearly, what's happening here is people are feeling an improved economy or believe the economy is improving. i believe it was more than half of americans believe the economy is improving, although, obviously, the overall sense of the economy is low. anyway, they're not connecting that with president obama. that's really the issue. >> right. yeah. i mean, this president clearly feels like he wants to start taking credit for what we've seen in the economy. you know, six plus months of 200,000 plus job growth. the white house is thrilled about it. .they've started to go out and discuss it in public in a way that when i fist started covering the obama administration in 2009, 2010, you get the good economic news

and -- >> but eamon -- >> that's something we've done and we're taking credit for. >> the whole in that is a lot of folks look back at the jobs in the 80s and the jobs market was so much nor stellar. a lot of people remember that. so this 200,000? great. but it's not what it could have been a lot of people believe. that may be part of the reason why. and 60% of the people surveyed in this poll said they think america is in a state of decline. >> that's very bad. >> foreign policy -- >> thank you. >> all right. eamon, thank you very much. >> you bet, guys. >> when we return, refueling the future of education. education is on the front line of that charge. we talk to the new ceo of that division just the in time for back to school. as we take a look at the markets, you're talking about a surprise decline for the second quarter in a row for gdp in italy. that's having a major impact on stocks of all the surrounding

nations there. you can see germany down 1.6%. additional declines in the ftse and in the cac in france. stick around. "squawk box" will be right back.

welcome back, everyone. after the declines we've seen in the last couple of weeks, again yesterday, you can see futures are indicated lower. those declines have been picking up steam over the last half hour or so. right now, dow futures are indicated down about 70 points. s&p futures down by close to 10 points. nasdaq is off by 17. among our stocks to watch today.

general electric. upgrading the dow component from market perform to outperform. analysts citing an industrial focus mix, large backlog and upcoming catalyst. mcgraw-hill education is the second largest education company in the world and it is focusing on the digital transform age in education. the company's new ceo is david levin. david, thanks so much for coming in today. >> good morning, becky. >> we've been talking about the digital transformation, too. what are you seeing? what are you trying to react to? >> it's not so much react, it's take advantage of. so we're seeing an opportunity to improve outcomes to work with kids and also the teachers to help them get better results. and that's the technology is allowing us to do. >> how does it work specifically? >> specific is what we're doing is adapting technology or adapting education so that we can really deliver answers and problems which are suited to the individual. so instead of treating a cold cloth as one group, to deal with

the educational needs of each single child individually, each single learner, each single learns separately. >> because they can each have their separate program? >> it's not a generic program. each one customizes to the way that child or that young adult learns. .each student has a different practice of learning. >> what do you have right now in terms of the rollout? >> we're just crossing the point now where we will sell more in terms of our cash revenues in the digital product than in the old traditional print book. which is significant in higher education. it's a bit further behind in k-12 because the infrastructure is less developed. but in higher ed, we're really well advanced. >> so basically, to buy textbooks for ipads rather than physically having them shipped to the school? >> not at all a textbook. it's a richer environment. >> i'm showing my age. >> well, no, what it doesn't show is imagine a book which

reacts to you. and as you learn things, the things that you learn sort of fade into the background whereas the things show the tests show you're not getting come up to the foreground. >> so you're asking them to buy something that's going into an electronic product rather than the physical textbook. >> correct, correct. and we're also dropping the prices very, very significantly, so it's a much better outcome and it's much cheaper. >> what are your margin better on a physical textbook where the price is higher? >> the margins are about the same. we've got to keep investing to develop our products. we've got a team of about 500 software engineers and developers just building these new products. none of that existed three years ago. >> there's an article in the research packet that came along with the extended period which is why i bring it up. there was a study that showed that the more you spend on education, the better the outcomes.

is that -- >> well, i think, tale, it's not about the absolute amount of money. it's the efficiency. so the first thing just to think about is that companies like mine, instructional materials account for about 1.5% of what goes into what we spend on education. so the whole debate for us is about that 1.5%. and we are reducing -- >> where is the rest going? >> labor. >> pay for people who teach their kids. >> no, paying for their pensions and their health care. >> i don't want to get caught in that particular issue, but the crucial thing for us is we need to work with teachers, we need to work with professors to help them be more efficient. and these tools help both sides of that debate. both the teachers and also the educators and the students, as well. >> okay. david, thanks so much for coming in and spending time with us this morning. >> thank you. >> this is for you. >> thanks, michelle. coming up, we head to chairs with some of the things we are picking up from the pages today.

and later, an update on the ebola issues. squawk returns in just a moment. life with crohn's disease or ulcerative colitis

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. all right. we're in the chairs. i have papers. in the headline it says walgreens decides against tax

relocation. apparently the corporate parent is walgreens. >> the stores are walgreen's with an apos trophy, too. >> it's the one store on 134th street that decided to oppose the tax inversion. >> it's probably the family name, right? >> it sounded confusing. >> in my neighborhood popular diner closed down and a walgreen's across the street they started we building the diner and the walgreen's closed. >> can you tell us your story today the long bond? >> i like this story. so the journal has the story today for bond, long is strong. these are companies and countries that are issuing 30-plus year bonds, japan, austria, france have sold ultralong bonds. canada did a 50.

mexico a 100 year bond. corporations are doing this, too. if i can get serious with this, seriously, this is a reason why this cycle is different from other cycles. company balance sheets should be in good shape. they should not be an issue being tremendously affect. ed. >> i want a 100 year mortgage, my cash flow should be fantastic, right? >> if you have an adjusted rate mortgage, don't do it, if you have any chance over the next four years, have a 20-year plus mortgage, 20 or 30-year, it's something that's free for you and an asset down the road. >> can i amend that? >> by the way, can you kaul pay it off anyway the bank can't call it. >> the average stay in a home is seven years, done pay for insurance beyond the horizon that you need. so weigh these things, say you know what, this is my first

house, i got kids on the way and i'm going to want to move out of here. >> if you cannot lock in at historically low levels. >> which is what these countries are doing. >> if you can pay less. >> pay less i need to wake up every morning worrying about what the ten year is trading at. >> i'm pretty sure you will move on. >> exactly. >> people start out with first homes thatkind wind up being plates they stay. >> we are lucky. we are the only people in the world that can have the conversation. in canada, it was an interest adjustment every seven years regardless. >> and it's a great thing. you can pay it off at any point you want. the bank cannot call it. >> that is a loan that you hold on to, that you can control. i want to point out one story on the front of the "wall street journal." they say the buyout firm is plotting its comeback. it's been on the rise, this is what you have been watching with jim coulter and the other partner there bonderman building

things up. they face a tough slog t. story goes out talking to oregon, the investment counsel there, ppg had big missteps and a big deal that blew up beforehand, they are coming back and working their way back into the top ranks, delling people, yeah, they learned their lessons, they won't make the same mistakes this year around. >> you can do it again, people will give you a second chance. >> i love that about the country. >> that's right. >> when we come back this morning, running away from deals, sprint ditches t-mobile, rupert murdock drops his $80 billion pursuit of time warner. time warner's ceo talks to us about why he is not surprised by this dramatic dwompblts also aol chief tim armstrong first on cnbc ar rolling out quarterly results. more "squawk box" still around. what if there was a credit card

where the reward was that new car smell

good morning, everybody, welcome back to "squawk box" here on cnbc. i'm becky quebec along with michelle caruso-cabrera. we have been watching the future. watch out. we see a lot of red arrows, dow futures down another 60 points. s&p futures off 8.5 points. a lot happened because of what happened in europe. europe's european shares have been selling off in the early

trading. among some of the big reasons there, weak economic data and worries that tensions between russia and ukraine could escalate even more. have you the biggest declines in italy because that country came in for the second quarter in ra row. that puts them in the territory t. ten-year note, let's take a look, mark grant points this out to me as yields continue to decline 2.46%. he's been calling for the ten year to end potentially below 2% the end of the year. so we will talk more about that in a moment. in our headlines, wall greens made it official. it doesn't already own, the price is about 15.3 billion in cash and stock. that deal, toe, will not if done as a so-called tax inversion with walgreen's saying it considered the idea but moving

the headquarters overseas would not be in the best with interest of shareholders, questions of whether boycotts would be held in stores after president obama came out saying he is not a fan of inversions. right now, let's talk about several big deals that will not be happening. 21st century fox has dropped its bid for time warner saying they refused to come to the bargaining table despite a compelling offer. sprint abandoned its efforts to buy sprint mobile and apple and samsung have scaled down their ongoing patent wars. they have agreed to drop all illegal action against each other. their battles pence the united states will continue the size of potential damage awards might be much large were than overseas. back to the media, earnings came in at 98 cents a share, that was quite a bit better than an liths had been expecting. we are calling on fox, joining

the news line is former time warner chairman and ceo jerry levin. he joint us with his reaction to the news, jerry, i know you were a little surprised when you first heard about this deal last month, what do you think about rupert calling off the deal at this point? >> well, i'm not surprised. i don't think it was a head stake by rupert. i think the stock got punished by the street. we are bulking up. there is a lot of tidying that need to take plates in talks. i think he understilled the backbone of the board and time warner and it's also a question of valuation, you know, it was just not fluff cash and not really even though it was treelging to the street and gets everybody's blood racing, it really, the strategy behind it and the management challenges and the economics didn't make a

lot of sent. >> you don't think this is a head fake? the timing is unbelievable. we were expecting time warn tore come on with strong earnings, we knew this would be the quarter the timing would be proving to the street it might be worth more on its own than a part of fox. even though they came out with earnings that beat stills by a long shot. are you talking about that stock down 10% this morning. >> it's an obvious reaction. it takes the takeover sluffs out of the stock. now a return to the fundamental also. what is really an example of time warner as it stands. as an example, an old asset of hbo, hbo whereas if you look at the valuation of netflix. so there is a lot more work that needs to be done in properly valueing time warner. what has been demonstrated is that the company is being managed very much in the interest of shareholders and has some of the grit assets that are

just beginning to flourish under the current management. >> that couldn't be a tactic by runnert murdock. we should be doing a deal about the earnings, the failed deal, if are you him, you could say, okay, i will do it the morning of the earnings, now the shareholders will pressure them to come back to the table because the stock is getting hammered so much. >> it actually make itself good grand theater to think rupert has chest gamed this all the way through. but you look at that statement that he put out and you look at t the. that fox has to tidy up the company, get management if place and besides it's not only from a financial point of view, it doesn't make a lot of sense for fox. it doesn't have enough cash.

the management challenges, fox needs to get its house in order. i don't think this is a diversion. i think when somebody put out a statement that they're going to be disciplined and follow what's best for shareholders, you better deliver on that and that's what rupert has set up for himself. i just felt this is not the "wall street journal." this is a very different situation. >> all right. our guest host has a question for you as well. >> jerry, this is a very different situation than the "wall street journal." the "wall street journal" was sort of languishing going nowhere. time warner is a company that was beginning to gather so there is a much stronger argument for keeping it independent than for making it a part of 21st century fox, do you agree with that? >> without a question, that's basically what i'm saying.

you have a strong company that is extremely well managed that has a lot of focus and a lot of great assets that are all seem to be percolating at the wrong time. what i think rupert misapprehended was that it just doesn't have the fire power to really go after a company like time warner. i think you'll see over a period of time the stock of time warner will be valued essentially the way that the company is performing. the other thing i would say is maybe the focus should be put on what should be the strategy of the major media companies? is it simply to bulk up now in light of the distribution consolidation you have kwoim cast and time warner cable and detect tv? is that the strablg?

or is the strategy to deal with digital disruption, this massive digital taking place right now? really remediation and having production and exhibition doesn't make as much sent? >> so these companies are in kind of a double window, do i bulk up and get consistent bugs or do i just focus on having them create original programing and assume that the platforms will be there and i can realize value. >> jerry, that's along the same lines of my question was this an optional deal for either of these companies, they must do a deal here in order to survive and profit and be competitive does fox need to go after

somebody else? >> well, i would think so, because because you know there is a ned or there is a gap but i don't believe that's the case. i believe now is the time for companies that articulate a clear digital strategy and make sure their management, current management ask in place. that's the assignment. i don't think there is any reward for simply bulking up at this point. >> all right. jerry, it's a pleasure talking to you. >> thanks again. >> we should point out time warner beat expectations and they have this paragraph, it's odd in its phraseology. it says the outlook does not include future merger unstructured severance charges the acquisition of sales and assets are the impact of taxes that may occur from time to time

do you to management decisions and changing business sessions. the company is currently unable to forecast precisely the timing and/or the magnitude of events and resulting impacts. it sound like they'ring a knowledgeing there could be merger activity being acquired or as the aquisitor. >> we will experience a dekenzian market as in charles dickens, the worst comes first as geopolitical problems lead to a sharp correction. byron, are we there now? >> which are not down 10%. >> more from here? >> we could go look. there was too much optimism. you've seen this over and over again eneverybody is feeling

complacent, the market is vulnerable. it doesn't, you know, there is an updeal political turbulence to precip date. the mo mr. o, moment item stocks rolled over. high yield rolling over very, very hard. these seem to be in the past these were signals of something bigger to come. and the yield curve is flattening, by the way, am i overreacting or is that what you are thinking here? >> the dollar market. steve will tell you the fundamental also are very sound the economy is doing well. there were no other bubble signs. some of the guests may tell you there were. the valuations were an extreme. the economy was beginning to gather some momentum. we have a terrible first quarter, a much better second quarter. i think we will have a better second half. i think the fundamental also are sound and the valuations are anable.

so i think this is a correction in an ongoing bull market. >> are you hearing any complaints about liquidity. so much from the fed, yet we hear from corporate bond yielders, buyers, sellers, they're struggling to make a market sometimes in some of this stuff. etfs with high yield bond in them, will they gap down when people try to get out? >> i think there was a bubble in high yield. you know the yields are once 22%. they went down to 15. 5% for a high yield bond. that's too low a yield for the kind of risk you are talking about. >> it looks great for a two year, a ten year >> the fall rick is much greater than it is on treasury. i hope. >> famous last words. byron will be with us the rest of the show. we will talk a lot more about the markets. >> when we come back, aol unveiling quarterly results.

tim orm armstrong will talk to us about what drove the quarter and later an update on the ebola scare in new york city with mount sinai health system president and ceo dr. ken davis coming up at 7:30 a.m. eastern time. "squawk box" will be right back. . it has to be a great one, and i don't compromise. ok, how about 10 gigs of data to share, unlimited talk and text, and for a family of four, its $160 a month. wow, sounds like a great deal. so i'm getting exactly what i want, then? appears so. now, um, i'm not too sure what to do with my arms right now 'cause this is when i usually start throwing things. oh, that's terrifying at&t's best-ever family pricing. for instance, a family of four gets 10 gigs of data, with unlimited talk & text, for $160 dollars a month. in a we believe outshining the competition tomorrow quires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you.

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welcome back to "squawk box." the futures have been in the red. i haven't seen them in a couple

minutes now. >> worse than they have been. the dow would open 55 points lower. the fax down 17 points following through on yesterday's weak there is. the mortgage rates average 4.35% on the weak. >> aol out with second quarter raults. motels ago, they came in 34 cents a share. revenue did boat the streets. joining us right now is aol cramer and ceo tim armstrong. it's grit to see you this morning. >> tell us about the quarter missed in terms of what the street was expecting for eps, a little better than revenue. what happened? >> we are one quarter consecutive growth in adjusted eb california our calculations around the adjustments is aol had a very strong quarter.

number two growth. we are the largest players in the video space, program advertising space. we have done a great job of building global premium content brand overall. aol is one of the most forward looking, forward leaning companies. we are really happy with the quarter. >> let's talk about what you said in terms of consumer growth. how did you do that? by building growth organically or bringing in organic brands? >> if you are out on the street, they're doing multidevices, you look at media over the phones through the top tv. aol is one of the largest providers of content and advertising for the multi-platform world. we are on 15 checked over the top devices, delta airlines at

30,000 feet, can you see our programing on there, when you think of the future of med why and advertising, it's going to be a multiplatform world. >> does that mean people are spending more lyme time online media, they are doing it through cell phones or places before. >> one of the things that are interesting is our results show, few look at our mobile growth, our desktop growth, over the top growth, that consumers are actually consuming more types of content more often. my guess is in the future the value of content companies, programmatic advertising and the value we are specifically doing to the business is going to go up dramatically. a huge am of shift upwards in value will be driven by consumer changes. can you see it in your families in co-workers, can you see it on the street that's an obvious thing that will happen. we four years ago set the table to invest in all of these

businesses, today's results are showing what the output of those investments are. >> what do you think of rupert murdock walking away? you think it's good? >> i think the time warner fox deal points to one specific thing which is the value of content in a world where devietss are getting faster. networks are getting faster. people will consume more content. i don't know the deal mechanics there. i do know the fact that that deal was proposed than some of the dheels have happened in the past few weeks points to the fact that our strategy has been dead on in the future. people will consume more high call content, more devices, more networks. the advertising business and precipitation businesses will be beggar in the future, probably dwarf overall. it points to the one thing which is value. there is a lot of value in whatever they were trying to put together there. >> you don't necessarily think the price was too high? you think these assets will be

more valuable overtime. >> i think if you look at disney's results and the companies that have truly invested in premium content and brand experiences, we have been on the show talking ab branded content, where brands is going will be very, very impactful. i think those companies have big brands, which we are helping hundreds of companies do at aol. we partnered to transition their linear to digital. that is a megatrend. i think people are going to get in front of that megatrend to own significant brands. i think that's a smart move. >> where does that put you in terms of the buyer being acquired on the whole game channel with that? you are right, people are looking at content, recognizing how valuable it is, you have done a great job building up your content, does that make you a potential target, too? >> our plan has been to basically do three simple things, turn the aol brand around the core service.

the second piece is to build global content brands, which we have done with huffington post and we are number one with women's style online. the third piece is to put the revenue piece behind that. recently we announced going into linear tv, we bought a company called precision demand and we bought a company invertro the best acquisition company in the world. so our growth as an independent company has come from us actually adding individual value to all of our partners and all of our customers. when you go to madison avenue, main street, wall street, i think people are now understanding our strategy in how strong it's been and we were against setting the table three or four years ago, we're going to continue to set the table to be an independent company with a lot of growth behind it in the future. >> so you haven't heard from anybody else, because you'd tell me, right? >> we had a long-term relationship, you'd probably be the first one.

>> does management know about this? i want to ask you of the stuff you are putting out there for people to consume, where's the growth? what is different now twharks are you -- how have you guys changed your content? >> just this morning huffington post launched in arabic, right? >> there is a couple areas of growth. one is in the premium content business. we were nominated for two emmys. we are doing slate programling and video. at that time getting a lot of traction. the second piece is actually really taking a forward leaning approach on our digital content. we bot the huffington post. they bought 20 million users in their blog. today they have 97 million users. we're in 11 countries. we have huffington post live, the first cable channel for the web. we got through serving 1.4 billion streams on huffington post live. what people want is they want the megatrend sight, sound, motion and digital and want to

be served in all countries t. digital platforms are erasing the barriers between the devices and the companies in terms of content. >> what's the next big contenting tim? >> we have exciting things this fall. i am really excited for format changes and the next version of the huffington post. which we have been working on, excited about our slate programing. we will launch more video programing overall. super excited about the changes at the aol core service and bud rosenthal, maureen sullivan doing a great job basically turning aol into a great curator of content. we partner with you guys, we partner with the new york times and kond nast. we have a kur rated way through owl of our systems, lastly, quickly, we also built one of the largest syndicated businesses that allows us to put content and ads all over the web. we have between 30 and 40,000

other partners that take our content in advertising. we have taken aol from our entire media business if you are in the business we are in is going from horses to automobile itself. we are a company building and selling automobiles in this space him we are doing a great job of making that transition. it's a big transition. >> tim, i want to thank you for joining us. we will talk more with byron in a moment. tim, thank you. >> thank you. >> much more ahead on the market itself with our guest host byron weened. amazon launching same day deliveries in six major cities. is your town on the list? find out when "squawk" returns. you're driving along,

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unlock the creativity in anyone. with the ibm cloud. the ibm cloud is the cloud for business. welcome back to zwaux, everyone, in our headlines, amazon is expanding the same day delivery service to six cities. more than a million items will be available in baltimore, dallas, indiana and washington. prime members will pay a flat 5.99 fee for the same day delivery items you can order. it will be something interesting to watch. >> they citity it's a stat fee. >> for anything you want to get delivered.

>> five bucks. >> six. >> the ceo of mount sinai is treating a man with ebola-like symptoms as fears of the virus spreads, dr. kent davis is telling us why he cozy to take this patient. more "squawk" after this break. .

> . welcome back to "squawk box." two potential mergers not happening. 21st century fox reject the bid for tile warner. they argued it was better off on its own. you can sew time warner shares getting hit today in the wake of good earnings, lower by more than 10%. sprint dropped its bid for t-mobile. they have not ruled out consolidation in the future but say the deal is not going to get approval any time soonful we will be talking to an analyst why this deal fell through.

>> and in earnings news, a magical quarter for disney, earnings and revenues boating the street by a lot. >> we initially saw them climb, prepark they were week. we'll see what it does in the real trading session. now to the latest on the ebola outbreak. the latest development today, the nigerian nurse who treated dr. patrick sawyer has died. the is the sec hesecond health worker to have died after treating davis. the ceo ken davis of mt. sinai health system the hospital hasn't announced the results of the blood test yet. doctor, thank you very much for joining us today. >> a pleasure to be with you. >> obviously, there is a high public fear factor and misinformation out there. but what can you tell us about the gentleman who showed up at

mt. sinai with some of these symptoms? >> he's stable, improving, in good condition. we believe it's unlikely he has ebola. but we have sent his blood to cdc to test for the virus and we'll have a definitive answer today or tomorrow. >> today or tomorrow. when you say he's stable and improving. that in itself sound like it's not ebola, correct? >> it could be. it's a good sign. there are lots of things that can present with the symptoms of high fever and gi distress fossia and vomiting he presented with not ebillion la, it could be typhoid fever, malaria, a bug he pickled up if east africa. >> when people think ebola, people think it's much greater than that when you think about blood coming from different areas and eyes, those aren't the symptoms he showed, are they? >> well, the symptoms he showed were symptoms compatible with

ebola, high fever and fossia, vomiting, diarrhea. >> i heard you correctly, you say you think it's unlikely. >> we believe it is unlikely. >> why is that? because because there are lots of other things that would explain his symptoms much more likely to have occurred and his course in the hospital is stable and improving. >> it's the cdc you are waiting to hear back from to have a confirmation. >> that is correct. >> we appreciate you coming on. there has been a fear factor, people concerned about the idea that there is a potential of someone showing these symptoms from ebola who shows up in the united states, what happened? was it a decision you made whether or not to treat him. he came in the hospital the first thing you would do would be to test him in. >> he came early monday morning and because we were aware of the cdc information and all the

media adengs tension we had put everyone on the alert event someone comes in from west africa, larl the areas that had had the small outbreaks of ebola, that we have to be supersensitive and treat it with the possibility that it would be ebillion la. so within seven minutes this patient was put in isolation. we began working him up to see what was going on. at this juncture we have not ruled out ebola. what is permanent to keep in mind for all those people who were anxious, this is a very hard disease to contract. it is not a very contagious condition. you only get this disease by being in contact with bodily fluids and having those fluids enter your body usually through a cut. that's not an easy way for

things to be transmitted. it should not be confused with the flu, you breathe it, you touch it, you get it. much more difficult for there disease to be spread. >> i think what frightens people, they read articles about workers in the full suits and if protective goer and yet they're dying, so you are saying they got infected before that? when you read that you think maybe there is a transition mechanism we don't understand. >> right. we know a we know if they're in those protective suits, it will not be transmitted. it's from bodily fluids, usually through a part ol, usually a cut. >> it sound like down in atlanta, they're treating these patients with a cure for ebola. >> well, there is this point from atlanta a mix closure of anti-bodies had a remarkable effect. the doctor who had been exposed.

in our laboratories at mt. sinai at our emerging pathogen institute, we are working on medications and approaches as are others around the country. i would to the be surprised within a few years if not much sooner we don't have an effective -- >> can you explain why we have this here but it doesn't appear over in africa? >> why we have this here the. >> why they have something to treat ebola patients in atlanta but not in africa? >> the scientists who developed this treatment are from the united states and the treatment is experimental. it was obviously given as a last resort. generally experimental treatments that haven't been tried in humans go through must more testing.

it wasn't like there is a treatment waiting on the shelf that could be exported to africa and we'd be able to exploit all those people. this may have been the first patient ever exposed to this new treatment. >> effective, it is, dr. david, i commend you to taking the steps to recognize and foe that something like this could show up. to have your staff put this gentleman into isolation in seven minutes. when you look at emory hospital in atlanta the two ebola patients were set up there. their isolation is a strict isolation one that completely has taken off. i just wonder. are they prepared to actually, what does ice lalgs mean at other hospitals? >> hospitals around the country are prepared. this is not a conthat just

disease. we take care of conditions far more kwon they just in our hospital with isolation techniques enormously effective. the ability to contain and isolate this within the hospital is straight forward, patients treated in the hospital should never worry they will be exposed and have a risk whatsoever because there might be an ebola patient in the hospital. in this case it is extremely unlikely the patient has ebola. >> have you seen a drop off in business since monday? >> no. >> no the compliant is in admissions? >> i think the people have good judgment and you know it hasn't affected people in our emergency room. >> coming up, a check on oil prices and russia amassing troops on ukraine's border, then, rupert murdock, his bid to boy time warner, ending what was

shaping up to be the biggest media merger in a decade. we discuss that plus time warner's latest earnings, "squawk box" is coming right back. thank ythank you for defendiyour sacrifice. and thank you for your bravery. thank you colonel. thank you daddy. military families are uniquely thankful for many things, the legacy of usaa auto insurance can be one of them. if you're a current or former military member or their family, get an auto insurance quote and see why 92% of our members plan to stay for life. frothere's no reasonn average 17 we can't manufacture in shuthe united states.

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. welcome back. the futures right now still down, a little better tan they were t. dow was down to 55 now it's down about 40 point. s&p off six, nasdaq off about 15. the situation if you crane putting pressure on the marks as military action along ukraine's border increases the morning russia has around 20,000 troops on the eastern border. the peace keeping mission is sending them into ukraine. this one we saw earlier, byron, how big a deal is this in russia? >> if the russian troops go into you crane, it's a good deal. it would demand the west take stringent sanction action. that could further hamper the russian economy. which is also in bad shape and the russians could threaten to send oil and gas into europe. so it could escalate into a much more serious situation.

>> is this for more than a year now, every geopolitical situation comes along, one-day sell-off. the market moves along, it keeps on going, is this the thing that can follow? >> there are so many things and it's probably difficult to do. be you the whole situation is such that the people in the marketty somehow this will be resolved without military conflict. >> all right. byron, you talkled earlier about market evaluations and the economy coing well. is it a problem for companies if this becomes a year when wage goes up? is that going to affect margins? >> two things can hurt margins, commodity prices going up, oil and wages going up. the last report didn't show much of a wage increase. >> why do you think that is?

it does seem it's difficult for firms who have specific skill sets. is the a tail or two? >> there are jobs waiting to be filled for people that don't have skills. those jobs are mainly technical skills, there are plenty of people waiting in line to get them. most of us that have a job are happy to have it. we're not pounding the table asking for a waenl. you don't see wage increases in a virulent state. >> you brought up commodities. joining us in oil is matt smith and michael duda senior analyst at stern agy, michael, we saw i'll sell-off yesterday. now it's coming back. what was that about and why are the geopolitical tension pushing it more? >> it's interesting. i think the geopolitical tension

should be the head wend here. it will last the last couple of months, you had the dollar bid up relative to other currency. >> that has been impacting it more than say the fear trade when it comes to market. >> on the one hand you have geopolitical tensions, at the same time you have the dollar lot stronger. >> exactly. yeah. and byron have stolen my thunder. i think michael made the point we are seeing the dollar strengthen because of the inverse relationship with crude is pressure tack liar. disney dipped back into recession, us the weakening the euro. that is dragging crude lower because of that inverse relationship with the dollar. in terms of the geopolitical tension, that isn't the likelihood with russia even though it's a huge concern isn't going to escalate to the point where it impacts energy markets. >> let me be clear, you don't

think it escalates the situation where it ill packs energy? >> yes, exactly. we see in european natural gas prices, we are seeing them skittish, not concerned of supplies cut off from russia into europe in terms of the old mark because russia is so dependent on the revenues, europe is so dependent on the 6 million barrels a day it gets from russia even though there may be tit for tat and drawing lower. the reality is that those oil flows are not likely to be ill packed. >> so the investment thesis is they can't be that stupid? >> and as irrational? >> well, i didn't exactly say that, butten the concern here is that normalcy doesn't prevail. you don't have sort of the sensible path forward. but i think it's going to remain

in terms of the rhetoric and diplomacy rather than anything more than that. >> where do you think gold is by the end of the year, what move would you think if we see invasion, everybody thinks it will not happen. >> invasion would pop gold 50 to $70 over a reasonable period of time. we are trending to first quarter next 84, seasonals and technic also are supportive for gold. so i think that's going to help trade. also, chinese demand should improve in the second half of the yearful as the economy picks up, that should be helpful as well. >> good to see you this morning, matt, mike. >> thank you. . >> when we come back today, rupert murdock creating one of the media companies in the world. withdrawing his bid for time warner. is his bid off? plus, disney has better than expected earnings, don't go. "squawk box" will be right back. (trader vo) i search.

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5.7% in revenue. it rose from a year earlier. the average revenue for the quarter rose to $84.15 from $80.81 last year. all right, folks, rupert murdock reviewing his bid. let talk the media right now. joining us is rich greenfield, tech following media and telecommunications analyst. our guest host is also here, rich, i want to hear what you think about all this. you think rupert murdock is really walking away? >> i think this is about putting the ball in the court now. time warner didn't want to talk to them. jeff you prove you can get your stock to $85 let alone my gut is rupert was willing to pay more than 80. he was probably $95. can time warner actually get there or, i know, locking at their rules, advertising still

really soft up only 1% t. question is who ul this merger have created more merger than the companies could have generated themselves? jeff will have a lot to answer at 10:00 this morning. >> i thought the timing was brilliant. announceing this the night before their earnings, a quarter we knew would be better-than-expected numbers. time warner would be pushing to show investors how much they can do. they came out, beat expectations, if you look at that stock today, down more than 10%. >> becky, you got to remember. hbo, a great quarter, the profitability growth is tremendous. remember what they did during quarter, they stole their back catalogue to amazon, a one-time adrenaline jolt that boosts profitability. it hurts margins, when you look at the organic growth and you see turner ad revenues up 1% that helps by the timing of having more nca laid around

games the underlying advertising growth isn't all that strong. i think when you look at what the combination would have created, it's hard to argue this would not have created a company more like disney, which is why we to the the combination was attractive of time warner and fox. >> so you were of the opinion time warner shareholders wouldn't lose out. >> i think talking to a tremendous number of time shareholders, most were in favor of this transaction, they wanted jeff to sit down and talk to fox i think they looked at the created, must love company, we loved disney, they had blowout numbers as you mentioned earlier. the quality of the content and owning so much incredible films from pixar and all the other assets in disney, when you think about putting the fox assets together with warner brothers and hbo i think you would have

created something much more similar they only wanted them to sit down and have the conversations. >> are they going to be able to pressure them to do that in some way? is there any chance the this deal comes back? >> i think when you put the ball if jeff's court the question will be okay the stock is down. the results are obviously good on the cost side. they didn't raise guidance for the year, maybe they end up boating that number for the year. i think the reality is if this stock isn't up significantly in the weeks ahead the question is going to be, why shouldn't jeff go back to rupert saying, yes, i want to talk now. where this deal goes now, it will be up to time warner to initiate discussions. he's put the pressure on time warn tore say, okay, do we really want to go it alone into this changing world? sample what are the odds that je

bukus comes back. >> unlike with rupert, jeff's job is never secure. at the end of the day, public company, fully, there is no super voting power, this is all a public company. so if the stock suffers, the board is going to suffer and jeff's job will suffer in a year. >> rich, where does he need to get the stock to show he was right to reject this deal from rupert in. >> i think if there is an incredible believe this stock can get into the 90s over the course of the next year, i think people are going to really start wondering. >> he's got to give them the deal by the end of the year? >> noen i don't know by the end of the calendar year the deal would have taken a year to close anyways. i think something like that. i think really the bigger question is not so much the stock price he has to give him. he has to explain how the, i think there were unique benefits that neither of these companies could have created on their own.

how does he talk through and dismiss those potential, you know, what i would call synergies or one unique opportunities that they don't get access to by staying stand alone. >> one concern, fox is saying it will take $6 billion in buy back shares. >> i think it's a red hering. it sound great. >> you think they will be sitingthere holding it maybe wait to boy back those shares until the end of the year if it doesn't happen. >> fox has tons of cash. they have $6, $7 billion generating significant billions of cash every year, they're bring aing in seven billion over the course of the next six monlths. the reality is they did a buy back last year. 6 billion is really not a number that should say, oh my god, they can't do something now. it's a very nice gesture.

16 billion. you put a one in front of that. all of a sudden you say they're been for good. i think this gives them the flexibility. if jeff wants to talk. there is certainly the flexible to do something. this is all ability putting the pressure on time warner, jeff and his board to decide whether they want to have the conversation. >> rich, we have to run, great talking to you. >> thank you. >> coming up next, what's next for sprint and t-mobile. we speak to an analyst after the brake. plus, fed fears u.k. concerns hanging over the markets. we cover it all. .

welcome back to "squawk box," everybody, here on cnbc. first in business world wide, i'm becky quick along with michelle caruso-cabrera, byron weind, rupert murdock fox officially pulling the plug on its offer to buy time warner.

media analyst on "squawk" earlier this morning. . >> if you really were interested, you'd probably do what fox did, in other words you raise the price here, you get a little more pressure to the time warner shareholders. i think you have to have consolidation. the reason being is this pressure in the ecosystem, content cost is going up. add sales are slipping. there is this fear it shifts over to digital. >> time warner posted quarterly results in the past hour. it's getting hammered because rupert walked away, sprint is dropping its bid for t-mobile. we will talk to a telecom analyst in a moment. walgreen's is buying alliance foods, it's not going to be an inversion deal. the company says it has concluded it is not in shareholder's best interest to redomicile outside the united states for tax purposes, the

company will still be based in the chicago area. yesterday the treasury announced it will not have action from congress for enver jens. >> you said shareholders belgium to dimpl it's not in their latest interest. the latest "wall street journal" nbc poll finding widespread economic anxiety. eamon javers is here to break down what's bothering corporate america. >> foreign policy is hampering america. there is late news the president is sinking to new lows in his approval rating hitting 40%. that is a new low for the president in the entire term of his presidency. coming's approval rating a whole lot worse at 14%. look at the president's approval on the economy, 42%. on foreign policy 36%. it's really foreign policy that's hurting him badly here. steve, to go back to a point you

made in the last hour. take a look at the percent annual of the people in recession. tech federal governmentally we haven't been in a number of years. back in 2012, 64% of the people said they thought we were in a recession. if 2013, 58% in this poll last night, 49% of the people say they believe we are in a recession. to your point, steve that, number is moving in the right direction in the obama white house, it's still very, very high, they are trying to get out there on the stump and take credit for the good economic news we have seen, including the jobs numbers, which have been good for six months. >> i was encouraged in the poll, the ones that show the people think the economy is improving. whether or not they attribute that to president obama is not of interest to me. but the idea that they see it as improving, i think that's reasonable. it creates a little reason for optimism amid what are essentially low numbers in terms of total optimism.

>> low numbers for the president and congress. but they can both take heart. wall street does badly from this poll. vladmir putin polls worse than everybody. >> what are the 4% thinking on putin? >> they approve of him. they think he's doing a great job. >> 49% of the people think wooer in a recession, they will not be spending vigorously, that doesn't speak well for the economy. >> that isn't a good number. >> is that a cyclical thing that can find kind of feed on itself, byron? >> yeah, remember the unemployment rate ticked up. we still have a very low participation rate. it did get a little better. not a lot better. so i think the mood and the economy still isn't as positive as it needs to be. i think we need to show we are moving towards a sustainable 3% growth rate. >> it's a very long rate. we keep polling in our cnbc

america poll. we have never recaptured in terms of people's optimism the pre-2008 levels of optimism. >> eamon, thank you for joining us. regulatory issues turned out to be too much for sprint. so it is abandoning its pursuit of t-mobile. craig moffett of moffett nathanson. they told us they were surprised to see sprint go after this in the first place, regulators said they wanted four competing mobile phone companies. what happened? when did sprint finally realize this wasn't going to happen? >> well, becky, it sound like they just decided over the last couple of weeks. i think randall is right t. writing has been on the wall since day one that this was never a feasible expectation and the department of justice and the sec had both gone out of tear way to signal as clearly as

they could that this deal was never going to fly. this is in some ways a belated acceptance of reality. >> sprint is down 13.5% fees, are there brake-up fees? there was never a formal deal. there is a part of the rather odd world that we're living in where these deals get shopped around for months and months and months in advance of any real announcement. in this case, there was never a deal on the table. it's been talked about so long that it feels like there was. >> what's the deal for sprint and what's the future for t-mobile? >> for t-mobile, they will be just fine, thank you very much. their brand has a ton of moment item. tear balance sheet and physical statement are getting stronger every day. the clients that i talked to were actually very frustrated that the telecom was considering this deal. they like t-mobile on a stand-alone biefs, so do i.

sprint on the other hand has a lot of wood to chop. because they will now, they had seemingly abandoned any plan b other than the merger. now they have to go back to heavy lifting, incresting in their network, more capital spending and cutting their prices to make pricing more competitive. >> that means their longer term profitability estimates on which their valuations are based are completely out of line with reality. so will you see sprint trade down sharply as people come to terms with just how much work they have to do to fix that business. >> craig, thank you so much for joining us today. >> thank you. >> our u.s. week titis futures are pointing to the worst levels of the morning. european shares have been in the red. renewed fears of russian ukraine fighting. also, news of weak economic data out of germany and italy. joining us now, "squawk" market master, officer of highland capital and along with us also

is our guest host byron weind as well. what's your sense of the markets? we had a sell-off the last couple of days, is this the correction we are waiting for? how much more do we go if at all? >> good morning. i'm in the sure it's the correction we are needing, it makes sense given as far as the low liquidity in the market t. fact that it's been so low and behind for so long. so it doesn't surprise us we have seen some vol in here. we had urgents in the numbers, whether you are talking about gdp numbers, employment numbers, what the fed is doing, you just mentioned what's going on in germany and geolily. there are a lot of reasons for the market to be doing what it's doing. liquidity isn't great. so it makes sense we see this volatility. i don't think it's the end of the bull market per se. i think we could be in a period of digestion for quite a while and have this volatility.

that certainly teams e seems to be or feels a little unsettling. >> could we drill down the liquidity issue. with the fed, people talk about there is so much liquidy. yet when you talk to people who trade, if you need to boy or sell a corporate bond, anecdotally we are finding it's getting tougher and tougher to find market makers in those products. is that true? >> yes, it is, well, i think i was on the show in may. we talked about high yield. the market comes and goes and when the mark was at a $105 prize, really because of what had happened in charge rates and the move in the ten year down to two-and-a-half for the year, we were really getting more concerned with that market. it looks like investors are starting to listen. we seen about ten billion in the last four weeks. that's about almost four.5 billion in the last week, which is about a record. so when you have that much technical pressure on a mark,

it's going to be down the interesting thing, though in contrast to last year's paper tantrum. we had about 11 billion of outflows in a forward period. the mark was down about 4.8%. this year it's down 1.7. it has been more orderly than you'd expect it to be. ety that itself just because we had a lot of inflows in the high-year-old early on. i think a lot of magers were sitting on cash and being fairly selective with what they're doing. again, i think it's interesting to play from our perspective. there are things to boy when they're technical pressure on names, there are things that will trade down three or four points when that liquidity isn't there. >> byron has a question, mark. >> at the beginning of the year nobody thought the ten-year treasury would be at two-and-a-half or below. where will it beat the end of the year?

lower 8s for an indefinite period? >> byron, you are much smarter tan i. i would defer, i would sigh we are at the part of the market are preparation pleased prediction. i think it's hard to call things like the ten year. it's hard to call rate. it's hard to call markets in here. we're late in the cycle. it's been a very long time sense we've had qe starts. we push a lot of liquidity into this space. can you have speerdz where the fundamental also tell you one thing the liquidity goes the other way like the example of the ten year. i think it makes it very difficult to make predictions in a calm market. so preparation becomes really the more important thing to do. i think that's what we're seeing here. we seen a lot of rotation out of risk assets, out of equity, out of long only beta products, things that are unmanaged. and where has the money gone? we seen it go into global allocation funds, into anywhere

funds, things that have much more flexible. we seen flow into long sore equity. that makes sense, you are adding this nimbleness to be a stock picker in a stock picker's market as opposed to having to call the mark where your bricks becomes very difficult that preparation is kind of what i see going on right now as far as fund flows and investors are doing. i think it's a good thing to happen. i think it makes a lot of sense. >> mark, great to have you on. we appreciate it. >> byron will stick around until the end of the show. a man showing ebola symptoms with the deadly virus who recently returned from west africa, they treated him in mount sinai the dr. kent davis joining us trying to calm fears. >> we believe it's unlikely he has ebola. but we have sent his blood to

cdc to test for the virus. we will have a definitive answer today or tomorrow. >> let's get to kate snow outside the hospital in atlanta where two americans who were infected with the virus if africa are being treated. kat kate. >> reporter: steve, good morning to you, fancy reichbold joins dr. kent brantley in a specialize lated unit. we can tell you his sons were here. they wanted to visit with their mom. she is doing a lot better. she did come in on a stretcher yesterday. that got everybody's attention. we are told by the relief organization she works with, she's just weak. this is a disease she has been fighting now for more than a week. she's 15-years-old. she's in a weakened state. she is eating food, showing other positive improvement of yesterday we were also told that brantley is improving day-by-day, part of this might be because of an experimental rare drug that both of these

patients are on, it's called z emphmapp out of a company based if san diego, california. interestingly, it's grown pence modified tobacco plant in kentucky, a company owned by reynolds american, which of course you know is the large tobacco company. it was a joint project. some government funding, military funding along with reynolds and other private vechlt but this dug teams to be helping these two patients. steve. >> kate, thank you very much. coming up at 8:30, richard preston, a best seller about the spread of ebola. he will share his personal experience and more in just a bit. . coming up, research and development to create shareholder value, especially with dow chemical and dupont. which has the edge when it comes to efficiency and which stock is

a better performer because of it. as we head to break, check out the "squawk box" market indicator. .

a mini series kicking off right here on "squawk box" this

morning him dom chu looking at r&d spending and how it compares to shareholder value. we kick things off in the capital business with dupont and dow. tom. >> so steve, guy, here's what it comes down to, research and development, many consider at this time life blood of the companies future and continued success. spending on innovation is key. with everything, some companies do better with r&d than others. we look ltd. at hoy company sales increased year over year and related that back to how much more they spend e spent on r&d. it comes up with a research kwoesht or rq rating that these companies basically are ranked on the ones with the better r&d spending overall and the ones that spend near optimal levels. that's key.

there are some surprising winners and losers with this methodology. like you said. with the chemical side of things, let's take dow chemical and dupont. both are massive companies that spend a lot on research and development. one company does it more effectively at least according to others. dupont spent $2 billion last year, which is about % of revenues, according to his calculations, a boost in r&d spending could lead to about a $600 million boost in overall sales, dow spent less about that $1.75 on r&d last year. intuitively you think they lose out to dupont. in this case here, a 10% increase in r&d spending for dow can lead to added sales. will it translate into actual stock price performance? it's helped when dow handily outperformed dupont.

about eight years ago, dow had a new vp and brought in new technology to speed up the pace, recently, activist investor dan loeb targeted dow. that shaped the stock gains. still, it's an intriguing concept. throughout the course of the day we will be highlighting various competition in r&d efficiency. so stay tuned. go to cnbc.com/rq 50 for the r&d all stars. some of the names you may not think are on there. they are very, very intriguing. >> tanks so much. coming up, the spread of ebola and heightened global concerns, best selling author richard preston joins us to discuss the deadly disease. as we head to break, check out the futures this morning.

. our guest host today byron weifd, one of our market masters him we had two big deals fall apart. rupert walking away we think from time warner and sprint and t-mobile. there are individual issues with both these deals, some see a bigger message in this in that it's a signal we could be peaking when it comes to the mark. it's a signal the animal spirits maybe aren't there and could

signal a downturn, more of a downtourn. >> looking there are more than $2 trillion dollars announced the year. this is the biggest year since 2007. it was indicative of the fact that business confidence was very strong. the fact that these deals fell apart is perhaps a kind of canary in a coal mean but it's not surprising considering during the past week the mark, itself, has been very soft. so i think people are reacting to the people behind these deals are saying, wait a minute, let's take a moment and rethink this. let's see what the market is going to do before i pay up for something. >> so no overall miami for the broader market? >> it can be an early sign. we have to see how far this carries. >> do you think things are getting friendsied and frothy? >> i think we have further to go. i'm in the position, this is a

correction in an ongoing bull market. i think we will bottom. i don't think we will go down more than 10%. i have been looking for a 10% correction sense the beginning of the year. i think we will have further amplitude in this. i don't think it's the end of the world. i don't see signs of a recession or bubbles in any place with a high field mark. so my view is this is going to be over and we're going to resume the upturn. >> you asked mark where he thought it would end the year? >> i thought higher. i think there is so much liquidity around the world, so many people looking for a place to park their assets until the geopolitical and market trends clarify, so i think rates are going to stay lower than most peoplely the for longer. >> it's astounding, there is so much debt from countries in the world and yesterday there is any more demand for that debt.

>> that i am told there is not enough supply of debt in the world for the demand that's out there. >> that's absolutely true. remember, the budget deficit has gone from 10% gtp to 3. the pension funds are getting more money so the demand for bonds stays great. have you yields in europe and france that had a balance sheet lower than ours. german interest rates are lower than ours. >> they're talking ultra long bond, would you lend money to france for 50 years? >> i would lend money to france for ten years. >> all right. you think europe sim proving at all or? >> no, i definitely think europe is improving. if the european central bank were easier, they could heal more. they are not taking advantage of it. i think europe will grow 1% this

year. it could grow a 2 with mormontary compensation. >> still to come this morning, we do have international trade. we will get the numbers and the mark reaction. best selling author richard preston will join us to talk about the deadly ebola virus. "squawk box" will be right back. .

welcome back to "squawk box." we are second away from international trade. rick santelli has those numbers. good morning. >> yes, the trade downs going to be a deficit. actually improved. it's less negative. 45.1 billion. we were expecting 44 and change, so this is good news. when was the last time we were at 44-and-a-half or lower. it was the first month of the year, january, when we were at 40.05 nonetheless it is good news, it will in many ways impact how we look at second quarter gdp revisions. this is a biggy. in terms of yield, even bigger, we traded interdi 3.42 yield on

the ten year. if you recall the may extreme closed for the year 2.44. theoretically, interday we've traded through it. if we were to close under 3.froo 442 it would be at parody with the 30 year, why are yields so low? europeans, stabilization. yeah, that was 2013. that's so last year. look at italy's gdp, you will figure out water moving the markets. >> excellent. >> been's, 110, they traded a new all time low deal. >> i was hearing from mark brant today, he was one of the people looking for yields to fall. you too. i will put you in the small camp. particularly, we are about to break through that trading range. >>. >> reporter: it does, technic

physica physical technicals get you there in a more expeditious way. it might be one of the first days if these deals plummet or the ten year in the year e treasury complex may impact equity, really, it's going the other way of late. >> you have been right. we will continue to watch it. see you again soon. sprint is announcing its board of directors marcelo clowor is replacing hes, he has succeeded to the position. this is not surprising. we knew mr. hess didn't want to stay there for a while. >> analysts we spoke with says in his opinion sprint has a lot of shopping to do and less

things to cut out. >> the examiners department assumed 44 and change billion dollar trade deficit 44 first half. that number will go up above 4%. i love the way we got there. imports down. i think it looks like the big trade balance improvement came with opec. we want to see imports stuff. just right around the time people think of imports when it comes to the holidays, back to school, that kind of stuff. with we want to see that go up. you are right, a big change in the petrolium balance what will happen, we need to see what the impact is on the third quarter. >> so where are you on that? where do you think the third and fourth quarter are going to be?

>> i think around 3%. i want to see if workers will help spending and this will be some demand driven here. >> where are you on the minimum waenl? >> i report on this story, byron, i would love to see people make more in a way that doesn't reduce the number of jobs the poorest people get. so i'm interested to see, i'm looking carefully at places they're raising it, like washington to see if it does, endeechltd i read a bunch of studies, they're all over the play, i like the goal. i'm not sure the means necessarily are the ones to get there. let's talk about the disease the ebola in africa, a second patient arrived to be treated and now hospitals and airports around the country are on high

alert. >> i'm zrchlt nancy snyderman at atlanta international airport where 250,000 people pass through every day, including a daily flight from nigeria the latest hot spot in the west africa ebola outbreak. for anyone arriving on a flight, u.s. customs protection is the first line of defense. if someone appears ill, cdc quarantine officials will bring them here. this is a cdc isolation room in atlanta. one of 20 look it around the country where infectious diseases are looked for and sometimes treated. in this refrigerator, anti-toxin, malaria, diphtheria and botulism. it is now ebola everyone is worried about. so anyone with a fever, voming, diarrhea is put in a super isolation radio. 96 to passenger under surveillance, there are public health information throughout the terminal so everybody knows

what to look out for. joining us now with more on the potential of the virus spreading globally is the author of the hot zone richard preston, he has an article in this issue of "the new yorker." our guest host by the way is also here with us, richard, thank you very much nor joining us today. >> thank you for having me with you. >> i read hot zone when it came out. it was not alone an really starting to think through the queens of some of these things. what do you think about the situation right now? first off in west africa? >> well, ebola is a scary viempls it's doing a lot of damage in west africa right now. i don't think currently we in the united states or europe need to be terribly worried about i. it's another story for folks who live in africa. the experts are telling me they've lost control of the ebola outbreak. what that means specifically is

they've lost the ability to trace the cases and contacts. the people who are infected. so i'm reminded a little of the word of the great general, sun su who said foe your enemy. unfortunately right now the doctors lost contact with the enemy. they don't know where it's moving. so there is a big full court press to go get if there and send in a lot more doctors an teens and get this thing under control. >> what's so concerning is the high mortality rates. watching doctors who are trained who know how to deal with these quick spreading diseases, watching them go in, in suits, yet, still being infected and dying from this. what's gone wrong in terms of how we've dealt with it at this point? >> it's horrifying, it's something to never forget the heroism from the people abroad and the african people going in

there at risk to their lives. the problem is you have these wards of, you know, 30 or more people all of whom have ebola. they're lying in beds and you have one doctor and one nurse carrying for a whole room of ebola patients. people are bleeding, throwing up. it's really awful and the environment in these wards is so contaminated even with the very best top level biohazard suits, some of the workers are nevertheless getting infected. >> that is counter to a lot of expert, here who told us over the last several days, you shouldn't worry about this. it's ha ready to contract ebola. it's only done if there is an open cut or something, you actually come in contact with these bodily fluchltdz it's not the same as getting the flu. how do you match up those two descriptions? >> that's right. ebola virus does not travel through the air like flu does.

it doesn't jump from jump to person, luckily, it's only contagious through direct contact through blood, boiled fluids, so forth. also with sweat. now in africa most people don't have good access to a hop. right now the hospitals in monrovia are closed. they're full of ebola patients. so in africa, if you get sick, you don't go to the hospital. you stay with your family. you are cared for by loving members who take care of you because they love you. this is how ebola is spreading largely, within families. unfortunately, within people who care for other people in africa. >> richard do the wealthier western nation versus an interest here in helping africa solve this problem? >> they absolutely do. it's not just the moral imperative to help out. but we are all one species. we are all the human species and a virus makes absolutely no distinction between poor people

in africa and the people living in manhattan. it's to the virus we are ohost, a potential host. we are really lovely eden for the ebola virus. the virus if you say the virus has a desire. one could say it has a biological desire to make itself immortal that is to say get established in the human species and continue in a chain of permanent person-to-person transmission forever. now i think the doctors are going to stop this. but it's going to be a bloody fight and it's going to take a long time. >> what is that in general, richard, the spending on these third world tropical diseases versus what we spend here in the united states for even casual problems we have? >> well, let's just think about a huge killer, malaria, an awful lot more people die of malaria

than ebola. and there is very little spending on research for cures and prevention of malaria, i'm talking about drugs and a vaccine or simply reduction of pa larria if these communities because because malaria is not a big problem in the developed world. it's a huge problem if you live in the tropics. >> let me ask you this, we saw a package from dr. nancy snyderman talking about the airports and isolation rooms. earlier, we heard about how the staff was ready when they had a patient walking if from west africa and exhibiting the symptoms of ebola. within seven minutes they had that patient in an ice lakes room as well. while it may not be a huge threat, i wonder how prepared the united states is in terms of dealing with something if it were to reach our shores? >> i think the medical system if general is well prepared. we have great hospitals here, they know what to do. they know how to isolate a

patient and how to deliver good care to a patient. the africa you have 30 people with ebola, one doctor, one nurse. here in the united states if anybody showed up, first of all the major hospitals have perfect capably to get that patient fully isolated. second, they would surround that patient with doctors and nursing staff. there would be a whole team working on that patient around the clock to save the patient's life anditis late them from other potential victims. so, yeah the doctors are good here, we request handle it here. >> how do you see this coming to an end? >> i see this as a long difficult fight the billing concern is could ebola get into 21 of these major cities in africa, such as lagos, population of nigeria, it's nearly the same number of people that live in texas. you take all of texas, pack it into one city in the developing world, take away access to

medical care, take away sanitation, you could have a very big problem stopping ebola in a place like that. but it can be done and i think it will be done because now we're seeing a very strong international determination to get in there and deal with ebola. >> haven't we seen suspected cases in lagos right now? >> yeah, there are a few. reportedly, there are a few. i think doctors have not lost control of the virus yet in lagos. in other words, they know who is sick with ebola in lagos. if you start hearing about many more cases if lagos, then there would be a cause for concern. but as of now the virus is under control in lagos, it's not under control in the west african countries of like berria, sierra leone and guinea? >> isn't it people seek medical treatment, they think there is some spiritual reason why they've contracted the disease

and go to some spirittial source rather than a medical source for cures? >> sure, thinking of someone in africa, that would seem like a reasonable thing to do. if a hospital is closed because it's full of ebola patients and you know you take a look at that place and it's horrifying, what alternative do they have? some part of the population, first of all a general disbelief in western medicine. if you have no alternative, this is what people do. >> one of the things that surprise me, richard, a third of all the deaths caused by ebola in the 1970s has been with this latest outbreak. we are talking close to a thousand people beyond that,

what should we be prepared for before this the contained? >> well, i think the governments of western nations need to be prepared to spend money and to send experienced people in to deal with it. i think we, you know, we regular people who live in regular places in the united states don't need to be terribly concerned to tell you the truth. i think our medical system is strong. it's vibrant. we got talented people here in the united states, doctors of all kind, they're well equipped to deal with an infectious threat like ebola. i think what we will see is a big fight. it is kind of a war. there is a front line with the ebola virus. the doctors and medical workers on the front line are taking casualties. we shouldn't forgive the bravery to help people save lives and deal with this threat. >> okay.

richard, thank you so much for joining us today. we appreciate your expertise and taking the time to explain it all to us. >> it's good to be with you. >> people need to read that story in the new yorker. it's stunning. you need to take a shower after reading it. when we return, power in australia. the walgreen's company is not doing an inversion deal. $160 a month? sign us up. um, maybe we sign you up at the store after this. right, 'cause this is the... food court, yeah. it's the food court. at&t's best-ever family pricing. for instance, a family of four gets 10 gigs of data, with unlimited talk & text, for $160 dollars a month.

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welcome back to "squawk box," you need to see this video. dozens of kmutders teamed up to help a man trapped on a train platform. they called passengers for help. the people tilted the train to free the man's legs. the man is believed to have escaped injury and caught the next train out. people got off and pushed it over? waiting to see it. >> here we go. >> all right. push, push. >> one, two, three, push. >> oh, my gosh. >> is this going to move? >> they did it. i saw it budge. >> good job, people. >> wow. down to the new york stock exchange. jim cramer joining us now, and, jim, i have to hear your take on

what happens with the two deals that fell apart last night. >> i can't believe the market's not looking down a great deal more. there's a lot of money lost here. walgreen's, one of the great american companies, a lot of activists said, we give up. we're going to dump it. they didn't like the 2016 guidance. time warner, a lot of people, look, it was a matter of time. i think it's not a matter of time. i think murdoch's gone. it's not in the cards -- >> that's key. you think he's gone? >> oh, yeah, i think he's gone. i think he felt there was a certain point, david faber said, jim, there's a certain point where he's giving the company to jeff, and that is not the goal at a hundred dollars, but giving the company. i have to ask byron. we had periods like in october of 1989 where the united airlines' deal fell apart. >> right. >> doesn't it look worse now

given ukraine, a couple quarter misses this morning. i'm confused by why we're not down more. >> well, i don't know that we're not going down further. the key thing is that the economic fundamentals are sound, jim. you know, we've the economy.

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let's get back to our guest host. byron, you gave us thoughts only how valuations would be affected by the two deals falling through. >> well, right now, the market is 17 times earnings. i don't think it's at a bubble state, but i do think that the level of euphoria in the market was sufficient so that we could have a correction that might go as far as 10%. >> earnings -- >> a correction in an ongoing bull market. >> earnings higher than expected, revenue higher than expected, but markets come down. stocks are cheaper and less expensive. >> that's true. look, sentiment has a lot to do with markets, and the breaking up of the two deals and the negative sentiment likely to push the correction further. >> jim thought it should be worse and market weaker based on it. >> right. >> you agree? >> you would think so, but,

look, the ongoing fundamentals are sound. mortgage applications for purchase are turning. housing has been one of the uneven parts of the economy. >> you're going to get about two to three tenths on second quarter gdp, more like a 4.2 quarter. we may have to bring down inventories a bit, but looks to be doing well. exports, the ism services and manufacturing both doing well. get housing along, we could do better than 3%. >> you think 3% in the second half. that's not the underlying fundamentals. >> is the fed behind the curve? >> well, no. i think the fed should do what it's doing. i don't think the fed should raise short term interest rates until next year. let the economy build for a while, don't truncate it at the beginning. >> do you buy the dip? >> let it go further, but

definitely buy the dip. >> again, what you're expecting by the end of the year? in terms of the market, s&p 500, dow. >> i think the s&p will be above 2,000 at the end of the year. >> 1920 right now. 80 points from here. good game. byron, the thing that worries you most when you look around at everything? >> well, there may be some geopolitical or ebola, some unpredictable event that does scuttle this, but it's going to be an exonnous event. >> it's not the fed? >> no. people are worried about the fed, but the fed -- remember, the fed could tighten a few times before we really have an impact on the economy. rates are so low. you know, they could go up a little bit, but psychologically -- >> but don't people start to sell because they are afraid of where they end up?

don't you want out of the way of the train? >> but, you know, right now, i don't think the fed is the principle danger. i think the geopolitical things are more important. >> byron, thanks so much for coming in today, great seeing you. >> great to be here. >> steve, thank you for joining us, michelle, see you tomorrow. thank you for joining us see you tomorrow. now it's time for "squawk on the street." good wednesday morning, welcome to "squawk on the street," i'm carl carl quintanilla with david faber. meantime, futures weak as the s&p is 30 points above a 5% correction from the july highs. media earnings on tap, big upgrade for ge, by the way. ten-year yield, if closes here, lowest close of the year. italy officially back in recess