reports say apple may be preparing to move into original video content. it's tuesday september 1st, 2015. squawk box begins right now. ♪ >> live from new york where business never sleeps, this is squawk box. >> good morning and welcome to squawk box here on cnbc. becky and andrew are off today. if you're just waking up this morning, buckle up. markets are looking to be in for another rough ride. us equity futures down sharply, triple the losses that we saw even in yesterday's future's market. the dow has an implied open, negative 353 points. that's a pretty stunning number to see. reminds us of what we saw last

week in the future's market. the nasdaq would be down about 10 102 points and this comes after the dow closed in triple digit negative territory yesterday despite a big spike in oil. we did see another negative session in asia. of course among the big reasons, new economic data showing china's manufacturing sector contracted last month. it contracted at the fastest pace in three years. the official number contracting for the first time since february. you can see how the chinese markets are he reacting to that. down about 1.25% but you can see a sharply reaction in hong kong and shen seven which shows china's higher growth stocks. meantime, exports from south korea tumbled by the most in six years so that is also effecting the markets here. shanghai composite was down as much as 5% before recovering to close down 1% thanchts loo.

that looks better. we have to switch the percentages. soon, now, today i think. instead of arresting people that are selling stocks like in china. >> that's first reaction i had. >> 350 is -- that's not that much, right? what is that? 2% or something? >> i said yesterday 100 wasn't a lot. >> but we need to switch to percentages. triple digits doesn't count at all anymore. >> especially when we say things like the worst point drop since 2009, of course where the dow was in 2009. >> bwe're 2% today. i know percentages and when i -- coming in in the car this morning and i'm like --

>> this to me is more worrisome than that. >> of course it is. death cross was passed last week. >> the 200 goes below the 50. plus everybody is saying buy the dips. we have been buying the dips for six years and it's always worked and when you have a horrible august, 80% of the time september is bad. haven't we seen that statistic too. >> september is a bad month. >> september is always a bad month. >> september is historically the worst month of the year for stocks. >> i said that yesterday and you laughed at me. >> these random statistics. >> i don't think that's random. >> why is september bad. give me a reason. >> should we take a check of what's happening in jurors? >> europe's bad. >> we should show it to our viewers so they know what's going on. >> 2%.

>> 2% down across the board and in france and the u.k. less than 2% in italy but red across the board there. >> a rough end to the summer for stoxx. august was the worst month for the dow since may 2010. meantime, the s&p 500 and nasdaq ended with the worst month since may 2012. here are the numbers for the major averages. the dow dropped nearly 7% in august. the s&p was off nearly 6% this month. sorry that should have been august and the nasdaq dropped almost 7% year to date. the nasdaq is still fractionally positive. check out crude. oil prices dropping this morning. wti crude rising about 4% in august. that might not seem that interesting but listen to this, wti crude overcame a 20% loss from the july close to the august low. before then turning positive on the month.

>> spiking just three sessions, four bucks. >> the volatility is stunning. >> the biggest oil move in 25 years. >> $48. now above $51 from what yesterday? >> production was down a little bit in this country and saudi arabia is talking about ways -- it was nothing new. it's weird. >> comments from opec that they would be willing to talk to producers. that's obviously not a very definitive statement but it was enough to get the oil market going. >> is he coming on. >> he was going to go long at like 38 or 39 and he said no, no, never mind. >> my recollection of covering the oil downturn in '98 was that you have these guys like russia comes forward and says we're going to talk to venezuela and the market gets spooked but it takes saudi arabia and

everybody, all the major players. >> totally differ world now though. >> that's true. >> we're almost a swing producer now. >> yeah but we don't act as a factor, right? we don't have our president telling the oil producers. >> based on prices. >> based on prices. >> and it matters. >> but the question is whether it takes saudi arabia to come forward. >> everybody is looking for market share no matter what. >> if that's the case. >> it was going to back down. >> but it didn't. we don't operate that way. it's a market price thing. >> okay. there are other markets effected by what happens. you figure yields might drop again today. we'll see. as people rush in again into, i guess, that move to 3% is going to be put off again.

112 on the euro this morning and, you know, gold keeps -- people keep saying it's time. there's a lot of uncertainty and it's time. you're seeing that up 920 to 1141. >> big u.s. economic reports of note today. at 9:45 eastern we get manufacturing pmi 15 minutes later we get the august ism manufacturing index and july construction spending. also worth watching auto sales will come out throughout the day. that's been a bright spot for the u.s. economy. analysts are looking to show continued strength in the consumer. part of that is continually low. gas prices, getting people to buy those strucks and those suvs but we'll see if that can continue rolling through the summer. >> so you saw the china pmi stuff and it wasn't really down. below 50. i guess that's bad. that's contracting, right? they use the same methodology we use but it was down less than a

point on both indices that has everyone so uptight today. >> the problem is it contracted for the first time since february and so if you think the economy has worsened -- >> coming back a little. >> it seems like it's a turn in the other direction. >> plus they did all -- they were cooking the books and looking at everything and saying i don't see how we can make this look any better than just down -- we have done everything we can to fudge these numbers and we still have to show it's contracting. >> no one is going to -- >> you can't get around it. >> that's my next set of report as good trying to figure out is there any actual real chinese economic data. >> when they come say it is contracting. that begs the question how much really is it contracting? >> i think that some of this data is private sector data. i'm not sure all of it is official government day to to which you have to ask, are they free to report what they find.

>> is that the government? >> in some cases, yeah. >> like here. >> it's also a country that takes factories off line to make the air quality better. >> for the big parade. >> yeah. >> when everybody is coming in. that's thursday i think, isn't it? >> joining us now michael zin. very close to zen. one vowel and you could be very pro -- >> just on the cusp. >> he's not a junior but senior vice president and steve wood, chief market strategist at russell investments. in reading, preparing, which i do just all night long, you're both dip buyers. you're buying dips. buy the dips, right? >> well, you know, i think that every time you see market

dislocation which i have to look at whether it's crossed important thresholds and established a down trend and if that's not the case you're just dealing with fear and emotion and you have to have a discipline that established when you have to take a different attack. and i don't think we have established it yet. we have an economy picking up steam and not showing overheating yet. >> depends on your position coming into this. overweight europe and underweight the u.s. and on the sidelines, it's out performing. you're looking at fixed equities. from a global perspective as well but valuations ultimately matter and the last time we spoke a couple of months ago this u.s. market was getting rich and the environmental low volatility. that's coming three days essentially but valuations matter and volatility matters and this might be a time to reposition over the last six to

12 months. >> europe outperformed. in the last couple of weeks you mean? >> over the last year plus. the economy of europe is coming off a bottom where as the united states is maturing. >> what about in the most recent three weeks? >> it's probably across the board volatility. you're seeing risk assets getting shaken up. i don't know that it's exclusively because of china. the chinese markets are less important than what's happening in the chinese economy and we're going to talk a little bit about the fed. a hand full of days we're going to get a clear sense of what the fed wants to do. i think the fed institutionally is committed to raising rates and they're just looking for the timing to do it. so in the absence of really terrible data the fed would like to be positive so it's a future path that becomes important. >> the start of three or four weeks ago people said it's not the chinese. there was some worry but people are saying this stock market is up 180% and this doesn't even

portend bad things for the chinese economy and it doesn't mean that a stock market break is going to have negative feedba feedback. >> the underlying economy looks worse. >> it looks worse and you have to think about the currency relationship. if you get enough of a break in dollar yen, dollar euro you have the ability to disrupt quantitative easing programs in europe and japan and that's probably shaking things a little bit as you see the relationships begin to toy with their 200 day moving averages and that probably more than the chinese ability to disrupt u.s. economic activity which is pretty robust is that the quantitative easing side of things may be at least perceived to be more in jeopa y

jeopardy. >> the u.s. market wouldn't have responded to this. what is causing us to respond to this? >> we connected. we're trading partners with japan and europe and we're going to experience weakness too and there is during times of great stress and volatility correlations may run together and that may prove to be an opportunity for buying equities here in the u.s. being patient in september. a notoriously weak month. but you may have it in the u.s. because of growth and value sectors because of what we're seeing and the us. may end up benefitting from what we're seeise

seeise seeing overseas. >> will there be an actual cross? >> i think that's a nontrivial possibility. i don't know that we would forecast that. i still think the united states right now is responding to valuations, inflation, fed policy in the rhett m of a descent economic environment in the united states. that's better important than what's happening globally. they both study under fisher who is setting the tone for the conversations. japan is there as well. even if the fed does go by the end of the year this is still an extremely accommodative environment and valuations are the key story in the u.s. >> great. thank you. you were covering oil in russia? >> no -- well i was covering russia and oil was a big part of the story. when i came back to the states i

was the international energy reporter for the journal. >> i'm sure you didn't see 60 minutes. when did you get your social security number in this country? >> i'm not sure i should answer that question. >> that was what tipped authorities off that this russian spy. >> my kids think their parents are russian spies. >> have you seen the americans or whatever. >> you're an inigma already. so you didn't have it very early in your life. >> i did very early in my life but that could be part of the conspiracy as well. >> did you see this guy that lived here for 30 years and no one ever knew. he had a wife here. >> no one ever knew a thing. >> the plot thickens. >> i'm never going to be able to watch the americans now without thinking of steven. [ speaking foreign language ] >> i said read. >> in corporate news, public

pension funds joining forces to oppose the joint ceo at bank of america. they argued the roles have inherent conflicts which require them to be separate. the board changed the company's by laws to allow him to become chairman. in the spring the board announced it would hold a shareholder vote on the change after many were up in arms over this move. that vote is now set for september 22nd. in a statement to cnbc bank of america says, quote, it's board believes that having the same flexibility on board leadership that 97% of the s&p 500 now have while still providing strong independent oversight is in the best interest of stockholders. so certainly an update to that story which will be coming to a

head the next month. mike mayo will join us in the next hour. he opposes the dual role. >> apple wants to begin the service next year and has held preliminary talks with hollywood executives. it would put apple in competition with other streaming services such as netflix and amazon. in other news, the company is teaming up to improve the performance of its iphone and ipad devices on the corporate network. tim cook is making the announcement. >> we want to transform the way people work and we know that we can't do that alone. we can't do that alone. if you think about what's key in the enterprise space, the device is very important, the apps are very important. the network is very important but in reality none of those --

each of those can be great by itself or each can be great in total but it's do they work together seem lesliamlessly and what this is about. i couldn't be more excited about it. i really believe this is going to have a profound effect on the way people work. >> apple is expanding it's foothold in the enterprise. it was loaded with applications geared toward corporate clients. >> he's very excited about something that is going to involve apple and cisco working together that doesn't seem like it's anything -- >> so that's what you got. >> did you get something else. >> i saw john chambers there. i understand that it was cisco and apple but what did he propose there? >> our producers did their best to find something explanatory.

>> what you said in russian i understand. >> you understood better than that. >> when you're dealing in the cloud it enhances the scale of all open networks. samsung -- how did that sound? >> that sounded pretty good. >> i think you have a better chance at being part of apple's original content. >> you didn't use the word synergy. >> stepping up the competition with apple launching a new smart watch. the gear s-2 is samsung's first round faced smart watch. oh, okay. so that's new. the device will run samsung's own operating system rather than google's android and it has 3-g

connectivity which means you can wear it as a smart watch without having to have your smartphone with you which is one of the complaints. that's cool. >> any dial up is that the idea? >> back to thinking about analyzing what tim cook said. >> moved on. >> news from yahoo! ceo marissa mayer. she is pregnancies nant expecti identical twin girls in december. she says since this is a unique time in yahoo!'s transformation i plan to take limited time away and working throughout and we know you don't need to be in a specific place nowadays a lot of times and you can do, i'm sure you can do a lot of work remotely where ever you are. this is exciting. twin girls. >> and after she had her boy, she had a little nursery adjacent to her office. that is how she was able to

seamlessly continue working throughout that process. that will come in handy i'm sure. >> thank heaven for little girls. twins. when did you get married? >> april. >> okay. all right. just wondering. >> are you doing some math. >> just thinking. no, families are great. it was the greatest thing -- and i was old when it happened and -- is that not the greatest thing in your life? >> absolutely. the best. >> it will be the greatest thing in my life. just not yet. >> take your time. >> this is the greatest thing in my life right now. >> today. >> on this show. >> right now. >> but you have to go on your honeymoon first and everything else. all in due time. >> take it from me. >> coming up, continuing coverage of this morning's biggest global sell off. equity futures pointing to a sharply lower open. s&p would be down 30 points. dow down 313 points. i think the magnitude of that is still very important. >> might be less.

>> less than two. s&p will be down more than two. >> that means you still need to watch. >> that's exactly what it means. >> plus about 7,000 pages of hillary clinton's e-mails were released overnight. 150 messages said to contain now classified information. the details on that story straight ahead. but first as we head to break here's a look back at this date in history.

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internet essentials from comcast. helping to bridge the digital divide. welcome to squawk box. if you're just waking up we have another global sell off on our hands today. asian markets overnight down across the board. china's pmi contracting officially for the first time since february. down close to 4%. hong kong down. shanghai down about 4%. it closed down around 2:00 in that market. there seems to be a wait and see game for whether it will begin again. some buying did help put a bid under stocks in the trading there. u.s. equity futures are pointing to a sharply lower start on wall street. you take a look at what's going on in the u.s. market.

we're still in deep red territory for the future's market about 2% across the board. joe. >> that's another way of looking at it, isn't it? in china? once again that's the best they could do was down -- last week they were at least able to move it up nicely in the last half hour and the best they could do was down a little over a percentage point. >> we all thought it was stopping yesterday. >> in political news nearly 7,000 pages of hilary:on tlary s e-mails were released last night. some were dumped because it contained information deemed classified. it was not identified as classified at the time that clinton sent or received the messages on her private e-mail server. >> the latest installment of the speak easy series he sits down with republican presidential candidate scott walker. >> my kind of sandwich.

>> exactly. >> to me ham and cheese is something i've had for about 25 years. two ham and cheese sandwiches most days packed in a brown bag. obviously i can't pack it myself these days so i pick it up somewhere on the road. >> when you call yourself aggressively normal what do you mean to communicate about what you are and what you aren't. >> i'm a normal guy. a guy with a wife and two kids. happen to have a harley. >> but on the other lanhand whas aggressively normal about a career politician which is what you are? >> public servant. >> that's not what donald trump says? >> no, but career politician is my mind is somebody that's been in congress for 25 years. >> he says career politicians is what our problem is because they don't do anything. >> and he's right but part of the reason he gave me money and never asked for anything in return is because he said, his words were to me, i like you

because you're a fighter. >> sandwich is good by the way. >> you're taunting me with the sandwich. >> nobody holds ronald reagan closer than you do. he had an electorate that was 88% white and so did you in wisconsin. that's not a winning formula nationally. >> nation as a whole is not going to elect the next president. 12 states are. how we're going to win is in a way similar to how we won in wisconsin. >> what is scott walker's modern day version of the agenda on taxes. >> we'll lay that out in about a month and a half. >> should we look for something like reagan tax reform? marginal rate under 30%. >> yeah. because to me again i believe personally what reagan did was very effective. we need to get back to that kind of growth going forward. >> you talk about fighting and winning. sometimes when i hear that it sounds to me like the emphasis is on the fighting almost like

you're running to be the hockey team enforcer. >> right now people do want to fight in america. people think the fighting in washington is what people are angry about. the fighting in washington makes people angry because each side fights each other and nothing gets done. that's part of the appeal to some of the candidates that don't have elected offices experience. they say they might get things done. that's great but if you want a proven track record of somebody that did exactly that then i'm your guy. >> governor, thank you for doing that. >> you got a couple of bites in. >> wait until you ask me a question when my mouth is full. that's what's really going to happen. >> and of course the challenge for scott walker is to generate some momentum because lately he has been going backward in the polls. not just nationally but also in iowa which is the lynch pin of his strategy for winning this republican nomination. >> i like him, john. i like the lunch stuff but i just had a thought. midnight, a bar, like six drinks and then ask some of these

questions. have you thought about that? >> oh yeah, sure. i'm trying to move these guys to the most relaxed way possible. >> six drinks is definitely more relaxing than two ham sandwiches though. >> that's true. >> might get too interesting. walker has been -- it's weird, john. all the guys that -- you could write about each -- a lot of the people that you thought might get some traction and one after another it's like disappointing for some reason. >> trump's really been hurting scott walker because he has taken that sort of tough guy thing away from christie and rick perry and scott walker and what walker has to hope is by natural forces trump will come back down to earth and republican primary voters will settle on the most plausible of conservative candidates and he

thinks that's him. >> rubio and walker have similar positions and i've just seen it tweeted rubio just sounds better when he's saying a lot of that because maybe he's not aggressively normal. >> i think it is fair to say that as a matter of pure communications talent, marco rubio is better than anybody in the republican field including walker. that doesn't mean that he's got all the assets that everyone in the race has got. he doesn't have jeb bush's money. he doesn't have scott walker's midwest center of the country positioning and executive record but he's smooth in the back and forth. >> we keep showing this picture of her in the big sunglasses. lose the sunglasses and retire the orange jump suit. my only two suggestions. the whole election could turn around based on those two things, john. >> do you like her in black better? >> i don't like orange but you're right, orange is the new black.

that's right. see you john. >> coming up, live reports from our colleagues in asia and europe. stocks selling off there while we were sleeping. first as we head to break, check out the ten year treasury yield. you're watching squawk box. when you get up to 50% off hotels with travelocity,

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breaking news, global stocks selling off among the overnight sparks new economic data showing china's manufacturing sector contracted last month at the fastest pace in three years. seema mody is standing by in london but first let's go to eunice yoon in beijing. >> thanks so much.

well, asian markets were weighed down about concerns over the chinese economy. tokyo ended the day down by 4%. hong kong lower by 2% and here in china the shanghai markets ended in negative territory. here a lot of people were focused on how brokerages were doing more buying today after the government issued a directive yesterday asking that more listed companies buy sha s shares. also the focus is on the investigation. the hedge fund manager is still missing and was taken away by police and reports are she is insisting in an investigation. the main factor today in the markets was manufacturing data. we had twin surveys showing the fastest pace in many, many years. part of that is the clamp down on the factories because of the

people coming up very much concerned about the services pmi as well that also showed that services are expanding at the lowest space in a year. now over to seema in london. >> >> thank you, a strong correlation between oil prices and stocks. european stocks have been moving in tandem and that's what we're seeing in today's trade. add to that dispintiappointing chinese manufacturing data. the people's bank will devalue it's currency again which is bad news specifically in the auto and luxury space so investors are selling stocks. we're down about 2 to 3% in today's trade. they're selling stocks but they are are buying the euro. it's been seen as a safe haven currency when volatility rises over the past two weeks. we also had a solid read on german manufacturing. expanding at the fastest pace in 16 months. there's an ecb meeting coming up

on thursday. qe here in europe is open ended. >> perhaps you will mention it but we have a couple of days. put an even sharper focus on the data coming up later this morning. >> coming up more on china's big issues. does beijing have more up it's sleeves? check out the futures. you're watching squawk box on cnbc. first in business worldwide. ♪ 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. ♪

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welcome back. you heard when the u.s. catches a cold the rest of the world catches pneumonia. he added a new line suggesting when china catches a cold the u.s. sneezes. bill, just walk us through what data we got this morning because there was previous manufacturing data. is this new data we have out and how much worse or different is it from the old data? >> good morning, yes. we got three additional indicators out overnight. there's two government provided pmis. one for the services sector and one for the manufacturing sector and one for nonmanufacturing and privately compiled pmi for services manufacturing and updates to all overnight and all of them tick down from where they were in july and in the august release. it's a matter on the floor sof

were the weakest seasons the financial crisis. pmi was the weakest in 14 months. everything pointed to a little bit of a leg down in august. it's a matter of the degree by indian a to. >> you're not in china, right? is that a pittsburgh backdrop i'm looking at? >> the skyline before sunrise. >> you can speak honestly and tell us what you think about china honestly? >> what's going on right now is there's a big financial correction for chinese business sentiment you saw a drop in august and that makes sense when you see a big downturn in financial markets. >> but my big question is what can i believe of this stuff? is that kay at a you're quoting me this morning, is that believable data or is there a sense that because it came out weak it's probably a lot weaker because the chinese aren't being honest about their data.

>> they provided the first downturn or business cycle or whatever you want to call it during the financial crisis. you do see a very sharp slow down. at this data you don't see a slow down as well or anything comparable to 2008 or 2009. >> this is private sector data and it's showing weakness and the official data hasn't caught up to it yet. >> they're measuring different parts of the economy. measures state run enterprises but they're having a sharp slow down as well because of the chinese infrastructure and anticonstruction campaign. >> this is an economy growing double digits. it was 10 or 11% and then cooled down to 7 and now i hear forecasts in the sixes. where are you on all of this? >> we're likely to see 65 or 66.

maybe slowing to 62 next year we could have a similar conversation about indian gdp statistics but even if it's slower than if official stated data it's also probably much faster than u.s. economic growth. >> the chinese government is involved and we see it in the data, for instance, auto sales down in the month and we see factory data soften in a month when they're taking some factories off line. i'm wondering how much of these numbers you say are the governments whims. >> in the government data there was also an impact from weather

and typhoons and el nino. it's hard to say in real time about economic data. what is weather, what is one off events and what is a slow down. a decline in these business sentiment surveys pointing to lower growth in the second half of the year shouldn't be a surprise. >> thank you, bill and i think everybody here joins in the outrage over making him confess on national television. this is the chinese economic policy and they're going in and harassing the brokerages that are are doing the selling. this is not the way to run it. >> given the piece on the factories that are being run to sell their product to nobody anyway. if you shutdown zombie factories you shouldn't use that number when they shouldn't be operating anyway. so shutting them down doesn't mean that -- >> maybe they should be -- >> in russia we had this concept

called negative delta g -- >> oh my god. >> it's a cool idea. you put inputs in that cost 100 and put them into the factory. on the other side come goods worth 90. so negative delta at growth and that's the same thing. >> that's happening. >> and there's no reason to buy or process those commodities if the output is lower. >> not all of them but how many cities have a billimillion peop? it's like a thousand cities. >> the idea yesterday that they reached the lewis point which is the point at which you gained all the low hanging fruit produfrui fruit productivity. >> but they're being run to maintain the factories. >> the population is equivalent to the entire population of the united states. >> that's wild. >> it is wild. >> coming up, should we fear

september? afraid already. since 1950 it's the worst performing month of the year for the dow and the s&p. that's why a lot of the market lows are in october because september was bad leading into it. we'll ask a technician what the charts are telling us about this this time around and then next a u.s. equity future, take a quick look at where those are now. not much improvement. down more than that earlier but 3.7-on-the dow right now. 41 on the s&p. as we head to break check out oil prices this morning pulling back after a huge day yesterday. ♪ ♪

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u.s. stock features pointing to a more than 300-point drop in the dow at the open. currently the implied open for the dow would be down 336 points. for the nasdaq, close to 100 points at the open. our next guest admits the market recovery is of a low trajectory right now, but he argues market sentiment is overly pessimistic and the secular bull market is still intact. we'll need him to break this down for us. craig johnson is senior technical research analyst at piper jaffray. it's good to see you this morning. >> thanks. good morning. thanks for having me on the show, bright and early.

>> bright and early, indeed. the prevailing question everyone in the market had after last week's volatility is how much technical damage was actually done to the market and what we should glean from that. what was your take? >> sure. there's no question a lot of technical damage was done. it was reported last week's wall street's biggest bull has thrown in the towel on this secular bull market. i've got the towel right here. we still think the secular bull market is very much intact. here's why we think so. the selloff we've seen in the market last week has, yes, done a lot of technical damage. we've gone back and studied how many stocks remain above their falling and rising 40-week average. from our perspective, a lot of the damage is already done. the simple question that i've asked a lot of managers on our west coast marketing tour last week is are the conditions in the market today as bad as they

were during bear stearns and lehman brothers. across the board, zero hes tashgs every portfolio manager, every person i've spoken to, the answer is, no. a lot of the bad news is already baked in. the primary trend of this market is up. when you're in a sick lar bull market you want to buy the dips, not selling the dips. >> that's one reason why some people said we were overdue for a pullback because the market had gone so many years without a meaningful one. i see in your notes, we've had about 60 pullbacks of 5% to 10% since 1946 on average. you see 7% shaved off the market an average. is that the type of garden variety pullback you're expecting here? >> it's interesting. when you go back and look, there's only been three times you've had pullbacks that have taken greater than 80 days, from the peak to the actual 5% selloff. one was in 1953 and the other

one was in the '90s. at this point in time, from our perspective, this is probably going to end up being a correction, which it is, and i think it's just one of these garden variety correction and pullbacks. a lot of the bad news is baked in. i don't expect -- i expect us to find the lows in here. somewhere soon. i'm not saying today is going to be the day but i think within the next few weeks we'll see this low gets set. if you take that into consideration with the fact that the market is already oversold, if you take into consideration that 9 out of 123 of our sectors are already in oversold territories on 30-day oversold oscillators and the fact you still have positive things happening with the economic backdrop. 3.7% gdp growth, the unemployment rate coming down. there's a lot of good things happening that are being discounted at this point. >> you don't need a once in a generation selloff like bear stearns/lehman brothers 2008. you don't need that to get 20% to get a bear market that's a

garden variety bear market. also, if you had gone back to 2007, you could have talked to the same people you talked to that didn't see anything happening now similar to '08 and they wouldn't have seen anything happening in '07 similar to '08 either. i mean, that doesn't provide any consolation at all that they don't see -- you know, in the same -- and as i said, you don't need the great recession to have a reason to sell on strength. you could just sell on strength if you're going to have a 20% break. what about the death cross last week, do you follow -- is that part of your technical arsenal? >> yeah. joe, when we put the other -- what we found is that most of the technical damage is done when you actually get the 50 crossing below the 200-day, so supporting our belief that the negative is there. >> craig, thank you. we appreciate it. >> thank you. >> craig johnson from piper jaffray.

coming up, we get a history lesson in the september swoon and offers a few hints.

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dismal manufacturing data from china. we have top wall street strategists on set to break down the market move. bank of america should split its chairman and ceo roles according to analyst mike mayo and two of the biggest pension funds agree. the battle over b of a leadership ahead. is apple gearing up to take on netflix? new report says they are in talks to produce original content. the second hour of "squawk box" begins right now. ♪ wake me up

when september ends ♪ live from the beating heart of business, new york city, this is "squawk box." ♪ here comes the rain again >> that's a good one, "wake me up when september ends." welcome back to "squawk box," the first in business worldwide. i'm joe kernen, becky quick is off today, here with steve liesman. we're kicking off september with a big move in the futures. and it's not up, it's down. what is that? oh, that's -- okay. down less than 2%. okay. it was a suggestion just to make us feel better, but if we're going to show people we need that 300 number. down 320. down 39.83 on the s&p. down 94 on the nasdaq.

why? overnight manufacturing data from china, it contracted at the fastest pace in three years. as with we noted earlier, those are the numbers they were willing to give us. could even make it look better, still a contraction, not even an expansion in china. that's so different than what we're used to. >> growth is still officially projected at 7%, officially. >> which is like -- i mean, no one really thinks it's 7%. what do -- >> i here a lot of 6s. >> 6s? >> yeah. >> refuse new is two to three. >> they would kill for 6. a real 6? >> yeah, that -- >> here you have a government, part of its response to a financial problem decided to arrest journalists who will talk about what the -- whether or not the central bank would

intervene. that's part of their solution. and they're rating brokerages as part of their solution. how much confidence can you have in anything going on? >> you're right. >> investors who have been attempting to, perhaps, benefit. >> right. >> -- the down turn in china. >> all that does is exacerbate. it will probably help them in the sense you'll have capital flight, leaving country into dollars. who knows they're probably real estate on this very avenue behind us right now in order to protect their wealth. >> all right. well, here's what's happening in global markets at this hour. as we just mentioned, asia is down as well. japan's nikkei fell by nearly 4%. the hang seng in hong kong was down more than 2%, about 2.25%. shanghai composite fell down more than 1%. it is up off the lows. it was down as much as 4% in early trade. checking european equities, down across the board except, interestingly, except for greece, up by 1.25%. greece not the dominator of the

headlines. take a look at the price of crude, with stunning volatility over recent sessions. crude down about 2% despite getting an uptick yesterday, turning positive midday on some positive output data in the u.s. as well as positive comments from opec and brent. nat gas up by half a percent. take a look at the dollar, $1.20 against yen. >> you say the biggest move in crude percentagewise -- >> did you say in 25 years? >> in 25 years. brings it back to the high 40s. so, right, it's all relative? makes a huge fill back, if you're back with retracement -- >> and we're still a half off from last year. >> a lot of volatility in trade in here but the idea is oil

prices are lower. they need to settle down someplace. >> slob. >> joe, for 30 years, have i never -- >> slob. >> let's bring in our resident stat guru, dominic chu on the prospects of a september swoon. >> just going back to that oil chart you pointed out here, we're coming up on another earning season not too far from here. oil companies will play a big part and they've been a huge drag on the earnings picture. let's talk about that september swoon overall. it's that song, accentuate the positive, eliminate the negative, latch onto the affirmative and don't miss with those in teen. we'll present two different takes and let you, the viewer, decide which one you think weighs in more. accord to our data partners, september over the more medium term, we'll call it the last ten years, has been actually not a terrible month, although it's starting off that month. the dow typically gains close to 1%. positive seven of the last ten

years. seven of the last septembers have been positive. the s&p up by half a percent. and the nasdaq up by half a percent-p. some of the sectors we wanted to watch over the last ten years, which includes the financial crisis as well, so those numbers may be a little wonky, consumer staples up 1%. technology also up 70% of the time, average return about 1% as well. biggest sector in the s&p. energy is up 60% of the time. however, the average return is a minus 5%. the materials, the worst sector performer, down over a percent, up 60% of the time as well. that's ten years. the longer, longer term picture becomes more dire. according to s&p capital iq, if you go back to december 31, 1945 n that era, post-war, september is by far the worst performing

month out of any of them on average since 1945, the end of -- over 0.5%, it's positive only 43% of the time. compared to every other month out there, the average monthly gain is up 0.7% and positive 60% of the time. it depends on which one you want to accentuate. it appears right now people are focusing more on this longer-term picture where september is the worst month of the year for the s&p 500. but, again, we just wanted to balance things out a little over the last ten years. data says september may not be as bad as some people want to believe. >> were there any reasons for why september behaves the way it or just a random -- just decided september is a bad month and they sell and there's no fundamental reason behind it? >> first of all, there's always going to be folks out there who say it's a random walk because you can't factor every single variable that happens. but people point out after what may be a seasonably less

volatile and perhaps less, you know, volume-driven trading season during the summer months, you come back, people get back to work is and all of a sudden they jockey around, causing more volatility. the downside move is interesting because 0.7% is the worst performing month going to data back to the end of 1945. the curious part is about whether or not we end up seeing more gains heading into the end of the year. there are a lot of experts out there who believe that the volatility is here and will be here for the next few weeks, but that maybe sets up well. the valuations become a little more attractive and then all of a sudden you have a bit of a reason to want to buy stocks going into the end of the year. it remains to be seen if that happens. remember, guys, a lot of these macro catalysts will be around for a bit. the question is whether or not it starts to affect corporate earnings. we'll find a lot of that out in the coming weeks given what's happening with earning season. it's starting to slow down the first couple of quarters. we'll see if that really carries through into the third quarter numbers, second quarter numbers

as well. >> makes no sense because, okay, everybody takes off, so it's liquid, nobody's trading. they come back, wanting to do things. why do they always want to sell? they're in a bad mood. it's part of s.a.d., seasonal affective disorder. daylight savings time is coming. we know what it's like to go back to school, horrible, dreadful season, that's my take -- >> and this -- >> going into summer, it's spring, things are growing, it's young, my hormones. coming out of summer, i'm selling. i'm old and i'm tired. >> i can sense the hints and maybe subtle sarcasm you've got going on right now. although,ly say -- >> i'm not being -- you don't believe in s.a.d.? do you -- have you ever been in a tanning machine? you go in, feeling a little under. people here on the east coast

and in seattle -- it makes you depressed. >> i will end with this, anecdotally speaking, i'm a much happier person the more daylight there is out there. >> thank you. thank you for admitting that. i'm not being sarcastic. >> i don't believe -- maybe it's -- i may be wrong here. i don't know if that ultimately has an affect on the stock market overall. >> summer's over. >> i will say a lot of hedge fund managers look at lunar cycles, solar cycles, so -- >> the soviets had an official illness due to low pressure. if pressure was low, you could take off for three days. you could call in sick for three days because of low pressure. that was an official soviet illness. >> is that like barometric pressure? >> exactly. >> i didn't know that. >> there's a lot of vodka. >> nobody -- >> in siberia, is there anything

to do besides drink vodka in siberia? you'd be depressed if you don't do that, right? >> no, but you can go outside and urinate and it freezes immediately. >> okay, thanks. dom, thanks. for more, we're joined by james lu and allison deans, also a cnbc contributor. buying dips? >> i don't think it's dipped quite enough yet. i think we need -- >> okay. james? >> yes. not because it's a dip. everything else looks good. >> doesn't matter why. weakness is a time to add positions because we're still in a bull market. >> not simply because it's dipped. i know everyone is saying, buy the dip. everyone wants to buy the dip but they're waiting for clarity. i don't think we're stretched at all at this level in terms of how people feel about the market. >> i just wanted to get both -- both of you out on whether you were dip buyers or want.

what were you -- >> i think the market has been fairly valued for a while. there's uncertainty around what the fed will do. if the fed backs off bad news or fed tightens to some degree, it's like the market has been looking for a correction and china is handing it to us. it could cause global economic slowdown. could put pressure on multinational and so the s&p earning trends could flatten out for a while. i think there could be a bit more of a dip before you need to buy. >> we have said, you know, greece didn't do it and some of this other stuff, but when you think about it, it sounds like the greek economy, it would have had to be contagion for the entire eu for that to be systematic. china you don't need that. immediately hurlts markets, immediately hurts the commodities. >> hurts countries like japan, australia. we're attached to them. it's much more significant. >> even though you're saying it's kind of an excuse that we've been overvalued anyway and the fed is going to eventually tighten, right?

>> right. >> china provides the excuse so it doesn't filter through and cause a slowdown in our economy here? >> well, we're not an export-oriented economy. 13% of gdp comes from exports. i'm more concerned about corporate profits. the 40% of s&p revenues comes from overseas. that's where you could get negative announcements from corporate profitability which puts pressure on the market. where i think u.s. economic growth should continue to improve unless consumers get spooked by what happened in china. we're a consumer spending domestic driven economy. >> that's why i say fed hike matters because the dollar gets stronger and that hurts -- agree or differ in certain ways? >> i jeblly agree. the difference is we've been talking about china soft landing for five years now. let's say they are throwing out 5% or 6%, even a little lower in reality, that should already be filtered out into the rest of the world, including corporate earnings. a hard landing is not a 5% number. it's a zero percent or negative

growth rate which some pmis might ultimately point to. >> how does the hard landing play out in the market if what we're going through is dramatic softness that's landed a long time? >> in the short run it's psychology. the last five years all of us have had china in our black swan column, so this is a reaffirmation. what we've seen over the last few days is some stabilization across global markets. this morning notwithstanding. that's because basically we've returned to some notion that the u.s. should be somewhat distinct from the rest of these global developments. so, that should cause some stability in the short term. >> do we have any idea how much s&p corporate profit growth comes from china? and does all of that corporate profit growth go away because china is weaker or some countries retain it? >> it won't all go away. about 45%, 46% of total revenues come from abroad. in terms of trade for the united states, we're talking about

0.9% -- >> it's a small amount but a lot of companies are building stuff, making stuff they sell. >> true. we have foreign direct investment in china, that's directly true. again, if we're talking about instead of a 7% number, maybe a 5% number, it's basically that difference. we won't have zero in terms of actual growth rate. >> china -- of 40% of the s&p, europe is the wiggest piece and china isn't that large but there's the indirect, which is europe is relying on china, europe, australia, and those are more significant to the u.s. it's not as easy and as straight forward to measure. >> is there anyone that's not a long-term bull on china? would you buy the dip on the prospects for china long term? and i would say that's probably consensus. no one thinks china is going to end up like japan for 20 years, do they? >> the thing chinese needs to do, same thing -- they need to spur domestic spending. >> they never did. >> so china needs to be pretty good at learning from others'

mistakes. the near-term concern is does china have control of the country -- >> long term -- >> the problem with buying china is it's a lottery ticket. if you tell me you should buy today because valuations look a little better, that's like saying you can buy a lottery ticket at a 10% discount. >> the economy comes back? >> the economy ultimately comes back. >> and they're going to smoke us eventually. >> you never know about that. >> they're going to be number one. >> maybe. >> all right. good. you want to make america great again? >> i want to make america great again. >> all right. don't be shy. don't be afraid. thank you. coming up, a closer look at the moves in currencies and emerging markets. and then a leadership battle at bank of america. analyst mike mayo wants the company to split the chairman and ceo roles and he's not alone. he'll join us at 7:30 a.m. eastern time. plus, apple rumored to be

getting into original programming. we'll ask an analyst how that fits with the apple tv hardware business. "squawk box" will be right back.

without the internet i would probably be like a c student. internet essentials from comcast has brought low-cost high speed internet into the homes of hundreds of thousands of low-income families. it lets students do homework and study at home. so far more than two million people across america have benefitted. internet essentials is going to transform the lives of families. i see myself as maybe an entrepreneur. internet essentials from comcast. helping to bridge the digital divide. the u.s. treasury announcing this fall who will be the face of redesigned $10 bill? the next guest is a money expert who met with treasury officials to give some suggestions. joins us is kabeer sagal, the

new author of "coined." first, i want to talk about the -- what's going on in the world today. the headline this morning, emerging market currency worries threaten to cut back -- i don't know if we can get a picture of that. is there a currency war going on? >> why would you ask him that? he used to be an emerging market analyst at jpmorgan. that's why we're asking him that. >> thank you, joe. >> you're welcome. i'm just trying to help. >> it's cool to be on the set because you got my back. >> i got your back. just be careful i don't -- >> it is troubling what's going -- kubla kahn printed money out of the barks of tree, in the words of marco polo. in researching my book, i spoke

to president jimmy carter and asked him about his opinions of china. he says, we cannot control china from washington, d.c. or new york. the chinese are gradualists. this is going to be something that's going to be going on for quite some time. >> but what they just did, which was a 2% or 3% devaluation, and then everybody's had to adjust around that, is this an issue where people are using their currency to prop up their economies right now or is this a normal situation in history in the sense that they're using their currencies as a flexible tool to adjust their economies? >> i think they're trying to use it as a tool to adjust their economies. the eurozone policy makers like to adjust their currency. you'll see in the indonesia, philippines, even in india, you'll see responses to this. >> we've seen some already if you look at malaysia and thailand. both of their currencies have depreciated against the dollar. then the new game is they have

to adjust versus china as well. >> china is the game. remember, america still grows -- drives the global growth agenda. still going over 3.5%. you were in jackson hole last week. i think the u.s. is going to be driving the markets. >> joe was asking an interesting question before before. long run, is it -- is china a positive -- a place where you can just bet on it and you're bullish on china long run? >> i think so. look at the demographics. it's a shrinking labor pool but have you a lot of capital still coming into the market. and i still think -- if you look at consumer side, there's going to be a lot more growth in consumer demand coming forward. that's the big rebalancing that's going to be happening now. >> let's turn to what you originally came in for, what's happening to the u.s. currency. they're talking about several women, eleanor roosevelt, the leading one. people who were actually -- tried to comment on this to the united states treasury. >> i spoke to rosie rios, united states treasurer, and there's a few leading contenders.

i think eleanor roosevelt, she was the first lady of the united states. she was the longest first lady of the united states. rosa parks, 1955 civil rights movement in montgomery, alabama. racial carsons, a science, her book "silent spring," another one is barbara mcclintocclintoc. >> that's a good one. a scientist. >> they're not talking about leaving hamilton -- >> decreased production. >> they should have done that with jackson. i have a lot more 20s than 10s. is that because of the atm. >> there are 10 billion $20 bills in circulation. >> why not the $20? >> the $10 is the next to get a refresh. it's the next -- >> it takes them a long time to do it.

it's not until 2020. they're making the decision this fall and it takes -- >> we talk about how the fed can print money overnight. not in this case. it will take at least five years to print all this money. >> i talked to george in jackson hole about the future of money. can i blipg my eyes, wave my hands and pay bills? she said, no, money is popular. people want it in their pockets. >> 85% of transactions in the world are based in cash. >> it's popular for illicit activity. >> what percentage are dollars? >> the federal reserve holds about 65% dollars. >> when i was on a plane to -- i'm telling russia stories. >> you are. >> there was $2 billion on the bottom of that delta flight. >> you are definitely a russian spy. >> no. we got to go. i'm done telling these stories.

you also have a grammy -- grammy nominated -- >> new album. >> in cuba. >> piano player. >> i'm miss aggie tar player, though. >> happy to oblige. >> next time. >> these guys in cuba are amazing guitar players. >> after the broadway musical, hamilton. >> that's why they made the musical, to reserve his spot on the $10 bill. >> maybe that's a sign they'll keep ham ton. >> what about these great women and honoring these great women, american great women? >> get rid of jackson. >> i think so. >> i agree with that. coming up, imf boss christine lagarde issuing a warning about the global economy. details up next. here's mohammed el erian sounding caution last night on "fast money". >> keep an eye on what these long-term institutions do because some haven't look add

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a bad habit ♪ ♪ walking up and down welcome back to "squawk box" on cnbc. first in business worldwide. among the stories front and center, dan lobe's third point fund dropped 2% 5% in august. still up for the year. david einhorn fell, expanding the loss for the year. it's now nearly 14%. i think i could do that probably. imf -- and i'm doing 1 in 10, steve, if you want to think about it. >> okay. >> i wouldn't even charge you. i'll lose you 14%. lagarde raising a red flag on the economy. in a speech she said global rise is expected to be weaker. she warned emerging economies

should be vinl lent. her spillover from china's slowdown. also tighter global conditions were to be seen in the prospect of a u.s. interest rate hike. futures this morning, we've been talking about all morning long, it's -- oh, it's not a three handle on the dow anymore. 296, 297, which is less than 2%. 37 now on the s&p. and we're below 90 on the -- the downturn on the nasdaq, or indicated down 87 right now. >> you realize there's no 20 if there's no positive, right? you only get the two. you get that part, right? >> no. these guys will take part of your losses, too, when you lose, don't they? that's only -- >> i would like to track investors. >> no, you don't get the 20. >> the innovation that is current and capital. >> i'm thinking -- >> two and plus or minus 20.

that would be -- >> might not be quite zero. >> you must have been quite a broker. >> not quite as good a business model. this should be illegal what they have now, right? >> i don't get it. >> at least they pay taxes like everyone else. >> no, they don't. >> they don't do that either? >> no. >> holy -- >> no, the 20 they get remai remains -- >> whoa. >> former office depot ceo warning -- warns we're living in an economic twilight zone where things look healthy from afar. employment still lagging. suggesting congress, three steps the u.s. must take to energize job creation. he wants washington to, first, lift the oil export ban, reform the corporate tax coated for large and small businesses and focus on what he calls nurturing innovators and entrepreneurs, including immigrants. don't miss steve on "power lunch" this afternoon.

>> when i saw we had mike mayo on, i said, you got to do this. you were working on this all day yesterday, weren't you? >> i cover bank of america, so -- >> in this role you're just a co-anchor on "squawk box." coming up, bank of america shareholders should split the chairman and ceo roles according to the aforementioned analyst, mike mayo, who will join us next on set to explain why.

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welcome back to "squawk box." dow has a three handle on it once again. it would open about 310 points to the downside. nasdaq would be down about 89 point. s&p 500 would be down 39 points. of course, this is extending losses we saw overnight in asia, losses we have seen interday in europe, all on the back of chinese factory data slowing in august. meanwhile, bank of america ceo brian moynihan has held the chairman since board decision last october but shareholders are scheduled to vote this month on whether to make that

consolidation of leadership roles official. analyst mike mayo voicing his concerns saying a vote to keep the positions together could put a larger regulatory target on the industry's back. he is urging shareholders to vote to separate the roles. two of america's biggest public pension funds now saying they support splitting the chairman and ceo roles in a letter they sent to the bank last night. mike mayo joins us this morning to make his case on this. we know -- you know how to write a headline for your analyst report. why do you think this decision is so important for bank of america share holders? >> it's not just important for bank of america shareholders, it's important for the banking industry. we believe the actions taken by the board of bank of america make a mockery of the industry's efforts to improve oversight of the bank since the financial crisis. look what's taken place here. on october 1st, as you mentioned, the board promoted the ceo to the add the position of chairman after a bad year.

they have a $4 billion acting error, issue with the fed's stress test, low returns. on top of, that the board promoted ceo to chairman when shareholders voted in 2009 not to do so. in a binding vote in 2009 said dobt combine them. they did it anyway without talking to shareholders. add insult to injury, they gave themselves a raise after the annual meeting. this is a making a mockery to improve the industry. you have 13,000 pages related to the dodd/frank act ensuring the industry gets its act together. these moves by bank of america taint the entire banking industry. >> you also have an industry where most of the big companies in it do have these roles consolidated. not without challenges either. jamie dimon won in an overwhelming vote. lloyd blankfein, goldman sachs.

i wonder why you think this is different for bank of america and why they need to specifically keep this separate? >> bank of america has the worst stock performance among biggest banks. the management team has no time frame for any financial target. if you look at the four largest banks, two have the position separate and two have them combined. so, citigroup and bank of america have the worst returns. jpmorgan and wells fargo have good positions and they're combined. if board of bank of america has bad oversight, which we think they do, you should not take actions to reduce that oversight. >> do you think it's fair to say so far as a turn-around goes, we know brian moynihan was inher inheriting a very troubled company when you came on board in 2009. do you think the progress in turn-around is closer to

citigroup than closer to a jpmorgan or goldman sachs? >> absolutely. their earnings -- >> mike, mike, is your problem here with mobrian moynihan or t guy getting two jobs? should he go? >> the problem is the board of bank of america -- >> if the stock is not perform, why does the ceo remain? shouldn't the ceo go? >> we can debate whether the ceo goes -- >> i'm asking you that question. >> we don't care how bank of america improves governance. either change the four members of the committee -- by the way, they got the lowest re-election vote among bank directors of the s&p 500. share shoulders are already upset with the committee. have good governance, have a score card for compensation or change the ceo and other management. we don't care how it gets done. our point is this -- >> so, you're saying -- >> here's our point. >> oh, gosh. >> bank of america, hear your

shareholders. bank of america, shareholders have spoken up. can we please hear your response? >> we have heard in a letter overnight calpers and calstrs coming out in this proposal, they would like the roles to be changed, changed to when the labor group would like them separated. that more so alines with those groups' purposes. i wonder if you think this is such a controversial idea we'll see vanguard, blackrock, fi tellty come out against this. when you say shareholders are vocal, are they the top institutional shareholders or are these pension funds and labor groups that traditionally have had ideologies that support this? >> you're right. some shareholders will vote against the shareholders for the vote on september 22nd on philosophical grounds. having said that, we think there will be other shareholders who will vote no september 22nd.

in fact, for the annual meeting vote last may against the governance committee, you did see some crossover, some investors who wouldn't normally vote no actually voted no. so, i think it will be a close vote september 22nd but it has the potential to be an epic vote. a watershed vote, september 22nd when the industry finally takes over the governance as opposed to having regulators step in there. >> is this -- >> this is a chance for markets to do their job as opposed to just regulators. by the way f they don't, it will invite more regulation. you've heard there from dan t turillo. >> steve, do you think if bank of america keeps these banks that dan will come after the industry? >> he don't think that's enough to precipitate it. i was going to ask mike about getting their act together when it comes to the stress test and share buybacks and dividends. where does bank of america stand with that?

>> that's another amazing aspect of this vote. before bank of america has gotten the green light for their fed stress test. imagine how embarrassing if shareholders say -- >> just update me. they've been one of the banks singled out. i think the one bank singled out for not making the -- having the ability to do the share buybacks and dividends? >> this year bank of america has to resubmit their plan by the end of september and the fed will rule some time in the fall after the shareholders -- >> do you think they'll make it this time? >> they probably pass the fed stress test but they're putting the card before the horse. we say bank of america, have a clean year, pass the fed stress test, have better results, improve fed oversight and then have this vote. >> the last time this role was separated, ken lewis, then chairman and ceo, ended up having to resign as ceo later that year. there are currently 4 buys on bank of america. do you truly believe that if

brian moynihan lose this is vote, that he should be out? >> no. if brian moynihan lose this is vote, then we should have a new, independent chairman. we're not talking about checking the box here. we're talking about an independent chairman who knows his or her stuff that will have strong, independent oversight. how about someone like dick, ex-ceo of wells fargo? why don't you bring him along as the new chairman of bank of america. >> he comes on "squawk box" a lot, so i'm sure we could put that question to him. mike, we appreciate your time. three weeks away from that vote. we should mention we reached out to bank of america. the company sent us the following statement saying, quote, the board believes that having the same flexibility on board leadership that 97% of the s&p 500 now has while still providing strong independent oversight is in the best interest of stockholders. no company has dug out deeper since the financial crisis, turned back health with solid earnings and also to the benefit of our shareholders. the board respectfully recognizes that stockholders hold varying views on the matter which is why the board committed

to putting it to a vote. steve, just had to include that. >> good reporting. thank you very much. >> they're not going to do it. you know, they have an independent directive. i don't feel that strongly. can't you get on the band wagon? i get charged when i use a nonbank of america atm and i get charged $3. why don't you focus on something we care about. focus on something that affects. i take out as much as i can to lower the percentage. don't you do that? >> do i the same thing. >> because i don't like paying that $3. now, give me that mega phone. i'm mad about that! he can keep both titles but can't do you something about that, mayo? >> you're messed up. >> you can't hear me. bank of america did. i can respond to that statement because that's new information? they're saying good earnings -- >> it's basically exactly what's in their proximate. >> the chairman and ceo -- >> but, look, you of all people -- >> you could do the $3 for me.

>> you of all people, haven't you had enough of regulation? >> i have. >> this is inflated self-analysis. you say good earnings, let them define good earnings. they're at less than half -- >> we'll see how the vote comes out. >> they're good at picking data. you say 97%, the proxy for the special meeting talks about 28% -- >> mike, we have to do some commercials. apple looking to change the game for mobile internet browsing with plans to enable ad-blocking software. julia has the winners and losers from that move. new rumors apple is considering taking on netflix with original programming. stick around. ♪

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other stocks to watch this morning. we don't want to leave out american airlines and delta air lines were upgraded to hold from buy at deutsche bank. the idea that the positive impact of lower energy prices on earnings might be understated. and fedex was added to citi's recommendation for reasons.

coming up, apple preparing to take on netflix by jumping into original programming, according to a new report. it's tough to get a hit, isn't it? i mean, it's not like -- a lot of people dry. can they do it? details straight ahead. take a look at u.s. equities future. still sharply lower. ♪ tell me that you love me more ♪

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its new operating system and for the first time it will add ad-blocking software in its safari browser. madison avenue is on high alert. cnbc's julia joins us with a look at potential losers and winners. i imagine there might be more losers than winners. >> that's absolutely right. until now ad-blocking has only been available on the desktop but that will all change next week. for iphone users the ad blockers mean pages will load faster and phones will use less battery. so, that's bad news for advertisers. ad blockers are projected to cost the global ad industry $22 billion in revenue this year, according to a report by adobe and pagefair, which helps companies work around ad-blockers and measure their impact. the potential winners, companies predominantly mobile and serve ads within their apps. where ads can't be blocked like facebook, instagram and snapchat, even twitter. potential losers are those who

rely on serving ads the via the mobile browser. google lost an estimated $6.6 billion in blocked ads last year. yahoo! and verizon-owned aol are relying on the type of pop-up and video ads that they find the most disruptive. what madison avenue is looking for is how ad-blockers figure out how to block ads in apps where people spend half the time they're on their phones, though that percentage is sure to rise. >> thank you. for more on apple, let's bring in senior technology analyst at fdr capital markets. dan, good see. >> you great to be here. >> ad-blocking, how much is this going to matter for apple? why do they need to do this? >> this is a shot across the bow, especially against google. they're trying to put almost a chinese wall around their infrastructure. you look at the apple news app, and this speaks to apple not just on the ad-blocking site but

some other areas, trying to put a finance around their backyard. they want to view themselves as consumer-friendly. i think it's a positive move they'll highlight. also next week at the conference. >>. is safari enough of a money maker to actually need to put this shot across the bow into effect? this is basically saying they think that users will leak out of safari if they're faced with a pop-up ad. is that really true? >> i think the jury is still out on that. this is not necessarily about the revenue implications. it's really around them sort of creating this more ecosystem from the app, from the news side. what they're trying to do, really, is protect from -- especially for privacy, post-snowden. some consumers have complained about, and i ultimately view it will be positive. the question is does it go from 6% to 10% to 16%. is the bark worse than the bite? that remains to be seen. this is really apple protecting their core infrastructure, their

core customers. i think that's why they're doing it, at least in the first step. >> do they need programming now, too? i mean, with the missteps they've had in services with apple music being as confusing as it is, and then apple tv, the actual platform being held up. why, then, decide to go into programming, or at least consider it? >> that's the game-changer here because they recognize over the next two, three years in terms of, you know, cord cutting. we've seen the streaming tv service, you know, go up and down in terms of the rumors. this is really around them creating that entertainment arm. they need to get more entrenched the consumer living room. that's why the apple tv, the next gen, that's tip of the iceberg because it will ultimately lead to more streaming and entertainment to where apple will build itself. the iphone will still be the bread and butter but they recognize over the next two, three, five years whether it's the car, whether it's entertainment. they need to create that next

leg of the growth stool. that's why they're focused on programming and you've seen the back and forth in terms of the -- >> sure, dan, in "the times" over the weekend head of programming at hbo said, we are aware that people are telling us, they cannot commit to any more tv shows. there is this content boom that has now become a content bubble. i'm paraphrasing. people say, i can't commit. there's too much and not enough hours in the day. why does apple need to get into a space where netflix, hbo and others are dominating? >> that's the question for investors, they need to walk through the rationale. it's not from a revenue perspective. it's trying to build that ecosystem out. they cannot be left behind when it comes to programming, but when you look at the broader set in terms of augment reality, streaming, they're building out other pieces of the puzzle. they need to make sure they're not missing any of these trends.

that's why they're focusing on this entertainment programming as content is key. apple, a billion ios devices sold to date, it's the gold standard. it's hard to dismiss apple, regardless of what they get into. >> maybe they should buy amc because i made time for "fear of the walking dead" up. didn't make time? >> i didn't. >> are you kidding me? >> flo. >> you don't want to know how the zombie apocalypse started? >> i can go back. we'll learn more about apple on september 9th. auto sales numbers due out today. our thanks to dan ives. we'll tell what you to expect when the automakers report. you totalled your brand new car.

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stocks setting up for scary start. u.s. equity futures getting crushed and oil sinking after china's manufacturing sector slowed again. we're breaking down the big movers and getting the trader's edge straight ahead. breaking news on the pulse of small business. what toll did the summer swoon for stocks take on jobs for america. the ceo of paychex will take us inside the numbers. a closer look at this new

relationship. plus, latest on that news, apple might be ready to take on netflix by getting into original programming business. the final hour of "squawk box" begins right now. >> announcer: live from the most powerful city in the world, new york, this is "squawk box." welcome back to "squawk box" on cnbc. i'm joe kernen along with steve liesman. futures continue to be down more than 300 points. keep in perspective, that's less than 2%. given the august we had, this is not a pretentious start for september. asia was down overnight. new economic data shows china's manufacturing sector contracted last month. worse than expected. it does fuel the fear of what's happening in that -- the world's second largest economy. exports in south korea tumbled

by the most in six years. checking out the markets in europe where a lot of this started, they continue to be weak, all down between two -- at least down one point. greece is not a bright spot. it was earlier but down in the sixes. it was in the eights during the crisis. >> let's find out what else is happening. dom chu joins us. >> freeport mac shares were down after citi downgraded from flew tral to buy and cut previous price target of $10 from $12. firm sites unattracting pricing environment as key factor after struggling stock soared 33% last week after announcing some staffing and spending cuts after activist carl icahn gave it another boost after he said he had a stake in the company. the stock is down 72% in just the course of the last 12

months. also chipotle mexican grill following the premarket on light trading, the fast casual taco chain is facing a lawsuit over claims its food is not gmo-free. that is to say genetically modified organism free. colleen gallagher claims chipotle offerings are not gmo free. chipotle says it will fight the claim. analyst increased dollar tree. as a result, those shares down 5.5%. back over to you guys. >> thanks. let's head to the cme group for a check on what traders are watching this morning. jim yurio is a cnbc contributor. i guess we need, jim, to talk support levels giving where we

were a little over a week ago. what do you think we're likely to see today? >> the reality of that is we're still in the thick of the correction. 1870 seems fairly legitimate. the thing important to me and what i'm looking at is the correlation between the stock market and the u.s. dollar. if you look at that over a six-month time frame and you think back to bill dudley, stanley fisher talking last week and you want to know who the market believes, and that's bill dudley. the what the dollar is telling us by being weaker is they don't believe all the tough talk, yeah, we're tightening, no matter what. they believe bill dudley who said, it's less compelling, we're in the throes of a cascading market. that's what the market thinks. they think if we go much further than here, the tightening will be taken off the table. what's going to happen is they won't talk about asset prices, obviously, but they have their cover. they'll say the situation could be deteriorating in china.

makes it less compelling for us to tighten. >> why would the market be going down if people thought as has been evidenced so many times they don't have feet of clay? or is the market just making sure -- is the market -- you're saying the market is diabolical enough -- >> the market is easily diabolical enough to force that issue. we've seen things like the taper tantrum before. the market is not your friend. the market will force the issue. again, within this correction, too, there's some market position that needs to be worked out as well. a lot of people got long over the last five years. some of the weak hands got to be knocked out. that's the purpose of a correction. the combination of that and the fact that the market is nervous about the tightening and may want to force the market's hand, i don't believe that's unreasonable at all. >> jim, has a technical death cross in any market forecast 20 out of the last three crashes?

>> i have some of those, too, i think. we've talk the about corrections -- >> never happens, does it? i mean, that was a pretty definitive crossing last week, right? i've seen some in other markets and we never talk about it again. it crosses and then it doesn't usually happen. has it ever happened it forecast a real sellout? >> what forecast -- >> certainly has but hasn't over the last couple of years. and i was -- i was not paying much attention to it. to me, it just seemed like who have to run to a logical end of the fed being very, very aaccommodative. people get long. i'm not talking crashes. i'm talking about corrections. we put one off for a very long time. interesting about corrections, they have the ability to convince you they're a crashing bear market right at the point where the correction's ending. and i think that we could see those lows again we put in last week. we probably will see those lows again. i don't think there's anything to worry about.

the big crashes come when there's debt crises, a bubble in housing, a bubble in tech stocks. there might be a bubble in tech stocks. i don't see people borrowing and buying assets -- >> how do you know there's not a bubble in global debt, public sector debt? >> i don't know there's not a bubble. >> in hindsight, that's what we attribute it to, in hindsight, then everything hits the fan. >> yeah, no, and we could do that. the bubbles i've seen is when the level of people borrowing to buy the asset gets way down to institutional, and mom and pops borrowing to buy tech stocks, until we see that, i believe a bubble will have much different characteristics than we've seen in the past. marginal calls are handled differently by institutions than mom and pop. >> yeah. because if a market's going down, sooner or later, the

50-day does cross the 200. seems like that happens. seems like that happens by definition, so why even mention it when it happens anyway? >> of course it happens anyway because people like to call it the death cross. if we call it the ominous death cloud of ultimate destruction, people would buy newspapers because it's a fun thing to say. is it powerful? no. does it deserve to be watched? of course it does. >> jim, thanks. >> thanks. oil prices are down today after a big surge yesterday, closing at six-week highs. crude coming off the biggest three-day gain in 25 years, up 27%. joining us john kildoff. it says you're on again, or is that the name of the company? >> name of the company. >> you weren't on earlier, were you? >> not today. >> i didn't think so. he's not on again. he's with again capital, the founding partner and cnbc contributor. you founded other firms. it's like, wow --

>> like i'm doing this one more time. >> here we go again. >> one point we made earlier, we've got the biggest three-day gain in 25 years and it's still got a four handle, which is just -- just shows you where we come from. if it goes down 50% of the recent move up, we're down in the low 40s again. the fact remained, oil prices are shockingly low, given the last five-year history. >> they are. and i think the volatility across the markets has been remarkable to me. this three-day rally rivals what we saw back in 1990 with the gulf war in terms of the price spike up. so, show you where we're at. i think the oil market has witnessed is how bad it can possibly get. when i hear people like me going to the 30s or 20s, that's the -- it needs to slow down. that's the excess production. that's opec not having their act together. at the same time, seeds of recovery, when people talk about

getting back to $60, $70 a barrel, is seen as well. we have this opec blog report they were going to talk to other countries about cutting yesterday. that helped. and i just think some of the other measures taken by the chinese government got the market -- got its attention. a lot of people were caught short. the daily price bars are huge. which tells me there's not a lot of support in this recent run-up. the seeds of the recovery are there. eia yesterday came out and said that u.s. production wasn't anywhere near -- not anywhere near, but wasn't as robust as maybe we would have thought. >> you thought yesterday was more of a short squeeze than optimism? >> i do. i think there were a lot of weak shorts in this market. i think you saw a lot of people piling in. we got a lot of good data in terms of who's on what side of the ball here. there's been very little in terms of bulls this in market. a preponderance of shorts by a large degree.

in this kind of a market, when you get down, people scramble. >> what will you be listening for for real rhetoric from the producers that they're going to do something? russia and venezuela talking, that's not what it's about when it comes to putting a floor on the market. what kind of signals are we looking for from opec or other countries? >> it comes down to saudi arabia. they're totally in control, totally in the power seat. i do think the one catalyst is going to be u.s. oil production falling below 9 million barrels a day. . >> what price could cause that? >> i think we're in the process of it now, joe. the producers in the u.s. have been driving down the costs remarkably. i think certainly this 45 to 35 area -- >> we'll stop here? >> yep. >> if we went from 4.5 million to 9 million and we only have to fall back down below 9 and we can still do it at 8, that's retaining a good part of the growth of the u.s. production? >> but i think the saudis will take a shot at reining in their production.

with we go to 700,000 barrels, they cut it to 800,000 barrels, now the surplus is gone. >> will they do that unilaterally? will they require oe opec members to join them? >> i think they'll get kuwait and uae to join them. >> do you buy refiners in the meantime like buffett? >> i thought that was a remarkable purchase by them. i continue to be worried because everybody in the world has got into that refining game. i've been talking with you guys how the saudis have ramped up their productive capacity in mining. chinese, russians. there's a lot of sloppy markets out there internationally, especially for diesel fuel. i have a hard time saying going in there at these valuations. >> we appreciate it. >> thank you. a news alert. fiat-chrysler reporting august sales rose 1.8%. u.s. jeep sales soaring 18%. take a look at how fiat-chrysler shares are trading, down 3%.

coming up, more on those numbers and a preview of the other automakers as they get set to report auto sales later on this morning. as it stands, though, 2015 could be the second best year for sales ever. we'll go under the hood after the break. check out futures as we head to a break. still with that three handle on the dow. dow would open down 350 points. nasdaq in triple digit territory as well. that would be down 102 points. "squawk box" will be right back. when a moment spontaneously 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.

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automakers, fiat chrysler posting 1% 7% increase in sales, topping estimate. jeep and ram driving growth. check out major auto stock this is morning. gm, ford and fiat all down in early trading. phil lebeau is telling us what is driving strength in the auto market. it seems like these numbers come out every month.

>> and they do. they're impressive, joe. when you look at the numbers from fiat chrysler, we usually don't look at the raw volume in terms of the number of vehicles they've sold, but we believe this is the first time, at least going back well before the financial crisis, that fiat chrysler sold more than 200,000 vehicles in a single month. we do know this was the best august since 2002. we have the numbers from fiat chrysler up 1.7%. here's the estimate for the other major automakers. don't focus too much on whether or not they're going to be up a few percent or down a few percent. what you want to focus on is the pace of sales and in august, most believe the pace of sales will come in somewhere between $17 million and $17.4 million. in other words, a very strong month. that's without the labor day holiday, which is a huge month -- or huge holiday in terms of auto sales. what's driving it? we already saw with fiat chrysler, it is suvs, pickup trucks. those are in red hot demand right now. that's what's moving everything in the show room.

as you take a look at where we expect annual auto sales to be for this year, look at the far right column there. 17.2 is the current pace of auto sales, which would make this the second best year in the u.s. in terms of annual auto sales. but then again, when you look at the auto stocks, they're not really doing anything. gm, ford, fiat chrysler. all the numbers coming up all morning long. we'll have them for you. >> phil, thanks. stick around. let's bring in another auto expert for more on how the china slowdown may impact the auto sector. joining us, paul, only one economy in the world that don't sell cars in america, only in china. is the auto industry going down and going to be bankrupt because of the chinese slowdown? >> i don't think bankrupt, but certainly is going to be affected by the chinese slowdown. i think the companies that will be most affected, honestly, in

china are the germany luxury big three, audi, mercedes-benz and bmw. they've had strong sales in china over the last few years. it's going to be a little payback time because of what's happening in the chinese market and the chinese economy. >> any early sign of that -- >> ee meshlging markets are down pretty badly, too. >> any early sign of that yet, of whether or not the weakness in the chinese economy has taken some growth off the auto sales of those importers? >> early signs but it's not a crash. it is a crash -- i was going to say, it's a crash really in brazil and russia, two of the other bricks. you know, auto sales in china are estimated down about 7.5% for august. it's about 23, 24% in both russia and brazil. >> would you weigh in on the importance of asian economies to u.s. automakers? >> they're incredibly important. you look at general motors and

ford to a lesser extent in terms of china. they're a little more isolated. first of all, they ramped up their capacity in china. ford is more focused on inner china. for general motors, they've got a lot of capacity there and a few more plants coming online. it doesn't look like they're overcapacityized. china really is the engine for the auto industry and, in particular, it's going to be critical for the future for both ford and general motors. >> we were talking earlier in the show about how the government in china plays such a huge role in the data and how the data fluctuate from month to month. in beijing, because they're trying to control the air quality, it's harder to get a license plate. you can only dry on certain days of the week. in shanghai, license plates have gotten to the point where they're auctioned up. it's harder to get a car in

china. i wonder if you think that's playing a big role in the growth of car buying there. >> i think that's certainly a factor but not a big factor. the biggest factor is the chinese economy is slowing. the chinese stock market has slumped badly and the regulatory authorities are at a loss of what to do about it. as opposed to letting it take its course because it did run up dramatically last year. this is a necessary correction but that doesn't seem to be allowed to happen right now. >> can you talk quickly about u.s. inventories and production? are we on a pace, do they need to ramp up production or inventory is too high right now? >> they're already doing that. you look at what they're doing at general motors in terms of truck production down in arlington or at their plant in st. louis for general motors. ford's doing the same thing. they are pretty much at max capacity in a number of their plants, especially when it comes

to suvs and pickup trucks. they try to squeeze out any volume they can right now. >> thanks very much. phil lebeau and paul, thank you for joining us. paychex ceo. former counsel of economic advisers ed lazear joins us. check out the futures an hour before the stock market opens. we're still steeply in the red. dow would open down 364. s&p down 45. nasdaq down 103. "squawk box" will be right back. these two oil rigs look the same.

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a fiery interview within the last hour. banking analyst mike mayo joined us to discuss his push to separate the role of chairman and ceo at bank of america. saying the move is needed to protect shareholders. >> it's not only important for bank of america shareholders, it's important for the banking industry. you know, we believe that the actions taken bit board of bank of america make a mockery of the industry's efforts to improve oversight of the bank since the financial crisis. this is not a philosophical view that the position should always be separated, but if the board like bank of america has bad oversight, which we think they do, you should not take actions that reduce that oversight.

>> bank of america shares are down in the premarket about 2.75%, but also we got news public pension funds calpers and calstrs are joining forces to oppose the joint chairman/ceo role. in a statement to cnbc, bank of america says, quote, the board believes having the same flexibility on board leadership that 97% of the s&p 500 now have, while still providing strong independent oversight, is still in the best interest of stockholders. that vote will be september 22nd. >> that's going to be a big vote. coming up, four key dates in september investors need to watch. and then paychex ceo on the state of small business. take a look at u.s. equity futures.

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s&p 500, dow jones, nasdaq showing what could be a 300 decline. energy will be focus for ail aye lot of traders. oil down by 3%. nat gas showing fractional gains. again, oil very much in focus. especially after that big three-day winning streak where we saw a huge move. 27% to the upside after that three-day span. wti crude over the last month here actually eked out a gain, a small one in august, after ratcheting back from a 20% decline from the end of july. certainly a huge, strong move there in terms of oil. now on a year to day basis, the downtrend very much intact like you're seeing there. over the one-year basis, even much more so. again, oil, a huge focus. brent and wti, steve, right now both moving lower. again, a nice, nice run up over the past few days. we'll see what happens as the trading gets under way in earnest and volume going the next few days.

back to you. >> thanks, dom. nice being relative to the oil trade. break right now. the health on the jobs market. the paychex survey for august showing the economy and job market are experiencing slow and steady growth. here to take us inside the number paychex ceo marty mucci. thanks for joining us. >> good to be here. thanks. tell us where the index is and what it means. >> well, a little drop-off in the august index indicating the rate of job growth for small businesses has tailed off a little bit but it's still consistently strong. we've seen a steady recovery of jobs in the small business market. that continues. >> so, we're at 100 here, which is daushg -- looks like almost above the national average. the average going back to the 2006 year. you have this big ramp-up from the prior -- from the recession.

now we're going -- what does this tell you about what's happening with job growth nationally? >> it tells you our high point last year, we're down about half a percent in the rate of job growth. over our base year, which was 2004, we're still a half a percent higher in job growth in businesses under 50 employees. and it's a little different around the country. so, central regions of the u.s. still the strongest. you look at states like wisconsin, michigan, texas, so north to south in the central part of the u.s. are the strongest states in the country right now. >> let's talk about the strongest states. it used to be washington. now it's wisconsin. what did wisconsin do? i think what you're seeing is they're having a better recovery. could be a number of things that you see there. but i think, you know, energy and particularly in texas is where you see the most evidence there, in texas it's a tale of two cities. dallas is strong and houston dropped off when the -- when oil was -- is low. and is coming back a little bit,

but houston is low. dallas ohio. texas pretty strong. michigan, we saw detroit really come out of the recovery and continue to recovery in a lot of call centers and a number of other jobs in detroit that they didn't have in the base year as they suffered from the recession early, i think. >> what impact do you see from what's happening in china, overseas, the impact on the dollar? is there an impact on small business from that? >> certainly there is some. i think the biggest impact on small business is concern over a lot of regulations coming out. between -- the new overtime rules proposed, minimum wage hikes in about 22 states and you're seeing a lot more concern over hiring in those areas. it's still steady growth in hiring but i think more of the concerns for small business are around the u.s. and i think the regulations are what's causing a little slowdown right now. >> thanks for joining us, marty.

>> thank you. >> ceo of paychex. i want to give you a couple calendar dates to write down and make sure you're paying ta attention with some economic data. some key factors the federal reserve will be watching. first is that jobs report on friday, looking for 220,000. then one you haven't heard a lot of, september 9th is the quarterly services survey. this has ended up being a huge swing factor for gdp growth. this is for the second quarter which has already printed around 3.7 we'll see if that holds or gets stronger. in terms of the fed looking for the strength of the economy, the september 9th number could be significant. september 15th retail sales will give us august retail sales number. maybe a piece of the back-to-school purchases we're looking for to see how much -- how well retailers did. september 16th, first day of the fed's meeting, is the cpi, inflation data. see if it's firming or getting worse as far as the stronger

dollar and overseas weakness. on the right side are a bunch of icons for factors the fed will be watching. exchange rates, global economic weakness and this market volatility, which is how, guys, i process this, joe, this market volatility today. you know, fisher was clear, if the market's going up and down like this, it could be something that stays the fed's hand. >> are they using percentages or points? >> i didn't ask him that question. had you fed me that question, in your notes, i would have asked it to him. >> we may be back above 2% today, but we're around 2%. who knows when it opens -- >> i don't think that it's going down so much as the way it was going down that scared people. you open up down 1,000 points, it freaks people out. and it's fair to say, it freaks out central bankers, right? >> it doesn't freak them out when it goes up 2% and 3%. they say, hey, look what we did. >> that's probably true. >> that's a problem in and of itself.

377 now. ahead of friday's jobs report, loolgts get more on the pulse of the economy and fed's next monetary moves. joining us is ed lazaer, professor at stanford and senior fellow at hoover institution, former chairman of george w. bush's council of economic advisers. today, the most recent data we saw causing this is continuing underlining the economy in china. it's not the stock market in china, it's the manufacturing sector in china. is there a problem in china n your view? >> well, there is a problem. if we look at what the market is saying right now, gdp is going to slow in the future relative to where we would have been, say, six, eight months ago. we're not predicting a recession the market is not predicting a recession. the market is predicting growth rates of 1% versus 3% earlier in the year.

and if you say how much can be a result of china, the answer is only about a fourth of that decline. a fourth of that difference between 3% and 1%, can be attributed to china. china is a big player in the world, obviously. we trade with china. it's an important component in our economy. but it's not that important. and if you just do the numbers, you just do the -- kind of do the arithmetic and say, how large can this be, direct effect and indirect effects, it's about half a percentage point of gdp. not trivial, but we're not talking about the -- about the kind of moves we've seen in the markets over the past few weeks. >> the other three quarters, is it all domestic or other -- is it europe? what's the other three-quarters of the slowdown? >> well, you know, as i look at it, to be honest, i don't see an obvious factor that explains what's going on right now. so, coming back to what steve said earlier in terms of volatility, you know, i'm sure

the fed is watching that. everybody's anticipating what the fed's going to do. my view has always been that the fed doesn't have all that much effect, particularly right now on the economy, whether it raises a quarter of a percentage point or not, is not going to have a great deal of impact on gdp growth. i wouldn't really expect that to have an affect on markets. when i look at, this i say, gee, you know, there's no obvious thing in there that has changed so dramatically that would cause this kind of movement in the market. so even with reduced gdp growth we're predicting, we should not be seeing these kind of movements right now. i must confess, you know, i'm -- i'm at a loss to explain the difference. i usually take my cues from the market, not the other way around. >> shifting gears just a little, ed, you know, any polling that's done reflects a populous that doesn't feel flush, doesn't feel like 5.3% unemployment.

if we go down to 1%, and we, once again, are not in an upward trajectory, getting back to 2.5%, 3%, like we hope we will. what's happened this time? it's been seven years. what happened this time? >> well, i -- go ahead. >> i saw the latest lrb and don't think that's going to be good. almost kills the franchise model. i don't know what that's going to do for jobs. regulations, you know, are still coming fast and furious, as you know. no one seems to really connect the dots anymore between, up, what the federal reserve's doing and this tepid recovery. >> right. well, you know my -- you know my views on this, joe. i'm still concerned i we don't have as strong a labor market as reflected in the unemployment rate. the unemployment rate is still

way down relative to where it should be and it's been there for a long period of time. we do have job growth right now that is better than enough to keep up with growing population. we are making gains, but still quite slowly. when you say, what are the factors that cause this, i'm kind of with you on this. i always think about the government is pretty good at affecting long-term growth. there's not much it can do in the short run. most of the policies we have have not been positive for long-term growth. the regulatory policies you talk about, that your previous guest talks about, are negative, the tax policies have not been positive, the trade policies. maybe we can get there. we had what looked like we might have a breakthrough on that, and perhaps we will with transpacific partnership. i think that would be good for us. but that seems to have slowed. finally, of course, the long-term concern we always have is what's going on with budgets and the long-term impact of the fiscal situation.

so, all of these things over the past few years have been negative. you know, despite that, we've had -- we've had some recovery, but as you point out, you know, this is not really a recovery. we have not even reached our prerecession growth rate. so, not only are we not recovering, we haven't even converged back to earlier growth rates. and, you know, i think that we ought to start moving in a more positive direction in terms of the policies that you mentioned and the ones that i just mentioned. >> steve, maybe we can start trading with iran now. get more trade going, more global trade. maybe that will help a little bit. >> maybe. >> is that one of your ideas? >> or cuba. >> cuba? there you go. >> you're against cuba? >> no. i just -- you know, the things that we focused on don't seem to be -- >> what's weird, joe -- >> oh, here we go. don't look at me. don't say, what's weird, joe. say, what's weird, ed. say, what's weird, ed. explain rush that -- >> you know -- >> we got to go.

>> we don't have to go. >> you know, i agree with that. but what's weird, ed, is that we can't do the things that both sides agree we ought to do, right? how far apart is either side or both sides when it comes to corporate tax reform? the last i saw it was 28 versus 25. in the united states, i used to know, we would compromise in the middle. someone would dot calculation. no one can do the calculation of what's in the middle of 28 and 25. why can't we do that? how much better would it be if we could get rid of the loopholes and otherwise lower the corporate tax rate, which both democrats and republicans agree should be done? >> well, i certainly agree with you, steve, that if we were to reduce capital taxation, i'd prefer a slightly different way of going about it. the details are less important than the general directions. i think those things would have positive effects, particularly now. when we're looking at capital

expenditures having been relatively weak over this recovery, we know that we have not had a positive climate for that. even the things the president suggested would be positive moves in terms of lowering corporate taxes. >> he'll be gone. neither hillary clinton or bernie sanders has ever uttered anything close to the corporate tax reform. neither has hillary. >> unfortunately, i fear that you're correct. but i do think there areas where there can be compromise. the problem s you almost never get compromise when you're close to an election. so, you know, are we close enough? i mean, we saw the same thing back in late 2007-2008. it really took the major impact of the financial crisis to get anything done with congress at that point of time. we had a democratic congress and republican president. >> we should get corker on -- >> ed, down 417 now on the dow futures. so, we're now down over 400.

thanks, ed lazzear. we'll see you again, soon. the s&p down over 50. >> we want to take a look at oil, too, because we're seeing some losses accelerate down about 4.1% on some wire headlines that have just crossed. attributed to iran's oil minister saying the crude oil $70 to $80 a barrel is, quote, fair. saying opec can koortd nature output without other producers. so, of course, that keyword, want oil at $70 to $80 a barrel. we'll see how that plays out in the markets. apple has a new friend in the corporate world. it's teaming up with cisco to improve performance at the office on its ipads and iphones. details after the break. take a look at those stocks over the past month. august, a rough month for them and for others, down more than 2% in extended trading. down more than 9% for the month. "squawk box" will be right back.

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welcome back to "squawk box." futures have been red territory all morning, sliding over just the past couple hours. dow would open down 400 points. nasdaq down 111 points, s&p 500 down about 50 points. of course, losses more than 2% on each of those major averages. we have key economic data coming up. in an hour. pmi, construction spending and we'll get more drips and drabs

of auto sales. big movers this morning, financial names are moving. i guess we won't do that, so let's move to apple. >> apple making a move into the enterprise space. announcing a new partnership this week with cisco. josh lipton in san francisco with the story. josh? >> well, steve, apple's ceo tim cook not only wants you using iphones and ipads at home, he also wants you to harness the power and benefits of those devices at work. so, to that end, apple now partnering with cisco. the point of this partnership, making sure that ios devices work seamlessly on corporate networks that rely on cisco technology. >> we want to transform the way people work and we know that we can't do that alone. we cannot do that alone. the sum -- if you think about what's key in the enterprise space, the device is very important. the apps are very important.

the network is very important. >> and this collaboration will be a close one. i'm told apple and cisco salespeople will now work together when pursuing new business with corporate clients. so, why is tim cook so excited about the workplace? well, because there's a lot of money to be made here. this year i.t. spending will total more than $3 trillion, according to gartner. it isn't just corporate technology cook is interested in. he's also apparently looking to tinseltown. "variety" reports apple is now talking to hollywood executives about a potential move into original programming. the goal could be to create and develop content to stream? a bid to compete with netflix, amazon and hulu. there are caveats. it's not sure whether apple could create original tv shows and movies or just dip a toe into original content as it's

done with apple music. back to you. >> thanks so much, josh lipton out west for us. when we return, jim cramer joins us from the new york stock exchange. the market is set for an ugly open. his take on this big move up next. ♪ 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.

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welcome back to "squawk box." first in business worldwide here in cnbc, citi analysts are agtd fedex to the recommended risk based on the exposure to growth. the shares you can see down by about 2.5% on a light volume. keeping an eye on energy names, chesapea chesapeake, marathon, eog, transocean, everything there is a focus on investigators, falling from 3% to 5% on light volume as we head toward the opening bell. oil prices will be a focus here. that slide after a three-day rally for crude. let's get a look at futures. we could be poised for a 400 decline on the dow. the nasdaq showing a decline as well. the picture getting worse in the last half hour or so.

let's go to jim cramer. jim, do you like to blow your own horn or do you want me to do it for you today? >> i don't know. >> you can't do this yourself. tell me what you are doing fake tweets the other day looking into the future of what china was going to say. you said market sells off, china has bad numbers. >> that was me. i just said -- >> when did you tweet that? >> i tweeted right before i went to bed, and i tweeted it during the show, and then i got up at 3:30 to see the dream come true. >> yesterday tredream comes tru. you were saying this is what was going to happen. >> we've been in a bear market for months. >> it was the news 24 hours before it was the news. this one -- >> because it's a big joke. everything is a big joke right now. we know china is going down. they're trying to prop it up

from the victory date from 1945. they're a bunch of clowns. they tell everyone they're not going to buy back stocks and they do. they're a bunch of baa foons over there. europe goes down because the dollar is weaker so we go down because the dollar -- that's wrong too. some stocks are going to fail and you have great buys if you want them. a guy selling the futures now down 49, is he going to pick them up down 73. it's a joke right now. you play along and look for stocks that are coming at your price and stop being power lunched by the futures. i'm bored. i'm just bored by it. >> it's obvious. so you did your homework and knew that the pmi was coming out. >> true. >> so 24 hours before, but it was, it was weird. it was like remember back to the future where he had the racing guide where, you know, the sports quotes, to know what was

going to come up. those tweets could have been 24 hours later. >> it's my eighth big correction. i don't use the word crash. it's my ninth crash crash. i find it -- i'm not saying it's boring. when i got out of the hedge fund business it was bored. this is ludicrous. nothing is happening. oil is trying to put in a bottom at $38, $40. the markets are exaggerated. there's no one around. and we're all paralyzed and i'm totally bored. i'll tell you what's going to happen tomorrow too if you want it. i'll tweet it. sorry to be to sanguine like bulla bullard. >> i recommend people follow you. i watch it -- >> i'm too hold for this. >> you're only as old as you feel. he's sad. he's getting seasonal

affectiveness. i get it too. >> bring on football. >> km coming up, some of the biggest losers in this trading. ♪ ♪ isn't it beautiful when things just come together? build a beautiful website with squarespace. in the us, three in ten college students drop out. but how can you spot who's at risk? the one who lives far from campus?

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before the open. near the lows of the session. check out some of the biggest components of the dow slide, caterpill caterpillar, home depot. caterpillar and boeing, knock on. home depot got out a few years ago. >> make sure you join us tomorrow if we're all still here. "squawk on the street" is next. >> good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer. futures down big as we ring into the month of september. no surprise china's pmi goes negative. we're on alert for macro data. europe is looking at losses around 2 pc. shanghai down 1.2 ten-year hanging back and oil settling in a