they decide to are a little bit better off. i think we'll see some buying after these declines and we saw some rebounding on friday after the steep selloffs. >> julia in l.a. thank you this morning. we should thank brian and becky this morning as well. make sure you join us tomorrow. "squawk on the street" starts right now. >> reporter: become to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. >> china got the best gain in about five months after a trade data was lousy. bonds are worth watching as w l well. stan fisher saying it's temporary. warren buffett's berkshire

hathaway acquiring precision. >> we knew this. nfl deal kind of interesting. >> yes. ahead of earning, reports for tomorrow. al boib. first up berkshire hathaway saying it has agreed to acquire precision cast parts. they say the deal has an enterprise value of 37.02. they say it takes berkshire out of the market when it comes to m&a. >> we'll probably be buying a few small things in the next six months. i mean, we're in negotiations on a couple but in terms of a deal of similar size, it pretty much takes us out. what we'll probably do on this

one is we'll probably borrow about 10 billion and use about 23 billion of our cash. >> asked about a lot of different things. ibm, hinted he's been buying more. said kraft unlikely to do a big deal in the next couple of years. >> i thought there was a lot here. i know the three reasons the market is up. china should have been down a lot. the stock market has disassociated it from the data which is terrible this weekend. second, when i look at what's happening with apple, untold but the stock has bottomed. i think that's causing a lot of happiness among people, and then this deal, prekags cast parts was down 50 points because 17% of the business is oil and gas and that has been able to pull down the aircraft business. there's a great three-minute clip, if you don't know what they do, on their website. this is basically how you build a plane. warren buffett is endorsing the

20-year cycle that boeing has talked about, and that is a very bullish thing given the fact that that cycle has been under question by mcnerney's retirement. >> when i looked at this deal, i did find myself looking at it quickly at a chart and saying wow, they're selling it below the 52-week high. if you look at a five-year, it has been far higher than the 235 price that they're selling out at. it made me wonder, it's all cash. it's not as though you're getting a consideration where you're going to own 45% of the combined company and you'll get stock in return for some part of your consideration. it's all cash. you're done. that's it. that's the premium you get. it's a significant one, and to the point of some people i spoke to this morning, the multiple is not low. in fact, it may be the highest multiple he's ever paid for a business, but i did find myself

curious. i know the management of precision cast parts will probably roll into berkshire and be happy. we know warren buffett likes to leave his managers alone. i haven't seen a merger agreement. i'd be curious to see if they get options. it becomes a private company been the public umbrella of berkshire, but i just wonder whether some of these share olders are going to say that's the best you could do for us? >> i was shocked this thing, all they did was get back to where they were before oil and gas weighed on the company, because this is a great company. i remember when they bought wiemen gordan and fixed that and bought sps. they really did own a lot of the entire part of an aircraft, and the only reason it's -- >> do they have any competitors? are there any -- >> interesting you say that. the only one is alcoa, and people hate alcoa because they think it's an aluminum company.

they've done everything they have k to compete in the univer universe. i mean, i was surprised they gave up at these prices given the fact that the stock like a lot of companies that are tainted by oil and gas could bounce back in a second if oil were to go back to 48. >> right. i'll be curious to say. there's a shareholder vote here. it's hard to imagine that there's enough opposition to a deal that it wouldn't happen, especially with mr. buffet. they got this thing quickly. i don't believe they shopped it. it was sun valley, first conversation sun value. the conference. what i've heard from people who are familiar, and then they get the deal done. we know warren. he doesn't have to check with a lot of people. i got the money in the bank. financing isn't an issue and i want to do it, done. so they get these things done very quickly. i'd be curious to see what some

of the big players are going to say. they are levered to production of aircraft but we know that's moving this oilt. oil and gas, obviously, right now, and then people say they had an underlevered balance sheet and said they wondered if they could pursue their own acquisition of precision cast parts. >> i think they're still the single play. there's still hex play and alcoa and ge for engines. they're not going to buy ge. they gave us too soon. >> you think so? >> yeah. it's a great company but if they had closed their oil and gas division, this is one of the things that's happened. you look at any of these companies that are involved p f peripherally, it's killed them. >> sometimes the -- >> a 3 billion nothing

company -- >> sometimes the market can be wrong. it was too high. they got ahead of itself and management knows better and they're selling at $235. >> buffett says he hasn't plunged into oil and gas. not seeing any bargains there. the discount on disney and media names did not entice me last week. tried to defend coke in the times today. saying they've been putting time into saying it's not about what you eat but how you exercise. >> it's all moderation. the idea that you could somehow just exercise your way into thinness is just not going to happen, but i think they tried hard. the quarter wasn't that bad. does well on the activism. >> asked about the market at large and used the example of you wouldn't sell your house if you thought it was about to drop

5% in value and then buy it back there. >> i like that. i think that's the way some people should be thinking. if you're in exxon, you're thinking my house just dropped 20% or 50%. if you're an apache, your house was abandoned. >> i love the fact they had a one-page press release. a biotech sells itself for a billion, it's four pages. this one is four photographs. >> once again, all state, when i say the quarter is bad, please, it's warren buffett. that means it's better than everybody els's, geico wasn't that good. geico is kind of like all state now. the number of miles driven, it's a claims issue. we keep hearing the number of miles driven.

auto fatalities were going down. i was prisurprised to see geico have the same problems as state farm. >> if you believe oil and gas are going to stay down here. burlington, coal not so good. >> there's so many companies here. buffett is incredible. amazing individual. the fact that he's 85 and is where he is in his game is incredible but i do wonder, one day, do they just take it all apart? >> i don't know. the pipeline business is strong. a lot of people hate the pipeline business. plains of america not considered to be a top flight operator. the oil and gas business, the actual pipe business of buffett is fabulous. everyone wants to short the group because franklin income has a big state in it. we can hit it in a couple of hedge funds. they say it's overinvested in oil and gas so hedge funds are

trying to beat them and give them the business. one day the business comes back. it's not that bad. buffett is in it and making big 91 money. but they think the business is going down 40 %, and they want to get out before it's consumed. >> we are getting some breaking news on twitter. the nfl and twitter announcing a new multi-year content partnership which has some ramifications for long-term engagement when it comes to twitter. a filing that jack dorsey has disclosed a purchase of 32,000 shares. following that purchase, he has a lot of twitter stock. now beneficially owns 21.9 million shares. there's reports last week that anthony noto filed to buy shares. >> they did, and they're giving you blow by blow of guys who buy. the good thing is they can't sell for six months. it's funny. anthony noto used to work at the nfl.

i thought this deal was good for twitter within the confines. f there's a lot of reasons to own twitter with what could go right. any time you're affiliated with the nfl, things will go right, other than things that are outside the lines that we don't want to see from the san francisco 49ers? >> i'm going to see a lot of video and highlights? >> there's money involved so it's not just all bluebirds. there's money involved. >> and this is on top of the news that dick costolo may step down. >> that was always intended. i think we talked about it when we stepped down initially. you don't want the former ceo on the board when you're the new ceo. from what i hear, there's still a hope that jack dorsey will take the top job. >> there's three ceos on the board. it will take it down to two. >> i guess if dorsey takes the

job, because he's -- how many former ceos would be on the board if costolo steps off? >> evans offered to step down if the new ceo felt uncomfortable with the setup. >> let's say we have some changes in the board. the nfl deal, costolo goes. what would be amazing if they could turn the business around? that would be something. the other things are fabulous but to turn the business around would be a seminal event. >> the stock dropped last week to 27. a bad week last week. >> a lot of people think it goes down and then there's a bidding war at 21. >> you believe it? >> i don't know. my trust is stuck in it because i talk about it every day. >> another day you can't sell. >> look at that board. if every one of those guys bought some stock, it would mean nothing. there's so many of you.

you ever see the amounts they buy? >> we're talking a few thousand shares. >> kinder comes in and buys 1 million shares. he was wrong because he's never sold a share. these guys come in and buy 4,207 shares. wow. >> you see the sell of 1 million shares? >> that's what i want. earns and momentum. >> sell a million shares and you make $500 million. >> if you only buy companies that are doing well that have insider selling, you do tell. take that to the bank. if the companies are doing well, it's shocking how well their stocks do. if the company is doing poorly, it's shocking how well their stocks do despite insider buying. >> when we return, buffett is not alone. alibaba putting billions to work. we're going to talk about that. take another look at the premarket. we've had seven straight dayis s

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morning as the dow looks to snap

the seven-session losing streak. in china, the shanghai up almost 5% on possible restructuring among shipping firms and when you get the inport export data this point, some think the government would step in again. >> we're in the bad news, hopefully good news in china. i would say this. i know i'm not being facetious when i say this. there's chart us and the governments, their technicians over there. they follow money and the shanghai index, if they could get it up another 400 points, they could break the shoulders. they want to break the head and shoulders pattern and cause a squeeze. they hid sell a couple billion dollars in treasuries. all the chinese stock markets --

you have about $7 trillion worth. they can profit and move it and keep selling treasuries. you didn't even see them sell 200 billion. >> is it keeping the currency stronger. for a long time people would complain it's too cheap. now they say they're keeping it too high. >> i don't know. how about the fact that it's rural to urban move seems to have slowed. i think a lot of it is that you don't want your kids to grow up in an atmosphere where you can't breathe. better to be a scratch farmer -- >> although pollution in some of those areas isn't good as well. maybe near a smelter or something. >> they built them all and there's no water and the pollution is bad. they're trying to get away from coal. they're very coal-based. so are we. >> and they are alibaba which

announced it's going to invest $4.6 billion in suning electronics. they'll deliver goods in as little as two hours. this comes ahead of alibaba's earnings report. that's about 2 and a quarter billion dollars they spent for 1.1% interest. alibaba buys parts of this country. keep an eye on jd.com. it may present a challenge for them. they're going to have a store. suning will open a flag ship store and will focus on home appliances, baby products, and that they say is a major win for the t moll.com. it helps on the logistics, but i

think jd, they are going to be down this morning. >> and morgan stanley downgrades jd on a lot of parts aside from that. that's a good stock to sell today. >> this is an important company in china, alibaba perhaps the most important, but that partnership is not to be overlooked. >> yes. and it's interesting. remember, yahoo still owns -- >> yahoo has not been a good performer. partially because alibaba shares have come down to the $78 level. >> when you get this twitter goes down a lot and then bidding war. i mean, you know it's funny. these are like valueless suggestion. i have to sell my twitter house and try to buy it back at 5% but people fear yahoo has nothing to lose because their value of the rest of the business is little. >> right. the core business is valued at virtually nothing when you take out yahoo japan and alibaba.

all the things she's done to return to capital of sharehol r shareholders but can you turn around yahoo? >> it reminds me of ibm and warn buffett. you can buy back all the stock you want, but you put that label on dog food that says new and improved but it doesn't matter if the dogs don't like it. >> you've made that comparison before. >> yes. beware, it does, in your refrigerat refrigerator, don't be like someone in my family who made a sandwich. we stopped him right before. fresh pet looks like boars head. they should wrap it in the pack. that would fool the dogs. >> we'll get cramer's mad dash and take one look at the premarket as we're looking at an up side to the open. see you in a minute.

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♪ >> all right. got me moving a little bit. you want to talk about a small company. it's known as apple. >> it's interesting the stock bottomed at 112 last week. capitulation downgrade. iphones sales could prize in 2016. that's contradictory to what people have been saying in china. the research i've seen is china is not bad for that. recall that right here was when

everyone panicked. the technicians have not made you a lot of money other than oil and gas. and this was the moment where everyone said it's finished. it's funny how a finished stock act when it starts going back up. fossil, people are saying the watch is denting sales of other watches. my problem is that we still don't have anything hard and fast but applecagey. a lot of people are saying the watch is a dud. keep track of the other duds, they didn't, the ipod, they turned out not to be duds in the end but people like to judge by the first week and the second week and the third week. give this product time. but no one wants to give anyone any time anywhere. you can start to see sky works bought. nxpi and then avago.

it's been a one-man wrecking crew for your portfolio. those could have a comeback. >> time. time for you. time for me. time for the taking of toast and tea? >> that's not bad. i like that. >> it wasn't me. it was a po et. we have the opening bell about four minutes away.

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>> you're watching "squawk on the street." we'll get the opening bell in just under a minute. a busy morning as we kick off a busy week. the biggest m&a transaction as buffett buys precision cast parts. we are going to get more earnings this week. 15. one now component kraft tonight, cisco later in the week. >> retailers, i think a lot of people are suspecting there should be some move up for the retailers moven the gasoline. i would point out that raw stores was the only retailer

last week up. people don't think people are spending. when you go to ralph lauren, they keep saying destination cities aren't strong because of the strong dollar. >> we will get retail sales on thursday. that's one of the highlights of the week. there's the opening bell and the s&p at the bottom of the screen. at the big board this morning, medley management. a and at the nasdaq, the medicines company. under armor and the nba teaming up as it will become the official sponsor of the combine. and a few other things, a global marketing partnership for a name that's done well. >> kevin plank doesn't stop. and footwear, foot locker, under armor, nike, all doing

incredibly well. kevin plank is an unstoppable force but mark parker is no slouch either. >> no. far from it. >> yeah. nike bored with him. i keep thinking that nike would do some sort of tie up with apple on the watch. it would be good. the fitness, you know, a connective fitness group from under armour grows 100,000 a day. it's one of the most impressive things i've seen. it reminds me of what coca-cola is trying to do. if you exercise more, you lose weight, but i think if you ate -- cut out fatty foods -- >> that helps. i've tended to notice what goes in really, it matters what goes in. consumption is important. >> yes. >> level of consumption. >> if you cut back what you put in, it does change the kwags. >> really? less in, more out? that does change the balance. >> spend more energy, put in less. >> what food, if you eat it

causes you to lose weight? it's an 8 calorie weight loss? celery. >> it was a week that media investors will soon not forget. viacom down. the loss of market over yaall. led by disney. a bit of a rebound on friday for some names. a bit of a follow through right now. we'll be watching closely. time warner regaining its foothold in the 80s at $81.57. >> that bounced back harder than the others. >> fox down. we mentioned value, they own a lot of fox. >> the movie, was apparently not fantastic. >> it's been challenged in the -- >> you're such a diplomat.

>> netflix is up. you mentioned the steeple call. i don't think that's a street high quite yet. >> this is in a new one for me. i've been watching companies based on a 2020 earnings. the analysts have been positive on the tesla 2020 forecast. this one today steve folds using a 202,480 million subs. you we're getting into it. >> 2024 is a ways away. >> in the -- >> did you see morgan stanley says in terms of u.s. ad revenue, facebook will outpace disney by 2016, youtube will take over viacom time warner by 2017. >> i was knocked off my chair last week when they said they've

shifted 25% of their ad budget online. they directly attribute growth to innovation and social media. they say they write a check to social media and that typically means facebook and google. not necessarily twitter. they have given them a great return on investment. if you're a media company, and you're listening to the ceo of clorox which is supposed to be a stay company and he's saying 30% and wouldn't mind putting more in social media? >> it's not as though they're -- the share is changing. last week there seemed to be more of a focus on this idea of cord cutting or a slimmer bundle of programming. people using streaming services. you're right.

advertising is also an important component and that's why viacom was down so sharply. the ad numbers were not good. ratings fall and there's a smaller audience and there may be suffering there. that's a key point. it's moving to other platforms. >> what can't you stream? what do you need immediately on viacom? what do you have to have right away? >> not jim stewart. not colbert. dora? sponge bob? >> i watch a lot of -- exempt for sports and that's why i think that bob iger felt a little aggrieved. and if there's anything you can't stream, it's espn. maybe they pay too much for some contracts but there's no doubt about the immediacy of espn. it doesn't lend itself to delayed viewing. >> right. >> as of today, only fox down

about a half% at $30. everybody else is up. including our parent company comcast. >> there was so much selling. you had bob iger come out and the next day it was hideous. and then there was a bounce back and i feel like that bounce is for real for disney. the other guys, i still question because of how much you can stream. you have to have come immediacy. you have to. >> in the meantime, we haven't talked much about fisher saying u.s. inflation low but that a large part of current inflation is temporary and that will stabilize at some point. says we're at a situation with nearly full employment but very low inflation. we see the long end of session highs. >> stanley fisher morphed into a giant hawk, and i didn't regard

these comments in boom berg as being that hawkish. stanley fisher knows the impact on the currency, and i think the subtle story here is if this dollar go gets much stronger, which it is slated to. despite what's going on in greece, you would have thought the dollar was up -- down against the euro. you simply cannot have a serious rally if the dollar keeps going higher. i thought fisher's comments were a nice break for the bulls but it's not enough. >> we had the small deal today that i mentioned. longer press release than that for precision cast parts. buying a company out of a group, $1.3 billion. shares of mallen carrot down about 2%. >> they bought at gar and the

numbers -- >> it was the jet -- >> and the numbers did not really -- >> there's been a lot of questioning about that. and mallinckrodt, but the questi generic business is bad. that acquisition had voided it far while but maybe this one can change their fortunes. >> you've been talking about oil going to 43 for a few weeks. we're essentially here. >> i think it breaks and people have to recognize that the commentary out of almost every single oil company is very bearish. it's hard to go against every single oil company, but these guys know something and we haven't had a saudis break. they do a bond deal before they break. and -- >> saudis, i know. they've done some -- >> they'd rather borrow money

than stop pumps. >> i know. and you have to keep an eye on their budget. >> spend a lot of money. >> they've take an lot of money. they're still very profitable but it was interesting they hit the public markets. >> i was surprised but i know this is the reason why oil is going lower. the saudis are pumping so much more than we need. the day rates for suez max ships are very high. a lot of people, a million a barrel, a good one. i was going over with this nat which is doing pretty well. there's so much oil everywhere and not a drop to be exported. >> is it time to buy some mlps? >> i think so. i think a lot of people felt the plains all american was em lamatic of all mlps. plains had a couple of things that indicated you need to spend more money on maintenance. that was a bad report and some

of it was maintenance. and specter energy, it's not mlp, it brought down to a 52-week low. kinder morgan, down. the pain in the mlp sector is also inflicted by the sellers. a lot of hedge funds like lever up, and gives shareholders a terrific investment that's better than treasuries and sometimes it backfires. >> yes, it does. >> dow is up 154. every component in the green. let's get to bob on the floor. >> reporter: it's a nice rally. it's a broad rally. four to one advancing the declining stocks. dow up 150 points. it's a broad rally across the board. defensive, offensive, industrials, techs, consumer discretionary. health care is doing well. financials are up. this is a nice start to the week overall. tech internet leaders, your big

four and apples and am dazons a goog go go googs and netflix up. aerospace is doing well. i think maybe a follow on from the precision cast parts up. doing is up, textron is up. good gains on the industrial group. europe is on the up side modestly but the main story is in mainland china. shanghai and shenzhen are up 5% but hong kong is down. what's happening is we had dismal economic numbers over the weekend. the mainland market, shanghai and shenzhen responds to rumors of any kind of stimulus, but hong kong responds to the economic news.

the main indicator of what demand would be like on a domestic level is at a low. exports were down 8.3%. imports were down 8%. that's down nine months in a row, imports. this is what they're concerned about. the news was not good. but as you noted, there's speculation there will be more stimulus coming. there was also a number of stories over the weekend that there might be additional sovereign health funds created to buy more shares in state-owned enterprises that the government already owns. you're talking about potentially multiple classes of government entities owning these stocks here. there were numerous stories about positions that the china state finance agency had mass positions in including railway companies. take a look at china railway construction. there was an article that the china state finance company had amassed a nearly 5% position in china railway. it was up almost 6 % largely on

the realization that the government is heavily involved in buying state-owned enterprises. it already means the government has large positions. in some cases maejjority positions. speaking of deflation. cis sysco. they noted food cost inflations were flat and deflation in dairy, produce, and seafood categories. no notable inflation in food over here in the united states. good point for them and there you see them up fractionally. they had a decent number. slight miss on numbers. right now the dow up 169 points. back to you. >> as we mentioned, oil below 44 today. jackie is here with us. >> reporter: good morning. overnight the low for oil prices, 43 .35.

we're negative right now. down by $0.32. at this point what the markets are focusing on is china. the export number not great. also what we're watching is gags prices. the lundberg survey saying we've fallen $0.11 in the last two weeks. 271 is the national average. you can the tell that the crude oil prices falling are having an impact on what consumers are paying at the pump and we're expected to see another drop toward the end of august. opec was out saying it's got to plans to hold an emergency meeting. it doesn't look like on an international scope we'll see a change in the supply in the near term. right now trading at 43.60. >> we'll come back to you later. when we return a preview of shake shack earnings out tonight. as bob said, the dow is up a

quick 167 points. don't go away.

take a look at the dow. every one of them in the green. even chevron, pfizer at the bottom but being led by boeing. >> i'll tell you, this cycle, the aircraft cycle had just -- people stopped believing in it and then bing go. >> buffett says believe. is that all it takes? i don't know if some of their shareholders will be full believers but management believed. didn't take them long. below the all time high and below the 52-week high. interesting to see an all cash deal. >> carl tweeted the amount of m&a, and almost one of the m&a deals, the sellers said you have to take out substantially where the stock was.

p precision cast would have been higher if not for gas. >> the that buffett halo, it helps. >> yeah. >> if you're a manager at one of these companies, and you can sell to him and make the case why it's a good price. he leaves you around. he gets to manage your company and you get to operate with long-term goals. >> they're not going to sue anyone for selling to buffett. well, probably someone. >> someone. i think there might be some opposition but it's hard to believe it'll amount to enough. >> steve miller. >> that steve miller. >> some people think i'm a joker. >> shake shack tonight is going to report earnings after the close of tradings. analysts expect quarterly profit of $0.03. journal today says valuations are at nosebleed levels.

it's missed badly the last couple of times. we're looking mid to low single digits. >> 13 stores and the comp no, your honors stories. >> this is a cult story. i love the burger so much i bought the stock and everybody says it's bound by how much you sell per unit, chipotle was the only one at a 52-week high. >> i'm sure this could be shared here. driving back last night from far parts of long island, i wish there was a shake shack on the way home. >> who doesn't? i tried to get one at every single hotel i stay at. i always go to the front and say you have to get a shake shack. >> you want to -- >> i want to put them in but it hasn't happened yet. i'm doing my best to make it happen. >> not yet. >> i want to break all the rules by being a journalist by demanding will you make a deal

for room service? this is all i want. if i'm in room service, i want one of his burgers. danny, you know, he's the inspiration. he's not the guy who runs it but they have to make deals with restaurants. wouldn't you prefer that to the hotel burger? >> yeah. i'm not eating burgers in hotel rooms often but i would have liked one last night on the highway. >> yeah? >> yeah. i'll go out of my way if there's one nearby. >> there's a mcdonald's. >> no. shake shack. >> i've been there. i got the bathroom cleaner. >> we'll get to stop trading with jim in a minute. dow is up 173 now. "squawk on the street" is back in a second. it took serena williams years to master the two handed backhand. but only one shot to master the chase mobile app.

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defending biojenn. sure enough they come out and say they have a survey that boys the ms drug is doing better. free port, fcx trying to mix the balance see. a billion at the market offering. that means they kind of lay on

it, but hope springs eternal in the copper, gold, and oil businesses. i mean, remember, they are an amall gum in everything going wrong in the commodities. i wish them luck but that nice guy thing is continue wall theme of mine. i think they could go into iron at any minute. if they go do, go into iron and iron -- call sun beam before you go into it. go into the iron where you push it. if have you ironed lately? >> you mean shirts? >> yes. >> they're itching to get into iron and rubber but they ought to just get into ironing. >> it's always hard to get this area. >> it is. i burned a shirt, too. but it was one of the sheep shirts i got at century 21.

which i love. >> what's on tonight? >> bio. bio. bio. radius has a drug that i think stops broken, it lowers the bamt -- amount of broken bones and then there's a new vac zone against cancer. >> a cancer vaccine? what? >> i know. they hope to develop it. >> wow. >> we got through a lot today. >> yes. we had to because this is august and there's more to do than i've ever seen and you just think that can't you just go garden g gardening? >> no. that's not your father's august. >> no. i'm power gardening now. speed gardening. it's ridiculous. >> jim, we'll see you continue. >> what does that mean? >> when we come back, tony

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good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen who is back. good to have you back. david faber at the new york stock exchange. markets up 173 points after being down seven straight. buffett's biggest deal ever. oil trying to hold on at 44. >> a new week, this is our road map for the next 60 minutes. berkshire hathaway buying precision cast parts. hear what warren buffett had to say about the deal. >> and oil sliding. find out if there's a bottom in sight. >> twitter bouncing back from lows today. we'll tell you how you should there b playing that stock of it lost a quarter of its dvalue. >> stocks kicking off on rally mode. joining us head of north america economics and the managing

director at wells fargo securities. you guys have an eye on the markets and the security. was that it, the correction last week, back higher for stocks? >> it feels like it today, but i don't know this we're entirely done. the economic outlook is far from certain. and we're going into a fed rate hike in a soft economy. i think we have more volatility through the month of august. >> do you share that kind of caution as you look at the bounceback today? >> i'm not an optimist but i think the bounceback is telling us that we're on a 3% growth path and they will be ready to move in september. those are the kinds of things we want in the median term. >> i think you have to add in m&a, whatever is happening in the markets, another $30 billion deal from hathaway.

buffett says stocks are going to be higher. are you afraid of an interest rate hike? >> i'm not, but i didn't want to let the cat out of the bag. that's a big part of the rebound was the big merger announcement and getting a big merger on a monday always helps a little bit. we're probably a little sold from a technical standpoint but the economy is a hard road. our third quarter gdp growth is coming in shy. we're going to have to get some help to get 2% growth. and the fed is raising interest rates because that's as good as the economy is going to get until something happens on the productivity end. >> the next test for the economy and market is retail sales. we'll get a slew of retail earnings, macy's, jcpennys,

koels. what's your sense on how it will play into the fed? >> i think the 2 to 3% means it should come in at a moderately strong pace but what will it take to change the view on what's going on and change its mind about september? i think it will take something that breaks the mosaic to the 3% growth and that's not likely to happen. >> on friday we hit this 200-day moving average and three times over the summer we managed to bounce substantially on that. are you suggesting this time around it may be more difficult? >> well, i think that we may test the notion. we've been doing that the last couple of years. you really have to wonder if we're going to get a more significant test at some point or another. and august and september are typically times where you get a lot of market volatility and a lot of people out on vacation. in years that commodity prices have come under stress, the

market has -- the stock market has tended to get tested a little bit, and i don't think we've seen the end of the slide on oil prices. i think it reflects a weak global economy and a lot of producers in the united states are under intense pressure to increase production and convert the oil to cash. they're going to have a harder time renewing their credit lines when they come due later this year. >> what's the smart thing to buy? if look at a buffett buying stocks like this, are we missing a trick here? so much of the headlines are dominated by what's happening with the likes of google and amazon. i mean, what should the focus be over the median term in let's say they're looking to invest five to ten years. >> i was going to say buft seems

to have his eye on the prize. he seems to be going for the hottest sector which is aerospace. that's hard to beat right now. boeing's orders are backed up for quite some time, and that's going to be a strong sector for some time to come. >> but in terms of stock market performance, it hasn't been. we're not talking about the cyclical rebound that many have amendmented for that sector so it's not done as well as it should. i wonder if that represents value or that you should think twice relative to areas like technology. >> i'm certain there's value but there's a long supply chain in there of companies that aren't the household names like a boeing, and really, this upgrade cycle in aerospace is just getting started. there's a lot of growth ahead of us there. we're probably going to see more on the defense end. that's one dkey sector.

i focus more on economy an investments. >> okay. william you said at the beginning, you chose your words carefully when you were talking about the interest rate rise. you said growth and interest rate rises which for the median term is what we want. what's the short term snesket. >> the short term effect of even going 100 pay sbasis points is nothing on the real economy. it worry about the financial markets. >> what happens to the stock market? let's say they move in september so there could be two interest rate rises by the end of the year. let's say they're good to their word. what would that do to the stock market? >> i think it will depend on how people change their asset allocation. risk is being financed at zero rates. if everyone corrects tomorrow,

they'll have a crunch in the gates of all the gate keepers out there. that's what i worry about. will volatility come with the rate increase. >> we've spoken a lot about what's happening in the china and the data was soft. a lot of economies around the world are in a fairly distressed state. we just got news that russia, the contraction, and gdp shrunk compared to a year earlier and the contraction the quarter before was 2 .2%. can we shrug that off? all these commodity producing countries are in -- what conclusion should we draw here? >> we can't shrug that off, but i think one conclusion is inflation is likely to remain

low for some time to come. that means the yield curve may flatten a little bit. we've seen that with the ten-yeten two-year going up and the ten-year coming down. this weakness in commodity prices, it hurts anybody that produces anything anywhere in the world, and that includes in the united states. mining has gotten hurt, agriculture is getting hurt and we're likely to see more pain. there are some implications on growth in the u.s., and they're largely negative from all the weakness around the world. we're also likely to see the dollar continue to strengthen. that's going to cause our trade deficit to widen. that's one of the reasons why our forecast is closer to 2% instead of the 2.5 to 3% growth. for now, thank you both for weighing in on the markets and on the economy. >> let's go focus on berkshire.

buying precision cast parts for $37.2 billion. it is one of the largest takeovers ever by warren buffett, and he was on "squawk box" early this morning. becky joins us with what the man was saying. >> it is a big deal. it's hard to get your head around some of the numbers. but when buffett makes up his mind, he tends to act quickly. the first idea for this deal didn't come about until five weeks ago. precision cast parts isn't new to buffett. berkshire brings in cash through insurance operations and through otherubsidiaries. here's how buffett said he company up with the idea to buy the whole company. >> about five or so weeks ago

the ceo along with his cfo and ir person came by berkshire. they were seeing a number of shareholders, and they met with todd and then i dropped in on the visit in the last 15 minuteseminutes or so. i was impressed by him and the company. shortly thereafter i asked todd to give them a call to see if they would be offended if we made a bid, and they indicate they were particularly receptive but they also indicated that they would listen. >> listen they did. precision cast parts ceo dropped in to visit buffett at a conference. and sun valley was about a month ago. that's how quickly the whole deal came together. it's a big deal. over $37 billion.

buffett likes to keep 20 to $30 billion available at all times. he won't take on any other big deals this year. >> we'll probably divide a few small things in the next few months. we're in negotiations on a couple, but in terms of a deal of similar size, this pretty much takes us out. what we will probably do on this one is we'll probably borrow about 10 billion and use about 23 billion of our cash on that order. we'll be left with over 40 billion of cash when we get all through. >> this deal makes sense. this company has a protective mote built around it. it is difficult to get into the airline parts company. they want tested parts they know will work. 70% of the company's revenue comes from the aviation business and jim cramer pointed out, they

they there's a long runway for airline purchases. a couple quick points. we talked to him about ibm. if you take a look at the shares, they're trading around $145. he says he's not concerned about the idea that ibm trading below the zok that he paid. he hinted that he may have been buying more stock. he said to check the sec filings to check activities in the next couple of days. we also got the chance to ask him about mondelez. that's an idea that they thought maybe kraft heinz would be interested in buying hond leez. buffett says they'll have their hands full with the kraft heinz business for a while. >> mondelez, i thought it was interesting. obviously this is going to take

time to get the kraft deal and the heinz deal together. what's your thinking about buffett on food deals? there's some weak nness in campbell's soups and others when it comes to the transformation of food stocks. >> the first point on that, how involved is he? i think not at all. i think he knows what's happening but i don't think he's involved on a day today basis in terms of what's to come. he mentioned if you look at some of the food companies and he mentioned mondelez and campbell's soup. he pointed out they've been trading at higher levels. he thinks that's because investors are looking at it thinking they could eventually get the type of margins that they've accomplished at kraft heinz. he thinks it's a long shot.

>> and kraft heinz will be reporting the first earnings today. that will be interesting. >> when we come back, crude oil falling almost 30% in the last two months. gas down a whopping $0.11 in two weeks. is that a good or bad thing for the economy? we'll talk about that when "squawk on the street" continues in a moment. another look at u.s. markets up 1% across the board with some pretty good breadth. we're back in just a moment.

>> take a look another crude this morning. back above $44. present slightly higher after a six-month low this morning. joining us a global head of fundamental commodity research. good morning to you. looking at your note from late last week. it's not just about chinese demand, chinese power generation, chinese power grid investment. you're looking at the intersection of the commodity with the currency. the k you explain what that means to the downside? >> absolutely. we do believe investors may be underestimating this relationship a little bit. we look at all the microdata and it has come out poor and that has partly been a contributor to lower oil prices in recent weeks but really what i think the market should be getting more concerned about is the fact that

policy makers in china are stimulating more and more via lower interest rates and alternative measures. at the same time, a lot of capital outflows in china and they're trying to really square the circle, so to speak, by keeping the exchange rate fixed to the dollar, and that, in our view isn't going to work going forward. the chinese currency is extremely high. china has lost a lot of competitiveness on the foreign exchange side. and in our view, given all the policy stimulus coming into the market, they'll have to continue, or they'll have to eventually devalue the currency and the question is how of a devaluation is it? is it minor or a lot larger that could really rattle cyclical

demand for commodity markets. >> you estimate it at 10% could spell 6% downside for crude and 5% on brent to the downside. i mean, do we have any inkling as to the timing of this if it were to be? >> we think about probably taking until settlement or october, past when the imf is looking at the inclusion of the chinese currency into the special drawing rights system. but we do believe this is going to come at some point in the third, fourth quarter, and the chinese will have to start letting the currency go, because the imbalances are just too big. if you look at the chinese currency since 2007 and also in the more recent period, it is, by far, the best performing currency. for oil that has in a way been good news and it's really helped

to support oil demand in china because the chinese were able to still afford a lot more oil compared to other countries outside the dollar world, but increasing need, that will be a lot more difficult to maintain. >> i'm so glad you brought up this point. i think not enough folks are talking about the fact the imf is considering this with china. as it relates to oil, how do you tie this into the other factors that are going to the china demand story and what's not happening at opec and the fact that the u.s. is a swing producer now? >> yeah. in the oil market, it's been a confluence of bad macro and microaffects that's affected the prices. we have an iran deal on the table. it's a question of when not if

they're going to massively increase their production once the sanctions are inked. it will bring a lot of oil into an oversupplied market. on top of that, like you mentioned, other opec countries are also increasing production. saudi is going for record production. saudi rig counts, and drilling activity is at a record high. and iraq's production is at a record. the only, if you want, sort of good news, we have offsetting some of this lack of bad news is what's happening to u.s. shale producers. we believe u.s. shale producers are going to have a hard time getting access to capital, refinancing, they're underhedged going into next year and we think we are at the turn of quite a big roleover in u.s. shale production. >> it's a good addition to the conversation. i'm sure we'll talk again soon.

thank you. >> when it comes to hedge funds, july was a perfect example of be careful who you invest with. kate kelly has more on the winners and losers and a divergent set of. >> absolutely. major players in the stock market were killing it where the s&p is up only a couple of percentage point and the average hedge fund is flat according to tmr. citadel was one that's doing well. as a momentum type shop, the holdings change frequently and it's hard to know what they're in at any given time. a snap shop of recent long filings suggest that amazon and dollar general help drive returns pushing it up 3% for the month of july and 14% overall for the year through july. pushing square, also doing

great. helped in part by its new position in mondelez and finishing the month up 10% overall. interestingly.72, the a great year overall, up 11% at last check. other funds having a rough doe. david ian horn green light capital being brought down. at least in part it seems on long positions in energy like consul and sun edison which has taken a beating in recent days. also worth a mention, the commodity shop lost nearly 17% in july bringing the year to date losses to 15%. they remain bullish saying including in his early august letter that low oil prices would

be the cure for low oil prices. >> a bullish take this weekend. >> time to buy in. >> maybe or maybe more pain. big debate. >> coming up, twitter bouncing back from its lows today but the stock still down about 45 %. just in the last four months. can twitter shares fully recover from here? 28.10 right now. we'll be back to does it.

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most of them targeting turkish security forces. two of these attacks here in istanbul. one was a bomb attack on a police station that was followed on with an ambush when police officers started to investigate the bomb scene and then there were shots fired in front of the u.s. consulate, and the u.s. consulate is right on the edge of istanbul. it's like a fortrez on a hill. difficult to approach but at least one woman approached the consulate, had a bag, dropped it, took out a weapon. we've been told by a witness it was a pistol. some are saying it was a long weapon like a rifle. then she was confronted by consulate guards, by local police. there was an exchange of fire, and that woman was injured. she's been arrested and is being treated in a hospital, and police are looking far possible second accomplice, possibly another woman, although there

are conflicting reports as to whether there really was a second attacker and if that second attacker, if it existed was a woman. a lot of violence across turkey today and people are worried this could be a start of a dangerous period for this country. >> thanks for bringing us the report, richard. straight ahead, we're keeping an eye on the rock market rally. kicking off the week with a bang. the dow is up 188. most industry groups in the green. industrial and energy in the lead. we'll talk more about today's market action right after the break.

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here's your news update at this hour. violence overnight in fergson missouri that came during a protest marking the anniversary of the shooting of michael brown. officers exchanged gunfire with a man and critically injured him. it happened shortly after an incident. the shots has protesters and reporters running for recovery. a group claiming responsibility for an attack on the u.s. consulate in istanbul. a woman fired shots there. they say the assay lent was captured with injuries. it comes on a day of heavy violence. a development in the search

for flight 370. they're trying to determine if new debris found came from the airliner. and cocaine seizures of latin america's coast soorg. more than 119,000 pounds of cocaine have been seized. that's more than the total amount in 2012, 2013 and 2014 combined. that's all for this hour. for now, back to you. let's get back to the markets at this hour. a pretty heavy rally on our hands. 174 is how much the dow is up. we are joined onset by gordan. the chatter, the berkshire

hathaway, the biggest deal ever or is it just a comeback? >> it's interesting. i'm not sure what the catalyst was. a sneaky rally today outperforming europe but china was the story when we came in this morning. the deal today is an important one. it's been the position of a lot of folks down here that the one thing that's been missing has been the big deals. a lot of activity in terms of mega mergers and just the calendar overall. it hasn't been light, but it hasn't been sort of overblown here. so a good sign for us here today coming into the week. >> where are we now? more than a trillion dollars in deals? >> we're at 1.3 trillion. that's 51% from this period last year. where would we be if m&a wasn't doing what it was. >> private equity is one thing. if you're talking private equity, that's outside the market. because when you're talking

about the deals that these kinds of things, these are the ones that generate enthusiasm and get the small investor, the middle investor. right now the hedge funds are being trouble because the space is sort of crowded. it's been a sloppy summer for many of them. >> do you feel like most people are nervous and depressed going into the second half? i'm serious, clients. >> depressed? >> yes. >> nervous and depressed. you mean are they getting involved with things like funeral services and distillers? >> there's a spectrum of emotion there, yeah. >> every year has a different personality. if you go back ten or fifteen years, it seemed the rallies were happening later in the year. for the last five years there was a lot of activity in the first quarter. this year not much of anything so far. the question becomes is there money coming to the market later in the year. i'd like to believe there's some optimism that that will happen. but we're talking about a move

with the fed. most likely happening in september. we'll get some fed speak this week in a relatively light calendar in terms of financial news. >> do you see something to chai chase? >> not yet. one of the things we've been noticing is as folks have been patiently getting stocks to come to them, is that there hasn't been a real good catalyst for guys to get aggressive, whether it's the fact that it's august and vacation, whether the markets -- >> why would you -- this is a question. why would you get aggressive ahead of an unknown fed? one or two rate rises? until you have clarity on this, surely the rest of the market will remain nervous, or not? >> i agree but i don't think it's nervousness. i'm sorry. it's more that let's just be patient. we can wait and get what we want. i don't see this thing turning around. i think the buyers are being patient, and they're letting the

stocks come to them. the patient investor at the end of the day, always does better and that's what we're seeing here. >> isn't the fed rate hike priced in? isn't china the bigger uncertainty here with movers like energy and industrial in the lead? >> of course, china's market is something that everybody is focusing on, also in terms of what it means in terms oh commodity and commodity prices and will they start to turn around? you see people starting to think this is an opportunity to get into the commodity market. a lot of moving parts but buyers being patient. stocks coming to them. no real reason for guys to get aggressive ahead of any of the different things we're seeing. >> at lot of moving parts. thank you. >> twitter shares turning around last week's declines over the last two weeks. today announcing a multi-year

partnership contract with the nfl. this amid the search for a ceo. let's go to mark at citi. >> good morning. >> what do you think is more positive for the stock? is fact they've done the deal with the nfl or the fact that jack dorsey is making a song and dance about the fact that he bought stock after a lot of selling from insiders over recent quarters? >> well, content is key to any services, and the nfl is popular content to the mass market. i think the nfl deal is a great deal for twitter. clearly the cfo ease relationships at the nfl as well as the scale of the twitter audience is helping that deal come around. i think the endorsements from the insiders that are buying stock, not just dorsey but peter and others is a good sign, you

you have to take it into the broader perspective. they are selling millions of shares of stock in the last couple of quarters. the amount of stock that these insiders have bought in the recent weeks pales in the comparison that they've sold in the last few months, and so i'm not reading too much into that, frankly. >> what do you make of the piece of news that jack dorsey would resign as a board member moving forward once there's a new ceo? i mean, you have three former ceos on the booshard and there' suggestion that there's an impediment to some wanting to take the job. it makes me wonder if they're not looking for an insider to take it or dorsey, maybe they're looking further afield? >> i think it's too hard to read into these but the board probably does need to be diversified and bring in some

new thought leadership into the company. if you think about the role of the ceo and the chairman, i think having those be independent roles might play well here in twitter in particular given that the current chairman is a founder of the company. bringing someone in with an independent perspective as chairman could help, particularly if they choose someone like dorsey or bain or anyone that has an insider view of the company. i think having an impartial chairman might be a smart move. wouldn't read too much into that. a new chairman could come from an externlt candidate as ceo or an internal candidate. >> in the meantime, do you look at the news flow at the moment and think this is getting bitter and negative, maybe it's overdone? news week over the weekend compared twitter to cb radio in the 70s. the whole debate that the gop debate, we had 24 million people

on watching it clear that facebook according to consensus won there in coverage when twitter should have done so. do you think people are ignoring the type of developments that there are at the company and not periscope or project lightning, the new simplification of what they do? >> if you look at the current events that are happening right now, clearly platforms like facebook are going to win in almost any instance against twitter. it's far larger. the audience is four or five times larger. the engagement of the audience is greater. if you're comparing twitter to facebook today, facebook is going to win every time. i think twitter has an opportunity to expand from here, but it needs new leadership. it needs improvement of the product. and it needs someone that can take something like periscope that it's really in its infancy and be a product visionary that can see how periscope added to

twitter can become something maybe not as big as facebook but something that, you know, is broadly appealed to the broader mass market, and that's what this company needs. >> so bottom line it for us, market. what is the call? what's the price target? >> we think twitter if you look at the fundamentals right here, could be a sideways for a while. the valuation support right around $20 billion is probably there based on m&a value. but in order for the stock to materially move higher, we need better fundamentals. they are the result of an improved product which is only going to happen with a new visionary at the helm. i think you're looking at a said wo -- sideways stock for a while. and we would say to look at facebook. >> thank you. >> thank you. >> you mentioned the presidential debate. let's go to the race for 2016. asking what have we learned from the presidential hopefuls about

social security? well john har wood is live with the details on that angle of the story. what have we heard about it? >> reporter: we have two different trends buffing social security. one is the fact that we have a massive baby boonl retirement. after 2034, social security can only pay 34% of promised benefit. the other is stagnating wages and the decline of pension. people where are concerned about debt want to trim benefits to try to make up the gap and people more concerned about incomes don't want to touch benefits. check out this exchange in the fox news gop debate last week. >> we'd raise the retirement two years and phase it in over 25 years. that means we'd raise it one month a year for 25 years when we're all living longer and living better lives.

secondly, we would means test social security for those who are making over $200,000 a year in retirement income and who have four to five million dollars in electric kid assets save. they don't need the social security check. >> nobody on this country is on in country because they made the decision that they wanted to trust their money with the government. the government took it whether they wanted them to or not and if a person goes to 65, they're going to spend 51 years with the government reaching into their pocket at every paycheck. >> now, while that debate was going on, bernie sanders, the socialist running for the democrat presidential nomination tweeted out that if you simply raise the tax on the capital on taxable income under social security, the program would be solvent for decades and sanders doesn't want to stop with that, he also thinks wen fits should be raised at the bottom end and he has paul ryan, he has talked

about that. that just guarantees this that this social security on the benefits and the tax side is a debate in the future. >> thank you very much for the update on social security. john in washington. up next, the latest trend in ipos. health and fitness. do these companies really have what it takes for long term success? find out when "squawk on the street" comes right back. not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business.

when it comes to the stock market? find out why a few tough months ahead could be ahead. that's on cnbc.com/trading-nation. more "squawk on the street" coming right up.

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>> argentina was the seventh largest economy coming out of world war ii. it's kind of a sad path of a once very, very impactful country economically. self-inflicted wounds. i think greece should have pulled out after the first restructuring a few years ago. i think they should have pulled out now. i think what they've done to themselves is a tragedy. i don't think the fixes to the financial system have actually made the financial system of large financial institutions sounder than they were in 2006 and '07. and so everything is now riding on government policy. >> that was part of david faber's conversation with paul singer at last month's

delivering alpha conference. and to see the full video on a variety of comments, visit deliveringalpha.com. the dow now up 193. we'll be right back on "squawk on the street."

health and fitness issues amongst recent ipos, bob pisani has more. >> reporter: i've noticed that it's marketing health and fitness products largely to millennials. we saw this last week with amplifier which is essentially a popcorn company. we also saw it with planet fitness. interestingly there's going to be a wrath of these ipos that are marketing to health and fitness people who are interested in sort of latching on to the newest products. let me give you a couple of examples coming in the next couple of months. you heard about fitbit coming but it has a big rival that will be likely ipo-ing and that's jawbone. in gyms there's a whole bunch of new gym concepts around. we did see planet fitness go last week that did fairly well although it was disappointing on its opening day.

soul cycle will be coming in the very beginning of september. this has an even more fanatic following and it's around cycling and intense cycling workouts around the personalities of the people that are performing in the class. a lot of anticipation about that. natural consumer products are strong. we saw blue buffalo, natural pet foods doing well recently. honest is coming. that's jessica alba's nontoxic baby and cleaning products company. a lot of interest in that as well. packaged foods have been big. amplify in the popcorn area but atkins nutritionals in the next couple of months as well. and then there's better health care concepts. teledoc. the hip eyeglass company warby parker. on the perception that people felt it was better for you, bfy product, that company did fair priced at $18 now $16.

the problem, simon, a lot of competition out there, frito-lay, for example, a big company is a major competitor that's also entering the popcorn space. back to you. >> thank you very much, mr. pisani. back to one of our top headlines today. that deal by warren buffett's berkshire hathaway down about $37 billion, equates to $235 a share. and it is all cash. what's interesting is when you look at a chart of precision castparts, you note that $235 in cash is not the 52-week high for the stock. yeah, there you go. thank you. it's not near the all-time high or at least the recent high over the last couple of years of $270. and so some shareholders, in fact, one of the top ten shareholders that i have heard from this morning, saying we don't get it. we don't understand why the company would be willing to sell at this price given, we believe, at least, that they are

leveraging production and accelerated orders among the aerospace industry, that they are given an opportunity to do more deals in their own sector and perhaps add value that way, and that with oil and gas to press right now, why not wait? it will come back and perhaps so will that part of the company's portfolio. so the question, will there be more than one top ten shareholder that says, uh-uh, we don't get it. we understand why mr. buffett would want to buy the company at this point. the deal was done as are many berkshire deals done very quickly. is it management's best interest? probably. you get to be part of berkshire hathaway, run the company the way you want to. mr. buffett famously doesn't get himself involved. a quick sampling of research notes this morning to get a sense of the sentiment. ubs says the deal is largely on berkshire's terms, the offer valuation appears to be modest on the basis of premiums, recent

aerospace acquisitions 11 times earnings. the midpoint they're not there. citi says 18 to 19 times pcp fiscal year guidance, but only 15 or 16 times our fiscal year, 17 or 18 estimates. 11.7 the last 12 months valuation. sorry we didn't have that for you. we're out of graphics. we're out of graphs. >> so much to say about it. >> point being, mr. buffett can move quickly. there is no ability to shop itself and it's unclear whether they did that prior to the deal. >> that's one hell of a read.

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