lens. >> right. but if you're not in lockstep with what, i don't know your peers are doing, or even if you don't appear to be in lockstep, you in a heap of trouble. folks, thank you for joining us today. make sure you join us tomorrow when we are at the delivering alpha conference. we will see you then. right now it's time for "squawk on the street." ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber, sarah eisen. cramer is off. futures red but well off the lows of the morning, the worst day since brexit as you know, worst week for the dow since the middle of january. europe and asia playing defense overnight and this morning, plenty of fed speak today driving bonds. and oil has touched the 50-day moving average. our road map begins with that global selloff.

futures coming back slightly, but now goldman's out with a new very pessimistic note on the market. >> hp is buying samsung's printer business for $1 billion. we're going to talk to hp inc.'s ceo about that deal in a cnbc exclusive "squawk box," donald trump saying we're in a false market. and janet yellen is keeping rates low because president obama wants her to. we'll have much more from that interview coming up as well. first up though, futures are recovering a bit after this morning's losses following the friday selloff sparked by those rate hike fears. this morning atlanta fed president dennis lockhard saying there's been enough economic improvement, he says, for a, quote, serious discussion about a hike at next week's fed meeting. near-term there's enough economic momentum to basically say the fed has met its goals, in the medium term, mike. >> yeah, seemed pretty noncommittal. obviously they were going to be having serious discussions at the meeting in september anyway. i think the market, the bond

market, will be calming down a little bit as probably had those futures firmed up. not just here but globally. to me it's not just about the fed. it's been almost a global temper tantrum, other countries, qe, maybe we're starting to rethink how much more is there. >> the german bund yield going to 0.4%, but it has been a big move. we've seen it in the japanese bond market as well, and the uk bond market. i guess we're really finally contemplating might the end of qe, and whether this is it, the great bond bull market that so many times before we've expected it to be over, is this time going to be any different? >> yeah, i mean, look, i think the sentiment conditions surrounding bonds maybe you can make the case. they set the stage for the ultimate lows in yields. 1.36 in the 10-year, whatever it was negative around the world, but to me it's still a little premature. we're still not back up to levels we were in before the brexit vote. we still are down tremendously in yields from the beginning of the year. so you can say the low is in

without really saying that they're going that much higher. i mean, i think you could have it both ways. the big question is wasn't that the premise for a lot of other investment activity, for stocks being where they were, people coming on here repeatedly telling you how many trillions of debt trading at negative yields and you could pay a higher price for stocks, that was the logic for a while. >> to mike's point, pre-brexit, we did get to 1.7, which we've not been able to crack since, we got awfully close today at 169. as goldman says, david, you've got debates, a fed meeting, weak data, net weak they argue, and that's why they say again 2100 year end. >> yeah. and an economy that keeps kind of chugging along with an employment number that really wasn't too bad after people sort of got another look at it from the last month. you know, carl, we're only a week away, right? roughly a week away from that fed meeting. nine days. >> next tuesday and wednesday. and the quiet period starts tomorrow. so this is it. >> that's it. >> i'm very good here reminding

people of the calendar. that's my role. so nine days, i'm counting down. >> but friday's still at the end of this week? >> it is. it is. and we still have to work on this friday, i believe. >> economic data picks up toward the end of the week as well. retail sales. it's a quiet day today. today it's about fed speak, which seems to matter more these days than the market. it's like everything -- i was gone last week and all of a sudden rosengren is a hawk, which i think caught a lot of people by surprise because he's been one of the most outspoken doves, and i think that's why people are watching braynard today. not only is she a governor, she votes at every meeting and considered part of the inner circle, but she's also notably been worried about the rest of the world and sort of dovish on her idea to raise rates. so she changes her tune, that would really say something about next week's meeting, which odds are still below 50% that they move. and that would really catch the market off guard. >> the thinking is that's the last shot for the fed to drag market expectations higher. if they were to wish to do so, right? so if you have the dove to come out and say, look, we think september makes some sense, that

could be seen as some kind of decisive move. but even if not september, again, you're not seeing the short-term treasury yields shoot up the way you would if everyone was saying september's on the table. it's a much more general sense of central bank fatigue, or just, look, we had kind of a peek in demand for bonds short term and we're working that off. honestly you could look at a chart and tell you the same story. >> but how do i approach the equity markets if we do get september or even if it's december, we're at 50 basis points, right? what kind of a multiple should i expect, michael, in a market that clearly has had a strong multiple given the underlying growth rate has not been particularly good especially when it comes to the top line? >> no, i mean, i think the problem is we started valuing stocks on yield, right? so a huge percentage of the s&p 500 trading at a higher dividend yield than the 10-year, that story gets complicated if the 10-year starts to go up. also starts to make people rethink what was my reason for buying, right? >> right. >> so i think if you look back to that taper tantrum in 2013,

you had 10-year yields go up 3% in a hurry, stocks were much cheaper on a p/e basis and went down in four weeks, not terrible, but a gut check. we're going to stick with the markets. joining us vice chairman and head of the investment group with ariel investments. good morning to you. >> good morning, sarah. >> so on this conversation we've just been having, if the market is worried about the federal reserve raising rates in september or december, we've been here before. is there any reason to think that this time might be different in terms of the selloff? >> yeah. you're never going to do very well in my opinion trying to predict when we're going to get a fed hike or trying to time something like this. what you can do well on is buying the parts of the market that aren't expensive and selling the parts that are. clearly the parts of the stock market that are overpriced are yield sensitive stocks, reits, utilities and some drug companies. and the parts of the market that

are cheap are the more cyclicals and financials do better in a higher interest rate market. you've got to be discriminating about this market. >> a lot of people are saying financials might help cushion the blow here if we get a selloff on higher rates like we saw on friday, like it's looking like today. the question though, charles, if we get a rate hike and that slows the economy down, that's not very helpful to the banks. >> right. but obviously and again, this isn't exactly unique perspective, but the reason why we're going to get higher rates is because the economy's not that bad. we actually have a better employment situation. we have a pretty good car cycle. we have a pretty good housing market. we have a very strong oil market. we just discovered billions of barrels of oil in west texas. so the economy is not that bad. it's going to get better. and that's why interest rates are going to go up. and in that environment the stock market is actually not that expensive. >> so you say that aside from financials there are some of those cyclical sectors and stocks that look like they're inexpensive. where might they be? and are they really dependent on

kind of the data that shows economic momentum for the next month or two? >> yeah. so a lot of light industrials. we love borg warner that's trading at 10, 11 times forward earnings. it's a great company, power train company. and it's a little bit higher beta. so another big thing that's going on right now is anything that's considered market sensitive is very cheap. so a stock like borg warner or annekster. trading more like 10, 11, 12. >> charles, we also have an election coming up, as you know, about eight weeks. donald trump was on "squawk box" this morning talking about the federal reserve, talking about janet yellen. listen for a moment to what he said. >> she's keeping them artificially low to get obama retired. watch what's going to happen afterwards. it's a serious problem. i think it's very political. i think she's very political and to a certain extent i think she should be ashamed of herself.

>> certainly doesn't give investors confidence to think that a fed would be very political. they say that politics has nothing to do with it. does trump have a point? and does that worry you? >> actually, on this point i don't think he does. i don't think janet yellen is making her decisions based on trying to help obama or clinton. i think they have a view that the world economy is weak enough that it's not a great time to raise rates. i don't happen to share that view, but i don't think this is political. and just as an aside, it would be nice in my personal opinion my advice would be that he actually was doing fine in that interview until he started taking the shots at the fed and that's where he got a little bit off track. >> but it does raise the question about what happens to the fed after an election and the fact that the fed is becoming a punching bag. certainly in terms of credibility it needs to remain completely independent from what's going on with politics. if it does raise rates in september, can it do that? >> so that is the fair criticism. i think a lot of people have been critical of the fed for not

having taken advantage of the many opportunities they had to raise rates because right now they have no bullets in the gun. and they have not much to do if we did go into a recession. so there's a lot of fair criticism of the fed should have taken rates up to normal levels. interest rates at these levels are very hard on pension plans, very hard on savers. so there's lots of unintended consequences. but the point is this is not because of politics, it's not because somebody was trying to get somebody elected. it was because they had a view that the economy was weak and that they couldn't take up rates. so it's, i think, dangerous to attack the integrity of the fed or to the fbi, it's just not healthy. >> charles, i mean, part of the premise of criticizing the fed for being political and holding off on rate increases is that presumably that means the fed thinks if they raise rates the markets are going to fall apart, it's going to be bad for the incumbent. is that something you think would be the case at this stage? >> yeah, so in the short term there's no doubt that rumors of

a fed increase take the stock market down. that is true in the short term. and as we all know the value of a stock is the discounted present value of their future earnings. so the higher the discount rate, the lower the value of the stocks. all of those things are truisms, but the point is that interest rates are artificially low right now. we're at the lowest rates for the 10-year that we've had since alexander hamilton was secretary of the treasury. these are unsustainablely low rates. they're going to go higher. when they go higher certain parts of the stock markets, particularly reits and eutilit s utilities, are going to come down. there will be some short term volatility. you invest over long term, not the next three months. >> yep. got a preview of that on friday. charles, thank you. always a crowd pleaser to bring up alexander hamilton, carl. when we come back, kayla tausche's interview with barclays jes staley and what's at stake for his company. first though, health concerns

becoming an election issue as hillary clinton now diagnosed with pneumonia. the latest on the race for the white house including squawk's interview with trump this morning straight ahead. take one more look at the premarket. dow down 394 on friday. that was the fifth biggest drop of the year. we're back in a minute. ♪ with this level of engineering... it's a performance machine. with this degree of intelligence... it's a supercomputer.

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on the campaign trail, hillary clinton's health now clearly in focus. and donald trump speaking out on many issues on cnbc this morning. our chief washington correspondent john harwood joins us with a recap. good morning, john. >> good morning, carl. it was a very bad weekend for hillary clinton, as you can see from this video. she collapsed leaving a 9/11 commemoration ceremony yesterday. that is not what a presidential candidate wants to see. and then her staff provided halting, not entirely candid reactions to it, explanations for it in the hours after before finally coming out with the fact she'd been diagnosed on friday undisclosed at that time with pneumonia. but donald trump had an uneven morning this morning reacting to those events. in the beginning of the interview he just did on cnbc with joe and becky, he did exactly the textbook response

that you would want from a candidate trying to keep the focus on hillary clinton's problem by wishing her well. take a listen. >> i hope she gets well. and i hope she gets well soon. but, you know, it was quite sad, to be honest with you. and i hope she gets well soon. no satisfaction, believe me, whatsoever. >> now, that was disciplined trump. that's what republicans would want to see. but then he went on in the aftermath of the controversy over whether his supporters are racist or whether he's encouraging racism to refer to elizabeth warren as pocahontas. and then he went onto question the independence of the federal reserve with these comments about interest rates. >> they want to keep the market up so that obama goes out and let the new guy, whoever that new -- let's call it the new guy, okay? because i like the sound of that much better, but that the new person that becomes president let him raise interest rates or

let her raise interest rates. the interest rates are kept down by president obama. i have no doubt that that's the reason that they are being kept down. >> now, the problem with that statement is first of all it casts doubt on the federal reserve, which is an independent agency. janet yellen's stewardship of that agency, but also cast doubt on donald trump's own opinion on how he would interact with the fed if he were to be elected. he went on in that interview to question the upcoming presidential debates, which he is slated to do along with hillary clinton. so the moderators are going to be very unfair to him. he'd rather have no moderator. raises a question of whether he's actually going to show up for all those debates. again, donald trump by putting more attention on himself and the things that he says rather than hillary clinton's problem is not necessarily helping himself this morning, guys. >> john, when you say it was a difficult weekend for clinton, i wonder can you break that down? is it because of what some argue

is a lack of transparency? is it the fact that it now inhibits her ability to drive the conversation to issues the way she's been trying, obviously. >> both of those things. look, hillary clinton -- both of these candidates are old by historical standards. hillary clinton's 68 years old. she has been facing what she's denounced as conspiracy theories about her health and related to her coughing and other things from conservatives for some time now. when you then collapse on camera, blame it on being overheated on a day that isn't particularly hot, that only encourages people to question whether she is authentically healthy at this moment. and not to have come out quickly and said, look, she was diagnosed with pneumonia. which may not be a serious thing at all. she's being treated with antibiotics. may not be a big deal. but you make it look like a

bigger deal if you're not forthcoming about it. and she has not released medical records since a letter from her doctor a year ago. donald trump of course has not released records. he said in that interview today that he had a physical exam last week. he's going to release the data later. the only thing he's released so far is that ridiculous letter that he got from the doctor which everybody is ridiculed for it being not serious. we'll see whether he comes up with that stuff. but, no, health is not something to play around with as a presidential candidate. hillary clinton is leading this race. and to have that kind of video that came out over the weekend is not good. >> yeah, not to mention the fact she's missing a few days of campaigning here to rest. john, thank you. john harwood in washington. when we come back, hp inc. looking to disrupt the copier industry by acquiring samsung's printer business. we have an exclusive with hp ceo dion weisler coming up.

counting down to the opening bell, a look at where futures are headed, losses have been cut in half. dow futures down 65, s&p down 7, nasdaq down 18. much more "squawk on the street" straight from the nyse straight ahead. energy is a complex challenge. people want power. and power plants account for more than a third of energy-related carbon emissions. the challenge is to capture the emissions before they're released into the atmosphere. exxonmobil is a leader in carbon capture.

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just about seven and a half minutes to the opening bell. let's bring in kenny pulkari joining us here at post nine. from what i can tell is about to light a fire. >> that's right. up on the day, i think that's where you have to start. we've already had premarket selloff. yes, european markets are still down, 1.5, almost 2% certainly in some of them. but i think friday was a reaction to a need, right? people needed a reason to just

take some money off the table. they got it with rosengren, they're not going to get it today. bra brainard is very much a dove. we understand it's going to be gradual, no one's going to light a fire under it. neither one of them said it, i don't think she's going to say it's happening in september next week at all. >> this is garden variety, taper -- we've been here before? >> yeah, i think the markets have been so complacent, stuck in a tight range, they needed a reason to take money off the table. they got it from mario draghi on thursday, he didn't take it away, he didn't enlarge it or increase it. and then rosengren comes out who's really a dove and all of a sudden he says -- and he doesn't talk a lot by the way. he's not one that runs out looking for an interview, so when he does talk the markets listen. >> so you don't buy the doomsday scenario that qe is over, bond yields around the world have hit their lows and are going up from here and the addiction and the froth needs to come out and it's going to be a painful adjustment? >> listen, i agree it is going

to be painful when it happens, but i don't think qe is over by any stretch. i think that the markets and the global economies are still not there. i think they're getting better. but i don't think it's going to happen yet. that being said when it does happen, yes, i agree, it could be ugly and painful. because we've gone so long, eight years -- >> we're not there. >> we're not there yet, but we're getting closer for sure. >> anyway, we had to get something out of our system. we were looking for an excuse friday, 2%, one day, one and done, that's it? >> no, i say a little volatility but i think it's going to find its base. this morning every reason down 15 points at 6:00 this morning or 5:30 this morning. we've rallied back. we're now above that midterm support at the moment. i think we end the day on the plus side today. >> kenny, i wish we had 30 more seconds. thanks, man. kenny polcari. opening bell three and a half minutes away.

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. we'll get the opening bell in just over two minutes this morning. it's going to be a busy week

even though obviously the marquee event, the fed meeting that is, is next week. but plenty of fed speak already this morning. three speakers. later in the week we're going to get claims, some inflection data, industrial production, as much as we want to read tea leaves there will be some ir per kal data to judge. >> one of the tailwinds for stocks was that the surprises were coming to the upside with data. it's totally changed in the last week and a half or so, so i feel like that's one of the reasons why fed speak takes on more importance. the market never wants to see the fed on its own schedule somehow being -- >> we came off manufacturing contracted, a services number that was soft, a jobs report at 151,000, and yet the bets ramp up. you have to wonder if investors are making too much of the fed speak. how much is lobbying for what

they want and how much is actually trying to set expectations, which is going to be a big question when braynard speaks this morning. we'll watch the 10-year yield hovering around the 170 level. >> in longer term japanese yields, actually. a lot of people as you know, sarah, going to point to that's where it all started. the long bond in japan down 15% or price or something in the last month. >> still negative coming back a little bit. the dollar strengthened on friday and that was a tell that the higher rates were really starting to ripple across the markets. >> that german 10-year sarah mentioned so far the high today 0.058. they're just off to the races after going positive a few days ago. let's get the opening bell here and the s&p at the bottom of your screen setting up for an

eventful session, no doubt, and a busy week. at the big board b & g foods celebrating the launch of green giant's new frozen vegetable lineup. and over at the nasdaq, provider of enterprise software celebr e celebrating its 30th anniversary. little m&a, david, to talk about today, here and there. >> we've got some deals, yeah. i mean, actually, when it comes to excitement, really there's not much more that gets the blood going than the merger of equals between two fertilizer companies in canada. i think everybody can agree to that. but potash getting together this after hearing weeks of the possibility a few weeks back, they got it together pretty quickly actually. i think both stocks up this morning, 52% of the new combined company will be owned by shareholders of potash, 48% by shareholder of agrium. it will create a canadian champion in this area. but certainly you have to wonder about antitrust approvals. the two companies are going to push the idea that we're about

commodities, we're not technology, we're not seeds. as we see the landscape changing so much. if you're a farmer right now you're looking at all this consolidation going what is it going to mean for me if and when monosan monsanto gets bought, dupont dow. we're competitors in many markets, and also talking about synergies some $500 million in annual synergies, throw a nice multiple on that. it is a true m.o.e. you've got potash's president and ceo becoming, i think, executive chairman. chug magro, agrium president and ceo will become ceo. no worries about the canadian government having any problem with it, guys, because it creates a bigger stronger company.

in the past potash had been prevented from doing a deal, quite a few years ago at this point. >> precious national resource, i guess, in canada. but you say it's only commodities, but back in '08 these stocks were high flying. potash was $75 stock. it's $17 and change now. >> remember that? yeah, the multiples. yeah. >> they were going to run out. >> they were going to run out of nitrogen or of all sorts of things. potash has come back dramatically, more so than agrium allowing for the m.o.e. if you're an agrium shareholder get 2.2 tle shares of new co. if you're potash you get 0.400 shares of new co. one mover here at the open, actually best gainer in the dow and almost in the s&p is walmart. wmt got an upgrade from cowen, oliver chen takes the price target to $83 per share. says this is an early stage retail comeback story. he cites seven straight quarters

of positive u.s. traffic. confident that that's going to continue. he also likes the jet.com acquisition as a way to level the playing field, he says, to compete with amazon as we continue to learn more about how walmart's going to integrate that one. and interestingly takes down target's price target at the same time for similar reasons, but for saying it's going to be slow. >> yeah, that's impolilicitly t gap is going to continue. walmart down by 20 percentage points or so in the last year and walmart also has been grocery and that's been a pressured area recently. >> yeah, takes the target on target goes from 75 down to 68. the point is largely squeezed on price at walmart, squeezed on convenience at amazon, largely on consumables and dproegrocery which is about 45% to 50% of target's business. pandora will have a good day 3% gain as "new york times" continues to raise the curtain on this potential for-pay service. suntrust also with an upgrade on

the heels of that report. we might talk to bob peck in the next couple of days, but certainly speculative name that with the product that has been long anticipated, guys. >> and i guess, you know, you make the argument that apple music and to an extent spotify created this pricing umbrella getting people used to the idea. used to just basically be a pure m&a speculation with pandora, but seems like people think over time maybe they can make the numbers work. it hasn't been proven out, that's for sure. >> has not been proven out. there has been interest in the past from sirius, but no real interest in the part of pandora at least engaging at this point. >> but they have an activist, right? >> they have keith in there as an activist to push but he missed the opportunity previously in terms of nominating director. so you may have to wait a while before getting to that. speaking of activist, we have news this morning involving perrigo, a name viewers might remember of course with the fight with mylan where they managed to keep the company independent saying we're going to do better than that 2.3

shares of mylan and $75 shares in cash you're going to get, they haven't done better. they've done a great deal worse, at least at this point. even if you take mylan's current stock price and do that math you get a far higher price. jeff smith, the man who runs starboard writes a long letter talking about the operational deficiencies of a company that relies largely on consumer health care business but also significant stake in prescription pharmaceuticals, royalty screen saying unfortunately since the operational and financial missteps began in '15, perrigo's valuation multiple has plummeted, in the board's oversight of the management as well as management's ability to as well think strategically beyond behalf of shareholders. we believe with a proper portfolio changes, significantly better execution and thereby renewed confidence the multiple should be in line with peers, therefore you would get a higher stock price. this is an irish company, but it

does have a single class in terms of its board of directors. you can't come and challenge for votes to get seats on that board of directors, that won't be until early next year. but certainly a significant battle here potentially brewing. remember jo papa stepped down as ceo of perrigo, great deal of missteps, stock collapsing. it is a dear john letter by the way to mr. hendrickson who is the new ceo, but they point out at starboard he's been there 27 years and hasn't really said anything that leads them to believe that it is a new day dawning for that company. so this one can just be starting in terms of an activist battle. >> we mentioned earlier the comments donald trump made this morning on cnbc regarding the fed, calling it political, saying that yellen should be ashamed of herself. mark cuban now in response, dear donald, if the federal reserve were truly political they've announced if you were elected there will be a huge rate increase. trump's comment on the fed is

exactly why the market will tank if he's elected. ask him if he understands how the fed works. so that debate going back and forth. we're going to watch tesla today. elon musk reportedly going to unveil an update to autopilot. this is going to be autopilot 8.0 they're calling it with greater emphasis on radars and not just cameras. of course coming after all that controversy regarding the safety of the product even the name of the product some high profile crashes involved. larger questions for tesla about production schedules and the like. >> yeah, without a doubt. you almost think tesla would like to kind of turn the focus onto product enhancements and fixes and upgrades and things like that. especially when you see the way the spread with solarcity which it is attempting to acquire has been widening out so much. a lot of questions about that deal and whether the market thinks it's less likely than it was. the financing is so complicated. >> speaking of autonomous cars, there were reports over the weekend in "new york times" that apple has -- or is perhaps

shifting a bit in terms of direction on its efforts here hereto for but unclear what their thoughts are at apple in terms of an automobile, but apparently they may not be pursuing it in the same way or if at all any longer. again, i'm relying here on the reporting of others. but always interesting to see as that stock is actually up about 1% this morning. >> after a hard week last week. >> yes. >> one reason the nasdaq has gone positive, minutes after kenny polcari said we'd be up on the day. let's get to bob pisani on the floor. good morning, bob. >> good morning, guys. we have had quite a morning, quite a move in the s&p. i want to show you the futures preopen. we were down to 2100 on the s&p futures. remember we closed 2118 or so on friday. and we're close to 2100 right in the early morning about 6:00 a.m. and as you can see slowly moved up and we have just moved positive on the dow. so we've come about 25 points

from 6:00 a.m. to about today. that's quite a move to the upside. take a look at sectors early on. banks, which were flat to slightly up on friday, down a bit here, energy also down as oil has been down. utilities and more interest rate sensitive sectors have done a little bit better this morning. take a look at the financials. remember the great run that the financials have had overall here, metlife generally was up, all insurance companies were up on friday, you can see down fractional today, so giving back some of that gain it saw here. european financials, which have done pretty well in the last seven, eight, nine, ten trading sessions, also generally down. but bear in mind they have -- yields have been moving up in the last several weeks in the european financials. there is an etf for that, if you look at the european financials etf, that's been moving up in conjunction with the bank etfs recently. there they are. and there's the white line is

the european financials -- excuse me, the white line is the european financials and the orange line is the u.s. financials. they've been moving up right in tandem together in the last six weeks or so. so where are we right now? all this is reversing a little bit today. we've had a modest pullback, but is it a serious question? we don't know. it's too early. there's been mixed signals from the fed. remember september and october typically a soft stretch for the markets. but in election years stocks have outperformed going into the election overall. so a lot of cross currents going on. there's a lot of resistance obviously to central banks lowering rates and more qe right now. so you heard about lockhard, serious discussions of a hike, rosengren got everything going on friday talking about raising rates, ecb standing pat on more qe on thursday was the start of all this, then we have kuroda speaking next tuesday. not clear what he's going to do but there's obviously some pressure on him on extending qe overall. if you're looking for a template, it's pretty hard to find. something like this might have

happened with a taper tantrum, still early to call it that but remember what happened in may of 2013, we had a roughly 5% drop in the s&p, outperforming at that time were bank stocks, energy, industrials, generally high beta stocks, underperforming emerging markets, gold, as well as interest rate sensitive sectors like utilities and telecom. so that's possibly a template for what could go on here. what's interesting is the sort of minirally that we've been experiencing all throughout the morning. right now the dow down 21 points. guys, back to you. >> bob, thank you. let's get more about the heart of the action that would be the bond market. over to the bond pits, rick santelli at the cme group in chicago. good morning, rick. >> good morning, sarah. well, the treasury complex is for the most part kind of holding steady with friday's closing yields. but remember, again, we're over 30 basis points off of very significant june and july levels, no matter if you look at our 10-year or the japanese

10-year. let's pick june, june 1st, 2-year note yield look at the left side compared to the way the right side is trading. there's a lot of similarities. next one is the 10s. you can see 30s more behaved, yields haven't popped quite as much. yield curve implications. bunds have had a good run indeed as they hover now three, four basis points in positive territory. the 10s the historic low of 1.35 earlier so 68, over 30 basis points there. look at jgbs since june, february i believe the low yield was close to minus 30, 29ish, now they're trading, what, basically right around zero or a little bit better. so you could clearly see that 30 basis points, 33 basis points are rather large moves. and the euro versus the dollar, this is interesting, this chart doesn't look a whole lot different than the dollar index who it's really supposed to be the mirror image of because it's such a sizable part of the dollar index. but there have been such

counterintuitive moves on some of the other currencies that they've pretty much leveraged part of that equation, think dollar/yen, think the pound, of course everybody's trying to handicap what the fed's going to do. i'm sure behind closed doors they're thinking the same thing. back to you, carl. >> rick, thank you very much. rick santelli. when we come back, the ceo of hp inc. on his company's deal to acquire samsung's printer business. and then kayla tausche in new york getting ready to talk exclusively with barclays jes staley. hey, kayla. >> hey, carl. well, on a day when the market is grappling with the steepest losses since that brexit vote and this continued specter of central bank tightening, who better to talk with than a ceo of a company who's value has been cut in half by brexit itself, interest rate sensitive about what he actually thinks will happen with rates, global trade and much more. that's at the top of the next hour. we'll be right back.

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hewlett packard announcing plans to buy samsung's printing business. jon fortt is here at post nine with a special guest. jon, good morning to you. >> good morning, carl.

dion weisler is joining us by phone, i believe. good morning. >> good morning, john. how are you? and thank you for having me on the show. >> doing great. thanks for coming on. so this is just over a billion dollars. you peg the market that you're trying to attack at $55 billion trying to move into laser and multifunction in the enterprise, the a3 market. explain if you can what gives you the confidence that this is going to be accretive in the first full year with cost synergies, given that you're not acquiring an entire company with the requisite that usually goes along with that but a unit of that company? where are you going to find the cost savings? >> well, indeed it is a $55 billion copier segment which we think is absolutely ripe for disruption. the a3 copier market is a bull's eye for us, it's a $55 billion mature segment. it's lacking innovation, it's service intensive, it's complicated. and the technology samsung's

developed over the years with more than 600 under patents, world class brings a very disruptive print kind of technology to the a3 copier space. we expect this deal will be accretive in the first full year of operation one to two pennies. we do see significant synergies in the business. we are acquiring the print business globally. and with the very vast extensive distribution channels that we have, i'm here in boston today with more than 1,400 partners at local partner conference. we have real confidence in our ability to disrupt this market. >> now, dion, an analyst has estimated that samsung's printer business was bringing in between $1 billion and $1.6 billion in sales per year. i'm wondering how you expect that business to look five years from now? i mean, print, scan, copy is sort of a legacy of premobile,

precloud business. you remark on how this arena has not innovated much in the past couple decades. how is this going to be different? and how does this purchase set you up for that? >> well, i think you're absolutely right. we're disrupting a very outdated copier market with superior multifunction printing. it's cloud first, it's going to be very highly secure. we're going to take all the technology we've developed over many years in our printing and apply it into the samsung portfolio so you'll have world class security, you'll be able to service these devices remotely. it's just going to be a complete game changer. the number of serviceable parts in these products will be, you know, about seven versus more than 24 in the traditional copier. that's going to lower the overall cost of service. people are going to be happier, their machines are working, color at much cheaper prices.

it's just going to disrupt this entire channel. >> dion, how much should we be thinking of enterprise printing as a service? as a managed services type business versus you actually selling these units primarily into businesses? as we look at how to model this business, again, over the next three to five years, does that simplicity in design help your margins? because perhaps you'll continue to own the hardware primarily. how do you expect this business model to shake out? >> well, indeed we expect almost all of it to be -- traditionally copiers aren't sold today but sold on a manage print service contract. customers pay per page. but in many cases the cost of color pages as an example is extremely high. with this acquisition paid with our page wide technology when you have the fleet of products we're going to be able to significantly bring down the cost of color, lower the cost of overall costs per page and enable our channel partners

which is a very big extension of hp to earn more money. >> clarify if you can the relationship with canon. i know you've said the a4 relationship will continue, but some analysts have said cost savings and not having to license as much i.p. from the likes of canon is possibly one of the justifications for this deal. so will this deal and the i.p. you get indeed reduce your reliance on technology and reduce your costs? >> well, so we have a more than 30-year relationship with canon. and we -- it's probably the best example i can think of we are the closest of partners and have been for 30 years on our a4 print business. we're very happy with how that's operating with market leaders and we have been for more than 30 years. and we don't want to disrupt that relationship. in fact, sitting across the chairman of canon, we agreed to double down on this business ahead of this acquisition.

so that's a great space for us. this is just going to open up -- >> what are you going to pay them less? >> we're very happy with this business. this is about the $55 billion a3 business. >> all right. well, can't get exact clarity on whether you're going to be sending canon much money but that partnership does continue. dion weisler joining us exclusively on this billion-plus deal to buy samsung's printer business. thank you. >> thanks for having me. >> thanks for bringing it to us. we'll see you next hour. a gathering of wall street heavy hitters just one day away. we're counting you down to tomorrow's big delivering alpha event, a preview coming next when "squawk on the street" returns with the dow continuing to climb back from the deeper losses this morning. now down 31 points.

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amazon.com and what an amazing run it's had up 72% since the conference last july 15th. jamie dimon of yor capital talked about medivation recently agreed to be acquired by pfizer up more than 50% in the interim period. keith meister liked reit up close to 19%. tom sandell made a case for ethan allen, the interior design company. that's up more than 13% since last july about 14 months. meanwhile, some tough calls in there, too, that depending on whether these guys are still in the stocks may have lost them some money. bill ackman liking both fannie and freddie and nomad foods, platform company. still does and still owns them but those names are way down since last july by teens and by about 47% respectively. jeff smith made a case for macy's, he of course is in the news today regarding perrigo and

his activism there, but regarding macy's he said the retailer had huge real estate value and should split up. there's been a bit of change to the board since then, but so far the splitup he talked about has not happened. the stock has fallen more than 46%. and jamie dinen on pharma here again we talked about his great medivation call, on the other hand he predicted consolidation in the generics business that didn't work out. to be fair, some of them tried. but mylan, perrigo and teva still stand loalone companies today and all fell dramatically over the last year or so. as for york, his company, he missed out on part of that downside move, he sold at various points. it varied depending on the name, but he did manage to avoid some of the damage there. >> we can't wait for tomorrow. kate, thanks so much. our kate kelly. when we come back, barclays jes staley. dow's gone positive up 9 points.

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welcome back to "squawk on the street." i'm carl quintanilla with sarah eisen and david faber at post nine of the new york stock exchange. bears not getting the follow-through on that selloff from friday, but of course it is well early still. dow up 13, s&p up about three points. oil, meanwhile -- >> fed is in focus. governors koskari, lockhart and brainard all speaking today. >> kayla tausche speaks exclusively with the ceo of barclays jes staley. >> plus, hillary clinton's health in question after falling ill over the weekend. and donald trump speaking out about it this morning on "squawk box." the latest from the campaign trail is straight ahead. but first, let's get over to our kayla tausche standing by with a very special guest. good morning again, kayla. >> good morning, carl. we are here in midtown manhattan with jes staley who is the ceo of barclays. jes, thank you for making time today. >> thanks, kayla.

>> the last time we spoke to you you were announcing a major overhaul of the company, slash the dividend and then brexit happened. how many of the deals that you had laid out then are still happening, and how close are they to getting done? >> obviously the brexit vote was quite a hit to the market from the day that we announced that new strategy on march 1st to the night of the brexit vote barclays was the number one performing bank stock of the global banks. then we lost a third of our market cap. but in terms of executing the bank strategy, it's unchanged. all the businesses that we had decided to sell or get out of, from our italian retail banking system to our credit card to the asian wealth management businesses, none of those will be impacted by brexit. in fact, we announced two major closures two weeks ago the index business to bloomberg and italian retail bank. so we're all on track. we look forward to closing in a very short period of time. >> in the meantime you've had to

have many soul searching discussions with your board and with regulators about exactly what brexit does to your company's footprint and how it will actually progress. what have been the conclusions from those conversations? >> brexit is a reality. and we're going to embrace that reality. we actually had an executive committee session on that following sunday for about four and a half hours thinking about what our response would be and how we'll map ourselves going forward. i would say, you know, on july 1st of this year we had to set up an entirely new holding company to operate in the united states as per u.s. regulation. it's own board of directors, joe mcgrath is the ceo of it, it's own organizational chart. that was a big heavy lift to run our bank with a new legal structure here in the u.s. in the uk we are complying with the ring fencing rules by january 1st, 2019, we'll create barclays uk, an entirely stand alone commercial bank from barclays international. on one level we're getting a lot of practice at responding to

regulatory changes, how we set ourselves up as a legal and organizational matter to continue to do the exact same business tomorrow that we're doing yesterday. so brexit will be a lift, but i think not -- but not anywhere near as seriously as what we've had to do in the u.s. and what we're currently doing in the united kingdom. >> a lift on the regulatory side, but what about on the economic side? just today we saw the british chamber of commerce downgrade the growth forecast for the next three years for the uk. there's an expectation that you'd start seeing more loan losses, credit would deteriorate, are you seeing that? >> no, we're not. you know, brexit was a political shock, which had a very quick impact on consumer confidence. in some case industrial confidence. but generally an economic contraction of size happens because there's a curtailment in the supply of credit. credit markets are wide open. the british banking system went into the brexit vote very liquid, very strong. i think the bank of england

under governor kearny has reacted swiftly and correctly under our judgment. and what we're seeing, you know, 50% of all the payments through credit cards and debit cards goes through barclays in the united kingdom. what we saw in july was an uptick year over year of 2.6%. in august we saw an increase of 4.2%. so, you know, we think consumer confidence may in fact recover fairly quickly in the united kingdom. the economy was doing well going into the brexit -- >> but recover from what level? because june to july it was the biggest contraction in confidence there in a quarter of a century. >> for the consumer credit, and obviously we have a large mortgage portfolio, we have a large credit card portfolio, what's key for us is unemployment. the unemployment rate going into the brexit vote was about 4.9%. a lot of the analysts now believe that will go to 5.5%. let's see. the truth is we all don't know. what i do want to say is barclays is well open for business. we are extending mortgages. we're making loans to small

businesses. and what we're seeing right now in the consumer behavior is sort of less problematic than what those numbers might imply. >> you gave the bank of england high marks just a moment ago. how will this corporate bond buying program unfold when we get details this month? and how much eligible debt is there actually for the bank of england to buy? >> well, for us to me one of the very important statements by governor carny, first move the base rate from 50 basis points to 25 basis points, but he's very clear he does not want to go to zero and he does not want to go into negative territory. we think that's a very positive and correct statement by the bank of england to make. a couple things, one, this funding for extension of credit to corporates in the uk, but also changing the calculation of the leverage ratio excluding uk treasuries from our leverage ratio. these are efforts to sustain the profitability of the uk banking sector, which i think is a very smart thing to do.

it's not just about capital. it's also about the profitability of your underlying banking sector. so i think the base rate move was correct. we transmitted that base rate move to our entire mortgage portfolio that night and was the first british bank to do that. so we think the policy is good. and, again, i think that's one of the reasons why we're reasonably constructive of what the uk economy may do for the next year. >> but you service so many multinational companies, and right now a third of eurozone corporate debt is trading with negative yields. that can't help. >> no, i -- you know, for our side we are an originator. we did the first euro bond post the brexit vote for the german railroad company. our volumes are actually reasonably high and doing well. but negative interest rates are not helpful. and i think one of the questions we all need to ask ourselves is has accommodative monetary policy going towards zero and

negative interest rates rk has that run its course? is it having the benefit that one would expect by dropping interest rates? i think it's a fair question that all central bankers and bankers need to be asking themselves today. >> well, companies are certainly taking advantage of it. just last week we saw the first companies actually sell debt for the first time at negative interest rates. why would you underwrite something like that? and how do you market that to investors knowing they'll get less back than the company's borrowing? >> so couple things. one, the market is looking at asset valuations, not so much yield in the bond market. that is a completely new phenomena. obviously they're buying that bond with a negative yield because they think it's going to appreciate in its asset value. that's a new world for the debt capital markets to this extreme. and i think it's going to be interesting to see how it unwinds. i would go even further than that. what does it mean that the bank of japan is buying equities in japanese public companies? >> i'll put that to you, what does it mean? for somebody running a company

like barclays? >> one of the challenges and i think we see it in the market's reaction in the last couple days is in the u.s. we have a federal reserve that's on the cusp of raising rates again, versus the policy out of the ecb and the bank of japan. and are we seeing a divergence of monetary policy from the major developed market central banks? and what does that mean for market volatility? i think everyone needs to have their eyes wide open and recognize that there's a good chance with this diversion in central bank policy it will increase market's volatility. and ultimately with will have to come out of the negative and zero interest rate environment. and how we all deal with that is something we think a lot about. but we think the market needs to give a lot of consideration as well. >> this morning on "squawk box," donald trump said when interest rates are eventually risen, the stock market will plummet. is he right? >> you know, i think the fed has shown the right level of

caution. they are data dependent. i think what they see in the labor markets and what they see in the underlying economy, that's what's driving this move up in interest rates. so the stock market should respond to underlying economic activity. so if there is a correlation between where interest rates go, economic growth, the labor market, that should translate also into pretty good environment for corporations. so i'm not quite sure i'd make that connection that rising interest rates will hurt the equity markets. i think actually it could be just the opposite. >> so elaborate on that. because you said that you expect volatility, but you don't think that the market would immediately fall if and when interest rates go up. so where will the dislocation happen? >> the uncertainty. the uncertainty of the current monetary policy that we have in terms of how novel it is. i mean, this is a massive experiment on a global scale. and so there will be uncertainty as that policy gets shifted and

as you have this sort of separation from what the u.s. is doing versus what you're seeing in other major central banks. so that i do believe. what i don't necessarily believe is that you'll see rising interest rates with the declining economy. i think it will be pretty hard to have a significant decline in the valuations of u.s. corporations if the economy actually is doing reasonably well. and it is the health of the economy that will give the latitude to the fed to raise rates. so i think we'll have volatility, but i'm not that concerned about the ultimate direction where the u.s. equity market's going. >> on the u.s. and global economy, brexit is seen as a reclusive decision. the rhetoric here in the u.s. has been against the free flow of capital and goods. there's a lot of anti-trade rhetoric that's happening right now. what happens to the banking business? what happens to the outlook for global trade if this rhetoric actually takes hold and continues in the long run? >> you know, i thought there was a great op-ed piece by henry

kissinger that talked about the importance of having a vision for the future which embraces globalization as a pathway to geopolitical stability that everyone is willing to sacrifice for. and the brexit vote, i think, pulled back from that vision, which is a big challenge for all of us. but one thing that i take encouragement from is the g20, which met a weekend ago, when they first met post the financial crisis, they said two things. they said, one, we need to completely change the regulatory environment for the largest banks around the world, which they've done. but secondly, they made a commitment to do that re-regulation with a commitment not to put up protectionist barriers for the free flow of capital. i've talked with a number of people in europe post the brexit vote. i think everybody wants capital to be able to flow, to be efficiently deployed to generate economic growth. so putting up barriers i don't

at the end of the day it's not beneficial for anybody. so i think there will be moderation on the dialogue around brexit and its implications, but i think regulators are committed to the free flow of capital and will stay that way. >> interestingly and finally over the weekend the international trade secretary for the uk, liam fox said british business owners don't care about exporting anymore. they've become too lazy and too fat, to use his term, and all they want to do is golf. how did you respond? >> i think the uk has great companies, great entrepreneurs, great industrialists, some good banks and i think we'll do our part to keep the united kingdom growing. >> we appreciate your time, jes, as always. thank you so much for joining us. >> thanks. >> jes staley, ceo of barclays. guys, back to you. >> and all the hot topics. kayla, thank you. we'll see you here at the new york stock exchange in just a bit. politics front and center this morning with hillary clinton's health being called into question. our john harwood joins us with more on what was a busy weekend for the campaign and a busy morning as well, john. >> sarah, the last thing a

68-year-old candidate wants to do is have video like this of being overcome, collapsing after a public event, 9/11 commemoration yesterday, hillary clinton was waiting for her secret service to take her away. you can see from the video what happened. now, there was a delay afterwards. she went to chelsea clinton's apartment, came out and had this to say. >> are you feeling better? >> yes. thank you very much. thanks, everybody. >> that was only hours later that we got a statement from hillary clinton's doctor saying she'd actually been diagnosed with pneumonia on friday, prescribed antibiotics, advised to rest. that rest didn't work out very well. now, this is something that might be a minor illness, but it certainly creates an opening for those who have argued about her fitness and health wise to be president. donald trump was an "squawk box"

this morning. now, he made some controversial statements, but not on this subject. he simply offered well wishes for hillary clinton. take a listen. >> i hope she gets well and i hope she gets well soon. but, you know, it was quite sad, to be honest with you. and i hope she gets well soon. no satisfaction, believe me, whatsoever. >> now, that was smart politically for donald trump to treat that episode that way. he keeps the focus on hillary clinton and her campaign team, which is attracting criticism from her own side from democrats like david axelrod, chief strategist for president obama tweeted concerns, questions about the transparency and straightforwardness of hillary clinton, her penchant for privacy, that prompted a response from the communications director for hillary clinton saying, yes, we could have handled this better yesterday, nevertheless more is known about hillary clinton than any other candidate and donald trump has been not transparent.

now, that is a line that the clinton campaign has used in particular about taxes. she's released her taxes. donald trump has not. she released a full doctor's statement from a year ago. donald trump has released a statement that's kind of ridiculous. we've all been making fun of it for weeks now from a doctor. now, donald trump did say on "squawk box" today that he is going to release results of a physical exam that he had last week. this incident is going to ratchet up pressure on hillary clinton to release more contemporary information about her own health, guys. >> john, what about the comments on the fed? we've been discussing them all morning, him accusing janet yellen -- trump, this morning accusing being political and obama's retirement and any idea who trump would look to who he might appoint to the fed? it's one of the most important jobs that a president has. >> no, but trump has undermined whoever he would put in that job

by those comments. the comments not only are critical of janet yellen and her independence, but they also raise questions about donald trump's own vision of the independence of the fed, which is something very valuable to the u.s. economy and the u.s. position in the world. and by making comments that the fed like the fbi as he said in relation to the e-mail inquiry, is not independent. that is not confidence inspiring about what a donald trump administration and economic policy and approach to the federal reserve would be. >> all right. thank you, john. john harwood reporting. coming up, fed speak front and center this morning as we approach the blackout period ahead of next week's fed meeting. we'll give you the latest. take a look at where the markets are of course after that almost 2.5% down day on friday. we are in the green. a lot more "squawk on the street" right ahead.

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awful lot of fed speak this morning to chew on. our own steve liesman is here to break it down with some highlights. hey, steve. >> carl, good morning. two speakers have spoken, and they're already split. on "squawk box" this morning minneapolis president koskhkari says he hasn't seen enough. >> my view is there doesn't appear to be huge urgency to do anything, frankly. let's get as much data as we can and try to get inflation back

up. again, look around the world. around the world inflation generally is coming up low. this is a global phenomenon. it's not just a u.s. phenomenon. that's why i think we need to understand what are those drivers, why are interest rates over the last 30 years, why have they been falling? >> but atlanta fed president dennis lockhart, he suggested he has seen enough. he said, quote, conditions warrant a serious discussion of a rate hike at the upcoming meeting in september. finally, he concludes his speech by asking if the current low rate is still appropriate. here is my very subjective take on all the fed speak so far and where and how they would vote if there was a rate hike on the table. i think stan fisher, esther george, would vote for a hike. i think janet yellen is possible given her comments that the time is nearing for hiking rates. bill dudley might join her. and james bullard as well. unlikely perhaps daniel tarullo,

and i don't know how j. powell would vote at the upcoming meeting. here's another chart says, hey, if the fed chair does decide to vote who would side with her and i think she essentially would have nine votes. i think all of those people would likely join, i don't know about brainard, but she would likely have nine votes if yellen decides that she wants to hike. and ten possibly depending upon how lael brainard decides to vote. carl, big question as to how the fed chair is processing those two weak ism reports that we had. it seems like a bunch of fed guys have spoken since those reports and it has not been enough to deter them from hiking, carl. >> i just wonder that wall graphic, steve, if you think that the odds for september are too low. >> i think it's possible, carl. it is a very, very close call. you know, i don't pity myself. i don't envy myself having to make this call.

it's part of my job. i want to hear lael brainard talk today. we have retail sales before that, before the meeting. i also get to do our cnbc fed survey where i get the wisdom of the 40 or so market folks who will give us how they think. and i think it's possible, i think they could take this and do it and sort of do what i would say would be a possibly -- a possible dovish shie isish hi they kind of bring down the outlook for the future on rate hikes and otherwise say we're kind of on hold until we see how this works. we're running 25% to 30% in september possibility with around 15% for december. i thought those isms were more significant than apparently the fed thinks. i have to put janet yellen in the possible column after her comments in jackson hole. >> it looks right, steve. >> let me know, sarah, if you think i should move something around, this is my completely -- this is you send me a note. i don't know what the right way to go on all of this. >> sounds like based on the

conversations we've had on cnbc and a lot of the lobbying these fed presidents have done, that's where it lines up. i wonder to what extent inside the fed they're talking about the markets and this idea maybe they want to teach the markets a lesson, we're in charge here. we're not just going to only look at market expectations, we're not going to pause because there was a big selloff on friday when the rate hike odds went up. i mean, how aware are they? >> they're very aware. i think i'd push back a little bit, sarah. i don't think they want to teach markets a lesson. i think the fed sees the market as a major conduit for its policy. it likes to have the market onboard, but you do have to go back to comments made by robert, the dallas fed president. he is otherwise very dovish, but he's the one who said that if we hike the market is on notice. we've already told them or warned that this is possible. so the fed will only go so far in telegraphing its possibilities what it might do. and the market has to price it. and it could be, i think as carl

suggested, that september may be a bit low. i think i put it maybe more in the 40 to 50% chance of a hike. >> we'll see what the data show later this week. steve, thank you. >> sure. thanks, sarah. >> steve liesman. when we return, the ceo of panera taking shots at mcdonald's and other fast food companies for serving unhealthy food to kids. he'll join us on that topic next. and as we head to break, take another look at the markets right now. back in positive territory with the nasdaq leading the way up almost 0.5%. we'll be right back. welcome to opportunity's knocking, where self-proclaimed financial superstars pitch you investment opportunities. i've got a fantastic deal for you- gold! with the right pool of investors, there's a lot of money to be made. but first, investors must ask the right questions and use the smartcheck challenge to make the right decisions. you're not even registered; i'm done with you! i can...i can... savvy investors check their financial pro's background by visiting smartcheck.gov

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panera calling out the food industry challenging its peers to offer healthier, more nutritious meals especially for kids. joining us now to discuss it is panera founder and ceo ron shaick from the national press club in washington where he is speaking this morning on his challenge to the restaurant industry. good morning, good to see you, ron. >> good morning, sarah. how are you today? >> i'm good. so i'm wondering why you're starting a little bit of a war here with some of your rivals and competitors, especially mcdonald's, on kids meals. >> no, we're not here to start a war. that's not at all what it's about. we're here to invite people to join with us in trying to do what's right. i mean, it's not complicated.

no artificial ingredients, colors, flavors, preservatives or sweeteners, no toys. we're talking about doing things in a way in which the guests, the young person gets. no sugary high calorie drink with it. we're talking about things like soup, salad and sandwiches, real food. and lastly, we're talking about things like sides not high caloric fries, but things like apples and yogurt and green rolls. we're inviting everybody to this. this isn't about a competitive battle. >> but mcdonald's did announce it's going to be taking high fructose corn syrup out of buns and antibiotic free chicken and made a big deal about the mcnuggets. so what exactly did you have a problem with on mcdonald's specifically? you did call them out in terms of their advertising.

>> yeah, listen, i think it's great where they're headed. i think they're doing the right thing. i think they're moving in the right direction. they're following of course we've been on for over a decade, but what i call them out on is the mcnugget. and to advertise a single element the fact that they'd remove the preservatives from the mcnugget, but those mcnuggets were being dipped in sauces that were laced with artificial ingredients and high calories. i thought that wasn't complete ly of the highest integrity. and i think that it's reality. if you're going to try to have the halo, go all the way. that's all we would say. >> you do still have, correct me if i'm wrong, a relationship with pepsi. and you still sell pepsi and diet pepsi at paneras, do you not? >> we do. >> that has high fructose corn syrup. >> yes, we've been very clear in saying we will by the end of this year have removed all

artificial flavors, sweeteners, preservatives and colors that are not naturally occurring from all items on our menu. relative to the beverages we have not stated we're able to go that far today. there is a real core constituency that wants these beverages, but frankly it's something we're looking at and we're very serious about moving forward. you know, sarah, you know us well. this has been a two-decade-long journey. ten years ago we started by removing antibiotics from our poultry. today the world has followed us. some years ago we were the first national company to remove non-naturally occurring transfats, federal legislation followed, the world has followed us. some years ago we removed -- there was discussion about posting calories. the rest of the industry fought it. our view was, hey, we're in the business of building a relationship with our guest, let's post that information. that's now being required by legislation. we're doing the same thing with clean food. and i think that a real

commitment across the menu, across all that food to removing artificial colors, flavors, preservatives and sweeteners in a comprehensive way is the way to go. and, again, we don't have -- we encourage everybody. this isn't about competitive advantage. it's frankly about what's right. we encourage everybody to join with us, but we really do feel somewhat challenged when you have people that are using it simply as marketing halo. >> ron, it's carl. >> hey, carl. >> just curious on mcdonald's, the things they have done, cage-free, egg whites, apples in happy meals, transparency on pink slime. is there a point at which you can argue they have done enough? or do you need to keep putting pressure on them until they essentially are a fast food panera? >> well, let me be clear. i salute them in what they've done. i think steve and the team have gone much further than ever before, and it's the right thing. we are not in the business of challenging them. and we are on our own journey.

i say that with humility. we are not above reproach. all of us in this industry are trying -- are moving forward. and i can only tell you where we're at. and i can only tell you that we're committed to continuing to move forward. and i encourage everybody to do it. i approach this not as a business person. i approach this as a father. i've got a 13-year-old daughter, emma. i've got a 17-year-old son michael. and they're in our restaurants five, ten and 20 times a week. my challenge to my competitors are what do you want to serve your own kids? and our own view is it's not about the marketing value of it. it's about the fundamental guest relationship and doing the things that over time add value to that experience. >> and, ron, i would suggest that the entire restaurant industry and the consumer packaging industry is moving in this direction because the consumer is demanding it. it has proven to be good business for you. just in terms of your trajectory here, your stock has

outperformed. are you seeing any signs of a slowdown? and what is looking like 2017 is shaping up to be a slower growth year for the restaurant industry, fast casual and fast food, what are you seeing right now? the responses to the ingredient changes and the overall consumer. >> yeah, you know, sarah, i think that we've had a 20-year record of extraordinary performance. i think our stock is up 40 or 50 fold in the last 20 years. our job is to continue to try to deliver real experiences that engage guests, food that is both an ally for wellness and cravable in environments that are exciting. i can't control the external environment. you've got structural labor costs that are escalating. you've got people beginning to talk about a recession within the restaurant industry. all that effects all of us, my job is to do a better job in delivering for the guest. and that's what we'll stay focused on. >> ron, thank you.

>> thank you guys. >> ron shaich, always good to see you on some of the ingredient changes, the founder and ceo of panera bread. when we come back, we're counting down to gathering of heavy investment hitters, delivering alpha one day away. for more information and tickets go to deliveringalpha.com. there's a look at some of the guests. take a look at the markets right now. session highs dow up 58. we're back after a short break. ♪ with this level of engineering... it's a performance machine.

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on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. good morning everyone. i'm sue herera. here's your cnbc news update at this hour. nine people killed in an early morning fire in tennessee. four adults and three children were declared at the scene. two more children died after being transported to a local hospital. one child's still fighting for life. it is currently unclear how that fire started. an arsonist set fire to a florida mosque once attended by omar mateen, the man who opened

fire in the orlando nightclub in the deadliest mass shooting in u.s. history. video showed someone approaching the center around 12:30 a.m. about 30 investigators are at the scene. more than 400 migrants from west africa were brought to an italian port in sicily. they were rescued from three rubber dinghies off the coast of italy. back here at home, more working women are buying luxury vehicles than ever before according to edmonds.com. lexus leading the way with 47.5% of u.s. sales going to women. that's the news update this hour. carl, back downtown to you. >> sue, thank you very much. let's get to jackie deangelis with the latest moves in oil. what a wild couple days it's been. hey, jackie. >> good morning to you, carl. that's exactly right. you can see from today's session we were down under $45 a barrel. about a 2% move to the downside. now we're in positive territory in over 46. this really shows you how

polarized the oil market. the shorts that are out there, they continue to maintain their position. they are saying while the next few weeks could be volatile and we could see some of these upside moves, they don't think we're going to see oil prices move substantially higher. in fact, we're probably headed lower. this camp thinks there's going to be more moderate inventory drawdowns, also no opec deal in september. demand is going to scale back as we see it do every year, and a move higher in the dollar based on fed speculation could push oil prices down. now, the longs are out there, and they include not just the people who are in the market but also wall street analysts. they're saying, look, the rebalancing is happening, it's just happening slowly right now. they're optimistic that this is the key time for opec members like the iranians and the saudi arabians to at least make an appearance that they're going to put a freeze in place. also, they think no rate hike this year and we're going to see that dollar a little weaker, which is supportive. so the one thing everyone agrees on right now is that volatility is going to continue. and we're going to gravitate

around this $45 mark at least until that next short term catalyst is out of the way, and that's the meeting in algeria. back to you. >> jackie, thank you so much. jackie deangelis. stocks were sliding earlier today, but obviously the dow's gone positive about 38 points to the upside. jim tyrnie, anthony chan, good to see both of you. somebody said over the weekend it's the first time in a while 2% has felt like 20% on friday. but did friday undermine your confidence in equities? >> not at all. i think friday was just a long overdue day. we had had 50 days of almost no volatility. there will be more volatility. but it's all about where are earnings going to be over the next few months. and into 2017. that's the key for equities. >> and the answer in your view is? >> better. third quarter earnings should turn up, fourth quarter should be really nicely positive. and we're looking for growth in 2017. >> we had lockhart this morning say second half 3% annualized,

are you that bullish? >> not so bullish to say 3% plus but earnings will be better than first half of 1%. for volatility some of the work i've done shows the vix index does move higher and beats october that number was just too weak in the summer. 43 days with less than half a percent move in either direction. >> it strikes me investors are so sensitive to every single fed member, fed president that speaks every single word whether they're trying to figure out september, december, this year or not, what about the election? why aren't we seeing more of that priced in, this increasing probability that donald trump might be president and with that comes uncertainty? >> well, sarah, i think that most investors believe that as you get closer to the election, irrespective of whether it's a democrat or republican, they move closer to the center. and therefore they won't cause as much harm to the financial markets. with regard to the federal reserve, remember that the fed already jawboned financial markets into thinking we're going to do something in december and financial markets

were fine. when they threw this cold water in suggested september might be a possibility, that's when people got very nervous. but one of the most -- >> what is the difference? >> well, because if they do it in september, they open the door to the possibility of two rate hikes in the year. that's something that the financial markets can't accept. if they did it in september and specifically said no more rate hikes for the year, markets will be just fine. >> interestingly others argue the opposite, jim, that the fact that it could be only one is not the kind of normalization they have telegraphed in the past few years, so they're looking for two. do you agree? >> i don't think they're looking for two, but over time rates have to go higher. it's just too low of a rate structure that we have for both the economy and for investors taking on risk. >> i mean, we are talking three or four last year, right? >> we were talking three or four, but remember the first half of the year was about 1%. one of the most important tenants, carl, for central bank is do no harm. the central bank wants to make sure they normalize without causing havoc. certainly what we saw friday was a sneak preview to potential

havoc. i think for that reason the federal reserve holds off in september. >> why does it feel like the more they communicate, the more uncertain and confusing it is? >> well, i think that we should not confuse what the federal reserve wants to do with what they will do. and i think the federal reserve rhetoric suggests they want to raise rates sooner rather than later. but economic conditions and market reactions suggest otherwise. >> we had donald trump this morning suggest that a rate hike whenever it comes will cause stocks to crumble. jes staley at barclays a few moments ago said it could be exactly the opposite. what do you think? >> i think there are so many groups that are undervalued right now, and there are a couple of groups that are overvalued. so those groups will be under pressure, consumer staples, utility, telecom would be under pressure. if rates go up, the rest of the market i think is really undervalued here. >> like what? i'm curious to hear you say undervalued. i wouldn't think that at this multiple level. i know you're arguing for better numbers next year that show a significant overall growth rate for earnings. but undervalued what?

>> look at google, look at mastercard. two great companies growing in earnings 15% this year, 20% next year. they're both flat year-to-date. i think those are companies that are undervalued. there are a whole lot of secular growers like that that have been ignored this year as people have raced toward the dividend trade. >> going into rate cycles, anthony, stocks don't always disappear at the front end of it. >> no, they don't. in fact, some of the work i've done finds that in september it's the worst month of the year, but guess what, as you approach the latter part of the year, those are the best months of the year. so to the extent that the federal reserve doesn't disappoint and global financial conditions don't tighten up, the markets should rally between now and the end of the year. >> you think industrial production this week backs up ism? cpi, ppi, is wage growth a second half story at all? >> i think wage growth will start to accelerate, but we will see a little bit of softness not only in industrial production but we will see some softness in retail sales, which i think will hold the reigns on the central

bank. i don't think retail sales is going to be a blockbuster this month. >> jim, if you look at some of the outperformers right now, telecom, consumers staples, utilities, they're back up on top. it's either they're on top or they're on the very bottom. do you have any kind of exposure there just as a hedge for if we do see some type of pronounced selloff in the markets? >> we have a little bit of exposure. but i think if you see a selloff, it may be because rates are going up and those stocks wouldn't really be defensive. so what's traditionally been a very defensive group of companies might not be this time around. >> what is? what's safe? >> i think health care's safe. we had big selloff last week in particularly biotechs with hillary clinton's tweets around the epipen disaster. those stocks are still subject to some of the political pressures. i think they go up over time. particularly if the election is very close and the house or isn't the doesn't flip democratic. >> answers we're all waiting for the next couple weeks and months.

guys, thanks so much. and as we head to break here, take a look at shares of potash and agrium. the canadian companies will be combining to create the world's largest crop nutrient company in the world. valued at $36 billion, potash higher, agrium lower. the market continuing to stay higher with the dow at 38. much more "squawk on the street" straight ahead. announcer: alvin and the chipmunks want to remind you-- bacteria can hide in food and make you ill. wow! announcer: but you can keep bacteria from ruining your day with 4 simple steps: clean, separate, cook, and chill. the roadchip to food safety starts at foodsafety.gov. gomery and abigail higgins had... ...a tree that bore the most rare and magical fruit. which provided for their every financial need.

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investors are piling into emerging market debt. is it a smart place to find yield or a risky choice of last resort? we discuss on tradingnation.cnbc.com. more "squawk on the street" coming right up.

with the dow up about 25 points, let's go out to rick santelli in chicago with the santelli exchange. hi again, rick. >> hi. and thank you, sarah. i'd like to welcome my first guest of the week, tim cross. tim, thanks for taking the time. >> good to see you, rick. >> everybody is debating what

the fed's going to do. here's the way i want to frame it. let's take the microphone hawkishness away and look at some facts. let's look at the fed's balance sheet, the notion of october, mid-october reform for money markets, the idea of the new markets, the idea of the new form of funding and the form of reverse, repurchase agreements by the fed, interest rate on excess reserves. there's a balance sheet issue that doesn't go along with the hawkish microphone issue. is there not, tim? >> that's right, rick, thanks for having me. so, we'll try to simplify this. the fed, let's take that piece, has two levers in effect. one is bank reserves. more money in bank reserves, more money available to lend and easy money leads rates down. then the fed can borrow money from banks through what are called reverse repurchases and when they do that, the money supply tightens. if you look at the history back over the 20 years before the 2008 financial crisis, bank

reserves averaged about $10 billion a year and reverse repurchases were about $30 billion a year. now you step forward and today bank reserves are about $2.3 trillion. that's 26,000% higher than the historical average, and the reverse repurchases is about $300 billion or about 1,000% higher, but look at the balance has shifted dramatically. for the fed it's like having a whale on a fly rod. >> well, how can we even make it more simple, in other words, in order for them to truly gain any traction, tightening, they have to overcome this whole rrp inertia. maybe you can explain that a little bit. >> exactly right. if you look at what they did in august, they shrank the balance sheet, they put $100 billion more into reverse repurchases, so what they were telling us with those signals is they were interested in raising rates.

but remember, in december they did the same thing. then in january the markets imploded and they had to put $500 billion into bank reserves to stop that collapse. so i think -- >> in other words, by doing the reverse repos, they are taking the seed corn, they are taking the money out of the system in a form of tightening, but considering the way the funding works and the banks now use this as a source of funding, should they actually tighten it, it changes all the dynamics. your final 25 seconds on what that means for those looking for a tightening september, november, or december? >> right, well, i can tell you, the data looking at the balance sheet tells us that they aren't going to tighten before september, because they put those $100 billion back. so before the plow even hit, before the blow landed, they reversed it already. so what's that mean theist of the year? we'll see, but they have a delicate balance and if you look

at the economy, 150,000 jobs seems great, but that's barely enough to replace attrition, so it's a challenging balancing act and if we want to know what the fed is going to do, look at the balance sheet. >> tim, always give us an interesting perspective, nobody knows for sure what the fed's going to do and my money says neither do they. back to you, sarah. >> exactly. >> all right, we'll ponder that ahead of next week's meeting. rick, thank you. a blockbuster lineup for the sixth annual delivering alpha event. it's just one day away. for more information and tickets head to deliveringalpha.com. much more "squawk on the street." dow up 16 points.

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the nasdaq in the lead up half a percent on a calmer bond, currency, and overseas market. let's send it over for a look at what's coming up next on "squawk alley." good morning, john. >> of course, we're going to continue to follow the markets, but we have a couple of guests i wanted to let you know about, sam altman is going to join us from the west coast talking about the state of start-ups. also david marcus, who heads up facebook messenger for facebook will join us on that exciting market in messengers, in apps, all that and more coming up on "squawk alley". so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go! the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade

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kicking off delivering alpha, investing moves with host john bayeric and jack lew's insight on the economy. "squawk box" tomorrow cnbc. >> good morning, it's 8:00 a.m. in tesla headquarters in palo alto, california. 11:00 a.m. on wall street, and "squawk alley" is live. ♪