>> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew ross sorkin is off today. we have breaking news out at this hour. reuters is reporting about 70 trucks from a russian aid convoy have crossed the russia/ukraine border. the trucks were accompanied by a number of pro russian vehicles. the russian markets on this news, if you take a look, you see right now are down by about 1.5%. we've been keeping an eye on the u.s. equity b futures right here. you can see rite now, things look relatively flat. of course, we should point out that we have a lot of momentum this week. this as the s&p is coming off its record close since july earlier about a month ago. if we see a gain today, the dow

could chalk up its biggest weekly advance in six months. we will continue to follow the story out of ukraine and keep you updated throughout the morning. the russia/ukraine situation, that is not the only geopolitical story on the radar. chuck hagel sounding the alarm on the situation in the middle east arguing that the long-term threat of isis is even more dangerous than al qaeda. chuck hagel talking about the 9/11 threat to the united states. >> jim, isil is as sophisticated and well funded as any group that we have seen. they marry ideology, sophistication of strategic and ticketical military prowess. they are tremendously well funded. this is beyond anything that we've seen. so we must prepare for everything. and the only way you do that is

you take a cold, steely hard look at it and get ready. >> also today, fighting between israeli and palestinians continues. israel air strikes continuing for a third day following the collapse of cease-fire talks. the israeli military says it carried out 20 air strikes in gaza earlier in the day. >> we are going to go beyond geopolitics in just a second, but tsd amazing. and i question you being here. >> did you miss me? >> i missed you. but got four days under your belt and now this is a reset. any progress you've made has been canceled out. although andrew is not here, so that's a little bit easier for you to come into this. >> one day of work isn't a big deal. >> but you're not coming in next friday. >> i'm not. >> but you came in on the money, it's syndicated.

i question the -- >> the sanity? >> yes. >> and you, i remember hearing from you after about ten days like i am so happy. >> never going to be up to -- although, okay, so do you remember it was one week ago, the markets opened strong, and then we had the ukrainian stuff happened and then they destroyed the convoy, remember? and the markets went up 80 down a hundred and -- >> now here we are, it's another convoy and it's a friday and what is ukraine going to do now? here at any time, they did the same thing again. and this thing with isis, did you see that guy sitting there and not even -- he's so brave. but isis, now we're finding out that you're not even going to be able to do anything to him. the president talks about containing them. others say we have to try it bass it could actually undermine

or destroy this group, but they're in syria. we're so worried about mission creek now back of the past ten years, the country is so receipt sent. we don't have it in our -- we don't seem to have the -- >> what hagel said is really important, though. it presents a massive threat to homeland security. the stories in usa today said there are 500 british people who are over there with british passports is a hundred americans. the idea that these are people who could cross back in -- >> this is unfortunately his wacky base while watching every move he makes that they can attribute to mission, it's not what he said initially. it's not just humanitarian. going into syria to try to get this? no way that it's -- we'll talk to -- >> these guys are more dangerous than al qaeda. >> that's what they're saying. they supposedly are close to having the capability to do serious damage to a city. ben is sitting down right now.

i guess we rushed him in here for the geopolitical -- >> he's happy. >> because you're ready to talk all different things. >> i will talk about all different things at any given -- let's go. beyond geopolitics, the other story, and we have to talk about yellen. if only we could get like one of the major fed heads to actually be with us, to speak today, to -- >> that will be an amazing feat. >> bullard, if he would be available. >> if only. oh, wait, he is. he's joining us at 8:00 eastern time. >> 7:30 or 8:00? >> i think it's 8:00. >> that will be great to talk about this. i went back and i raeld read the piece in the journal about inflation being back. i went back and looked at his entire presentation delivering alpha. these are questions that i want jim to be able to -- i'm sure he's really because those guys have seen all this stuff. and then you've got yellen's address in jackson hole. i don't know why people are

saying she might talk hawkish. she is a dove. >> they were much more hawkish. he said he was feeling that people were listening to -- >> their actions. we're still q.e. >> it would be regardble if she were more hawkish. >> but then again, we still doerchbt know, does this definitely mean the markets sell off? eventually. you usually see a knee jerk wobble, at least. >> anyway, we're at 28 new high for the year. she's going to start speaking at 10:00 a.m. that's important that ben white is going to start speaking at like 6:08. >> we know the markets move more on that than janet yellen. >> the central bank is expected to talk on the labor market.

pomzmakers were surprised about the improvement in the employment picture. in an interview with steve liesman yesterday, philly fed president plosser warned against waiting too long to hike rates. >> i would prefer us to begin raising rates sooner and more gradually. but the longer we wait, the more risk i see it as us having to raise rates quickly in response to a stronger economy and perhaps more inflation. >> bullard seems to consider the facts. i guess you'd say overall he's more hawkish than the others. he can surprise either way sometimes. you don't know what he's going to say. but he will join us live. he's in st. louis, the president president. you missed some of the good stu stuff. >> i've been hearing about the water yesterday and i heard about the helmet.

>> no, no, no. we were talking about -- he was arguing with me that everyone is leaving the suburbs and moving back to the cities because he said -- >> there's a book that we had. >> but then we had jeb from cocoa and he said absolutely not true, that the whole rest of the country, everyone is still moving -- >> ben just moved to the suburbs. >> there you go. >> you think in indianapolis and denver and all those places they're moving back to the city? he said i don't really consider any of those places cities. >> he didn't actually say that. >> swear to god. >> he was kind of doing it to just -- >> oh, andrew. >> to be a caricature. but i could see that he meant it. >> those are some great cities, too. denver? chicago. >> you know how you try to be funny sometimes? trying to give you a -- >> what, on twitter?

and then off camera he said all these places have downtowns. they're not really cities. >> you can't out people what what they say off camera. if i start adding you for off camera -- >> i already did. ben white is here from politico. >> right here. >> so many things. >> so many things. >> is this not unbelievable? then you throw ferguson into the whole mix, as well. with so many things happening -- >> it was not a relaxing summer. >> some is not over yet. this is a side show from isis. but even the "new york times" decided to start talking about the golf right after view. >> i think it's a good turn for the serious this past week. i mean, i think the decision generally -- i don't know what presidents do in their leisure

time. one minute he's on tv talking about the heading of an american journalist. people are skashd, they're scared about what happens to this yun man and his family. and then he's smiling on the golf course. about ten minutes later. >> the juxtaposition of those images struggling to people and not just republicans who always criticize him for whatever he's doing, but for democrats, there are democrats on the record quoted in that story saying this was a bad idea, this was a bad move on his part because it reinforces this narrative and the motion people have that he's somewhat checked out from the job right now. there's a lot of stuff he doesn't like to deal with. then a few minutes later, he's on top of the world play iing golf. >> so he has made it clear that his last campaign is in the past? >> right.

>> okay. and the people that are not president obama fans already know how they feel and the people who support the president no matter what he does, there's a certain percentage of those, and right now he's at the bottom. 40% as we talked about earlier. he could do anything and -- >> and not going below 40. i don't think he cares. he had a great tee time, a beautiful day. >> and that's fine. maybe he waited until later in the day. i think he should have taken the day off. whether or not at new hampshire. we have a poll out in the new hampshire race this week, considered fairley safe for democrats, running for scott brown, but she's now, according to the latest university of new hampshire poll two points ahead of scott brown. maybe that poll is not -- >> look at obama's numbers there. they're down to something like 37%. he's dragging democrats down

right now. this is going to hurt democrats in the senate. >> i think so? >> i think so. i think he has to reininvestigation to get those numbers.. >> how reingauge? what does he need to be doing? >> i think on the substance, he's doing a fair amount. on isis, obviously, we are bombing, were active. hagel talking about what else needs to be done. i think there are things going on. to a degree, it's optics, being reingauge in ga re-engaged. you have democrats on the record saying they have no relationship with this president. it's the worst that they have ever seen it. he feeds to be up there talking to him more actively about what's going to happen the rest of the year. if he wavents to do ewe lateral action on inversions or immigration, these are serious

policy moves he's going to make. he's going to need widespread democratic support because republicans will go nuts. and if you doesn't have solid democratic support to that, he's going to be lost. >> you can't do anything with inversi inversion. the treasury department is trying to come up with ways to handle that. >>. >> he wanted to yell at -- and the president said, you know, gary, i've got some stuff happening here. i liked him for saying that. it was like, well, what are you guys doing? you want me to go and individually call about every one of these? just work together. i liked when he did that. >> you liked that? >> yeah. just to illustrate that he doesn't seem particularly engaged. >> i like the point when his

base hates him. that's when i like him. i do. >> that makes sense to me. the fact that he does not have this relationship with democrat is in the senate who want to see fire from him, who want to see him go up there with republicans and be engaged with him. as he said in that "new york times" article, he doesn't care about his critics. he love ago gave up on what people saying did. >> reporter: but he wants to carry the senate again. >> it's another year to have two eye of your term be both houss.s i think the senate -- i don't know what you can take how about -- there is a piece in fact huffington post, you missed this. and it was momentum endorsement

for obamacare. momentous endorsement for obamacare. and i'm like, wow, what happened? is it some big republican? what happened? and i went into this. it's by this guy that -- i should have known, jason linkedin. but guess what it was. it was one of the economicic senators two roted for obama care. >> there are some stuff. at the big gyms. he didn't say what was volatile. he said i actually voted for -- for pre-existing conditions. >> let's be pair to mark. he has cancer and his insurance company couldn't drop by because of obamacare. >> but this is what democrats

will do. i think it's smart. they'll pick out the things that -- >> and it's a commentary on how much of a burden it still is in states. >> and he's getting hammered on it. so there's an argument that he had to respond. he's not so active. -- >> but, you know, the headline was momentum endorsement. >> i'm glad i came back for a day. this is fun. >> that was an interesting fact that he would do an act where he talked about positive care. >> you should embrace it. >> and republicans at some point will have to come up with something other than repeal. >> like now you're doing the work of the other side?

>> oh, wait a second. don't let him say whatever he wants. >> no, no, i just take one issue at a time. >> they know exactly what they want to do. i watched paul ryan on the show. and great interview, as ever. and he said i want to repeal obamacare. but he did not come out with a proposal. >> not then. >> there are some that -- there's things that we could do, there's things that we should have done beforehand. >> and this is exactly why obama needs to change his operating method so he doesn't lose the senate. if he does, republicans will send him with bill after bill after bill, first of which will be the repealing of the medical device acts, you repeal that, how does -- >> we've done a lot of the pullbacks in terms of the seas that you charge for the fines. >> they got rid of some of the mandates, saying you know what? i've got to pay for that.

>> there's going be a number of things, it's going to be either shut down the government or agree to riders that the republicans will put on everything they send him. it will be a nightmare for him. >> did you see paul ryan? >> no. >> he said that he has aspirations, leading in iowa, at least he's the one that might -- >> i heard him say he would get on mitt's bandwagon. >> he said he would be the best guy to run the country, ryan/romney or romney -- line. vort for his book, as well. remember when romney got blasted in that hammer down. >> what i like, it's going to take one more cheap shot, far be it from me to do this. john kerry, secretary of state, the biggest threat facing the united states at this point, cash i don't knowon dioxide.

do you remember when he said that? >> i don't remember that. >> yeah. he said carbon dioxide is the biggest threat facing the country at this time. is that really what they think when they're in those ivory towers? >> he has not covered himself in glory so far as the secretary of state would be. >> all right. good job. >> yeah, thank you. >> i'm doing a lot of cardios, lifting some weights, salads. although i've learned, joe, that you don't have to avoid all carbs in the evening. it's actually a good idea to eat some. he help you sleep and give you more energy the next day. you should avoid them earlier in the day. >> did you see my beach shot from my vacation? >> i would love to see it. bring it on. do you have it? >> no, we're not going to show

it here. >> oh, no. >> you come over here .i'll show it to you here because i want to show you the progress that i've been making. >> you look great. you look awesome. >> after we finish this love fest, when we come back, home depot names a new ceo. plus, how under armour is trying to lure kevin durant away from nike. "squawk box" will be right back.

welcome back, everybody. home depot names craig menear as the new ceo. home depot stock has nearly doubled during its six years of him running the country. fraj blake is someone who has been widely credited with just doing a phenomenal job, even for the housing crisis. >> i asked for that. got it earlier this week. macy's last week, they were supposed to be different than everyone else because they're waiting for home depot's numbers. they're up like 7%. new high, the stock was up two or three points. and one retailer that, really, the ohm one -- and then we said is lowe's going to be the same? and lowe's wasn't. >> by the way, he stepped in in 2007 right before the housing crash managed to keep that company afloat and maneuver through a very good time.

>> i've talked about the airlines, how one guy at the top, can you manage to filter stuff down, the ticket agent, flight attendant and everyone else? >> i haven't seen that yet. right now, there are a lot of unhappy -- >> but it makes a difference. >> when you go through just about any of the airlines. >> and i think home depot employees, they seem to be happy and connected. i walk in and they immediately talk to me. >> i would agree. >> maybe i'll get there. >> a do it yourself kind of man? >> at different times. yeah. they usually all work for the same -- and i have people to help me through. >> more questions about general motors today.

federal prosecutors have learned lawyers for the automaker present at key meetings during which information about some problems with some of its vehicles were discussed. >> then what they did with that information that was shared. gm has, for the most part, blamed low-level employees not being reported. in squawk sports news, under armour, trying to lure kevin durant away from nike. espn.com says the deal could be worth as much as -- is there an extra number here? >> no. $285 million. it is said to include stocks and other incentives, including a community center built in durant's mother's names. nike would have the right to match the deal under his current contract with the apparelmaker. >> he's well liked on and off the court both. he's seen as a humble guy. >> and, you know, that's a lot of money.

and, you know, a lot of times we worry about some people making too much money and other people not making enough. if the market says you're worth that much, i really like -- >> plus you like to see it for a nice guy, too. >> i wish everyone had this same thought. yes cried when the won the mvp and he thanked his mom. speaking of, a study on the wealth gap getting some attention this morning. the census bureau reports the median net worth of the richest haas holds rose 11% between 2000 and 2001, but the majority of americans saw their net worth drop. they point to a lot of different factors and it's been something we've been talking about for years and even more so this year. you happen, there's been no wage growth and it's all tied in with the fed, it's tied in with what

the response to 20308, which was -- you know, we've seen assets come back. >> home prices haven't rocketed back quite at sharply. and nordstrom, tiffany, neiman marcus, mercedes, ritz carlton, and then down at the bottom -- >> walmart has been under pressure, mcdonald's. >> at least it's susceptible to that. >> yeah. let's tell you about another story this morning, too. twitter the dealing with the controversial issue of whether or not to take down graphic images. the social network began removing images of james foley after his family's request to do so. but it says it isn't actively searching for them. it's a fine line for a company that's been dedicated to free expression and it's raced a lot of questions with james foley's question. are you terrorists who are terrorizing people with these images.? >> gud a -- i wouldn't -- i don't know if i'm deeply

september. watching his expression. he spent two years looking at death right in the face and, you know, daily baitings and everything else. and he was a pretty xwepgzal individual to start with, i think, because that's why he was there. he wasn't there because he liked taking pictures. he was there because he liked showing to the world what was happening. >> truly, we throw the word "hero" around a lot, but i think the daily news got it right today. hero to the end for this guy. anyway, if you're just waking up, check out the futures. we've been seeing a drop following author headlines out of russia because we're worried the same thing could happen. trucks in the convoy moving across the ukrainian border. more on this breaking story when "squawk box" returns.

sfwhoo breaking news out this hour. reuters is reporting about 70 trucks on the russian aid convoy, and we use the word aid, we don't know who they're aiding. across the russian/ukraine border. aiding this, things other than humanitarian items. the ukrainian state security chief says that the movement of russian trucks into ukraine represents a direct invasion by russia. so that's what -- whether this could be the beginning of something like that and you know that the guys in ukraine -- i don't know if i call them trigger happy, but they said they got rid of that last convoy that came in pretty quickly. i was shocked that they would

actually destroy it. >> and that affected the markets we saw and turned things and pushed futures down. you can see this morning, moscow's market is under pressure. our futures are down, but just slightly at this point. just down by about 22 points. joining us now to talk more about it, jadon pride. on fixed income, we have kevin giddes, from raymond james. gentlemen, welcome to both of you. i'd like to talk a little bit about what you think just about geopolitical news at this point. is it something that makes you nervous? is it something you pay attention to but you continue to invest? what do you do it with it at this point? >> well, look, becky, this is an environment where you have to kind of recognize the risks. we've gone from having an undervalued equity market to having a market that's relatively full valued. it may not be extremely expensive, but we're at least at prices here that don't protect

you as much from the downside. we're not sitting closer to the floor. so you have to take into account the risks that come about. and geopolitical risks come about on a regular basis and do hit the markets quite off. more likely than not, they're transitory. but there are the odd events that could have an economic back. when we look at russia, our backdrop thought on this is they're heavily incentivized not to have this whole situation breakdown. they get 10% of their economy from europe. and then on top of it, 52% of their federal budget revenues come from their sales of oil and natural gas into the european union. that amount of their budget actually kind of restricts their ability to do a lot of things and be truly dent mental to the economy. we may have to deal with the skirmishes, the invasions and the whipsawing that comes from

that, but the economic impact from our perspective looks like it's something that it would take a very kind of core financial decision for the country to actually have that come through and hit us. >> kevin, do you think that putin really cares all that much about any economic impact at this point? >> it doesn't appear so right now. clearer heads may prevail in the end, but this is part of the plan of his and it's been in place for a while. i don't think at some point in time he's too concerned about what he's losing economically. >> what do you expect to hear from janet yellen today? that's the other thing that could impact trading today. >> well, i think the market prepared for a complete dove report from the fed chair. anything other than that is going to be negative for the bond market. so i think we are bracing ourselves for, really, more of the same from her in terms of the labor market and where she is with her version of fed policy.

we would have a pretty quick sell-off. >> in the last fed meeting, did you catch it? >> yeah. it's stuck in my -- >> it's something that happened again. >> i know. and then they keep playing that. >> kevin. >> thanks, mac, for helping. >> i mean, at the last fed minutes that we got from the last fed meeting, it did sound like they were a little more hawkish around the table. do you think she has to take any of that into account? >> i think so a little bit. but i don't think that that is going to change her view on interest rates and when we're going to raise interest rates. and a lot has happened since july 29th and 30th when those fed minutes were actually created. >> in terms of the economy? >> in terms of the economy, in terms of the geopolitical risk,

in terms of the general view of the marketplace. so i think the numbers aren't as strong in august as they were in july when the fed was making these decisions and making these comments. so i think there's a little bit of a different world, even in the last two weeks. >> that's a fair point, jason. we have heard some concerning news from some of the big companies that we've heard from, even mcdonald's talking about some of these issues. walmart not looking at strong as it in before. how does the fed handle that? >> i think the fed is basically looking at -- when we're hearing this difference between yellen and the committee, we're talking about a difference between when they start between second quarter of next year and third quarter next year. we're getting fine tuned here and maybe overemphasizing sometimes how much the different is. there's a possibility that the fed members would actually say, okay, we started and let's go very slow in getting into it because the economy just it's

not going to be rocked too much by any news that comes out of this. you think the fed has done a good job of priming the market for these higher rates? >> you know, i think they have generally for higher rates. at the same time, i recognize the fact that the market tends to take these news items and react fairley dramatically to them when it really doesn't make all that much sense, just a slight wording change and you'll find that the market moves, you know, 50 basis points or a full percent on that news alone when in reality, i don't know if the true impact of what's going to happen is really changed. it's just that sent mental change of one person saying one thing and the committee saying the other and that back and forth that occurs. actually, i think that the fed, to some degree, creates that somewhat just to see how the markets react to the different pieces of news in order to gauge

how they will actually implement the policy down the line. i think it may actually help them see what the market thinks of those different types of actions going forward. before they actually implement. >> kevin, what do you think of that? >> well, i think we have to keep this in perspective. the fed is -- their charge is to raise short-term rates. if you're going to affect the short-term market. the story this year has been the long-term market and the value in treasuries versus other sovereigns in the world and the lack of inflation. so as long as inflation is present, we got 30 basis points out of the ten year quickly with a lack of inflation as well as what we're debating the fed's future tightening needs are. so, you know, they're going to -- they're going to raise rates here on the short end of the curve. but the best story of the year in treasuries has been in the long end of the curve, a lack of inflation, call it geopolitical risks included. but if you compared the ten-year treasury against germany, against canada, against france,

and even against italy, it comes out pretty inflatable. >> thank you so much for joining us today. >> thanks for having me, becky. coming up, a record breaking week. the health of the consumer, some of those numbers as we head to break. a quick check on what's happening in the european markets right now with that convoy, moving along.

welcome back.

u.s. equity futures down about 21 points. we're flat at the beginning of the show. news is sort of trickling in about -- you see it? >> nope. >> what happens with -- he's getting some newspapers. for the slide. we -- this convoy is moving? >> it started around the top of the show, about 70 trucks. >> last friday, a convoy went in and it was destroyed by ukraine, the russian convoy. now there's another one going in and some say it's going as a direct invasion. >> some ewe crayan officials are calling it a direct invasion, yes. right now, some modest led arrows here for the united states futures. overseas, we've seen some red arrows, as well. some of those european markets down by 0.7%. this is happening as we've been watching what's happening with this trucking convoy. the dax right now in germany, down by 0.8%. we'll continue to watch this through the morning.

it has been a big week in retail, as well. home depot, lowe's and kohl's hitting highs. next week, abercrombie is out with results. how should investors feel about the sector and the health of the consumer? joining us right now, jay rogers, worldwide enterprises ceo. also our very own courtney reagan. what is happening with the consumer? what's taking off with this? it's hard to get a feel for that right now. >> i think if you're winning, you're really winning. i think if you've got names, the big brands, macy's has been a stand out in the department store secretarier for a while and i don't see that changing. home depot, a winner in the home improvement space as well as in the format in general. they're beginning to use their stores and distribution centers. you have the big standouts. the ones that are filling are filling. consumers are fickle and they're strongly fickle. they have discretionary income

that they're willing to spend on items like sweaters and shoes. i believe that's beginning to slow, but it's been a tough go for some of these retailers. >> i think the bifurcation is about to stop bifurcating. if we see wage growth then people like walmart who haven't been participating will start to participate. i think it's true, that's what we've seen so far. the upper end has done really well, the lower end hasn't. unemployment is rising, wages are starting to have some growth. people are about to give up their love affair on boig a brand new car. when that happens, we'll start to see booeg people buying sweaters again. they may still be mad as hell at the polls this november, but they'll be wearing a new sweater when they get there. the consumer confidence is going to get better even if their attitude towards politics doesn't get better. is that the the end of the new normal? do we get back to a more normalized growth rate? do customers feel better? looking at the corporate bond

issuance, it's hitting new highs, taking off on things. is that a sign that companies feel more competent, too? >> companies do feel more confident. i don't think anybody thinks we're coming back to a new normal. all evidence is we're going to see slow growth for a time. >> is that evidenced by the stocks? >> no. it's the best set up for department stores that i've seen in a long time. i've just walked stores in chicago in the last two days, 20 hours in the malls, didn't buy anything. inventories are at the cleanest in the mall and at the department stores that i think i've ever seen them. that tells you we can have pretty good strength on the back half even with moderate growth. also, the setup is great for the weather, right? the weather compared to last year has to be better. we're going to see one more day between thanksgiving and christmas on selling. all the things you're looking for with a healthier consumer is

about to happen. so we should be -- >> when you think about the department stores, i think macy's. >> i think macy's, kohl's, jcpenney and nordstrom are all buys right now. they're going to have a good back half. i'm not pushing dillards. i think they're starting to struggle a little. i think part of that is penney getting better. part of it is macy's online. part of that is those two don't have big online businesses. more than 100% of the growth in retail sales this fall is going to come online, meaning brick and mortar does less online and it's all the growth. you have to be a big player. macy's is the best at that. nordstrom is the best at that. penney's is getting better at that. kohl's is good at it. gap, too, one of the good omni channel retailers. they're about the only guy in the mall i really like unless

you include people like foot locker that are just best in class, right? but as far as being disadvantaged by the business moving online, gap is going to be less disadvantaged than all those other guys in the mall. >> one thing we've heard again and again is online sales are great, but they're not as profitable with brick and mortar sales. >> that may be true, but they better get used to it because it's going to be what happens. only 10% of those sales are happening online, but it's all the growth. so you better get good at it. and the future of retail, i don't believe and most people don't believe stores are going to completely disappear in the future, even 25 years from now. but they will probably be less important, perhaps more showrooms, perhaps some retailers are more important than others. i think they'll be very important for the home depots of the world with lumber and things like that. but i think that the online is something that retailers are

having to really give themselves a react check about. >> courtney, jan, thank you both. >> do you like a sharp -- >> i love it. see, they're not bugs. find out which little critter is also actually not a big fan of suburbia. >> roaches. >> like cities. >> bed bugs? >> no! they're not bugs. and then they're arachnids. and then later this morning the newsmaker of the morning. you can kill as many roaches as you want but it's a sin to kill a spider. st. louis fed president -- jim bullard will be on at 8:00 a.m. central bankers gathering in jackson hole debating issues including future rate hikes. we're going to talk about his response to all kinds of stuff. druckenmiller, feldstein. he's going to have a hard time with dawes. i'm just letting him know. get ready, jim.

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i need more time than three minutes to talk about this. one of the biggest fears of people are afraid of spieders. which is pathetic. anybody that kills a spider doesn't know what they're doing. you don't kill spieders. >> i killed a spider this week. >> don't kill spiders. do not kill spiders. >> it was in the bathtub with

me. >> live and let live. >> i never kill them outside. >> you should leave them in your house. they kill disease -- >> they kill mosquitoes. i'm glad for that. >> they kill roaches. they kill -- >> what if they fall on your head when you're in the shower? >> so what? they kill clothes moths. they stay away from humans. you shouldn't get too close to them because they might bite. but they usually wouldn't. but they kill all these other disgusting things -- >> it scared me. >> it is like harper lee. you can shoot as many blue jays as you want. >> i agree with that in theory but when almost drops on your head. >> but they do kill all these other things and flies, too. >> i know, i saw charlotte's web. i agree with you on every count. >> you remember the babies? joy and arannia and nellie. she was nice to the pig. >> agreed. >> a report from the "l.a. times," you know, sorkin thinks nobody's moving into the city -- actually, when you look at what happens to animals in urban environments, some of them

thrive. like raccoons apparently do very well in urbanization because they learn to become urbanized. pigeons do very well. >> they eat garbage. >> most of the time people do not do well like humans do not do well in urban areas because you're all too close together. >> you get grouchy. >> i'm kidding about the humans. but that was actually for andrew. but they have -- they're checking now, scientists, to see how some species do, urbanization, and spiders do very, very well. and you might -- >> why? >> they looked at these spiders that they could follow for a long period of time. they're this golden orb spiders. they make semipermanent webs where their live their whole life so you can follow the females the whole time. the females were bigger, better at mating, that's call eed -- bigger, fatter, and the reason, warmer environments. urban heat islands. >> that makes sense. >> not all species do better. don't, please -- and i'm -- >> fecund?

>> you can kill as many blue jays as you want. it's a sin to kill a spider. >> i apologize. when we come back we are going to talk about futures under pressure, what's been happening. "squawk box" will be right back. [ male announcer ] don't just visit miami.

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breaking news. moscow defying kiev. trucks from an aid convoy passing the ukraine border. one official calling it a direct invasion. >> the fed in focus. janet yellen and the world's other leading central bankers gathering in the mountains of wyoming. this is no time for the markets to be on vacation. making money in the stealth summer rally. opportunities abound and we'll bring you many of them. second hour of "squawk box" begins right now.

good morning, everybody. welcome back to "squawk box." we are following a breaking story for the global markets. stock futures have been trading lower this morning. obviously we're off the lowest levels of the day. but we've seen some pressure that started after reuters first reported that a russian aid convoy entered ukraine without government permission. and without a previously agreed to red cross escort. ukraine's state security chief says this amounts to a direct invasion by russia. again at this point looks like the futures are down by about 7.5 points. they were up by about 20 or 30 points at the highs this morning. down by close to 40 points. and, continuing to fluctuate as these news reports come in. >> so, the news is important, and it's big. we weren't necessarily breaking news, futures down six, based on russia -- no -- but did you see how -- we have to show the futures to let you know what's

happening based on this big story. but we're not saying -- futures down six because -- >> what we're saying is, look out. because, the situation in russia and ukraine affected the markets greatly in the past. also if you look at what's happening with the russian stock market this morning, it was down by about 2.3%. >> looks like the simpsons, ken brockman with the big storm. the death toll currently zero. and we will monitor the other big story, market story this morning. the street -- >> we didn't sell it. >> because people at home, i don't want them, you know, don't want to be a cliche. >> we realize, sometimes -- i've got serious problems. the street anticipating new comments from fed chair janet yellen. she'll be speaking in jackson hole, wyoming at 10:00 eastern. investors looking for new clues on when the fed may start to raise interest rates. >> the summer rally rolls on. the s&p notching its 28th record close of the year.

the nasdaq back at 14-year highs. and the dow just over 100 pajss away from its all-time high. all of this as investor sentiment sits at a nine-month high. are these reasons to feel more bullish or should you be afraid? joining us is vice president and editor of the american association of individual investors journal. rich steinberg is the ceo of steinberg global asset management. gentlemen, welcome to both of you. charles let's start with you. this has been anything but a typical, quiet summer. how do investors feel after all these ups and downs this year? >> well, we just had a big upward swing in optimism. it rose about 15 percentage points over the last two weeks. and i think it's a reaction to the market not correcting. if we go back two weeks we -- two weeks ago we had the s&p 500 down about 4%. and there was some fear that a correction was finally starting to occur. now, obviously, we've had a reversal. the s&p 500 is now at new highs. and i think we're actually

seeing a relief reaction to the market not correcting. so investors are looking at the upward momentum, seeing it continuing, and are now feeling more optimistic than they did just a few weeks ago. >> charles, is that a good sign or a bad sign? >> it's neither. when we look at optimism, right now it's really within its historical range. so i think it's more of a psychological reaction. and probably more of a short-term reaction. what's interesting is when i talk to individual investors i'm not getting this big sense of optimism. even last month i was talking in san francisco, and one of the questions i was asked was, do i think a correction is going to occur? so i'm not seeing -- i'm not getting the sense that investors are really overly optimistic. i think they're encouraged. but there's still a sense of caution out there. >> that almost sounds like capitulation, too. like keep waiting for that drop and you don't get it. rich, how do you feel about things this summer? >> well, you know, since last time i was on, becky, we had that go back to the 1920 level.

we're back up at this trading ridge and i think we're going to be stuck in this trading range. your guest talked about, you know, investors feeling more bullish. but it's really going to be the difference between what they say and what they actually do. so now we're at the 17,000 dow level. earnings are getting more -- coming in well. but unless investors start to really plow that extra cash in, we're not getting a sense from our channel checks that the retail investor is completely frustrated with the cash on the sidelines. and until that cash and capitulation occurs where you get a blowup rally i think we're going to be stuck in a trading range for awhile and investors should be waiting for that cash to buy on the way back down. maybe back to the 1920 level. so for now i think we're going to tread water. >> so you would buy at 1920 but when you approach 2,000 on the s&p you're staying away from it, rich? >> we're staying -- we're in the -- at the firm we're about 75% invested. and my feeling is, if the market

moves higher, which it could because oftentimes you get further push-up from valuation, but it's okay to make less on the way up until we really see that the earnings are going to really start to come in and people are going to focus on 2015. >> rich, let's forget about sentiment for awhile. let's just talk about valuations for stocks and based on earnings do you think stocks are expensive right now? >> based on this year's earnings, the market's expensive. the s&p is going to earn $119 this year. geopolitics aside, unless earnings start to get hurt by a slowdown in europe, the market's trading at over 16, almost 17 times earnings. next year earnings are going to be about 130 dollars so if you apply a 16 multiple which is pretty close to the five-year average we could see 2100 on the s&p. which would be about a 7% total return. 5% in price and 2%. so if you get a pullback, investors will have a chance to have a decent year next year. but it's not going to be walking up a series of steps. it's going to be a pullback, and

give and take for awhile. >> charles, what do you think happened to make investors feel better over the last couple of weeks? if you look at global headlines, there's certainly not a lot to feel great about. >> i do think a lot of it was the upward momentum. you're right. the global headlines are negative. we did have that incident, in missouri, which is ongoing and that took some of the negative headlines from the global perspective. off the front page. obviously today's news in ukraine cause for concern. but i think a lot of investors right now are looking at the trend, and the big challenge for a lot of investors if we look at stocks, we're not seeing a lot of stocks that are cheap. but then when you look at bonds, they're not really cheap, either. so for a lot of investors, it's very frustrating, because they're not getting interest on their cash. but they're looking at stock valuations, and they're not seeing that stocks are cheap. i wouldn't say they're expensive. but they're certainly not cheap, either. >> rich, there's a story in "the wall street journal" today about how corporate bonds are just on fire.

that entire market has sold close to $100 billion this year alone. that the money that companies are putting out there in terms of what they want to put back into plants and spending, that's up about 90% from where it was a year ago. that's an awfully good sign for the markets, isn't it? >> well, it is, it will help earnings. but i think what's happening, becky, is your corporations know that the fed's going to be raising rates maybe by midsummer next year. and there's a race to kind of grab that cheap cash right now. the question will be, are they going to use it to hire more people? are they going to use it to refinance other debt? or are they going to be investing in cap-ex? those are questions we don't know yet. but i think it's important to realize the part of the bond market that the other guest was just talking about that we should also be thinking about, in order for the market to have the next leg up over the next 15 months, endowments and pensions are going to have to say bonds are just too expensive.

should we be shifting more money out of bonds, and then into equities? september 30th they'll start to be thinking about the managers that they have going into the end of the year. and i think it's something we should be watching over the next couple months. >> okay. rich, charles, gentlemen, thank you to both of you and have a great weekend. >> you, too. >> have a great weekend, guys. >> okay, see you guys. in corporate news, could the anticipated cement launch of the iphone 6 be delayed? reports say apple's suppliers are scrambling to produce enough of the screens. i guess they're bigger, for the new phones. after production was halted due to the redesign of a key component. apple hasn't yet officially announced the date for an iphone launch event. still got two? >> yeah. >> blackberry and an iphone? >> mm-hmm. >> haven't tried the dictation? >> no. >> on the iphone? >> but i like it. >> i know. you're carrying two phones around. there was a time when you had none. now you got -- >> and that and i also have -- >> a mini pad. >> an ipad. i also have an ipad.

>> citigroup facing restrictions on sales of hedge fund investments following a deal with the s.e.c. the bank reportedly sending hedge fund firms letters telling them it can't sell investments in hedge funds and private equity funds to clients at this point. and another company facing a security breach this time it hit a venture capital firm, kleiner perkins that famous california firm and detectives out there are investigating the theft may put some valuable financial data at risk. >> that's surprising. you would expect kleiner perkins to -- they're so tech savvy you would think they would be on top of everything on top. >> that is weird. >> all right when we come back, "squawk box" takes flight. airline stocks soaring to record highs riding on low oil prices and strong consumer demand. we'll put the best investing opportunities in the sector up on the board right after this. and then speaking of travel, las vegas welcoming its first new resort in five years. the big bet of one legendary hotel owner still ahead.

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welcome back. the futures now down 14 points. among our stocks to watch today,

foot locker. the company's earnings beating the street by a dime. revenues also better than consensus. quarterly same-store sales jumped better than expected 7%. and that all looks good there for foot locker. i'm not sure why. foot locker is doing so much better than so many other retailers. i want to see a longer chart but that's 7% same stor sales. >> this is the time to buy sneakers. >> whoa. >> i'll say it again -- how do you spell whoa? w-h-o-a-h? what is whoa. that's all i can say to that. you got -- oh, my god. you got obsolescence, planned obsolescence with sneakers. and i do believe it because i start getting shin splints. >> i noticed it this week. it's my hips that hurt. i need a new pair right now. >> because they look the same. >> yeah. >> but they really do -- >> it's the wear and tear. >> i don't believe them -- >> i do. >> you can't be more than 200 miles on them. >> i was walking in here today

thinking i need new sneakers and i need them right now. >> it used to be if you're not a runner you wear the shoes until they wear out it doesn't matter. >> you can feel it. i feel it right here. it's -- >> oh, boy. >> all right. also united airlines hoping the wave of business travelers wallet is through their stomach. it is revamping the menu in first class in hopes of filling the cab be. phil lebeau joins us with more. this is a good thing. upgrading food. we like that. >> we don't see this very often these days, becky. and this is something that i think some people who fly united airlines on a regular basis will say what? that's a nice change of pace, adding meals for a few more flights. here's what united is doing. really two changes. one is the fact that starting next year they will be adding meals for their premium customers, we're talking about people in the business class and those few flights, very few flights that have first class. those are on domestic flights at least 800 miles in distance. that's a little bit shorter than they were in the past. at the same time what we're going to see starting next month is united revamping its business

class meals to include salads and wraps all in a hopes of freshening the menu, and adding a little bit more pizzazz to those who are really frankly tired of what they're seeing when they come to the meals in business class. >> menu fatigue is probably our biggest issue i think when you're flying. because if you fly a lot you see the same thing no matter how often you try to change it. for us it's like basically once this rolls out i'm already going to start working on wiping it clean and starting all over again because we're going to have to in about nine months, a year, you know, reinvent the wheel and start from scratch. >> we caught up with a united airlines chef yesterday when they were showing off the new offerings that they'll be having in business class. look airlines have been shifting their meal plans on domestic routes over the last eight, ten years. used to be you'd get a meal, and any class on the airplane. not the case anymore. but american and delta have cut back their meal plans on many of their routes here in the u.s. as you take a look at shares of the airlines keep in mind that for the airlines they look at

meals as being important for making those top tier customers happy, but it's not going to bring people in to an airline. generally speaking, most people in the airline business will tell you that this is important on the margin. on the edge. but it's a very important edge when you're talking about those business class customers, the people who are paying top dollar, becky and joe, they would like to see something a little bit different in their meals in first class, or new when it comes to certain routes. >> how about something other than a basket that has bananas and cookies in it? >> the bananas and the chips and the canada, and then you always see somebody who is like, well, here, let me take three of these. and then you're like -- one! this is not like trick-or-treating when you're a kid and you stick your whole hand in there. >> yeah. >> you have a friend who does that, right, phil? oh, boy all those other people -- >> believe me if i did that people would say something. so yes, people notice. people notice. >> i'm going to say something.

here's lebeau i just want to say one thing in defense of the whole air -- it's hard to travel. it is. ever since the shoe bomber and all that, it's hard. i will concede that. but, i still think we take it for granted. i think we take the price for granted because it hasn't gone up in 25 years, really. >> correct. >> and if you take your kids, and get in an suv and drive 1,000 miles, and when you're done, tell me that flying is hard. >> no, i just did it. i went to maine and back. that was an 11-hour drive. >> every big long truck that you pass where you're going okay i think we're going -- i think we probably are going to survive this truck. and then there's another one. >> no, if you're driving -- if you're going less than 12 hours, you're better off driving because of the delays and the time it takes from the time -- >> no, drive something hard and dangerous. it's hard and dangerous and taxing and you go crazy and you need a vacation -- >> i just flew out to indiana, to chicago and drove to indiana to see my grandmother. it took us almost as long, it would have been two hours -- >> i know -- >> it would have been two hours longer if i would have left the door and drove there.

>> we're just too fat. we're fat and happy now and we don't appreciate flying. and if you're lucky enough to get an upgrade, phil, to one of those united beds with the -- you got every movie. my kids don't want to get off it. seven hours is not long enough. it never was like that before, phil. >> don't ever take a trip with becky. don't take a trip with becky. >> you play the license plate game when you drive? >> with becky you got to -- you got to make sure -- >> i got 29. >> you make sure there's a barf bag. a couple barf bags. >> that's true. that's not the airlines' fault. >> goldfish crackers. you'll grab one of those bags. >> no one time there was no bag, i grabbed a -- never mind. pillow case. >> oh. >> doesn't work very well. >> oh, god. okay. >> thanks -- >> nobody wants to fly next to me. >> airline stocks have been flying high. check out the performance for the major airlines. united, jetblue, delta, american airlines and southwest all soaring. they're telling me. so is now the time to buy? has the big market opportunity already taken off?

joining us now is joseph denarddy transportation sector analyst. there was a time even warren buffett said i made a mistake, i bought an airline. they're not investments, they're at best trades. but there are other people that say in the last five years that's changed. what about it, joe? >> yeah, i think a lot's changed since warren, mr. buffett made those comments, i think consolidation is really helping the group quite a bit. i think that, you know, capacity discipline has created a very healthy pricing environment for these guys domestically. so i think they're making money in both markets now domestic and international. you know, in the past they've really made all their money internationally and then broken even or lost some on the domestic side. so i think quite a bit has changed over the past few years. >> what was it that was so messed up? i mean there were some really bad ceos 10, 15 years ago. i don't know what they were doing running some of those places. but was it hard to come off of

deregulation? were we not ready? what went wrong back then and you said what's going right now a little bit of disciplining and capacity discipline is helping. but, what was wrong with the industry? >> yeah i think it was a function of how mature the market was at that point. that it was more about market share and growth. i think at this point the u.s. market is very mature. you've got a good industry structure in terms of how many airlines, and the market share that each of them have. so i think that's allowing them to focus more on roic, returning cash to shareholders. you now have five or six airlines either paying a dividend or buying back stock. that's a huge difference between you know, this cycle and past cycles. so i think that says a lot about how the industry has changed and we think it is suitable as a long-term investment. >> really. so your favorite stock is delta at this point? but you'd buy them all? >> yeah, i think there's a lot of upside for the group. if you look at valuation, they

still trade at significant discounts to the s&p. similar to the rails previously. you know, before that industry went through consolidation. so we think as airlines start to look at their balance sheets and their capital plans look more like industrials that they can get a better multiple. i think that will take a few years to occur. given where investor sentiment towards the space is. it's still fairly tenuous. but i think, you know, that that's a pretty good next leg for the industry. >> well i would even think that the shale revolution which takes less pressure off of, you know, oil for -- we're always going to need it for certain things. if we can replace some other things with it. you worry about an oil shock with jet fuel and then you worry, you know, unfortunately we still worry about some horrific event that someone does on purpose with an airliner. you remember what happened last time. that's always looming. hopefully that never happens again. we got a lot of security hopefully. but, it's a dangerous world. but so go ahead and do it, and

even though you saw the charts, they go straight up, just stay in them and buy them? >> yeah, i mean our top pick is delta. we probably like delta, united, spirit. so we think there's a lot of upside left in some of these names. >> all right, joe, thank you. >> okay. >> okay coming up, our newsmaker of the morning is jim bullard. the big fed guy. what's he going to say? well, he's warning investors that it could be reading the fed all wrong at this point. we'll see what we mean by that when st. louis fed president jim bullard will join us first on cnbc at 8:00 eastern with liesman. e

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welcome back, everybody. happy friday. take a look at this video this morning. comedian chris rock sitting in the front row behind third base. that dugout at yankee stadium. yeah, he was in the right place at the right time. a foul ball came his way. it wasn't a clean catch but the ball did land in his seat, and nice guy that he is, he snatched it up and handed it off to a young fan down the row. yay. good for him. >> mm-hmm. >> when we come back, nbc's richard engel will join us to talk about the big geopolitical stories of the morning. "squawk box" back after a quick break.

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crisis in the middle east is intensifying. defense secretary chuck hagel calling isis an imminent threat to every interest that we have.

also out this morning are the last e-mail sent from isis demanding millions for the return of slain journalist james foley. take a look at the cover of the daily news calling foley a hero to the end. richard engel joins us now on the "squawk" newsline. with more. this was, as you can imagine, richard, for us unsettling, for you, i mean it must be a constant, constantly in the front of your mind what's happening. but i'm sure that didn't make it any easier just to look at the images, or to read about the actual story, and i think we just need to see what life -- what the value of life is in certain parts of the world. it just is not consistent on how a value of human life is measured, i guess. >> yeah, well, it's always terrible to report on the death of a colleague, and particularly

when it is a brutal, horrible execution. james foley was held for two years. and other people who were with him, who were released, describe how he was singled out for abuse because he was americans. and that his kidnappers really had no intention, no serious intention of letting him go. they asked for 100 million euros or 130 plus million dollars, which is a ridiculous amount. many times more what other hostages were being negotiated for. and it seems like they wanted to keep him for pressure, for political reasons, to execute him. and they found this opportunity, when the u.s. began airstrikes. isis felt it was immune. it was operating in syria, then it crossed over in to iraq, it didn't think that the u.s. would get back involved in this war, after nearly a decade of a very

painful experience with the united states. and then the air strikes began and isis took out its prisoner, sent an e-mail to foley's parents saying, he is going to be punished for these airstrikes, and then they beheaded him on a videotape. >> yeah. all the different ramifications and angles we haven't talked in a while, richard, so the big story today it involves, in most of the u.s. papers, and that is the -- we really don't have, as a country, or i don't think the administration, you know really feels like getting more deeply involved in the middle east at this point in terms -- and you see mission creep every time the president does something even incrementally bigger than what we've announced, it comes under criticism. but now we're hearing to actually deal with isis we might even have to go into syria. so it seems like we are -- our options are not very -- we don't have any really good ones.

>> no, the options are all terrible. you have to think of isis now, unlike other terrorist groups. most terrorist groups, they're small cells, they don't control territory, they hide in the shadows, they meet in safe houses and they plot attacks. isis has effectively a state. it doesn't even call itself isis anymore. it's now called the islamic state because they control about a third of syria, they control large sections of northern iraq, including the city of mosul, which is 2 million people. they have heavy weapons. u.s.-made weapons stolen from the iraqi army. so just carrying out airstrikes in iraq doesn't do much against the group. it contains them. it pushes a little bit them back over the border into syria, but since they operate both in iraq and syria, it's not going to eliminate the group, because if they get hit in iraq, they just retreat back over the border into syria, regroup, and live to fight another day. what we're seeing now is the

senior u.s. officials, including the defense secretary, and the chairman of the joint chiefs, saying, this isn't enough. this isn't working. we can bomb northern iraq forever, and trying to bomb, you know, the isis targets, and it's not -- this problem isn't going to go away. and this group is dangerous. it is incredibly radical. it is blood thirsty. and it is -- it wants to attack the u.s. it's not just satisfied in carrying out attacks in iraq and syria. it's clearly says we're going to go further. we wanted another 9/11. and it's attracting a lot of recruits. so the question is what do you do about it? do you send forces into syria? do you start carrying out air strikes into syria? or do you have to have some sort of rapprochement with bashar al assad? bashar al assad, the regime, the brutal regime of syria, the u.s. policy until recently has been to topple the regime, to support the rebel movement. but now we're sort of fighting on the same side.

so, we're starting to hear more about well, maybe we should rehabilitate bashar al assad and let him do the fighting against isis in syria. so that the u.s. doesn't have that mission creep you were just talking about. >> richard something you told us six or eight weeks ago is now the lead story in "usa today" this morning. it talks about how there are people with western pass ports, something like 500 british citizens, and another 100 american citizens, who are there at this point, helping and what a huge problem that presents. i mean if this is something that we can identify those numbers, can't we also identify those people? >> we have u.s. intelligence has names. because a lot of these people, they go missing, they leave their country. they go most of them through turkey where i am right now and they never come back. a lot of them also become active on twitter and post their exploits to syria. so there are names. the u.s. has thousands of names of these fighters. but it's no guarantee that we

have all of the names. and once you're dealing with people who have western passports, it does make it easier for them to get through border controls. it's not like these are people operating in pakistan. when anyone comes from pakistan and lands at jfk, they're flagged. but it's not the same if they come, if they have a french passport or a belgian passport it doesn't get the same level of scrutiny. so each one of these people who has a name tries to land at jfk, yeah, they'll be picked up. and that's happened before. when landing in the uk, or in france, and other countries. but if they're not on the list, and they don't have a -- and they don't have a suspicious passport, it could be a lot easier for them. to enter the u.s. >> richard strange things happening politically over here. we have this odd bedfellows created between libertarians like rand paul and some of the people in the president's party that don't want any engagement

whatsoever. and the idea that we have to police the entire world given that the last ten years people don't necessarily think that that's our role. does this show -- i'm -- usually i think maybe there's some truth to that. but now it seems like there really was a vacuum in the -- of leadership in the middle east. and it seems like vacuums sometimes can be filled by things like this caliph that you're talking about. if we had been more involved could we have done anything about this? do we need to continue to lead? >> well, if you ask the people where i am right now, the answer is a resounding yes. think about what happened for a minute. the arab spring happened. and this is what the root of the conflict is. the chaos introduced in the middle east by the arab spring. mubarak was toppled. libya was toppled. the revolution began in syria, and the u.s. was encouraging it. the u.s. was encouraging it with

political statements, encouraging sanctions against the regime. we were behind it. washington said, go for it. take down the regime. and the people who went and rose up against bashar al assad thought that they would get a no-fly zone. they thought that they would get weapons. and then it never happened. because the arab spring started falling apart. it started to get ugly. and the u.s. backed away. and the rebels who were encouraged to rise up felt that they were left hanging. and they became desperate, they became angry, and out of that desperation and anger and bloodshed and carnage -- by the way, 200,000 people according to the u.n., which released the figure today, have been killed in the three years of conflict. so out of this horror, a group like isis comes in and says, okay, the u.s. isn't going to help, we're going to do it, and they're getting -- and they have weapons, and they're capturing resources that bring them money

so it's a problem. now if the u.s. wants to ignore it and very tempting. who wants to deal with this? it would be wonderful to not have to think about this group. but this group thinks about us. >> yeah. well you know what? hillary, don't do stupid stuff is not a policy that there you know that's looking pretty smart as at least it looks like that makes sense. it would be nice if it was just don't invade anyone and everything's going to be fine but i don't know this is really scary and as you say, there's state of intention is another 9/11 and they're much more together much more powerful with much more capability. >> much more money, too. >> richard engel, as we always, you know, i don't even like bringing up the subject, but just be safe. you know, we see something like that and we just worry about a lot of things. and we appreciate what you do. so, we'll talk to you soon. >> well, i look forward to it. thank you. thank you very much. >> okay. when we come back this morning. gasoline prices have been plummeting this summer. the decline is expected to continue. so for every cent consumers save

filling up how much gets pumped back into the economy? the stats and what they foreshadow for the markets. plus sin city is sizzling. las vegas opening its first new resort in five years. a big bet on the gambling mecca. that's still ahead this morning. (vo) rush hour around here starts at 6:30 a.m. - on the nose. but for me, it starts with the opening bell. and the rush i get, lasts way more than an hour. (announcer) at scottrade, we share your passion for trading. that's why we've built powerful technology to alert you to your next opportunity. because at scottrade, our passion is to power yours.

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trading bloc this morning oil prices down more than 10% this month. this is what i -- did you see this? gas prices i mentioned this earlier this week, gas prices this time of the year, lowest since 2010. $3.20. >> filled up this morning. on my way in it was only $54. >> the national average, $3.42 per gallon of regular right now. joining us is tom kloza, why at this time of year, and does it indicate anything about the oil dynamics? >> well it indicates that speculators got spanked when they chased oil up on all the international intrigue and violence. and so we've got crude oil prices down about $10 or $14 from their highs. and the other side of this is

that the season was front end loaded. people drove more in the first half of the year. driving less since july, and into august. and i think that trend's probably going to continue. >> i keep hoping, thinking that the natural gas revolution that all energy is going to be reprised based on how much of the stuff that we have. but it's not directly replaceable. you can't replace jet fuel for example with natural gas. >> yeah. >> you could do trucks with natural gas. i'm hoping some day that the whole supply demand dynamics for oil gets reset. is that happening? i mean, here we are, we're stuck at 95 for oil with all this stuff happening. maybe without all this stuff happening in ukraine and syria, maybe it would be 80. maybe it would be 75. maybe that's what holding it up at 95. >> i do think the world oil price and the notion that maybe two years from now or whatever we might be exporting oil probably has something to do with it. >> becky won't let us export any

of it. >> no. >> let's say we get around her objections to this. is it too high right now? are there dynamics that would force it lower? >> i think the world price is probably reasonable. about $100 a barrel. i think the u.s. price, and you know, everyone looks at the wti futures price, which is in the 90s or whatever. they're selling wti this week in west texas for about $76 a barrel. $78 a barrel. north dakota crude is in the 80s. canadian crude is in the 70s. we really are the privileged continent. we see it on natural gas where our price is a third or a quarter of the natural gas prices elsewhere. it's more subtle on gasoline and it's more subtle on jet fuel and diesel. these are the lowest prices for oil, those products, though. >> i know but we're getting better and better, you know all the arguments about everything, we're going to run out of everything, and then technology gets us, now we got horizontal fracturing and all of a sudden all the stuff that we thought was going to happen didn't happen. we keep, you know, finding more -- >> i think we're on the right

path. i really do. we're going to probably be between 10 million and 12 million barrels a day of oil production, which is higher than it was when richard nixon was president. and the cafe standards, they kick in at 36.5 later this decade and then up into the 50s, the mix will change a little brit. natural gas will get some traction. but i don't think -- i think we're still going to be dependent on fossil fuels with the occasional tesla and so forth. >> right, right. thank you. >> appreciate it. >> joining us right now with more on how lower energy prices could prime the economic pump, michael darda, mike what do you think? is this really making consumers spend more money on other things right now? >> becky, i thinkth a very positive story that fits into a few other elements of a brightening economic outlook. the first thing we have to ask ourselves, though, is why are energy prices falling? if they're falling because of weak demend and that's not a good thing, if they're falling because of a supply side shock

that's positive more production coming online, the horizontal drilling and fracking boom, that is like a tax cut, that is positive. so i think it definitely helps in that context but we're also seeing rising confidence levels, so the conference board has a specific measure of the present situations index it's called at a cycle high. that one's very highly correlated to economic activity so good news there. and then we're seeing leading labor market indicators like jobless claims fall to cycle lows. job openings from the jolt survey hitting cycle highs. so i do think that we have a firming foundation under consumer spending going into the back half of the year. >> in terms of what gasoline prices themselves have meant, what would have happened if we'd just say, been near normal levels? >> well, it's funny, i mean if you look at -- if you look at a four-year chart what you see is we're basically moving on to the low end of a four-year range? and unfortunately, you know, if you look at these things you

don't find a stable relationship between, you know, "x" percent fall or rise in fast lean prices and what it means for consumer spending. it really depends what's driving it, as i mentioned before. in the context of rising confidence, and improving labor market prospects, i think this recent pullback in gasoline prices is certainly a positive. >> mike, we talked to a couple people this morning who have said that they think wages are climbing from here. and that's certainly going to help the economy overall. the consumer in particular. you agree with that? >> well, i think we're going to need to see a tighter labor market. i mean if you just look at the head line unemployment rate the u-3 rate we may not be far from a level that would start to generate some upward pressure on wages. but some of these broader measures of labor market like the u-6 rate that adds back people that are part time that want full time work or if you look at an employment ratio for prime age adults you know those are still at levels that are consistent with pretty weak wage growth. it doesn't mean that income growth can't accelerate.

because hours worked are going to be moving up along with job gains. but i think we could have a ways to go before we really see a lot of upward pressure on wages. by the way, that may not be the best thing for the stock market. because if we start to see nominal wages breaking out into a 3% to 4% zone then we're going to be on the front edge of monetary tightening and we could be in the later stages of a business cycle at that point. >> and mike, were your ears burning last week? >> no, was i -- >> yeah, joe was talking about how debonair you are. one of your colleagues. >> he probably told him. >> i saw that. so i got the message, joe, and i'm here. happy to join you guys. >> yeah. and you what are you like an ultimate fighting champ or something they -- what do you do? you do some kind of -- >> jujitsu. >> yeah? are you any good? >> well, it's a good thing that i don't have to rely on that for income, let's put it that way. but i have fun with it.

>> can i just ask you what did the other guy look like? what the hell happened to you? >> it depends who i'm training were that day. >> yeah. i'm not we're not we don't want to know we don't know what the hell's going on there. anyway, jujitsu, that's where you sort of -- >> you use your enemy's strength against you, right? >> you like move whet he comes at you and he like misses you like a bull fighter sort of? >> yeah it's joint locks and choke holds. >> okay. saying please let's get out of here like they don't like this. anyway, darda. guess they don't want the -- >> we're entertained. mike thank you for joining us. >> okay, thank you guys. >> when we come back this morning it looks like las vegas is finally shaking off its recession hangover. the sls will be the first major resort to open on the strip since 2010. with it a new economic era will be ushered in and jane wells has that story after the break. also at the top of the hour don't forget a first on cnbc interview with st. louis fed president jim bullard.

live from jackson hole, wyoming. "squawk box" will be right back.

tomorrow the doors to the sls las vegas will open to the public. a big milestone on the strip. jane wells is there, and joins us with more. i don't -- you know, now -- it's las vegas, too. bacon. livestock. and las vegas. what -- and pot. and pot.

so -- why don't -- what are you -- >> joe, the list gets longer and longer. so if you think about it, i cover everything. >> it was also the mile high club this week. >> and the mile high club, jane? congratulations. when did that happen? oh, you covered it. i'm sorry. >> more on that in a minute. it's my favorite small business. well -- anyhow. this development here when you add it all up is worth about $800 million. it's the first casino resort to open on the strip in five years and they're putting the finishing touches for midnight tonight is what is expected to be the biggest opening in vegas in a long time. there was a time it did not look good though for the sls las vegas. its owner l.a.-based sbe founded by sam nazarian bought the

property at the worst possible time, on the north end of the strip, the worst possible place, but they hung in there and two years ago decided the time was right to start construction betting big on the vegas recovery. >> when you look at visitation there, southern california and the economy slowly starting to turn, financing markets starting to get their legs, then we decided this is the time you begin construction. you get ahead of the curve, because we knew that investments would come into this territory. >> all right. vegas has been a bright spot this year for gaming companies. over 20 million visitors through the first half up 4%. revenue per available room up almost 11%. gaming revenue only up 3.5%. because millennials, the cool hipsters that sls targets prefer clubbing to gambling. >> we're seeing growth away from gaming, las vegas is becoming much lest gaming centric and much more dependent on upon night life covers, room rates, fine dining.

>> actually, the sls expects only a third of its revenue from gaming. it used to be the other way. you get 70% from gaming. now it's flip-flopped. later on "squawk on the street" how the north end of the strip may be the hottest place to be this is just the first of a new wave of developments. too much too soon? and then on "squawk" alley, only in sin city, this airline takes you up in the air for the sole purpose of joining the mile high club and its slogan is what happens over vegas stays over vegas. >> oh, my gosh. >> and becky tells me that your mr. wells actually is a pilot, your husband. >> thank you, put me on the spot. >> he -- yes, he is. he's not a pilot for this -- this -- >> no, i don't mean for them! i just meant in general. that, that -- we don't have time to talk anyway, jane. >> yes, he's a pilot. >> good. happy friday. have fun. >> all right, watch "squawk on the street." >> that thing is old hat for her. her husband's a pilot.

>> thank you. >> oh, boy. when we come back this morning, fed hawks and doves are starting to sound a lot more alike. but the central bank is still give identified over the health of the job market. up next st. louis fed president jim bullard on the growth in employment and how he thinks the fed should respond. and, if the thought of a screw-top wine bottle makes you uneasy get ready for this. brace yourself for wine in a can. we'll talk to the founder of union wine company. you're driving along, having a perfectly nice day, when out of nowhere a pick-up truck slams into your brand new car.

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that's remarkable that so much energy is, is wasted. streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years. we wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then there's a mesh network that takes this information, sends it over the internet so you can go find exactly where those open parking spots are. the collaboration with citi was important for providing us the necessary financing; allow this small start up to go provide a service to municipalities. citi has been an incredible source of advice, how to engage with municipalities, how to structure deals, and as we think about internationally citi is there every step of the way. so the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge.

the "squawk" newsmaker of the morning. savt louis fed president jim bullard. his view on the slack in the labor market and how employment is separating the hawks from the doves. trucks from a russian aid convoy crossing the ukraine border, escorted by pro-russian rebels, we'll bring you the latest. plus it's opportunity friday. the inside scoop on pimco's global value plays. and union wine company has a message for wine snobs. don't hate the cans. >> he hates these cans! stay away from the cans! >> we'll ask the company's founder why he thinks canned wine will catch on. the third hour of "squawk box" starts right now.

you like this song? do you know. >> darius rucker? >> he's a genius. >> i like the song, too. like everything about it. love him. welcome back to "squawk box" here on cnbc. first in business worldwide i'm joe kerner along with becky quick, andrew's off today. we're going to get to jackson hole in just a moment. we're going to talk to st. louis -- there he is. st. louis fed president jim bullard. first check out this video catching our attention. an atlanta postal carrier learning the hard way that cameras are everywhere these days. we will have the full story later and talk about how companies are dealing with bad behavior caught on tape. >> oops. >> do they have any cameras around here? >> yeah -- >> i assume we do all the time.

those little things -- >> you got caught. >> on the ceiling. >> what did i do? >> you moved a poster. oh, yeah, yeah >> yeah but they set that up to catch me doing that. the other ones are everywhere anyway. >> yeah. >> little things like that. yeah, i think about that, they can read lips like in 2001, too. i figure i'm being watched all the time. >> yeah. >> can't computers be looking at you, too? >> you put a mustache. you got caught -- >> oh, on carl's picture. i did that, too. that was another one. >> anyway, we are counting down to fed chair janet yellen's big speech about 2 1/2 hours away at this point. two hours. she is expected to focus on the labor market. the hawkish minutes coming from the last fed meeting suggested that policymakers were surprised by the improvement that we've seen in the employment picture. take a look at the futures at this hour and at least right now things have improved. dow futures and the nasdaq futures are indicated higher. dow futures up by just about 4.5 points. s&p futures down by less than a point. this is all coming after the s&p set yet another record yesterday.

right now take a look at what's happening with the ten-year note. at this hour looks like it's yielding 2.396%. just below 2.4%. let's get to steve liesman in jackson hole. he has a very special guest for our first on cnbc interview. steve, good morning. good morning, becky from jackson hole where it's a little on the cold side and the rainy side here. i want to get right to jim bullard, st. louis fed president. frequent guest on squawk. we were both kind of shaking our heads at the market reaction to the minutes. my take was they suggested, you know, maybe you guys might move earlier and yet stocks have gone up in the wake of that and bond yields kind of unchanged. and maybe even down a little bit. >> i don't think a little more hawkish slant has to be bad news for the economy. it means that the committee could be more confident that the economy's going to improve in the future and going to be able to handle the higher rates that will eventually come.

>> the market has been extraordinarily sensitive to any fed pronouncement, any tilt hawkish. does it seem like the market and the fed maybe are going separate ways in a sense that the market is maybe more focused on it is than fed policy? >> the market's been trading more dovishly than the median of the committee's sep forecast. i felt like that's a bit of a mismatch. i think the committee means what it says. and you know, you've got everybody putting their dots out there, and i'm not sure why the committee thinks they want to price for the very lowest end or even the very lowest end of the committee. >> explain that specifically. >> the markets are looking for a funds rate down the road that is lower than what the fed itself is forecast -- >> the whole path is lower. than what the median of the sep is. at least what i've seen. i haven't checked it recently. but i think this has been true for months. >> does that make you nervous that maybe there are excesses in

the market that maybe the market is not ready for a shift that could be coming? >> yeah, i think the economy has been improving. we've had -- we've got the 4% number on second quarter gdp. i think that was kind of a relief that showed us that there was a anomaly in the first quarter. unemployment has come down dramatically. growth is projected to be three plus percent over the second half. and into next year. i expect more payroll growth 200,000 plus. i expect unplimt to come down to a 5 handle. this is pretty good, especially given where we've been. so it's going to be time at some point to pull back the normalization. the debate is just about the subtleties of exactly how to do that i think. >> so where are we in that -- in your mind as to where the federal reserve should be relative to interest rates? should it already be telegraphing that there's going to be a rate hike coming soon? >> no, i'm sticking right now with, you know, end of the first

quarter, liftoff. but you know that is very dependent on my forecast which has us growing you know 3 plus percent in the second half and nonfarm payrolls and other labor market indicators continuing to improve as they have. >> what happens to the unemployment rate in your forecast next year? >> you're putting me on the spot. >> got to have a five handle on it, right? >> it is going to have a five handle. i think we've got 5.8 for the end of the year, and then we've got different coin amics in the out years. so i think ours is probably a little bit different. but if you just took literally what has happened in the last year, and projected it out, we'd be low 5s, you know, a year from now. that's how fast this has improved. it's really pretty dramatic. >> to be fair yous guys collectively at the fed have been wrong about growth, you've been too optimistic. and wrong about unemployment,

you've been too pessimistic. what makes -- gives anybody confidence you're going to be right about next year? >> now, i just want to point out that the dust has settled on 2013 gdp growth. we said 3%, turned out it was 3%. so it's actually the committee has not been wrong all the time. we did get that right in 2013. i think the committee has been too pessimistic on unemployment, and that has fallen faster, and that's really wrapped up with this labor force participation story. >> so do you still -- are you -- are your concerns about inflation growing, are your concerns about excesses in markets created by low interest rates growing? >> yeah, i think that's a big risk over the next two to three years. so i think the debate today is about, you know, how are we going to play this over the next two to three years? if we go very slow, very gradual, you know, are we going to get another housing bubble? and a big disaster on our hands? and so i think that's a, it's a huge issue. it's obvious that that's got to

be top of mind. we've got ideas about how to handle that but i think part of it has to be to normalize monetary policy. >> so you're at odds, then, with the statement, which suggests there's significant underutilization of labor resources? you don't think that's true? >> i tried to argue in the meeting against the word significant. i think there's underutilization of resources because unemployment is somewhat higher than what we think the rong run level should be. but at this point we still want to use the word significant. because significant to me hearkens back to 2010, 2011, 2012 when unemployment rates are much higher or all these other labor market indicators are much worse than they are today, so i think we should acknowledge the progress. we're still not completely there but we made a lot of progress so i would have said underutilization. >> you agreed to stick around after the break. i know joe's on the edge of his seat, wants to ask you questions and becky, as well. so let me toss it back to joe

and on the other side of the break jim's going to stick around and answer your questions, guys. >> great. i always want to. and then i'm glad you're there, steve, too, because you know, you can explain some of the -- ask about taylor. you know what john taylor wants to do. you want to see what president bullard has to say about that. and a lot of other stuff. we're going to take a quick break. continue our conversation later fed chair janet yellen will deliver the keynote address in jackson hole. that's scheduled for 10:00 a.m. eastern. first talk to bullard some more. get some highlights that can move the markets right here on cnbc.

back to the fed's jackson hole conference where steve liesman and st. louis fed president jim bullard are standing by. you're right. i have a lot of backup. i have backup questions. it hasn't been that long since we've seen jim, but i feel like i got a million things that i want to ask him about, and i'll get to that john taylor question, too, but first, let's start out with some other stuff, steve that you've already sort of touched on. but i want to make it a little bit more specific, jim, and thanks for appearing.

there's two ways to worry here. and maybe we don't need to worry at all. i don't know if you saw paul mcculley on from pimco. he said you guys have won. you can declare victory on inflation, there's been a dagger that's been stuck or a stake in the heart of inflation. you guys can take a victory lap. you've saved the economy and there will be no adverse consequences. that's one way to think about it and i hope that that's true. then there's the other side. i've got three guys to talk about druckenmiller, warsh and martin feldstein. there's one group of people that worry that there's a day of reckoning that come because you've mispriced risk by orchestrating where rates have been for so long. and you already addressed part of that with are there bubbles looming somewhere? but then there's another group like kevin warsh that thinks we've already seen sub par growth and a malaise, and no income growth at the low end. we've already seen that because of what you've been doing for the past five years.

you've got it, you've let a balance sheet recovery instead of an income statement recovery. so let's talk about that first. have you caused ceos just to borrow money to buy back their stock instead of investing in plants and equipment and causing real income and investment in plants, and employment and things like that? are you responsible for this tepid growth? >> well, i don't really think so. we've done the best we can to try to support the recovery, and i think we have -- we did get 3% growth in 2013 as i was just talking about. 4% in the second quarter looks like 3-plus percent in the second half. so if you're willing to throw out first quarter this year which looks anonymous now had pretty strong growth. the labor markets are showing that. 200,000 plus payrolls this year,

actually since qe-3 if i had my numbers right, since qe-3 was launched 200,000 plus dramatic ge kleins in unemployment that were unexpected. so i think we really got you know a good situation here. and we've managed to get things back to the. you know, i appreciate paul mcculley saying that we can declare victory and everything. but you know the game's never over in monetary policy. it's not like baseball. where the game can be over. in a hurry. >> that's the other flip side. i'm not sure i'm convinced that you've made the argument to the point where i'm not worried anymore. because i mean a lot of the job growth is part-time. you know the participation rate still sinks. some of the -- there's been no wage growth at the bottom. the income disparity continues to widen. we don't -- people in this country don't feel like we're at a 6% unemployment rate when things are just going swimmingly. we feel like this has been the worst recovery to a recession, really, this century, almost. so, -- >> i mean, certainly it's been a

tough five years. and i certainly agree with that. however, let me say this about labor market indicators. we have two workhorse indicators. nonfarm payrolls and unemployment. you know, then we've got a whole spread of indicators that in the past we wouldn't have looked at. or we wouldn't have worried about or wouldn't have thought about that much. i think a lot of the debate at this conference is how much weight should you really put on those other indicators because, you know, how much are they really telling you about economic performance that isn't captured already in the unemployment rate, or in the nonfarm payrolls number? and historically, the answer has been not very much. >> okay. >> so i think those have to make the case that they're telling you something special beyond what you're getting from your workhorse. >> the other argument is that, you know, in 2004, 2005, 2006, we thought, wow, fed's doing great. but if you add in the growth from 2002 to 2010 you have a much better idea of what some of

that stuff that the fed was doing early in the 2000s came home to roost. we feel like we're doing pretty well now but we don't know what's ahead of us. in druckenmiller's view he looks at where we are, he looks at ipos. 80% of the ipos have never earned a dime now back earlier in a previous bubble was only 83%. corporate credit is growing at a rate faster than it grew in 2007. covenant light loans are 300 billion dollars. they were only 100 billion in '07. all of these things are, if someone came from mars and said, look at all these parameters, 6% unemployment. the fed is still at zero and it's still doing qe. they're still in emergency mode, and all this stuff is happening. are they way behind the curve in terms of -- the fed fund should be at 5% now according to some people. so -- >> yeah. >> so there must be dislocation somewhere, or imbalances -- >> so i've been making arguments -- i've been making arguments similar to stan druckenmiller but may be a different approach. but i've been saying that we're

pretty close to our goal variables, we're not quite there. but inflation has now moved up toward target. and unemployment has come down we're only about 80 basis points away. and yet as you say, you know, monetary policy is still at emergency setting. so, the debate here is about how we're going to play this over the next two to three years, and the 2004 to 2006 example is a good one. you know, the fed was slapping itself on the back during that period as we were tightening, as if everything was okay. but by the time we actually got to normal interest rates, the die was cast. housing prices had already peaked and were starting to decline in 2006. and world global disaster was on our -- was on our hands. so, i think you really have to be very careful about how you play this, it may seem like things are going well and then they're not going so well when you look out five or seven years instead of just one or two years. >> jim, you mentioned -- >> -- debate out there which is

i guess becky -- go ahead. >> hi, becky. >> it's great to see you. very quickly you mention that there is debate that takes place. what's the thing that has surprised you the most, or irritated you the most, in that running debate? >> the debate on labor markets? >> yeah. >> i think that these labor market indicators are things that we haven't really talked about historically. in macro economics. and the reason is we considered them not employment of about the overall state of the economy that's one thing. we considered them outside the realm of labor policy. something like the labor force participation rate which is usually driven most by demographics, i was in the fed in the '90s and labor force participation was rising. i don't remember anybody saying we had to adjust things because labor force participation was trending in a particular

direction. so, so i think you know, these labor market indicators, the onus is on people that want to stress special labor market indicators other than nonfarm payrolls, and unemployment in making this debate, in making their points, and so i think we're going to hear a lot about that today. >> probably more than -- >> more than we're used to. >> what do you stand on the issue, alan krueger saying long-term unemployed are not coming back to work. >> yeah. >> that they do not exert downward pressure on wages. people who have dropped out of the workforce are not coming back to the workforce. what's your sense of that? whereas janet yellen has said they are? >> that's a great -- that's a great issue. and so, historically, we would not be sitting here talking about long-term unemployed for that reason. but it is very high compared to where it was. and so, is it a special -- is that a special signal about what's going on today? or should we take the historical evidence that this thing has not really been correlated with business cycle movements the way

we normally think of them and what is kind of what alan krueger is saying? >> steve, i want to get to that taylor thing -- >> come back slowly. >> that taylor thing and explain it this way. there are some people that would call what the fed does whether it's under greenspan or bernanke or yellen almost flying at the seat of their pants. so you've got one fed chairman he's dovish, you've got another one who's hawkish, you call one of the maestro as if he's someone that should be in a position to be conducting the economy. john taylor thinks that, you know, that all this should be taken out of the equation. and there are people that agree with it. and it should be a mathematical, something just more ridged. that who cares whether someone is dovish or hawkish, they shouldn't be in a position to guide the world economy based on their opinion. it should be done in a more rational way with mathematical formula. is there anything to that? >> there's a lot to that. and you know, john taylor has had enormous influence on macro

economics and monetary economics, exactly for this reason. because he has stress ed that yu really can't talk about monetary policy without talking about monetary policy rules. chair yellen has given speeches in the past where she's employed variance of taylor's rule so it's very pervasive and all the thinking about monetary policy. the truth is though that there has been a lot of improvisation in the last five years, and you know, there's still a lot of hand wringing about what that improvisation means. how effective was it? number one. and does it bode ill for the future, number two. and so, that's broccoli the core argument from taylor saying let's get back to normal. let's get back to something that worked pretty well in the 1980s and 1990s now that the crisis has passed. >> hmm. steve you were going to need to explain my question there to him because we've talked about this

so much with john taylor. the more i thought about it, it's like really seriously so someone thinks we ought to be doing this and you know just to call someone maestro it's like an it gives him so much i mean what if you get a different maestro then everything changes. >> just so you know, joe. joe i want to throw a wrench into your thinking. taylor considers the greenspan era to have essentially been a rules-based era. >> really? >> the big debate in the fed, this is how crazy it gets is over what rule to use. there are at least three variants of the taylor rule, and if you look to any of these guys with this meeting and say which varied of the taylor, you eastern orthodox christian, are you greek orthodox i mean they're crazy rules that they debate it. john taylor says it was my original rule and bernanke said it was the second rule and somebody else says the third rule. >> right. >> all right. >> i have more questions but we got to go. jim, president bullard, great to see you. hope to see you back here soon. i don't like the cardinals very much. but i know you do.

least -- >> they had a good weekend, joe. >> that's very hard. >> losing six straight. but, you -- i'm ready to throw in the towel there. thank you, jim, and you, too, steve. we'll see you soon. >> when we come back this morning, it is opportunity friday. investment ideas from pimco still ahead. ♪ ♪ [ male announcer ] during the cadillac summer's best event, lease this all-new 2014 cts for around $459 a month or purchase with 0% apr. hurry in -- this exceptional offer ends soon. or purchase with 0% apr. iit has become another way for. our customers to talk to us. we listen for it, we listen to it, and we use it to help deliver better protection

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welcome back to "squawk box" for some bacon news this morning. $2 million can buy a whole lot of bacon, or it can buy one prize kentucky ham. that was the winning bid for the grand champion ham at the kentucky state fair. the ham was purchased by republic bank hermitage farm and bridgemond foods. it weighed 15.98 pounds. that works out to fearly $126,000 per pound. that better be a pretty tasty ham. >> what's the -- is it -- it's for charity? >> it must be. i can't imagine. >> okay. >> that -- >> yeah. >> the $126,000 a pound -- >> we saw a $30 million ferrari. >> ham's pretty good. >> ham is good. >> yeah. >> i'm thinking, you know, dan greenhouse was in. he won't even any pig or animals because of the way they're treated. now he's got me thinking because pigs are really cute and they're like dogs. should we worry about that? do i -- i mean i have so many

things to worry about then. i've got to start worrying about the way pigs are treated? >> bacon. >> yeah. >> coming up, pimco beefing up its global equity team. deputy cio from the investment giant will tell us where she's finding value in u.s. and global stocks. >> cows are nice, too. just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own. helping you find new ways to plan for retirement. and save on taxes where you can. so you can invest in the life that you want today. tap into the full power of your fidelity greenline. call or come in today for a free one-on-one review. but parallel parking isn't one you do a lof them.ings great. you're either too far from the curb. or too close to other cars... it's just a matter of time until you rip some guy's bumper off. so, here are your choices:

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with millions of reviews, welcome back to "squawk box," everybody. in some of our headlines this morning. dynegy is buying coal assets from duke energy. the two deals are valued at $6 billion and will almost double dynegy's power generation capacity. also shares of game stock getting a boost this morning. quarterly results for game stock beating the street's expectations. revenues surging 25%. the company benefited from new game releases and solid sales of gaming hardware from microsoft and sony. that stock is up by about 6%. american airlines is extending the fees for unaccompanied minors on planes. now any child who is age 5 to 14 flying alone will cost an additional $150. that fee currently applies to children between the ages of 5 and 11. $150. >> for solo kids. >> yeah. >> andrew, we got to --

>> you're talking about steerage? >> we need some kind of additional charge for zero to 5. don't you think? >> for flying with parents? >> especially in first class. >> they should be sent through the mail like we used to do. with earnings season nearly at a close, let's take a look at how the large cap reports came in. and dominic chu joins us with the details. you know full well, dominic, that jane's husband does not fly for the mile high airline. he's tweeting that. did we find out for sure? >> dom did? >> did he find out for sure -- >> no, no. he does not fly for that airline. >> get your mind out of the gutter. >> i was just trying to clarify because there was a little exchange at the end of jane's last segment. >> oh, sure. >> i want to make sure that i have the record straight on this whole thing. >> sure. >> anyway -- >> let's talk about earnings season. i will get off of my mind out of the gutter type thing. so we're just about at the end of the whole season here and for the bulls out there that were hoping for a better corporate results to boost the stock market, you pretty much got it. according to analysis by

thompson reuters as of yesterday the vast majority of s&p 500 companies, 481 of them have reported their results. of those 68% have beaten the average analyst estimate for earnings. now that figure is slightly better than the longer-term trend for earnings beat rates. so that's a good sign. also 10% of companies have reported earnings that were in line and 22% have missed expectations. so that's the bottom line. profits. right? as for the top line, or revenue results, they're not too shabby, either. 63% of companies that have reported have exceeded analyst sales estimates and that's also better than the long-term average for revenue beat rates. so those are the bigger picture numbers. if you drilled down a bit further into the growth rates of those particular markets and senters, and companies overall the numbers are also generally positive. q2 earnings per share grew by nearly 8.5% over the same time last year. the expectations for that growth rate before the season even started were for about 6.2% growth.

so companies did better on the profit growth front. on the sales side, we saw a gain of 4.6%. analysts were expecting a little over 3% growth of sales ahead of the second quarter. so also, better than expected on the sales front. overall the season turned out pretty well on the microeconomic or company specific front. later on on "squawk on the street" we're going to take a look at some of the standout sectors during this past earnings season so stay tuned for that. one that you may not have thought really really led the way higher, double din it earnings growth, much better than expectations. we'll tell you more later on in the next show. >> dominic, thank you. we will see you soon. joining us with her thoughts on where she's seeing opportunities for investors ahead of yellen's jackson hole chief is cio at pimco. just to start off i really need your take on when interest rates finally rise so we get the next

year and we finally see that fed finally do what people are talking about, there are two schools, one is that that's the time, the bell's ringing, the bull market at least is going to take a breather, get out, or others have said okay that indicates the economy is finally coming back. great time to buy stocks. what do you think it's going to be? >> i think it may not be as simple as that. i think clearly it depends on what global growth around the world is doing. but one of the characteristics of the world currently is this new multispeed world where you have the u.s. and the uk ahead of the curve, if you want, in terms of normalizing monetary policy over the next 12 to 18 months. and in europe, japan, and china, where potentially we have more qe coming away. so i think for me, what happens in the u.s. and the uk clearly is important. and it's going to depend on how those rate increase happened. we believe they're going to be very gradual, and they will reflect, as you mentioned, an

improvement of the underlying situation. i think in that environment equity markets will continue to do well. >> do you think at this point the fed has drns i don't -- you work with paul. and paul mcculley i'm talking about, and he's really, really strident that the verdict is already in, they were successful. this is -- there's no way you can say it's not a victory in terms of inflation, and in terms of bringing the economy back. is there any day of reckoning to come for all of this really once in a lifetime stuff we've seen out of the fed that was really untested before -- heretofore? >> well, i agree with paul completely. my perspective on the global basis, however, is that they are pockets in the world be it on a geopolitical side or on the growth side, particularly in

europe, where things are still lagging. and i think it's very important for us to have the u.s. doing better and doing the rate or the normalization at the right time. because if we did it too early clearly that would have an impact on the world. and the u.s. is a good global citizen, if you want. of course thinking about all those things. so i think what's important, of course, is when we start but also where we end and how we get there. and our view is still that it's going to be, you know, quite slow and real rates will remain below what we've seen historically because growth is quite slow around the world. we're in that mutual environment. we also have all around the world a very uneven recovery. you've seen parts of the society doing quite well. we've seen unemployment in europe is still very high. and of course the financial

recovery is second place but the fundamental and underlying economy is still very slowly healing. so i think all those different dimensions are very important to bring into place when you think about that great normalization exercise. >> so pimco, virginie, a couple of times you made reference to i almost felt that i was just too u.s. centric in my questions from the kind of answers that you gave me. does it mean that for pimco you need to consider all these factors around the world to decide what to do with domestic stocks? or are you saying pimco is recommending you're all over the world in terms of emerging markets and frontier markets and bric countries and do you need to be everywhere to get a good return and maybe spread your risk around? >> well, i'm going to give you my answer as head of equities at pimco. i think that clearly when we look at equities we should look at the overall world opportunity set, and that is including

emerging markets. from that spend point of course the u.s. is very important. but they are a lot of stocks all around the world. and to build global portfolios i think it's only fair that we should look at every opportunity that we have. all this said, i still like the u.s. market, i think that clearly we're seeing the u.s. ahead of the curves. we're seeing some very nice delivery in terms of earnings. and i think that this will continue. there are areas that are like the normalization. one of the impacts of normalization of monetary policy potentially earlier in the u.s. and the uk will have an impact on currency. and that will in turn hopefully lead to a weakness of the euro versus the dollar and will help europe. so i think it's not only where the fundamental picture in the economy is going, but also where our stock price versus the expectations from that standpoint a think that there's still some very nice companies

to have in europe, particularly if you look at industrials, or the pharmaceutical sector, or in fact financials. and then finally, if you look at japan, i think japan is like this is also an area where we can find some good companies. >> okay. last but not least we do got to go virginie. but i hear -- >> thank you. >> what? >> just quickly, you now talk new neutral, versus new normal. but it seems like if low interest rates are the new neutral it's kind of being caused by the new normal in terms of growth being below what we've seen in previous decades. so is there really a difference between the new neutral and the new normal? >> yeah, well the new neutral is about a world where real rates are lower. you're absolutely right. the growth aspect is important. but it's also a world where inflation is very low. and where there is a lot of debt in the system. all that debt that was put in place in order to help navigate

through the very difficult time and a lot of it is government debt. so i think all of this makes quite a bit difference between the new knew tlal in our new and a new normal. >> very good. thank you. appreciate all your time this morning. see you soon, bye. all right. still to come this morning, wine snobs listen up. if you look down your nose at screw top bottles and boxed wine you might want to brace yourself for this next segment. union wine company is working to popularize fwhien a can. it's selling faster than the company can make it. up next the company's founder.

welcome back to "squawk box." stocks on the move this morning. hibbett sports is down significantly after the retailer had quarterly revenues which were below expectations. the company had already warned that traffic was weaker, and discount had affected profit margins. and another retail name, ann which is -- no it's the parent company of ann taylor's. why did they do that? >> because they have the loft stores, too. so they wrap everything in. although i don't know, ann is not -- i don't know why they did that. >> like when they change united or wool worth. we don't -- we don't like a

worldwide brand name, we'd rather get everyone used to venator. or united. how about allegiance or primrica. >> i don't know. >> it's the branding -- >> basically we don't like change. >> no. results topped estimates but the retailer warns that the second half of the quarter was, in its words, challenging. >> we don't like change but this is something you may just have to get used to. check this out, it is wine in a can. we're talking about pinot noir and pinot gris specifically. it's available in 40 markets and counting. the winemaker says they're pushing for a pinkies down movement making wine more accessible to the masses. also to appeal to a new varietal of wine drinker. joining us is the founder and uner of union wine company. ryan, good morning. >> good morning. how are you guys? >> good. how did you come up with wine in a can? >> well, it was a kind of an extension of that whole pinkies down idea. and we were trying to think

about, you know, what could we do to actually put it into a different package, what kind of lifestyle things were exciting for us to be thinking about for kind of our next adventure here with wine? and as we were, you know, great brainstorming session we said hey a can is a perfect vehicle. just to kind of simplify things. it's definitely kind of pinkies down. we're definitely all about kind of taking it down a notch, trying to simplify things. we thought the can was a great vehicle for that. >> i will admit i've gotten used to the idea of a screw top wine bottle. that makes sense to me. but wine in a can may be a little bit of a stretch. how is it selling? >> sales have been phenomenal. we launched the idea as just kind of a test concept last september. the response from consumers, and attention from the media kind of drove us very quickly to bring it to a commercial product. we launched it in june and we basically can't make enough wine

right now to sustain both our bottle sales, and much less our can sales. >> ryan, trying to think about soda, maybe one time thought there was a difference in the taste out of a bottle than out of a can. i'm not really smur there is. with wine is there any can taste either with -- >> metallic taste? >> either with a -- because the red you wouldn't drink it cold. you'd just drink it room temperatures. and then the white you probably have it cold. can you taste anything with either one of them? and if you pour it, is it indistinguishable from something out of a glass bottle? >> yeah, so we've been doing a lot of internal testing. you know, we like to do a lot of tasting, obviously, in the wine business so we're certainly comparing that product against our bottled product. and from our experience so far we don't see any difference. and in doing blind tasting we actually routinely confuse ourselves thinking that, you know, we're supposed to be the experts and we often will pick

the bottled product as the canned product. so, so far we feel really good about the performance of the can for the quality of the wine. >> hmm. maybe we should do our own taste test here, joe. you want to try it? >> yeah, i got some water here. i would like to pour it into something. i got a pinot noir. what do you have? >> pinot gris. >> at least they didn't give me a -- they gave me pinot noir. they didn't give me what's that other stuff? >> it's not bad. it's not bad. >> you know -- >> this isn't chilled so i have to admit it's not chilled. >> i feel like i'm at mass. >> that's what i -- >> you know. i need a -- that tastes -- >> i don't think i can taste the can. >> you know, ryan, i know you haven't -- i got a sick mind but the first thing i thought of was jesus juice and michael jackson in the coke can. i mean this is not the first time the wine has been in a can? >> yeah, absolutely. and certainly overseas the concept exists, and there's been a few people playing around with

it domestically. i think our idea, one, was to take it to the larger can that -- it's a 375 milliliter can. so it's a little bit bigger than your 12 ounce can and we really like that size. we think it's something that people are very familiar with and comfortable with. it certainly helps -- >> is this two glasses? >> you know -- >> is this two glasses, ryan? >> yeah, it's a solid two glasses. >> whoa. >> it is pretty good. and i got to -- when you're trying to lose weight or just don't want to feel bloated or something. i've been drinking more wane and drinking it out of a glass is, you know, i would drink it out of a glass. that tastes pretty good. and it's red. >> yeah. and we've been seeing, you know, people have been drinking straight from the can, you know, out on social media kind of seeing what people are doing with the cans. but certainly lots of people, especially because of the serving size are pouring it into a glass, obviously it's a great product to share for two people, or you're just kind of having a

casual evening and don't want to drink it out of the can. >> i have a feeling for me that first six pack would go down pretty smooth. right. i think that first would go down -- would go down -- >> ryan, is there an advantage just in terms of -- it's not as heavy as glass, cost efficient? >> yes, absolutely. it's one of the exciting parts to bring it to the market place. there's no degradation of aluminum going through the recycling process, and then, also, just from a simple shipping stand point, we can ship about twice the amount of wine in the same foot print we ship the glass products, so there's definitely some efficiencies and economic benefits. >> i think you're on to something. i think you're on to something, i'm not kidding. >> ryan, thank you for joining us today. cheers. have a great weekend. >> yeah, cheers, you guys, thanks. >> good.

>> would it be colder in a can? >> maybe. i don't know. this is warm. >> i bet -- this seems cold, and it tasted good, it was a red. >> i need to try yours. this is good, but we should have chilled it first. that's our mistake. when we come back, the 49ers put grass in the stadium four months ago. why rip it out now? we have that story next, stick around. ♪ ♪ [ male announcer ] during the cadillac summer's best event, lease this 2014 ats for around $299 a month. hurry in -- this exceptional offer ends soon. ♪ e hurry in -- this exceptional offer ends soon. financial noise

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welcome back to "squawk box," the futures right now are almost back -- not quite to where they were when we started out. we've been waiting for three hours the entire show to whether any -- hear anything from ukraine, russia, with the con y convoy, 70 trucks moved across the border. >> they went without red cross. i think that was the deal, red cross would escort them along the way. they did that without it. >> last friday, the guys in ukraine destroyed the convoy. >> right. >> we'll see -- markets sold off. we'll see if this has people worry and have a repeat of that. ross stores a winner, earnings, revenue, and profit margins better than expected. they benefitted from better expense controls, and problems

at the san francisco 49ers' new stadium, the glass was to sustain the punishment of a 300-pound lineman, but the playing field could not wi withstand its first week of football. the field was damaged in the first game last sunday. the team removed a 100 yard stretch of grass down the middle of the feel and working on installing a new playing surface. the 49ers say it's ready for this sunday as gain against the charge chargers. >> do you waesn't sound like itg to be grass. >> that's weird. >> exactly a hundred yards too. >> right down the middle. >> with cameras everywhere these days, difficult to get way with bad behavior. i can tell you that. and in atlanta, a postal carrier found that out. a home surveillance carrier

caught him delivering a package by airmail. that box, unfortunately, oh, boy, contained a handmade ceramic cup. the homeowner happened to be checking his home camera via computer at work and saw the unusual delivery method. you have to love the guy though. >> too many stairs. >> the carrier will be disciplined. by the way, the cup did not break. >> oh, hey, no harm, no foul. >> that would be -- think if it was an apartment complex and all it was was steps like that. every day, it's like again and again. >> would be old, right. >> i kind of get why the guy would do it, and the cup didn't break. >> right, the cup didn't break. >> when we come back, a slippery slide for another brand, why americans shy away from jell-o. thinking twice about skipping breakfast? "squawk box" will be right back. your 16-year-old daughter

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serious investors are choosing fidelity. call or click to open your fidelity account today. people questioning if jell-o lost its jiggle. sales tumbled 19% in four years. alternatives like greek yogurt took a bite out of its popularity, and there's the

issue of dyes and sugar, and foods natural are bigger sellers, plus the horse hoovs. i like the jello. i like it. >> put fruit in it i don't like it. >> i do. see you monday, and "squawk on the street" starts right now. good morning, welcome to "squawk on the street," i'm david faber with simon hobbs and cz sarah eisen. carl and jim are off. we have the annual symposium in jackson hole, wyoming. watch is on to see if yellen provides clues into the feds' interest rate outlook or change, perhaps, in that key outlook. i could just look that beautiful view. >> the sun is coming up. i love the gathering of economic papers, a