it is monday, august 25th, 2014. "squawk box" begins right now. good morning and welcome to "squawk box." michelle caruso-cabrera is in for becky today. we have a busy morning this morning. roche buying intermune for $8.3 billion. more than a 60% premium to intermune's close on august 12th right before reports said the company was evaluating strategic opgs. we'll have both ceos coming up on "squawk on the street" later this morning. the other big story, burger king in talks to acquire canadian coffee and donut chain, tim hortons. this would be make it the latest

inversion. they would operate as a stand-alone brand. two points on the burger king deal, even though it is an inversion, this deal likely a little bit more like a real deal in terms of strategic merit, both in terms that 50% of the company would be based in canada. there are reasons to keep it there, but more importantly from a 3g perspective, the guys that own burger king, we saw what they have done with inbev and heinz. this is sort of their approach at taking a restaurant company and using it as a platform to buy a lot more. i would argue to everybody that this is just the beginning. we should see the transaction cross the tape later this week, probably tuesday more likely wednesday. we'll talk more about that in a moment, but for now we'll send it over to michelle. >> i'm dying to talk burgers and donuts. >> i think it has more to do with fries. they finally said, you know what? the fry situation, the fry problem was too big for us at burger king.

>> you're right. >> tim hortons has a track record of making things that taste good. >> when deep fried. >> when deep fried. and burger king, again, the latest failure, what were those things? fries that were like lower calorie or something? >> the lower-cal fries. >> why even try? when you order fries you know what you're getting, don't you? >> yeah. >> so i think this is a more strategic move as you said, but it's about the fry. i think tim hortons is going to jump-start the fry. >> it is extraordinary that canada has lower taxes. >> that's what i thought. i wasn't going to say it to andrew. i wasn't going to say it. >> guys -- >> their health care system is more free market than ours is, too. >> no. >> but the notion that they have lower taxes than we have here is why. >> i don't get crazy about this deal. >> i'm sure the people doing it are going, wow, thank god. sorkin is not mad.

>> burger king is unpatriotic. >> they have a tax rate of 27%. >> i have not upset sorkin, so let's go forward with the deal. he's not upset. i'm sure they care, andrew. i'm sure we care, which we don't. go ahead. >> thank you. >> let's stick with the food theme. california's really struggling to clean up today after the largest earthquake to rock the bay area in 25 years struck at 3:30 yesterday morning. here's what we know, 6.0 magnitude on the richter scale located six miles south of napa, 60 miles north of san francisco, and one of the most press prest

communities. >> reporter: this is an area we think of the world class destination for wine lovers and foodies, but now they are dealing with a big cleanup here. as you walk through the streets, you have to really watch your step between the glass and a lot of rubble here. certainly when you look around, there's now actually 33 buildings that have been red-flagged as uninhabitable. and these are the buildings that everybody in napa uses. so we are talking about the post office, the library, local courthouse where a really big hole was torn into the facade at 1:00 a.m. i saw them roping off the entire area around the courthouse. and a big church here had the windows blown out. when we think of napa, we think of the worldwide vineyards. david marcus tweeted out photos after the quake. this is sort of what we are seeing here throughout this whole area.

those rack after rack of wine bottles have been smashed. those toppled barrels. we actually caught up to marcus to ask him about the quake and the impact. here's what he had to tell us. >> we make a blend and blend together different vineyard sources and make a beautiful consistent wine every year. and so these were those individual components of our blend that we bottle a few bottles of to save them to taste them over time. instead, those are completely priceless and one-of-a-kind wines now gone. >> reporter: napa is home to about 800 wineries that produce about 50 million cases of wine here. the industry's association saying right now they are focused on the safety of the members and security. we'll be here all day, guys, to bring you information and headlines as we get it. back to you. >> josh, we appreciate that. thank you. stocks are coming off their best week since april. three straight weeks of gapes now for the dow, the s&p and

nasdaq. two economic reports say we should pay attention to them today. 10:00 a.m. eastern, new home sales. and 30 minutes later the dallas fed survey. we'll check on the markets and where they indicate this morning. well, that's not up usual to see that in recent sessions up 30 to 40 points. i don't think they seem very talkish overall. and then, andrew -- >> yes, sir. >> i know you don't write the op-ed section, but what do you think it is with liberals and progressives and zero interest rates in just wanting to stay there forever. did you see the lead story? >> i have seen that, yes. >> did you see steve liesman's protester he interviewed? >> i didn't. >> the people that think maybe -- i mean, obviously, if you're just really stupid and

know nothing about economics, you would leave interest rates at zero forever. that way everybody can always borrow. if you had no idea how things actually work, how bubbles form, how you miss price risk and capital allocation can get missed up, then of course you would leave it at zero. so i think "the new york times" has no idea there's a counter -- >> i think there's a timing issue. >> five years after it is zero? >> that's the question. look, he has a nobel prize, i don't. >> they are not real. they give four out every year. alfred nobel did not designate economics. you want me to find one on the other side of the argument? >> there's a dime of dozen on all sides of the argument. i don't know the right answer, but i'm suggesting there's an argument by -- >> are you ever going to take

ownership of this? whenever i talk to you, you always say it is not me. when are you going to take ownership for this? you know this stuff. when you see him walking around, can't you say, hey, buddy, come here for a second. let me tell you what could happen. do you ever do that? >> it's a chinese wall. >> between what? >> between the new sign, which is the side that i anticipate and the op-ed page. >> the opinions on the op-ed are never reflected on the front page of "the new york times." >> you can make all the comments you want and i cannot engage, unfortunately. >> i saw two things about golf over the weekend. one was -- i thought it was funny but michael goodwin in "the post" said this, i like this, even the president's media

guard were appalled. and that's usually what he has. he usually has people everywhere and then i read a political piece where they said, you know what? the president needs to decompress. when he is at work, he's doing so much trying to bring congress together. >> it's very stressful. you have seen how he's gotten. >> stressful fund-raising? every night having three to four fund-raisers? >> what is stressful, you can't get that little golf ball in the hole. >> is that why he's gray? >> anyway -- we have the medal of honor here. we are making weight. you go ahead. we'll tell you about the geopolitical news. the british officials believe they identified the map who killed james foley. the person who beheaded foley in a video released by isis last week had an apparent british accent. meantime, a different terror group released an american that

was held for two years. the american air strikes continue. that's great news, by the way. continuing in iraq, the u.s. carried out two air strikes yesterday. now washington is debating whether these could expand to syria where isis is based. we were just talking about colonel jack jacobs, a medal of honor recipient and msnbc military and list. >> which we still allow you here anyway. >> that sounds like an oxymoron. >> i almost had a show my passport to get in here. you were talking about interest rates, and you were talking about risk, but one of the big problems with low interest rates is that you have a lot of organizations like pension funds and insurance companies who are having a hard time. >> terrible. >> imagine that. >> there are people who say as long as cop rations have low interest rates, that i will just buy back stock and don't want to invest in the future. >> what is scary about the investmentis they say we should use a regulation to solve these

systemic issues, which is like regulation has ever worked to deal wall this. >> michelle, they also say in the absence of another $800 billion stimulus program that worked so well lining the unions and congress passing more stimulus, so to continually redistribute you need the fed to do the redistribution instead of congress. >> anyway, did you win the medal of honor or the economic prize? >> i used to be the manager of bankers trust and lehman brothers, neither of which exists anymore. >> that has nothing to do with you, though. here's the latest, colonel, are you surprised that we really are -- there was a time when we could have gone into syria, maybe when it would have been preemptive rather than reactionary and we didn't. now we probably -- >> do you think we are now? >> we are always reactive. and when we were going to go in and could have gone in, we would

have been on the wrong side. i mean, people were saying we needed to go into syria to help the rebels overturn assad. and putin said, hey, do you know who these guys are? >> but there are different groups of rebels. >> i read something over the weekend that assad all along knew that if he let isis flourish, the good guys that we wanted, the free syrian army, that isis and those were opposed right from the start. so he sort of led isis along to get rid of the people -- and then he knew they would finally come around to say we have to get rid of isis. >> any operation on the ground, just dropping bombs on guys, even if we knew where they were, is not going to eliminate them. >> dempsey wants everything back. so late thursday we wake up friday and read the papers and think, holy smokes. looks like we might be going to war in syria. yesterday he's on a plane with

journalists and walks everything back. what happened? >> i think he got his backside chewed out for being as forthcoming as he was in public. i knew dempsey years ago when he was a cadet of mine and i was teaching the international relations at west point. he was one of my cadets. very bright and forthright. you ask him a question, he'll give you the answer. and i think he gave the answer but the national command authority didn't like the answer. >> you have seen the mission creek side of things, right? people don't want us doing anything in syria. >> there are. i have a different question. >> you can't weigh in on that, you're in manhattan going into the gray lady, give us that side. >> let me ask you a foley question, which is has the british government or any government put some of the other people who are being held hostage at risk by announcing or at least indicating they know who this person is? >> no, i don't think so. these guys are at risk in any case. i'm astonished any of them are

still alive. they want them to squeeze money out of them. they asked for 100 million euros for foley and his family and friends were trying to put together $5 million u.s. >> if they know who he is why don't they say who he is. >> it may put at risk their sources of information, the intelligence, which is by the way where we are sorely lacking. what we really need is information, we don't have the mechanisms for gleeping information on the ground. so you can't kill bad guys unless you know exactly where they are and who they are. and you can't do that by satellite. so releasing that would indicate perhaps where we get the information. >> what about the other information? >> because it's fairly complicated but if you release the actual names or release anything like the names, you have a higher degree of confidence and know who it is and who released it and gave the information to government.

>> there's an exercise to say to tell the people even though we know. >> the second is what are your sources of information? if you divulge the name, the second thing is, once you release it, do something about it. nobody is prepared to do anything about it just yet. >> on that note, this is going to sound like a really heartless question. what should really be done on half of journalists who make the choice to go to these areas? >> what should be done by anybody who gets captured whether a journalist or not. >> it makes a difference, they have made the choice and know the dangers and made that choice. >> military people make the choice, too, but we made and effort to release them. >> but that's competely different. you would expect the u.s. military and members of the military to go and get other members of the military. >> i don't want to come down too easily on your side, but the fact of the matter is, the forth estate has a role to play as well. and if you make a big mistake by

going into the region and get captured, and you are not protected by the military people and get captured, to the extent of not putting too many people at risk, we aught to go ahead and do that and we tried, actually. >> why can't we go after the money? >> that's a brilliant question. why don't we go after the money? because i think that is our information, too. >> are we talking about the original sources of money? we are talking about farther down the food chain. why not go after the rest of the money sitting in the accounts. we can do some of it. i don't see why we don't do some of it. and i think one of the reasons we don't do something about it is because people in the gulf, for example, we have to mullify before we go ahead and do that. >> these guys are in syria on an air base. we are going to be on assad's side before we know it. >> we are on assad's side. >> but the present political base doesn't want us to go into

syria. is he -- usually he finally comes around and sort of tows the line. he's the last guy in the world to want something to happen domestically. this could force his hand to do something in syria. >> there's no way you can affect what happened in syria by going after the bad guys in syria. we should go after the bad guys in syria but doesn't want to do it because of domestic political pressure or getting ready to go with the midterm elections. but everybody hates what he's doing and not doing. so it doesn't matter at the end of the day whether he does it or not. he aught to just go ahead and do it and risk the program. >> i thought to you that i didn't understand because he's not in the optics anymore. and it's hurting where there are close races and people are tied to him. it is hurting in the midterms,

but does he not care? he's not up for election, so he may not care so much. >> i think he does care but the people who say he shouldn't care are the people who were surrounding him. the three to four people he talks to all the time. rod, his wife, valerie jarrett. >> dempsey on friday night made it seem like we face a threat on the country as a group. yesterday he said we have no indication that we are dealing with that. we don't know what the specific threat is and he doesn't want to be an alarmist and doesn't want to be and alarmist, but the fact of the matter is there are hundreds of people from western countries who are fighting from syria and in iraq now. >> and their passports give them mobility. >> correct. and what everyone is worried about is for everyone to trickle down and be appalled somewhere.

looking in there, we need to increase our vigilance and stronger intelligence gatheri gatherings. we don't have that at the moment but aught to be scared about it. >> we have to go. is the ticker, is all of it from four days ago or just the baseball scores, do you know? atlanta beat cincinnati 8-0. it's been four straight days. it's a nice score to watch if you're a reds fan. when they just beat the braves the last two games, so i'm just watching 8-0, 8-0, just rubbing it in. coming up, chasing away the dog days of summer. how will the global flares turn out? and it's a bird, a plane, no, it's superman's first comic

book appearance. that's next right here on "squawk box."

welcome back to "squawk box." we have super news, the auction for "action comics" number one. the first appearance of superman went for $3.2 million. that was a million dollars more

than the issue that sold at auction in 2011. and there are as few as 50 known copies of this so-called holy grail of comics in this condition. a portion of the proceeds will be donated under the christopher and dana reeve foundation. janet yellen said, i have nothing to do with this either. >> were you a comicbook reader? >> i was not but we are now in a big way. >> you are now? >> yeah, i had a few. i had some "ritchie rich." and "archie." i had a few of those. >> not big into superhero. >> i had some like this back in the day. billion there were.

who was the one before her, julie numont, i believe. frank orson. >> my generation. >> wasn't halle berry one, too? >> yeah. how much will global numbers weigh into the futures? what do you think this week? >> we have a lot of geopolitics working in the background as far as the u.s. scheme is released. we had the new home sales, first gdp revision. and at the end of the week we have the pce, the income spending and inflation measures. so it is all very important. the stock market is pretty much ignoring all of the geopolitics.

as we move up to new highs, the one thing i think is the most important as far as the stocks go in recent history is the qe. even though we knew it was ended. we knew it had trouble. six months later we were told more qe2 was on the way. then this time we'll see if we rally up to the end or well beyond the end but that's important to watch. the interesting thing on the -- >> tell us what janet yellen said on friday. >> i don't think she changed anything on qe. we'll see the changes tomorrow. as far as her description of the

labor market, she is discussing how the labor market is acting and what to look for in the future. the important thing is not that it will eventually correct itself, but at what level of success will it correct itself. how much of this is structural and how much of it is just cyclical? in the key discussion she stalk ed talked about being satisfied with the less than economic performance which reflects on the long end to keep the rates lower than they would be in a previous regime of the economy. the interesting thing about the long end is when the qes have ended, yields have fallen each time. this time the yields fell once the taper started. now we'll see what happens when qe ends. >> thank you, lou. we'll talk to you soon. appreciate it very much.

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good morning. welcome back to "squawk box" here on cnbc. i'm joe kernan along with andrew ross-sorkin and michelle caru caruso-cabrera in for becky quick this week. engine capital in a partner control of 1% of stock in the company. i've always known them as ann taylor. if they want to make it more than that, because they have other stuff. do you remember? it is not just ann taylor. >> they have a whole bunch of brands. >> now they just call it ann, but i don't know. ann inc. they believe the buyer would pay between $200 and $250 per share.

a denial of service attack overwhelmed the system with traffic. the attack didn't access information of any of the playstation's 53 million users. twitter claimed responsibility for the attack saying it was meant to pressure sony to spend more of its profits on the network. also, the cme resuming electronic trading today after a glitch delayed the open. technical problems were to blame. you may remember the cme had a similar but bigger glitch back in april. the traders said the delay would only have a limited impact particularly because volumes are thing at the end of august on this monday morning. both the dow and s&p having their best week in four months last week. that's despite rising tensions in europe and the middle east. plus, the national association of business economists coming out with the latest findings today on fiscal policy. a number of other hot topics, more on the report and what it means for interest rates is joining us doug dunkin, chief economist at fannie mae and jeff

sought, chief advantage strategist. when i look at this, 50% believe the u.s. monetary policy is on the right track. jeff, do you agree? >> i do agree. i think the economy is strength anything from here. you saw the numbers that came out last week. housing looks better to us and you look like you're in the hint of the cap cycle. things will strengthen going into 2015. >> 39% feel the current economic policy is too stimlative. how do you feel about that? >> that's up a little bit. the headline number who agree with it is just down a little bit. i think it's reflecting the market's posture that they expect to tighten sooner rather than later. and i think some of the other data in the survey supports that. >> some people say they are behind the curve, what do you think? >> i think the respondents suggest slightly behind the curve if you look across the full data, but if you listen to

what took place in jackson hole, i don't think that's the view of janet yellen. >> what is your view, though? >> we have the fed and the fannie mae forecast not moving until the third quarter of 2015 at the earliest. >> jeff, what is the implication for investing then? >> i haven't waivered at all. i got it wrong on the pull-back here. i was looking for a pull-back beginning of july and thought it would be more than the 4.5% we got. but when we travel back up above the 1950 resistance you have to call for new highs which is what we are going to get here. we are in a secular bull market, i have not waivered on that in years. it has years left to run and most investors are woefully under investing in equities. >> congratulations for saying you got it wrong which is so rare. >> he's sort of saying i may have gotten the correction wrong but i've been right about the bull the entire time, and he has

been. so he's sort of -- >> he was expecting 10% correction. >> that's like saying, well, i did just buy this -- but jeff, do we know, again, that the most important thing in investing is don't fight the fed? they are still qe'ing. how can the market go down 10%? where are we -- i forget which month it is, but we are not finished with qe yet much less going up from zero. of course the market is going up. there's money coming in with nowhere else to go except for comic books. >> you see in the survey that people would like to see the fed start advertising the portfolio sooner than they actually expect them to do that. >> but jeff, they are still adding, aren't they? >> yeah, the fed's balance sheet is going to increase by 9% to 10% this year, but there's a pretty tight space as the

numbers go up. they say it is probably 10% to 12% this year, still sticking with that. >> that's why you got it wrong then, right? to joe's point, why ever fight the fed until this thing is done? >> well, it's not just the fed, michelle. the markets, all the markets care about is -- >> it feels like it is just the fed. i cover the geopolitical issues, you get one day of action on what would normally be incredibly scary headlines and bam, we are back to the races. move along, nothing to see here is what this market says every single time when there are these huge issues that i think historically -- it sounded like we were going to war in syria last week and we got a flat trade on friday. i mean, it's unbelievable. you think it's only the fed right now? >> i do not. i think earnings have tripled and next year's s&p earnings numbers, if they are correct, they will continue to come in better than most of us expect.

so that's the story going forward. the fed is capable of stepping out of the picture with qe and think the markets will do just fine. >> i'll take the silver lining. >> russia invades ukraine. that happened last week. >> it did. by the way, which we have not even mentioned today. >> because the convoy backed out. >> the ukrainians say they have established a position and are shooting. >> we'll act as the headline itself will move the market, but ultimately if all this activity happens but doesn't actually impact the economy. >> but it does. >> that's the question. but the question is whether it does. we are not just looking at the headline unto itself. >> that's why gaza didn't move the markets, which is understandable. >> but it is possible russia/ukraine doesn't move the markets, if you will. >> go ahead, doug. >> i don't think that's completely accurate. i think you have seen some downward rate movement as a

result of flight to equality to the u.s. capital markets. i think you have seen an international market impact. >> when you see germany go below 1%, for example. >> right. and that was one of the things in our survey, we asked, what do you think about the european policy. two-thirds of economists say they have not done enough to get the european economy going. so if you pile on top of that the geopolitical issues they are facing, you are still going to see a benefit in the u.s. capital market on flight quality. >> got it. thank you. see, they do matter. >> it does, i don't want to say it doesn't, but it's a question on how much. coming up, a tropical storm forming in the caribbean. its name is cristobal, but will it reach u.s. shores? a quick forecast coming up next as we head to break. and here's what's happening in european markets right now. you have a little bit of green across the board there. tdd#: 1-800-345-2550 trading inspires your life.

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welcome back. u.s. equity futures suggest that we would have an open higher. the nasdaq would open higher by 17 after a stronger week last week. tropical storm cristobal is drenching the bahamas and could turn into a hurricane over the next few days. this is the third named storm of the hurricane atlantic season. joe? you okay there? >> something went down the wrong

pipe right before that. i'm excited. where are you on boardwalk empire? >> i need to get up-to-date first. >> your thing went to showtime, your big deal, but why are you still friends with -- >> hbo. >> too big to fail. >> they are too big to fail. >> if people don't know, we are going to have lunch together, maybe hang out together and workout together. >> i didn't know about working out. we are going to the gym? >> yes. then we are going to get ready together and then go to the boardwalk empire. >> premier? >> yeah. >> wow, snazzy. >> maybe we'll do the show from new york the next day. >> you have the whole schedule. >> is that cool with you? >> do you workout? >> he works out. you should see him. >> joe, this is a big day. that's exciting. >> i'm doing the countdown.

at michael's -- >> is that on wednesday when you have lunch at michael's? that's the day they put the map on the internet, who sat where. >> it will be leaked. coming up, a feel-good story from the world of sports. and it happened on the golf course. that's next along with all the other big stories impacting the sports and business world. we'll talk about his beautiful little daughter. did you see that yesterday? we'll be back.

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lots of big news over the weekend in the golf world. south korea's team won the little league world series. and the u.s. open in tennis is kicking off the day with us. we have cade briggs with us. i don't watch every weekend. >> sure you do. >> hunter, that putt on 17 was manly. >> that was amazing. he birdied five of eight coming in. it felt like jim furyk, he had a 53-yard lead and lost. hunter went out and won this

thing. for his first win, this is since 2012. so it was nice to see. you mentioned in the tease this scene here with his wife and baby that surprised him, although if we can hang with him, hunter doesn't look as thrilled as i would have thought he would have. i would have jumped a little quicker, but you can't judge. >> this is a new part of his life here. >> i remember he had on a lead at the canadian open. he had a lead and he left the tournament instead of winning a million dollars to go for the birth of that child. so it was a nice -- now he's number one in the fedex cup playoffs and could win the $10 million. he has the game to make a run. >> you know who i was pulling for, the guy who i have played with three or four times that i love, stewart. i love stewart.

>> he also shot a 65. he was outstanding. >> did you see him, he kind of made a mistake and then rattled it out of the bunker, like a 30-foot putt and hit it and finished with a par. >> unbelievably. >> you stewart is now married with kids, and you remember that horrible thing that happened to him, that tragedy in this life. >> this is a nice story for marriage and for kids. because rory, as we know, ditched the -- >> she's really good. >> went on a run. so it's nice to see a guy going on a run -- >> i want her to win. >> with a wife and kids. she's done very well. maybe she could win the u.s. open. >> i didn't know the details. there was a big article about her over the weekend in the times. >> she's done very well. >> there were -- >> there was a cover of sports illustrated. >> she had all the details about that. he didn't even -- they had been to the three years. invitations for the marriage were out. he broke up on the phone. >> yeah. it was costanza-like. >> yeah. >> -- when he was --

>> i did not though i saw -- >> that would make you mad? >> that would make me mad. >> and the little league world series. >> little league world series? >> i did not see any of that. >> i love it, though. >> a fantastic loss, although for chicago. i mean this ask a city that desperately needs some good news. with the crime rate murder and everything else, and hey they also have the cubs. they lost to south korea. but this is a team that will be celebrated with a city parade on wednesday. and it's all african-american. major league baseball has gone from 27% african-americans in the '70s. mlb is trying to recruit urban areas, get more african-americans playing. this should help in that and this was one of their initiatives in chicago. sifx the guys played in an mlb type system. south korea a lot of fun to watch them play. they celebrate like pros. >> our ticker was not right. i don't even know what -- it's preseason okay. >> the bengals won.

>> they did win? >> but they didn't look great on offense. defense -- >> what about carson palmer threw an interception early on. >> for six. terrance newman took it back for six. >> i don't really like him. >> i think it was sweet for the bengals to see carson palmer struggle. your former guy. >> right. >> dalton just looked okay. >> jekyll and hyde. >> the offense in general. >> when is the first real game coming isn't it? >> a week from thursday on nbc this season kicks off. >> what network? >> nbc. >> say it again. >> thursday night, september 4th, on nbc. then sunday night, too. >> sunday night. >> we have both. >> you know, i am sort of a homer but collins worth is the greatest guy in football ever. >> he's the best. >> he is. >> because i don't know, he's really smart and he's a great player and he's funny and he just -- i think that's why i think we should get thursday. >> i wanted to ask about --

>> -- benched. >> they both have stunk. >> you never start right away. you can't go from college right to -- >> i think the way jacksonville handled blake was perfect though the guy's been brilliant in the preseason telling a guy he's going to sit and take some time and take some patience that's the way to handle a rookie especially a punk like manziel who wants to flip off the redskins bench, get fined $12,000. but they both looked terrible, he and brian hoyer should both be on the bench. >> calling him a punk, that's way too subject up. >> is it? >> -- on this show -- >> as the redskins -- >> did you do time at some point in your life? i mean a punk? >> i'm horde core, joe. >> a punk. >> hey. >> the breaking news here -- >> is that too strong? >> yes! >> why? >> a punk is what you call people when you've been out in the yard and picked a fight with you. >> this is going to force me to do it. >> we need a breaking news banner that says sorkin will do --

>> you want to ask about -- >> my wife who is responsible for forcing me to do this. >> october 12th, it's a sunday afternoon, i'm going to go through the mud, i'm going to get electrocuted, go through fire, joe. you'll appreciate this. >> he'll back out of this. >> i'm going through ice what's called the ice enema or something like that -- >> painful. your brain just shuts off. >> you know you -- >> it's not an actual enema. >> no but that's what they call it. that's the obstacle or something. >> no actual enema. >> you did bring up real quick -- >> sam bradford torn acl two straight years for the quarterback for the rams. that is devastating for him personally. guy that won the heisman trophy and for the rams organization who really thought they were going to take the next step. they had an incredible defense. and to lose your quarterback two years in a row just brutal. >> who plays in that thursday game? >> seattle/green bay. >> no way. >> and then broncos/colts on sunday. >> no!

oh, my god. an embarrassment of riches for nbc. that's, that's -- >> wow. >> it is good stuff. so -- >> we'll write both of those things down. >> always great to have you. >> i'll make sure to text you. >> in case you can't see this at home, this is -- >> it's not tacky. >> no, it's good. >> it's close enough but it's not the same. >> tacky if it was identical. >> if you have the shirt -- >> exactly. >> then you got -- >> the same pattern. >> oh, you would never -- >> then that came together and anybody that -- >> oh, yeah, look -- >> no, no, no! that's a pete peeve of mine. >> what's in there? >> nothing. nothing! >> oh -- >> it doesn't open? >> it does but it's sealed shut with starch. it's sealed shut -- >> i've never seen anything like this before. >> this is a specific special -- >> i won't even put a pen in there because i don't want to mess it up. >> you know like when you get a blazer and the pockets are -- >> yeah, exactly. >> very strange. >> have you ever seen -- >> i've been watching it for

years but it never occurred to me. dave briggs thank you for being here. >> i'm not anal, sorry. >> picking up the pieces in napa valley. we're going to talk about it. northern california's wine country was rocked over the weekend by the biggest quake in a quarter century. the fallout and the impact on the region, that's coming up next on "squawk box."

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built for business. earthquake in napa valley. northern california rocked by the biggest quake in 25 years. the epicenter is on one of the most exclusive places to live on the planet. now the region is picking up the pieces. >> isis on the move. the islamic militant group captures an air base in syria. how should the u.s. respond to the latest threat? and deal making monday.

roche for more than $8 billion and burger king shopping around for doughnuts and coffee. the second hour of "squawk box" begins right now. good morning and welcome to "squawk box" on cnbc, i'm joe kernen along with andrew ross sorkin and michelle caruso-cabrera. no. >> no pocket? >> but i'm going to get it done next time. >> becky quick is off today. our guest host, we're talking off camera about -- i don't -- it just comes this way and then i don't like to open it at all. founder, chairman and ceo of nbc partners, and the always controversial mtv video music awards didn't let the public down. i didn't see this. >> nicki minaj. >> really?

>> her hit that i've never heard of. >> anaconda. >> some very explicit dance moves. >> there was a wardrobe malfunction. >> i bet she planned this. >> it was almost -- it was almost janet jackson -- it was almost janet jackson-like. >> super bowl -- >> that's what you want to ask. is that real? that's always my question. >> we'll have more later. but did it involve -- >> if you're going to ask -- >> it's cold. the air conditioner is on. >> we'll get back to that in a little bit. >> is that what it was? >> we have miles on as the vma expert here. >> all right. >> so comment on that. >> it was deliberate last time. that was so rehearsed. >> i think so, too. >> miles doesn't know he's the vma expert. >> the futures are good this morning. we had three straight weeks of positive gains up another 58 points today. the fed is, i don't know, they talk about getting out but they're not out yet and the market keeps going higher.

let's check out the ten year. i still argue that europe has given the fed a lot of cover with less than one percentage earning. you don't feel like you're out of whack when you've got countries that can barely pay their bills with the same yield it makes, you know, then you can maybe feel like you're not -- >> what's incredible is based on their expected inflation rates, you actually might get a better return at a 1% yield in germany than you would in the united states. because real interest rates are you know, too high still. >> germany doesn't like inflation. >> oh, they're terrified of it. >> let's talk to you about what happened over the weekend in california. because california cleaning up today after the largest earthquake to rock the bay area in 25 years truck at 3:30 yesterday morning. here's what we know. it was a 6.0 magnitude located six miles south of napa, 60 miles north of san francisco, in one of the state's most prestigious communities and home to the nation's most expensive wine country.

more than 200 people treated for minor injuries in the area, hospitals there less than 10,000 people are still without power following the quake. there have been at least 50 aftershocks so far. let's go right to josh lipton who joins us from downtown napa. josh, good morning to you. >> good morning. yeah, guys, we're going to start by showing you some really powerful footage. now surveillance cameras actually captured the moment when this quake hit when the earth started to roll. what you're looking at here is actually inside a 7-eleven store and i had the chance to talk to locals here, people born and raised in napa and they told me they've been through earthquakes before, but this one they said really felt different. one woman told me she really felt like a shoe trapped in a dryer. i can actually tell you guys my own parents, my mom and dad, who live about a full hour and a half from here, my dad said it was still powerful enough it woke him right up in the middle of the night. one question is, what this is going to mean for local businesses.

one henry kiln company, a bonded wine warehouse caught up with its own bill hill and he was really visibly emotional when talking about the quake, its impact and what it's going to mean for his business. millions. it's significant for a small company like us, it's a big blow, no question. we're trying to figure out what we have to do today to protect what's left and then later i will have a chance to think about what this means for us. where we go from here. >> now hill tells us that he lost about 20% of his wine. that's valued in the hundreds of thousands of dollars. he also said he has more barrels of wine trapped under this roof that's collapsed. and like a lot of small business owners he did not have earthquake insurance. guys back to you. >> wow, that's pretty tough. i was going to ask did he have insurance? that is tough, josh. thanks for that. appreciate it. in geopolitical news british intelligence say they've

identified the man who killed american journalist james foley the person who beheaded foley in a video released by isis last week had an apparent british accent. mean time a different syria based terrorist group released american author peter theo curtis this weekend. he had been held for two years. and american airstrikes continue in iraq. the u.s. carried out two yesterday and now washington is debating whether the strikes should expand into syria, where isis is also based. all right let's get more on the isis situation and the ongoing hur mail in syria. joining us is general barry mccaffrey, president of mccaffrey and associates and military analyst at msnbc. >> good morning. >> what do you think? are we going to do something in syria or not? thursday night the head of the joint -- dempsey made it sound like we were going to do something in syria for sure. bombings. and then yesterday on a plane with journalists he walked everything back. what do you think is going to happen here? >> well, i think they've -- they came -- walked up to the edge. they know they could go after

targets of seized you armor vehicles that were abandoned by the iraqi army. now many of them are in syria and being used against both the syrian armed forces as well as the iraqis. but i think they've decided to think about it. dempsey clearly said en route to afghanistan they don't now see an active threat against the united states. which probably is correct assessment. this is a regional ethnic and religious war so far. >> colonel jack jacobs when he was on last hour suggested that perhaps dempsey had gotten yelled at by the administration for sounding so hawkish and was forced to walk it back. do you believe there's politics involved? >> well, i think they're all in very close coordination. they've -- they're having daily meetings the national security council. i don't think there was any missed signaling on the part of anybody. i think they've thought more carefully about it. the brutal murder of this one brave journalist really was not something that should have called into question a fundamental policy. if we attack these isis rebels,

in syria, essentially mr. obama ends up supporting the assad regime. so it's a real dilemma, and i'm sympathetic to them. they're doing the best they can, which is so far protect the kurds. and that's about as far as they've gone. >> darrell, have you been able to offer an explanation for -- i mean, grateful that it happened with this other journalist, but, you know, if it's an al qaeda affiliated group they've never wanted to look reasonable. i would think that in that circle you don't want to show mercy or compassion. what was the whole point of right after foley releasing a hostage? have you been able to figure that out? >> well, you know, it's clear to me that the majority with the possible exception of isis are primarily thugs and criminals, closed in this so-called jihadist movement. so i think basically if somebody

paid them, and that's more than likely the reason they let him go. very surprising move. we've got to remember, there may be as many as 20 journalists still being held hostage, and there are hundreds of foreign fighters in syria or in iraq from nations like the united kingdom, european -- other european countries, and the united states. so the big deal to us is what's the spillover that will directly affect our interests and those of our two european allies. >> do you think members of the military should be putting themselves on the line for journalists? >> oh, yeah. well i mean if there's american citizens anywhere in the world at risk, obviously the full sort of capability of the u.s. government, diplomatic, overt action, military, ought to be considered in the balance. but, you know, many of these cases getting in to syria with direct military action, particularly air power, just isn't going to solve these

problems. and it's unlikely this administration is going to want to put itself back into the middle east in an active combatant role. nor will our allies join us. >> general, real quick, couldn't we control the situation if we went after the money? meaning, we went after the accounts. we tried to talk about this a little bit in the 6:00 hour but we really didn't get a firm answer. is there a way to do that? >> probably not. >> to lock down these bank accounts? >> you know, i was in the strategic planner for the joint chiefs of staff, took part in a lot of efforts to strangle economically various regimes, the serbian government, the iraqi government, it never seems to work, and remember isis grabbed maybe as much as a billion or more dollars out of banks in mosul. and they're now taxing oil production in certain parts of the country. it's going to be very difficult -- they're also not consuming giant amounts of resources, as most state actors are. so, i -- you know, i think we

ought to try and affect the money but that's probably not the vulnerable.. the vulnerable point is going to be when do other nations, jordan, saudi arabia, the gulf coast states turn on them as a threat to their own interests. so far that hasn't happened. >> accusations against bnp paribas by the u.s. government when it came to enforcement of sanctions you discover how difficult it is to get bachs in the rest of the world to help you do exactly that. you think it would be so obvious. and yet. thank you, general. really appreciate you having you on. martin dempsey, head of the joint chiefs of staff. >> yes. >> sorry. brain freeze. >> martin. >> martin. >> martin. >> satin, manhattan -- >> deal news, burger king is in talks to acquire canadian coffee and doughnut chain tim horton. he was the hockey player tim horton. we have a guy to talk about this. the combined company would be based in canada making it the latest tax inversion deal. tim hortons and burger king

would operate -- what did you tell me burger king's tax rate is 27 here? >> so statutory rate in the united states is 35%. burger king's current rate in the united states is 27%. >> 15 in canada? >> statutory rate in canada you're saying 17.5. he's canadian. i'll take that to the bank then. the only thing that's interesting in terms of the inversion issue on this is that 50% of the company would already be based there -- this isn't someone taking advantage strictly of the tax code. >> she already nailed the most interesting thing. canada has a low -- has a 15% tax rate versus us at 35. canada is more business friendly than us. that is pathetic. that is sad. that is -- >> i would argue too this transaction is being driven less by taxes and more by the -- >> stop -- >> why are you not addressing the key point that canada is 15% and we're 35? >> i'm not going to dispute that. we have to fix that. >> the other big issue. >> go for it. >> the -- of cash -- burger king

has a billion dollars of cash on its balance sheet. 80% of it is outside the country. they repatriate that at 35%. they save 280 million. plus there's another $100 million a year of free cash flow internationally -- >> -- the -- >> but i would argue the bigger piece is that 3g is going to use burger king now as a platform to roll up lots of resources. they're going to turn it into the nexium brands. >> in addition to that. think about the complement. you've got a breakfast sandwich doughnuts coffee. >> the synergy. >> going to the with burger king. burger king can now go against mcdonald's. >> this is closer to being a real deal than all those other fake deals. that's all i'm saying. >> 15%. and the most we've gotten -- >> you disagree? you think this is not a real deal? >> if the taxes had gone the other way they would have put it in the united states. but it's so obvious they put it

in canada. >> tim hortons is considered almost like a national treasure and the government in canada could block a deal like this. >> you miss miles' point which is it's actually better for the united states if they do it this way. because if they want to invest $100 million in the united states, when they -- if they do it from canada there's no repatriation costs. $100 million is $100 million. if they're a u.s. company and bring back $100 million they can only spend $70 million because they've got to give -- >> it's actually pretty interesting because you could then see tim hortons all over the united states. they're going to try to make tim hortons -- >> there are tim hortons -- >> a global empire. >> we've had a lot of experience with 3g they have the smart ees deployer of capital of anybody around. they took $6 billion out of anheuser-busch. they're very clever. >> tim horton could help with the fries at burger king? see i think they've got deep fried doughnuts maybe they know something about frying technology. >> could be. but i've got to tell you -- you haven't lived until you've had these little tim bits. >> are you trying to sound more canadian than normal?

>> the who -- >> the other deal of the morning roche is buying biotech company int intermune for $8.3 billion. >> idiopathic pull mon other fibrosis. >> that must be good for other stuff too. that market is not that big but it's very expensive, right? >> that's true. there's nothing out there for this disease. this drug could bring in a billion dollars plus and go up to $1.7 billion. ipf affects about 100,000 people in the u.s. and maybe 100,000 in europe. nobody knows what causes it. that's the idiopathic part. this works on fibrosis and inflammation. but this is really the main focus. this is what drug companies want. they want unmet medical need. they want chronic therapies. they want a lot of pricing power. analysts say this could bring in you know $80,000 per patient per year. that's how much this could cost the united states. obviously it's a lot less in europe. but what's interesting is we're talking so much about

inversions, and we've been seeing that more than anywhere in health care. but this is not one of those deals. roche obviously is a swiss company. >> they have an advantage though. >> they have a tax advantage over the company that they've bought. absolutely. >> oh, that's absolutely true -- >> potentially -- >> they can afford that asset because it's worth more to them than an american company buying -- >> right. >> they could pay more -- >> but -- >> so we're losing -- >> by taxes here. roche isn't buying it because of the taxes. >> but it's easier for them -- what's cool about this deal people say return to the big pharma buying biotech for growth and for revenue. >> so a lot of the reasons that the inversions have happened in the uk with pharma is because of the way they tax the profits from intellectual property. >> correct. >> they buy the patent box -- >> -- in this case with roche? >> this is an american company and roche is a swiss company. >> so the swiss the way the swiss taxes -- >> they say it is pretty business friendly but i think the patent box is unique to the

uk. something ian reed has brought up the ceo of pfizer -- >> so many shenanigans once you're on the patent box you can move everything around. that's what it is -- >> you assume evil things. >> no, you play the cello while obama is fiddling maybe you could play the cello just have -- >> just like the guys on the "titanic." the orchestra that's playing as they're rearranging the chairs. >> okay. guys in the control room play us out. coming up why global flare-ups including threats from isis could be putting the summer risk of -- summer rally at risk but first before we go check out this video, a colorful building implosion in albany, new york. crews spent three weeks planting explosives in this old 11-story hotel building. the fireworks started the show, and then the building came crashing down. there it is. >> wait for it. implosions are great. these can go very wrong. there's a lot of science here.

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million more than it went last year and we just pose the question again. did it ever make sense to fight the fed? is that what's going on here, phil? zblaz a rule you never want to fit the fed. you made a good point earlier we're still at the $25 billion -- >> is that where we're going? >> we're going to end that. >> and when the fed eventually beginning to raise the funds rate next year, that's not the death knell of this rally. the market is going to appreciate the fact that the fed is starting to normalize policy. that must mean that the economy is starting to normalize for the first time in seven or eight years. that's good news for investors. >> bob? >> hard to disagree. equities are going higher, as long as the economy is doing better and earnings are growing. >> but from the fed -- >> patients -- >> well the fed is part of the reason that -- >> wait a minute. the fed is part of the reason the economy is getting better and that's why the market -- the fed is just -- you can't make the leap right from fed to stock market? you need to go through the economy? >> the both the economy and the stock market have done better as a result of the fed than they

would have done without the fed. no question. so it's direct and it's also linked. >> miles, janet yellen last week inferred that there may be an acceleration of when the next rate hike when the first rate hike will happen. has the market factored that in to itself in the equation? >> not everybody agrees she said that by the way -- >> that's where i was going to go. i'm not sure she really said that or intended to if in fact she did -- >> she has no idea -- >> could say the economy continues to accelerate, and they do move up the first rate hike. does it have an impact on the momentum of the market? >> i think in a positive way. because what it's saying is the economy and earnings are getting better a little faster than we previously thought. that's good news. >> i would jump on one point. the piece i wrote about friday on yellen's speech, one of the key elements that she discussed was that when core pce gets up to 2% that in her mind is not the trigger for beginning to

hike the funds rate. >> core pce is an inflation indicator. >> exactly. that's one that the fed prefers. >> so what is the key? >> the key in my mind is that labor dashboard that she's looking at. there are a number of indicators that aren't cranking right now. wage inflation is at 2%. she'd prefer that to be at 3% or 4%. hours worked have been flat for the last five or six months. every increase of only 0.1 of one hour is the equivalent of 350,000 jobs to the economy. participation rate is low. those are indicators that the fed would like to see moving in the right direction before they start to move the funds rate higher. >> miles, what do you do with your money right now? >> managers. >> managers? >> fund guys. high dividend paying stocks, and portfolios. give it to managers. i think throwing darts is a mug's game. i think trying to pick what you're going. are go to people that have professionalism. 80% of all managers don't beat the index.

so why would some layperson. >> great line. >> you're not ignorant, are you? >> relative professionals who do it 24 hours a day. >> still haven't seen 10%. neither one of you said cautious -- >> cautious optimism? you didn't say that. >> didn't say he was going to -- didn't say anything. >> where were you on gdp growth out of curiosity for the year? >> three going forward. >> that for us isn't 3 1/2% neighborhood. >> so we've been running -- >> you guys can go ahead and live together -- >> i know. >> you've been running 2% real and 1% inflation. if we're heading to 3% real and call it 2% inflation, that's five nominal. big difference between three and five in terms of corporate america's ability to grow their revenues, and sustain or enhance profit margins. >> why are you above -- >> all right we got to go. miles thank you. well, thank you. >> coming up, mtv and

controversy go hand in hand. i think they foster it in fact. last year it was miley cyrus and the twerk. this year nicki minaj opens up the vmas and there was a wardrobe malfunction. we're going to check it out next on "squawk box." it's monday. a brand new start. your chance to rise and shine. with centurylink as your trusted technology partner, you can do just that. with our visionary cloud infrastructure, global broadband network and custom communications solutions, your business is more reliable - secure - agile. and with responsive, dedicated support, we help you shine every day of the week. centurylink your link to what's next.

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welcome back to "squawk box." making headlines this morning, amazon reportedly planning to develop its own online advertising software. "the wall street journal" saying that the announced platform is initially planned to replace ads supplied by google on amazon's website. i want to talk to miles about this. also goldman sachs planning to designate no more than 70 employees partners this year. that's also according to "the wall street journal." that's about the same number designated by goldman two years ago, which was the smallest partner class since goldman went public in 1999. they'll officially unveil that information in november. that's in large part, nobody is leaving that place. prices are staying and it's creating a huge issue for the younger guys who are thinking that they got to get out of there because they don't think that they have the kind of

upward mobility -- >> get a goldman ceiling? >> we'll worry about this a lot. >> upward mobility within the partnership that is goldman sachs -- >> upward mobility within the sort of -- >> i know i see what you're saying. these poor people who are stuck making one million, two million a year it's harder and harder to move up. >> i'm just making the comment. >> let me tell you about -- what were you going to say, miles? >> i saw blankfein yesterday, he's smiling. >> he is smiling. he's staying. >> business is great. >> good. >> platform is strong. and he's under the lime light. >> you were in london yesterday. >> no, i was -- i was at a function for prostate cancer. >> good for you. >> let's tell you what else is going on this morning. the falling price of crude oil continuing to make its way to the gasoline pump. the latest lundberg survey showing gasoline prices down another four cents over the past

two weeks. to an average of $3.48 per gallon. that's what jeffs tells me. vaseline costs eight cents per gallon less than a year ago. you'll be proud to know i was up in connecticut this weekend and i did go to the gas station myself. and was upset because it was a full service gas station, i wanted to pump it myself. and they wouldn't let me. so just -- for you to know. >> we're going to take that little sound bite. i wanted to pump it myself. we're going to have that on the year-end reel again? andrew. >> yes? >> smart car? >> not a smart car. >> a prius. >> no smart car because he doesn't have a car. did you rent one? >> it was a bicycle >> no, no, did you rent from hertz or something? >> yeah, yeah. >> oh, all right. a smart car is just for a day. in this case -- >> you mean a zip car? >> yeah, yeah, yeah. >> this is a larger vehicle. >> okay. and you actually rented it from

a bona fide car rental agency? >> yes. >> okay. >> let me tell you what else is going on. >> that's great. >> this is more controversial. >> did you go midsize? >> big. >> the always controversial mtv video music awards didn't disappoint. nicki minaj performing her hit anaconda very explicit dance moves. now, she also had a little bit -- i wouldn't say a little bit, major wardrobe malfunction. >> she is holding the dress closed. >> you can see that, yep. >> but the rapper maintained her grip on the dress or we could have had a janet jackson super bowl moment like there was following last year's twerk heard round the world by miley cyrus. our mtv vma -- >> there was an award -- >> correspondent miles is here. what do you say about this, miles? were you advising her on how to hold onto that dress? >> i am not an expert on any of this. and with young children, young daughters myself i can't comment but -- >> what is her sponsorship --

did her rate go up after this? >> i don't think it has a material impact one way or another. may have affected her fan base positively. >> you're not going to hire her for the next campaign? >> i'm not the talent recruiter guy. >> okay. >> i like better than the green dress she had on earlier. it's much better than the green dress. >> and we know, you know, it's history now that miley cyrus, it was the greatest pr stunt in the history -- >> it was. and the madonna kiss was also -- >> with britney. >> with miley, she was so smart, immediately afterwards she said, huh the whole world is talking about me. >> but justin timberlake that was not -- well that didn't work. right? with janet jackson. neither one of them -- >> it got tivo in trouble. that was the only thing i remember about that. that's when they figured out, they were watching what everybody did with their tivo. >> right. >> the u.s. chamber of commerce says the economy is gradually getting better and will average 3% growth in the second half.

marty regalia is the chief economist for the chamber. also with us is christian weller, professor of public policy at the university of massachusetts boston and senior fellow at the center for american progress. i'd really like to discuss what happened on friday in jackson hole with janet yellen. christian, let me start with you. calling the a dashboard of things that she watches within the labor markets, some people have read that that she's going to be easier on rates than you might otherwise expect based on the unemployment rate. do you think that's a good position for her to take? >> well, i think at this point, it's good position to take to take a wait and see attitude. i think the federal reserve can only do harm at this point raising rates. but we need to -- >> why? >> i think we still have in this uncertain world what we have is we have strengthening growth but the labor market is still lagging behind in the federal reserve has played a supportive

role, pointing for many years to fiscal policy to step up the game and really invest in infrastructu infrastructure -- >> but isn't employment always a lagging indicator of employment? >> but not as much as it is now. we should have seen much stronger economic growth. much stronger job market growth especially this year. and part of it is that i think generally both on the policy side as well as on the business side we're still sort of stuck in this mind-set of like oh, what happens next month, what will congress do in terms of fiscal policy. i think we need to change both on the business side as well as on the government side on the fiscal side investing in the future and that really means investing infrastructure in -- >> christian, let's get marty in here. you have a survey out you think the economy's getting better. >> the economy is definitely getting better. i mean we saw a little bit of a snapback in the second quarter. we expect 3% growth in the second half of the year. part of that improvement is in the labor market.

we've seen consistent but very slow improvement in the labor market. we're now back from where we were in the number of jobs when we went into the recession so we're starting to move ahead. and we're seeing a little bit stronger growth in terms of jobs and wages. so all of that is a plus. i think janet yellen is doing a very good job at the fed, continuing the policies of bernanke. she's being moderately aggressive in terms of, you know, phasing out slowly. but they haven't really begun to divest any of the portfolio that they've accumulated. and they really aren't ready to raise rates any time soon. >> but should they be based on your assessment of the economy? in other words -- >> i don't think so. i think when you look at inflation we've seen inflation relatively benign. so i don't think she's behind the curve yet. and i think they're, you know, continuing to phase out so they haven't stopped that. they're continuing to modestly stimulate the economy with the size of their portfolio.

so i think they're about right on target. >> did you think he'd be on the same page -- >> well but i think that the whole thing is that if you look at the economist, about half of them are saying they should phase out quicker. and half of them are saying they're just about right. so when half of the economists are an open side of the equation i think they're probably splitting the baby in half pretty well. >> i agree with marty. i think the federal reserve is doing an admirable job. but i think the other part of the equation that we sort of have shifted to the side is the fiscal policy side. both on the spending and the tax side and i think now is the time that the economy is improving as the federal reserve is easing out its quantitative easing, is tapering and certainly holding its line on interest rates. i think now is the time to have a conversation about what we're going to do in the spending side, infrastructure investments, but also, the long tax reform debate. that's certainly an area where i think marty and i -- >> president obama is very, very interested -- >> i think the need for -- >> yeah. >> sorry?

>> well, certainly -- >> but i think the need for tax reform is there and everybody agrees that the mess both on the corporate side as well as on the personal side has to be cleared up. and we're -- >> thank you we're going to leave it there. it's so great to see agreement on both sides of the aisle here. good to see you guys. >> coming up berman is booming. kentucky's distilleries filled 1.2 million barrels last year. up next the president of heaven hill distilleries, creator of evan williams, elijah craig and larceny. and from drinks to food burger king is in talks to buy tim hortons and move its operations to the north. another inversion. cute little guy, huh?

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not even labor day yet and already beer drinkers are enjoying a taste of autumn. pumpkin beer. last year pumpkin beer sales boomed helping turn a slowdown in overall craft beer sales of 125,000 into a 300,000 case improvement during the season. pumpkin beer outsold even india pale ale craft beer. sales rose 20% to $14.3 billion

in 2013. this year you'll have to sift through the pumpkin patch to find your favorite. nearly every craft beermaker has a pumpkin beer. >> is this every shot of you that you've ever drank beer in? >> really hard to find a shot of that. but yeah, these are all the ones that we have on file. >> on file. let's talk about bourbon. because bourbon production is that its highest point since the '70s. the spirit is experiencing a renaissance. joining us is moron the bourbon boom, the president of heaven hill distilleries, the second largest seller of bourbon in the world behind jim beam. good morning to you, max. thank you for joining us. >> good morning. >> you have a number of bourbons there. just explain really to me, maybe the audience understands this. all bourbon is whiskey but not all whiskey is bourbon. correct? >> that is absolutely correct. >> and just give us -- what's the distinction? >> well, bourbon is made under

u.s. government standards. and they have a specific set of rules that you have to have. you've got to have a product that's produced and the recipe with a minimum of 51% corn. it's got to be aged in a brand-new white oak barrel and can be aged at no greater than 125 proof, which is 62.5% alcohol by volume. so those are some of the very basic standards which bourbon must adhere to -- >> but isn't the key distinction something about the filtering process between bourbon and whiskey? >> no. we actually filter all of our bourbon after it has aged in our warehouse. it's a charcoal filter product and we do that for all of our products. >> is all whiskey charcoal filter? >> i'm sorry. i didn't hear that. >> is all whiskey charcoal filtered? >> not all whiskey is charcoal filtered, absolutely not. but, that is one of the things we do with our bourbon that makes some of that taste and aroma come through in such a pleasant way.

>> so what is the deal then, bourbon has to be created in kentucky or doesn't have to be? it's like champagne? >> bourbon does not have to be produced in the state of kentucky. but 99% of all bourbon is produced here. it's a combination of great water, limestone rock formations which make that water so perfect. it's the humidity, the temperature, the aging factors, all that goes in to making a great whiskey and that all comes together here in this state. >> so, max, what do you attribute the sort of massive increase in sales? it's a marketing thing? what's happened here? >> well, it's a couple of things. first of all it took a long time for this industry to actually get it right. but you see in front of me a variety of different bourbons. there's a wheat-based bourbon. a single barrel. a traditional sour mash. a flavored bourbon, 12-year-old. each of these products have distinctive product characteristics.

age, alcohol strength, recipes, who would have thought just as little as much as ten years ago that we would actually have flavored bourbons today. it's brought in a whole new range of consumers, both domestically and around the world. that coupled, those great product offerings, coupled with the flavors and with the mixologist the rise of the cocktail culture has brought that to the consumer in so many different ways. >> what's the gender mix? men versus women? >> well, it's still more men than women consume bourbon. but that trend is rapidly changing. and particularly these new variations are brought in a whole different set of consumers, a whole different set of consumer dynamics to the product. >> max, we have a marketing maven at the table. miles nadal who, do you understand how this has become so successful? >> well, yeah, actually we created a bourbon. one of our agencies called

papa's pilar so there's a lot of microbreweries that are now spinning out. max, why is it that what's happened to the beer business is now happening to the bourbon business and other spirits? what is it -- is it about consumer appetite? and fragmentation of the market? what is it that's creating opportunity from people like you and others? >> this is really sort of the age of discovery frankly for consumers and they're interested in a broad range of tastes. so the rise of the craft distillery segment of our business is probably something normally that you would have expected to have occurred. we have done it ourselves. we actually opened a tourist center under the bourbon experience. we have our own craft distillery that produces about a barrel of whiskey a day and that's just all indication of what the consumer wants and desires -- >> so that might be a good

explanation why i see here the kentucky distiller's association says the number of distillers is going to double next year from 201040. you're not worried about a glut? >> no we're not worried about a glut. to us the future really looks absolutely unbelievable. remember alled increases that we've seen in the bourbon business today or nearly all of it has been domestic here in the united states. and that's great, but outside the united states i said this for many years if you go outside the united states and ask for a whiskey and water or a whiskey cocktail 99 times out of 100 you're going to get scotch. scotch is a fine product. but all we have to do though is to reduce that 99 times out of 100 to about 95 times out of 100, and there won't be enough bourbon to satisfy that kind of demand for years to come. so the opportunities abroad are rather remarkable and rather interesting and that's really all around the world, whether it's japan, australia, new

zeala zealand, capetown. it could be anywhere. >> max, we appreciate it. thank you very much. before we go, i'm a lightweight on this kind of stuff. of the stuff on the table here we have larceny. which would you -- for someone like myself what would you drink, the evan williams? what do you recommend? >> who's your favorite child? >> whoa, i think that you should go with the elijah craig 12-year-old. it's a really unique, unusual, out of the ordinary whiskey. so that's my recommendation. >> okay. there it is. max, thank you so much. >> coming up. >> take care, thank you. >> saving iconic brands, companies like procter & gamble are looking to move weaker performing names that have been around for decades. can you imagine life without jell-o? ivory soap? apparently a lot of people do. a look at some dying brands, turnaround stores. more next. and at the top of the hour, marty feldstein on the fed and the systemic risk balancing act it's taking on. he will be here to explain. "squawk box" will be right back. >> football is back.

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welcome back to "squawk box." procter & gamble planning to sell up to 100 of its signature brands like ivory soap and duracell and jell-o. sales have tumbled 19% from five years ago so we wonder can

nostalgia keep a brand alive? we're going to talk to our guest host miles nadal about what makes a product iconic. are these -- look at these brands behind us. i don't know if -- you can't see it. if you can see what's going on here. we have a list of brands that apparently are on the bubble. blackberry to me it's clear why blackberry is on the bubble. shutter fly? really? is jell-o really on the bubble? kids still eat jell-o. >> i don't know that kids eat jell-o still. >> bill cosby? come on, miles. >> so what makes a brand iconic? something that has a durable competitive manage. >> right. >> a sustainable point of differentiation. and emotional attachment between the consumer, and the brand. okay? an ultimately that emotional attachment induces people to make purchase. >> so what happened to ivory soap? >> that i don't understand. because that's -- it's a clean soap. that's what i have. that's what i use. >> yeah, what do you use irish

spring or something? do you know? >> you have the leftovers from the hotel like when they give out the little -- >> no, do you know? you've never -- you've never bought soap. >> i think i do dial. >> you do dial. dial is not that much different than ivory. >> i don't know why. >> not having like a perfumey soap, is there? i'm surprised ivory -- >> most people actually are going away from perfumey soaps because of allergieallergies, e. >> what's wrong with ivory then? >> no, no, ivory is a great product. >> i'm taking it personally. >> ivory soap floats. >> dove -- >> that's what i use. thank you. i use dove. i knew it was -- >> you need a quarter cleansing cream? and dove -- >> because -- >> it moisturizer. >> ivory is square. >> it's curved. >> that's what i use. >> these brands have a resurrection. so we've got kraft macaroni and cheese. it was flat for decades. and now it's had real growth. because people, you know, men are now using it. >> what did you use like product placement? every high end restaurant now

has trouble throwing -- >> cheese in people's perception and also expanding it -- >> a little brand extension. >> but also hoping people the application. i mean nobody admits to being eating kraft macaroni & cheese once you leave teenagehood but the reality is is that students do. adults do. i'm always the finisher of the kids' macaroni & cheese. >> me, too. just about every day. >> it was 25 cents a box when i was in college. >> domino's pizza. >> that's back though. >> huge. i mean, but it was moribund before, up until about seven or eight years ago. >> i have a list. you say volvo could be a dying brand. >> i didn't say that. that was melody said that. >> our producer said that. what's happened to volvo? >> just lost its luster. i mean, if you compare it to bmw, if you compare it to -- >> a client of yours -- >> yes, yes, yes, yes. but if you compare it to so many competitive brands, why do

you -- what's the competitive advantage of owning a volvo? i mean -- >> it used to be -- >> is a volvo a safety -- >> now all these other cars -- >> everything is safe today. that's no longer a sustainable -- >> but they do have better models now. a little bit better. >> there are certain brands that just people have an emotional attachment to that are iconic. coca-cola is an iconic brand. >> but even they're struggling to grow. >> cnbc. >> "squawk box." >> we're going to go to commercial. >> joe kernen. >> joe kernen. >> miles is our guest host. he will be here for the rest of the program. >> miles nadal. >> and -- >> rafa is not playing at the u.s. open. >> do you play tennis, too? >> janet yellen's message to the markets, and then an earthquake shocking california's napa valley. the governor declaring a state of emergency. we're going to get the latest. it's monday. a brand new start. your chance to rise and shine.

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a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits. so every time you use it, you're not just shopping for goods. you're shopping for something great. learn more at buypowercard.com frothere's no reasonn average 17 we can't manufacture in shuthe united states. here at timbuk2, we make more than 70,000 custom bags a year, right here in san francisco. we knew we needed to grow internationally, we also knew that it was much more complicated to deal with. i can't imagine having executed what we've executed without having citi side by side with us. their global expertise was critical to our international expansion

into asia, into europe and into canada. so today, a customer can walk into our store in singapore, will design a custom bag and that customer will have that american made bag within a few days in singapore. citi has helped us expand our manufacturing facility; the company has doubled in size since 2007. if it can be done here in san francisco, it can be done anywhere in america. >> a whopper of a deal, burger king looking to buy canadian based tim hortons and move its headquarters to the north. another possible tax inversion deal. >> picking up the pieces. a powerful earthquake rocks nap

to valley. an outlook for wine country and the california economy. >> plus it's the smartest helmet on the road. gps rear view camera and bluetooth technology meet skully a disruptor in the motorcycle industry as the final hour of "squawk box" begins right now. >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with michelle caruso-cabrera and andrew ross sorkin. becky is enjoying some time off today. i don't expect to see her on friday. >> until september. >> that was a mistake that she came in on friday. she had to do -- she had that important show "on the money" and i threw some water on her head. but -- >> did you? >> yeah. but it erased the four days that she had off. the progress she had made in getting to -- >> oh, she did the als challenge? >> yeah, she did. and then she challenged warren

and a couple of others -- >> well, i mean warren's been challenged now 100 times. and he's not taken the bait. >> i think maybe this time -- >> this time he will? we can only hope. >> it is back to school time, which still strikes fear in my heart. i get butterflies. if you have teens in your house, the next story will come as no surprise. the american academy of pediatrics said teens need a later start to the school day. my kids are starting at 7:00. >> it's ridiculous. >> therefore high schools and middle schools should begin the day no earlier than 8:30. that's because the group says that the adolescents need more sleep. >> yep. i agree with that. >> for sure. >> kids are up watching -- >> i think the shows should start later, too, by the way. >> part of the reasons why they need more sleep is because they're using their pdas, they're on facebook until all hours. >> biological changes associated with puberty cause teens to get tired later at night, making falling asleep early harder --

>> i thought pda was a public display of affection. >> isn't that what a -- >> it is. >> that is so old school you said pda. >> he said a pda. >> yeah. >> just -- >> i heard they go 21st century digital boy, he doesn't know how to live but he has got a lot of toys. and that made me -- that struck home with me because my kids they're never looking up anymore. they're never looking up. it's like, we're in the car, i say was that a -- what was that? adoberman? and nobody hears me. nobody saw it. nobody sees or hears anything. >> how about when you go to a restaurant the parents walk in the kids are behind and the kids all have their hands down and they're working on their smartphones. and they don't even see what's going on in the restaurant. >> that's what i mean. it's a lot of that. i just wonder what does it mean, andrew? what does it mean? you weren't -- did you have a playstation or anything all the time? >> no. we didn't have anything. >> they had nothing like that? >> it had to be attached to a wire back then. >> i had an atari. >> yeah, i know. there was a time when people

used pagers. that used to be -- if you were really high tech. >> if you had a pager you were a drug dealer as far as i was concerned. >> or a physician. >> or a drug dealer. >> all right. >> headlines at this hour. fast food powerhouses in the works. burger king is in talks to acquire canadian coffee and doughnut cham tim hortons in a tax inversion deal. we're going to talk to an analyst who covers the space in just about 20 minutes. because taxes, corporate taxes in canada are lower than they are in the united states. >> right. and of course, the canadians have that big army that they have to support. i forgot about that. >> oh. >> and they need all that money -- >> right. >> because they're fighting over in the middle east. >> you say our taxes -- >> are being used. we have taxes that are being used to build roads and support military and also the things that we have. that other countries don't all have. >> and our personal income tax -- >> we're talking corporate tax.

>> i know. >> corporate taxes aren't being used to support that. i mean, it's -- >> well money is fundable. >> you should do it with the assumption -- should do it on an individual level -- >> exactly. >> corporations around the world could be zero and we should all compete on an even plane and whoever competes best gets the most jobs, gets the most facilities and manufacturing facilities in their own homes, capital investment. occurs in your own country. the race to zero would be good. what you're so worried about. this 10% that you're saddling corporations with -- >> 9.9%. >> makes no sense. >> of our revenue comes from corporations. we fight over this little pile of money when it's all income tax. >> right. >> in other deal news roche is buying intramune, a more than 60% premium. when reports first surfaced that the company was valuating strategic options. >> okay. let's get more on jobs, the economy, fed policy from one of

our very own "squawk" market masters joining us now is marty feldstein, economics professor at harvard university and former council of economic advisers chairman under president reagan, recently wrote a piece in "the wall street journal" bringing to life the challenges of the fed's macro prudential policy. marty thank you for joining us. you heard what ms. yellen had to say on friday and i wanted to get your thoughts before we even get into the op-ed. >> well, i think she gave a piece trying to -- speech trying to indicate that she wasn't as dovish as she had been made out to be by the press, and the markets, tried to give a more balanced analytic speech. she wasn't giving away any secrets about what the fed was going to do next but she made it clear it's not out of the question that we be surprised at how soon the fed would start raising the federal funds interest rate.

>> and what is your sense in terms of gdp for this year? >> my sense is going forward, so forgetting the 1% -- the negative 2% in the first quarter, and the jump in the second quarter, going forward, i think we're going to have about 3% growth. >> so, in your op-ed you talk about this concept where she's made it clear that she didn't think that interest rates should be used to deal with systemic risk, but instead it should be this macro prudential policy which to me sounds like regulati regulation. is that a good way for the federal reserve to be thinking or would using interest rates be a much more efficient -- >> interest rates are -- >> -- bubbles -- >> interest rates are the cause of the problem because interest rates are so low, we've got investors and lenders taking all kinds of risks that they hadn't taken and wouldn't take if interest rates were a more normal level. >> does she think that? >> i think when the fed thinks

about setting interest rates they should take that in to account. >> but she doesn't, right? >> well, exactly. what she said was we're going to depend on prudential regulation. now for the banking system, there are things, increased capital requirements, limits on some of the positioning that the banks can do. but for the rest of the financial sector, that's not there. and so very low interest rates are driving lenders in to taking risks. low quality loans, investors buying junk bonds with low spreads and there aren't any prudential regulations to prevent that. >> martin, it's miles nadal. you forecast 3% growth for the second half of the year. where are you on 2015? what kind of gdp growth do you see in '15? >> you know, the further you try

to look ahead the cloudier the crystal ball becomes. but i can't see why we're going to see that slow down if we move in to 2015. so i think over the next twelve months i think we see a continuation of that 3% growth. >> marty, the big question we have right now is whether the fed's behind the curve and whether there's going to be any, you know, negative consequences to really staying at like emergency level policy, even though we're five years in to a recovery. then i look at europe -- >> i think there's a risk of that. >> i know. i look at europe -- >> pressures are building. >> i've cited you or druckenmiller, a lot of people, but then i look at what's happening in europe and it almost is if maybe the fed doesn't have interest rates here at artificially low levels, when in a world where germany's below 1% or has been and these other

countries that obviously are not as financially -- their balance sheets don't look like ours and they're at 2.3% as well on a ten-year so maybe that means that the fed isn't that far from where interest rates would be naturally and maybe there aren't any negative consequences. >> well, fortunately we're not in europe. europe is dead in the water. even germany saw decrease in gdp, france, italy, decreasing gdp. so for the eurozone as a whole there's no growth. so it's not surprising that the european central bank is trying to keep interest rates low. they have an inflation right of less than one half of one percent. that is not the situation in the u.s. where inflation is picking up. the cpi increased more than 2% which is the target that the fed has set. if you look at the more recent numbers, the last quarter, if the pce inflation measure that the fed likes to focus on was

increasing at more than 2%. 2.3%. so i think there's good reason to think our interest rates are just too low. >> i'm sorry to interrupt because we're stuck on time. is the risk that something is coming up in the future that's going to hurt us, or there are those that say our economic recovery has already been tepid because of this low interest rate policy where corporations, instead of investing, they're buying back stock. borrowing money and buying back stock and they're not doing the things that they would normally do in terms of plant and equipment and investment to make it an income statement recovery instead of a balance sheet recovery. are we right now being hurt by the fed? or is it something in the future that's building up that we don't know about? >> it is something in the future in terms of the risk taking that's going on in the economy, and in terms of potential inflation increases. >> okay. yeah. i think you can argue both really. but then again you have people that say the fed can declare victory, and you've got "the new york times." you've got christian weller just

on. stay zero forever. why not? you know. so i don't -- you know. >> can i say, marty i know you're not a stock guy but i'm curious, do you watch the stock market and what do you think of all this? >> i think everybody has to watch the stock market. on the other hand, i think that the stock market has been boosted by the quantitative easing and by the promise of low sort-term interest rates for the indefinite future. that's what ben bernanke said was the strategy of the fed in doing quantitative easing. it was to stimulate equity prices so that consumers would feel better and go out and spend. i think that means we've probably got an overvalued stock market. >> okay. we're going to leave it there professor. thank you for joining us this morning. appreciate it very much. coming up isis on the move. capturing an air base in syria. we're going to get the latest after the break. plus winners are picking up the pieces after an earthquake rocked napa valley over the weekend. we're going to get the latest from the wine country after the

break. and then, a whopper of a deal, burger king looking to do an inversion deal with canada based tim hortons. we're going to have more on that story in just a bit. the world , but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running.

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today from a 6.0 earthquake that struck the heart of california's wine country yesterday. that centered about six miles from napa. no reports of deaths so far but the quake injured close to 200 people and dozens of buildings were damaged. it was a winning weekend for new hampshire couple visiting vegas. they hit it big on the legendary lion's share slot machine at the mgm grand, winning $2.4 million. yes, a slot machine. reports say they put $100 into the machine and played the $3 max bet for only five minutes. the machine has quite a reputation because in the past 20 years no one has ever hit the jackpot. wow. >> i heard about that. >> do you know what happened the second they won? there was anners man standing right next to them. >> no. >> no. for sure. it happened to my mother when she won the slot machine and an irs man shows up right away to take half of it. >> that was a vegas story?

>> i haven't talked about shug knight in years. >> you heard what happened, though? >> no. >> he got shot. he was at a party over the weekend ahead of the vmas and he got shot. >> oh, that's right. >> six times. >> shug knight. >> is that the guy? >> and tupac had been in his car years ago. >> yeah, yeah. >> when there was also a shooting. he had been shot at. >> with biggie small? >> i don't know about the biggie small part. >> did he live? >> shug knight did live. he's in the hospital. >> this is part of the buzz about the vma that we've been talking about this morning that i have to read now. it was perhaps a 2-year-old who stole the show, blue ivy watched her mom beyonce perform, and then was brought onstage by her dad jay-z. >> oh, wow. they're together. that's good. >> andrew's wondering whether this could put rumors of trouble in paradise to rest. pretty happy there. >> but good. because they had apparently hung out at gwyneth paltrow's house and people all these reports that gwyneth paltrow was giving them advice on coupling and all

this kind of -- >> that's weird. >> they could be getting some advice on the conscious uncoupling thing. >> from gwyneth. >> andrew knows all this about pop culture. >> this is really not surprising. >> entertainment -- >> he's not a -- >> there's no stars too small for him to want to meet and somehow get to know, is there? >> i would go to the opening. pretty much. >> he will. >> i mean, sports are called jock sniffers a lot of times if they get very close -- >> every time i go to the academy award dinner, function -- >> there's a term like jock sniffer no matter how small -- >> did you catch what he just said? >> yeah, i did -- >> the academy awards -- >> i know he is. >> he's just flying in -- >> not at the awards. he's like at the parties. >> oh, all the parties. >> not a party. all of the parties. >> we know this. you know what? i like it, too, and i glam onto him to go to drns

>> you got one next week. >> i'm going next week with one. i am. >> you know what? credibility by association. >> you know what, miles? wait till the thing on showtime is huge. and he won't even be here. >> i was going to say -- >> we get an invitation. that is what we want -- >> when we get the invitation we'll still get the invitatioin. >> isis -- we are going to switch gears. thank you. >> isis capturing a major air base in syria the last government held outposts in an area dominated by extremists. amen mohyeldin joins us from london. we need you every week as things i can never remember it being this tumultuous in that part of the world, but what can you tell us today? >> well it's a situation that continues to worsen on both sides of the syrian/iraq border. you were talking about isis making gains on one hand taking

over very important air base and airfield in the northern part of syria that was held by the regime of president bashar al assad. certainly shows that they have the ability to fight on multiple fronts because also today there was a suicide bombing that took place in baghdad, killing at least 12 people. but more importantly, they have demonstrated the ability to move troops across those borders, in a very open way that now has really pretty much wiped out any kind of border between those two countries, iraq and syria. that certainly is going to be a major cause of concern for the united states. but more importantly, today, the syrian foreign minister warned the u.s. not to engage in any airstrikes against isis targets inside his country without coordinating with damascus. now his government said that they are prepared to work with the united states, and the international community to try and thwart isis' gains but for the time being he is warning the u.s. not to act unilaterally and violate syrian sovereignty. not a lot of good news that comes out of that part of the world these days. today there have been some and

that is the release of the american writer theo curtis. that was confirmed by the united nations. obviously since then a lot of confirmation coming out from the u.s. government. it seems the deal to secure his release from a group that is not isis but an al qaeda affiliated group was brokered through the qatari government. they say they did not pay any ransom money but there are going to be a lot of questions as to why this american was released or if there was any kind of deal in place that secured his release. guys? >> and we wondered that. because, you know, you can be less radical than isis, but you know, normally you're not -- if it's al qaeda affiliated you don't think of it being conciliatory unless there's something in it for them and you wonder if we finally do find out. anyway, we do appreciate seeing you this morning. thank you. >> coming up a couple of deals being announced this morning from biotech to burgers. we're going to speak to a man who is no stranger to deal speaking about the state of m&a and why he's throwing money at

pet and vet supplier companies. scott sperling is our guest in just a bit. and then later the world's smartest smartest motorcycle helmet from situational awareness to bluetooth connectivity, even a rear view camera it's the helmet of the future and we are showing it off right here on "squawk box." stick around. this is a burrito made with chocolate, soybeans, and apricots. what kind of chef comes up with this? a chef working with ibm watson, on the cloud.

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a lot of news about fast

food today. burger king is in talks to acquire canadian coffee and doughnut chain tim hortons. mean time the "journal" has a piece this morning suggesting that mcdonald's is facing a so calmed millennial challenge as customers in their 20s and 30s defect to restaurants like chipotle. when i see andrew eating, what is that stuff, that kale that's flat and it crunches when you eat it? i mean, you wouldn't be caught dead with a mcdonald's fry and you eat those, what is that kale stuff? millennials are healthier, right? >> sea weed. >> sea weed. he eats sea weed -- >> no, it's not that. i was doing it six months ago. they were sauled sea weed chips. they're delicious. >> you're not -- >> no, not anymore. >> joining us on the "squawk" news line today, global director of consumer equity research, i think coke has the same problem in carbonated drinks. will millennials ever come back

to so-called unhealthy food like mcdonald's or carbonated beverages or do these brands have a problem? >> i think the brand is going to take a look at some of the challenges facing them and traffic upon the millennial audience. i think there is opportunity, meaning the large system, whether it be cokes, bottling system, and mcdonald's obviously, a number of units out there but they have to take a look at what they're offering consumers now. there certainly have to be adjustments made. >> what's so funny is joe refers to the less healthy versus the healthy. eating chipotle burrito, which costs seven to eight times more than a big mac, or a whopper, which has fewer calories, i mean, isn't necessarily more healthy. in fact they're eating more volume. they're spending more money. and yet there's this perception that it's better for you. >> it's lower in -- >> yeah, it's -- there is a perception that mb donald's is the leader in the quick service industry.

obviously it gets pegged as being an unhealthier fare than what's out there. to your point on a pure calorie basis there's a comparable. i think mcdonald's looks at the market a little bit differently and it's difficult to overcome when the persona is that it's a quick service restaurant it's difficult to overcome that. >> what do you think of the burger king tim hortons deal? >> very interesting. i think the timing is very interesting given all the issues mcdonald's is having. this is clearly a shot across the bow there. makes sense from a geographic standpoint, and from a -- >> does the inversion thing matter and the reason i ask is in the case of walgreens they decided not to do it because in part they thought people might protest that people would not go to the store. would that -- >> i don't think it's going to happen here. i mean it's only a smaller part of the deal. i think that there's some other things. i think there's some services and overhead type synergies that could come out of the deal. i'm not sure at this point. >> all right. all right dave, thank you. >> thank you. >> okay.

>> coming up, road and track calls it the most anticipated motorcycle helmet ever produced. new technologies that will keep ri riders out of harms way you going gps and a rear view camera. the skully is on "squawk box" just ahead. your sacrifice and thank you for your bravery. thank you colonel. thank you daddy. military families are uniquely thankful for many things, the legacy of usaa auto insurance can be one of them. if you're a current or former military member or their family, get an auto insurance quote and see why 92% of our members plan to stay for life.

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welcome back to "squawk box." let's take a look at some stocks in the news this morning. biotech firm intermune is surging after roche agreed to buy it for about $74 per share a 38% premium above friday's close. also, activist investors engine capital and red older have ann taylor parent ann inc. in their sights. they sent a letter to the board saying the company is deeply undervalued and urging it to explore all available strategic alternatives to enhance shareholder value. ann inc. says it welcomes open communication with its shareholders. and u.s. steel was upgraded to outperform by underperform by credit suisse which cites raw materials cost advantage over competitors. >> 2014 has been a comeback year for mega deals.

joining us is private equity titan scott sperling, thl has invested more than 100 employ yo poll yos, 150 billion since its inception. last time you were on were you saying this was a time to be an opportune time to be selling some stuff in the portfolio, are you still finding things that make sense? >> i think it's both ways. one of the things that we've done over the last few months is use these opportunities to realize on a number of the investments that we've had. it's been a good time to sell. i think there's been strategic interests out there. for the reasons that i think we're all aware of. interest rates are low, the ability to borrow, strategic, very low cost and a lock that ends for an extended period of time gives you the ability to do very accretive transactions at prices that are good for both the buyer and the seller. so we've been looking at taking advantage of those opportunities

when they come up. sometimes that means owning a company a little bit sooner than you might have anticipated. but given the performance that we've seen, you know, that makes it a very worthwhile exercise. >> differential tax rates ever factored in to any of the deals you do? why do we talk about it all so much now? why has it become such a -- an issue? >> well, i think it's an issue for the obvious reason that it's yet one more fiscal headwind that we have in the united states. and when we talk about issues having to do with federal reserve, providing stimulus on the monetary side, one thing that we have to keep in mind is whether it's a whole long list of fiscal headwinds that we confront. you know, the average tax rate for a corporation in the united states varies very significantly across the full range of companies -- >> in general is it higher than everywhere else, or andrew's

column last week says not really. >> well, i think if you start with the same base, just start with the base rate and forget everything else we put on it's certainly significantly higher. and many of the companies that you see out there, particularly the faster growing companies, tend to have fewer deductions, or opportunity to take advantage of some of the tax incentives out there. so their typical rate is, in fact, higher than it would be. >> i agree with you on the smaller companies, smaller and midsized companies get dinged in the united states but we would all agree that multinationals have figured out how to weave their way around quite nicely. no? >> andrew i think you're exactly right. you know, look at the, your former parent ge which is historically had a wonderfully good tax company that has generated an ability to have tax rates that are often -- >> but weaving around for the company means that -- >> leaving it overseas. and you know what i mean okay? so they found a way to do it.

they found a way to do it, but it's bad for the country that we're not attracting capital here. so, that's what i'm saying. >> i am. >> right? >> i am in full agreement on that. >> that's the problem. they can't get down there in >> one of the things that we have to look at is how do we simplify tax regulation and all the other elements that as i said really go in to creating a much more significant fiscal headwind for doing business in this country and consumers in this country. so i think this is just one part of a broader -- >> what's so frustrating -- >> everyone says we need comprehensive tax reform. president says it, but it never gets done because they actually don't want to get it done. >> well let's be -- realistically, obviously, it's not going to get done until this '16 election at very best. closer to '16 election. you're right even then everyone's idea of what comprehensive tax reform means is very different. so it's hard to piece this

together. but, nonetheless, we have had periods of time when we've been able to undertake significant simplifications that are intended to be revenue neutral that can be accepted by others. we saw it in the 1980s. we saw it in the 1990s. hopefully we'll be able to see it in the middle of this decade as well. >> scott, it's miles nadal. >> hi, miles. >> how are you? >> i'm good how are you? >> you've enjoyed great success by being opportunityistic at troughs in the market. today, the multiples paid for private equity investments, it's about 10.2 times ebita up from about eight times five years ago. more competition than ever, more liquidity with firms in the private equity space. how are you finding the level of competition, and what do you think it looks like going forward? do multiples continue to increase? obviously with capital being so abundant and low cost, it's provided a great catalyst for

activity. but what does it look like going forward when multiples have gone up so substantially? >> you know, that's the multibillion dollar question. i think that, you know, we believe that there is a cyclicality to this and that nothing we've seen breaks out of that. that being said the fact that you have relatively low interest rates, and the weakness, the continued weakness in the economy, i know we talk about looking at 3% growth. i know we talk about an unemployment rate of 6.5%. but when you look at the number of people who don't have full-time jobs in this country, when you look at some other factors, there's still a significant room to go and maintain, and i suspect we will maintain low interest rates, because of all of that for some period of time. if you have those low interest rates you're probably going to see an abundance of capital in the credit markets. and it's the credit markets that tend to be the fuel for the multiples that are being paid in our industry. and as i mentioned earlier, by

strategic purchasers who are looking at that very low cost of capital as a way to do accretive transactions at purchase multiples that you might think are otherwise quite high. >> so, scott, as we did as the fed exits and rates start normalizing and going back up, there they -- the tradeoff in it being a better economy, will it just be net-net about the same environment for you? or will it start to hurt as rates go up? >> well, i think from a buying perspective, we've always liked environments where credit markets are a little tighter. and i think it will create opportunities going forward if you see the credit markets tighten up, because interest rates have gone up. that being said, you know, again i think that we're probably in for a more sustained, lower rate environment relative to the normalized rate than we'd all like to see, because your

fundamentally right show we'd rather see strong performance at the company level. and while companies are, in fact, doing pretty well right now, they're still not at the level that you would expect them to be given the depth of the recession that we saw a few years ago and the amount of time after that. so i think there's room, there continues to be room before we hit a point where the fed meets to take significant action on the interest rate hikes. >> all right scott sperling, thank you. appreciate it. >> you're very welcome. >> okay. see you soon. >> coming up the world's smartest helmet that could change the motorcycle industry. we introduce you to the skully. tech meets the open road next. and check out the futures. right now they're suggesting that we're going to have positive open. "squawk" rolls on right after a quick break. ♪ [ dog barks ] ♪ [ male announcer ] imagine the cars we drive... being able to see so clearly... to respond so intelligently and so quickly,

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welcome back to "squawk box." the futures right now are even better if you're long than they were earlier up 72 points. in the news sony's playstation network is back online following a cyber attack that took it down over the weekend. the attack coincided with a bomb scare on a commercial flight carrying a top sony executive in the united states. the threat came from a tweet that originated on a game player's online forum, and the flight from dallas to san diego was diverted to phoenix. sony said on its playstation blog that its network had been

taken down by a denial of service style attack but did not compromise any network user information in the process. a group known as lizard squad on twitter said it had also targeted the servers of war craft video gamemaker blizzard entertainment whose website was down and threatened to attack microsoft's xbox live network. you look cooler in this next helmet. >> we are going to talk about one of the coolest motorcycle helmets you will ever see. we are developing an obsession here with new helmet technology on "squawk box." we told you last week about the football helmet. with the camera inside. that is me wearing it on the show. >> you look like that little -- like the little space guy -- >> he looks like rudy. >> i want you to check this out, guys. this is a new juiced up motorcycle helmet. you're watching video of the view from inside the helmet. it's kind of like the tesla of helmets. it has a heads-up display, gps

navigation, rear view camera and many other functions. joining us now, to talk about it -- >> it's unfortunate it's on the right-hand side you can't see the little insert camera. >> we'll be able to see it in a second. marcus weller is here, the ceo, chairman and founder of skully the helmetmaker. we think this is very cool, marcus. thank you for joining us this morning. tell us. >> good morning. >> tell us where are you in the production of it. >> so currently we have beta test models on the road. and this is really to get some early stage user feedback and make sure that we're enhancing safety the way that we intended from the beginning. we have been compared to tesla for motorcycle helmets. and i think the comparison is apt in some ways in that we're taking a vastly underinnovated platform, and bringing new technology to bear on this to ultimately make the roads a safer place to be. >> and just to give everyone an idea, you guys did the equivalent of almost like a kick-starter campaign that's begun to support this, and you have become way oversubscribed. >> we did. we ran an indy go-go campaign to validate interest and what we

said was a goal of $ 50,000, a quarter million to validate that interest and we vastly overshot that in the first two weeks so we're at $1.4 million as of today. >> this helmet is going to cost how much money? >> it's $1399. but we're actually releasing a $499 reservation model via the website. so if you go to the web site skullysystems.com you can reserve one for $499 and pay $9.99 at ship. >> given all the technology, effectively there's a tv screen on the side of you get a phone call, a camera in the back can you make money on this? >> it's a highly complex consumer electronics device that is for sure. but i think that it's an important, and a needed thing. we've gotten some good interest from investors and i think that the path forward for scully is promising. >> what about the safety issue? the one thing that gets me about this helmet it's great because you can do all of these things, quote unquote multitask while you're driving.

then i get nervous -- >> we're really about not multitasking. it's about increasing situational awareness of the rider. taking a 180 degree camera that eliminates blind spots for the rider and rendering it in a translucent heads up display. 180 degree viewing angle showing the heads up display with turn by turn gps navigation will vastly improve riding safety. >> can we bring up the video, there it is. what i see on the big screen here is the open road and lower right-hand screen is a rear view? >> yeah, that's the rear view. >> that's the rear view. >> you're also getting a telephone call in the middle of it. >> that's telling you the phone is ringing? >> that's an option you can enable via the smartphone. so there's companion app and users can configure their helmets for their specific functions. some people like to ride with music and they find that they can increase their concentration whereas some people like to ride just totally pure, and so we're going to enable either one of those modes. >> most of the new helmets, though, do have bluetooth technology. i have a question. what was the derivation of the

evolution of this? are you a motorcycle rider? what was it that you saw in current technology that was not in keeping with what you thought the future should look like? >> well, it was really an idea that kind of chose me. so, back in 2011 i was on my motorcycle in barcelona and i looked to my right to read a street sign, because i was doing that i hadn't noticed this little smart car in front of me slammed on the brakes so i smashed into the back of it. then i realized the street signs were there to read. that's what they're there for. that's all i was doing. so i realized there was definitely something that we could do with technology to basically take that information, render it in a heads-up display that's in my line of sight. so it's easier to concentrate on the road ahead. >> so just to go through the price points. a traditional helmet is $300 to $400? >> between $300 and $800. >> this is going to be about $1200. and then there are helmets that are as much as $4,000, i'm still wondering given all the technology inside this helmet what kind of margin you can make. >> the margin is pretty solid

for this first production run. but really there's a lot of costs to getting a new type of technology that's category defining out to the market. so we're starting out with strong margins. but honestly, there's a lot of work ahead. and we're very much looking forward to bringing this to market -- >> in this helmet that's not available in cars yet? i haven't seen -- >> this is a rear view camera like there are in cars. >> but you don't see a heads-up display that way in cars this -- >> i guess i haven't seen that on the video to really -- >> i thought rear view cameras in cars were only when you were backing up. >> only when you're backing up. this is all the time. >> yes, right. >> yeah, it's 180 degree viewing angle that's digitally flattened and rendered in a heads-up display. we do have some ip on that and is a pretty big safety advancement for transportation safety in general. >> marcus, we wish you all the success in the world in this project. it's very exciting. please keep us in mind and let us know how it goes. >> certainly will do. thanks very much. >> thank you. >> people said last week side by

side -- >> the great gazoo. >> what do you got? >> he's a little green guy from the flintstones. do you remember him? >> oh, yeah. >> i do, actually. >> and you know who did it -- you know who voiced -- >> you know who voiced over, harvey korman was the guy -- >> i wasn't able to put the helmet all the way down because we wear these ifbs in our ears so you couldn't get it -- >> dukakis said you know what i put that on, i didn't want to go -- he had a lot of excuses. he had a lot of excuses, too. he had a lot of excuses, too. he never -- >> it never helped -- >> i know exactly what he was referring to. >> i want you to wind surf with that helmet on. just throw all the things together for that. >> that's good. >> in a wetsuit. >> in a wetsuit. >> maybe i'll wear it in the tough mudder. >> in the tough mudder. >> how about that? >> coming up we'll have jim cramer's take on the burger king action today, possibly moving to the north. also roche is buying intermune.

in cash. $8.3 billion. and that is a 38% premium to friday's closing price. and more than a 60% premium to the cles on august 12th. both the ceos are going to be on "squawk on the street." later this morning. "squawk box" will be right back. football is back. which means it's busy season for buffalo wild wings. ceo sally smith joins us to explain this fast casual success story. "squawk box" starts tomorrow at 6:00 a.m. eastern. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

post a video with your question to the fast money twitter page. fast money traders are help you fast money traders are help you make the grade and make sense of did you know a ten-second test fast money traders are help you make the grade and make sense of could help your business avoid hours of delay caused by slow internet from the phone company? that's enough time to record a memo. idea for sales giveaway. return a call. sign a contract. pick a tie. take a break with mr. duck. practice up for the business trip.

fly to florida. win an award. close a deal. hire an intern. and still have time to spare. go to comcastbusiness.com/ checkyourspeed if we can't offer faster speeds - or save you money - we'll give you $150. comcast business. built for business. welcome back to "squawk box" this morning. take a look at futures see how the market's setting it self up. dow looks like it's going to open up higher, 78 points higher, s&p 500, higher as well, ten points. nasdaq higher, about 21 points right about now. >> down to new york stock exchange. jim cramer joins us now what happen did you used to say about intermune. >> we had welch on, asked him whether he felt his company could abchoired. he did say, we have proprietary

technologies, continue to develop the tests. this is what happens when your roche and have a good cancer franchise but need to expand, a big sales force already for pulmonary. look for more deals like this. the sector, i think, the most undervalued versus what the federal reserve thinks is the most roovervalued because big pharma has not been able to come up with drugs. >> burger king and tim horton, is it doughnuts, coffee? what's the big seller for tim horton? >> tim horton, coffee and doughnuts. but a dominant chain in canada. a giant step-up in same-store sales when it report the august 6th. interesting, the stock spiked very big. we get in the papers there was some talk that these two companies have been talking before. i condition understand the big spike. though the come store sales were up, they weren't up so much the stock could have had a big run. somebody knew, congratulations. people get aware with this

stuff. but this was a deal that must have been known to some insiders or that stock wouldn't have taken off the way it did. >> what do you make of the inversion aspect, tax aspect? we've gone over it, you know, right now burger king has 27% effective tax rate. i'm told, we talked about canada having 17% or 15% tax rate -- >> federally. >> i'm told with the state, for burger king, the combined with tim horton, it gets closer to 26. it can't -- you think this is being driven by the tax component? >> no. look, one company has very good breakfast meal, very strong, tim horton's been trying to move to lunch. burger king has decent lunch. burger king's comparable store sales nothing great. throw in a tax report, we dwell on tax too much and not the strategy of trying to come up with growth in your in the challenged section, that is, where burger king is. these are all in response to the fact that chipotle had 17 same-store sale growth. i don't care whether chipotle is

in timbuktu or ireland, this is about growth, trying to elimb national number of competitors. we want to focus on taxes yp? it's easy, something to talk about, good to debate. >> because the president accuses them of being un-american. it's going to be tough to do this because they're brazilian. >> pro-profit. my old partner, larry kudlow, profits. walgreens, cvs was going to attack them and the president. this is a good deal for the two companies. >> mcdonald's having a tough time. think if you weren't the leader, think of some other way to do it. mcdonald's has to say, we've got to get relevant again. maybe -- i'm sure dunkin' donuts will be up for reason to think that those two companies have to get together. >> really. >> somebody has to do something. mcdonald's has to do something because their performance is horrendous. >> all right. >> wow. dunkin' and mcdonald's?

>> no, i'm saying -- that's what happens, they both are growth challenged. >> i love. let's float it. >> see you in a couple of minutes. >> is the president going to call the brazilians un-american for this? >> if he hasn't already. coming up, the getco brings coming up, the getco brings green for warren buffett. requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. chocolate, soybeans, thisand apricots. made with what kind of chef comes up with this?

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warren -- it's buffett. >> buffett. >> he is buffo. warren buffett is buffo. >> a nice little fellow. the great gazu -- no, not the great gazu. the gecko lizard. no wonder why the gecko helped sell millions of policies since the debut in 2000. they've had successful campaigns. that's my least favorite, that squirrely little thing. >> i love it. so funny. >> really? >> you remember the cave guys? >> yes. >> they were good. >> hilarious. >> other ones, guise stepping over the great wall. have you seen that one? the "wall street journal" reports that the ads cost more than $1.2 billion. >> billion? >> warren has said that made

geico advertising more and aflac as well. do you have gazu? here's a quick gazu. decide for yourself. >> very nice. >> decide. that was harvey korman. >> we want to thank miles for being here today. >> pleasure to be here. >> come on back. join us tomorrow, "squawk on the street" begins right now. >> a lot of fun. ♪ canada canada ♪ ♪ it seems everything's gone wrong since canada came along♪ >> good monday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber is off. stocks up three straight weeks in a nice start to a new one on tap. s&p 2000 should be on your radar today, too. road map begins with flamed broiled doughnuts, burger king in talks to buy tim hortons and the canadian mailing address. the heated tax debate. a biotech company cramer's