good morning and welcome to squawk box right here on cnbc. i'm andrew ross sorkin with joe and sarah. right to the markets u.s. equity futures pointing to a higher open on wall street today after that huge rally yesterday as stocks snapped a six day losing streak to end at highs on the session. the biggest percentage gains since november of 2011. the nasdaq had it's biggest day since august of that year. closing up 600 points. something we haven't seen since the fall of 2008 though. the percentage gains are a little bit different. check out the blue chip index's roller coaster ride over the

last week. then on monday that nearly 600 decline. another 200 point loss tuesday before yesterday's big surge the dow is still down though. more than 1% this week. but the nasdaq has narrowly erased this week's losses off by .2%. >> i was on the floor of the new york stock exchange all week and it's not just the crazy moves where we settle, it's the intraday volatility. everybody was bracing for a repeat of tuesday. they had this giant rally and it started to lose steam and everybody thought here we go again and then it charged back. >> a bounce? a technical bounce? >> the first day, looks like -- wow, this is great. this is great. it's slowly declined down 200 and the next day it looked like that's going to happen again. you know at the end it's going to melt up this time tnchts

question is what comes next. looks like we're extending those gains. is that the bottom? >> is there a place called -- you're going to ask me if it's the bottom. >> we don't talk about the bottom? 50% chance of a bottom. >> it doesn't matter what i think about a bottom and there's only going to be one bottom. >> and it's going to be hard to call. >> but -- >> i think it's what people want to know. >> but nobody does know and you can talk about it and it's useless. bloomberg, is there a place called bloomberg that does this kind of stuff? >> yes. there was life before cnbc. >> do they have a tv? has anyone ever seen it? >> people watch it. >> not nearly as many as watch here. >> bloomberg is reporting that china's government intervened according to sources to boost the market today. they're saying that the chinese

market was down with a modest loss with 50 minutes to go and then ended up 5.3%. china supposedly went into the equity market with big money buying blue chips. >> there's the chart. >> and you know why? they want the market better for the september 3rd celebration which we know there's a big military parade celebrating the world war ii victory over japan where there aren't many western countries going there because they think they're going to throw it in abe's face. restart some type of little tif with japan. but that's going to happen other september 3rd. >> this goes back to your theory about how on the premiere's birthday the stock market must go up. >> they did do that. that was a done deal. now you know where they're getting the money to do this.

>> that's okay right? we want them to support their stock market. >> i'm a little actinxious that what they're doing is artificial it creates a whole thing. >> if we all try to support stock markets using government money, sooner or later we run out. you run out of other people's money eventually. you need from the ground up. >> well they're -- >> productive. >> they would probably say they're getting there. they're trying to move toward a more market based economy but there are bumps along the road obviously and it's not a good source of pride. >> is this related to the former mayor of new york city. is it all part of the -- >> 100% his company. he's back in charge. >> are you familiar with -- >> i know mayor mike. >> you're familiar with this

news. >> he run ace good company. >> i used to love it until they took them away from us about 15 years ago we had them here. >> if you're just waking up let's get you up to speed in the overnight action in asia and europe. the stock market there jumping more than 5% to close back above that key 3,000 mark. people are watching. stocks swinging wildly in the final minutes of trading or so. china intervened to shoot up stocks. more on that from our reporters. as for the early action in europe a lot of green arrows on the screen. bullish momentum following the big gains yesterday. the dax is germany is up 3% gains across the continent. we'll check in with our colleagues in asia and europe in just a moment. also the price of oil which was lower yesterday because wti

today is surging. brent up 4%. backing off a little bit of buying of equities. a second look at second quarter gdp supposed to be higher later this morning. the euro is weaker. strong dollar back in charge against the euro and against the japanese yen. the strong dollar has been correlated with strong u. s. stocks yesterday and gold is higher today. 360. it's early. 1128 is the price of gold. gold bulls were disapointed to

see it didn't get better this week. >> usually if you see an 11 point drop on the dow buy gold. >> been a long time since anyone bought gold for anything which is evidence in the price. >> they bought the euro instead. >> that's true. >> i'm going next week. >> where. >> for a wedding. a very good event. >> wow, tuscany is one part i've never been too. >> a lot of economic data and a couple of key earnings report. at 8:30 eastern we get a read on second quarter gdp. the number expected to be revised up sharply. first reading was 2.3%. also weekly jobless claims at

8:30 and later in the morning pending home sales in the kansas city fed survey. on the corporate front the consumer is front and center. we'll hear from tiffany and dollar general and gm smuk, smu and then there's the fed. many gathering in jackson hole but they're not gelling with yellen this time. she's a no show. as you know, was it worth 600 points to crack addicts out on wall street? maybe it was. bill dudley cracked headline with this comment. >> from my perspective at this moment the decision to begin the normalization process at the september fomc meeting seems less compelling to me than a few weeks ago but normalization could become more compelling by

the time of the meeting as we get additional information on how the u.s. economy is performing. >> i think these guys sit around and okay lockhart. you say we're still going to do it. dudley you say we're not going to do it. we'll keep people on their toes. >> good cop bad cop. >> not raising a quarter point is good for 600. it really did -- >> so that happened during the 10:00 hour when we were on set. the dudley news and stocked rallied a little bit off of that and then they lost team and the gains are being attributed to the dovish comments but you didn't see the 600 point gain when he was speaking. >> if you don't think at 9:50 that the market already thought they weren't going in september. >> i think we're back to thinking they still might go. if you read all the commentary yesterday if the market stabilize they're on track with the economic numbers they're on track to start in september. they want to do it. >> he said that.

i hope we can do it. >> i didn't think he said anything beyond conventional. >> i'm still hoping. >> i know. >> that they go. >> i'm still thinking they will. i'm hoping that they will. >> less compelling is a signal. it's a signal that the market has already processed. >> here we are talking about it again. >> it's the signal in that. not just the quarter point. everyone knows that's easy policy but that is a signal that they're in tightening mode whether the next one comes right after or not. >> they could wait another year. just get on the board. >> we talked about having a monkey and a dog on the set. what a dove. >> monkeys are disgusting stuff. doves, constantly. they manufacture stuff. dogs, you know, you can take them out. take them out. do your business. come back in. it's all very civilized.

>> but then you need a hawk. you have to balance. >> a hawk on one side. >> take the dove down to times square where everybody goes in this new city that de blasio has. it's one big toilet down at times square. julian is laughing. thank you, can you sit here for awhile. i need some help today. anyway. he'll join us with his conversation with esther george. andrew, it's your read now. >> lovely. our global cnbc team has the market story covered this morning. we'll talk about it as seema mody is in london but before that hong kong where susan lee is hanging out. >> i think everyone agrees out here it's consensus that there was government intervention and buying from china in the last 45 minute of trade because we were down 1% and then up 5% which is

the biggest rally we've seen since july 9th or so and we saw these sizable bids coming from china finance security corporation backed funds and it's backed by the state council and other people took notice of the csf flows and it did seem obvious that china stepped n. they were buying banks. some are saying this support is showing china and the markets look pretty good. and there's a term called saving face. that's what they're trying to do going into september 3rd. we're seeing funds going back in with china supporting the market again. they're trying to keep things light and hong kong following china's rally but akocross the regions we saw japan following

wall street's lead seeing a rally of 1% but they say this was not institutional money. the big institutions are still staying on the sidelines at least for today. they need a more compelling story to chase the markets. it wasn't a convincing rally today and we'll see how long those gains last. that balance in asia a positive session in wall street and a positive read on the health of the euro zone. that is right, lending to firms and households have increased in the month of july. that's a vote of confidence for the ecb. this suggests that qe is working and the recovery here in europe is intact but that's not it, spain actually reporting a strong gdp number up 1%. that's the fastest pace of growth we've seen in spain in the last 8 years.

spain seen as one of the come back kids here in europe. now our attention turns to the upcoming election. this is the spanish equity gain around 2. 7%. oil and gas given the rebound in oil prices this morning. some of the natural gas and resource companies moving higher. glencore with a gain of around 4%. over to you. >> thank you for that. in the meantime back here the global market turmoil hitting many hedge fund investors including bill ackman. he was one of last year's best performing hedge fund managers but now the firm is down for the year after the markets dropped. three weeks ago he told clients the firm was up about 10% for the year through the end of july but despite the sharp moves they

have made no meaningful recent changes so it's current portfolio holding. it believes the value has not changed but diversity is not his thing. he likes to have a basket of half a dozen, a dozen stocks and he's betting on those stocks and that's the deal. >> that's a company that i happen to cover, the stock is down 10% since he announced the stake this month. 80% of their business is overseas. they have ton of business in emerging markets. >> i always wonder how many of a macro take he looks at. how macro he's thinking when he's looking at a stock like that in terms of the value. bank of america and other lenders were issuing calls to clients loaned by investment portfolios. that's what happens when the market goes down. this coming according to the

wall street journal. a big business for brokerages and the important part here is also that the firms are likely to take a hit on profits with a security's based loan. a person pledges all or part of their portfolio collateral. but the client uses it for real esta estate rather than other securities. >> a rally for the market after six sessions. joining us now. >> we don't need to know if it's an exact bottom but we need to know if we're making a botd tom. and whether this turns out to be a correction and not the beginning of a secular bear

where we go down 20 or 30%. >> i think we're in the process of making the bottom. wouldn't surprised me to retest some of the lows. >> but not another 10 to 15% down from here? that's more than a retest of the lows. if we were down another 10, that would be down roughly 15%. >> so you could see another 10%? >> i don't know if it will be exactly 10 but we're down another 10:00. nothing has been truly resolved here. the fed has not made a decision one way or another. >> would it shock you if we already put in the lows. >> that's possible too. to andrew's earlier reporting on the margin calls you could see that happening when they have to

be resolved at the end of the day. especially with nyse margin calls. >> is that why the 3:00 hour has been so crazy? >> i think so. that's when you start to button up the margin calls. >> we were looking at that monday morning. there's been a fair amount of damage here. i'm not sure it would workout so neatly that the bottom would put in. it's been a v shaped correction. >> can you compete with a guy with a bow tie and glasses like that? >> do you want to try? or defer to him? >> no. basically if you look at the bear markets of the last 25 years every single one of them has been accompanied by a recession. so when we look at the u.s. economy there is the probability of a recession over the next year and a half is very, very slight. you know,the jobs picture is

strong the housing market is strong and what we got yesterday was this strong durable goods report. we're not saying the industrial economy is going to revival magically but it was a day that people had not been expecting. >> so it's the last two weeks if the better like that around the world, you would be full on for the rate hike? the economic indicators are what the fed is looking for to raise. >> absolutely. >> so they do need to care about animal spirits or stock market valuations. >> the fed, whether it's overt or otherwise always has the international situation in the back of their mind and you could make the argument that the chinese devaluations a couple of

weeks ago was the first fed rate hike in a lot of ways. you had a lot of the effect that you might expect. >> it would make it worse if they did one. >> we're still thinking. we're calling for the hike in september. >> really? >> we're sticking with our guns. obviously the fed has made it clear that the data dependency is greater given the last several weeks. >> on our side of the house our view is that we'd see the rate increases sooner than later. if you look at the numbers, the car sales, we have car sales at 17, 18 million rate. last time we saw that was in 2005. last time we had unemployment at these levels, 2.5%, ten year rates were close to 4. do we need an interest rate policy now?

no. if the u.s. market cannot tolerate a 25 or 50 basis point raise in rates -- >> if they raise interest rates in the middle of global market turmoil that would influence the outlook. that's what bill dudley was saying yesterday. >> that's a fair point but after almost a decade of zero interest rates when the realization that it's coming to an end is going to create volatility in and of itself, if you're worried about volatility you end up getting in a circular argument. so you have to live with it regardless of the environment. it will never be an ideal time to raise interest rates. you have to look at the numbers to get on with it. the sooner you do it, the better. >> rip off the band-aid. >> if you do go beyond the

domestic economy, there's no country too small. it could cause them not to raise the economy. so we had greece. we worried about greece. then we worry about europe and southern europe and now it's china. it could be russia it could be brazil. every single place we can't raise because of that? >> they may it clear they don't want the repeat of 1937. the fed doesn't want to derail the us. so they have been extra cautious but what we would say is its very typical when you're getting this close to the start of normalization to actually see a normalization in volatility and investors should not be fearful of this volatility. they should try to use it to their advantage. >> okay. all right. thank you. you did fine.

you were not intimidated at all. >> relief. >> do you have anything interesting? >> i do but we're going to switch gears. i was pointing because we're switching fwegears to a tragic story. we have details about the mind set of a hand that shot and killed two former colleagues a tv reporter and videographer. he faxed a document to abc news in which he described himself as a human powder keg waiting to go boom. nbc's sarah reports from roanoke, virginia this morning. >> colleagues describe allison parker and adam ward as special people. the kind that were up before sunrise to put in long hours reporting the news. their off camera lives were just as busy. parker had recently moved in with her boyfriend. ward was engaged to be married. >> if i walked into the office in the morning and the first-person i saw was either

adam or allison i got a smile on my face. >> they were interviewing a local official live for cbs affiliate when he opened fire killing parker and ward. he filmed the shooting and posted it to social media later as he was pursued by police before he turned the gun on himself. >> it's obvious this gentleman was disturbed in some way of the way things transpired at some point in his life. things were spiraling out of control. >> flanagan that was fired from the station two years ago went by the name bryce williams when he worked there. management describes him as an angry employee. >> after awhile, a number of incidents, we thought it was best if he left the company and he did but not happily. he had to get some assistance from the police to get him out of here. >> meanwhile, a growing memorial outside wdbj is focused on the

lives of parker and ward. late wednesday the community came together to mourn their loss. the nation used to covering the news, now the center of a tragic story of its own. in roanoke, virginia, nbc news. >> woman being interviewed at the time of the shooting was also hit and is in stable condition this morning. >> coming up on the show, more on that big market move that we've seen pretty much all week. the market story of the morning. futures pointing to a higher open. plus steve sits down with kansas city fed president esther george on the big fed debate. as we head to break let's check out how we're setting up for the morning. dow futures up 183. you're watching squawk box on cnbc.

♪ every auto insurance policy has a number. 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. get an auto insurance quote and see why 92% of our members plan to stay for life.

meg joins us with more on the cholesterol drug wars. >> this is a new class of drugs for those that can't tolerate statens or don't get enough benefit from it. this is pcsk 9 inhibinhibitors. they reduce cholesterol levels by significant amounts even on top of other drugs. the question now widely expected

to get fda approval is how broad will that approval be and how high will they replace this drug. they set the price at $40 a day or $14,600 a year for these drugs. folks are anticipating a lot of competition either among the two companies themselves or from the pharmacy benefits managers and ensur insurers that will try to pit them against each other to get higher discounts. >> is that already built in to the stock? >> approval is built in but it's where the approval comes down. how broad. depending on where they price it could effect the stock as well. >> do they still keep track of mortality data? not just to see that it cuts cholesterol but keeps people from dying from heart attacks? >> they are. >> we still don't know. >> that's one of the big questions with these drugs. they're running cardiovascular outcomes trials and those take

many more years so we should get those data over the next few years. stat nts lower the risk of heart attack and stroke and people are questioning whether that translates to that for every kind of drug. that's because there's been drugs before that haven't done that. people are worried about it. >> thank you. appreciate it. we're going to talk fed. we're going to talk jackson hole right now because the annual jackson hole conference kicking off today where policy makers are keeping the close eye on the major markets move and steve sat down with the host of the event. esther george. >> when the stock market opens up down 1,000 points, do you get nervous? >> i pay attention. because again that's volatility you want to understand but remember we've been in a period of a highly accommodative policy with the kind of tools being

used by the fed that were targeted at asset values so when you effect those kind of prices for a long period of time and how are we positioned to deal with that. >> so you link the recent market volatility to fed policy? >> it has an influence on it and i take that because when we did quantitative easing, policy makers were clear about how it would effect asset values so whether assets are overpriced i don't know. but it does produce an important factor in how assets are in the economy. >> that begs the question as to whether or not what happens in the markets and the markets recent reaction should influence the federal reserve and whether or not it changes rates.

>> policy makers are trying to define whether the forecast should adjust. you have to be aware of why the markets move. >> you think the fed shouldn't raise rates. has anything you've seen the last several days changed your opinion of that? >> so i've been talking about the normalization of rates for sometime. this week's events complicate the picture but it's too soon to say it fundamentally changes that picture. in my view the normalization process needs to begin and the economy is performing in a way it's prepared to take that. >> what's your view of the u.s. economy now? >> i think it's continuing a trend rate of growth. it has been uneven. the first quarter took us back a little bit to understand why growth contracted but it looks

again second quarter that we're back on track. so i think the economy fundamentally is is in a good place. >> kansas city fed president esther george pretty sharp and direction in my book and her attitude is if you play with fire don't be surprised when you get burn first degree you're going to use asset prices as part of your policy with when you with draw stimulus you're going to have the volatility. and the key talks more about inflation and the potential market effects from a rate hike which is if you're going to with draw the stimulus don't be afraid, or deterred from your actions if the asset prices fall. >> make mess wonder what the conversation is there. given this is such an interesting time for jackson hole to be happening about the dangers of not raising rates sooner than later in september or this year or the dangers of

raising rates too early. i feel like that's the debate that people in the markets are having. what are they saying over there? >> the trouble with the people like george who want rates to go up is all the dangers are perspective. there's nothing apparent in terms of you have this inflation and the bubbles out there aren't obvious. although some people say they are to them but they're not all that clear. that's where they say you need to move now or face these unclear, uncertain -- dangers that are there. >> your own opinion is totally clouding your judgment there. we've had this talk so many times that all the stuff happening, all the buy backs that maybe shouldn't have been done. all the borrowing that shouldn't have been done, you don't know when that comes home to roost. >> that's what i'm saying, joe. >> listening to her i was like i

wanted to play some patriotic music. let's go. dudley and you have price stability and you're going to add asset values to this? stock market values are the third mandate that they have now to keep high? >> i think they would describe it more as financial stability right now but yeah you're right. we need to hang on to the gains we solicited in the stock market. we can't get either of those back. >> i think like she had an i told you so attitude around this interview here which is this idea of she was against, along with her predecessor this idea of using asset prices as part of the policy so she's saying i told you this was going to

happen here. here's the interesting question. if this is a reaction, should you stomach this and take this and go ahead with your policy of raising rates? we can debate this. if what you get as a result of raising rates is a 10% sell off in the market are you getting off cheep here? considering you went from 6 or 8,000 up to 16 or 18,000 and all you do is come back to 16 in if this is it. go for it. don't stop. if every time you go to go forward and the market else is off and you stop going forward because of that then you're not realizing that what you're see as good the market reaction. >> you're underestimating the strength of the dollar and what that will do to u.s. growth and the fact that the fed is the global central bank whether it wants it or not. >> we can't feel bad for every country that happens to have crappy currency because their economic fundamentals are no

good. >> maybe it's not an accident that every time the fed talks about raising rates something bad happens. that bad is the thing -- >> steve, the other thing, the benefits are are gone. so why worry -- if there's any possibility this is going to come home to roost because of what you're doing you need to get out. we don't know what's lying ahead. >> what do you mean the benefits are gone, joe? >>. >> it's not going to induce anything. >> i want steve to try to read through -- >> raise in september. >> dudley is closer to yellen. >> are you 100% -- >> no -- >> i'm not going to ask when we bottom -- >> i asked that. >> i think there's a debate here guys and esther george is one

side of that. go for it. do it. let's start this process. because of the things joe was talking about. she didn't mention joe. but the potential bad outcomes here and you have dudley that's a little more center. dudley is like let's just be a little more careful. it's less compelling right now. he still wants to raise this. >> who is she actually listening to? >> isn't dudley closer. >> that's right but the world has moved a little bit closer to' year ago. >> the vice chairman is speaking on saturday. >> kansas city. midwest turned common sense versus new york. high in the sky, progressive. >> oh gosh. >> exactly what it is. >> we have to go. bye steve. watch out for the elk.

there's lots of elk. quite beautiful. >> lot of elks. >> elk. >> it's like deer. >> when we come back walmart kicking off the holiday push earlier than normal and they're hoping the star wars force will be a big sales driver. that story next. but first as we head out to break let's look back at this date in history. ♪ ♪ ♪ ♪

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. seven out of ten power outages in the us are caused by weather. but utilities can now predict where the power will go out, within a few city blocks. working with ibm, they're combining micro weather forecasts with detailed data from local sensors. to predict where outages are likely to occur. and send crews exactly where they're needed, when they're needed. ibm analytics from the internet of things is making energy smarter every day. when you're not confident your company's data is secure, the possibility of a breach can quickly become the only thing you think about.

that's where at&t can help. at at&t we monitor our network traffic so we can see things others can't. mitigating risks across your business. leaving you free to focus on what matters most. behold, these are two can you spot the difference? the wind farm on the right was created using digital models and real world location-based specs that taught it how to follow the wind. so while the ones on the left are waiting, the ones on the right are pulling power out of thin air. pretty impressive, huh? now, two things that are exactly the same have have never been more different. ge software. get connected. get insights. get optimized.

welcome back. let's get you up to speed on the markets this morning. china shanghai composite jumping

more than 5% to close back above that key 3,000 mark. stocks swinging wildly. actually just going up. straight up in the final 30 minutes of trading and reports say that china intervened buying the blue chips. the government bought a bunch of blue chips. they want the market higher for the big september 3rd, world war ii victory commemoration or that's the implied reason which is -- if you are going to be a communist country and have state control of everything, go full, man. you got all the taipnks and stu. you don't want a crappy stock market when that's happening. >> no, very reasonable. >> they have plenty of treasuries to sell. >> which they have been doing. but they have to get that market under control.

it's been crazy. >> you scare me. do we need to get it under control here? should we be buying s&ps here. >> no different kind of market. >> it's a stock market right. >> yeah but people always say that the chinese market is casino. >> it was rigged to begin with. accept what it is. then it's not really a market is it? >> let's tell you what's making headlines this morning. walmart is launching it's holiday layaway two weeks later than last week. among the drivers the december release of star wars, the force awakens. walmart will have 500 new star wars products on september 4th. >> we talked about yoda. will he be around? >> i don't know. >> you don't know? >> isn't he like a core

character. >> i don't know. which one is this? it's like reboot number nine. >> there's so much hype. >> we're talking about you go after the show, right? >> a little bit of yoga. >> you do? >> i did touch my toes. i can't touch my toes. >> when we come back -- >> go like this. >> coming up, tech names leading the rally on wall street. the sector jumping more than 5% yesterday erasings all the week's losses. we have that story and a lot more when squawk box returns in just a moment.

but it is not the device that is mobile, it is you. real madrid have about 450 million fans. we're trying to give them all the feeling of being at the stadium. the microsoft cloud gives us the scalability to communicate exactly the content that people want to see. it will help people connect to their passion of living real madrid.

s&p tech sector snapping back and rising more than 5% yesterday and facebook, amazon, netflix and google played a big part in the s&p performance this week all posting very strong gains of 5% or more. joining us is gene who covers most of these stocks. good morning to you. >> good morning. >> did we miss it? is the big chance to get in at a discount price this week, is it over? >> well, probably for this week but if you think about the broader secular theme the reason these stocks just ripped back is because investors recognize that these are great secular themes so if you take the approach of trying to get a quick buck you probably missed it. investing for six months and beyond these are all great stories to own. >> of the stories, which story

do you like the best? >> near term it's apple. i think that there's a lot of skepticism around these difficult cull comps and ultimately they're gaining share and separately is facebook. we talked a lot aboutfacebook. this whole occuec thing is a term of revolution of augmented reality theme and i think that's something to pick up momentum in the near term. >> we debate apple all the time. what's the potential of apple? can it get back to the most recent highs? >> i think it can. i think there's going to be a subtle shift in how investors think of apple over the next couple of years and shift more to this annuity, very predictable type of business. we are mott going to have the 30% growth but a steady kind of -- >> have we had a predictable technology company before?

>> there really has not been. i think that's a reason it doesn't get multiple like coca-cola, for example. but if they can kind of sustain this upgrade pattern that they have, and continue to inch market share i think as much as a tech company is predictable, apple could be one. >> you can get the 30% where you were pounding the table on it instead of 30% from there, you can get it back to the 785. >> yeah. i mean, there's that. our price target is much more optimistic. we have 60% upside to the stock which -- >> that's what i mean, yeah. you didn't lower the price target at all. watched it from 385 billion to the 5s last week and it was in market cap like 5 -- i don't know what it was, 520 or something. you department change anything. >> we actually raised the target because we felt more optimistic about the share gains an enso i feel great that this is one --

>> what's your target now? >> pardon? >> what is your apple tarl get now? >> we are at -- sorry. we're at 172. >> we're at 109.69. >> okay. >> gene, dare i ask, we have to run, google or now alphabet? how do you think about that? >> they'll give more transparency and investors like. it is a good steady story but i think there's other of the fang there's more attractive withins at this point. >> okay. gene, thanks for waking up there early. >> thank you. >> fang is amazon, fanga? >> "a" in fang is amazon. not apple. >> we were off track. >> thank you. all right. coming up, deal news to report to you as we look toward the market open. futures extending gains on top of yesterday's 600-point rally in the dow. rance 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. get an auto insurance quote and see why 92% of our members plan to stay for life.

can a a subconscious. mind? 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? dentist appointment when my teeth are ready? ♪ can it tell the doctor how long you have to wear this thing? ♪ can it tell the flight attendant to please not wake me this time? ♪ the answer is yes, it can. so, the question your customers are really asking is, can your business deliver?

you forgot the milk! that's lactaid. right. 100% real milk, just without the lactose. so you can drink all you want... ...with no discomfort? exactly. here, try some... mmm, it is real milk. see? delicious. hoof bump! oh. right here girl, boom. lactaid®. 100% real milk. no discomfort. and for a creamy and delicious treat, try lactaid® ice cream.

coming up, shares of saipt jude medical jumping right now. we'll talk about it on a report of abbotts labs preparing a $25 billion bid for the company. that story and more when we return in a moment.

♪ no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.

more and more, data is visual. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. because it's so challenging, a research project is teaching ibm watson to see. in the future, it could help clinicians spot key patterns quickly and precisely. ibm watson is working to make healthcare smarter every day.

china shot up more than 5%. futures indicating another big up move today. what to expect as we count you down to the opening bell. the global selloff worshipping out this year's gains for the persian square holdings but saying he's not switching gears. and the fed's jackson hole symposium is hottest ticket of the year. inside the peaceful mountain resort, the great interest rate debate is raging. steve takes us behind the scenes as the second hour of "squawk box" begins right now. ♪ ♪

welcome back. right here on cnbc. first in business worldwide. this morning, becky has the day off. our top story this morning, of course, the markets. u.s. futures indicated sharply higher this follows yesterday's snapback of more than 600 points in the dow. it was the biggest gain, biggest point gain ever for the blue chips. >> third biggest. >> broke the streak -- >> not the biggest. third biggest. >> third biggest? >> that's what it said. >> best day percentage wise for the dow and s&p since 2007. >> european equities, at this hour, as well. you are seeing a green arrows there with the dax and the cac up close to 3%. ftse 100 up.

and some of this happening in part we think because as joe was saying it's china propping up its own market toward the end of the day yesterday. >> i think we know. bought blue chip stocks. nice move, 5%. >> that's what happens if you throw money at things. >> it's very appealing. as a technique that i think we should think about over here. things are a little sad and all of us, oh my god, we feel horrible. >> buy some stock. >> come on in. down 10% to up 20% or something? >> don't you think we have more powerful tools? >> that's powerful. we have to work around the edges. >> cash is a powerful tool. >> we have to do qe and we recollect just do it. >> it worked, didn't it the. >> you said it did. all justifiejustified. take it away and won't matter. >> china had to do something. the stock market is getting crazy. >> you are wearing red today.

>> i'm wearing red today. breaking overnight, china did rally. a stunning intraday move from a los to a 5% rally in the final hour of trading an enthe support that joe reports, the reports that the government stepped in to buy shares of large companies. the rally ended, steepest five-day slump since 1996. that's what i was talking about. back in the u.s., it is a focus on u.s. economic data. a second quarter read on second quarter gdp and the number up sharply from the first reading. 2.3%. economists are expecting it to go up a full percentage point. 3.3%. better second quarter. pay attention to the weekless jobless claims numbers. per shing square founder said the firm is down for the year. three weeks ago, ackman said the

fund was up. in a financial statement, he said the firm made no meaningful recent changes an was not leveraged in a way that would force the sale of holdings at an inopportune time. i have to think, though, a lot of hedge funds hit on the massive market move out of nowhere and ended six years of calm in the u.s. stock market. >> i imagine if others september out letters and i don't believe they have yet they would read a little bit like this. >> probably. >> possible depending on what happens in the market putting out the letter today, i don't know what time he put it out. >> that's when it was reported. >> a carlisle fund up, $100 million in a week based on the currency shorts in emerging market. we decide china is like a corporation. run by the government and buying back their own stock. >> this is a buyback. you know my view on buybacks. >> if that worked, why wouldn't

everyone do it? sooner or later you run out of money. >> they're not running out of money. >> they have our money. let's tell you about another big deal this morning. a possible takeover deal is in the works. "financial times" reporting that abbott labs is preparing a bid for st. jude medical and working with jpmorgan and citi on the deal sending the shares of st. jude higher in premarket trading and looking at it up 12% in the premarket. i have to get on the phone. >> i can tell you some stuff about this real quick. >> please do it. >> let's look at if we have a one-year chart of saipt jut. ju. starting in mid-june sold off to where they can offer a premium and get back to where it was on july 21st, st. jude announced there you can see it. announced an acquisition of t when thoratech and not taken

positively. i don't know what this means if abbott buys st. jude. try to scuttle -- not sure if they would or not. both of them trying to make not heart transplant and mechanical hearts but the devices that allow you to support -- i think they're left ventricle assist devices and things like that. >> given where st. jude's trading, though, don't you this they'll say no go? we don't want to do this deal in. >> st. jude will say that. >> talk to the hand. >> talk to the hand. but they have probably -- maybe they bought thoratech knowing this is in the works and offering a premium to be back on its own. >> a sign that the deals will continue maybe even though what we have seen? yesterday -- >> yeah. we had roger altman in here just yesterday. and roger said that there hadn't

been a slowdown. he was not -- you know, we had asked. i think a project or two he said. little slower. but otherwise he said we'll steam ahead. questions of whether it will maintain on the ipos. i think if that doesn't happen, you have the private market situation. >> yeah. getting rid of the ipo this week is nerve-racking. >> when's the birthday? >> in may. >> do you have a -- do you have actual blue boxes that you buy something at kay's and put in it a blue box? >> no. >> never done that? >> only the real thing. >> there was an earnings miss for tiffany's today. >> the sorkin family did not contribute enough? >> a lot of people have blue boxes and go to -- you know, another place. stick in it there. >> speak for yourself. >> i have friends that have done that. five cents below estimates. tiffany pointing to a strong dollar and challenging economic

conditions in certain market. tiffany is like needles markup. tiffany is so much more expensive than what you can get on 46th street. i don't know. with yesterday's gain, the s&p ended out of correction territory. which stock and stocks snapped back the most? i'll bet you when i read something like this you know what i'm leading to? dominic chu. right? >> yes! it is. >> i knew it. >> you knew it. >> because you have no life. you do this every day, figure something else. >> i don't have a life whatsoever. i'm glad that you appreciate the fact i have no life right now, joe. >> right. misery loves company. >> it does, for sure. okay. so that tiffany chart you showed over the last year, shows real negative momentum and down year to date at this popt here so when we look at snapback stocks and find the one that have fallen the most and bounced back the most and not those

proverbial falling knives or dead cat bounces. maybe it's a short-term pop. what we did is took the s&p 500, looked for the biggest drops on tuesday, those that fell by 2% or more at least on tuesday. 500 stocks became 167. we then said, okay, then what about wednesday's action? up by at least 5%. that 167 fell to just 19 stocks in the s&p 500. and then we said, in order to avoid those falling knives, look at the ones still positive year to date. right in the ones that have shown some strength, relative momentum going into these numbers and that 19 became just 2 stocks. they're both technology. the first one here is semiconductors and we know how beaten up that sector has become. that industry has become. this one is invidia. you can see there, in the extended hours and two days and the last year and a half,

they're up about 8%, 9% during this time, as well. you can see there. relative strength. another one here, guys, is a dow component in technology and not intel or cisco. visa shares up. you can see over the last couple of days, pretty decent gains. two stocks bought on the dip tuesday and then kind of really went up on wednesday. the big snapbacks ones that invest or thes keep an eye on because they're perhaps signs that that momentum can continue to the upside given that trajectory. back over to you. >> interesting, dom. thank you. my friend. you have people help you with this. you're not like a genius, right? >> i'm not like a genius. we have a group of smart people here but we are a bunch of spreadsheet jockeys and goes to the i have no life here that happens. >> you do. that's the way to do it. you have a great team.

>> absolutely. >> humility is good. >> no doubt. >> for more, let's bring in barbara rhine hart, chief investment at credit suisse now? for barbara, since this is her business, this is her job, maybe we do ask her. you want to ask her? >> i do. is it a bottom? >> have we made the bottom? >> that's from yesterday. >> you made fun of me asking. >> that's the mocking of him. >> i think you're just mocking everybody. now you're asking the question. >> but -- is it a bottom? >> great question and one that everyone wants an answer to. we look for bottom and violent selloffs is a capitulation in investor sentiment and we have not seen that. looking at the risk appetite index, american association for individual investors, they're all getting down towards oversold levels but they haven't pierced through them and when you have violent moves like this, you generally need to see

a capitulation. >> as an investor listening to what you're saying and you have cash on the sidelines, are you supposed to wait for this violent moment that you're talking about or do you go in now? >> no. we are actually staying neutral. we have been holding cash for the better part of this entire year and more than average cash thinking there's going to be a volatility move. we got to august of this year without any one standard deviation and that's very unusual because you generally get three a year. so we felt as though there's a pullback and we don't think -- >> did we have three last year? >> yes. >> we have had had these little moves in the last couple of years? >> three a yore. >> didn't do 10%. >> in 2013, you only had two. last year you had throw. >> if you could have bought on the lows from a couple of days ago, would you have bought there? >> no, we did not. >> you didn't have time. >> no. the other thing, as well, in

these types of selloffs, you need to see either a very big down day on very low volume and exhausting the sell earls or the other thing you need to do is see a very up day on very big volume confirming it. >> can you imagine vick telling you these things? there's thinking and rational and work that goes in. >> don't knock him. >> i don't care whether you're thinking it's a bottom. >> there are things that you can do, right? some of the beaten up parts of the market, that's going to be a very big positive carry and to do something -- >> barbara, wasn't this whole rally that we have seen, this it wasn't a -- we didn't reach levels of optimism that are -- so, i mean, it is not -- i mean, you say we haven't seen the pessimism. >> this is a whole big year of a

gains, taking some gains and then taking them backment right? it's a frustrating -- >> people weren't overly bullish and haven't been for a move, have they? >> exactly. this is one of the most unloved, underowned, underinvested rallies since 2009. >> maybe we don't need that capitulation. >> you had it in 2011. you had the big capitulation in 2010 with big market moves like this. last time of a greater than 10% decline in 2011 went from may until october of 2011. you had a 19% peak to trough to decline in the s&p and oversold panic levels more severe than you saw than lehman. >> that was greece and the u.s. downgrade. what's the why now or just li psychological and emotional? >> it's the emerging markets in completely bear market territory. right? they have pierced through 20% peak to trough declines.

this is the first time the fed wants to raise interest rates since 2006. that's not a benign event to digest. and then the last piece of it, as well, is you have bond yields very low. stubbornly low and investors reluctant to say i want to move into equities and been a very untrusted market. >> what level on the s&p, we're at 1940. what level just as an estimate since you don't know where that capitulation would be but what level would you expect it to be where you see an event like that? 1600? >> no. it is difficult to say. >> 17? 14? give me an idea. which one? >> it generally is a transition, of course, from a valuation-led recovery into an earnings-led recovery -- >> okay. >> you know, there are some very important lows that were reached in the market and held -- >> what are some of those numbers? >> 1820 is a big one.

>> okay. >> there's a technical support levels below that, as well. >> in the 1700s. >> well into the 17s. >> similar to the 17s. >> this is what we think. we think that this has not exhausted itself. that is nice counter trend moment and there's indigestion to come before this is over. >> a clinic in actually talking about this, i think. >> no. we know what to look at. >> right? >> maybe totally wrong. we may go up from here but at least that's a really definitive -- >> what you heard on the floor yesterday. during that 600-point rally. >> well, traders on the floor -- it is oversold -- >> what's they? >> they were quick to warn. >> one of the best indicators we have. >> good to know. >> where can we find that? >> might need a business? >> might need an account. >> thank you. >> there's that word again.

when we come back, retailers reporting, courtney moves down the results. tiffany under heavy selling pressure down 7%, a big miss. and then investor thomas white is bullish on china. find out why he says the fears driving the selloff are overblown. later, more of steve liesman's interview with ester george and reaction of a former new york fed official on the timing of the elusive fed interest rate hike. stick around. you are looking at two airplane fuel gauges.

can you spot the difference? no? you can't see that? alright, let's take a look. the one on the right just used 1% less fuel than the one on the left. now, to an airline, a 1% difference could save enough fuel to power hundreds of flights around the world. hey, look at that. pyramids. so you see, two things that are exactly the same have never been more different. ge software. get connected. get insights. get optimized.

welcome back to "squawk box" this morning. look at the futures. we have green arrows after quite a good day. the dow opening up higher. s&p up 17 and the nasdaq up about 45 points. also a quick update on an earlier story. bill ackman we said saw gains wiped out by the market selloff according to a letter to investors yesterday saying he was down 10% but i should tell you doing reporting this morning that was based on their nav on tuesday. so if you think about that, it's possible that we're maybe instead of down 10%, down 7%, 6%. >> he was up 10. even or -- >> no. i'm sorry up 10. >> and then even? >> now he said he was down.

>> that was on tuesday. a lot's happened since. >> just down? >> just down. i shouldn't have given percentages and now really understand the dating on that, depending on where he was yesterday, it's possible that he's back in the black. >> 3% to 4% moves for the broader average estimate. several retailers with earnings this morning. courtney reagan joins us with more. >> high-end jeweler tiffany falling and weak guidance. comps flat in the u.s. due to the lower tourist spending and tourists were apparently spending in europe and japan. comps of 19% and 21% respectively. but again, u.s. is the big market there. separately, after the bell yesterday, pvh corp. turning in a quarter that surprised the street to the upside. beat on earnings and revenue. ceo pointing to strength in the

calvin klein merchandise, particularly the underwear. i guess the ads are working. lower traffic in key tourist stores. pvh expects headwinds to continue and held up pretty well for the quarter. william-sonoma slight beat on revenue and the weak quarter outlook dragging down shares. hardest hit in the wake of the west coast port disruption and that pain continues. the ceo says it incured further supply chain costs to restore the inventory levels. the big pieces of furniture they had to move and got stuck in the west coast ports so it was a big pain for them and still obviously dragging on the results. >> for tiffany, they have overseas business worth less brought back in the local currency and then shoppers at the u.s. store are tourists and they're just not spending as much. >> in the key destinations like in honolulu and here in new

york, san francisco. >> that's still the issue here? >> it is, it is. strong dollar, the tourist spending, interplay between the two not helping. >> consumer discretionary is positive for the year. one of the best performers. >> it is. it is hard to paint it all with a broad brush. see shares of pvh did better than tiffany and dealing with the same headwinds to some extent and there's some management issues there, as well. >> men's underwear at calvin klein? >> i feel like it -- probably the women buying the men's underwear based on the ads. i'm just saying. >> joe? >> not that i know. >> any expertise? >> who needs it? coming up, a big win for tesla's model s this morning. the car getting an unprecedented review. that story is next. eeep breath

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]

no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.

coming up, famed short seller says china is worse than you think. we'll talk to an investor betting that the dropoff in chinese stocks is a huge overreaction. we're back in a moment.

right now, at&t is giving you 50 percent more data. that's 15 gigs of data for the price of 10. and get 300 dollars credit for every line you switch to at&t.

♪ i agree with you. >> welcome back to "squawk box." mng the story that is are front and center at this hour, abbott labs reportedly preparing a $25 billion bid for st. jude medical. "the financial times" saying it would be a cash and stock transition an trying the line up financing for that transaction. the report saying that jpmorgan and citi working with that company. jm smuckers earnings beating by 9 cents a share and revenue better than expected and

michael's earnings beating by a penny. revenues roughly in line. then there's the new model of tesla s scoring a big win this morning. "consumer reporting" giving a score of 103 ever on a scale maxing out at 100. acceleration and top fuel economy, they're calling the model s the quickest car ever tested going from 0 to 60 miles per hour in 3.5 seconds. >> it really does almost everything better. and something we aren't used to seeing from cars at all. it's more like something you see in electronics. so it really kind of blew up our system, really. it scored actually above 100 before we actually had to make some changes to our scoring system to account for this car. >> wow. shares of tesla up this morning. elon musk got to be happy about that. shares trading at $230.50.

>> coming off the highs. chinese equities are bouncing back overnight after reports of the government stepped in and actually bought shares in large companies. let's bring in thomas white, president and ce io of thomas white with over $2 billion under management. you invest in chinese stocks? >> yes. it's the second largest economy and very interested in it. been very active in it over 20iers. >> hard to find a bull on the chinese equity market right now given the crazy swings that 60-point gain they had at one point in the year is wiped out. >> yes. but most of that was a confusion over what happened. morgan stanley capital international was going to increase them, put them in the indices and huge amount of passive money coming in the new effort they came across technological problems they couldn't get the settlement. they put it off. and when they put it off, the

market fell back down again. that's a blip up, a blip down. china is a huge economy. it will be the largest economy in the world in the next few yores. >> why not just buy a yum brands getting 52% of the revenue in china or an apple getting almost 30%? >> well, of course, companies whether they're in europe, japan, the united states, have had a good 20%, 25% of the earnings from china for a long period of time so there's not a global company alive that doesn't have some of the top executives in china working aspects of it, manufacturing or selling there. china's a big part of it. you just don't have very many people that truly understand the stock market in china. >> it is hard to understand. i mean, today, report that is they stepped in and bought shares to get it under control after -- >> you were -- >> cut rates. ratio requirements. pumped pumped pumped pumped

pumpedly liquidity. >> that is government with $3.2 trillion of reserves. we're a government who doesn't have any -- near that. we bought every bond alive for five years before our economy -- and yet you're so sensitive they're buying a few of their stocks and the stock market is nothing. 18% of the people have stocks in china. the rest are owned by the gft. >> not a casino. that's sort of a reputation it has. that it's kind of a fake market. >> let me assure you that they have a population which is 4 1/2 times many people in the united states. they have them aggressive, wanting to be entrepreneurs and places to put their money. real estate's too high now. they want to do it but they are also speculators by their very nature and they have always had been and but those small percent of the people don't let it confuse you. china is at the lowdown these are probably the -- it's governed by the best policy

makers in the world. they have turned the market 30 years ago a basket case through a period of time and now the second largest economy in the world. and now they're going to be the first before literally five years and the biggest stock market in the year within 12 years. and it's just because that stock market will open up to the world. they do not have an exchangeable economy right now. you cannot buy their stocks. very few people you ever had on this show ever bought in asia. >> how do you do it? >> so the shares are available to institutions. eight shares and shares that have been on the southern new york stock exchange. that's 4% of the world economy and second largest in the world. when they had the number of stock that is equal the size of their economy and that will happen, and it will happen by way of benchmarks and the passive investors will flow in there, you have got a major

event coming up over 12 years. it is a big name and yet this confusion has brought the shares down to single digits. you have a tremendous opportunity ahead of you and yet the shares priced at single digits because people -- >> how would you recommend since individual investors can't get access, buy an etf that tracks the chinese stock market here? >> morgan stanley's chinese index is the affect. >> sure. >> those shares are as i say very inexpensivnexpensive, rela strong economy. their slowdown and it's happening, they're converting from an economy which is manufacturing things -- >> right. you see this as part of the process of -- >> consumption and service and in that conversion they have a certain part of the economy slowing down and they should have slow down and more than that, they have most of their businesses are state-owned enterprises. they're not as competitive as they should be. a slowdown, a growth, recession will really help them and make

them much more competitive. this country is run out of university chicago, harvard, stamford. it's ready to move. >> what do you think? it's not a view we typically hear, andrew. >> it's truth. the you understand passive investing, you understand when they get exposure to the chinese market which is coming. it wasn't canceled. it was delayed. that exposure will put huge amount of passive money into the market. huge. >> is there one individual stock you would buy? >> yes. i'm not here to quote individual stocks. >> do you look at an ali bboba? >> china is converting as a manufacturer of products for the west to basically a more sustainable economy which is consumption and service like ours is. >> did you foresee the past couple of years in terms of 7%

or 8% to 4%? probably saying this all along, right? things have changed and slowed significantly in the past two or three years and talk to chinos. i think a lot of people are like this. we have people that, you know, the consensus is they know exactly what they're doing and state controlled. >> on the economy, not necessarily the stock market. >> sooner or later. they have a lot to navigate in terms of property rights, personal freedom, with everything else. >> absolutely. >> the stock market has been a force that has been difficult to force control. correct? >> they have a small stock market externally and internally. >> what would you call the last two or three years? a little bit of a -- >> they had a huge surge in growth. >> right. >> that surge in growth created unsustainable build-up of minds -- >> right. empty department buildings.

>> that's rare. >> really? empty stadiums and no one playing soccer. >> that a rarity. they have too much of certain things as they convert those things slow down and others pick up. >> why don't you think that state sponsored aloe case of capital they're going to screw up if they don't use market forces? thigh they know that's wrong. they are run right out of the mba book. >> they're not allocating capital? >> they know that. they know -- yes. they know it's ineffective ways to create an economy. they're bringing up -- what they need now is a large capital market. >> yeah. >> and a large stock market. they'll get it. they have tremendous -- joe, one of the strengths of a country is how big it is. this is 4.3 trillion people. >> yes. >> these are energetic people. they're learning how to get -- >> what? >> 4.3 billion. >> okay. >> billion.

>> billion. versus our 320 million. >> right. thank you. thanks for sharing your views. got to leave it there. >> great story. a great book for you. >> there you go. >> always looking. always looking. >> i thought 2 billion. is it 4 billion? 4? >> number of people? >> yeah. >> i thought it was 2. >> it's 1.4 billion people. >> okay. you said 4.3 billion. all right. anyway, sorry. >> 1.4 billion people. the united states is 320 million. >> right. okay. four times. >> that is big consumer market. coming up, fed policy makers gathering in wyoming amid uncertainty of the timing of rate increases. hearing from kansas city president ester george next and reaction of former new york fed official. that's coming up. 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?

kansas city fed ester george saying the u.s. economy is prepared for fed policy to normalize. here's what she told our senior economics reporter steve liesman about the fed rate hike path. >> i hope we can go gradually. i think that given how long we

have been at zero would be the ideal path to be able to lift off, to wait and see how the economy does and then decide when the next move is. >> when it comes to raising interest rates, are you concerned that the market would bring forward all future rates to today, this idea that they sort of price to the terminal rate? >> that's been the traditional reaction to bring that forward. i think through a lot of communications and efforts to be more transparent about how policy makers are thinking about rates this time, i hope will help that. but, yes, to some degree that always pulls forward in some sense. >> a stronger dollar, lower come bod my prices, weaker chinese economic, what impact on the near-term economic data? >> i expect disinflationary

pressures for sometime. what extent that feeds through to the real economy, to what extent we see that changing expectations, remains to be seen. hold have held up pretty well and why i think it's a transitory story. >> why did you come up with inflation as a topic for the conference? >> the issues we are seeing globally, major central banks struggle with. and the question i think is, is it a function of the nature of the crisis we just went through, what adjustments may have come from that, the time that it takes to restore economies to their full potential is having these effects. >> are you concerned about the market fallout from the federal reserve raising interest rates in the current environment? >> i think there could be volatility, steve. do i worry about that? if i thought the economy was not on relatively sure footing here, then i think the complications

from that would cause policymakers to have to think about that. given the fundamentals i think we are in a good position now and we can't wait until we can determine whether market conditions are just right. >> so there's bit of an ester george framework for raising rates which is look at the economy, if the economy's able to withstand the rate hike, look at markets but don't be swayed by them. i think the more extreme way of putting this, don't be allowed to be hostage by the markets do. the policy and let the market fall out where it is. tomorrow morning i think we have the other end of the spectrum, the federal reserve president and i don't know how much you like this but almost certainly arguing not for rate hikes but additional easing. >> okay. steve, thank you. appreciate it. we'll continue this conversation though now with a former fed insider, joining us is the vice chairman of evercore and head of

the group's global policy and central bank strategy team and former executive vice president at the new york fed. read between the lines for us. handicap what happens in september for us. >> look. i think that the probability of a rate hike in september is pretty low at this juncture. now, this clearly is sentiment on the committee they would like to move forward with raising rarts as soon as circumstances allow. but even before the markets sold off the last few days you had falling inflation break even, falling oil. falling commodity prices. strength in the dollar tightening things up and a substitute for rate hikes. the case for september weakening before the selloff and i think the selloff does matter even though you absolutely shouldn't set policy for the benefit of the markets. >> we keep hearing from different voices, right? one of the things that's always hard as an outsider to understand is, who actually has

the ear of janet yellen? what does she listen to and who does she not listen to as much even though i'm sure she probably thinks she's listening to all of them. you hear ester george, against a dudley. you have others coming on tomorrow and who might even be more dovish. how does that work inside the room? >> well, look. i think that janet genuinely is respected around the table for dealing fairly with people for listening to their opinions, to trying to build a consensus. with that said, clearly, her own thinking is closer to and she listens more to certain officials than others. now, i'm speculating from the outside as the next man at this point. obviously, bill dudley, stan fisher, very close dialogue with janet. john williams who she worked with at the san francisco fed. perhaps from the dovish camp and people paying some attention to, i think. she will be -- she is not out on the dovish extreme of this

committee at the moment. she is more in the center. >> you know, you heard the word transitory used and a fed president's favorite words to suggest it's temporary. when's the shelf life on transito transitory? because we haven't seen inflation back to the target. so forget the markets for a moment. they have an excuse in the fact that core inflation is 1.3%. way below their 2% target. >> so i think that's really absolutely on the nail. right? because if we were seeing wages accelerating, if we were seeing core pce accelerating or say core services inflation which is pretty insulated from oil or the dollar, accelerating, then there could be quite a strong case for these effects but it's awol. there's no sign of the domestic inflationary pressures arriving on schedule. will they arrive some day if unemployment continues to decline? yes.

but in a timely enough manner with enough force to overcome the external headwinds to get inflation back to target if two, three years? that's the question. not clear to be confident on that right now. >> another quick thing. i don't know if you saw the bridgewater report out earlier this week and suggested effectively we need more qe, not less. it's not about tightening but the opposite direction. talk to us about the straight line idea. is it possibly a tight end and then how do you communicate to the public if you don't plan to tighten again immediately afterwards. >> well, you can do that. this's the so-called dovish hike hypothesis. you hike once and then you issue those dots in the sep that show you're flattening down expectations for hiking. only one this year and done as of september and wrap it in cotton wool in the press conference. i think that's a superficially attractive strategy and i don't like it actually. in the final analysis, you would

still be tightening financial conditions and ray says you should be easing them. i don't think that certainly on the balance of probabilities the next move is to ease but there is some real insight in that argument which is the following. you have to be really careful here. the aim of the game is not to get rates off zero. the aim of the game is not to be back at zero. one, two years from now. if you dent like the idea of having to go become into qe-4 in the future, you have to be very careful not just about the timing of liftoff but communicating to markets and in the end the real economy, the households, that you are going to shepherd this expansion through the phase where rates are low and external shocks can present a serious risk of pushing you back to the zero bout. take us through to some safe, secure prosperous future. that's the challenge right now. >> always great for your insights. thank you. >> thank you. >> thank you very much. when we come back, more on

the reports of the deal by abbott labs to buy st. jude, the biggest gainer in premarket action. meg terrell will join us next. new jersey governor chris christie joining us on set to talk china, the markets and, of course, taking on donald trump.

two streetlights. the only difference: that little blue thingy. you 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.

possible deal in the works,

abbott labs reportedly preparing a $25 billion bid for st. jude medical. meg terrell joins us with more. >> financial times reporting the deal could be about $25 billion which happen which would represent a capital mark for st. jude yesterday. this might potentially make sense. the two companies already work together, selling the cardiovascular product portfolio to hospitals and seeing consolidation in the medical device space because the companies need more leverage talking to hospitals when they're trying to negotiate on the prices of these things and so if companies can get bigger, they have more power there. abbott itself has been slimming down a little bit. divesting the animal health unit and brand of generics and then folks wondering what they were going to do after that and they were planning or folks expected them to gear up or m & a. they were expected to do smaller

deals, 5 billion to 7 billion and bigger than expected for abbott an doesn't totally not make sense. >> i'm trying to understand hostile bid? friendly deal? what's going on here? >> unclear. unclear from this. >> given the market price, where st. jude is sitting right now, i would think they want a lot more. because they're going to look at the market an say, look. look at where we used to be. right? >> well, yeah. you can say that for a lot of potential targets right now. that's always the question, right? a big depression in the market like this, people are more vulnerable. some folks might argue that the highs of the prices aren't reasonable so -- >> on this whole idea of watching the markets and the bull market continues and $400 billion since january and health pharma and not over. >> continues across the board. >> thank you. coming back, much more on the global market rebrown. citi's levkovich and paulsen

join us and then new jersey chris christie here on the set. fighting the trump of listening machine when we come back. well, sir. after some serious consideration i'd like to put in my 15-year notice. you're quitting!? technically retiring, sir. with a little help from my state farm agent, i plan to retire in 15 years. wow! you're totally blindsiding me here. who's gonna manage your accounts? this is a devastating blow i was not prepared for. well, i'm gonna finish packing my things. 15 years will really sneak up on you. jennifer with do your exit interview and adam made you a cake. red velvet. oh, thank you. i made this. take charge of your retirement. talk to a state farm agent today.

dentist appointment when my teeth are ready? ♪

can it tell the doctor how long you have to wear this thing? ♪ can it tell the flight attendant to please not wake me this time? ♪ the answer is yes, it can. so, the question your customers are really asking is, can your business deliver? global market alert.

china reportedly stepping in to shore up stocks today. european shares surging and u.s. futures point to a big gain at the open. global market turmoil not crushing all deal talk. shares of st. jude medical popping on report that is abbott labs preparing a $25 billion bid for the company. and it's your money, your vote. our news maker this hour, new jersey governor chris christie, the republican presidential hopeful joins us in studio. ready to sound off on the economy, on china's role in this week's market madness and on battling the donald on the campaign trail. the final hour of "squawk box" begins right now. ♪ ♪ welcome back to "squawk box" here on cnbc. i'm joe with andrew and sarah. bec becky's off today. less than 90 moneys from the

opening bell on wall street now and the futures up over 100. that's less than before and still positive after a 600-point gain yesterday. checking out the markets in europe, which are probably catching up a little with our move yesterday and still all 2% or so. another wild ride in the chinese markets overnight. stocks went from a loss to a 5% rally in the last minutes of trading and the final hour there are reports that the government stepped in to buy shares of large companies and ended the steepest five-day slump since back in 1996 when hardly anyone was even watching. >> now obsessed with it. glued to it. but it's interesting quiet moves. >> almost 20 years. >> the new thing. >> percentage it's all the same, right? we said that would have to happen. >> 4% move yesterday. >> 4%'s okay. we talked -- we hyped that

1,000-point weekly move in the dow and that was 6%. >> 1,000 isn't what it used to be. >> that's what we said on monday. the market's going to show us what a real move is and it did the next day. on monday down 1,000. >> it's been every day, yeah. all right. here are the story that is investors talking about besides the crazy market swings today. a revision to second quarter gdp due in about 30 minutes and expected to be revised up sharply from the first reading of 2.3%. kansas city fed president george telling our steve liesman they're prepared for a rate hike despite the market selloff. >> this week's events complicate the picture but i think it's too soon to say it fundamentally changes that picture so in my own view, the normalization process needs to begin and the economy's performing in a way that i think it's prepared to take that. >> her own view. being the key phrase there. and the new version of the

tesla model s scoring a big win "consumer reports" giving a score of 103 on a scale that normally maxes out at 100. among the drivers, acceleration and top fuel economy. >> it really does almost everything better, something we aren't used to seeing from cars at all. it's more like something you see in electronics so it really kind of blew up our system, really. it scored actually above 100 before we actually had to make some changes to our scoring system to account for this car. >> bullish report there. and the stock tesla up nicely in the premarket this morning up 2.3%, well off the highs we saw earlier. >> you want people to think about their answer. i think. you know? consider their answer before they speak. >> oh -- few other stocks on the move, abbott labs reportedly preparing a $25 billion bid for

st. jude medical. you can see it's up 2.66 now. >> let's tell you what we know. meg terrell getting off the phone with a spokesperson for abbott an not pursuing a deal for st. jude. we saw that stock begin to tumble a little bit. >> in the ft report, no guarantee. >> they said they were preparing a bid. the spokesperson saying on the record they're not preparing a bid. >> not -- not even preparing one? >> there is no offer. meg, meg's on the sidelines right here. yeah. she doesn't have an mic on her. >> not preparing a bid. >> specifically on the record saying they're not preparing a bid. >> oh well. >> shooting down that story. >> in the ft. >> shooting down that story in the ft. of course, you know, it remains to be seen whether they can come back and make a bid later. traditionally something you don't do. if you're contemplating a bid for a spokesperson to come out on the record and say we're not preparing a bid, a, unusual, b,

makes it very difficult to later change your mind. but of course, crazier things have happened before. >> keep reading. >> i'm supposed to keep reading? >> i don't know. me? >> you, sir. >> i'm sorry. >> i'm happy to keep reading. meg will join us. >> this is like straight on the set. >> straight on the set. just off the telephone with the pokes person for abbott telling us that there is no deal. you can see this is like -- >> this is cool, yeah. >> live tv. >> broken through the fourth wall, right in you get the see the whole thing, sausage made. >> i wish the phones connected before we came on and why the deal makes sense. that's right. abbott spokesman confirming on the record not pursuing a record for saipt jude. as you were saying, that's unusual to hear a company spokesperson shoot something down definitively. doesn't seem like it's happening right now. >> okay. we'll keep your eyes on that stock. >> we have to say, while you're here, went through the trouble,

i mean, talk about the cholesterol? no. >> should we talk about underwear? >> we already did that this morning. >> let's talk about another mover in the premarket session? >> we have smart-ass viewers. they said, right? when you have a diaper, who needs underwear. >> i tweeted it out. >> i fueled the foir. >> a good one liner. >> i said it just depends. >> just depends. >> tiffany falling after -- >> so clever. using your noggin. >> yeah? kidneys. tiffany falling after both earnings and revenue missed estimates. citing a strong dollar and challenging economic conditions. and certain markets. discount retailer of dollar general, a penny above estimates and revenue below forecast and same-store sales increase of 2.8% also below estimates, as well. and check out the blue chip index's roller coaster ride over

the last week. friday, a 530-point drop. monday, after a five-minute 1,000-point decline and then back to almost -- ended down 600 and then 200-point loss on tuesday and before yesterday's big surge, and that 600-point gain. the dow down more than 1% this week. joining us, citigroup chief u.s. economic strat jik and jim paulsen, chief investment strategist. we'll get with you in a second, tobias. jim, you know, we get your snapshot of what's happening quite frequently. right from the year you expected both not much in the terms of gains. you thought this would be at least a consolidation year. probably didn't surprise you that when you can't seem to break out of a really narrow range, when you do break out it's violent. this time it was down.

healthy? >> well, i think so, joe. i mean, i think the drop had more to do with the vulnerabilities of the market as you say than with china or commodity prices. that was the straw that broke the camel's back but i think we had a market that got, you know, richly priced. we have one that where we had investors get too calm and complacent and we came into the year, we faced the more immediate need to reset interest rates in this country. and i think that eventually got the better of the market. who knows if we're done? that's always hard to tell. i guess what i -- one thing i really don't like is the reaction to this to me so far has been that it's just a refreshing pause and an ongoing bull market. i believe that myself. but i hate it that everyone believes that. >> right. >> and that this is a buying opportunity and it's reinforcing the buy in the dip that's been

so successful. >> right. >> i see no panic. i see no flight to safety. treasury xwreelds going up, not down. the dollar's down. the gold's down. i think maybe we got to go lower yet. maybe down around 1800 to really scare everybody and start have people talk that this could be a bear market and could be a recession before maybe we finally bottom out. >> not the first person to say that, though, today, jim. so, you know, both sides, barbara rhinehart on earlier saying didn't see the downward move as volume flows, capitulation that you see a lot of times. but then, if it's a correction, instead of a bear market low, if it's a correction, do you always see a capitulation? do you always see one of those classic capitulations even in just a 10% correction? >> not all the time, joe. certainly not. i think that's what we need here because i think we have to gate

better foundation, if you will, to continue this bull. >> right. >> we have a very pa chur earnings cycle which is not going to grow near as fast as it did earlier in the cycle. we still haven't started to reset rates which is really an odd phenomenon this far in and we need more like 15 times, 16 times earnings and a lot more cautious investment community to deal with what we have to deal with which is higher rates, probably some wage cost push margin pressures that we haven't had to deal with yet and i just think we're going to need a capitulation trade if you will to set us to be able to sustain another run. >> what do you think, tobias? do you agree? >> kind of disagree. sorry, jim. a couple things. you know, for example, monday's open where you had certain stocks down 25%, 30% on the open, that sounds capitulatory to me.

my wife complains that i don't like to talk about how i feel about stuff but the notion if i look at interest stock correlation, going into this, we were in the low teens. we are pushing the 60% range. stock correlations and the mid-70% ranges already and that usually suggests a herd mentality of selling. everything is trending down the same way. you are seeing signs of investors throwing in towels. i'll tell you a different factor. end of monday's trade, divided by the 30-day implied volatility, more than three standard deviations below average to 2000 and only happened 20 previous days. >> what does that tell you? >> you have a contango in volatility. people believe that the short-term volatility is too high and a 96% probability of stocks up in 3 months. but wildly above random. random is about 30% probability. so when you kind of look at those factors and you say,

forget about how i feel and what i have a conversation with the client on the other end, what is kind of happening in the market? suggesting that you are finding this bottom. i agree with jim that earnings are an issue and saying all along the first half of the year not good on earnings and second quarter numbers, down about 2% or so. if you "x" out energy and can't say just take out the bad stuff but there's a reason for the exercise. 5%, take out fx, up about 7%. as the year progresses, those drags will diminish with easier comparisons so just naturally, if the economy did nothing better than the second quarter, earnings would start to show an improving trend. i think earnings are critical for markets. i don't expect -- didn't expect a phenomenal year anyway. up 6%. >> the dow down 8.6% on the year. is that it? >> i think it's fair to suggest there's no great reason for everybody to start buying tomorrow. they probably do want to hear mr. fischer this weekend and see the ism and the non-farm payr l

payrolls next week for confidence and that's the biggest thing in the conversation of investors in the last couple of days and where does the courage come from and, you know, i think of them, think a number of them hit the bottle a last few days and not sure that's where you want the courage, too. >> thanks, jim, tobias, thanks. >> thanks, guys. coming back, china trying to stop the stock slide and reportedly buying stocks to prop up the markets themselves. china watcher will join us next. and then economic data that could move the markets. we have gdp revisions and jobless claims hilting the tape at 8:30 a.m. eastern time. plus, this is going to be big, presidential hopeful governor chris christie is going to join us right here on the "squawk" set this morning. we have questions and conversations to have with him. when you get up to 50% off hotels with travelocity,

it means you can also afford to get up to ♪ 50% romantic-er romantic sunsets. making it the place to find a place for labor day. go and smell the roses! no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop,

and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.

our next guest long sounding the alarm on china and a bearish call in mid-april saying the nation is far too dependent own exports and steer clear of the markets there. the shanghai composite is down 30% and joining us is peter

navorro and author of "crouching tiger: what the militarization of china means for the world." slated to be released this november. good morning to you. your call is right. the question, of course, is, when do you decide to not be bearish on china? >> great question, andrew. what i think i would like to look at is copper, for example. and also, the long bond. i mean, as long as copper's in the toilet and as long as the long bond stays where it is, china ain't going nowhere and xhi in's not raising interest rates and the global economy down on the back. structurally we have china's two biggest customers and the united states growing below norms to keep china growing with the export dependent model. so that's kind of the structure.

nothing changed overnight even though we got bounces. and i think until china adopts policies like health care reform, pension reform, things like that, to lower the savings rate an encourage chinese rates to consume, build up the domestic economy, we are fighting this structural imbalance and it could go on for a while. >> talking about the policy moves to make, there's one thing to try to prop up the stock market on any given day which apparently they just did, but to actually get to the point of the policy reform that is you are talking about, that's years from now. >> yeah. it is. and that's the problem. because this has been probably 14 years in the making since china got into the world trade organization and really opened up their economy and our economy to the world. so, it's going to be a very long and painful adjustment. it needs to take place. the problem, andrew, is that the knee jerk response that chinese

communist party every time this happens is to resort to mercantile measures. we'll see a devalued yuan, more dumping of steel into american markets, that's going to ripple over into hurting american steel companies and brazilian steel companies an it's going to be very difficult. of course, when china is having trouble, braville's having trouble. australia's having trouble. canada's having trouble. and so, it's got to be a structural adjustment and i think the lesson we learn over the past few years, the white house and the fed still hasn't figured out is that the problem is structural. you can't handle it. china needs a lesson, too. they try to intervene and fix the market somehow. that's not going to work. >> i understand the structural problems. is there something more systemic to pay attention to thinking about the banks over there and

interconnectedness elsewhere and think back to 2008 and what happened here in the united states. >> yeah. another great question because as you know the banking system even to this day remains far less organized and it's not transparent. and so, it's a fragile ent my. politically, i think it's worth noting that the new president xi jinping's battle on corruption and all that is causing great nervousness among people in china who have a bunch of money. so there's a tremendous rush to try to get money out of the country. and that further destabilizes the banking system. and then, of course, you've got people leveraged to the hilt buying houses and stocks and things like that. real estate bubble, financial bubble. again, it's going -- the chinese curse may you live in interesting times, it's really interesting how they get out of that. my biggest concern is kind of a wag the dog scenario where

domestically, communist party is in trouble and then start banging on japan or vietnam in the south china sea and then things really get out of hand and they can get out of hand. >> that's a scary scenario. everyone trying to figure out how much china matters. we know it's a second biggest economy. it's 15% of global output. but it's been a huge contributor to global growth so when's the slowdown mean in terms of resetting the expectations for global growth and the reverberations in the u.s.? >> yeah. let's go back to the days when the united states economy basically was the big dog in the globe and it pulled everybody along in its wake. the question i think to frame it another way is can the u.s. resume that role? we have a really strong economy and what we're blessed with now and really been benefiting us over the last several years has been this whole shale gas revolution and the ability not to see our gdp drained by oil

exports. so that's the question. and if we don't need china as much as we thought we did, it's only because the american economy is going to be able to pick up the slack ft i'm not so sure about that, particularly the way our american multi. national companies are interconnected in china. if you looked at the tape the last couple of days and see all this red, you see cisco, ge, gm, all those companies have made a big bet on china for growth so even if our economy is able to sustain itself, i'm not sure the stock market can because of all that exposure in china. >> okay. peter, thank you. we appreciate it. always a thoughtful take. we'll talk to you soon. >> my pleasure. coming up, breaking economic data revision to gdp. second quarter gdp and the fed's next move and the newsmaker of the morning, new jersey governor christie joining us right here in studio. what are you squawking about this morning?

we're reading your tweets and facebook comments. we'll read system of them in a bit. if you send us a story, use #keepsquawking. these two oil rigs look the same.

can you tell what makes them so different? did you hear that sound? of course you didn't. you're not using ge software like the rig on the right. it's listening and learning how to prevent equipment failures, predict maintenance needs, and avoid problems before they happen. you don't even need a cerebral cortex to understand which is better. now, two things that are exactly the same have never been more different. ge software. get connected. get insights. get optimized.

♪ ♪

jay-z bought title for $56 million in march and a new survey by billboard says 71% of top music executives believe the company will fold within a year. coldplay, madonna, usher support tid tidal. the $20 per month subscription fee is seen as steep and double the price of spotify and apple music. breaking economic data, a second read on second quarter gdp expected to be revised higher. that number moments away. take a look at u.s. equity futures building on yesterday's gains. the dow set to open higher by 132 on top of a whopper of a rally yesterday up 600. we'll be right back. turns romantic,

why pause to take a pill? and why stop what you're doing to find a bathroom? cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use. insurance coverage has expanded nationally and you may now be covered. contact your health plan for the latest information.

no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.

we are just seconds away from gdp, the revision and jobless claims. the futureless right now have

been up. right around there. that's a little better. um almost 2 an then just over 1 and now 158 on the dow, the s&p's indicating up about 18.5. the nasdaq up 43 or so. rick santelli at the cme in chicago. rick, the numbers please. >> all rightment let's see what the second look at second quarter gdp, it is a barn burner. 3.7, from 2.3 to 3.7. that is, indeed, a large number. consumption, 3.1. that's kind of as expected and boring by comparison to the headline. >> sell it off because -- >> the price index personal consumption expenditure quarter over quarter for what it may not be worth is 1.8. 271,000 on initial dlams. that is down 6,000 from an unrevised 277. continuing claims, whisker un2.27 million. corporate profits up versus the

last look at 7.9. so many ways to look at this. it's nice to see this bump up. and in the context of what we're looking at the first quarter, the averages come back in line to some extent and this does help. the other issue is, i guess if we came from mars and saw 3.7 gdp we'd probably say, oh my god, we're still at zero interest rate policy. what do you think, joe? >> i was just trying to figure out -- it's sick, rick. i'm figuring how the market to take this. >> you didn't get clarity of william dudley yesterday? on this hand, on this hand, on that hand! a lot of hands yesterday. >> is it too far in the rear view myrrh railroirror we're gr that level and the market should go down because they might raise again in september?

>> i don't know. i think it's crazy. i think we need some hard and fast rule-based central banking. i don't know. if -- >> the market's up, rick. >> the world will be running on battery cars and making rockets that don't crash, we should be able to come up with an algrithm that long to take care of this. the subjectivity of the fed brains doesn't make sense and fit with this. it is amazing. you can't have it both ways. read the articles yesterday in the journal talking about the great things and comes back to, you know, less compelling, you know, all the soft, spongy words. how important is university of michigan sentiment to your family's investing for your future? is that one of your key inputs? >> i think that they're going to be strong this year. actually. but i don't know. ohio state obviously is a team to beat but i think they're going to be pretty good. i don't know.

but why? what are you hearing? >> well, i just think yesterday i was kind of surprised that university of michigan and their sentiment index was -- >> from the dudley speech. >> highly showcased. >> getting the read of the reaction to the global market selloff on friday's u of m and emphasis on it. >> you never know how the students vote this. >> you can't top that compliment by the number two at the fed. i guess we're all locking at the wrong data points. >> yeah. did that 20 years ago. we would say the students, you know, their parents didn't send them their checks and in a bad mood so they vote -- anyway, thanks, rick. steve liesman in jackson hole at a big fed gathering. est ester's got it going on, steve. 3.7. let's go. there's never a good time. picking an awful day to quit sniffing glue. never a good day. let's go. it's "airplane," steve.

>> i didn't quit today, joe. you know? because i have a lot of work. real quickly, a very good report. almost everything revised up. consumer spending, business investment revised up big. a word of caution here. a big part of the upward revision of inventories. we have a near historic and may have been historic. i got to check. a rise in inventories in the second quarter. every economist on the street thinks it works off in this quarter and future quarters. so don't take this 3.7 at face value. the reality is still strong and weaker than this and you get payback, some economists 1.7 in the third quarter. the atlanta fed, lower for the third quarter because of an inventory drawdown from the historic build. another thing to watch out for, huge surge in state and local government spending. a big part of it. i don't know if that continues, either. underlying fundamentals, final sales pretty good. l highlights the dilemma. the fed to figure out pay

attention to the markets or the economic data? back the you guys. >> thank you, steve. next, the man of the morning, republican presidential hopeful chris christie joining us in studio when "squawk box" returns in just a moment. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. because it's so challenging, a research project is teaching ibm watson to see. in the future, it could help clinicians spot key patterns quickly and precisely. ibm watson is working to make healthcare smarter every day. you totalled your brand new car. nobody's hurt,but there will still be pain. it comes when your insurance company says they'll only pay three-quarters of what it takes to replace it. what are you supposed to do, drive three-quarters of a car? now if you had liberty mutual new car replacement,

you'd get your whole car back. i guess they don't want you driving around on three wheels. smart. new car replacement is just one of the features that come standard with a base liberty mutual policy. and for drivers with accident forgiveness,rates won't go up due to your first accident. learn more by calling switch to liberty mutual and you can save up to $509. for a free quote today,call liberty mutual insurance at see car insurance in a whole new light. liberty mutual insurance.

all right. we are excited to get to the newsmaker of the morning, new jersey governor chris christie is here joining us on set. great to have you here. >> happy to be back. >> governor, you know, it's rnc

chairman reince priebus? >> correct. >> he said republicans learned and it's a kinder, gentler primary season this time around. what happened? something went wrong. does it begin with a "t"? >> 17 people decided to run. it is difficult to have a calm process with 17 people running. it is not bad. i don't think anybody should overreact now. what we should really be talking about and concerned about are the things i'm hearing in new hampshire doing 18 town halls now. they're concerned about terrorism, student debt, this economy and jobs and so this is the things to be talking about. the become and forth amongst the candidates, it settles itself out. that's why we have elections. >> there's times when i admit i'm a little bit older and i look around the and social media, i point to it as a

problem in exacerbating a lot of things that human nature used to have under control a little bit better and can't help but think and celebrity worship and things like that. this is like a circus. i said the rest of the world might be laughing at us. look at their plt call process. 12 different parties, form the coalitions. they're no better and joined them in the muck sort of. doesn't make me proud the stuff we're talking about and focused on. >> the ultimate responsibility is each one of us as candidates. it is what we talk about, focus on, what we emphasize. >> you have to get traction. if you focused just on substance and on issues, you may end up not being noticed as much as you would be if you focused on some of the other stuff. >> i don't think i've had a personality problem. >> no. >> right? so the fact is that, you'll be noticed over time. remember something. it's august. there's lots of time to go here in terms of a campaign. campaigns matter. and they matter if you're communicating ideas, if you're communal kating a vision and

leadership for the future. that's a hinge things to do. we'll get there. every campaign has different phases to it. remember something. four years ago herman cain was at 30% right now. 30%. so -- >> are you still friends with donald trump? >> yeah. >> i am, as well. i watch what's going on. he really does want -- i thought maybe he enjoyed the process. it would be amazing to be leading the rnc and then i thought maybe he wants to be a building and be donald trump again. i think he really does now want to win the nomination and want to be president. i don't think he is any longer just -- >> i have no idea. you know? you have to ask donald. i mean -- >> we did. >> i'm in the race because i want to be president of the united states and because i want to fix the problems that people need fixed and, you know, people talk about outsiders. you understand this better than anybody. i'm a republican in new jersey. this means i wake up morning as an outsider. and have to fight against

democratic legislatures and entrenched special interests like teachers union and people want someone to fix the problem in washington. donald tapped into frustration and anger of the inefficiency. >> walk us through the path. for you. path to completion. what has to happen? i say that by the way i think of the context of this week of a superpac against you and dropped -- they have gone out of business because your poll numbers didn't have an interest. >> they raised $3,300 in their history. to raise $1,300 and they spent 3 and went out of business. i kind of think it was really just a press release more than anything else. her's the path. the path is same for me as anybody else, me or whether you're scott walker or marco rubio, you got to do well in one of the first three states.

iowa, new hampshire and south carolina, you have to do well or you can't continue. my path is no different than anybody else's and the way i'm doing this is to do what i did in new jersey and have done in new jersey over six years. holding more town hall meetings than anybody else. meeting voters one on one. letting them ask me questions and direct answers and that's going to matter ultimately. people are going to want to know what are you standing for and will you interact personally. not hover over them and wave to them but answer their question. and that's what i'm doing and that's the pathway to winning. >> governor, these red meat issues at both sides seem to focus on, here we are in the sixth, seventh year of a recovery, 3.7% number, i don't know. that's an outlier. >> totally. >> i wish it was real and the fact it's 2% or less for 7 years. so the republicans supposedly know how to generate private sector growth and if i were a republican, that's all i would

be talking about. but instead, we're -- we talk about a lot of crazy republicans talk about crazy stuff. i don't know how -- there's no way to put this immigration issue away to talk about the economy because it's going to be front and center because it's so much play. now that the left has other things they like to focus on but this is what we should talk about, prosperity and narrows the income disparity which allows us to pay off all the entitlements easier and made america great. private sector prosperity and all we should be talking about. >> you know, joe, my first two speeches on this on entitlement reform. only person that talked about that in any detail with any kind of specific plan. second was, you know, a regularity tax reform speech with real e dales and change the system. so we -- there are people talking about it and will come around to that. when people focus on it. i could tell you in new hampshire people worried about, ask me about, how to grow the economy, how will i take care of

my kid's student debt and how do they live after this if they can't find a job to pay off the debt? and also awfully concerned about terrorism and about preserving their lives in this country, not only the way of life but they actual life. we'll get the those subjects. we're starting the. >> i have a question on markets related to the economy. we have the crazy swings and this is a -- >> a bottom yet? >> historic week in the markets and i think i read what you said president obama's dealing with china and economic problems, you blamed him. but the stock market is up 140% since president obama took office. so should he get credit for that? >> well listen. a president gets credit and blame for anything that happens on his watch. okay? so that's the way it goes. barack obama can take credit for making the rich in this country richer. he's done a great job of that. the guy who claims to care about income inequality made it worse than it's been in the country's history and played to the investor class and to make rich

people richer. here's the problem. middle class wages are stagnant for 15 years and in fact behind the rate of inflation and what i said about china is this. the reason we're so susceptible to changes in the chinese economy is because the chinese have lent us so much money and have so much of our debt. if china gets a cough we get the flu. because this president's run up more debt than any president in american history. so specifically, what i was talking about was that in this current moment of crisis, on the markets, it's about chinese debt, people in china owning so much of our debt that we're so much more dependent on them as an economy. >> should we be less connected the. >> no. borrowing less money from china and get the fiscal house in order. stop spending so much and joe's right. growing the economy at 4% than 2% we could borrow less from china. >> the left, jeb is also talking 4%.

the left loves to laugh about that. they wallow in the notion that 2% is our maximum growth now which is probably true in a european society where everybody does the same and everything's all even and nobody's -- equal. no one's too well or too badly. 2% we should be satisfied. >> let's ask bill clinton. it happened when he was president, too. maybe his wife doesn't have that optimism ant america but i do. i love this country and i'll tell you this. the problem is the government squashed the ingenuity and the energy of the american people by the biggest regular laity scheme we have ever seen. last year 81,000 pages of new federal regulation by this administration, the most ever and now his own small business administration says it cost $10,000 per employee for small business to comply with federal regulation. awful. it's crazy. >> governor, speak to this the you could. tax plan. donald trump said this week he would get rid of carried

interest. your take? >> listen. i put out -- >> what would you do? >> i put out my plan. get rid of every deduction or loophole except for home mortgage interest deduction or charitable contribution and lower to 28% on the top end. 8% on the low end and one in the middle. do the taxes at 15 moneys for most americans then and keep more of your money. now, the rich aren't going to like that because they're the ones that benefit from the loopholes and deductions. most americans use a standard deduction. let's get rid of them. you don't why people hate the irs? they think the tax system is rigged for the rich and you know why they think that? it is. it's rigged for the rich. make it simple, easy, make everybody pay their fair share. we do that, we're going to have economic growth that you have never seen before combined with a regularity outlet to let businesses make the decisions and not washington bureaucrats. >> we were supposed to come together for six years. rich against poor.

it's -- hesitate to say it. there's divisiveness in the country right now. what do we need in the next president? should you -- let's say there's still a few democrats left in congress and will be, will you do an infrastructure deal? will you build some roads? will you do any public works? any education that involves government spending? or is it my way or the highway? >> look at what we have done in new jersey. i wake up with a democratic legislature and have for every day i've been governor. we controlled the budget in new jersey. we spent less today than eight years ago. we have 9,500 fewer employees. we reformed tenure. we reformed the pension and benefits system. we have done things like make sure that business gets tax cuts of $2.3 billion. all with a democratic legislature. it can be done and you can reach across the aisle and make accommodations. they need to know you're strong and what you would compromise on and what you want and get the know you.

one of the disgraiss of this president is reading three or four weeks ago, first time john boehner was air force one. the republican leader of the house for your presidency? when i'm president, you want to come on air force one, come to camp david, the oval office? come. >> the president hasn't visited a lot of his own members in congress much less members of own party. >> divisiveness. the president compares the republican caucus to the protesters in iran chanting death to america. you want to know why america's divided? because we have a divisive leader who believes that he is right all the time without exception. look at this iran deal, joe. it is one of the worst things a president has ever foisted upon a country. secret deals. know my bottom line? i trust the voice of the american people than the votes of the u.n. security council. this president, this president is now careening us towards a country like iran -- >> he is getting -- >> getting a nuclear weapon.

>> lining up democratic support and not public support. it's a strong majority of the public is against the deal. >> you know why? the american people know how to use common sense. how can you let -- we are going to let the the iranian rev lugs nary guard inspect iranian military sites and tell us whether they are cheating. they have been cheating for 12 years, the same regime that has been chanting death to america since 1979. why the heck do we think they will change their strategy? >> what do you predict will happen there? >> i am out there hard and strong with jewish leaders and saying, this is wrong. it needs to be rejected. you know what other secret deals i want to know about. i want to know the secret deals that he is offering to the members of congress who are voting yes. we are going to have to pay for those later. you know, with some of the people who are now saying they voted yes, glichb past history on israel. i want to know about the secret

deals with members of the democratic caucus in congress who are caving and putting our national security at risk. >> i want to get your reaction to a domestic issue, this terrible tragic shooting yesterday of this reporter and cameraman. clearly, a mental health issue but created a debate about gun control again. i'm curious if this has had any effect on your thoughts about it. >> i am incredibly sad for those families. it is terrible what's happened to them. every time you see something like this, you think, there but for the grace of god go i. i feel for the families. let's enforce the laws we have already. let's not worry about making more laws. it makes no sense to me. let's enforce the laws i was a prosecutor for seven years. we strictly enforced the gun laos. they are the ones committing crimes. >> how do we keep guns out of the hands of those that have mental health issues?

>> i put forward a proposal that the democratic legislature in new jersey won't adopt. it makes sense. it doesn't make headlines. we have to give doctors more authority to involuntarily commit people that talk about committing violent acts. we have to have more mental health records available for people to review. these are common sense things. it doesn't make a headline for left wing liberal outlets who think the next thing we need to do is take more guns away from law-abiding citizens. that's not the problem. >> nine months for me to finally be allowed to purchase a firearm. nine months. they had to look at me. the state had to look at me. the county had to look at me. i could have gone to washington heights that afternoon if i wanted to be a criminal. i could have bought a gun that afternoon. figure that out. >> they want more laws to make

it more difficult for guys like him. i know how you feel. this is in a safe. only a fingerprint opens it up. >> you know me. i'm scared of guns in all context. >> i'm more scared of criminals than i am of guns. >> if there is a criminal around or a bad guy and one of the law enforcement has a gun, you won't be nearly as afraid. >> it does expose the dark side of social media. >> that dark side is people. i don't want to blame the media. it is not like we didn't have really deeply disturbed criminals before twitter or before facebook. i think that we have to hold people responsible. one of the things i think the american people are so frustrated about, there is no sense with our politicians or with other people. there is personal accountability and personal responsibility for your conduct. we are going to blame twitter or facebook. heck, i don't think that's the

problem. the problem is, the stuff we put on it. the stuff we put on it is a problem. you know who does that? someone who takes their device out and types it in. it doesn't get there by itself. that's why folks are frustrated. they think politicians don't take accountability. you have hillary clinton saying the law doesn't apply to me. it doesn't apply to me. she makes jokes about it. can you imagine? she should be disqualified to run for president of the you states. >> now, she says, it was clearly the wrong choice. wiping it clean and i love snap chat. >> because it eliminates it by itself. >> she thinks this is fun by but meanwhile the diplomate in america was doing all her business on a private server hid in her basement. do you think she wiped that clean because there is nothing on there that incriminates her? the reason she is being investigated by the fbi is because people that do that kind of stuff, on struck justice and

mishandle sensitive, classified information should be investigated and prosecuted. >> if this justice department prosecuted david petraeus and sandy burger, you better be sure they should be prosecuting hillary clinton. the president of the united states, she worked for him. he should hold her accountable. the president should xwoe out and say, madam secretary, reveal all the administration. it is an embarrassment to my administration, you are playing hide and seeks with america's national security. who knows who got access to that and the information on there. it puts the national security at risk. what she really should do is get out of the race. >> governor, thanks for coming. don't be a stranger. >> my wife's favorite show. now, i know she is watching me. the rest of the stuff, maybe, maybe not. >> smart, perspective lady.

up next, jim cramer.

can it make a dentist appointment when my teeth are ready? ♪ can it tell the doctor how long you have to wear this thing? ♪ can it tell the flight attendant to please not wake me this time? ♪ the answer is yes, it can. so, the question your customers are really asking is, can your business deliver? great time for a shiny floor wax, no? not if you just put the finishing touches

on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. let's go straight down to the new york stock exchange.

looks like some good follow-through, dow futures up over 200 after last night. >> a lot of people are liking that we held for monday. the dudley comments were thoughtful and really did control. what we have been looking for, rather than hard line, it is not like we wanted soft line. that doesn't help either. we are looking at the data and the international turmoil. we talked to sanders last night and when the market is down, say, 11%, 12% on the s&p, that's factoring in a rate hike. sometimes i feel if we just got it over with, we would go higher. >> thank you for the thought. i know you have been critical of the fed members lately. it means a lot. see you in a few minutes for "squawk on the street." this morning, we asked you to send the stories that you buzzing. share some responses. lots of buzz around market

swings. squawk man, christopher, sharing his tweeting. he also says he is losing hair daily and days like this can make or break your year. >> we're all losing it. >> who has more hair, you or andrew you? >> i got your back there. >> thank you. thanks for joining us. more "squawk on the street" is next. >> good morning. ike david faber along with jim cramer. we're live from the new york stock exchange. carl quintanilla has the day off. we are looking for an up open. things can change. europe has been open for quite some time. take a look at the major markets, all of which are significantly in the green. you can see there