that's my mom's birthday. happy birthday. she would have been 93. and national dog day. national dog appreciation day. it is 2015 and squawk box begins right now. ♪ good morning and become to squawk box here on cnbc. i'm andrew ross sorkin with joe and michelle. if this week's trading left you nauseous it's for good reason. the dow traveling another 1600 points back and forth during yesterday's wild session and if you add the last two sessions together the blue chip index has now moved 6500 points all in. dropping for a 6th consecutive day and this marks the first six day losing streak for the s&p and nasdaq in three entire years

from the record highs. the dow is now down nearly 15%. the s&p is off 12.5%. check out these staggering figures. s&p 500 companies lost another $900 million in market cap yesterday. they lost nearly $2 trillion in market cap over the last seven sessio sessions. you see rich people lost $185 billion recently. this is good. this income inequality thing. >> taking care of it. >> this is not -- >> i also like the -- now we're going to do this every day where we can close on change but if that's not interesting enough -- >> it's like a fit bit for the market. >> it's not even the range anymore. it's brand new. >> we're talking about the full ride. >> we moved 100,000 points this week. it means nothing.

>> we totalled it up for you. >> let's tell you where the u.s. futures are after what was a wild yesterday as things got pretty bad late in the day. we'll try to get an explanation from our guests throughout the morning but the dow jones does look like it will oip up now 275 points up. s&p 500 would open up higher as well. 33 points higher and the nasdaq opening up by 66 points higher. >> 280 is not what it is. >> now i'm seeing 28. it's like money when i was a kid. now money -- do you tip people ever. >> come on. oh my god. >> but if you give someone a dollar now in a hotel. >> it's not enough. >> it's not enough. it's ten times. it is now -- in my life it's gone to 10 or 20 times what used to be -- >> 20% at a restaurant.

20% at a cap. >> airport they do your cabs. do you still use pocket change? >> not pocket change. dollars. >> i meant change. >> here's a quarter for you sonny. >> to your point, a 10 or a 20. >> a couple of bucks a bag. >> i saw 280 today and i go oh, 280. so it's starting to work. these higher level of the dow when they go down you're starting to seem less significa significant. >> it's been a week. bernie sanders, he has it on for sure. anyw anyway. >> china once again the big focus for the markets today. among the headlines, china's central bank pumping $21.8 billion into the financial system. the pboc into short-term

liquidity operations overnight. it came after they closed in the session. after the regular session overnight it was incredibly volatile. stocks hitting a low in the morning before surging 3% in the early afternoon back above the 3,000 mark but gains were lost quickly and the main shanghai composite finished lower. also stepping up efforts to curb speculation saying they will restrict trading and stock index futures. more from our colleagues in asia in a minute. did you see this list that our guest sent over of the 12 things china has done to prop up the stock market since it started falling. is this a lesson that you can't control everything. >> almost a 12 step program. >> but this wasn't hasn't worked. >> it hasn't worked. >> there's more steps to come. >> but all of these things, step 13rks -- 13 and don't they

realize that's what a market does. >> we have the opposite case in china, in their numbers because i saw shanghai close down like 30 points and i thought that's not bad and then i read it was down 30%. one and a quarter percent is 39 points now. >> it's like the 70s in the united states. >> got to keep score. >> a little bit of deal news amidst all the crazy in the. buying cameron for $66 a share. it's $14.8 billion transaction. it's about a 37% premium to the 20 day volume weighted average price and this is offering new opportunities to create the industries first complete drilling and production system so it's an energy bet and

consolidation at the same time that all of this -- this was widely predicted. very strong company with solid balance sheets would use this to kick off -- i don't know if you call this a weaker player but all of these guys were higher yesterday around midday. >> so this we're calling it how much? 15 billion but yesterday we. >> we're calling it $15 billion. >> it's a mixture of cash and stock it's about 47% premium. >> 568.4. so do the premium based on that. okay. let's check on the markets this morning and there are -- how many are there now? oil is always something that we need to check and it's always

intere interesting it's still below $40 barrel. a couple of years ago you'd think at least back to 4 but it's not. it's at $2. the dollar interestingly, the strength has been the problem yet we saw the euro go back and then gold, started getting a little excited that maybe this would be one of the safe havens. our global cnbc team has the market story covered this morning. seema mody is standing by in london but let's start with sri in singapore. you gave us a lot of color yesterday about what china did

with some of the moves but when it was all said and done, at least over here it didn't translate into higher stock prices. >> that's right. it acted as something of a circuit breaker i would say but the sense in the market was this was too little, too late. it was a good start arguably but more needs to be done and the pboc does have policy scope and the ammunition so there is room for more easing. it was a curious reaction in the regional markets because they were well received in some quarters. the nikkei, japanese equities were a case and point as well. but the easing measures didn't really benefit the market that needed them the most and that was the shanghai composite. it was down, today, for the fifth straight session at fresh 8 month lows. we penetrated the 3,000 handle

closing 1.3% lower and we saw extreme volatility and extreme swings, 3% in either direction. yes in the last hour or two we heard the pboc say they will commit to pumping in an additional 140 billion yuan via short-term liquidity operations into the markets but let's not forget we have seen capital outflows and that has caused something of a liquidity squeeze. so they're trying to address it by these recent measures. more so than anything else. they could stabilize the market tomorrow but only at the margins. that's where we stand in a yach asia. let me hand it over to seema mody in london. >> european investors keeping a close eye on china.

the active roll they're taking to prop up the economy unveiling the financial instruments hasn't restored confidence today. some saying this just tells us how dire the situation is in china. it's the fear weighing on stocks today. we're down by 1 to 2% in europe. in germany the xetra dax down 1.3%. germany has the highest exposure to china and makes 10.5% of the sales in the country. the xetra dax is in bear market territory trading down by around 20% from the recent highs hit in april. i want to talk about one specific stock that is getting hit here in europe and that's transocean down about 10%. this after the company said it is seeking shareholder approval to cancel it's 3rd and 4th quarter dividends as it deals with a prolonged slump in oil prices. here's one stock down about 9.4% in today's trade. joe, back to you. >> okay.

seema, thank you. >> 600 plus point reversal of fortune. late october of 2008. that happened during the depths of the financial crisis. we're going to start the day solidly in the green but is this another head fake and should investors prepare for another bumpy day of trading. joining us for more on where the market may be heading, charles parker and bill snead capital management ceo and cio. good morning to both of you. you're hear at the table so i'll start with you. can you explain what you think happened in the last hour of the day yesterday? >> right, good morning, andrew. thanks for having me. what i we saw yesterday was concern about how asia would respond, not just china but other capital markets in asia of both emerging market economies and developed markets to the

rate reduction by the pboc announced yesterday morning and the fear here by investors. is there going to be contagion to those markets. we didn't see the fear last night in those markets but that was a concern. we saw on our desk volume accelerate on the street in the last hour and we could easily see this. >> you think that was people trying to get out ahead of whatever was going to happen in china because peel didn't know. >> step back going into early august, hedge funds, large investors were getting offensive but their net exposures were too large given what unfolded and they had become increasingly cautious ahead of events that could cause pain. >> you look at the markets how they're setting you today and obviously you look at today and how it was set up yesterday and the head fake question becomes the issue. do we end the day positively?

>> what this all reminds me of is -- and i know it's not in the extremities of what happened in the 87 crash but the friday before the 87 crash and the monday was a huge drop. 21% in one day. the next three or four weeks the swings were 5 to 10% of the market in those four or five or six following weeks and it just scared the living daylights out of all of us at the time but the reality was if you bought things the market was substantially higher in two years. >> what are you doing right now? what's the move? >> our move is to augment the approach that we have been take chg is the domestic economy at large and people are fleeing stocks under what i call the spook factor. the spooks are out and things are swinging and so they're trying to extrapolate more to

it. if a business has a wide moet, a strong balance sheet, high free cash flow, all of this stuff is going to make a bit of difference in two or three years and people will look back and scratch their head and say why was i so worried about comcast because of the oil market. lower oil prices. 87 million millennials, it all spells a bright future for the united states but the professionals, those that asset allocate and those that pick stocks it's been a long time since they scared us. >> andrew wants to know if it's going to be up or down. is it going to be up or down at the end of the day? >> we don't even have the first clue even where it will be 90 days from now. >> we just saw this big deal.

that's a substantial deal in the midst of what seems like, i don't know if we want to call it a market crisis but something is clearly amiss. is that something you look at and you think that's being done by strength? there's a positivity you look at or do you say actually this is being done because the oil markets are as tough as they are and this is a defensive deal? >> it's a blend of both. m&a throughout the entire year has been dominated not by financial spontaneous source making acquisitions but it's by strategic players making acquisitions. many times they're creative in nature and that's why the purchaser stock price ends up going up so this is a symptom of company executives looking beyond the near term volatility toward the long-term and making acquisition. >> you listed last night 12

steps the chinese government has taken since the sell off started a few months ago. add two more this morning. >> right. >> clearly they don't have control. >> right. >> what astounds me is that american corporations and investors seemed to think the chinese government would always have enormous control. they can do all of these things. they can step in and tinker and is everybody finally learning and the chinese government as well that you can't possibly micromanage this the way they are? if they want to be in a market economy they have to be in a market economy? >> it's interesting. they remain and probably will remain a planned economy. they are trying to expand and grow at a controlled pace and is supply driven as opposed to demand driven fashion. unfortunately they are realizing the dangers of too much debt on the national basis where debt to

gdp. >> what they pushed for and created and incentivized. >> shadow banking system and margin debt which is off over 40% since june. >> the united states went from a back water agriculture society in 1800 to the largest economy in the world at 1900. we had 15 recessions, three recessions, a couple of all out panics and all along, the thing that doesn't pass the smell test, if you're going to do capital i feel you have to agree to the cleansings. cleansings are the recessions in depressions. the longer you attempt to postpone the cleansing t worse the cleansing was. look at what happened to us. we got attacked on 911.

we were going through a recession caused by the break in the tech bubble and instead of letting the cleansing process take place, we couldn't allow our foe to see us have an extended period of economic difficulty so we offered 0 interest on car loans and did everything we could and actually did cleanse in '07 through '09. it was probably four times the magnitude of the difficulty. >> great point bill. that's an excellent point in history to remind us of the situation. >> charles, bill, thank you. >> jim grant made that point the other day. what is capitalism without failure. >> exactly. >> what is survival? you don't want evolutionary economics. but what is survival of the fittest is everybody lives and everybody wins? how do you select for a behavior that's there to reward? it's impossible to do it. >> that collectively makes society better as you move forward. >> yeah. >> both of you are city

dwellers. >> i love it. >> so the national dog day. >> i wish i had a dog. >> you don't have a dog. >> do you have a fish? >> i have a son who is allergic to dogs. >> i think every day about wanting a dog. >> you have rats, i guess. >> will it be a problem -- i think i need to at least show a picture of my two dogs. it used to be three. i won't show the one that's passed. >> are you going to do it now or later? >> it's a tease. >> bingo. >> stay tuned for pictures of his dog. >> no dog. >> no dogs but my son is a dog trainer. >> no kidding. >> really? that's cool. >> so he's down with national dog appreciation day. >> it's trending huge, national dog at a.

19.7. >> are you on firefox? >> i am on firefox. >> he created fire box? >> yeah, it's amazing. >> anyway, coming up, charting the course. we'll ask a market technician for guidance next. first though as we head to break, here's a look back at this state in history.

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the s&p riding a 6 day losing streak into today's session. our next guest says that the charts tell him we're not out of the woods yet. here with a technical take on where the markets are heading. chief technical equity strategist at bank of america merrill lynch global research. we had a lot of fundamental analysts in and i give them all kinds of grief about the way they look in the rear-view mirror and they never consider things that might effect the way an individual stock moves but then i kid around with technical analysts move because a flag means it's going up or down and a support level either holds or done hold but neither are

perfect what are you using technically to try to disearn what's going on or what the future holds? >> great question joe. thanks for having me on. we're looking at secular trends and cyclical trends. it's multiyear. multibusiness cycle trends. we're trying to figure out where we are in that trend. we think we are in the early inning of the bull market. but what's going on right now for the first time in a long time looks like we can actually get a cyclical bear. we have seen divergences in indicators all throughout the range that occurred and all came to head last week for the price response for the first time in a long time. what's going on right now is we think that we can have a deeper correction and we think the market finds some stability

around 18 or 20. maybe can rally up to 1965. maybe 2040, 2050 but we'll be retesting the lows we think. >> retesting the 1820 lows. >> and maybe lower. >> what does that represent on the high. >> it's about 15% for the high. >> but you said a cyclical bear so you're thinking we could do 20. >> we could. if you take that from the high it's about 1700. what we're saying is you could retest the break out point. so a cyclical correction is actually not a bad thing from a longer term perspective. i think what investors aren't used to -- they're very comfortable buying two, four, six percent dip and quite frankly most of the calls i'm getting now are what do i buy. last october when we had the draw down everybody wanted to sell and the conditions were better so this environment is

much like 11, monday felt like the crash. the flash crash and it took three to four months for the markets to stabilize off of those levels. i think we got more time here. >> do you follow cramer? >> not much. i'm sorry. >> he's working at that hour. he's working at that hour. >> jim's recent thesis has been that when the market opens, and gets some strength, that a lot of smart people are using it to sell names they might eventually buy back lower and therefore don't necessarily look for an imminent move back to new highs at this point. that's what you said but i would say you're correct that most people have been conditioned to buy the dips down 2, 4, 6 or 8 because we haven't had a 10% in four years so the nonobvious thing to do is maybe when you get a good price for something maybe sell it and take a step back. >> sounds about right. >> you hate to say that and certainly people in the business

hate to say that that you're always long. interest rates are always going down. >> you have to time it perfectly and the question becomes you're going to sell now and you think you have two or three months to go? what is your base case for a true bottom. >> base case right now, retest, undercut, 1820, 1700. that would basically be a successful retest of a break out. now if you go down and retest the break out you're hooking at 1575. you had a new market in the s&p and came back at '82 and undercut it. if you have a decline of 10% or more there's been 93 of those since 1928 and on average it ends up being 19 and change. >> part of what makes it so painful is we ground along really tightly. we finally have an answer to that question.

we have been grinding around the same level for months and months and months. we'll break out to the upside or the down side. clearly to the down side. you look at the numbers, we keep talking about the correction year to date. we lost all of 2014 as well. if you put money to work january 1 of 2014 you're at zero. you got nothing after the big move we had last year. the dow is now down 5.5% from january 1 of 2014. the s&p is up only 1%. we could lose that in a nano second. the nasdaq is only up 8%. >> there's a stronger chance that we could see something more than 10. secular bulls. you can even get a 20% draw down on the secular bull. it's less likely. 13 october of the time you get it once you go down 10. >> does that signal recession? >> i don't know the answer to that. >> a lot of times when you get market bull packs like this it

can say that something bigger is going on. you know, something we don't know may be going on and that's the -- i don't know. >> the biggest problem that the whole fed is incredibly accommodated policy that's the biggest fear is we're fine, we're fine, we're fine and suddenly one comes out of nowhere and you're totally unprepared what is that? qe 4? >> diminishing returns to qe, probably. >> that didn't work last time. >> there you go. >> yeah. you know but what do you do here? right now you have to own the united states. em broke down. dollar is down but it's not out, you know and commodities are weaker. we had it set up in 1997 and u.s. out performed for another three or four years. em is still a weak pocket of the

world and should remain weak and basically that was the last time you went from a period where you had 4 or 5 or 6% declines that turned into 13 or 20% draw downs in 1997 and 1998. that's the same happening here i think. >> thank you. >> thank you very much. >> all right. coming up, china injecting 22 billion into it's economy. a live report next. first though check out how chinese internet stocks have performed this year. huge losses for alibaba. stay tuned. you're watching squawk box on cnbc. we're first in business worldwide. ♪ can a business have a mind?

a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive? good morning, welcome back

to squawk box. our global team of reporters has the china story covered. let's start with susan lee in hong kong. susan. >> good morning to you. no one expected china to get a huge lift today from last night's interest rate and rrr cut but what the markets were looking for was a stabilization that maybe things are not getting worse and at one point we saw asia markets here actually having their best day in ten months but then things fell back of course. hong kong followed china in the session. lot of volatility. selling off in the last hour after the asia pack closed. they're now being investigated for suspected rule violations. no idea in terms of what exactly that means but the important part is that volume came back today on shore in china. one of the most active days in recent weeks. and this is significant because it looks like players are getting back into the market. i want to show you what happened in japan. huge day. 5 billion in-turn over which is

double the usual amount and what's really encouraging across japan and taiwan and korea when i talk to brokers that cover the markets is we saw a lot of local buying coming back in and they're usual hi mean reversion traders. they go in when stock prices are down and they're hunting for bargain so seems like there might be backstop here and stability across asia pacific. on that note over to eunice in beijing. >> the chinese government continue to try to restore confidence in the stock market. the central bank injected 22 beside of liquidity into the banking system and this comes after we saw a revival of the heavier handed tactics to try to sure up prices. they're now restricting index futures trading. they also said in the words of the official state news agency that the government is going to purify the capital mashlths. the chinese police said they're going to step up efforts to

investigate illegal trading, insider trading and rumor mongering. so what we're seeing here is a continuation of a very inconsistent approach and one thing michelle i wanted to bring up and touch upon something that you had said earlier is there isn't a lot of transparency in how decisions are made here so with this approach it really suggests that the government entities involved and the central bank are not in alignment in how to address this issue and that uncertain approach is having a really negative effect on investor sentiment among regular investors. today on social media a lot of the people were talking about how the government has no control. the general tone is that people are feeling helpless and in one investors words the government has cut interest rates but what's the point.

>> expect government to have control are misinformed and don't understand how the market is supposed to work and in theory it's supposed to be market participants making the decisions and the belief that the chinese government was going to be able to control this thing from top to bottom. we're discovering it's a fallacy and it's interesting day by day to see every step they try to take here to sure things up and they're going to realize that in the end it's what market participants decide and every time you make it harder to trade you give people less incentive to get in the markets because they're not going to be able to get out. it becomes a self-fulfilling prophesy. >> exactly. tsa one of the things that is interesting here is that -- oh, go ahead. >> the delay from here to there. china is a far away place. these are pretty tough. great to see you. >> closer than ever. >> i know. it used to be like a six second delay. do you know what a six second

delay is? >> a long time. >> i was thinking in terms of the market price. >> coming up next, jp morgan's vice chairman of asia pacific. what she's telling clients about the market turmoil. but first as we head to break check out the dollar. you're watching cnbc and squawk box. first in business worldwide. car stronger across the board.

after this volatile session another big day shaping up on

wall street. it would open 314 points. s&p 500 looking to open about 40 points higher as well. but guess what guys, when he the same story yesterday and we ended the day in a very different place. we'll see how things shape up later. >> decline at the end. watching that. didn't want to watch that too closely. there was nothing -- people were keying off the policy stuff in china but they didn't really know what the chinese market was going to do so i can kind of understand what happened. >> the u.s. market had been way up before the chinese news. it actually barely moved on the chinese news, right? >> you thought we were decoupled completely. >> obviously not after yesterday but from the beginning you could see it started 315 and then 330 and 280 and there was no follow through and it looked like some

people were using it as an opportunity to get a better price the day before. >> if you think risk is much higher now than six months ago you're going to reallocate assets to a less risky portfolio in general. even if you think it's a buying opportunity. you have things to derisk, right? >> i don't see what is the actual fundamental ooecht that has increased the risk. >> the spill over of the emerging markets from china. you have a huge percentage of foreign, you know, u.s. companies with exposure to that part of the world. >> you throw into that the perception that our market was sort of on fed induced fumes. it was running on fumes to some extent. >> your theory might go away at some point. >> and the day is coming. they're still insisting 2015. they have to get on the board, right? kick the field goal. even if it's a 4th quarter and

you're down 40-0. kick the fieldgoal. just get on the board. it's three points. >> you know the political conspiracies throughout this by the way. did you read the ben white piece this morning? >> i did. >> raise interest rates. if it pulls the economy back. >> any type of recession. >> good for the republicans. >> you can spin it that it was sort of good based on the crisis and it's not a great place. there is a perception that things are not the way they used to be in this country right now, right? >> should we talk more china? >> yes, please. seems to be driving the china. >> vice chairwoman of asia pacific at jp morgan chase. great to see you. thanks for joining us over from hong kong. once again the chinese

government stepping in overnight with more liquidity measures, more moves to try to prevent, eunice yoon reported they're going to try to purify the markets. look i never thought the chinese government really had control over the chinese stock market but there seemed to be a lot of people that think that they could do something. what is your assessment of their policy measures. what they're going to do and whether it's going to be meaningful? >> good morning. so they did a 1-2 punch today. they cut interest rates and they also cut the bank reserve requirement ratio. they injected more liquidity into the banking system. i think all of these measures so far have been to offset the liquidity outflows due to the currency devaluations which occurred on august 11th of this year. so we're having a crisis of confidence in china now among the investors. so huge volatility just taking today as an example from peak to

trough. the market actually traded 8%. it was up early in the day but ended up down. we can help stabilize the economy first. no one can control the financial economy. if it begins to stabilize i think sometime down the road we could see a stabilization of financial markets. >> how long do you think that could take? >> well, this is going to take a number of months. before the financial market plunge we had actually begun to see some stabilization in a property market. prices were beginning to recover. consumer sentiment wasn't too bad but starting in august and july i think we're seeing a down trend again. so in a second half of this year we are going to see more easing measures. we're anticipating another move in the interest rates. remember china's real rates have actually moved up due to the

declining inflation. interest rates now 4.6%. still quite high by global standards. also remember the bank reserve requirement ratio is still very high. we still have about 4 trillion u.s. dollars locked up in bank reserves. so they could cut the reserve requirement ratio much more aggressively. the third point i want to make is basically fiscal measures. the government can start alotting more infrastructure programs to help prop up the real economy. so sometimes in the coming few months we really will see more policy measures coming from beijing which hopefully will help stabilize the real economy. >> to joe's question he was raising earlier which is when it comes to the united states and our economy and our stock mashlt market, how much of a connection do you think there is, with china being a walled capital account, should we not be so

worried about it? >> there's huge connections between the united states and chi china. bilateral relationships have been very strong but global markets are so interlinked. you cannot separate the u.s. markets and european market with the chinese market. if you look back on the recent months china has become the epicenter of market volatility. this is different than 20 years ago during '97 and '98, china held the currency very strong against the u.s. dollar but back then the chinese economy was much smaller compared to what it is today. so everything that happens in china has global ramifications and vice versa. everything that happens in the united states is felt across the ocean in hong kong china the very next day. so global markets are very much interlinked. so we're in this global route right now and we can anticipate a lot more volatility in the

days to come. >> we're certainly feeling it. thank you for joining us from hong kong. >> you went with good evening because it's morning here. >> it's 6:00 in the evening. >> we don't try. >> how you doing? >> so this dog thing, i'm getting indated. my twitter thing -- >> people want to see the dogs. >> no, they're just sending pictures of their own dogs because it's dog appreciation day and 25,000 and every time i don't look there's another 50 pictures. it is trending. >> jealous. >> as i already extended a wish to call.

welcome back to "squawk box" this morning. many say financials should be a bright spot but dick cautions. good morning. watching these stocks, monday, jpmorgan down 21%. people thought that was a great discount. just reading some of the things you've been talking about, it seems to me you're telling people to stay on the sidelines. >> yeah. i don't know where the money's going to come from in order to push stock values higher. in other words, if you check, let's say, three key sources,

one, you know, 20% of the u.s. money supply is locked up in the fed and can't be used to bolster stock prices. if you take a look at traditional sources like large investor banks and traditional banks, there's a voekle rule. places like money market mutual funds no longer have protection. money has been pouring out of traditional mutual funds. high-frequency traders and etfs tend to be trend runners. they're not going to go against the direction of the market. they're going to go with the market. looking at the structural side of the market, i don't know where it comes from. the thing that bothers me most is declines in currency values. all the world believes capitalism is dead and central banks run the world. >> yep. >> so, the central banks go out and print money like crazy.

what happens when they do that? the value of their currencies go down. if you think about the buying power, the euro is down 36% from its high, right? i'm sorry, the yen is down 36% from its high. the euro is down 24%. in the last 12 months alone, you saw a 19% decline in the canadian dollar. 24% decline in the mexican peso. where does the money come from? >> dick, this sounds like a sell signal for the market. you're not even talking about the banks here. this is an overall sentiment. >> you're exactly right. unless someone can point to a huge pool of funds which is ready to go to buy common stocks, how are bank stocks going to go up? how are any stocks going to go up? my thought at the present time, until you see a clear trend in terms of money coming into money stockings, i wouldn't buy them. >> would you hold or sell, given this thesis?

>> i would prefer to try to hedge positions. in other words, i think what people should be doing is hedging their positions because we don't know whether money's going to pour in -- >> given this scenario you just laid out, among the banks, who's the most exposed to whatever crisis you think we're in the midst of? >> well, you know, obviously goldman sachs and jp -- i'm sorry, morgan stanley are because they're pewly, if you will, associated with the market as opposed to traditional lending, deposit gathering, et cetera. so the more -- and then there's all these small advisory firms, you know, that are at big risk. then you've got companies like northern trust, which is again also at risk. those are the companies at biggest risks. >> thank you for your perspective this morning. it's an interesting one. we have people coming in on all sides this morning. thank you. talk to you soon. coming up, the dow set for 300-point gain at the open. we'll get you ready for the bell when "squawk box" comes right back.

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market alert -- u.s. futures rising after yesterday's head fake rally. experts from oppenheimer and gamco tell us where markets go from here. china's rate cuts couldn't prevent losses overnight but after the close, china announcing $ 2 billion liquidity investment to bolster their economy, or try to. we'll ask robert altman if they can stop the bleeding. we've had one big deal in

the oil sector this morning. now a veteran investor says energy m&a is about to break wide open. the second hour of "squawk box" begins right now. ♪ burning through the sky leave from the beating heart of business, new york city. this is "squawk box." welcome to "squawk box" on cnbc, first in business worldwide. i'm andrew ross sorkin along with joe kernen and michele caruso cabrera. becky is off today. we'll try to make sense of it this morning. major averages dropping for a sixth straight day after dropping sharply. it was the biggest negative reversal since the heart of the financial crisis. dow moving from gain of 440 points to close down 205 points at the end of the day. you can look at that chart. it was one of those days where you looked at it and sort of takes your breath away.

>> we have lost 2015. we lost 2014 now. we're back to a whole year and a half of gains gone. >> if you look at futures, implied open, dow looks like it would open 346 points higher, nasdaq would opener higher, 82 points. we saw a picture like this yesterday after we heard policy news out of china, the markets flew in the morning and ended, as we know, in the red. overseas, european averages coming off the lows of the morning. as we flip that board around. you're looking right now -- you know, everything is down marginally there. we'll see whether that will give -- if we'll key off the european markets at all this morning. another morning, another effort by china to lift the markets. latest came in a $ 2 billion liquidity injection into the banking system. the announcement came after the shanghai composite closed down 1.3%. this is overnight. this is even after china cut

interest rates and slashed the reserve requirements for big banks about 24 hours ago if you were watching about the same time. they took even more measures in terms of intervention into the stock market when it comes to -- they say they're trying to, quote, purify the markets. those are the words used over there. so far, nothing seems to be working. >> we do have deal news, amidall the crazy mags nations in the market, schumberger is buying cameron about $14.8 billion transaction. if you look at a 20-day weighted average it's less, but nonetheless it's extraordinary that people are doing a transaction in this environment. we will talk to a private equity unvester who specializes in the energy sector to see if this move is a defensive one, what this means to the oil and energy markets or whether we think this is a sign of positivity.

>> i thought there was going to be talk, there was going to be opportunistic moves for stronger players within the sector, right you? give them credit. instead of buying at the top, they're certainly not doing that. >> i should say, by the way, the chairman and ceo of schlumberger saying, old field service companies that deliver innovative technology and greater integration while improving efficiency which our customers increasingly demand will outperform the market, so that's the rationale in that sense. >> i wonder what their sumgts is. cnbc's dom chu joins us with a look at some battleground stocks. >> that's right. we wanted to ask our viewers and readers of cnbc.com whether or not yesterday's action coupled with the large stock market losses we saw last week and, of course, on monday have changed their outlook in any way, shape or form. we asked a couple different questions. first of all, has this changed your view fundamentally, bullish

or bearish? thousands of responses have come in on cnbc.com. 20% say they're staying bullish. again, not panicking here. they're seeing this as, perhaps, just some noise around an otherwise bullish market. 14% say they're less bullish given what's happening. who can blame them? it's 1,000 noints a week. 1,000 points intraday on monday. say they're getting a little more neutral on things, just not as excited about the stock market as they used to be. 22% say these moves have made them bearish. 19% say sell everything. if you look at this end of the spectrum, neutral to sell everything, that's about 60% of respondents saying maybe things aren't as good as they were before given the action. we also asked another question of our viewers here of cnbc.com, what exactly are you buying and selling? interesting responses came up. on the buy list favorites we looked at single stocks or assets. 20% of respondents said they

would buy apple on the dip. no surprise. it's always been one of those battleground stocks. facebook and netflix as well, and gold and silver, precious metals. notice the big gap between apple and just about everything else out here. as opposed to the sell side list, the biggest sell, people say, is apple. one of those stocks that really is a bull/bear debate right now. oil, that asset down 2%. and then netflix and stocks in general as represented by the s&p 500. this is on the buy and sell list. i should also point out, guys, that there were people who said they'd buy nothing or sell nothing. 15% of respondents say they would buy nothing given the current environment. 45% say they would sell nothing, so they're just going to hold pat. another 7% say they're going to sell everything in this market. so, joe, the idea here is the views are really diverged. a lot of people who think this is an environment, a stock market that's ripe with opportunity, perhaps to buy stuff on the cheap like this

deal, perhaps, in the oil services district. then others who say maybe there's more downside to come and they're not willing to risk it. very much a battle brewing in the market. >> the methodology on the apple sell that you just said, tell me about that. >> we asked an open-ended question. we said, if you were to sell something, what would you be selling? you could write in literally what you wanted to do. we said the same thing with the buy side, you know, how you wanted to go about putting money to work, what would you buy here? people were able to respond open-ended. we didn't give them options. first one we gave them options, you click a button, more bullish, less bullish. second survey we said, here's a box, write in what you think you would buy or sell and we counted all those things up and that's how we got this buy and sell list. >> that's so different than at 125. time for a buy on apple, i guess. >> it's interesting. apple, it's a lightning rod

stock. skeptics will always say apple comes to the front of all of these survey because that many people are interested in the stock. still, it's interesting that it tops both the buy list favorite and sell list favorite for a stock up 5%. >> like a twitter search for a word that happened or an event. apple would have more hits than anything else all the time. >> more mentions, more hashtags. >> all right, dom. they get more sells anyway because it gets more everything. but it wasn't a buy. thanks, dom. for more on tuesday's brutal day, wasn't as brutal as monday, though, for stocks and red arrows in china, we're joined by oppenheimer funds chief investment officer howard ward, gamco chief investment officer of growth equities. >> how are you? >> who has something to say? you have to raise your hand. did you see how fast that was? on "jeopardy!" -- >> i speak louder.

>> we'll get to you in a second. >> when i say the guy that says, which machine do you to want do, i say that one, he goes to that one, so i'm going to you. you're a little too anxious. >> i think the key question, is this a correction or end of bull cycle. definitely not the end of the bull cycle. china has a lot they can do, they will be easing in the monetary market for quite some time, until they devalue more than what they have done so far. at the end of the day, that will probably succeed in stabilizing chinese economy a whole hell of a lot more than efforts to stabilize their equity markets. i think that's where they should have started to begin with. eventually they're getting to it. that's what they need to do. >> howard, as a bottoms-up guy, is there any market where you'd say, i'm not just adding the positions of the stocks? would it ever get so bad where you wouldn't be adding -- >> sure, sure, sure. >> what are you doing now? >> wait a minute.

i have to frame this because you've had some people on this morning talking about china and how their market is linked to ours. i have to really disagree with that. the chinese stock market went up 160% from the 2014 low to the june 2015 high. our market didn't go up but a sliver of that. >> it can be linked on down. you don't need to be linked -- >> so -- >> that doesn't mean the break we've seen in our markets -- >> in the last three years the chinese margin debt rose 30-fold. >> i know that. but this isn't linked to the china selloff. >> u.s. experts to china are less than 1% of u.s. gdp. >> what is this linked to, then? >> it's linked to china. >> you just said -- >> no, no. >> the chinese economy -- >> it shouldn't be. >> it shouldn't be. i'm saying when china had a 10% gdp growth, what did we have? 2%. so, the link between what happens in china and what happens in the u.s. is not

terribly strong. in fact, the chinese stock market isn't even very well correlated to their own economy. it's a casino. >> i think it's perhaps not that simple. so, they are not totally linked, but china surely has been a great source of economic growth for the rest of the world for quite some time. then going down meaningfully. that's far more important than what happens in the chinese equity markets, i think, has repercussions for the rest of the world. global growth is slowing and it is slowing because china is slowing significantly. we can't ignore that. having said that, there are plenty of tools to do something about it. i think eventually they'll get around to doing those things they have already started, like adding liquidity, devaluing currency, making sure they destructure their economy. it takes a long time. >> you're agreeing with howard, if somehow the u.s. investor could or should look through -- >> absolutely.

they should today. >> i have to finish the comment. >> you're pounding on the table. i have to finish the comment. the chinese stock market was at 86 times forward earnings in june. when we had our big bubble, we were at 28. it's declined 40% since then. and this is, you know, an economy that has real problems. they have a credit problem, a stock market bubble, a real estate bubble, they have to manage this. >> off camera before we sat down, i said, what do you do during this, disregard all of this. >> what's what he's saying -- >> i want to know what's going on, but why do i have to react to this? what's this got to do -- >> let me ask this. forget china. all emerging markets which are far more pervasive in americans' portfolio right now are very linked to the economy and they're suffering dramatically. >> yes. >> we've seen emerging market

contagion -- we saw it in '98. you don't think this can happen this time? >> this is 1998. this is very different from 1998. >> i agree it's different, however we have more exposure to emerging markets than we did before. >> we're linked more to emerging markets from the standpoint of economic standpoint. >> that's my point. >> emerging markets may be slowing down, but they're still growing at a reasonable clip. so, emerging markets from a 10, 20-year perspective will still be the primary source of growth in this world. >> brazil is in recession -- >> these are commodity countries. >> yes, they are. but guess what, in a lot of portfolios. >> weakness in commodity prices are a stimulus for -- >> stimulus for emerging market consumers. >> true. >> price of oil is down 60% since june of last year. 60%. >> i think it's way, way, way

too early to give up on emerging markets. cycle back to 1998. at that time it looked like end of the market for emerging markets. five years later, they were the best asset you can buy. >> can you make this practical for us? what are you buying as a result of all this? what are you doing? >> why not buy stocks? if you're worried about china and things like old immediate, yeah buy facebook and google. neither has a presence in china. they're new media, benefiting from the problems of old media. they're down. take advantage of it. >> we would recommend to buy global equities on a diversified basis, including emerging markets. because emerging markets are very cheap and can snap back if things stabilize. at the same time, i think you look at european equities, the prospect of europe to grow or change their direction or growth rate meaningfully -- >> would you buy an emerging market etf in this market? big liquidity question --

>> i don't think you want to buy emerging market etfs because they get you exposure where you don't want exposure. you want exposure to emerging market consumption, not emerging market commodities. not emerging market producers. if you wanted to buy active manager, emerging markets is the one place you have to buy active. >> howard, this is another example where the market was ready for a pull back and this is what the market used. how can you decide at any given time which irrelevant exogenous event is the one the market goes down on? because if you just write off everything as not having any impact on the market, how do you know when the market is going to have a break? >> what i'm saying is, has the u.s. -- the u.s. economy right now is fine. >> no, i get all that. but something caused this to be the excuse to use to sell off. how do you know which irrelevant excuse is going to cause the market to sell off? >> you know, we've had a little

bit of froth in our market, you know, we've had six years of 20% compound growth -- >> we had all that stuff. >> so, we were due for a pull back. margin debt in the u.s. got up to a record high this summer, $500 billion worth, 2-point some percent, so we were due for a pullback. here it is. >> it's a pullback that has erased not just year to date, all of 2014. >> so what? >> what do you mean, so what? a year and a half loss. >> you're at 14 times forward earnings now. now is your opportunity. interest rates are so low, they are the gift that keeps on giving to this stock market and you will not drive this stock market down very far in an environment of 2% rates and nearly 3% growth. >> joe, to answer your question, for to you look for signals for the end of the bull cycle, you actually have to look at the credit markets. if secular default rates away from just energy increase meaningfully, i think that tells you the end of the credit cycle,

that means end of the business cycle. >> we've got a lot of debt ready. if we ever do have issues, we built up plenty of debt to have problems with. >> in the corporate sector perhaps not as much as in the government sector. i think from that standpoint, from a credit cycle standpoint, this probably will be the longest credit cycle any of us has ever experienced. as a result, i think this bull cycle will probably be the longest we have -- that we have ever experienced just as much. >> you're getting a thumbs up. >> slower growth equals sustainable growth. >> okay. slow and steady wins the race. >> appreciate it. >> when we come back, we'll continue talking about this and a lot more, the falloff in oil prices hitting drillers hard. we'll talk to hear m&a is about to break wide open. then squawk market master robert altman. he says china's real growth rate

could be as low as 3%. senator marco rubio sat down with john harwood to answer some of the biggest questions on the campaign trail. we'll have that when we come back.

taking a toll on oil drillers. however the weakness could make these companies ripe for investment and a lot more m&a in

2016, 2015. deal-breaking -- schumberger buying cameron for $14.8 million, cash and stock dealing. joining us is charles schering. good to have you here, sir. we planned to have on you before this dpeel, but what's your assessment of why this deal has been happening? andrew's been asking, are we seeing this because of a weakness in these countries or a slump with schlumberger or what's your investment of it? >> this is a merger of two great companies, both of which could survive any imaginable downturn so schlumberger needs more diversity of product, cameron provides that. very little overlap between the two businesses. something the industry has anticipated for a long time.

this is sort of two very good companies emerging from a position of strength. >> you're a private equity investor. did you have any stock exposure to either one of these companies? >> do not. >> can you help us make any money based on this transaction that's happening this morning? do you see similar deals coming down the pipe? who do you think could be an acquire acquir acquirerer? >> there's a distinction between the services market and e&p -- >> exploration -- >> right. if you're looking at troubled public exploration and production companies, oil companies, you'll see real opportunity very soon. there are a lot of companies that are on the verge of default if not in default and it's going to get much, much worse with two triggers. the first is that banks

redetermine those oil companies' borrowing basis at the end of the third quarter. next year, a lot of their hedges roll off, so they're surviving today on a credit line that's going to contract and on hedges that are going to roll off. so i think from the e&p side, everybody, public or private market s thinking 2016 will be a very good year to acquire and a very bad year for a lot of these guys to be in business. for services it's a little different. service stocks depend, obviously, for their livelily hood on oil companies. as oil companies get into more trouble next year, service companies will follow. they will struggle as well. we're talking really about north america right now. so, from a north american service perspective, we are sitting on our hands. most will wait until they think it's in much later innings because you're essentially buying a a set have cash flows and you're buying assets with an

oil company. two very different sets of dynamics in those markets. >> do you think you'll be basically in the restructuring business, you'll be buying a lot of these thinking out of bankruptcy? >> you have sort of e&p oil companies looking to merge, spin assets, to sell. there's still a bid/ask spread. from our perspective, they're worth more than they think they are. until banks take away their capital, until their hedges roll off and they're forced to do deals at fire sale prices, that restructuring's wanted going to kick into full gear -- >> when do you think that happens? at what price. if you look at wti crude and you look at the models these guys have set up, what is the cash burn some of these guys -- how long can they last? >> the cash burn is spectacular. everybody outside of those with tremendous balance sheets is spending more than they're

making. it's not so much driven by wti prices. it's driven by the fact they're hedged in 2015. we can't rehedge going forward, so they're going to be exposed to lower oil prices not year. doesn't matter if it's 30 or 50 or 60, they're going to have real cash flow problems. that's an inescapable reality. it's time driven and hedge driven, so 2016 should be a very interesting year with a lot of distress deals done in e&p. service companies that are already in a lot of trouble will face much tougher conditions next year. driven less by spot oil prices and much more by hedges rolling off and bank lines contracting. >> assuming oil prices do stay low. >> and i think the overwhelming assumption is they will stay low, certainly lower than is sustainable for kind of the north american energy complex right now. >> got it. charles, thanks for joining us this morning from houston. appropriate enough, oil capital.

>> thank you. trying to find time for some of these great dog quotes. i won't show the video of -- >> you can't. i'll cry. >> i'm crying looking at these. a dog who has gone to his master's grave every day for six years or a dog that is -- sees his master in a casket. you can hear in the dog's howling -- >> don't, don't, please don't. >> i'm trying to get -- i got you. i'm trying to get simulcast with carl whose dog lucky is getting up there. >> i got nothing. >> i love dogs. i want a dog. >> well, i got some great quotes, some make me cry, too. the one, andrew, a dog is the only thing on earth that loves you more than you love yourself. >> that's true. >> i would say that's true for most people. for most people. >> you're speak being yourself now. >> speaking about yourself. >> i'm the one -- i know what

that means. anyway, coming up, i don't think it would work. i don't think a whole kennel of dogs would work. >> great insecurity that is my life. >> no, no. you should love yourself. you're amazing. that's all i'm sale. >> announcer: time for today's aflac trivia question. which three-letter word has the greatest number of definitions in the oxford english dictionary? and . . . exhale. . . aflac! and a gentle wavelike motion... ahhh- ahhhhhh. liberate your spine... ahhh-ahhhhhh......aflac! and reach, toes blossoming... not that great at yoga. yeah, but when i slipped a disk he paid my claim in just one day. ahh! so he had your back? yep. in just one day, we approve and pay. one day pay, only from aflac. [duck snoring]

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back on "squawk box." among stories front and center, transocean shares after they announced plans to cancel dividend installments and take writedowns of more than $2 billion. take a look at nike. just upgraded from positive to neutral. price increasing to $22 from $103.

you might think that's on sale. also angry birds maker rovio plans to cut up to 40% of employee. the company ceo says eagerness to explore new businesses over the past few years led to rovio doing too many things. >> that's your core competencies -- >> stick with birds. >> there's a new angry birds. >> is there? >> yes. >> have you played it? >> i've played it before. i'm not great at it but i've knocked a few things down. >> forget the angry can cats, angry dogs, stick with angry birds. "squawk" market master weighs in on yesterday's stunning reversal. roger altman is here to make his case of investing in america. take a look at u.s. equity futures. ♪ go big or go home

♪ so wake me up when it's all over ♪ ♪ when i'm wiser and i'm older ♪ all this time selloff in u.s. markets got a little worse yesterday after

the dow and s&p gave up gains and their biggest reversal to the downside since 2008. joining us now, roger altman, executive chairman, founder of evercore partners and deputy secretary. the day before we had -- the half hour of the day before, the open. >> last thursday and friday weren't exactly anything to write home about. >> if you're sitting around the country and you're not a professional, it's a deterrent to investing. >> one of the top stories that shows the -- >> moreover if you're one of those, i'm not and you're not, who thinks the system is rigged, quote/unquote, placed directly into your hands. you'll hear a lot of that stuff, i think. what precisely went on. was it actually fair and transparent market, so forth. i don't have the answer to that, but i think that was disturbing. >> it was like a flash crash sort of bad memory of the first time. >> we'll hear a lot more about that.

>> i bet we do. some of those -- when it's bidless and you got -- >> well, ge and jpm down 20%. that's pretty -- >> i know. even some of those. netflix was down. those weren't real trades on any of them, even though -- >> exactly. >> i'm saying, they weren't -- the stock never deserved to trade there. it was bidless. if someone had been given the opportunity and time to bid, it would have been much higher for ge and much higher than when netflix was down. that doesn't help confidence. just the china linkage, we've been talking about that today, whether there should be linkage or shouldn't be. >> what's going on, i think, is two things. of course, china is slowing. i did a little homework before this morning. my two cents china growing at a rate of 3%, considerably below some consensus estimates and well below they're own official forecast. second and maybe morrell vanlt, i think there's a loss of confidence in the chinese

authorities. for a long time the chinese authorities were thought they knew what they were doing in terms of managing their economic and financial sense. that was around for a long time. i felt that. now i think there's a sense, perhaps, they don't know what they're doing. that's a double-barrelled negative as it relates to the perceptions of china and, of course, plays into the underlying sense, which is a correct one that emerging markets as a whole has been slowing. it's interesting how the signs of that slowing, especially commodities like oil, have been around for a long time. the market has corrected. >> it coukeyed on something tha may or may not be related to the underlying economy of china. the stupid stock market went up and that wasn't related to the underlying. so any metrics you use in china, other than gdp, all of those

have been slowing. the stock market may or may not be related to a slowing chinese economy. >> the chinese authorities are apparently, and i'm relying on various snippets of information here, apparently spent $400 billion in efforts to both stabilize the stock market and, in effect, stabilize their currency, all essentially for naught. and i think that's raised a lot of questions as to whether this long-standing sense the chinese authorities were competent -- >> the federal reserve here spent $5 trillion all for naught. what did you say, $400 trillion? >> we could have a long debate if the fed did that all for naught. we could have a -- >> i was just nudging roger. >> what's amazing is to see china in the same spot as every other emerging market economy for the last 30 years. oh, don't worry, they got piles and piles of reserves.

they blow $400 billion and they're back where they started. >> in a couple weeks. >> exactly. it's the same old story over and over again. >> roger help me with this. you talk to ceos and you're in corporate boardrooms all the time. there has been a huge m&a boom, ipo boom, buyback, does any of that stop that? >> i would say not, except for the exception of stock for stock mergers where the volatility in the equity markets make it harder as a technical matter to do them. so, not yet -- >> is there any project you've been working on where everyone said, pencils down, let's take a week, let's think -- >> where the price dislocations make it hard to complete it, and they're on hold until this is stabilizing of the two -- of the exchange ratio. whether or not this volatility translates into a real weakness,

m&a volume remains to be seen. >> do you think we'll have a slowdown on ipo market? that will have an impact on the unicorns in the silicon valley we keep talking about -- i think the odds are reasonably good, meaning a slowdown, but it depends on where we go from here. this happened very quickly and most of the ipos i'm familiar with that are in the pipeline, are still in the pipeline and proceeding forward. >> as the washington watcher you are, all of this linked to the campaigns? >> that depends on what the u.s. economy does. the u.s. economy remains especially solid. is it exciting? no. is it solid, yes. is it the best place to invest in the world? i think it is. we're in second gear or third gear, if we're in an old-fashioned four-speed. >> the question about election season is as a charter member of f.o.b., friends of bill, is

biden going to get in and how ugly would that be for -- >> let me answer andrew's question. >> oh, yeah. i bet you do. >> we're out of time. we're out of time. >> but let me answer andrew's question. the democratic party is the incumbent party as far as the white house is concerned. so, if we see further economic weakness in the u.s., to me it's not clear we will, and at the moment i don't see it. if we do, that undermines the incoming party, the democratic party, no doubt about it. i don't -- joe, i don't know if vice president biden, who is a great guy, is going to get into this. i don't think that would change the likelihood of the ultimate democratic nomination -- >> if the economy would undermine the democrat of the united states, why doesn't the foreign policy faux pas of hillary's second term of the united states, why doesn't that play into what's happening? >> i don't think that will have any impact on the nomination fight. whether there's a big debate about her record as secretary of state in a general election,

we'll see. probably there will be. i'm sure there will be knowing the republican side. >> you don't think joe is getting in? >> i don't know. i really don't know. >> do you think kerry is getting in, al gore, anybody else? >> no is my answer to that. i'm skeptical, but i don't know. >> roger altman, thank you. appreciate it. do you have a dog? >> i just got a new dog. >> congratulations. >> i was listening -- >> i always felt personally good about andrew -- >> name is jerry after my mother. >> i have great quotes. one if if you have had a great dog, then you don't have one, it's not aan unfulfilled life. >> the best is harry truman's. if you want a friend in washington, get a dog. >> there are touching ones i'll have for you that you might like. like next to a book, the next thing to a best friend is a dog, but -- i'm going to tell it later. >> we'll tease that. roger altman, thank you.

>> thank you, guys. >> coming up when we return, gop hopeful senator marco rubio planning a speech on friday to outline how his administration would challenge the chinese. we sat down with marco rubio. ♪ ♪ if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. but hurry, offers end august 31st. share your summer moments in your mercedes-benz with us.

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marco rubio's plan to change the tax code. >> you said in the debate the other day that you can compete toe to toe with hillary clinton on people who live paycheck to paycheck because you live paycheck to paycheck. >> and i was raised paycheck to paycheck. >> how do you think people living paycheck to paycheck will receive that your tax plan eliminates taxes on estates, capital gains and dividends? >> first of all, capital gains and dividends is investment. my father had a job as a bartender at a hotel. the reason why he had a job as a bartender is because someone who had money invested it in that hotel. that's why high dad had a salary and tips. >> one of the critiques from your plans as a conservative, you can't eliminate nature capital gains and dividends. it's a political loser.

>> i think anything you tax, you'll get less of it. that's why we tax cigarettes. we don't want people to smoke. the only quarrel "the wall street journal" have is on the personal side primarily because of the child tax credit. people who work are making huge investment in future. those are our future taxpayers. >> economic conservatives say it's all about marginal rates. it's not about giving money to that group or this group. >> we're not giving them their money. >> single people -- >> that's their money. >> you encourage people to have kids? >> people are ultimately going to decide how big they want their family to be. it's about recognizing in the 21st century, raising a family is extremely expensive and we want to help people with the cost by being able to keep more of their own money. by the way, we lowered taxes on over 90% of americans. the substantial majority of -- >> what about those upper middle class people with the bracket going down? >> no, it won't. number one, most people will be

paying 15%. we bring the top rate down from 39.5, that's a 10% reduction. even there you can lower your tax likt by taking more pretax money and putting it into a retirement account. many of those people will eventually get married, their taxes will come down, they'll have children, or they never get married or have children. they run a small business through an s-corporation, their taxes come down. ultimately, almost all americans can see a significant reduction in taxes. >> so, this tax plan that marco rubio has proposed is a big target, big topic of discussion, will be, as he gets toward the finals of this nomination race. divides the supply siders who think marginal rates are important from the reformacons. he delivers it with conviction, a very effective communicator, guys. >> in terms of the markets and wild roller coaster we've been on and looking at the candidates, is there anyone you

think has real credibility to be able to speak on the markets? donald trump came out and blamed the chinese. i don't remember what he said. said something crazy, i thought. is there anybody in terms of what's going on that you think is actually speaking to the issues? >> not really. i mean, pretumptively you would think the one who would walk into the debate is hillary clinton because of her husband and the economic success he had. i don't really think that the current market conditions naturally elevate anyone on the basis of what they're campaigning on right now. >> i associate with barack obama. >> right. >> or hillary clinton. i'm with you on that. hey, john, for a while you said that biden was definitely going to be a no go. i wonder if you still feel that way and one reason scuttle butt

seems a lot more likely to do it than you gave the possibility of. >> i think joe biden will end up not running. i think he and his team are trying to be figure out how could we run if we decide to? i don't expect him to decide to. >> i'm not saying you, but i think most of the people that want to downplay the biden run are people that are loathed to admit there might be a problem with hillary clinton's run and just can't concede that because that would show that they acknowledge there's weakness or a problem with the e-mail problem. i mean, it seems -- >> no. well, i don't really understand that linkage, but i think it's about joe biden, about where he is in his career and -- >> i think to say she's vulnerable is something that people are big backers of hillary clinton won't even admit -- at least they won't admit it in public.

maybe they'll admit it in private. but not acknowledging there may be an opening for biden, that causes them to concede there's a problem with the clinton candidacy -- >> that's a bank shot, joe. hillary clinton is gullible in a general election -- >> in terms of your inability to -- i thought it was a swish, not a bank shot. >> it's not about -- >> even the duke play. how about christian laettner, will that get you with me if i use a duke guy? >> hillary clinton is vulnerable in a general election, no doubt about it. i don't think she's vulnerable right now in the democratic primary. >> i'm riding with biden. >> go for it. >> thank you. >> do what you have to do. have you to go someplace and pretend you're a liberal and then daisht way they talk. hi a woman tell me she was worried about hillary clinton. of course she knew. you see? >> i do.

>> we'll have your list of stocks to watch next. former wells fargo ceo dick kovecevich. can a business have a mind? a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?

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also coming in ahead of consensus at -- it's not as cool as it used to be, i don't think. i'm going to do this quickly.

it's national dog day. i love -- it's tweeting like crazy. or trending, is that what you say? >> trending. it's trending. >> the groucho one i messed up. inside a book is a mavn's best friend. inside it's too dark to read. >> that's funny. >> here's a touching one. carl's wonderful dog lucky. >> that's your puppy dog? >> she has her paw up on -- she's smiling. paw up on penelope. she's the sweetest thing. did you see my kid? my kid had a laptop and a phone. laptop was open and the phone was open. that sums up our life. that's pongo. he's a designer dog. >> he's so cute! a mix of -- >> it's a maltipoo. maltese and a poodle.

and lucky has been around a long time. he's been part of the show. lucky is cute, isn't he? >> oh, yeah. >> here are some -- here's a couple quotes. a dog teaches a boy fidelity, e perseverance and to turn around three times before lying down. a door is what a dog is perpetually on the wrong side of. don't accept your dog's admiration you're wonderful. >> a dog loves you no matter what. >> you think you're cler. one is the truth, once you have a wonderful dog, a life without one is a life diminished. people like -- that's a fake look. that's a sarcastic -- >> no, it wasn't sarcastic. >> you would get one if you were out in the burbs. >> yes, i would love to have a dog. >> if you think dogs don't count, try putting three business cuts in your pocket and

give them only two. >> you're going to make me cry. >> sigmund freud had a good one. people always mix love and hate. only dogs can have -- they know their enemies and their friends. coming up, the fed gathering in jackson hole. steve liesman with biggest questions for investors. how will a selloff affect the fed's timing?

china desperately trying to save itself from a freefall. europe markets worried about getting caught in the contagion. investors here in the u.s. struggling to make sense of it all. the man who warned the world before many, ken rogoff joining us. is today's $15 billion bet by schlumberger the way to come. the chance of a september rate hike, the moods on wall street and where he's putting his money beyond the banks.

get ready for another wild ride. the final hour of "squawk box" begins right now. ♪ i like to dream >> announcer: live from the most powerful city in the world, new york city, this is "squawk box." welcome back to "squawk box," first in business worldwide. i'm joe kernen. we' the futures have improved from when we started this, up 328. who doesn't feel good on national dog day? i think it's causing, you know, the dogs of the dow. >> national dog appreciation day. >> yeah. and the dogs of the dow are probably some of the big winners today. we have nasdaq up 84. >> hot diggity dog. >> weird segue.

>> check out markets in europe at this hour. there has been quite a bit of improvement in red. it's still red, except in greece. there were a couple down 2% and 3%, i think. oil up 39.46. the ten-year at this hour is at 2.12. that's quite a bit higher. got down below 2.00 in the height of the angst, but now back to 2.12. >> the big focus for the markets today is china. china's central bank pumping $28 billion into the financial system. pboc pumping it into the banks through liquidity operations. the announcement came 24 hours after their previous measures we told you about yesterday morning. the injection of liquidity came after the markets closed. as for the regular chinese trading sessions overnight, it was a volatile one, even with those attempts to cut interest rates yesterday.

we're joined from beijing with more. eunice? >> reporter: thanks so much. the chinese government tried to restore confidence in the stock markets after the market closed the chinese central bank injected $22 billion of liquidity into the banking system. this is after we already saw a revival of the -- some of the heavier-handed tactics the government had used earlier in the summer to try to prop up prices. the authorities said they're going to restrict index futures trading. they also said in the words of the official state news agency that the government is going to purify the capital markets. the chinese police are stepping up efforts to investigate illegal trading, insider trading as well as rumor mongering. these moves did not restore or rebuild confidence among investors in china, but there's been some talk some of the steps, such as the interest rate cut, were aimed at rebuilding confidence in the economy and also that the target audience could be global investors.

the -- overall, the leaders here are aware that the global investment community is very concerned about the china fears. what we could see right now is a signal by the authorities here to the global investment community that they are taking action and that they do have tools and that they have the ability to manage the economy. guys? >> okay. thank you. appreciate that. in the meantime, let's get some details on what's moving this morning. john is at headquarters. >> let's take a look at big tech and media stocks that will be part of the news flow. the reason technology is in focus right now, for a lot of these names, in fact, the majority of the sector, the biggest in the s&p 500, they're all in correction territory or worse. a good chunk of them are in bear market territory having fallen by 20% or more. check this out. 43% of the entire sector in the s&p 500, again, the biggest one there, is in correction

territory. fallen by 10% or more. 54% are in bear market territory. that means if you combine those two, 66 of 68 stocks in the sector in correction territory or worse. a lot of attention, guys, is going to be focused on these f.a.n.g. stocks, facebook, apple, netflix and google. facebook up 2.5%, 3% in the premarket. amazon also up as well after an upgrade, evercore up 3,000 on 10,000 shares. netflix and google as well. interesting moves ahead of this what could be a nice, positive open. back over to you. >> we're watching to see if that holds through the day. thank you. the fed's annual economic summit in jackson hole kicking off this week. summer camp for policymaker. this year, not so fun necessarily. some notable names are not attending, including fed chair janet yellen and dan tarullo.

one man who will never miss, steve liesman. >> reporter: good morning. despite all the market turmoil, economists polled in the cnbc fed survey still see a rate hike this year, but they have pushed it ahead. looking at the results, what was a september call is now a december call. we'll look at the percentage on that in a second. pushing it ahead three months. when it comes to when the fed will allow the balance sheet to decline, also pushed ahead three months to december 2015. the so-called terminal rate, where will the fed when it gets done hiking is now the third quarter of 2018. also ahead a quarter. they brought down that terminal rate to 2.79% from 2.98%. jim bianco writing in with his results -- with his answer says, data dependency has been put on hold. it's now about financial stability. what i found interesting about this survey was, a lot of folks still holding out for september.

i guess there's three weeks left. durables this morning, another jobs report. if you look at the percentages, 38% still clinging to this september idea, saying the fed would hike then. 62% saying no. now, looking at the -- what's happened to the funds rate, very interesting. they brought about a percentage point off of the expectation for the fed. in the sense that's an easing. the funds right now is seen in 2015 at just 0.37. back when we started asking this, august 2014, it was 0.89. call it 80, 90 basis points off the expectations for 2016. the number is 1.12, that's down 30 bips from the last survey and 80 bips from when we asked in august 2014. some commentary, folks like lynn reaser digging in her heels on

this september rate hike, saying the fed believes it should take a long-term view and we economists should as well. no change in my answers. but bob brusca says, the fed has been crazy and misleading people to thinking all was fine and that it could hike rates despite inflation. way off track. shameful performance by the fed. guys, you have your septembers, your decembers, also people looking later on for a rate hike. there's a camp like that. a big diffusion of people. >> steve, before you go, how much is the fed likely to see all this market turmoil and relate it back to their policy and then, therefore, what they're going to do? >> i'm not sure they're going to see what's happening in financial markets right now as about fed policy. i think they see it about regime change when it comes to commodities and what happens to currencies in emerging markets. the commodity prices have come down as a result of the

supply/demand equation there. and china slowdown. i don't think they see this about the u.s. i think they see decent u.s. growth. that's the way the data has been. i think what they believe is that the feds fund market creates an automatic stabilizer for the economy. if you're worried about the fed and the data doesn't go that way, you bring down your outlook for the fed and that should neutralize. i don't think they see this -- even though there were the 2:00 minutes that created a lot of volatility in the market, i don't think they see it about the fed and rate hikes. >> takes a lot of courage, like the guys on the train, i don't see it. they should but i don't see it. >> steve, thank you for that. we're going to now talk to one of our gurus on crises. long warned of a financial crisis in china. now his prediction may be getting a little closer to happening. quen rogoff, harvard professor

of economics. you've said china is the ultimate example, but this time a different story. how sick is china and how much of a cold or how sick should the rest of the globe be getting? >> well, of course, we have no idea because they're not very transparent in their data. i don't even think the leaders themselves know exactly for sure is the economy has slowed dramatically. what we don't know is just how much cushion they have to try to control the fall. you see this in emerging markets all the time, and china is, where it grows and grows. they start building up debt, china surely has, then they slow down and investments don't look so good, financial firms start failing. china has trillions in reserves to help bail it out but it's unclear how flexible it is. it's unclear, you know, how easily and smoothly it can make this shift. so, we're definitely seeing a

slowdown. there's definitely a much higher chance it goes for the worst that we have a hard landing. it's a cloud exactly what's going on. >> is there an historical example? you've obviously looked at crises over eight centuries when you wrote your book. is there an historical example of what parallels what's going on right now? >> i mean, it's heart to put china together with, like, a thailand or asia. the chinese growth miracle is unparallel with the british industrial revolution, the united states in the late 1800s, this booming giant. remember, the united states in the late 1800s, even as we were overtaking britain, had some massive recessions in there. and i think that's the way to think about this. you just can't grow and grow and grow at this rate without some kind of pauses. the question market, and the chinese have been preparing for this, they have been thinking

about it is, you know, are they going to have a bad five years or are they just going to have a bad year? or two? right now i think what they're quietly saying is, okay, a year or two, maybe it's not going to be 7%. maybe it will be lower. then it will be 7% growth. i think that's the question mark. >> can we get back to andrew's second question which was, okay, china's economy is slowing dramatically. how much should the u.s. market and the u.s. economy -- how much will it be affected by what's happening in china? >> well, it's hard to know. you've been talking about it all morning, i'm sure. of course the big thing is the uncertainty that it puts. of course, china is very important for some countries that export high-tech machinery there. it's very important for emerging market. but this isn't yet as big an economy as the united states.

i think the problem is, when china slows down, even if they maintain political and social stability, and they've certainly been tightening the clamps down to be prepared to do so, will russia, will brazil, these other countries which probably are even more vulnerable seeing the sinking commodity prices. >> they're already in recession. >> it creates a lot of uncertainty. oh, absolutely. no the economies are in recession. the question is, is how bad is it going to get? they have floating exchange rates that helps a lot, so there are these vulnerabilities that almost reach into the geopolitical. of course, it makes markets nervous. >> what do you think of the banking system in china and our connection to it? specifically maybe not even the banking system as we know but also the shadow banking system? >> so, you know, it's very murky details, to say the least.

they certainly rely heavily on a few big banks. it's not clear how they're going to handle it. if there are a lot of nonperforming loans. the shadow banking system has increasingly become important for the marginal investment. so when the central bank is cutting its interest rate, it doesn't affect all the interest rates the way it does, say, in the united states. the shadow interest rates, i think, i bet, have risen during this period instead of fallen. i will say the chinese authorities are aware that a lot of these firms, these wealth management firms, need to fail. and they're a little worried, well f we don't let one get bailed out, is there going to be a panic? i think that's a problem they've already faced but it's going to get a lot worse. >> what about those who argue who say, look, they can have a horrific banking crisis in

china, but because their capital account still isn't open to the rest of the world the way other countries have done for the last 20 years, that while we complain about it all the time and we say they need to modernize, maybe in this case they're siloed in any way. do you give any credence to that? >> absolutely. it's one of these this time is different, china's story of why it's going to be okay. you know, they've been at risk for a long time. and the debts have been piling up. they've been investing 50% of gdp. there's this phenomenal imbalance. the scale of the problems are also phenomenal. of course, the legitimacy of the communist party in china very much rides off its ability to deliver continuing growth. so, we just don't quite know how it's going to play out. look, they've gotten very nervous about the stock market falling. that's political. it's not economic. they encouraged every day people to invest. it looked great for a while. now it's collapsed.

people who put their money in the tail end of the boom are hurting. it's hard to know how the political economy will play out. i would like to say when they first started allowing the stock market in china in the late '90s and having investment firms, the first batch of them were all sent to jail because the communist party officials and others put money in it and they lost it. it's hard to know how it will play out. >> can you look at the policy responses china has taken thus far? you look at policy responses that other governments and central banks have taken. again, is there an historical parallel? i start thinking about 2008 and a number of the things our government did during that time. some of which worked. by the way, didn't work immediately. >> well, let's face it, these chinese leaders have been

phenomenally smart and phenomenally successful for a long time so, you know, everyone's reluctant to bet against them. i think this issue of the stock market is one where they've really stubbed their toe. they look silly trying to control the fall of something that's just too much of a market. they can't do it. and it's undercut their credibility. they do have a lot of tools, for example. they were tightening fiscal policy. they can loosen it. they have done a lot to improve -- they seem to have, the finances of the local governments allowing them to issue bonds so they can sort of stabilize. that hasn't -- it isn't completely clear where that's going. they have a lot of tools. but this is a massive economy. it's very diverse. it's just not that easy to manage. look at our political system, with just over 300 million people and how diverse and hard to manage it is, they have 1.3

billion people. it's not an easy thing to do. they've done a phenomenal job for a long time but you just can't do it every year. there have to be some pauses. we may be upon one. >> we'll take a pause right there. ken rogoff, thank you very much. great coming up, schlumberger is in the market for buying cameron for close to $15 billion. that includes some debt. also, how investors should play the energy patch, whether prices are at $30 a share or -- a barrel, excuse me. rbc analyst joins us straight ahead. but not every insurance company understands the life behind it. those who have served our nation. have earned the very best service in return. ♪ usaa. we know what it means to serve.

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sharp price, but weakness can make this companies ripe for m&a. schlumberger buying cameron for about $14.8 billion, cash and stock deal. higher by 43%. joining us is chris, oil and gas companies research analyst at rbc. good to see you. >> good morning. >> did you wake up and say,

thank god i had cameron rated as buy when you saw the deal? >> when i woke up this morning, i say, thank goodness for this deal because now we don't have to talk about $35 oil for a while. >> tell me, you had cameron rated a buy and you thought the price would go eventually to $66. when you look what they're willing to pay at this point or what the deal is structured at, that's where about it is right now. i'm assuming you like what happened with cameron. you think this is a good deal? >> yeah. you know, when schlumberger joined the joint venture with cameron a few years ago, i always thought cameron would be acquired by schlumberger. it's always the schlumberger m.o. what they get into a joint venture, they buy the company. timing notwithstanding, i think it's a good deal and i think it's going to work out really well. >> can you predict other transactions like this? what other stocks would you be

buying that potential companies could acquire? >> i think i'll sidestep that prediction, but i think from an investor standpoint, the focus could turn to companies like weatherford, national, fmc technologies and oceaneering. >> why? when you look at national oil well, they're very well positioned, equipment manufacturing company. as you've seen over the last few years, there's been an intense push by industrial companies to get involved in the oil and gas space. so, i think there could be an opportunity for somebody outside of the energy business to come in and take a look at national oil well of arco. if that doesn't happen, national oil has been the acquirer of a number of different companies over the years. i think there's a great industrial fit between national oil well and fmc technologies. if that doesn't happen, you have fmc technologies in sub-c business, similar to cameron.

there's some industrial fit between fmc and oceaneering. and weatherford is the number one provider. maybe they would be looking for additional scale to compete more effectively with halliburton and schlumberg schlumberger. >> the lower oil goes, the more likely those deals are to happen? >> they usually happen after there's a stabilization so that the sellers can get a better view on the opportunity of their next 12 months and the buyers can basically see what the sellers are looking at. might be a little early in that process but i would say as we exit 2015, i would expect there to be a number of deals coming. >> back in july, there was a previous note, you guys thought wti would grind higher for the year and average $72 for 2016. so far it's ground lower at this point. have you reassessed that number at this point?

what are you thinking for wti when you make assumptions? >> sure, that's all fair, you know. i'd say that the oil markets are very challenging, the dynamic that we have a very intense process in supply and demand dynamics and sometimes they don't spit out the number you expect to see. there are other factors involved. not making any excuses whatsoever. we constantly recalibrate that dynamic. maybe in a month from now, you can get me back on and we'll have our revised outlook. >> at this price when it comes to oil, except for m&a, is there any reason to buy in this sector? >> it's a time frame dynamic now. there's probably very catalyst poor for the next three to six-month period. i've been through a number of different cycles in my career. this is a typical bottoming cycle. if you have a 12 to 24 month

horizon, i think the stocks will be higher than today. >> thank you. we appreciate it from texas again this morning. >> thank you. i think we're up almost 400. >> in the futures. coming up, durable goods data, we'll head to the cme group, check in with rick santelli after the break. plus, dick kovacevich is our special guest. why he thinks the fed should raise rates. check out the futures at this hour. 375, closing in perhaps on 400. i think we were closer a little earlier. yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep it all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberry apple scones smell about done. ahh, you're good. i like to bake. add new business services with at&t and get up to $500 in total savings.

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welcome back to "squawk box." an upbeat quarter for abercrombie & fitch, posting an surprising profit. although same store sales declined, the drop was smaller than forecast. you can see it's trading higher. other apparel retailer shares are on the rise. express beat estimates on top and bottom line and raised their 2015 outlook as well. better product miss, fewer promotions helped to boost profit margins. we're just seconds away from july durable goods orders. rick santelli standing by at the cme in chicago. we have about 30 seconds. let's talk about dogs or something, unless something strikes your fancy today in the markets, rick.

>> it's also equilibrium in discounts and premiums. a third china, two-thirds normalization of the fed and those two catalysts colliding. you know, i think there were premiums going up. you're going to take them going down. what do you define momentum as? richness. richness coming out. durable goods, much better than we were looking for. up 0.20. we were looking for a small negative. granted, that's a headline. last month had a positive revision from 3.4 to 4.1. let's go through the internals. we always like to take out transportation, a volatile aspect, a volatile component of durable goods. in this instance, it was. 0.3 is expected. we end up with double at 0.60. reconciling these issues with the headline being so strong, we of course have to dig down in numbers like boeing plane

orders. if we look at capital goods orders, nondefense ex aircraft, not shipments, that's orders. that was a powerful number and proxy for business spending investment. that was up 2.2%. many multiples up 0.5% or a little less. big revision from 0.9 to 0.4 last month. if we look at shipment versus orders, it was better than expected but not quite as powerful, up 0.60, a little more than half of 1%. also 1% revision from down 0.10 to up 0.90. the revisions were good, numbers were good. not off the charts terrific but definitely solid. you know there's been a lot of talk, if you came from mars and you looked at the fed issues of the day, you would think they would be easing, not tightening. you look at it differently, to come from mars and you look at any data, even spongy gdp for the last ten quarters and then

you saw zero interest rates, that would be shocking. back to you folks. >> okay. thank you. when we come back, we have former wells fargo ceo talking to us about the fed, china and the state of banks. also maybe what he's been buying or selling in the stock market given the matinations up and down. a private portfolio member making a big bet on cvs.

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the former wells fargo ceo says tepid economic growth and the wrong mix of fiscal policy has held back our economy. dick bover joined us earlier in the program and expressed his concern about the banks in stocks and in general, but you would have had to have seen that to know what i'm talking about. take my word for it. >> he did say it. >> can you confirm that, andrew -- >> i can confirm it. >> thank you. we're supposed to have a little tape but it wasn't ready, so that's really what's going on here. you didn't need to know that. what do policymakers do from here on out?

let's talk to dick. there are two kinds of people in the world. there are those that think it would be absolute lunacy to raise rates here and those that think the notion that rates haven't already risen off zero, for nine years, they think that is the height of lunacy and both think they're right. you're on one side, though. >> yes, indeed. i believe they should move. look, the market believes that the fed is going to move some time in the very near future. there's no doubt about that in the market. the fed has signaled they're going to move in the near future, so why not move and get it off the table and concentrate on how we get our economy growing faster than the subpar growth we've had over the last six years of 2% to 2.5%. the market hates uncertainty,

yet it's almost certain they're going to move so they should move. >> it's weird because this is a body of policymakers that shouldn't be individual egos, but there is talk they worry about being laughed at like, what was it, trucet that raised rates when they shouldn't have been raised. others say, my god, what if they raise rates only to have to come down, if there was some economic weakness? they don't want -- obviously, they're not on a mission because they've been wrong about every economic forecast, so would it be that bad if they were to reverse themselves if they had to and went up a quarter? i think they should get on the board. i think it's ridiculous that we're at zero still. >> exactly. and it is. and their economic forecasts have been wrong by about 50% consistently. again, the expectation is throughout the markets they're going to raise rates soon. if that wasn't the case, then

the uncertainty -- they would be surprising the market. i think they need to move and i think it would be positive because it would confirm the fed is not worried about a recession in the united states, that they do know that we're a lot better shape than we were five or six years ago. how can we have the same rates we had today that we had in 2009? it makes no sense. they need to show confidence our economy is doing better. >> i just want to jump in here because i don't -- they're probably focusing on what you're saying and maybe not on the screen. we have the dow looking like it's going to open up much higher. jumped, by the way, about 7500 points. >> after durable goods number? >> we look like we'll open up 436 higher. s&p would open up 53 points higher. the nasdaq up about 122 points higher. dick, separately, i was going through the notes and realized on monday, you've been -- you've been buying things in the stock market, as if it's walmart. you think everything's on sale right now?

>> i do. we're have 50% off sales on some stocks. >> what are you buying? >> well, i'm buying a lot of things. you know, certainly i'm still in the dividend camp, so i'm -- the prices have been low, so i've been buying dividend-oriented stocks like p&g, like exxon, cat, los angelas vegas sands. you've always got verizon and at&t. the retailers are on sale. their dividends are up to 3% now on target and walmart. and they're off -- you know, walmart's down about 25% from its high. kkr literally fell in half early in monday. and got down as low as $8. i bought some at $10. $20 price it had a 9% dividend. so, there's just a lot of opportunities out there. and as i mentioned, i think the

last time we were together, i expect that there would be a correction. and i expected that the correction would be a buying opportunity, so -- >> are you calling a bottom here? should people look at the futures and have confidence? they should be in this market? >> well, i don't think there's necessarily a bottom. i think we have to go through at least the rest of this week to figure that out. but if the market like yesterday did fall, i bought more yesterday. today i won't be buying. >> is this the bottom? i want to know, do you think this is the bottom? i just want to know. what do you think? actually, i don't want to know because i don't care, actually. no, i don't -- >> are you saying yesterday wasn't -- >> no, no. i just don't -- i don't know. >> i want to know -- i want to know what he thinks. >> i know, i know. i want to know whether -- >> dick, did you put any money to work -- >> monday. he just told us monday. >> i'm sorry. >> what are you reading?

how about this, dick, at this point with the fed, is it just that the policies are no longer benefiting us or that at this point do you think there has actually been some type of damage inflicted by fed action over the past couple of years? >> oh, i think there's been damage inflicted. >> that's the other thing people disagree on. how so? what's your -- how would you characterize the damage? how can it hurt the economy by staying at zero? >> well, i think the fed has done more for income inequality in the last five years than any fiscal or tax policy ever. the fat cats are enjoying record after record of stock market increases and 75% of americans who basically save -- put money in the savings account are getting 10 basis points, and they buy all of our services and products. so, i think it's inhibited the economy. i think there's bubbles in asset

prices because they manipulate interest rates. that's one reason why i've expected a correction in the stock market. certainly the bond market is in a huge bubble. and now that's carried over to commercial real estate. you know, bubbles when they burst, don't help. >> larry summers was on the other day, and he thinks this is the new world that we should accept. that we have subpar growth for a very, very long time and that in order to deal with it, we just have to have super low interest rates than we've ever been used to having for a very long time and this is the way it is. he's a very powerful voice. >> well, i totally disagree. i think -- you know, larry was the architect of our fiscal policy back when he was in the white house. and it's been the worst recovery we've ever had. because of the lack of doing the right thing fiscally, let alone monetary policy. there is no reason why our

economy should not be growing at 3% plus if we had, in my opinion, the right fiscal and monetary policies and we don't. >> dick, real quick before you go. when you look at the risks in the system, especially the banking system, the financial system, you look at the volatility that's taking place right now and you think about the issue of liquidity which keeps coming up over and over again, is that something you worry about either in the etf market or elsewhere? >> yes, i do worry about liquidity. it's related to the whole volcker issue. when markets -- what we know for sure is that markets get overextended and then when times are tough, they go down lower than the fundamentals. and someone has to step in when markets aren't performing and fix them because -- banks have the expertise and the money to do that. they're not allowed to do that because today because it would be considered proprietary

trading. i think we'll have more volat e volatility in all the markets when we don't allow financial institutions -- when they see opportunities to go after those opportunities, which then helps the markets get back to -- to where they should be based upon fundamentals. >> and your upside market on the s&p? >> come on. >> when people can hear, i -- it is a bottom, you told me. >> i don't know fitz a bottom or not. the guy manages a lot. he ran a bank -- >> he manages a lot of money because he ran a bank. >> because he ran a bank. and people want to know what he thinks. >> i know. >> dick, great to see you. we will see you soon. when we come back, names you need to watch in today's trading session. plus, a platinum portfolio member changing some picks, including swapping out apple for facebook. in the meantime, check out shares of both of those companies over the past year. facebook outpacing apple's

gains. find out why he says the stock is a buy next.

okay. our platinum portfolio managers have been coming on saying, now is the time to pick up some solid names that have been beaten down. paul meeks is doing just that. he's in our platinum portfolio contest. he's switched out apple, delta and power solutions replacing those with facebook, fleet kor

technologies, cvs. he's portfolio manager of suturna capital. hi, paul. good to see you. i'm going to put out your caveat at the beginning which is you still own all those stocks, just you're in these contests so you think these other companies will be better performers in the shorter term, right? >> that's correct. >> tell me why you like facebook in the near term versus apple instead? >> well, facebook, the world is going to all of your browsing on mobile, as everybody knows. and particularly when you take a look at messaging on the app and also the next big tranche of digital ad spending is going to be video, particularly on instagram and youtube with google. i think that the growth drivers for facebook, despite the valuation, and a lot of people will coming back to me and say, paul, facebook is expensive, i see much clearer growth drivers

for facebook. apple, on the other hand, which is still a big holding in my portfolio, like everybody else i'm worried about the second act after we get through the iphone 6 ramp. this year is going to be an extraordinary year. the problem is, next year with about 60% to 70% of your business coming from the phone, what's the next leg? and what happens if iphone units are actually down next fiscal year? >> yeah, a question we have asked many times on this show. you like flt, and you're switching that out replacing psix. flt has an uber connection. >> very interesting. so, fleet core is a very well-run company, organically and with savvy acquisitions. they have fuel cards. recently they did score a deal with uber. we know uber's driver base is growing very, very quickly. if we can get 40%, 50%, 60%

penetration with fleet core products, it could be a very nice driver, maybe a dime to 20 cents eps positive impact. >> and then you're switching out delta, replacing it with cvs. >> i likedelta. i've been on your program talking about it but cvs i brought aggressively on monday. we all know the united states is 2 or 3 times the rest around the world. it plays nicely with the hybrid pharmacy benefit manager model in containing costs. it's become an important part of this health care spending chain along with its competitor express scrips. >> all right. we'll see how you do. thanks so much. everything sold off, obviously, in this last round, but that one seems to have held it a little bit better than most. >> that's right. >> a quick reminder. you can go to cnbcpro.

>> people with suggesting we have a squawk dog. >> yes. that's a great idea. >> and then you take turns. >> your idea -- >> the today show has one. >> i wanted a monkey. >> you would have it throw darts. >> a squawk index. >> that's a one-day parlor trick. >> you know what monkeys throw. >> the question is, if the monkey does throw that, who is going to punish the monkey? if it throws its, are you hear to volunteer to do that? >> no comment. >> i'm not going to say it. i'm not going to say it. >> when we come back, we're going to talk to a guy who's not a monkey, jim cramer and what investors can expect at the open. we're going to hear what he has

to say about the craziness in the markets. dow looks to up about 420 points higher. see it? that's a sensor. using ge software, the light can react to its environment- getting brighter only when it's needed. in a night, it saves a little energy. but, in a year it saves a lot. and the other street? it's been burning energy all night. for frank. frank's a cat. now, two things that are exactly the same, have never been more different. ge software. get connected. get insights. get optimized.

>> let's get down to the new york stock exchange. jim cramer joins us with burning

ears. i don't know, i have no life. i talked about you again today, because yesterday early on, you know, and that is going out on a limb, to say a lot of times you should use some strength, maybe, instead of using the weakness to buy, maybe use the strength when you get a chance to sell some things. that's what uyou were saying yesterday. >> you want to come in and buy them up today and you forget the fact that at 3:30 the buybacks stop and you have big sell orders. i think they were correct about the idea that you buy them on the way down. the question about whether it was the bottom or not, it was the best stocks. i think it's interesting that there are moments when you can buy and do well. i don't think the opening is one of them, because we've seen that the market doesn't work right anymore. you know, you come in and you buy. you sell them down 200.

you buy them down 300. if you want to buy, wait for a better moment. i said, listen, this is not the right moment. i see these kinds of openings and say what are they based on, chinese liquidity? >> we've had some discussions about who i would -- i don't know about the whole notion of asking someone on any given day, is this the bottom. i think it's kind of a weird, it's a question that's not going to get answered. i might ask blank find, i would ask you. >> it's is successful retest is what people are saying. >> i would ask you. i don't think you think it is the bottom. >> no, i don't. i don't like this kind of action. there's not enough good things happening. >> this is what we want to know. and we're going to find out more on "squawk on the street." this morning we have the big movers and tomorrow we have the kansas city fed president. she's the woman behind this week's big gathering in jackson.

she can give us some perspective on what the fed might be thinking. ♪ thirsty? they said it would make me cool. they don't sound cool to me. guess not. you got to stick up for yourself, like with the name your price tool. people tell us their budget, not the other way around. aren't you lactose intolerant? this isn't lactose. it's milk. ♪

buying cameron international for $66.36 a share.

12.7 billion. shares of abercrombie getting a big boost. revenues and comps coming in ahead. we're up in the futures well above 400 and that's the big question we wish we could answer. does this hold or do we see something similar to yesterday? nobody knows. we'll see. >> make sure you join us tomorrow. "squawk on the street" is next. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. they are trying to try this again. futures are up. high profile upgrades. pretty good durable goods numbers. we'll get to all of it with jim. europe seems less convinced. shanghai got merely sold