through a modern filter. >> they didn't have iphones. >> but they did have robots and flying cars. >> and a food that would come out of a microwave thing after ten seconds. >> everybody have a great weekend. we hope to see you back here on monday morning right now it's time for squawk on the street. ♪ earnings are a head wind though. europe as well though we're watching for developments out of barcelona today. oil is stead i can but near the

low. and what influential senator calls for radical change at the white house. >> first up though, wall street hoping for a rebound after the second worst day of the year were risk about set backs for the white house. now year to date figures where gold is above the dow and the s&p for the year to date. >> not so for the nasdaq. >> they were a global cross asset phenomenon from wall street yesterday the japanese yen strengthened. the nikkei closed lower trickling over into the european action as well these factors and then add to it that it's all which is tra ti traditionally a weak month for

stocks it had this incredible run in the market all the way up to record highs and if you look at the flows already there's a risk off sentiment developing $1.3 billion of outflows from equities last week 3.5 billion into bond funds. so you already had this percolating. >> really felt that this chief executive exodus was the tipping point. as i read one strategist this morning the market had been giving the president and his agenda the benefit of the doubt up until now and all of that seems to be in question and that was really at play yesterday along with real questions of gary cohn's future and parts of the agenda all swirling around to factor into the reason why stock went down as sharply as they did and not to mention the comment that i thought was really stinging from senator bob corker let's take a listen. >> the president has not yet

been able to demonstrate the stability and confidence to be successful we need for him to be successful our nation needs for him to be successful. >> consider the message but not only the messenger a gentleman considered at one point to be a vice presidential candidate. someone tsa been a supporter of the president. someone held in high regard. i don't think this was similar to mccain or graham. they sparred back and forth. this was an interesting moment and really had an impact on the market. >> you don't necessarily need the ceos and by the way there's a lot of indications that the ceos still held behind the scenes you just don't have the optics

attack from president trump and this back by mitch mcconnell watch the republican party did anything change? >> despite the confidence level the markets have been comforted by the fact that he surrounded himself by good people and one of the big steps yesterday when you did hear the rumor of gary cohen leaving that matters to the market the market can overlook a lot of geo political concerns but he's been the point person for tax reform and that's something that the markets are focussing on and

li likewise that calls into question the ability of the republicans and the president to pass their growth agenda. >> i thought the adage was the market is not pricing in tax reform at this point and it would just be a bonus and sweetener if it had. look at the names t retailers, the domestic small caps that benefit the most from lower corporate taxes. that group has not rallied it's flat for the year. >> it has. it's not new if you follow the sectors they have not performed well. they have certainly not outperformed the s&p 50 you need to have certain people surrounding you and a sense that the administration and congress can both make sustained progress if you have the opposite, a

sense of sustained failure then that's just for a day or two at a time. >> so next week yellen is going to talk on the 25th. >> what we hear will be more likely to boost the markets than what we have seen. the stock market can overlook geo politics but we start thinking about what would be a catalyst that might end this long run we had so far the primary factory that historically has either sparked recessions or likewise caused

then to turn down is a rise in interest rates when we start look at interest rates that's what stocks care about and that's something that could be a catalyst for a downturn in market that is tarting to get to be priced a little bit richly. >> why wouldn't this be anything but a momentary blip the markets are overvald around 16 or 17 we think there's room there for the markets to think a little bit more closely about interest rate policy going into 2018. to think about what happens to wajs and compensation going forward and therefore earnings and we think that little bit of

hesitation will allow the markets to pull back from now until the end of the year but we think the cycle will continue something like between now and the end of the year. >> would you be a buyer of technology that seems to be more vulnerable and the winner all year. >> that's sort of volatility is not attractive to us you have

oil revisiting and approaching lows we saw in the early part of last year what is the most important thing to hold right now in the near term >> i will agree with the statements that right now is probably the time to focus on the cyclical names so they don't necessarily fit that realm but it's also the cheapest place in the market

so it would probably be a place to look to in these point and time. >> on track for their first two week losing streak since may thank you for joining us on the market. >> thank you. >> another arrest has been made in connection with a deadly terror attacks in spain. kristen is in barcelona this morning for with us the latest >> it's believed the driver rented three vans. after killing 13 people here and then a getaway van was found miles away from the city and then there is the third van still unaccounted for so a lot of questions here as this investigation continues.

meantime, people back out here, you can see the crowds behind me the police do have blocked off roadways so no cars allowed along this promenade today but a lot of people out here and as you walk down there's memorials scattered for quite some ways along here as if those candles and flowers are right where people fell here yesterday so a lot of people chanted we are not of course an explosion has been linked to this terror attack about 100 miles or so

that was the night before the attacks and it is believed now the working theory is that these terrorists were planning something much, much worse using explosives and when the house exploded they then switched to this plan of carrying out an attack via vehicle and so police wo working to connect the dots. >> also ahead black rock on the sell off in the markets. we'll take another look here at the premarket on this friday as they finally got that 1% move in the dow after 63 days without. more squawk on the street from post 9 in a minute when a critical patient is far from the hospital, the hospital must come to the patient.

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>> we are at a critical junction in american history and that's not an exaggeration. all of these ceos having to be expressive in a way they're not used to. >> what a new world where the moral compass is coming from the corporate executives i wonder whether they'll feel the need to jump in and weigh in on other issues. there's plenty of contentious issues around social policy and integration and they feel the need to do this right now. >> someone like howard schultz that some say has political aspirations in his own right and we'll see what happens there down the road but this issue isn't going away any time soon you have a clear message this

week. >> and for those saying this doesn't impact the markets, nonsense it shows the u.s. dollar tracking the u.s. presidents approval rating and i don't think you can dispute that the two are closely linked the dollar is always in charge that's something that everybody knows. clearly there's other influen s influences you have been watching the dollar on the political headlines. we saw it earlier in the week and the dollar dip and you can clearly see the trend. >> irony is this, going into office the president was worried about the strong dollar. >> he wanted it. >> but he also said the dollar was strong because of the confidence in him. >> that's a different cost

current can. currently the lack of currency head winds is one reason and why companies could get most of their revenue from other countries or outperforming domestic focus. >> mainly the dow. still to come a closer look at the news in the retail sector this morning big news from foot locker, ross stores, gap and more and taking a look at futures, going positive here on the dow up less than a point thnaaq ue sdp 13 out of the open more squawk on the street straight ahead what did you have in mind? i don't know. $4.95 per trade? uhhh and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab. they always refer to me as master sergeant.

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see the spanish and american flags on display here at the big board over the nasdaq. they will hold a moment of silence shortly. you can see the flag outside there in times square. obviously the whole world watching and praying for barcelona. >> absolutely and we return to the markets because we're seeing big movers in the retail sector when it comes to earnings. courtney reagan is back at hq with a pretty mixed bag. >> that's right sarah but have to say foot locker is the latest shoe to drop and no one saw it coming which is surprising the athletic retailer missing by a mile revenues also weaker than expected mar jins taking a hit too. comps down 6%. that's the first negative in 7.5 years for foot locker. ceo says top styles fell short just on the call right now why

certain styles of jordans in north korea. super stars and sam smiths in europe foot lock ore didn't get enough inventory of new products but didn't specify what he meant shares of athletic makers are down in reaction johnson expects the trends to persist guiding comps down to 3 to 4% for the rest of the year this leads to big questions. is this the beginning of the end of athleisure or are they cutting out the middleman and buying straight from them online we'll have to see. separate shares up 4% after beating profit and revenue estimates logging the first straight quarter of positive comparable sales so just up 1%. still it counts. gap upping the full year earnings guidance. he told me he's most encouraged that the results are a continuation of a positive trend. he went on to say we're moving

in the right direction but i always want more faster. while banana republic continues to be the point he says we have gotten under the covers at banana republic and identified the issues ross store shares beat across the board. comps up 4%. that's stronger than tjx gives a full year outlook is strong but it was actually helped by this just reported quarter rather than the rest of the year but investors don't seem to care because their shares are still higher. back to you. >> all right thank you very much courtney what a day for apparel what a week for apparel. >> it's a little bit of a lag versus some of the other retailers but now they're feeling the pain big time after dick's, hipbet sports below what they were looking for. the pressure on athletic retailers is only just beginning and one of the big reasons is because for nike and under

armour and adidas it's all about direct to consumer nike is going to amazon for the first time. >> the other problem is its heavy discounting. there's an article in the yournl this morning negative on under armour self-inflicted wounds they say are related where you have heavy discounting and and we'll get to that opening bell in about 5.5 minutes.

>> how yesterday was colored by options and other things. >> the options expiration was a key factor and the volume was high yesterday bigger than the market itself. so that is always some of the options players were probably trying to set up bigger hedges, you know it was about politics mostly yesterday and then we had the terror event in barcelona. as i kept stressing to people it was not mr. cohn alone that the market was concerned about even those that don't aglee wreh the president said over and over again at least he's surrounded by pretty good people so if cohn were to leave and that would start a rush out then the fear is that the president wouldn't be surrounded.

>> you mean -- >> re-sign and move on to something else if cohn went ross might go and other people might step away. >> is there a responsible to way to assess what the market impact would be >> we had a lot of inflammatory guesses about what that would mean for stocks? >> well, if you had more than one resignation it would have a very formidable effect 500 or 1,000 points from the dow possibly not all in one day. >> i am encouraged the vice president is back in town a day early he is scheduled to meet with the president at camp david. the vice president has cleared his schedule for the entire weekend to make himself fully available so we can cross our fingers and hope something good comes of this. >> the market has been fragile

anyway there's been a rolling correction going on. hundreds of stocks are down 10% from their highs as it is. >> it's very heavily, very heavily in the russell and 200 day moving average. >> the zap at the bomb of the your screen it's mission canine rescue serving the neesd of retired working dogs while i have you here critical to watch you have energy knocking on fair market windows what really gets your attention? >> the energy sector has been a real mess and that is of great concern. you ti

utilities, you have the yield on the ten year below 2.18 this morning. you could be headed to a record level. the lowest we got this year was 2.13 i think you got probably 35% chance of breaking below that. >> yeah, i think you could possibly get as low. >> what's driving that the safe haven bid that sort of thing >> it's the same thing with some backdrop to the central banks which look highly uncertain when draghi stepped back from the idea that he was going to explain everything and pressure

besides a safe haven. >> do you have a feeling that volati volatility is not here to stay for awhile it goes away for weeks or moss this is going to be something we're going to be living with now. >> you're certainly going to be more susceptible to it and it goes back to your comment earlier that there's multiple stock markets. they're not doing well and the energy sector is not doing well. everything is separating out so i do think you will begin to see the volatility with a good deal more frequency >> do you think we'll see more market sensitivity to republican comments scott earlier mentioned pretty inflammatory remarks about the president yesterday. at one point closest alabama lice is this something you're watching as it relates to the odds of an agenda passing?

>> there's no question about it. the feeling and concern on the floor is that they can't get anything done. so that's going to be very carefulful carefully watched. after that we'll watch the rhetoric as he moved up to the debt ceiling that's going to be critical. so can they come together and vote on what time of day it is. >> i heard both things i'm not elevate anything cash flow but if anything i'm rotating in a different area. >> i think there was some

rotation but you're seeing less of that now. it's being put on the side waiting for a larger opportunity. they haven't had the chance to get in. >> no because you had it move in almost instantly you drop 1 or 2% and suddenly everybody is in there. >> let's see where we go. >> looking at a few movers the two biggest winners are actually consumer names and off of better earnings this category continues to

outperform so you could be seeing a covering there going on but it was a better beat and the fundamentals at least within e-commerce and invenn toirs on the off priced retailers are better than the rest of the industry and the other one was este estee lauder even some other cosmetic brands so it's not all doom and gloom we also have the better retail sales number this week. >> the consumer is very much bargain oriented >> bargain and luxury. >> it's striking today the

split. while foot locker. >> down 24%. >> are the biggest much more exposed. nike is much more exposed than adidas and under armour as well. it's will be interesting to he see how they combat this whether they're more direct to consumer. >> we should mean deere as well. revenue is shy they do raise the full year guide. >> stock is getting ripped down 7%. >> deere is having some difficulti difficulties watch blue a problem they do come out in a two way

hold from a buy arguing that in the model which we know investors have decided is some whatchallenged by amazon is several quarters away. >> the only group in the green is technology and one of the reasons why is applied materials. we're going to talk to the ceo later but it's already been so strong for these stocks and to get another nearly 5% top on strong results certainly being rewarded for these better sales numbers. apple trading at an all time high people sort of question the leadership group, sort of get back on that mantel and lead the

charge and go higher with the other bank stocks. facebook is up this morning as well wonder where netflix is. netflix is up too. >> dow is down today let's get to bob. >> good morning, carl. a flat open. remember this is an options expiration monthly so it's not the quarterly so getting a little bit normal volume here. usually safety plays in europe gold is over 1,300 first time that period happened this yeemplt take a look at what's moving over in europe and not surprisingly you see some of the travel stocks a little weaker intercontinental, international consolidated air that's the british airways

they're all down but declines are not as great as some people think. only modest declienes in the major averages an odd distribution this morning. so you have gold up. we talk ability the cracks showing. the biggest one is the russell 2000 collapsing. the s&p is up almost 9%. we're down about 30% in the last

days some are starting to downgrade the policy from the trump administration where are we right now what's up with the markets transports are also below their 200 day moving action. it's very interesting. it's worked all year but in the last two weeks we have seen something we haven't seen in awhile two sell offs in a week. what's the psychological effect. will they be able to see buying dips now that they have been burned once. the other big complaint, there's truth to this. the leadership groups are tired and there is no obvious rotation slook so look at amazon. so everybody says let's buy value over growth. i don't he see it.

value folks is energy stock. value is financial stocks. value is car companies so they're the market losers this year who is going to buy energy after how many people got burned on the energy trade retailers, everyone that bought the retailers on a rally last month got killed this week no one is going to go near them. the only thing that's a candidate is banks it's hard to argue without some kind of yield curve and loan growth i don't see it we noted that the vicks is back. in higher prices than the futures contract that means traders are expecting a volatile event in the short-term but not for the short-term this has happened several times this year. it has been a buy signal

other than that watch the leadership group today and they all opened flat on the upside. that's a good sign given the argument that this group of all of them is the most tired. apparently they maybe tired but people are not dumping them at least not yet. >> buying of u.s. treasuries today rick. >> yes here's the important aspects it's not like we haven't been down here. even last week when you

consider we're a couple of days away from making low yield close in a year treasuries at 244 to give you an idea of how much we slipped. 30 down two on the day and down four on the week it feels like it doesn't it. we're drifted into an area that seems to always be composed of a couple of variables. weak stocks, high vicks and the dollar losing against the yenment if you look at the year to date of the ten year you can see what everybody is looking at that one bottom right there. we can be spending a lot of time with consolidation and feeling the trade from post election brought up by the comments and

really into a different loop for awhile as you see on the chart and i don't think any has been any time soon. that's when it starts to get a little dicey it's down here and if you look at a 2.5 year chart you can see it can't get out of its own way. it's not right on the lows it's getting close again. >> back to you. >> you're right no matter what then let's take a closer look then down 2 at the commodity desk with a look there. >> here's what we have right now. we have a positive for a good

part of the morning trading session. $51 barrel at least getting down a little bit and that's support prices. >> what he sees ahead for the markets after yesterday's big sell off thus prize winning journalist

wi his take on taking on president trump. the story of the week. squawk on the street will be right back stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and. duncan just protected his family with a $500,000 life insurance policy. how much do you think it cost him? $100 a month? $75? $50? actually, duncan got his $500,000 for under $28 a month. less than $1 a day! his secret? selectquote. in just minutes a selectquote agent will comparison shop

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>> shares falling sharply on earnings just ahead of foot locker at the bottom of the s&p. morgan joins us with more on what went wrong here for deere. >> hey, as you mentioned deere is crumbling this morning. down nearly 8% so earnings of $1.97 per share did beat by two pennies but revenue fell short of analyst estimates that top line miss is a big reason the shares are under pressure deere is higher this year. had been up about 20% the year before this loss today still higher by double digits. that said, deere did raise it's full year outlook and profit and sales that expects to grow 10% sam allen saying deere is benefitting adding in a statement that we're seeing higher overall demand for our

products that kix off and one thing analysts will want is working group. that's the construction equipment company that represents the biggest deal in the history. it's expected to close in december but taking a look at those shares they are down 8% right now. back over to you while agriculture has been a big part of the deere business they are

looking to diversify and double down i'll bring you the headlines as they come. >> big names. >> it's a big winner too. >> over the last year it's up almost r50%. it's been a good place to be. >> by the way, the retail sales that we get monthly a slight disappointment today when we come back, out with earnings the stocks up more than 60% over 12 months. pretty good outperformer we'll have an exclusive with the ceo later on today dfrks ow down 38 russell is going for four straight weeks down. haven't done that since 2014 back in a minute finally. hey ron! they're finally taking down that schwab billboard. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard.

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>> ceo aaron levey speaking to cramer on mad money. talking about the president and the week we had and the political divide in this country. a lot of ceos are learning how

to speak out about issues like this not new for aaron that's been vocal for awhile now. >> in some respects you have to be all things to all people and the challenge of trying to do that is going to become more difficult for the political environment. >> i agree with that but there are questions now about what it means for president trump's agenda how pro business of a business president is he really going to be and i get the sense from talking to people that even though you don't see these big councils and some of these th theatrics that go along with it, the president on this infrastructure cut in regulation made progress working with governors and ceos that was overshadowed by the news conference. on work force development we're expecting more announcement on that

they served the interest of ceos and their employees. they're facing a labor shortage so i'm wondering if you'll continue to see work like that being done that's why it's so key to see if we see cabinet defections. >> mad money at 6:00 p.m. eastern time dow is adding to its losses down 64 watching the internals trarlgz pobd z have transports have your attention. >> they do it continues to raise questions about the real strength of where the stock market is. >> it's a long held thing that people point to. it hasn't mattered that much lately the question is will it. if transports continue to have the trouble they are looking at the rails this morning, kansas city southern, csx are down. some of the airlines are down

yet again. whether that starts to have a broader impact on where the stock market goes. >> 50 day moving average on the dow today is 21-6-11 which is about 70 points below where we are right now. so we'll see if they find us some support here if it goes any lower than this. former vice chairman on growth under president trump. teaking consumer sentiment data onhe other side of the break don't forget at 1:00 this morning we'll be right back come on, check out that stop-and-pop! what do you think? my trade-off analytics indicate no one creates more space on offense. this allows him to nail a jumper from a densely populated urban area. what you're trying to say is from way downtown? i am still learning. i can see that.

welcome back to squawk on the street marktd data the sell off yesterday. today another 73 or so oil not cooperating and transports also weak. >> our road map for the hour does fwin with those markets as carl mentioned the sell off continues. stocks set for their second straight weekly drop over con sthaerns are growing that

president trump won't be able to advance his economic agenda. >> shares getting slammed after a big earnings miss why ceos are now speaking out on politics rather than avoiding it. >> data heading our way. let's get to rick santelli. >> yeah, listen, august preliminary which means this will be dropped for the final read but it doesn't diminish it's a bit surprising.

>> i'm look at 226 unchanged from july final but we did drop them on the 5 to 10 year inflation outlook from 2.6 final july read to 2.5 in this report we're still watching the dollar lose against the yen down in yields but up in prices. back to you. >> yeah. doesn't seem to be having much of an upbeat effect there in the market rick thank you on the better confidence numbers markets coming off of a major sell off in yesterday's session. they saw the dow and the s&p posting it's worst day in three mont

months. >> trump would moderate his position moving away moving away from his more extreme positions on virtually all issues and right wing loyalists that doesn't appear to be hap n happening. >> now it's reversed again he digs in and doubles down and that's what is happening here and he's losing support in the process. >> the market is due for correction i have been commenting that we have gone a long way since the election the market went up almost every

day in november, december and january. we haven't had a 10% direction in a long time they're becoming very complacent and it's being blamed on trump but it could be blamed on anything what you have to look at are the underlying fundamentals and they're pretty good. the economy is stronger than people expect it at the beginning of the year. i think we could be headed toward 3% growth by year end earnings are coming in much better than expected at the beginning of the year the s&p 500 to earn between 120 and 125. that means they'll be close to 130 it's still low and inflation is low and there's no recession.

and when it's over the market will resume it. >> what makes you think that this is the correction it's not like tend of the world. >> right i don't know whether this is the correction the market is vulnerable to a 10% direction. this may be the start of it. somewhere is the positive trend. >> how do you reconcile arguments that more bearish people maybe cautious commentary from the fed. do those things point to a stronger domestic economy? >> there's always negatives out there, i mean, you and i have

both seen them so you can always make a case but the so if you're european you have just about broken even on your investments even though you haven't made a lot of money my view is the fundamentals look forward to higher market everybody says the market is overvalued but they're comparing price earnings ratios with periods where the ten year treasury yielded 4 to 6% and they can support a higher multiple because stocks compete with bonds and bonds aren't much

competition right now. pulling out of his policy forum and manufacturing and councils does that make you rethink the trump growth agenda of tax reform and infrastructure spending and deregulation that got the market so excited after the election >> you raised a good point >> i myself was enthusiastic about the outlook and you're seeing some people in congress pulling away from the president. some republicans in congress

pull agoway from the president and one of the reasons i was optimistic that he implemented the agenda was because the republicans controlled both houses of congress but now that looks like it's shredding so i'm worried about that and i'm worried he won't get a lot of his program through but offsetting that is the fact that the economy is doing better than i originally thought and i think that's going to neutralize some of the negative sentiment in washington that changes the markets for last year. i do think that some of the deregulation has already begun

we will get some tax cuts. the most important thing that we have to get is a revision of the affordable care act. you can't have tax reform unless you know what the budget is going to be. there has to be more harmony in washington than there is right now. and i'm hopeful some of the wounds will heal but right now it doesn't look too good. >> thank you for your input. the s&p on the lowest level since july 11th. vice chairman of blackstone. >> a man hunt is underway. killing 13 people, injuring more

than 100 others. she joins us with the latest good morning once again kristen. >> hey there carl, we have learned that there has now been a 4th arrest though. officials are not saying if that's the suspected driver on the loose believes that person rented three different ones. the working theory is that this terror cell was working on an explosive attack and when something went wrong there and that didn't workout they switch to this vehicle attack

here where the attack happened and you can see they're coming from all around the world. peru and he kwa dor. people are coming to pay their respects and stand with barcelona. they want to send a message that they are not afraid and they'll keep coming out. that is we're learning of foss blt of other type of incidents in finland so terrorism on the minds of everybody here today. >> thank you so much >> second week in a row for the first time since may

this was a vulnerable market waiting for an excuse. is that whaer facing todt we'rey >> the market has always a myth you have dor one of the things we need is real growth potential and we need some reinflation. today all the action one of the interesting thing we see is gaps are unsustainable. either we get the growth and the rates rise or our rates are going to collapse. >> we're going to see change this week as to how the markets are going to react to noise out of washington and events >> probably not.

that seemed to change with these events to gorge changes that benefit the hole >> i always like to remind viewers in december and january everybody was all, all of this was going to get there we're going to go. in that direction. you told everybody to take a breath that there was going to be a lower ceiling as people

thought. is it any different now? >> 2.15 to 2.16% we are in the terrible twos so a break down in any of these things and break out of that. >> what about, does this scare you that there's a lot of chatter? a white house official says he is not going anywhere but does that worry you that that's where the dialogue has moved after all the corporate executives have spoken out against the president? >> other than if it helped them sell more product i think the ceos would rather avoid it you can be sure when they write

them and republicans will come more together now because of it. they will write a tax bill that there will be lobbying efforts and i don't think he's going to leave. >> this morning on the ten year, are you shocked anymore at where rates seem to be >> no, u.s. bond markets, treasury market has the best in the world. we know it's much lower. >> it has tablt to move lower. >> and the low part of the united states. for interest rates to be low right now. >> did you see my chart of the week the dollar moving on the trump approval rating.

the story has been one of political risk, has it not i'm wondering when this is going to spill over into currency marks. >> as you know, the united states economy is down 10% on the trade rated basis. we'll get a closer look at retail we'll discuss it with jim stewart and don't miss former federal reserve vice cirhaman with us. dow is off to lows but also lower than it was at the open down 42. and at $4.95, you can trade with a clear advantage.

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>> moral fibers and values is literally hanging in the abyss we are at a critical juncture in american history that's not an exaggeration james murdoch says i can't believe i have to write this standing up for nazis there's no

good nazis or terrorists and democrats and republicans must all agree on this and it compromises nothing for them to do so. also pledging a million dollars and it is a dilemma when the power of a boycott is accelerated by social media. >> i think it's important to recognize the historic nature of what happened this week. people couldn't come up with any precedent in american history for the exodus of the business leadership community from its sitting president. they're not in those jobs in order to pontificate about their views. occasionally a political view

will align with those interests but for everyone to be recognizing that they at this point must take a stand to protect their business interest that may be because they have a consumer, you know, focussing where there's a boycott risk or more broadly because they see policies are at risk of taking the entire economy i can't believe we're discussing this seriously but that was one example where industry was wiped out but also after the 57 race riots there was significant damage and harm to the american economy from that. a lot of businesses today worry that the potential for civil unrests has gone up and that will be harmful to any business

a ceo that says i'm stepping off one of these councils i'm never going to go to a state dinner or in sort of announcement of a may r j -- major tax plan or infrastructure process. >> they have to put their personal views aside but then consider what is going to advance the interests of the people i owe responsibility to and what is going to harm that so visible support is being identified with white supremacy and extremism. they can't go back there quite advice to the president i don't see any problem with that. look, you have ceos on the council like boeing for example, clear benefits here. who resisted this. we should keep our voices in

here and there's a lot of people out there that are sorry to see these things go. >> a great look at internal message boards at jp morgan this week and the blow back from some employees saying i got enough policies at home >> i don't expect to hear it from my boss and bosses boss at work. >> the simple calculation is if you're an employee what is in my company interest and you don't want to hear it well then that may be good. you have no choice at this point. and the importance of hiring a diverse work force and then you got, as you know, a lot of employees who are desperate to hear political view so in any

company you'll have individual vie views. >> especially now but where is the balance of the risk? that white suprmeacists are going to boycott you or if you're under armour as you have the celebrity athletic community that depend on you for endorsements, i don't think that scale is close for companies that don't have that risk, i think and they just have to weigh in. >> maybe there's a strength in

numbers. >> told the council meeting target that. >> trump can't target the entire ceo community of all the people that left at this point. yes i think there was a lot of wisdom in doing it together so that nobody really had their neck on the chopping block. >> good read important to put it in historical context as you do thanks for sharing it. jim stewart of the new york times. >> keeping our eyes on shares of foot locker. and nike most exposed to foot locker. >> when we come back much more on these markets

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>> tom it's always good to go over charts with you good morning. >> good morning, carl. >> you know the old saying is sell in may but your argument is the it's just now started. >> real seasonally peaks in august but the problem is there's no word that rimes with august and people tend to believe things more if it rhymes if the glove doesn't fit you must acquit. if you can come up with a good rhyming praise with augu-- prai with august in it icon gara cont you. >> you have a bottom in late

september and retest in october and we're off to the races again. i expect a great up trend but we dance around with the things we have seen in the last two weeks. >> chart number 2, ge is one of the lagers for the dow for the year is it important that it has not at least tried to confirm what the index has done >> it is important so what i like to do is have predictive indicators and confirming indicato indicators the top was due in august and came in like it was supposed to go >> it's not a big contributor but the important thing is the indication it's a great messenger when you

see the two of them disagree making a lower high for example. it's usually ge that turns out to be right about where both of them are headed. >> a lot of them going down and that's a good sign of the reversal back up where you're coming what we're using ge for in this case is them telling us that now. >> if the weakness does persist and this is what he they were expecting to have at some point how long do you think it lasts >> lasting until late september and we won't be done yet because it will be probably in late october. we're rather immunized

generally speaking you're limited to 10% when it suddenly ended and yanked the punch poll away you can get a decline bigger than that a pretty descent quarter and retail is in a world of its own. it's going to take a lot more in terms of results to impress this market how do you read that >> well, i like to say that the

real fundamentals that effect the overall stock market not just one stock or another stock but the overall stock market is only 2 fundamentals that matter. the first one is how much money is there and the second is how much does that money want to be invested so we had the fed give us a great answer to the first one. they have been printing money and giving us three different rounds of qe so there's lots and lots of money and that is attempting to produce lots and lots of high evaluations suddenly that money is getting fearful and people are saying the world is coming to an end and we'll all die in a terrorist attack let's run for the hills and this is normal. it happens about every year on this time and that turnover of get wrenching sentiment that people are experiencing making them want to pull away should end by october. >> we had two years since 2010

let's send it to sue for cnbc news update this hour. >> good morning. reopening to the public today. the morning after one that killed 13 and wounded more than 100. remains under heavy surveillance the state department announcing one u.s. citizen was killed in the attack and another was wounded. a 4th person was arrested in connection with an attack. another statue has come down this time of a controversial supreme court justice. best known for the dread scott decision the california department of corrections releasing a new mug shot of 82-year-old charles

manson they're updated every few years for security reasons he is serving multiple life sentences for murdered committed in the late 1960s and the solar eclipse that will take place monday will cost u.s. employers roughly $700 million in productive the cost comes from employees missing roughly 20 minutes to check out the eclipse. wear glasses sarah back downtown to you. >> people are so into it >> they really are. >> why he saysore nn msuy days are likely ahead for the u.s. economy. squawk on the street will be right back

>> that's what we're seeing and as long as the fundamentals of the economy and earnings stay healthy stocks can continue their upward momentum. so tell us what you're seeing fundamentally beneath the surface? >> well, i see the fundamentals are a mixed bag. in terms of gdp growth we have been going at this 2.2% the pace for a long time now and that looks pretty likely to continue. that's the good news and the other good news is jobs are being created which is the main thing as far as a recovery so bad news is that productive is the flip side of the job creation if you have how was this

mediocre gdp growth getting so many jobs the answer is that labor productive has been growing very, very slowly. historically slowly. and that's the bad news, you know, it's a two side coin. >> so what does the fed do about this predicament super low unemployment, multiyear low and yet very little size of inflation and wage growth. >> i think what they do is scratch their heads and get the staff work like mad to try to figure this out. i think the answer is that inflation doesn't perk up a little bit between now and december which is the widely expected date of the fed's next rate hike they'll skip december and keep scratching their heads.

it's actually creeping down which is very surprising. >> he said this week, we're good one more this year we should do it. do you disagree? >> i don't disagree but let's predicate it on what they have always been saying it's only august so we have a ways to go >> you say it perfectly well that's exactly what it is. and some might say that there is some underlying current of technology that we had not been able to quantify or measure that is the culprit how do you think that is >> well, it's almost another

version of scratching your head. whatever this technology is its not showing up in the productive statistics maybe we're just missing it. that's possible. allen greenspan famously saw a surge in productive growth before the data actually showed it back in the late 90s. maybe we're experiencing something like that now. we just don't see any signs of it and the other thing you always want to ask with these hypotheses is how come this wasn't happening six months ago? six months ago we were looking at stable inflation and now falling inflation. what in the world happened >> i wanted to ask you about the politics because we talked to larry summers. you guys are both former democratic presidential economic advisers summers has been extremely outspoken on the need for big business to walk away from president trump after the response to charlottesville,

let's listen to a moment to what secretary summers told us earlier this week. >> the question for companies, the leaders of companies, for the leaders of institutions that hold thelss out as leaders in society of whether they want to lend legitimacy to this, i cannot understand why others have not followed ken frazier out the door i cannot understand why they have not endorsed his courageous actions. >> sub se conventionalothers die out the door do you agree with summers and do you think some of the cabinet members also should walk away? >> you know, i basically agree with one caveat. this was a personal decision if you're the head of a company you're representing a whole lot of people and not just yourself. so me it's morally easier for

say a cabinet official speaking only for himself or herself to say i've had enough of this and i'm out. because i don't want to associate himself with this man. the tone of what you just played back from siummers i couldn't agree with more. i feel that way myself and in the unlikely event that i was in the trump government i'd be out the door for sure. >> the minnesota fed president went a step further. he tweeted basically saying that if janet yellen the fed chair accepted a reappointment she in effect would be endorsing the president and his views and i'm going to read a quote to you and i'd like your reaction to it accepting fed chair job from him would send a signal that she would regret and possibly deeply being appointed by trump to this position or any position means that you approve of his goals

for the u.s. so here we are talking about a fed president talking about the fed chair, a job that is supposed to be a-political. >> yeah, this is a tough call. i say a agree with that more than i disagree but there say key distinction. once you're appointed by the president then kocherlakota's point is correct that's an endorsement by a president that a lot of us think is an abomination. you don't have to answer to the president or do what the president wants you to do. that's a very different thing. >> and, in fact, the fed, i would double down on what you just said. the fed has to fight to prove that it's independent from congress and from the president even with these appointments and even though it does answer to them that's been a fight that the fed has been fighting for years now. especially with some of the republican calls to monitor that

independent further. >> yeah and past the house of representatives as you know. it's going nowhere in the senate and i hope that is right but that's a serious threat coming from the house. >> finally is it a threat to you what we saw from ceos this week? your opinion about the administration what it all means for taxes and infrastructure and regulation and growth for this economy? you painted a sunny to use your words image of this economy. how much damage do you think that political turmoil is doing to that. >> i didn't make a big deal of

it at the top of the united states government that's a real danger any one of them are shaking confidence right through it's roots. if you start shaking confidence and consumers put away their wallets. >> we haven't seen it yet and university of michigan sentiment numbers today are still strong we'll monitor it thank you the former vice chairman of the federal reserve. >> when we return this morning we'll have a lot more onhe tse markets. the dow is down 61 points. squawk on the street continues in just a moment

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>> hey, rick. >> thanks, carl. part of this exchange is for you and everybody one of the big topics is august is the month to pay attention to and so far it's deliberate on that notion. i'd like to welcome my las issues to contemplate with what's left of august, you think september is the month that you really ought to pay attention to tell us why. >> the congress is really dug themselves into a hole here. they spent five months failing to fix repeal replace obamacare. that problem is still there. it's a huge issue. but in addition to that, the children's health insurance program funding expires september 30th eight million kids will lose insurance if they don't fix. that we have the debt ceiling that has to be dealt with. that will be problematic by the end of september the government runs out of monday on first of october if they don't fix that. and we've got obamacare in serious trouble. just today the -- force. >> the 2018 contracts, don't they have to kind of be

finalized and all the exchange contracts done for the obamacare like all that, isn't that deadline in september as well? >> yeah, exactly by the end of september, all of the obamacare insurance company contracts have to be finalized the insurance companies doebts know what to do here trump keeps threatening to cut $10 billion of payments to them for low income subsidies if they cut that, the carriers are going to suffer significantly. they're turning around and giving much bigger rate increases. >> not to mention the headlines, bob. can you imagine the headlines? children health insurance program unfunded like all the issues, media plays a big part no matter what side of the issue you stand on, they're not enamored with this president r there way you think the things can be resolved without a lot of hiccup thaen hiccup that's end up hiccups in the marketplace? >> no. now they're talking about bipartisan work to stabilize

obamacare. that could mean $15 billion of new subsidies for the insurance companies to keep the program afloat you know, obamacare needs fundamental fixing in the insurance exchanges. and they could stabilize it by ensuring the cost sharing subsidies that trump keeps trying to cut out. while they could help stabilize it by pouring $15 billion a year in subsidies in, you got a law that is flawed throwing $15 billion into it only stabilizes these incredibly high rates it's not uncommon for families who are not getting subsidies. rick, remember, 40% of all the people in the individual insurance market get no subsidies. it's not uncommon to see the unsubsidized people paying 10, 12, 14, even $17,000 a year i've seen for plans with $6,000, $7,000 deductibles so from a bipartisan standpoint, they might subsidize the status quo. but the status quo particularly for people who don't get subsidies is just unacceptable

>> well, bob, you know, i was hoping you would give me some glimmers of hope here. it doesn't sound so optimistic but, of course, we never know how the future turns out we'll have you back as we get towards the middle of september so can you give us an updated report card. thanks again have a great weekend scott, the judge, back to you. >> all right rick, thank you so much. as we head to a quick break, take a look at shares of applied materials. they are reporting earnings beating on both the top and bottom line. stock up is 2% they also gave strong current quarter guidance by the way, the ceo of applied materials gary dickerson will join us in just a bit.

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take a look at the markets we're watching critical levels on yields, utilities and a whole lot more we'll cover that whether we return, foot locker is get hammered. more on the mixed baofg retail earnings "squawk alley" is coming up next whoooo.

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welcome back to squawk on the street we're washitching the energy sector standing out as the worst performer on that basis for the worst week since february 5th of las year marathon oil, hess, payne and also falling yesterday's selloff the energy sector is now back in bear market territory. down more than 20% from the most

recent 52-week high. that also goes for the energy select spider etf. that is down 3% this week at 7% this month also in bear market territory. so keep all of that in mind as we watch more of the data on oil and, of course, the baker hughes rig kounlcounts coming up let's send it downtown for the start of "squawk alley." >> thank you very much good morning it is 8:00 a.m. at applied materials headquarters in santa clara, california. 11:00 a.m. on wall street. and "squawk alley" is live ♪ >>