tv Squawk Box CNBC August 8, 2012 6:00am-9:00am EDT
good morning and welcome to "squawk box" on cnbc. we're already having fun. i'm andrew ross sorkin along with joe kernen. becky quick continues her time off but we'll have her back in a week or so. let's get you to up speed. disney quarterly earnings, 31%. results were helped by higher spending at theme parks and the blockbuster movie "the avengers." disney's ceo bob iger talked to us last night. >> we're willing to step up and pay for product that they believe in, they'll get good value in, they basically see as high quality product. when we invest in that, the cruise ship business, the recent expansion and additions to our theme park, we see increased business. >> the entertainment giant also announcing it signed a deal for avenger sequel and mavble based tv series for abc. morgan stanley reportedly
considering closing brokage office, laying off support staff and requiring some branch managers to generate revenue as advisers, part of a cost-cutting drive as the company comes under pressure to boost profits. morgan spokesman declining to comment. and ni capital regaining some profit. nyse saying it will reinstate firm's full market duties as of next week. joseph kernen, good morning. >> i can sleep in a little later because we can get here like ten seconds. >> is that what you think we should just -- ten seconds? >> why get here early when everything is fine? our director get a little was in but -- >> what time did we -- we were standing here? >> a few. my audio guy is scared. let's look -- what happens?
does anyone die? no. a few early stocks to watch. dean foods posted profit. dean is spinning off a part that sells silk soy milk. express scripts citeding a strong second quarter. increased use of more profitable generic drugs and cost savings from acquisition of medco health solutions. the big story yesterday after the bell, priceline hit after hours, the online travel agency -- >> you ever use priceline? >> no. i don't know how. -- better than estimates but they warn weakingen conditions in europe could hurt potential growth. i have seen the shatner commercials -- >> what about -- >> we're converging in a lot of
things. look at the uniform that we're wearing today. it's blue. >> a little purple. >> oh, you've got the purple going. i'm channelling the sorkin look. >> the sorkin blue? >> i want to be invited in "gq," too. yesterday i saw that was a sensitive subject so i'm bringing it up again. what is that going to happen? >> one day into the future? i'm not wearing the monk strap shoes -- >> is the day in the future set? >> no, no, no, no. >> how do we even know -- >> we don't. that's why i was trying to say to you that we should not -- >> you said you were going to be. obviously, there's some negotiations going on there with "gq." cover or is that aaron sorkin. >> i was told i could only get cover if we did the photo shoot together. >> you're lying. let's check on markets this morning. futures after what we saw yesterday, another pretty solid session as we slowly creep above
1400 on the s&p. >> wow. >> yeah. and 13168 on the dow. we are indicated down about 0.5%. >> we need like the kernen indicator and just have 15,000 at the top -- >> you do. you left a lot when you were throwing my 30% prediction in my face when the market pulled back at one point. once again, when you were excited about the -- watching the world burn. >> where is lock right now? >> we'll have him on. >> we'll have him back. se he -- >> you remember? >> i remember. we haven't got to labor day. i still think that once everybody from europe gets back from vacation -- >> things are going better in europe, in sharp contrast to what you said last week. >> what do you think about hollande? >> 75% is too low for those rich frenchies. no, i'm not going to -- >> is 81% better, you think? >> what's the -- >> 90%. you bring up eisenhower.
during one of those periods that you cited yesterday as a period of prosperity in this country -- >> was it only 30,000 people or 300,000? >> there's a great -- >> the people in france who would be paying that tax is a small amount. >> there a great piece -- we can look at oil board as i talk about this, but there's a great piece in "the wall street journal" today which talks about romney-hood and this ridiculous sort of -- what would i call that? the obama administration has set forth -- they've used a very liberal left wing think tank and analysis of romney's tax plan to call it romney care, the opposite of robin hood -- or not romney hood, romney economics, the opposite of robin hood economics. "the journal" today points out -- what is it -- it's 20% of the taxpayers in this country, the top 20% pay 94%, 94% of
income taxes by the top 20%. the middle qintile pay zero. quintile is a fifth. the bottom fifth pay zero, top 20% pays -- money comes towards them from federal government. this is how i don't understand when you're asking about fairness, how -- you want it more fair when the top 20% pay 94%? that's sort of progressive. isn't that kind of a progressive tax cut? >> the occupy wall streeter in me you know how much they live me -- >> to know you is to love you. >> if you look at top 20% earners in this country and that they are taking in 80% of all the income, if not more so, and that's -- >> i don't know whether that's it. is that a number you're throwing out or -- >> no. i'm throwing that out -- >> you don't know if it's 80%.
>> i can get you a number -- it might be worse than that. >> the top 1% pays this, top -- it's a progressive tax code. >> it is. in fairness, it must be in the eye of the beholder. have you to define fairness, whether it's earned success is what's fair and getting what you deserve is fair or in galitarian view, the liberal, who said anyone born in this country, no matter where you're born, you should have the same life as anyone else. that's a different concept. >> we talked about what the american dream is supposed to be. >> this utopia, this social welfare state, utopia has been tried and this is what you're watching in europe. >> we also debate these issues. >> we almost came to blows about i.r.a. rollovers again, didn't we? >> it wasn't blows. >> i meant physicifisticuffs.
. >> read. >> okay. we have to do some -- >> this awkward moment was brought to you by andrew ross sorkin. >> it wasn't me. >> they decide. they decide. >> did you see the olympics last night? i want a reruling if you saw what happened -- >> what time was that on? >> it was on late. it was on late. >> two unbelievable women that have more -- the beach volleyball, misty may and -- unbelievable. >> ally raisman. >> i didn't see this. >> they gave her a score. everyone's waiting around. here, let me get light on that. they gave her a score, waiting around, and then they raised the score. it was fascinating. anyway, we'll talk about the olympics later in the show. let's get to some of the news. across the pond for the global markets report, our good friend kelly evans is standing by in london. >> i don't know if she got a chance to see that. did you see the diver who fell flat on their back like that?
>> andrew, i missed it. i did sit down with gabby douglas and talked to her. she fell on the balance beam. it wasn't the event she was expected to do the best in necessarily, that was a disappointment but she had a positive attitude and talking about how being financially stable is motivating her and she stands to make a lot of money from endorsement deals. so, anyway, i had a chance to talk to her. didn't catch diving. markets aren't diving this morning. >> we saw a weaker tone. the ftse 100 is down 0.5% as bank of england mervin king is giving a press conference, doing latest quarterly, downgraded inflation and growth, not necessarily sounding as dovish as some expected. xetra dax and cac down 0.6%, and ibex down as well.
it's not just the u.s. where markets have had stealth rallies, it's europe as well. a little less relief across the bond markets this morning. we can take a look at what's happening with the ten-year in spain, inching back up towards 7% level italy holding below 6%, 5.96%. bunds, we just had a ten-year auction at 1.24% versus 1.31% the last time around. that's roughly the level we're seeing bunds this morning. ten-year gilt is down 1.56%, but we'll keep an eye as we continue to hear from mervin king. we've seen a reaction in gilts, he's talking about balanced risk maybe in the longer term. inflation, some concern about productivity levels in uk. u.s. products report coming up later today. we'll look at how forex markets are responding. the euro/dollar is down this morning, consistent with the
other red arrows we've seen. certainly again strengthening against the yen as well. the aussie/dollar is also retreating. standard chartered shares this morning, rebounding up about 6%, although as you can see, that's not enough to turn around the ftse, which is still down in the range of 0.6%. back over to you. >> kelly, that was interesting what you said. you would describe gabby as -- how would you say it, she's in a good place? i mean, she won the gold. she's america's sweetheart. on the cover of the cornflakes box, the last person was like phelps or something. you said her financial stability. i like the way you said that. kind of stable. you've seen what the estimates are for what she's going to -- >> what are the numbers? >> $100 million. >> no, no, no. those figures are high. >> 90 i saw. >> no, but that's -- that's a
rumor that's unconfirmed. >> what do you mean unconfirmed rumor? she's could be -- >> joe, joe -- >> don't joe me. she could be in the olympics when she's 20, 24. >> while we could put any big number out there, what we do know is that she's likely to make something in the range of 1 to 3, maybe upwards of $1 million a year in endorsements and sponsorships, and what you're talking about a one time, big ticket potential in earnings is a different story. it's not something nailed down. even a figure like that -- joe, we asked her what she's going to do with the $50,000 she's won as a result of her golds. and she said she was going to save it. so, we'll see if that's still the case once she figures out how to put that money to use. >> i'm looking at -- they're extrapolating her social media fan base. i mean, they actually have connected the dots.
90 million is the number they're claiming. i mean, other athletes with her potential and her star power and smile, would that not be out of the question to think -- i mean, a smile isn't the mitt romney smile, the $100 million i.r.a. we talked about yesterday. >> according to her, she's going to 2016 most likely. she wouldn't confirm that but we'll most likely see her in 20167. she'll get another boost there likely, regardless of what that outcome is. she definitely stands to make quite a bit. she has an agent. she is pro. we asked her, given the troubles her family has had over the years, whether that was an important part of her decision-making. she did say having stability -- >> stability. >> -- motivated her to get to this point. >> i liked that word. one word for it. she's a little more stable. andrew? >> she's more stable. >> with her earnings potential she's in a good place. >> look, i'm very happy for her.
i'm back playing the new game today. >> i couldn't figure out how to play that. >> the basketball one? yesterday was the hurdles. do you know about this? >> on google. >> we'll tell you about it in a second. demand for investment grade corporate bonds are strong. we'll talk about it. jim keenan manages $32 million -- you manage $32 billion? that's a lot of money for a young man to be managing. $32 billion for blackrock, also lead portfolio manager of high-yield bond fund. what the heck is going on? >> well, i mean, as the world is deleveraging right now, it's leading to low growth and then you have central bank policy around the world that is really keeping the front end very, very low. many investors globally are looking at low curves, low yields -- >> how long does this last? is this like a -- my question ultimately is, when equities all of a sudden look like they're
doing better, if that happens, you're a little run here may not -- may end quicker than we think. no? >> fundamentals are driving tacticals. you look at today's economic environment and you have global deleveraging. look at central bank response to that, deflationary pressures of the private sector deleveraging are being met with monetary stimulus. have you low yields but very flat growth. when you look at risk premiums in high yield market you're talking about getting 7% or 8% above a 70 basis point five-year treasury. >> what do you like right now? if you could buy anything, what would you buy? >> in high yield, because there's a lot of volatility, uncertainty with fiscal cliff and european instability, i still like high-yield market here. what it's pricing in on an absolute level is you're still talking about 700 basis points or 650 of spread premium. you need to see about 40% of the high yield market to file bankruptcy over the next five
years to lose money on your investment. in relative value, it's still very attractive. that historical relationship has been about 2 1/2 times. >> did you read bill gross's analysis? did you see this? >> yeah, i saw it. >> he made the bull case for bonds all over again. he said the bond market was dead, what, five years ago. >> bill -- it was -- do you remember his call for 5,000 on the dow? >> that was -- >> that was -- >> bill has -- bill is so rich, he doesn't care -- he will opine about anything at any time and live with the consequences. he's got a billion dollars -- >> this guy is managing billions. he doesn't have -- >> bill doesn't care whether he's right or wrong. whatever he's feeling at the time, he'll say. i would take it with a bill
dollar grain of salt, what he says. >> how are you feeling about the economy, now till christmas? i have a view -- >> big limo live, too. huge caviar. >> what's going to happen? >> i think global growth has slowed dramatically. some things where emerging markets were -- central banks were tightening last year to offset, and you started to see that slow in the beginning of the year. european austerity. in the business cycles have been faster during deleveraging. the summer has been very, very slow. you're starting to see economic data pick up from very, very low levels. i think in the short term you'll see risk assets increase. because as economic data is starting to beat expectations it's also being met with more communication from both ecb and fed about potentially more supportive policy. that's leading risk assets to increase here in the short term. >> favorite olympic event so far?
>>'ve got to go with gabby. >> i felt so bad for her last night. did you see what happened when she fell? that was uncomfortable. >> soccer was big. did you watch the beach volleyball, the gold medal round is two american teams, so we get a gold and silver medal. watching misty may-treanor and walsh -- did you watch that? they were down. they just -- unbelievable. they were great. they've lost one set in olympic competition. one set. this was like -- i don't know, third olympics, one set, never lost a match. the set, where they lost the set, the next game they won 21-8 when they lost one. >> thank you for coming in early this morning. >> is that why? you're listening to the music, not really considering the content of what i'm saying, it's that important? it's not. coming up, michele caruso cabrera joins us from london with the european fight you have to see to believe. >> i have voices in my head.
welcome back. michele caruso cabrera joins us live from london, but she managed to sit down with one of the more controversial members -- oh, i thought it was an olympic interview. i didn't understand how andrew would chafe from this. i want to see this because you've teased me. i don't know if everybody else -- >> you'll like it. >> i am, but maybe andrew not so much. >> i'm getting the baby powder out. thanks. >> reporter: all right. is he a youtube sensation because of the absolutely brutal things he is willing to say outloud when he speaks at the european parliament. nigel faraj, leader of uk independence party. he wants to break up the eurozone. >> it's fundamentally undemocratic. it's the european commission that has the sole right to proceed possession legislation, whether it's unemployment regs
or environmental standards or health and safety at work. all these things that really affect industry and business. those guys are unelected, they're appointed. there's nothing the voter can do to hire or fire the government of europe, which is, i think, fundementally objectionable. but there's a bigger concern about europe and about whether the whole thing can work. look, there's no way the people of germany and the people of greece want to have one flag, one anthem, one president. and one nationality. we're too different. >> what do you think of angela merkel? >> i'll tell you something. in brooift, angela merkel looks more miserable than in public. >> that is so mean. >> i know, but it's true. i said to chancellor merkel, i said, wouldn't it be kinder to your taxpayers who have just spent 20 years paying for eastern germany to be re-integrated? wouldn't it be a liberation for greece if they were allowed to leave the euro, have a
devaluation and be competitive? she said, mr. farrage, if greece leaves the euro, others would leave, too, and that would be the end of our european dream. half of me is tempted to say, i'll drink to that but what she's really saying is we don't care how many tens of millions of people we force into misery, starvation, unemployment, we don't care about the human suffering of this, we must preserve european project. >> standard chartered, any thoughts? >> i'm not going to sit here and defend everything the banks have done but i do say. begins to feel like a witch hunt against anybody involved in banking and financial services. i'm pretty unconvinced at the moment that standard chartered behaved badly. >> reporter: libor scandal, should bob diamond have lost his job? >> we're a witch hunt country. whether he makes his bank huge amounts of money or not, there is nobody, it seems in public
life, prepared to defend a real capitalist model. as far as i'm concerned, if i was the boss of a big financial services company, bob diamond is the kind of man i want to impe. >> reporter: if you want to do a search on youtube and see the things he says out loud at european parliament, he invults the head rumpoy over and over again. we'll see, maybe in the next round of elections, guys. >> an interesting comment he said no one -- i don't know if he said in public a lot but no one willing to advocate for capitalism at this point almost because it's politically incorrect. you seem like the old concept of robert barrons and brutal capitalism, survival of the fittest. people are afraid to embrace
what's -- people really are afraid. you know why i think, did you see batman yet, the new one? >> reporter: yes, i did. >> did you see the judge? he was actually in the first batman. he played the scariest guy in the first batman of the trilogy but the judge sitting up there sort of in front of the occupy wall street mob that -- and sending people out on the ice to fall through the ice on the river and die anyone who's made more than 40,000 a year, basically. >> reporter: right. >> that's what people are worried about in the future. >> reporter: absolutely. you know when i saw that scene? you know what it reminded me of? the old black and white footage of communist taking over cuba. i swear, they might have borrowed that actual setting because it looked exactly the same. >> or the french revolution. off with their heads. we have to go. thanks sflu when we return, we'll talk about the street's take on the house of the mouse. disney's quarterly results and what they tell us about the consumer.
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york bankers decision -- >> did you see this? >> explosive attack on standard chari chartered. reportedly $250 billion in alleged money laundering transactions tied to iran. it's said to interrupted ongoing segmentsment talks with federal officials. >> the other story in the new york times about how the government settling with everybody and nobody goes to jail -- >> andrew, i did read about -- >> a separate article? >> pfizer paid $62.2 million to settle investigation about bribery overseas. once again i'm wondering -- i didn't read details -- where it was, what it involved. again, the morally ambiguous idea, whether we need -- whether we need to change the u.s. fair trade -- you know, the act
itself or whether shareholders just continue to -- you know, i don't know what they gain from that, but you can just do the math on the $60 million on whether it was the benefits outweighed the fine you have to pay. in walmart's case, i would say that a machiavalian, they have a huge presence in mexico, they built that quickly. if you had to do it over again, would you change it this time for sure? you would, i know. but i don't know if the average shareholder would want you to. >> those with a moral come pass should. >> but it's a -- it's a moral -- >> it's a moral -- by the way, it's not -- >> didn't ben franklin close whether it was good for mexico or not. do the benefits for people getting jobs down there, people getting low cost goods. you know, maybe -- maybe eventually mexico becomes less corrupt because of this.
you could make that argument but you could also make the other argument -- >> we need to -- >> we need to be the leader in the world -- >> this is why we can talk about it. >> if we don't, where do we go? >> have we broibed you to come in here -- has disney bribed you to say positive things. >> i'm here to talk about the happiest place in earth. get everybody's minds off europe. >> your mickey mouse ears? >> you mentioned disney might fall off a little. tony wible -- >> yeah, just like bible. >> wow, just like bible. the company for janey montgomery. you know, on face value everything looked solid. why is this stock weaker today? >> expectations are high. >> the stock made a huge move. >> when you run 30% year to date, expectations are high. i think there's two things to harp on in the number. first is park metrics,
attendance, there was deceleration in growth on key metrics and that around espn means there could be moderation -- >> what does that mean when i saw espn is not invincible? what in the report would give you that notion? >> two things. one i would throw out the idea of a timing issue. some of the analysts probably forgot to think about. that ultimately caused -- >> what do you mean? >> affiliate fee. every month they collect fees for their programming. with comcast they weren't allowed to recognize those fees until after a certain number of games aired. thap dynamic disappeared on the most recent renewal of that contract. it shouldn't be that much of a surprise but i think it was one of the contributors. >> do you think that either the nbc sports network or this thing fox is trying to do, do you think they would look at what you're trying to do and say,
wow, we have a better opportunity than we thought before? >> i think the olympics are the bigger issue. the olympics tell you that people like live sports. it's commanding a huge amount of ad dollars. now looking to be profitable for them. and espn is still that juggernaut in most -- for these other emerging networks, they see it as an opportunity. you have to get the sports rights. that's another issue. not only do you have to wait to get into that window but it's still very, very costly to buy in here. i think espn is in a pretty good spot. ratings are holding up. i worry about internet eroding content which disney doesn't face with espn. >> is the film business something that -- i mean, there are times when a conglomerate looks at the film business and says, i can't figure out how to plan for this. it's just hits versus bombs, and i can lose so much money, and quarterly numbers get so skewed.
they're stick with films. they're never going to get out of that. >> they got a little different strategy than most because they have all these other arms for distributing their ip. film business for disney as a launching pad to launch a brand. it's going to demon ties "cars," right? >> redheads, i like that. >> it's now warranted a whole area of the theme park expansion in california. you know, frankly, when you think about disney, too, they have this old library so they re-release "nemo" and re-releasing "monsters". >> how much do you worry long term about these type of media companies when you think about what's happened to music, when you think about what's happened to newspapers and you think about the transition from analog to digital and effectively going from analog dollars, as everyone likes to say, to digital pennies, digital dimes and what
that means to the economics of all of this. putting sports aside, which may have a moat around it. >> i am concerned. you think content is king but distribution is gaining more power and it's partly driven by iptv and this move to digital where it is can balancizing ratings. there was a piece in "the journal" with signs of cord cutting starting to manifest. you know, i do think have you to be collective in management teams you back as well as the assets they -- >> it's a plug for comcast, by the way. >> well, no, he already said it's the only company you think is better positioned. >> well hedged with the broad band business. >> okay. i have one more thing. what can you tell me about "toy story 4," anything? >> you know, other than it's going to sell more merchandise -- >> it's in the works. i mean, "toy story 2" i was
disappointed. "toy story 3" was phenomenal but they brought back the original guys. who was on the production side -- there were important -- was it stanton or -- one of the key executives at pixar has to be involved with this. >> i think marvel is the bigger emphasis than pixar. >> but for me. i mean, is "toy story 4" going to be a lousy -- >> as long as it makes money they'll continue -- >> no. do you have kids? >> i do. >> have you watched "toy story 3" a million times? >> i've watched "cars" many more times. >> i don't like "cars." i have discounted anything you've said. "cars 2" was worse than one. >> it sold a boat load more money. >> everything is about money with you. >> what do kids like more? >> "cars". >> no, no, no! >> when you think about the theme parks as a proxy, you don't see as much emphasis today on "toy story" as "cars".
>> woody and buzz. what about you? >> we're still in elmo -- >> that's right. >> we're not even at nemo, still elmo. the party continues. it's 5:00 somewhere. the story of the beer production, commodity costs and later this morning, a special "squawk" moment, county u.s. market get its groove back? confidence is the word of the day. we'll talk local and state financing with meredith whitney. we'll have a bold call now starting to seem right all of a sudden. you're not -- you're not there? >> it's not right. >> it's more right. >> how about direction. >> we'll talk stocks with pimco's neel kashkari and housing behind every u.s. mortgage in the country, the new ceo of fannie mae. stay tuned.
welcome back to "squawk box" this morning. you're taking a -- that's a nice picture of some beer at this early hour. making headlines this morning, beer production hitting a high. a study releasing today showing 2011 was the 27th consecutive year that beer production marked an increase. yoe helping that along a little bit. research attributes the rise to robust demand from mr. kernen, in asia, though. you haven't been there for a while. and developing countries. you were in europe, that doesn't count. china is the world's largest
beer producer. the u.s. saw a slight decrease. have you slowed down? >> next time we are to play a country, i'm pretty good at drinking beer would have been much better for this sugegment. there's a country song -- >> a country song? >> yeah. you know what i see right there? >> trying to help demand. >> i see i was already losing my hair in these two spots six or seven years ago. now maybe it's not dropping out quickly. that makes me feel better. greco runs this to make me mad but -- it's right here and here. >> i think it's looking better. i think it's grown in. >> no. it's a little comb-over, which i never thought i would have. joining us from the futures pit, from a man that can't even do that, ira harris. you gave up on the comb-over how long ago, ira, 10, 15 years ago? >> i have a deal with somebody, if he ever sees me with a comb-over, they have a gun -- >> just kill you. >> just kill me.
>> driving a mini van or -- how about a minnie van with a comb-over is even worse. ira, we're both 1400 on the s&p. i don't remember you being that sanguin about everything. do you feel we're in for more gains? how are you? what do you think? >> joe, i was the first one with the 210 curve in spain and when that started to move back, i said, it's tough to be short this market because we're -- we are in the slow interest rate market. now you see how people rotate. they were parking their money with the telecomes, and, of course, the drug companies. everything with high dividends. you're starting to get roll out of that we see on regular days. this market, in this kind of environment, as long as there's no major blowup in europe, it will probably ready to on and we can put to bed the sell and go to bed crowd because we're back to where we were april 30th.
it's kind of been a push. >> we have to go, yra. what did you look at, the two-year/ten-year spread in spain? >> yeah, and that's when draghi got aggressive. when that came down, november 25th of '11, they were starting to threaten that level when draghi started talking on july 25th. that reversed that. we've gone from 80 basis point differential to over 320 since draghi started his aggressiveness. and that turned this market around. >> yra, thanks for your time. we'll see you. >> pleasure, joe. coming up, when we come back, the bonds, they are achanging. a privately held company in tennessee is preparing a $300 million bond, backed by the cut the firm receives as a middle man between music companies and song writers and outlets that broadcast their music among the music. it has the rights to bob dylan, neil diamond and rush. up next, though, we'll take a look at the life of dylan and ask what lessons we can learn when we return.
tomorrow on "squawk box" -- confidence in the banking sector. carlisle's oliver sarkozy will join us on the health of the financials. we'll ask him about sandy wild's call to break up big banks. don't miss "squawk box." okay, here's the plan. you have a plan? first we're gonna check our bags for free, thanks to our explorer card. then, the united club. my mother was so wrong about you. next, we get priority boarding on our flight i booked with miles. all because of the card. and me. okay, what's the plan? plan? mm-hmm. we're on vacation. this is no plan. really? [ male announcer ] the united mileageplus explorer card. the mileage card with special perks on united. get it and you're in.
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ttd#: 1-800-345-2550 you can't create a retirement plan based on ttd#: 1-800-345-2550 a predetermined script. ttd#: 1-800-345-2550 at charles schwab, we actually take the time to listen - ttd#: 1-800-345-2550 to understand you and your goals... ttd#: 1-800-345-2550 ...so together we can find real-life answers for your ttd#: 1-800-345-2550 real-life retirement. ttd#: 1-800-345-2550 talk to chuck ttd#: 1-800-345-2550 and let's write a script based on your life story. ttd#: 1-800-345-2550 what are the business lessons people can learn from bob dylan. john, thank you for coming in, waking up early. >> sure. >> we've been talking about bob dylan during the break and
talking about it all morning ourselves. >> this is a guy had existed for generations -- >> prebeatles. >> a guy that was commercial, he seemed it do it and never really upset his sort of core fan base who would be anti-commercial. how did he do that? >> he's an artist. he always tries to innovate, tries to please himself, not the crowd. it's a lesson for business folks, please yourself, make yourself happy, trust your instincts and the crowd will follow you. >> not to say he flip flopped but he was doing lots of different things, he went to electric and they n he was back. >> he always tries to be ahead of of the crowd. whether it's folk, country.
>> but then he's doing victoria secret commercials. >> if you're going to pick a commercial -- >> he found a young are crowd, an audience of women, people who would not necessarily follow bob dylan on the radio. >> and then you finally pick one to do it makes it even -- it's still part of the, you know, it's part of the mystique. >> people are talking about him. he accomplished his goal. people are talking about him in a new vein. >> who effectively i think -- i wouldn't say manufactured himself but he knew what he wanted to do when he was very young. the entire time he's known how to do it and yet not become too bob. >> mr. longevity. 50 years he's been in our lives. >> but can you conjure up a mystique that you are mysterious? >> well, you are, joe.
you're doing it. bring it out. >> this is steve jobs' guy, right? business people even looked at him. >> when you think about him in that context, i think about neil diamond, he's iconic. >> not the same. >> he hasn't progressed, he hasn't stayed cool the whole time. >> dylan always tries to put his own personal stamp on his own movies. he's not following the crowd, the crowd follows him. >> the stones were doing that, mick jagger -- >> nor a time, for a time. >> even when i saw bob dylan, i saw him at lincoln center, he was kind of disdainful of the audience. said nothing.
>> that's the mystique. that's the mystique. that worked for him. >> why did you write this book? >> i wanted to appreciate dylan as beyond music. he can be somebody who teaches life lessons. he's a self-help guru. 50 years of success teaches us a lot about longevity and success. >> did you get to meet him in all this? >> i did not meet him. >> what's the process like -- >> you maight be able to now tht you're on "squawk box." >> to get close to him, cover journalists and i've known dylan's work for a long time and get a sense of what makes him tick. it's a very fascinating subject. >> big option trader, dylan. >> no, i don't know that. a big option trader who watches everything morning. >> you just have the investor, though. >> is it he?
>> real estate all over the world. >> was he an internet guy early? i don't think he was. >> he tried to keep hoffline. >> favorite song? >> tambourine man. >> people know the lyrics. you won't believe how passionate people are about this man. they know everything about this man. it's kind of eerie in some cases. >> hooves born -- he became a born again for a while? >> he was jewish originally, then he became christian for a while, and then he said he was an atheist but his kids got bar
mitzvahed. >> you're just conflicted with where he is. >> dylan is true to himself. dylan is his own religion you could say. >> john, thank you for coming in. congratulations on the new book. out in book stores today. and on kindle. "forget about today," that's the book. >> coming up, we'll find out what the race means from commodities to jobs. one u.s. company bucking the trend, fighting off higher food prices and keeping consumers coming. >> and there's beer? >> right over there. and shutting down entrepreneurship at its best and some big sandwiches. you do what you do...
keeping an eye on china's money machine. we're going to take a closer look at the country's economic future and what's at stake for your investments. and the hot business of cold cuts. the sandwich maker who is not afraid of new challenges for his business. the ceo of jersey mike's is here to talk jobs and expansion. hold the mayo or at least make it low fat as the second hour of "squawk box" starts right now. >> good morning. welcome to "squawk box" here on
cnbc. i'm andrew ross sorkin along with joe kernen. becky's on vacation. >> i don't know the name of that band. >> japan roid. >> you're like so much coomer than you look when it comes to music. >> i'm what? cooler than i look? >> when if comes to music. if i saw you on the street, i would not think that you knew all these -- go ahead and read. you've hurt me. so i'm old is that what you're saying? >> just read the futures, sorkin. >> i love you. i just want you to know. >> i've got a walkman on my walker. >> take a look at the futures this morning. we should get a squawker moment as we're doing this. the dow looks like it would open down about 27 points, the s&p would be off, as would the
nasdaq. on the headlines this morning, a dispute between new york state and federal regulators over money laundering. officials are upset with the state's decision to pursue those accusations. and a move between the bank and treasury to settle those claims. and the knight had regained market share this week following the software clich that resulted in that $440 loss. and finally bloomin brands is below expected range. it is the parent of outback
steakhouse, bow and fish grill and other things. i love the onion and -- >> that's why it's called that. i didn't know that but they named that whole onion after that greasy -- >> that onion that opens up like that. >> they're great. you put ketchup on it. but that is deadly. that's like a -- >> a heart attack. does it come with angioplasty on the side? >> yeah. >> avoiding all cliff issues for the u.s. and across the pond. "author of winner take all," she will be our guest house for the next hour. dambisa space -- dambisa moyo is
with us this morning. i get scared thinking about china and the burgeoning population. what we have seen and their savvy move of buying up a lot of resources. i understand malthusan fears. >> we'll, we shouldn't be afraid. >> i'm afraid. >> we should try and and you. we haven't taken the time to focus what the problems are around the rising issues, contrasting supply issues with supply constraints, that
discussion is not as mainstream as it ought to be whereas the chinese political class has done that. i think that we are -- the rest of the world is behind the curve. >> and you make the case and one thing that people do give you is that you do a lot of research to make this case but that it eventually will be in a period of permanently high commodity prices and i would imagine some shortages. what year are you forecasting that? >> well, it happening already, isn't it? last week india with the electricity shortage was a good reminder of some of the constraints of energy and delivery of not just power is
something the government has written about. if you look at food shortages, there are at least 20 conflicts over the last decade which have been raging that have their origins in commodities. >> you have addressed people that mao said this is it the 18th century and then there was the bet that was made in the 70s about nickel and zinc and everything is much cheaper than it was even back then and we haven't deplight plooeted it. >> we have got a bailout that way, absolutely, yes. >> the other thing that i bring up is i think back in the late 1,800s people said we don't need a patent office because everything's already been invented and then you think of moore's law with economy conductor. it seems like now we're doing
nano technology where we've gotten around -- are you sure innovation -- maybe we'll go out 100 years. there's club of rome, there's lots of -- people talked about sort of peak theory and also even in economics, it's something that's been very much a part of discourse in the past. >> you think it will be different this time. >> i do think we will get a bailout from innovation. i think it's not as fast as we would like it to be. >> could the world's population finally peak and actually decline? >> that's when what forecasters are forecasting. >> when? >> i think it will peak at 10 billion. >> can we peak at 10 billion? >> not at the levels we have in the west.
the united states consumes 20% of energy consumption, 85 million barrels of oil a day. >> how about coal fusion would be nice. >> i'm much more of an optimist in these things. there are certain resources where those con trants might be -- constraints might be binding. we don't talk enough about desalinizati desalinization. >> there's a lot of oil under the ground in china. the problem is they can't frack it because of water. >> what about brazil. they have this field of oil that's under salt and it going to cost a fortune to break
through it. >> don't you think there will be some innovation to fix it. sn. >> i think the innovations are not come online as fast as we would like them to be. >> should we talk about europe? >> our favorite topic. we have two hours with you -- one hour, i apologize. >> only one hour. >> we'd love her back for more. but your sense of what's going to happen -- you don't even have to go far out. just give me two or three months out. >> the first this evening i would say is it's very hard to come up with something clever that hasn't been said already. it all the obvious stuff, big uncertainty, there is tlit plit call uncertainty to exist. there's way too much focus on the debt issue, which is very important, but not enough discussion around the denominator to gdp, which is the
gdp story. almost no conversation about what's happening there. i wish there were more going on there. what do i think is going to happen in the next few months? >> i would say some of the comments coming out of draghi last week, which i think perhaps were not really focused upon were i would say a bit more positive in the sense that you might get a bit more action from the ecb. >> i was on the other side of that so we can debate that in a little bit. thank you for being here. we'll continue this conversation. if you have questions, comments, you can shoot us an e-mail or follow us on twitter. investors will be watching out for data from china this week for a possible hard landing. you can call them anytime you feel like saving money. it don't matter, day or night. use your computer, your smartphone, your tablet, whatever.
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. checking the futures right now. a little bit of a pullback after some pretty good actions, pretty good sessions we've had in recent days, down about 20 points and so but it's early, we'll trade all the way till 4:00. down less than 0.2, andrew. >> the chinese economy is close to if not at the bottom. it reflects a different story of
economic conditions. john rutledge is a strategist for chief investment firm saf -- is that how you say it? >> it's a word that means an arabian stallion. >> i remember seeing the movie "the black stallion" as a child. that's about as far as it goes. are we a at a bottom? >> i think rumors of china's death are not correct.
they're going along. >> play it out two, three, four years from now. were we going to stay at this type of pace. is it going to get better? is it going to get worse? how should we think about that? >> i think china grows slower and slower over time until it gets to be an adult high consuming country like the western countries but the fact that they're starting from such a low level means in a takes quite a long time. they do have some ways of smoothing it out that we don't have but they also have policies that's a pretty blunt instrument. they can make mistakes as well. i wouldn't rule out mistakes. the big drop earlier this year that everyone was worrying about was due to a drop in infrastructure spending from the end of the stimulus program and residential real estate and those drops have now bottomed out. real estate is firming a little,
state-ond companies, spending on infrastructure. i don't think you're going to get a big drop in growth. commodities are going to be soft but china and growth, that's not going to be it. >> do you agree with that? >> i do, perhaps except on the commodity point. i think the general story is the skism between what the markets are saying, a lot of bearish sentiment. it might be because of the political uncertainty. >> do you believe the numbers? >> i do to some extent. in the sense at that they may not be explicitly accurate but i think the general trend is probably right. i do agree we'll probably see -- as was expressed a moment ago, i think we'll see slower numbers
over the decade but i think it got a good run. >> talk about the commodity issue. >> the commodity, it the enput. if you look at not just the convergent stories but the amount and intensity of use of key commodities, things like copper in particular, coal, there's still very, very significant demand coming out of china. by the intensity, the human gdp is still rising. so i don't see how they continue on an 8% plus, which is what we think without having these significant draw on commodities. >> john, to me that makes a lot of sense. what's the problem? >> near term there's an issue where we have very sharp live dropping copper prices, coal prices and it because europe's not buying the stuff, china's changing its mix somewhat, a
little more services, a little less heavy manufacturing than there was a while ago and we've actually just had a recent increase in may have. there's coal supply coming in that's pushing the price down. what's happening in china is one and second, what do investors think is happening in china. i think most of the swing in the prices, in the markets, are caused bin vestor ignorance about china rather than actual fundamental changes in china. even if you do know what's happening in china, how do you make a bet on it? i wouldn't want one of our viewers to go out and buy tock listed in the chinese market. i'd rather buy from australia, sing bore where there's an
english speaking judge. >> there was an article about manufacturing that started about foxcon and the cost of workers and things like that. i wonder long term as input costs rise, how long their advantage lasts and whether you see manufacturing ultimately coming back here or to other places and what that ultimately does to this competitive dynamic. >> that's the big question about where things move. is there going to be this big rebalancing, not just because of labor costs but in terms of energy costs. i think if you look at migration within china to the cities, which is a big part of their component and strategy of the government. if you look at the waejs, there are concerns we start seeing waej prices rises. >> is that a good thing or a bad thing? >> it depends, i suppose. i think for the perspective of a
global -- the u.s. it might be good news because you've had a des makes of the manufacturing sector, if you can really get the energy changs that you hope to, it could be very good news for the u.s. >> it could cost more, though. >> it could cost more, absolutely. but if the cost structure looks much better in the u.s., who knows. you might be getting it here in the u.s. >> john, can i ask you a quick question just before you go? >> yeah. >> i just get the idea and it an ideological one, that china is getting away with central planning and sort of deciding where to invest and sooner or later the laws of adam smith and economics comes home to roost and you never think that's going to happen. aren't there empty rooms and infrastructure projects that should have never been done? the population is growing so
quickly, eventually the people will fill up in these buildings and stadiums in. >> a great amount of the infrastructure has been productivity oriented infrastructure, in order, transportation infrastructure and so forth. but of course what you say it true. the way the government there get a lot of money in the economy is they cram it through the state owned companies. and it put downward prsh on steel prices around the world. >> it works. let do infrastructure here. we might as well do it. >> but to your point, in china i believe china is in many ways a more market driven, market oriented economy than the u.s. >> i've heard that but i don't know how you make that chase -- >> you go there in a -- the competition in china is much more brutal than it is in the
u.s. or -- >> the policy makers, they're focusing on the transphase to the extent there is viability -- >> i heard from both of you, we'd screw it up because we're not as good as china to do that. >> the cynical since is get china to do it. >> the bridge, they built that bridge -- >> and everybody was unhappy about that, too. coming up, we're going to be introducing you to zedunk. do you know what that is? >> no idea. you'll find out what it is after the break. plus some headlines, how jersey
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now the answer to today's aflac trivia question. in what year did ray kroc hope his first mcdonald's restaurant in des plaines, illinois? 1955. >> aflac! >> here's what's happening in business today. i'm sorry. >> now what? >> hurricane ernesto made landfall over yucatan's peninsula overnight. >> did you have another mohita today, sorkin? ernesto is moving across a sparsely populated area. the storm is expected to weaken
further. >> i'm glad it's not hurting anyone while you're laughing over a hurricane. >> that's not fair. >> chevron -- and finally we talked about zzedonk. this is a cross bred zebra donkey mix. it will grow to about the size of a donkey. if you have any questions including my -- >> you. >> don't say that. >> we have to run. that's about it.
up next, author, international economist and "squawk box" guest host dambisa moyo. ♪ technology that connects us to everything the world has to offer and vice versa. ♪ technology that makes lightweight stronger, safer, and faster than ever before. ♪ technology that makes electric electrifying and efficiency exhilarating. ♪ technology that doesn't just drive us, but drives progress. ♪ and driving progress is what we do every day. ♪ ♪
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this morning, head lan list noting it's up 30% on the year it's trading near an all-time high. you railroad back in the 80s, maybe you don't. but when eisen took over after they lost their way, it went up, it split, it went up and split. >> but it's doing well again. mortgage applications fell 1.8% last week. applications for new home purchases and refinancings were lower. 30-year rates averaged 3.76% and that was virtually unchanged from the prior week and liberty media is planning to spin off
its stars premium network, which has channels under the starz -- it has a z on the end. dambisa is an "s," though and not a "z," right? >> i have my tutor coming after the show. >> greg lefebvre says -- he was a lotus guy, wasn't he? will capitalize the structure and provide significant liquidity. >> let's turn to our guest host this morning dambisa moyo, cnbc contributor and author of "winner take all." let's talk about the news. standard charter. and what seems like a bit of a
scandal. joe sometimes says when in rome, do as the romans do. >> i don't really say that and i don't say the ends justify the means. i'm just saying there are some morally ambiguous cases that be can made. that's all i'm saying. i'm not promoting bribery in other countries. >> your thoughts? >> isn't it too early to say? i'm not too sure we have any clarity on what the situation is. so i think i will withhold judgment until i know what's going on? >> i like that. i like that. should we talk about france? >> we can talk about france. that's a little less politics. >> france and politics in the same sense. >> and there's a piece in the "new york times" about a law firm in paris and they're fielding calls not on from companies that are sing should we move but individual who is
make 200,000 euros, young professionals, who are saying is it time for me to leave the country at this point. i don't know you go to 75% unless you're making some social commentary about making money because it's going to be self-defeating in the end, isn't it? >> two things that jump in my mind. i've had the good fortune to travel to over 50 countries around the world. it's remarkable how many highly trained, super smart young people from france are now living outside their own country and it's largely because they feel like they're not able to contribute to their society as effectively as they'd like to but also they fear it's becoming less of an environment where they feel that they can prosper. but the more general question about this type of a policy move goes back to something i said already which is growth. where are we going to get the
growth from? of course i think there has to be a balancing exact between government spending and also tax increases. this is discussion that's going on not just in france but the united states and elsewhere. where's the growth story in all of this. you get to these high, very, very high, super high tax rates and what does this mean in terms of labor productivity, labor supply but also capital issues and productivity don't see to be on the agenda at all. >> what's the optimum tax rate? >> i have absolutely no idea. i think it depends -- >> you must have views on how it's supposed to go. >> i think it's what the society wants. you go to scandinavia and people are happy to pay quite an amount of taxes but there are values added in terms of public goods.
they're able to do that balancing act. you can see why in other countries people's appetite for public goods delivery coming from government is not so high and therefore tax is a bigger issue. >> so in the u.s. if we sent you to washington, what do you think the right answer is? >> goodness me. my answer would sort of be couched in what i consider to be an absurd situation that we're living in right now, which is that we have i guess two classes. we have the rentiers and entrepreneurs. it seems bizarre we're living in a world where ten-year yields are 150 basis points. you buy and hold for ten years, you end up with minus 50 real yield -- real return on a ten-year and equity markets are trading side ways. what does this really mean?
this means there's something wrong with our policies. what's wrong with the policies? the policies that people are piling into treasuries in a time when we need to create jobs and figure out way for people to be more rewarded for investing in equity market. we need to encourage people not to be demanding more dividend payments, which is where we are now, people want more dividend payouts. with that back drop, it seems to me bizarre that we have two campaigne campaigners, two campaigns going on where there's very little discussion, to my mind, and i put my hands up, i'm a foreigner, i'm not american so perhaps i'm missing something but we have two people out there campaigning and i don't hear much about what's going to happen in this country. >> but if you want people to be rewarded for taking more risk, that seems to argue against punitive tax increases on capital, right, to some extent? and the other thing i was going
to ask you listening to you, i know people are piling in at treasuries but i see the fed orchestrating this low-interest environment. when the fed doesn't allow the market to go where it wants to go, we sao bubbles crop up. do you think we're in a period, some dislocation because of fed policy that comes home to roost? >> i think that the dislocation is perhaps not what other people might think it is. i think it's more of what very good friend of mine george young calls a fear bubble. in that sense not just the political discourse of, oh, my goodness, just listen to the campaigning on both side, it's very, very negative. but more than that, the policy of keeping rates low still has a cultural impetus, this idea that we're still in crisis mode, which we're not discussing what are we going to do about it. >> and the fed does feel in a way. they look around and see 8.3%
inemployment and it fear. it's like we need to act or we could go back into a double dip or something like that. it is a fear. >> absolutely not. in a moment we'll have the opportunity to speak to someone who is seeing opportunities in the united states but we need to hear more about that. the good news in the united states is there is a consensus on what the problem is. i think that we node noe there have been too many policies that is disincentivised capital being used appropriately, labor markets that continue to be quality and quantity issues. science, mathematic and reading quality has deteriorated, the u.s. productivity comes out. look at europe in terms of
productivity. these are our three ingredients for growth but where's our story. why aren't we raising i am i alarm. at sount point we need o get the growth story back on track. >> i like the growth story. that is the one -- the question is how do you do it? >> any country we talk about growth is the answer to everything. >> it pretty obvious in the sense. i don't think i said anything ground breaking. i just worry our policy makers around the world, not just the united states, are not focused on where the growth is. >> still to come, she's on record of saying a bank breakup isn't a bad idea. meredith whitney joins us at the top of the hour. >> coming up, who knew cold cuts could be such a hot business. from the beach of point pleasant, new jersey, to a nationwide sub making machine,
♪ just eat it, eat it >> you hearing this? >> yes. >> in our american made series, we've been asking you to tweet us your suggestions. today we're featuring one of them. the owner of this company started his career at the age of 14 and bought the company at 17 and now it reaches from coast to coast. joining us now from the original jersey mike's sub shop in point pleasant, new jersey is ceo peter cancrow. i live in jersey. i don't like the bad rap jersey gets. if i'm going to be in jersey, i'm going to call it jersey mike's. i'm not going to apologize to anyone it's called jersey mike's. >> you ask anyone you have a problem with that? i'm from jersey. we have to stand up.
the jersey short is a little different. we have to accentuate that. >> i've senior forecast of one of your competitor, subway. if you can offer people reasonable foodfare that doesn't have 1,400 calories and it's fresh and you have good service, it works. and that's basically it. >> right. right. so 56 years ago we didn't realize that we were offering something very healthy but we were. we've been doing it a long time. everybody is sort of aware of that now and it's here to stay. we've had it since the beginning. >> who came up with the franchise model and -- was that your dad or how did that work? >> the original owner was mike in 1956 in point pleasant, new jersey on the jersey shore. i started working in '71 and became the fourth owner in 1975, took the store owner from a football coach of mine who was a
banker, ron smith. he said i think we can do something and he did. got an early start at 17 in '75 and started franchising in '87 and now have about 560 stores in 31 states. >> wow. that's amazing. >> when we go into economic boom times and economic bust times, what do you see? what did you see three, four years ago and what are we seeing now? >> the worst for was us '91 when the banks were closing in this area. this one was hit hard but we continue to grow and we're starting to grow with 120 new stores this year andy wee expect to have 200 new stores open next year. 560 stores now, we expect to be b at about a thousand units in the next through to four years. soap our growth is really happening right now. >> would you suggest to help small entrepreneurs like you --
well, you're not small now but one time you were, anything you need help with the government get out of the way or tax incentives. what would help you right now? >> the financing is always an issue. it's really starting to listen up as far as we see. so people always have to borrow the money to open a business and at different times throughout the years, that's been very difficult. the money. >> are you going to sell the squawk sub? or is did you make it a one-shot deal? i'm introducing it. >> i saw that. i'm a little disappointed. i thought you should have had the cancro special. but you're going with the turkey. i'd like to keep it on the menu and see how it sells. >> that's one portion there, which is going to be interesting
for us. big portion. >> a whole sub feeds four people. that's what we're supposed to be eat persian gulf. >> wow. look at that. >> peter cancro, good luck. we appreciate it. >> how much are you selling this sub for? it's priceless. >> $4.45. >> it's a bargain, too. >> see you later. thank you. >> thanks. appreciate you having me. >> when we return, the worst dive you may ever see. this is from the olympics. and then at the temperature of the hour, meredith whitney will join us to discuss what banks need to do to restore investor confidence. squawk is back after this with a dive that you just can't believe. [ male announcer ] at scottrade,
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let's go to michelle obama across the bond. i stayed up late and i saw the driver. i just can't believe this. >> 0, 0, 0 across the board. >> unbelievable. >> yeah. he landed on his back. >> what has he said about this? has he explained? >> i have not seen any commentary from him at this point, no. he was 167 points behind the second to last diver as a result of that dive. his legs went apart. look, i'm not an expert but it obviously bad. >> he probably has practiced however they do. but if someone said go up on that diving board and go three times around, i would have the same problem. >> i would have no idea what would enter the water first and i could be much worse than that. >> he must be pretty good.
he's from germany. this isn't one of these tiny countries that have sent a bob sled team even though they're in the caribbean. something obviously went very wrong. >> he was off by a quarter of a turn basically, right? >> you're right. >> weight lifting. you have weight lifting for us? matthew steiner. >> but nobody was hurt! >> landed on his neck. he's apparently fine. 436 pounds landing, oh on his neck. but he walks away just fine. >> another german, what? germans had a tough day. >> can we talk about aly first?
i don't understand what happened. she she gets a score and then she was scored too low? >> the u.s. team said we think you didn't give her a high enough score for difficulty. so the judges went back to the tape and said you're right, we got the difficulty wrong. that meant she was tied for third place. if your difficulty score is higher, that breaks the tie. so the romanian girl who thought she had won third place in the bronze did not. instead the u.s. won the bronze. so that was pretty controversial. >> that was emotional. >> this is an exciting day. you can't miss a minute. >> what do we have today coming up? >> usain bolt is going to run in a heat tonight and u.s. volleyball it is an all-u.s. final. we hope to win silver and gold
because the top two teams are american. >> that's what i'm predicting, we win a gold and silver. >> i might actually walk over there. >> misty may-treanor, i haven't seen the other american team play but treanor and walsh, it's unbelievable. did you watch that yesterday? though guys, they get down and they just bear down and it's amazing. the chinese are really tough. >> there's a lot of skill and strategy. >> and just the athleticism, too. >> and she's married to a doctor, treanor. we don't have much time left. we want to thank our guest host dambisa moyo joining us for the hour. when we come back, i want to ask you what i ask you off camera how you grew up in zambia, middle class there is different than middle class here and then
to harvard and to oxford for your ph.d and you told me you were heartened less aid is going to africa because people want to work, be productive and i'm always talking about earned success versus earned helplessness. >> africa will be the third fastest economy, over 5% after india and china. that is big story because i think there's been far less meddling in a sense. >> we want to talk about that when you come back. >> thanks for having me. >> and meredith whitney will join us next. "squawk box" will be right back.
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and me. okay, what's the plan? plan? mm-hmm. we're on vacation. this is no plan. really? [ male announcer ] the united mileageplus explorer card. the mileage card with special perks on united. get it and you're in. an hour of squawk market masters and newsmakers. our guest host meredith whitney, we'll find out if she sees more fiscal doom and gloom for towns around the nation. >> the changing culture for equities. pimco's head of global equities
neel kashkari is here. plus, a squawk exclusive. ph fannie mae's new ceo will give us the word on housing demand as "squawk box" begins right now. ♪ hour houour house in the middr street ♪ >> welcome back to "squawk box." i'm joe kernen along with andrew ross sorkin. becky quick is off today. u.s. equity futures down about 32 points premarket. that's less than 0.2%. mcdonald's same-store sales are out. you can see that is not
yesterday's trade. it was -- 89 was yesterday's close. 86.70 is what we're seeing from mcdonald's in response to these numbers which just hit. so you would imagine that at least some are below. the july global, same-store sales number was flat. flat for mcdonald's. u.s. comp stores sales down 0.1%. that's disappointing compared to where the company had been. july europe comp stores sales down 0.6% and then asia pacific, middle east and africa comp store sales down 1.5%. and all these metrics are below where the street was, as you can see, as we're showing you there. you can see for asia we're supposed to be up 1.1%, instead it was down 1.5%. this is interesting that mcdonald's -- we bought mcdonald's in every city that we
visited in italy. >> why would do you that when the food is so good? >> because my son will eat nugge nuggets. >> did you see on whose honeymoon recently, big ceo, goes to italy, hangs out as mcdonald's. >> want it zuckerberg? >> mark zuckerberg. >> they're really clean there. i can detect a difference, the nuggets aren't quite the same. the french fries are great in france. >> the blockbuster move, "ave e "avenge "avengers," they're talking about a sequel. >> we've seen a consumer that
they're willing to step up, they're willing to pay for a vool u they see as a high-quality product. when we invest in that, the cruise ship business, the expansion of our theme parks, we see increased business. >> and they signed a deal for an "avenger" sequel. i'm eating this sub. eating and tv don't mix normally. the nyse says it will reinstate the firm's full market making duties as of next week and it dispute between new york state and federal regulators over that stanchart situation and the money laundering charges brought it against it. fed officials are squup supset e
decision to settle those claims. wa could you get if it 250 billion? i'd do a percent and. >> what do you think? $500 million? >> i'd do a percentage. it would sound small but would be a huge number. >> our guest host today predicted a spate of muni bonded faults. joining us is meredith whitney, founder and ceo of meredith whitney adviser group. good morning to you. >> good morning. >> off camera i said you're doing a victory lap and you said "no, i'm not." why not? >> i never did a victory lap when the financials went down, when all the financials have a problem. that doesn't make me happy. it doesn't make me happen that
these tons and particularly cities are under so much duress. >> so we're there? >> so we're there. >> on a relative basis to what you said then, we had a year and a half where some would say the call didn't look so hot because the market went the opposite way on you. >> the market has nothing to do with the the underpinning. the market was reacting to a dearth of supply and a tight cor corollary with -- prices were jacked as much as they could be in terms of rising property tax rates and still towns and citie strained tax receipts and struggling costs.
>> given the bankruptcies we're starting to change, do you imagine this will happen more fastly, swiftly, more slowly? more what? >> i think you've created a number of precedents which people never thought would happen. you haven't seen municipal defaults in 30 yiers but you haven't seen the escalation in state and local spending than ever before now. you can't haven't seen tax receipts pressured for so long. and you haven't seen pension costs rise to the agree agree they have and you haven't seen state and local governments cut to the degree they have. now you reach a point where it an inflexion point. at what cost am i going to honor meyer obligations? and that's a case of san jose or san diego. at what cost am i going to honor a revenue bond? that's the case of jefferson county. at what cost? how much am i going to cut into
basic social services to honor an obligation that i just can't commit for the long term? the precedents are being set now and you're going to see more cities adopt -- >> if i'm your client and i call you and say what am i going to do? >> i never advise my clients on municipal bonds. i advise my clients look where the growth is going to come from. it cannot come from these vortex committees like california, arizona, nevada, areas that powered our economy. texas is a juggernaut. florida's big on its feet. you see incredible growth through what people call silicon prairie. right-to-work states that have clean balance sheet, that are creating jobs and intervesting in education, the states that were most hard hit by real estate have cut back the most in
education. so offer the lower, long-term value for new resin dent and their cost have almost double over the last five years. you can invest in consumer stocks that way, transport that way. state give you their play book a year in advance and they tell you where they're going to cut from their budgets. i've never seen any other industry do that. the banks to give me their internal budgets. you can play this any number of way. what always attracts me is how is the government going to reinvent themselves. >> what do you think of the standard charter? >> i think the stock was a safe haven for so many. it was a rich valuation. deservedly so. eight high-profit bank.
you can't look at the 16% decline in standard charter and say it all because the franchise is eternal live damaged because i don't think that's true. i don't know enough about the details to make a claim either way. the allegations seem severe. >> it sounds like you like the stock, though. >> it's a very expensive stock that came off because of, you know, run on rumor. >> but the reputation -- look, all these banks are under horrible reputational -- >> you can be a good bank and people still can have a problem. >> we're going to get to this conversation but i want to note one thing. when we promoted you we said that you were prepared or think the banks should be broken up. you say that's not true. >> that is not true. the big banks will get a lot
smaller but it because shareholders forced them to be more profitable. >> so bank of america will like luke wh -- look like what? >> a much more streamlined, productive business. government is the last to get there. they'll be the second last to get there. >> breaking up is hard to do. >> i don't think you remember how long it takes to intergreat institutions. >> when you saw him make those statements, what did you think? >> i thought you cooed over him like crazy. >> but what do you think he thought is it. >> i have no idea. >> conspiracy theory or -- >> your guest jimmy dunn said
great things -- >> he said better things off air. >> he had somebody else talking about something and then he just said all he has left is the fall. and you didn't coo over what jimmy said about it unfortunately. >> i was trying to coo over her. >> well, that's okay but -- >> look, there are some people who say you coo. there are a lot of people who would have preferred we should up and shot him with a revolver. >> you really doesn't like profit making entities. you like to break them up. >> if that was the case -- >> you like to break them up. let me talk about mcdonald's. the futures now on the dow, they've been down 30 all morning. they're down about 47 or so because mcdonald's, a dow component, is down more than 2
points after these weaker than expected same store sales. people were looking for gains, looking for up 2.4% in europe, and don thompson is making a comment saying our promotional activity in the u.s. didn't offset the effects of a sluggish economy and the launch of last year ears mango pineapple smoothy. that must have been a loss. a weaker performance in germany and several southern european markets, which is a difficult environment and in the asia pacific it was japan. they had strong results in australia offset by ongoing whackness in be japan and a negative timing for ramadan.
>> coming up, he was involved in reviving the financial sector during the crash. coming up, we'll ask neel kashkari when we come back. >> meredith, stick around. >> still to come, the health of the housing industry. the new ceo of fannie mae will join us for a special cnbc exclusive interview. we'll ask him what it will take to bring home buyers back to the market. first in business world wide.
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of global equities at pimco. neel, it was the first time i was sort of holding your feet to the fire initially because you said it's a very cautious time with a lot of potential pitfalls on the horizon so we want to look globally for situations that appeal to us but not just sort of go in head long. i gave you a hard time about that that day. then we had that big break in the spring. you remember you came back in and i said you were really right to be cautious and i gave you kudos for that. now i'm back to saying 1,400 s&p, neel. if you thought a lot of this was baked into the market you would have been a lot more long than you were. see how that works? whatever happened in the last three months i'm going to throw at you. do you wish you'd been more bullish three months ago? >> first of all, joe, great to see you. you've got a great memory. risk is switching, right? it swings risk on, risk off, risk on.
we're investing in equities for the long term. we want to deliver returns over three to five years. we're not chasing every policy maker's moves. we're buying individual stocks that we like and that we plan to hold for the next three to five years. there's going to be a lot more volatility. risk is going to swing back to risk off and then back to risk on. we're trying to stick to fundamentals and buy stocks that can outperform over the long term. that's what we're buying today. >> do you think we've now moved to what we call the high end of a trading range in the u.s. markets? >> the markets seem to have priced in, assuming the fed going to act with qe3. the fed is in a box right now. if you look at the indicators we look at, long-term inflation e expectatio expectations, volatility, now bernanke's hands appear to be tied and if he doesn't deliver
in jackson hole, at least give a very positive signal, i think you'll see the risk marks then we act and fall back down. i think the fact that qe3 is priced in suggest there is is down side risk from here if the fed doesn't move. >> does bill -- did he run that by you before he said -- you give as global -- as head of equities, did you give him your blessing? i told andrew he's got a billion dollars. he says whatever the hell he wants when he wants to. >> bill always calls it like he sees it. he said that equity returns and fixed income returns are going to be lower in the future than in the past. and to us that means we need to work harder is to go find individual stocks that -- >> which past, though? in the distant past people thousand they could do 10%, 15% with equity. then i've seen people say the lon long-term historical average is 6%, 7%.
is he saying eyou're not going o be able to get 6% to 7%? >> corporate taxes have gone down and down and down, corporate profits as a share of gdp are going up and up and up. some of those tail winds are going to stop blowing. one-time benefits that lifted all asset prices are probably not going to be there. if we thought we'd have a raging bull market from here, we should all close our eyes and buy a cheap index fund and go home. >> he made the point bonds are going to continue to outperform stocks. >> he said the opposite. he said return from stocks are coming down but stocks will outperform bonds. he said the opposite. >> we can argue about this for a while. there a lot of people who talk about we've seen a regression to the mean in the last 12 years in
the stock market, while it's not a rip roaring buy, the yields are pretty good and reasonable. the sentiment is so negative. nobody believes in buy and hold, maybe it not a time to do a five-year buy-in to the market. let's talk about which individual equities you do actually like and you think the risk-reward is force. >> let talk kia motors, the large korean automobile manufacturer. they started out as an entry auto manufacturer, they've been going up the auto curve, increasing fuel efficiency. kia sales in europe increased 25% at a time of the eurozone crisis. they're taking market share away from other global leaders and trading aroundeven or eight times earnings on a forward basis. we think kia is an emerging market leader doing well and competing with the best companies around the world.
>> go on. >> if you shift here at home, think about baxter health care. big sales in the developed world, 22% of its sales come from ef merging market. baxter has a great long-term history of increasing dividends overtime. they announced a 34% increase in dividends and it's only trading at 13 times earnings. very attractive difficult depends, great management team at an attractive price and a small company, viewpoint financial, a small cap texas thrift. eight cheap play on the growing texas economy. it trading at a significant discount to its texas piers. and while we not buying many of the big global banks today, we're finding selective and local -- >> when did you buy viewpoint? >> we've owned it for quite a while. i can't remember a year ago or
nine months. >> it a small cap but it up a lot. all right, neel. my friend macauley, he looks like he's up on a mountaintop in a meditating position. >> he may well be. >> he's loaded, too. >> coming up, we've got much more from our guest host meredith whitney. the cooing is going to stop, te gloves come off. >> organization, no. >> yes. >> and the new fannie mae ceo will join us at 8:30 a.m.
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welcome back to squawk. we're just seconds away from productivity data for the second quarter. rick, the numbers . >> non-farm productivity rose 1.6 and the accompanying shadow to that unit labor cost rose 1.7. let's go in the weed as bit. the 1.6 productivity is better than expectations and follows what was a negative minus 0.9 which was upgraded to on minus 0.5. up 1.7 is indeed triple estimates where productivity was just a few tenths stronger. if we look at the last look on unit labor costs they were originally at 1.6, then zoomed up five fold to 5.6 and from that up 1.7.
the market response not nearly as passionate as i am about these revisions because we're still a little above 1.6, bund yields have led the way, even on socht data they're moving higher and today we see a very large opposite side of the street. yesterday we had a fed person talking about more accommodation. today we have the anti-view of that in the form of fed's fisher saying we have enough, no more needed from you. >> let get to steve liesman crunching numbers over there. >> the upward revision expected to have been because of compensation and one-time bonuses, not the sort of wage level that creates inflation. it's 5.6%. what's happened is we've come back to normal after a pretty decent decline in the first quarter. and i want to show you a chart,
guys, that looks at what happens to employment and productivity. and what's been happening is especially after recessions they work against each other. the question is whether or not we're in a time period with productivity having come down where we're more prime for job growth just because businesses have effectively -- there's the chart. take a look at that, andrew. what do you have see? a nice inverse relationship. it's not perfect. job growth on a year-over-year basis is higher, productivity lower, there's the spike after recession with the decline in job growth. the question is whether we've reached a point whether companies have max migimized profitability and do they have to hire people. and is labor about to get more of the share of any productivity growth than capital has? it was the reverse for a while. the question is whether or not it goes back to a more normal split where labor can count on better incomes because of the
productivity that they along with capital generate. those are a couple of the broader questions that are out there right now. what we've been through is a serious cyclical period of time right now, the question being whether or not you -- this stuff happens over quarters. it more works itself out over years. >> thank you, steve. thank you, rick. we're going to get back to meredith. >> and our guest host is a squawk market master, meredith whitney. she is found aer and ceo of the whitney group. i have to stay more up with the news, meredith. the main force behind the home price gains appears to be a shortage of homes for sale. the number of properties on the market is down sharply from a year ago, meanwhile prices are up. and then they quote an analyst. there's not enough supply given the higher levels of demand. when the hell did this happen? >> i think you're bouncing on the bottom so people are going to get excited. they're talking about percentage moves. the percentage moves are going
to be bigger. >> that's significant, isn't it? are things different from a year ago? i thought there was still a huge overhang of available housing on the market that we have to work through. have we worked through some of it? >> some of it. the number of foreclosures are down, delinquencies are down. the core problem is access to credit. homeownership continues to decline because more people can't qualify for a mortgage. 50% of the mortgage originations were refis and the other big slug was from cash buyers. how many cash buyers, you fancy rich guy probably know a lot of cash buyers. >> me and all my friends. jets. >> the average american can't meet a mortgage. it's much more difficult to come by. >> why is it that you're still
having trouble qualifying? i want you to tell me. is it regulations that now are forcing lenders to not -- to be overly cautious about who can -- who deserves credit and who doesn't? or is it just a hangover from the experience of the past four years? i mean, is it regulators being too tough on these guys? we had jim rory yesterday. he said they're readily available to lend money to people. >> sure, but the people you want to borrow are not necessarily the people you want to lend to and the people that don't want to borrow you're readily available to lend. >> should we be lending to the people who want to borrow? >> i think you lend to the people who want to borrow at certain rate and regulators are against that. you have higher lending standards, which is return to normal and that's a good thing and you see reregionalization of
lending. and you just see a shifting. a lot of what fueled the mortgage market were companies that just don't exist anymore, that simply went out of business and were jamming product through this process not concerned about what kind of documentation people had. >> let's stop with the coo. there's too much cooing. >> you have your own little ax to grind. i have another question to ask about the consumer. has the consumer gotten healthier? that was your big thing, credit card debt and everything else. the consumer was not going to be that active because he didn't have the capacity. has it improved in the past year? >> no. unemployment is still structurally high. rich people are fine. the middle class is where the pain is. poverty continues to increase. a lot of that is tied to employment and it the middle
part of the economy that's getting squeezed because you have lower access to credit, you've got lower mobility and you often times have debt that what existed at one point and now you just got to delever in the process and that's painful. >> you know it's called champing at the bit. you are champing. >> i'm told we have to go to a break. i'm not finished with her. >> i know that but who are you responding to? so you can coo to sandy but you can't coo to her? what's different sm. >> sandy was wrong and i would make an argument that she's wrong, too. we'll tack about both of those. >> okay, you go ahead. >> coming up, the new ceo of fannie mae on the state of housing and the plan to get mortgage holders out of the red. we're going to get reactions to the ceo's comments from our own guest meredith whitney, who may be right or wrong.
we've been talking housing all morning. let's go now to diana with an exclusive interview. >> fannie mae just reported quarter live results, net income $5.1 billion, the second straight quarter fannie mae has been in the black. last quarter was the first time since 2008. the bleeding has stopped for now. they did pay $2 opinion 9 billion back to the treasury. also in q2, fannie mae got a new ceo, timothy mayopoulos. you were at the company since 2009 as chief legal counsel. we are not seeing the bleeding anymore, at least for two straight quarters. what is the current health of fannie mae? >> we're very pleased with the second quarter results and pleased with the first half results.
it's too early to declare a national housing recovery. i think a big part of what's driving our results has been home price improvement. we expect that prices have stabilized but they could go up a little, they could go down a little over the coming months. >> let's talk about that for a minute. there has been a lot of bullish initial among the markets and yet the second half of the year we could see a slowdown. we're already seeing some signs of it. do you expect to see a slowdown in housing or do you think we've reached a real bottom? if you do see a slowdown, will that affect your results more and will you need more from the treasury in the second half of this year? >> our view is clearly the economy is a huge driver of home prices. it really about consumer confidence and employment numbers. but, you know, we think that prices have stabilized but we think they might bounce around here a little bit at the bottom, might go up a little, might go down a little. but we're not expecting to see
huge improvement going forward. you know, we could expect to see that over the long term perhaps, but in the near term we're really not so sure. so it's going to take some more data to figure that out. in terms of what it's going to do to our earnings, we're excited about the new books of business we've been writing since the crisis. we've improved credit standard and our new book of business is profitable. nonetheless, home prices are a big standard for us. it doesn't necessarily man we'll make enough money every quarter to cover the entire dividend to the treasury. over the long term we think fannie mae can have profitability and return value to the taxpayers. over the next three quarters it's going to depend on home prices and other factors. >> because of the huge drop in home prices, we have epidemic negative equity, which causes rising delinquency and keeps
homeowners stuck in place because they can't sell their home enough to pay off their mortgages. i said fannie mae and freddie mac would not participate in the principle reduction program. was that the right call? >> i think this is a topic reasonable people can differ about. eight very complex issue. we're comfortable with where director demarco came out. we believe we have the tools here at fannie mae to help homeowners in terms of doing modifications and refinancings and helping people in distress. i think this is a complex topic but we're comfortable with where we are. >> comfortable with where you are but we talk about a lot of homeowners being stuck in place also because of tight credit. you don't see principle reduction in the future, you don't see the need for it. do you see any need for loose i don't knowing of credit? retailers and home builders say
too tight credit. has the pendulum swung too far? do you see loosening in the future? >> we think we clearly need a market that's different than the wine have. between fanny made, frie mae an mac and fha, i do think left-ha lenders have imposed instructor credit standards. the pendulum did need to swung back. if lenders actually lend to where we are, i think that can satisfy the market. >> but how account private market get back into the overall mortgage market? that is private label securities. right now as you said, you're over 90% of the market and that's not where you want to be. >> no, we need to shrink. >> how do you shrink that market
when private investors are saying we can't compete with fanny, freddy and fha? >> private capital is sitting on the sidelines. i'm afraid we're not going to see them come back into the market until we have sustained home price improvement over an extended period of time. that's a reality of the way private capital is looking at the market. it why what fanny and freddy and fha is doing to sustain funding in the market but i don't think we're going to see private capital come rushing back into the market until we have stand home price improvement. >> post-election we'll start to hear about fanny and freddy restructuring your future. how would you like to see fannie mae restructured? >> look, i think this is an issue for policy makers. this isn't a topic we're going to decide. had is something for the administration, whoever is the president and it a topic for congress to sort out. what we do think we need and what we want to help build is a better functioning housing finance system going forward. so what does that look like?
well, it a system that has sensible credit standard and a system that has greater transparency and lower risk for everybody, for borrowers, for lenders and investors. >> and a government back stop? >> that's a critical public policy issue people need to wrestle with. again, not going fob our decision. it will be up to others. >> new ceo, timothy mayopoulos, thanks so much for joining us. >> thanks, diana. and thanks to timothy mayopoulos. let get some reaction now from our guest host meredith whitney. i just told you housing prices had soared. i guess maybe i can't -- if it's in the paper, then it true? >> that's right. >> in i put it in the paper, it true. if i said it on 60 minutes, it might be different. >> ask meredith -- >> you hold such a grudge.
>> well, no, let me ask it in a different way. when you watched the "60 minutes" clip and up saw the impact that it had, was there any moment where you said i wish i said it differently, i wish i clarified, it i wish i -- only because so many people obviously got out of the market and if they got -- based on what you said and because of it probably didn't do as well -- arguably the world is about timing. >> to do so well they would have had to get in at the bottom and ride to the top, you know. look, i don't know. >> but i'm curious like a year and a half later, maybe two years later, how do you feel about it in. >> when i come here, i don't ask you for the questions in advance. no one gets themselves on "60 minutes." they come after you. >> do you wish that the impact was different? >> do i wish the impact of anything that i've done has been different? i try to look out for investors
and protect them. you're focusing on the performance of the market and i'm focuses on the fundamentals, which i always do and the fundamentals are baring out and that doesn't make me happy and it's shocking. even though the numbers led me to believe this, it is still shocking when towns and cities and municipalities go bankrupt. >> look, you may not be wrong on the larger sort of macrotrend of where we go. the issue is at the time you scared a lot of people. you agree that you scare people, right? >> i think it a scary issue. it's a scary state of affairs. it's very, very scary. it was scary then. it continues to be scary now. >> so mea culpa. i've done interviews, interviewed people and i've left the interview and said i wish if i had could back in time i would have added a sentence or two. >> it was a two-hour interview and i had no say in the editing process. >> do you wish they cut it
differently? i'm asking as an honest straight up-and-down person. >> they used my research as a narrative to the story and i think it was an excellent piece. a lot of people didn't watch the interview and so took some of the statements out of context. and i can't control that. so -- >> okay. >> go back and watch the interview and see what i said answered think it clear. i think it's very clear. if you're just going to take like a sound bite and then assume you know what the context of the interview was, i think that's mistaken. >> i'm putting my gloves back on. we'll continue to queue after the break. >> coming up, we'll head down to the new york stock exchange for the latest buzz on wall street. ♪ i'm back, back in the new york groove ♪ of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments.
i haven't seen this yet. i'm nervous. welcome back to "squawk box." video not to be missed this morning. secretary of state hillary clinton had a little fun during her trip to south africa, turning a dinner to the dance floor. >> a friend of squawk. >> she's raising the roof. >> she's doing pretty well.
i'm glad that bob has obscured -- oh, no. go. move. go back. >> oh, the clap. man, goldenman sachs executive -- >> is he doing the overbite? >> he serves undersecretary of state for economic growth, energy and the environment. and you know, you're right, meredith. what you see on tv lives forever. >> and how you dance on tv. >> also does. wow, anyway. let's get down to the new york stock exchange. jim and david, you know, i don't think i could see david doing that. jim, you shake a leg, don't you? you don't care whether there's camera on you or not. >> one wedding saturday night. >> you still got the moves. >> i have seen you dance, joe, by the way. >> not unless i remember it. >> guys, do we have the video --
>> oh, that one. oh, that one. that was a joke. that was not serious. i do the shopping cart. and i do the -- i do the sprinkler, those are the only ones that i do. cramer, what happened to mcdonald's, dude? >> europe is still central. the united states is not that good. the company is spending for the future. people want action right now. they want activity right now. they're not going to get it. japan, not so good. the united states, not happened just yet. when this yield 3.3, or 3.5, you can buy it. ralph lauren, terrible. >> priceline. >> priceline, fairly significant deceleration. short of stock. short me, please. >> expedia. >> expedia was better.
>> s&p, do you think we're at the high end of the range? things that got better. we might be spring loaded to go above these old resistant levels? >> i think if the transports have been stronger, joe, i would have gone with that. but the better tone is what moved us up here. i want to see how we act on priceline. when chipotle blew up, it took every growth stock down. >> yesterday, you know i like you when your hair gets a little bit longer. the last couple of days you probably have a cut scheduled, don't you? >> yeah, i do. >> you get this little sexy swirl on the right-hand side -- >> i'm doing it mostly for you. >> okay, good. >> i want to rekindle the fire from way back when. i know you always like the hair long. >> i can feel the fire. >> scheduled next week.
>> thanks, guys. we'll see you in a few minutes. all right, jim. we'll see you in a few minutes. coming up, some final thoughts from our guest host meredith whitney. we're going to queue her in the break. it's going to be good. tomorrow, oliver sarkozy will join us on the health of financials. don't miss "squawk box." starting tomorrow at 6:00 a.m. eastern. it's something you're born with.
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stock of the day, we just talking about it, mcdonald's a dow component is going to be pressuring the averages today to some extent. july same-store sales fell short across most of geographic markets. japan was weak. volatility. some professional activity in the u.s. didn't pay off. softer sales trend began in the second quarter. the stock has been a great performer. one of the best. andrew in. >> very special -- i was going to make a paper airplane. we have about three seconds,