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tv   Squawk Box  CNBC  August 9, 2012 6:00am-9:00am EDT

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the big, most important news of the morning, china's annual consumer inflation now falling to a 30-month low last month. consumer price rising 1.8% but now that's important, this is well below last year's highs. economists say that the new statisticsre going to give the chinese government more room for additional stimulus and the markets are going to be keeping their eyes all over that. the bank of japan keeping its monetary policy steady today. policy makers cutting their assessment on exports and output. companies feel the pinch from the slowing global growth. the decision is now signaling that the boj's ready to expand stimulus again if the risks to the outlook increase. finally, top oil exporter saudi arabia is now cutting its oil output last month to 9.8 million barrels today. that's down 300,000 barrels per day from june. joe, what do you think about suing a regulator? do you want to do it? we could sue some people. how do you feel about that? >> i just like suing people in
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general, andrew. >> blocking people on twitter, suing people in general. >> people are made to be sued. i'm more excited about the -- we've got to talk about this battery company. >> the chinese battery company. >> chinese company buying a u.s. battery company. >> it wasn't before. the obama administration has put a lot of money into this and now who's going to get the technology and the company? this is the latest in a series of things that's very difficult to decide what type of industry you're going to create when it's just not being created by market forces. this is unfortunately what happens. i don't know how much we, taxpayers, have put into it but the chinese are going to end up with a lot of the innovations and kind of step in and save it. classic. in other news this morning, more homes entering foreclosure process in july. lenders are tackling a backlog of mortgages that have gone unpaid. according to realty track, the number of homes hit with an initial notice of default rose
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6% last month compared to july of last year. citigroup's mart unit is testing a program to rent homes back to borrowers instead of foreclosing on them. bank of america has a similar program. citi's going to offer 500 people to hand over the deed to the bank and rent and the company will offer leases to the homeowners so they can stay in their homes and rent them. on the economical lender today, we'll get weekly jobless claims following that important jobs report we had last friday. also, international trade at 8:30 eastern. then at 10:00 we have wholesale trade. let's talk some corporate news this morning. necessary l nestle expecting raw materials prices to ease. the company says it will help it meet its outlook. the world's largest food group reporting better than expected first half results this morning. the united nations warning the potential for a food crisis
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is growing. food prices surged in july and the u.n. is saying more increases are coming. >> i don't ne if i can really say this. >> would you say that? >> all aboard! i need a little hat to take people's particular. all aboard! >> i'm not feeling it. >> you're not feeling it this morning? >> i'm not feeling saying all aboard. thank you. >> all aboard. ha ha ha ha. >> and transportation company plans to go ahead with the $1 billion project to build a privately run passenger train service now between miami and orlando. it's expected to begin operations by the end of 2014. florida's east coast industries says the project is financially viable without any need for federal or state grants or subsidies. i don't know. >> you don't know? well, the wrap was that you drive to the train station, you get on the train, you take the train. by the time you get there, you rent the car, then you drive. could have driven. >> all aboard.
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>> all aboard. >> ha ha ha ha ha. >> you were a "new york times" like -- >> i was -- i don't know. >> you've been reduced to saying, all aboard. >> all aboard. >> all aboard. >> reading things. >> it comes up on the screen. >> sources, rolodexes. >> really sad. >> you wrote the -- >> it's a depressing state of affairs, what's happened. >> you wrote the definitive narrative of the financial crisis. >> now i spend my mornings. >> saying all aboard. you would put on the hat. >> i put on the hat. >> you would. >> as a prop. >> you've fallen to -- it's just sad to see. >> let's talk about some other news this morning. zynga's chief operating officer is resigning. the move was foreshadowed by a recent management shakeup at the game publisher. john schappert is his name. shares of zynga have been sliding. you can see where we are now. that's another sad story unto itself.
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are we going to have a chance -- i don't know if the viewers understood what you were talking about. this is a front page article in the "wall street journal" today. right over here if you can get in here, a 123, chinese company buying -- >> not a good sign. >> buying a battery company. >> this is not solar. this is for the lithium batteries. >> for vehicles. >> for electric cars. the obama administration has been trying to put us ahead in that industry, and it would be nice if it is going to be a car of the future, it would be nice to, you know, be in on the ground floor with the technology. >> right. i sent you something yesterday that a viewer sent in. i'm having trouble -- >> you sent me something. >> i did. i don't think you looked at it. it had a list on the left of a lot of bain companies, staples, a lot of successful companies. romney companies. it was called romney's capitalism versus obama's socialism. >> solyndra.
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>> and five or six others. it showed which ones succeeded because that's a -- you know, you don't -- i don't see that. why i don't see those ads from the romney camp i don't know. >> you may have just given him an idea. >> do they need that? do they need ideas? i hope they don't. >> everyone needs ideas. >> yeah, you're right. let's check on -- i'm trying to get it up. i'm having computer problems. maybe this is an hp -- is that not a depressing story too? >> hp. >> $8 billion? wasn't that the new model? didn't they buy a consulting firm. >> eds. >> from one of the accounting firms. so they were going to be a -- >> they wanted to be the ibm. >> ibm with services, yes. so people didn't go to them for services? meg -- can you buy any of the stuff on ebay now? is that the way it works? are they selling it off. >> maybe that's the model. >> they're writing $8 billion off. >> they haven't sold the business. they're keeping the business just saying it's not worth anything. >> that's i think still a --
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>> i should go back and find it. i wrote a column a year ago about all the bankers -- >> when you were a journalist. >> back when i was committing journalism before i started reading teleprompters. >> what are those monkeys with the cup and everything. i know, that's what we -- unfortunately, i'm right there with you. let's check on the markets this morning. after all is said and done we got 7 points yesterday up. today we're looking at an indication of being up 6 points. oil, i filled up this morning, andrew, and i didn't have enough money. i said, fill it up, cash. >> are you -- you don't use a credit card at these things? >> no. i usually use cash but i needed to today. i had to go into the place. i had to wait. he had to put the numbers in. there was guys buying lottery tickets. they were buying 15 lottery tickets. i'm like -- you know. but i had to because it was -- it was more money than i thought i was going to need. >> see, in the future -- >> it's back to almost $4 now for premium because oil is at $95 again. have you noticed that?
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>> i have. >> do you know why i think? why do you think? give me your reason. >> qe 3. i think it's been slowly going up as it's been clear that that's where we're headed because that's what happened last time. >> there's other things obviously. >> demand issues. >> iran, demand. you know, worries. but the commodities do seem to be moving and look what else has gone up too? i know that things have improved because of draghi but the dollar has improved. >> i'm still concerned that you're paying cash. >> why? i like cash. i still use it at the supermarket. people look at it. they don't know what it is. >> did you see howard schultz from starbucks teemed up with jack dorsey, founder of twitter on this great new product called square. i'm going to get you one. use your iphone to pay for everything. next time there will be no cash, no nothing. you put your iphone up and you'll leave. how do you feel about that? >> i feel like i'm not going to be able to pay because i don't have an iphone. >> i'll get you one of those too. >> i need one of those. all right. let's look at the ten year note this morning.
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it's been moving up just ever so slightly. now it's at 1.7. that's more than it was. it was 1.4 percentage basis. 1.4 to 1.7. pretty big move. still under 2%. dollar, 1.23 as far as the euro goes, gold has been above 1600. that's another thing, andrew. hasn't been moving up but it hasn't been moving down given that the prospects for -- don't you think qe 3 is coming in a month? >> qe 4 is coming. >> yeah. yeah. yeah. >> we're on our way. >> i don't think they're going to worry about the political ramifications either. i don't. >> you think september, october. >> 8.3% with a dual mandate, they have cover. >> should we go to the land of the olympics? we only have two more days to say that. it is time for the global markets report and kelly evans is standing by in the land of the olympics. >> yes, i am, andrew. >> are you going to the closing ceremonies. >> i think if london has its way. i don't think they would mind you calling it the land of the olympics for some time.
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that's part of the pitch to bring people to the city long after the games are over. i have made it to a few of the events myself. by the way, we had the ceo of the sochi 2014 games on. he remarked what an exceptional job london has done, handling the games, transportation. a lot of people are echos the sentiments. it has been a so far so good on that front. we'll see if sochi can match it. much more difficult. this err' building something from scratch. here's what's happening overnight. china, the main story driving markets. data there was weaker than expected on the industrial production front. cpi under 2%. ppi negative. marginally higher up .1% because this is spurring hopes that the pboc will come in with more action. as we spoke with people this morning, it's quite possible china could do fiscal stimulus.
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that helped stocks overnight. hong kong, shanghai composite up .6%. it didn't necessarily translate into a lasting boost across europe. the xetra dax up. banks up now two days in a row. ceo peter sands making comments about -- indicating the bank is going to fight back against the charges the new york banking regulator has accused it of. also some talk about a counter suit. standard charter up nearly 4% today. take a look at what's happening as we turn now to bonds. a quieter story on that front this morning. bit of a relief. spain and italy both prices higher, yields lower. italy at 5.85. spain's at about 6.87%. france and germany, same kind of thing going on here. investors leaving those asset classes somewhat this morning. 2.11%, 1.44. that's the yield on the ten year
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bond. currencies, the aussie dollar did rise after that china data, again speculation hopes coming into the market. 10573. back here the euro is weaker. guys, i want to highlight this. it's down .4%. not necessarily as negative a tone of the markets. were that the case a month or two ago, may be indicative of this trend. guys? >> thank you, ms. evans. enjoy what's left of the olympics, if you can. at some point we should talk standard charter. that's a crazy, crazy story. in the meantime we will say good-bye to you. see you soon. coming up, david rows senberg says buyer beware before jumping into this market. plus, if you're heading out the door to the office right now, possibly the airport, we have the business travelers forecast. it's kind of interesting. july, by the way, the hottest
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month since recordkeeping began in 1895. we won't make any comments about global warming. >> it's in the north -- >> just in north america. >> it was in 1936 it was 77.4 degrees. the record is 77.6 but there was not as much carbon in 1934. what caused that in 1936, do you know? >> i don't know. >> if it's not -- if you're not measuring in 10,000 year increments, don't try to correlate this. you saw, it was because of a high pressure system over north america. the rest of the country -- i mean, the rest of the world is not -- >> you don't care. i don't know. you don't even care. >> i don't. it's been hot here so it must be -- this year -- >> i'm just reading what they tell me to read like the monkey that i am. it is now -- we are now on track to have the hottest year on record, but first -- by the way, maybe joe should read this. the pga championship reads this. i don't know why you're on the set. you should be there. the scenic but treacherous course is the setting for the
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last of the majors of the season. rain now has pounded though the island throughout the week limiting practice rounds. >> global warming, a lot of rain down in the islands. choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter.
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welcome back to squawk this morning. let's take a yik look at u.s. equities futures. you take a look there. i want to say mixed but we're close pretty much across the door. dow looks like it would open a higher, nasdaq higher. making headlines, chinese demand for u.s. automobiles slowing in july. economic slowdown and weak consumer confidence has weighed on those sales. mr. concekernan, what's going o the weather? >> let's go to the national weather forecast jen carfagno. >> close. i pronounce the g. it's carfagno.
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>> nothing like -- >> either way, my family has -- yes. but now you'll remember it. >> i will. >> all right. so let's talk about temperatures because heat has been making headlines, of course. we do still have some very hot temperatures across the country. the southwest getting it. but we're finally getting some relief from the heat. our jet stream taking a dip. we'll see some changes into the weekend. this is air like you get in september. we're going to see it here in the middle of august. we're going to find temperatures topping out only in the 60s across the upper midwest. marquette 68, saginaw, 69. cleveland, more like september weather. friday, finally going to see this air make head way into the northeast. even into the south. eventually in the tennessee valley, ohio valley going to see much dryer, much more comfortable weather into the weekend. blue sky returning. the northeast, we get it saturday into sunday is when our nice air is heading our way. with a change like this in temperature you have some thunderstorms. we have a pretty nasty front
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that will be moving through the midwest to the northeast today, tomorrow. today thunderstorms could be severe watching indianapolis, watching parts of ohio, including around columbus, cincinnati, pennsylvania you could see some thunderstorms today as well. then tomorrow the front moves into the northeast. we could see some big boomers. the chance of those storms from new york to d.c. south through richmond. we'll watch the southeast as well all the way through atlanta. this front means business. comes through, brings storms but then some much, much micer air comes in for the weekend. run through the areas of the country will see active weather. northeast. severe weather in the midwest. pop up showers in the south. dallas continuing our heat stretch. southwest, phoenix was 118 yesterday for a record high temperature. today close to it at 113. we could tie the record for today. then of course the tropics are still making headlines. tropical storm ernesto likely to become a category 1 hurricane again. over the bay of cam pea che now.
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it will impact parts of mexico with heavy rainfall. that will be the biggest impact there. guys? >> jen, thank you. andrew, have you read this piece on the battery maker? >> yes. >> it is interesting. the goal for the obama administration was a million plug-ins by 2015 which we're not at a million. we're at literally -- >> how many are we at? >> thousands. >> thousands of plug-ins. >> this year nissan sold 3500. general motors -- electric vehicles. general motors sold 10,700. so that's a number that now seems wildly optimistic. now the entire vehicle battery industry, the u.s. provided 1.26 billion to battery makers of of that, only 249 million went to a 123 but what we talked about, the transfer of technology now to the chinese, that is being -- you know, you're seeing some of the politicians, you figure that they're going to start carping
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about this. this is going to be like solyndra. you'll hear about this. the guy says the chinese do see this as helping them achieve their ambitions in the chinese market for electric cars and cliff stearns who chairs the house energy subcommittee says we need to make sure that the federal government isn't left as an unwitting accomplice to theft of our technology. what are you reading? >> i'm with you. >> are you down with this story? >> i'm with you. my question is ultimately -- when you go to paris, for example, and you were just there, you see in the streets places where you can plug your car in on the street, right? you've seen that. >> yeah. >> so the question becomes -- >> i'd say a lot of single person cars. a lot of bikes. a lot of scooters. >> so what's the role of government in that conversation, meaning to make this really work, if you really want plug-ins, ultimately do you either have to subsidize the plug-in. >> i'll tell you what --
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>> the plugs physically in the street. >> if nothing happens in a vacuum but fracking and natural gas and $2 gas and you do the btu equivalents, when you decide, okay, i'm going to go this way, i'm going solar and battery, and then suddenly this other disruptive technology comes that happens to be natural gas in this case, that shows you that the best laid plans of central planners, of governments, doesn't work as well as the invisible hand which just makes markets, capital go to where it's treated best, where it might work to where you can actually employ people. >> i accept that. i think sometimes you need a little bit of help. >> some seed capital. >> sometimes you need seed cap tam. can we talk about this real quick? front page of the financial times. i don't know if we can get a shot of that. this is an amazing story because it talks about the potential for settlement here with new york state. but more importantly, that they
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might try to sue them. that's what's at issue. have you ever heard of a bank suing a regulator for defamation? >> definition of character. >> definition of character versus defamation of character? >> right. >> if you do nothing else today, go read the actual complaint against stanchart. if you read the e-mail. >> you read the actual complaint. >> a friend of mine said repeated read the actual complaint. see what it's actually saying. there were people in these telling each other that by working with the iranians this will create a problem. they knew that they weren't necessarily in the right and, in fact, it appears that they were -- all of the order flow, they were stripping -- you probably read this, that they stripped all of the wire transfers. they stripped them of the actual client's names and created a whole back end technology system so they could replace the client's names with a number.
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>> that's nice. >> anyway, let's get to -- >> i'm not digging that story. >> no. you're watching the world -- you're watching graft, people do illegal things. you love that. you're eating it up? >> no. i'm just saying it's fascinating. >> it is. let's get to rows senberg who's fascinating himself. this week's market gives us some hope that maybe recovery could be around the corner. should buyers beware? david rosenberg, chief economist for gluskin shef. as i do so often, david, i remember what people say. you're one of the people that probably aren't surprised at 8.3% unemployment and 1%, 1.5% gdp. this is what you've been talking about for the last three or four years. >> well, you're 100% right, joe. thanks for having me on. i think the overall story is that, you know, with the massive intervention by the u.s.
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government and the federal reserve, they did manage to terminate the great recession in 2009. the reality is we never really had much of a recovery, at least in the economy. in terms of what we're seeing going forward, i think there's more down side risk than up side potential. like you saw coming out of mr. draghi's comments last week and what you're seeing, for example, today out at china, we're back to the situation wherefore the stock market bad news is good news because the good news is that we're going to get more gobs of stimulus to push asset prices higher over the near term and i think that's been the driving factor for this recovery that we've seen and the stock markets globally in the past month or so. >> so you were -- i'm trying to remember what your main reason for forecasting that was. it had to do with housing being -- continuing to be pretty weak, i think, and also the consumer not having taken care of all the excess debt that he had built up over the past
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couple of decades? was that why you thought we'd be stuck in this morass for such a long time? >> it was realizing that despite all the policy stimulus, you know, we weren't seeing the economy really hit a velocity. >> why isn't it though? >> if this had been a normal inventory cycle -- >> so it was a credit thing? that was your point? >> that's it. but it's realizing that, you know, look, the fed took rates to zero. then they tripled the size of their balance sheet. we had unprecedented fiscal stimulus for a peace time economy. if this is a normal cycle, joe, we'd be averaging 8% gdp growth. we barely averaged more than 2. a lot of it was inventory reinvestment. this goes back to rogoff and rhinehart. recessions do end but they're very weak and very fragile. here we go into three years of
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statistical recovery and each one of these three years we had a double dip scare. that's not normal in the context of a plain vanilla cycle. so it's understanding those contours. we're deleveraging outside of student loans. housing seems to be recovering at a rebound. on top of that we have this fiscal bog that we're in creating a lot of uncertainty for the private sector. on top of that it was a credit cycle that went viral. now we're seeing gear up. i think the biggest risk will be with the deepening recession and spreading recession in europe, we're seeing at the trade close in asia, what will that do to exports and the trade deficit in the united states. >> all right, david. we need you on camera. i don't know what happened today technically. we'll get you back soon. >> thank you. 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.
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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.
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♪ good morning. welcome back to "squawk box" here on cnbc. i'm joe keranen along with russ sorkin. >> you had to think about that. >> yeah. madoff's lawyer. >> unrelated. i would hope so. very nice guy. >> no, he is. everybody needs a lawyer. >> everybody needs a lawyer and a fair trial. >> hopefully not everybody. if you do need one, you know, that's when you're glad that we have them. >> you need someone to write about it. >> right. >> then you call aaron. >> right. we've got a segment now. you weren't continuing that? >> no. the back to school shopping season is the biggest event for
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retailers next to black friday. the weeks leading up to christmas. we're about to be in it. we have dana tellsy from new york. my guys are too small. joe, are you starting back to school here? are you spending money yet? >> yeah. we never stop. >> you never -- you never stop. i'm going to go. dana, let's start with you. jcpenney seems to be in a free fall but this should be their time and it seems to be opening up all sorts of opportunities for everybody else. >> exactly right. what we've been seeing from jcpenneys is almost $3 billion in sales have been taken from jcpenney as they embark on transforming the whole store. the in-store shops are going to begin to debut. in the meantime, it's giving tjx, ross stores, macy's, gap, a bunch of other specialty retailers an opportunity to gain share. >> i noticed you like the gap.
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why do you like the gap? i have not been to a gap for a very long time. i don't know if i'm -- i think i might not be in the minority unfortunately for them. >> i go around the country and do shopping tours. in the middle of our shopping tours now for back to school. the scores that we're getting on gap from consumers seeing better prices, more on trend product. the store's looking better. it's not all the time. it's fits and starts. this year the color is working for gap and there's more traffic there. both at gap and at old navy. >> are you hanging out at the gap? >> i hang out at every store. >> andrea? >> i can't say that i'm a gap girl. >> you're not. >> no. >> who's the winner and loser? >> what we like -- we look at the department stores. i think there are two big trends. value. value is definitely envogue. people are looking to stretch the dollar farther. then we think there's a bid for brands. people are looking. they can't afford the cost of trial so when you think about brands, people are looking for that security and that seems to be trumping private label. >> is that a winner, would
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macy's be a winner. >> macy's, nordstrom, tjx box. >> ron johnson? >> yes. >> j.c., is this workable? are you willing to suffer through whatever this transition is to get to the other side? what's on the other side? >> yeah, that's a good question. i think it's too much too soon. i think this is one of -- we've seen retail turnarounds, they're tough to begin with. the massiveness of the change, whether it's the pricing. it's confusing for the customer. the assortments are still the same. the customer's saying, why should i pay noncoupon prices for assortments that have yet to change. they clearly are dropping a lot of share. and in this environment -- >> can they get it back? we've had -- bill has come in here, we've talked a lot about this company. this is supposed to be the future of retail. this guy was supposed to be the guy who understood how to do this better than anybody else. is it the guy or was it the product which was apple at the time? >> right. i think we've seen many examples
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where a guy can't trump an organization that has been frankly dysfunctional for a long time. that's challenging for one guy to turn that around. >> if they had done nothing over there at jcpenney, where would they be today? would we be on a steady decline? >> there needed to be some change. it wasn't heading in the right direction for sure. these aren't necessarily new strategies. the former ceo was trying to introduce shops and brands in the past. that jcpenney customer needs that coupon in terms of driving that shopping trip. >> isn't there something in a retailer or at least a clothing retailer's dna that makes him know how to order what people are going to want, not order too much, put things in certain places that are going to sell? how would a guy who's arranging ipods, ipads, has a sleek apple store, why would you assume he knows what to buy for people that are shopping for clothes? >> well, ron johnson used to be at target before apple. >> so he's got a lot -- >> yeah, there is definitely
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retail experience. >> i think i would be a great store manager at apple. i probably wouldn't. i would be the only one that wouldn't be. >> sure. >> it seems like a job where you watch things leave the store. >> my kids tell me i want an ipad, ipod, ianything. >> is this guy going to be a big winn winner? >> so far, not so good. how likely is it to claw back those losses, it's tough. it really is tough. very competitive out there as you can imagine. macy's, coles, t.j., ross are beguning for that share today. as far as clawing that back, i think it will be a tough slog. >> they have a new logo. do you like the square? >> it's better than the old logo. >> it has to be more than the logo. all about the product and price. >> dana, let's talk teenagers for a second. abercrombie & fitch, in manhattan, there's a line around the corner. it's a crazy situation. when i was in paris there was a line. did you see this? >> yeah. >> unbelievable. yet not a lot of people love the stock. >> what's happening with
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abercrombie & fitch is prices got a little bit too high. certainly here in the u.s. we're not seeing tourism as great as it has been so that store in new york isn't getting the same sales volume. there's a lot of competition in the teens. the new competition is the fast fashion retailers, whether it's forever 21, h and m. newness and differentiation are key and they have to have more spunk in order to be able to drive the sales. >> who else is doing well in teen retail these days? >> it's funny. it's always retreads that come back. right now we're seeing american eagle. with the new ceo in place is taking a little bit of share driving better sales gains. they've been doing better than others. >> adrianne? >> the ones that are on trend and value. you're seeing the juniors do really well at off pricers. value is envogue. >> keep talking about value. i want to go back to the gap for a second. it's a company that's supposed to be a perennial. dana was saying the gap is doing better. old navy is doing better.
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how about the banana republic piece which was the high end version of all of this? >> that's the smallest part of it. gap and old navy are making bigger advancements than banana republic. even banana republic is doing better this year than last year. with gap, it's always what's going to be the next season. >> adrianne, dana, thank you for a very interesting conversation. are you going to be buying any of this stuff this week? buying it every week? >> i don't shop. >> your family -- >> i'm responsible for a lot of shopping but i don't shop. i get incredibly tired the minute i walk in. >> doesn't that happen? >> online? is that an alternative? >> i've lost credit cards putting it in the little slot there. it jams the whole -- how do you do that? >> i'll show you later. >> okay. comments, questions about anything you see here on squawk e-mail us at coming up, can the bulls make it five straight days of trades. we'll head to the futures pit.
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welcome back. u.s. futures now down 2 points, 3 points or so. we had seen a little bit of a gain earlier. we'll see if we can make it five straight winning sessions. making headlines, amgen halting a late stage trial of an experimental drug. this one for pancreatic cancer. they concluded the drug was unlikely to significantly help patients, which is a disease we haven't had much success with so far, pancreatic cancer.
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that's a tough one. >> now to the futures pit. daniel stetisch. that's the first time i've seen that name, daniel. when i'm running down towards the vault and i did a perfect flip and landed, did i stick the landing on your name? >> you most certainly did. >> like a 10, right? do you see how that's done. >> 9.7. >> i'm watching. i'm learning. >> boom, done, first try. >> that's been butchered more times than you can imagine. >> shannon miller. call me shannon. >> daniel we said when we came back from break we would get someone to tell us will we continue this streak? yes or no, does the market close up or down today? >> i'll say no. we've had too much anticipation of good news in the past few days. we're probably due for a little break. i don't think you can make much of it. this morning we have jobless claims, obviously a very important thing to watch. next week we have a couple important numbers. we have retail sales.
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philly fed. so we have to look forward to actually what's going on in our economy right now as opposed to all of the what ifs that are out there and everybody expecting that. >> everybody in chicago, dan, a lot of guys in the past we talk about call him bernanke. everybody needs to know about bernanke in chicago because so much of what you do seems to be controlled by what he may or may not do. have you -- can you see little ripple effects of the -- of the upcoming qe 3? am i wrong to saying that oil being back to 95 has something to do with that? are you seeing the effects of the possibility of that? >> well, there's most definitely the effects. i think the fact that there's talk that china's going to do it along with us doing it has been one of the key catalysts of this market rallying. >> even equities? >> even equities. what you really have to wonder, i'm not so sure it's going to happen. let's see what our economy does. i want to see next week's numbers and the importance that
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they play. but if, in fact, the economy's growing a bit and the fed doesn't feel it needs to ease anymore, that actually should be a good thing. it means we're growing on our own and we don't need the stimul stimulus. that's my hope. the market's belief is that we're going to see something. >> yeah. they're tricky. when you have guys like rosengren that comes out, you wonder whether he's the designated guy to make it seem like qe 3 is imminent, he almost said, yeah, we want to do it. then you wonder they already get the bang for the buck just talking about it. then if something were to improve, maybe they don't have to do it and they already benefitted from even the possibility of it. >> that's absolutely true. it did stabilize the market. you have to look at that. another important thing to look at is does the fed in september want to be making a move that could be judged as being political? i don't think they do. and unless there's a real need for it, i'm not so sure we'll see it. >> all right. now put dan's name back up.
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would you thank this gentleman, please, andrew. here's his name. daniel. >> this is like -- >> come on, grasshopper. go ahead. what's his name. you're going to do -- you're running towards the vault. you just put your -- it's right there. what's his name, daniel? >> daniel -- >> look at you. i butcher everybody's name. we have shannon miller coming on. we actually do. she's coming on after this. she could stick this landing but i can't. >> there's the name. it's spelled out for you. stecich. >> you messed it up. >> because, look -- does that look like an e. >> just leave me alone. it's too painful. >> too good. i can't. i can't. stecich. thank you. >> thank you, daniel stecich. >> i'm sorry. too good to pass up. >> it is. yes, grasshopper. coming up. >> we've got --
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>> those eyes. >> we've got the most decorated g gymnast in history. turning business into gold. this is an exciting interview for us. the squawk greenroom. among the names mingling around. barclays people. david walker, a summer stock rally breaking up the banks and the looming fiscal cliff, all topics on the agenda with these gentlemen still ahead. ♪
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>> those eyes. the looming fiscal cliff, all >> those eyes. the looming fiscal cliff, all
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welcome back to "squawk." the fabulous five winning gymnastics gold in london, and their lives will be forever changed. shannon miller can relate, she is the most decorated u.s. gymnast in history, winning a record seven olympic medals including two golds at the 1996 atlanta games and welcome,
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shannon. i remember those days very well. congratulations -- >> but you're not shannon miller. that's not you. >> yes, it is. >> with the pony tail and the scrunchy. >> you are not shannon miller, an imposter. >> i just got older. >> you look great. >> she looks great. >> wow, 16, you were such a kid, unbelievable. >> it's an unbelievable story, but tell us, shannon, life after the olympics, for so many of these athletes, you know, gabby douglas will have a career after these olympics and have to figure out what to do. michael phelps figured out what to do. what did you do in. >> it was hard, after my first olympics i was still only 15 years old so i went back to the gym. i was back practices three days after the olympic games, very focused. of course we didn't have social media and i didn't really read my media, so i was kind of in a bubble and after the 1996
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olympics, it just went crazy, it was absolutely insane. i went on tour and had so many more opportunities. >> i remember when you were on the wheaties box. walk us through what happens. i assume there's all of this attention and a huge bubble around the olympics, but after that, how long can you stretch it out? >> well, it kind of depends. some of these athletes will go home and their lives won't be that changed. we'll go back to training, they'll go back to their day jobs, for some of the athletes like gabby douglas, life is never going to be the same for her and she's going to have to really focus on what do i want my voice to be from here on out and that's a pretty heavy question for a 16-year-old and the decision time, do i continue to compete in gymnastics and how do i balance all of these demands on my time with all of the marketing. >> you hear a lot about the numbers that get thrown out about how much money these athletes can make. what is realistic for most of
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them? they're going to be the stars, but most of them are not going to get anything? how does it work? >> that's right. you don't go into the olympics for the money. you go to the olympics to represent your country on the international stage, to hopefully win a medal but really to become an olympian is something in and of itself, it's pretty amazing. for the majority of these athletes, this ey're not going make much money but for the more high-profiled sports life will never be the same. hopefully gabby douglas will pay for college and help her family because it's an expensive sport training. >> did your parents start out with the idea they wanted you to do something like this or start slowly and you showed a talent for it and chose it yourself? how did it happen for you? >> i begged and pleaded for my parents to get me in gymnastics. my older sister wanted to do it
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and they said yes to her and no to me because i was too young and i called my grandmother and cried and she ended up paying for my lessones and she said two weeks will go by and she'll be over it, and 20 years later my parents are still dealing with it. >> now you're an icon and medals and everything but in general, if someone wants to do it, it's a long road and i would imagine that for every person, for every shannon miller there's hundreds of people that don't, but would you say it's worthwhile and let your kid try and do that? you got to devote so much time and you really don't have much of a childhood really or not as much as other kids, right? >> well i guess it depends on what you consider your childhood. for me it was being with my friends every day in the gym and i loved it. i would say absolutely get your kids involved in sports first of all just for the ifle activity. second of all maybe it doesn't lead to an olympic gold medal, maybe it leads to a college scholarship, maybe it just leads
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to physical fitness and better flexible and balance and coordination that will last the rest of your life. >> my son is going to gymnastics today, i was talking to his teacher at 11:00. michael phelps, i see eyebro eyebrowsizeyebrows eyes raised a little, he wasn't at the pool quite as much as he was ten years ago and i swim some days it's cold. i don't want to. he has to be there every morning and you're supposed to do this because in four years, we want to you win that one extra gold medal, you need to swim in the pool six hours every day, i mean that is hard to do, isn't it? it's a lot of dedication. >> it is hard to do and also your training changes i think over the years. i didn't train the numbers that i did in '92, in '96, because i was older, done the numbers in the past so it was more quality over quantity. >> shannon, thank you for being
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here this morning. this was a real treat for us. we appreciate it. congratulations on everything you do. by the way, she has taken this and used it as a springboard and created a remarkable career and done some very good things for the world so thank you for being here. coming up, carlisyle's sarkozy's statement for reinstating glass-steagall. >> look at me see gentlemen. >> barry knapp should be proud of t "k". i sometimes call him k-nap. h. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work.
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the state of the banking industry. [ bell ringing ]
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the carlyle group's oliver sarkozy shares his thoughts on how the industry can navigate through recent scandals. and engaging americans on the need for fiscal solutions, former u.s. controller david walker. getting inside the minds of billion-dollar investors, trading psychologist denise schell will tell you how to remain calm under pressure. >> remain calm, all is well. the second hour of "squawk" starts right now. ♪ good morning, welcome back to "squawk box." i'm andrew ross sorkin along with joe kernen. becky quick is on vacation.
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with us, barry knapp from barclays. let's get you caught up on the morning headlines this morning. the number of homes entering the foreclosure process increased by 6% in july, compared to a year earlier. realty track says that reflects banks getting caught up, amid allegations of document robo signing. nationwide settlement was struck in february. samsung is saying it is not considering buying blackberry maker research in motion nor saying it will license the new operating system. jeffries analyst yesterday said they might strike a deal. food prices surging following a three-month decline and the united nations saying the increase likely to continue because of soaring grain prices that could result in a food crisis like the with unthat erupted five years ago and resulted in violent food riots
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in some parts of the world. quick look at futures, dow looks like it would open off about 11 points, nasdaq almost unchanged, s&p would be off slightly. joe kernen? >> newsmakers finding their way to "squawk box." yesterday controversial analyst, controversial analyst meredith whitney? >> she's not controversial. >> i guess outspoken. >> outspoken. >> talked about the changing makeup of the banks. >> i think the banks, the big banks will get a lot smaller but that's not because someone forces this emto break up, it's because shareholders forced them to get more profitable. >> joining us with more, if i was going to say it correctly it would be olivier. >> yes. >> call you oliver in. >> yes. >> oliver sarkozy from carlyle financial group.
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you said you think glass-steagall should come back, that may be overstating it but you agree with meredith, the banks need to be more streamline? >> listen, banking is a xh commoditized business and in an environment where the yield curve isn't allowing banks to make any money you have to focus on the cost of your business system. >> you say there will be a debate, you say it's a fair debate but not one that, i guess we decided yesterday the toothpaste can't be put back into the tube or genie can't be put back into the bottle. i got a few more. >> eggs scrambled can't be unscrambled. >> all the kings horses and all the king's men. could we go back to glass steegle? >> i think that's certainly a possibility and when someone as
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prominent as sandy weill and the whole buildup to -- >> what'd you make of that? >> i think a man who has reflected and changed his mind and that's okay. >> religion, is there some guilt there in. >> it depends on what side of the argument you're on and i don't think this is an open and shut case. i do believe what's clear is that the concept of too big to fail is a clear subsidy, that we as a society provide to those institutions that benefit from that moniker. >> and how does it benefit them, having lower funding which allows them to do things? >> yeah, if you think about a bank its cost of good sold is how much it costs. if ultimately you believe the institution that you are lending that money to cannot be allowed to fail because of its size, then it has an implicit guarantee of the u.s. government, which means it's going to borrow money more cheaply because nobody borrows
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more money more cheaply than the u.s. government. as a result, you are providing indirectly a fairly meaningful subsidy to those institutions. >> when does that come home to roost, because they take risks they shouldn't be taking? >> well, it may never come home to roost, so i think that's the debate that we need to have. what's the benefit that we get from these mega sized banks versus the cost that's implicit. >> the line of logic here -- >> barry knapp is here. >> the line of logic you're going down would imply that the first order of business is not the big banks, it's fannie and freddie, because that was the ultimate subsidy. that's, and a lot of people would argue there's 30 trillion in assets across european banks, 10 trillion in u.s. banks, a big chunk of the differential is the agency mortgage-backed securities market, right? five, six, seven, $8 trillion, depending on how you think about it, that's subsidized by the
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government in this country, not in europe. you've got to eliminate that subsidy and start to work through that process before you can get to the big banks. >> yeah, i separate the two but i don't argue with the logic of what you're saying. i separate the two simply because it has been a political objective of the united states to reduce the cost of home ownership, and we've done that through setting up fannie and freddie, we've done that through -- >> at great peril. >> in canada, ownership is higher without any of that. >> i'm not defending it. i'm just saying we decided to do it. >> over a lot of different administrations. >> over virtually every other country in the world at some level is implicitly backing their banking system. the germans back their banking system. uk backs their banking system. japanese. china backs their banking system. the question is, and if i was
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jamie dimon sitting here, what i think i would say is, in a global marketplace to the extent that you have to compete against barclays and mitsubishi and hsbc and whomever and you're looking for clients like general electric that need $20 billion checks at one shot that they can't be competitive. is that a reasonable argument to make? does that make sense to you? >> absolutely. it's absolutely a reasonable argument and obviously we back our banking system probably more explicitly than anybody else through the fdic guarantee mechanism. >> the question, those were stability measures that became permanent. >> correct. >> should they have been reversed? taking deposit insurance from 30,000, 100,000 to infinite, those were supposed to be temporary measures to stop bank runs that weren't supposed to become permanent. >> the larger question do we need banks of size and scale. does the competitive argument make any sense and if you were to reduce the size of banks what happens? do they become less competitive and by the way, do we care?
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what does it do to growth? >> correct. i think the argument that jamie would espouse, as you correctly summarized it, assuming we can put words in his mouth, does have some validity to it. the question is, does it have enough validity, given the cost at which it comes, and i think that's a valid debate that needs to be had. does the world need banks that have trillion-dollar balance sheet or in the case of jp, more than 2 trillion, is that actually something you can manage and therefore is it risk that can be quantified and while there are moments in time when the corporate sector needs to borrow 20 billion or whatever the number might be, is it that important that there be a single place they could go to or is burdening them with the need to actually go more broadly to make the case. >> the debate you're on -- >> well the answer is, i think
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it's a valid debate to be had. we have not had it and until it's had and until it's been studied -- >> don't you think that's happening? >> did you see when hanig was on? the case he made the guys running the banks don't want them to separate these profitable ventures, but they're selling at such a low -- selling at a percentage of book that if they got back into the normal banking business, both shareholders and the general public would be better, everybody would be better off. what's barclays as a percentage of book, where is barclays? >> probably 0.5 or so. >> get out of fixing libor and get back t making some loans. >> here's the longer term perspective on this. in the '50s, for basically 15 years from the late '40s through the '50s, r.o.e.s were capped at 10% in the banking system. 80% of government assets were government securities coming off the world war ii debt but
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household debt to gdp was only 25. the economy was able to grow because credit wasn't in great demand and consumer was building up credit over the decade. now government securities in cash are 30%, household debt to gdp is 85%. if we put ourselves in the same sub 10 r.o.e. financial pressure environment we'll make this debt supercycle even longer. that's part of the problem if the big banks can't earn a competitive return, if the small banks can't, can you sustain growth going forward. >> when you talk about world war ii and i close my eyes, i see general george patton. do you listen to his voice? did you see that in. >> i was there when the fed -- >> i'm thinking you were there commanding the allied forces there, too, for a while. >> maybe. >> i'll flip the conversation around. you're an investor now. you invest in financial institutions. assuming you could invest in the
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public markets, the private markets, all different markets, what kind of institution would you want to be an investor in, meaning would you prefer to invest in a jpmorganig supermarket style bank today or would you want to invest in a goldman sachs like bank today or a boutique bank today? >> regional. >> or regional? >> given the style of investing that we do on jpmorgan or goldman sachs it would be out of the question. >> out of the question but if you could put some of those -- >> there's no way whether you're a public investor or private investor to know what is on the balance sheet of those companies and that's not me. i mean you just need to look at their results to understand that you end up surprised because with $2 trillion plus in assets or $8 billion, depending on the institution we're talking about, it's impossible from the outside looking in to know what you're dealing with and i would argue it's probably very difficult to
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do it from the inside, and that is a challenge for these institutions trying to attract investor dollars, because that's just a fact of life, if you're investing in one of these banks and that would be one of the arguments against, if you will, which is just simply that these institutions are too big to manage and with that comes a risk to the depositor and to the ultimate guarantor, the u.s. government, for the non-deposit funding components of their balance sheet. listen, a capitalistic society needs a vibrant banking system by force, and we've got to figure out how we're going to get there, recognizing that the banking system we have in place certainly in europe got way, way, way outsized relative to both the economies it was serving and most importantly, the deposit base that it had access to, because banks live
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and die and get given the ultimate subsidy of leverage by virtue of the fact that they are funded primarily by deposits, and in europe, we forgot that, we got away from that. >> not funded by deposits. >> these banks are funded by things other than deposits but they're levered like banks and that's the difficulty of the situation we find ourselves in. >> we haven't seen you on. thanks for -- don't make it so long. anything else going on in your life, interesting happening? nothing? >> trying to keep it focused. >> keep it focused, head down. olivier sarkozy thank you. >> hopefully not another eight, nine months. we haven't seen him in about a year. >> it has been. appreciate it. coming up next, barry knapp will give us market musings and later david walker sounding the alarm on the country's financial sink hole. i shouldn't smile so much, i'm smiling at these guys, joins us at the bottom of the hour. "squawk" returns in two minutes.
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checking the futures we are up a little and then down a little, oh, my god, now we're down even less. you know what i want to see? it's implying less than a point down. what would that be on a percentage basis, if it's less than a dow point, what do you think, andrew? right there? >> less than a? 0.01%? >> a bip, less than a bip.
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>> it's less than down a point on the normal on the dow, so we look at a percentage basis of what a point is. we need scientific notation. it gets much less. now that you know that -- >> we can only go two things over. >> now that you're armed with that knowledge, let's go and talk about something else. >> you want to talk equities? >> why not. >> equity markets apparently are creeping higher, is this true? the street is looking past all this policy uncertainty? so of course the question, what does it mean for the remainder of the year? our guest host all morning or for the next hour really is barry knapp, barclay's head of strategy. >> i'll be around until 9:00. >> and another guest coming on. >> drinks, cuts hair and will shampoo your head. >> is that right? >> he's an interesting guy, too. very interesting guy. >> what do you make of this? >> you know, we got the 1420 at
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the beginning of the year with the cyclical rally and the economy was getting better. back up to 1400 completely driven by stocks with characteristics. there's a good precedence, in the '40s and '50s these stocks worked for a long time so i get that, and when i get asked by big pension funds what do you do, you stick with these defensive names really pretty much until the fed starts to normalize policy which is sometime in the future to be sure. >> the future, two, three, four, five years? what are you talking about? >> or mid 2013 at the earliest for me is when the process could start. >> to be normal? >> to start normalizing things, change the language. >> earlier than most people. >> the at the very earliest if we settled tax policy and
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started down the entitlement process. >> if we do tax reform and fixed earned entitlements by mid 2013. >> start the process. >> six months from now. >> we got to get cracking. >> about a year. mid 2013. >> budget. >> right, right, so anyway, those worked for a long time and they will work again. the question though is the last two years we've had these rallies in the fall, driven by an improving economic outlook. there's no improving economic outlook right now. for me the global growth situation, the u.s. growth situation looks much worse than the last three years. the question is, can you rally just on election-related optimism, it happened in '80, it happened in 2010, it happened in europe last year and, -- or are we just going to have an ugly september. >> that's ugly september, right now for the past week, week and a half draghi made his comments and everybody just sort of has forgotten about europe, waiting what happens, everyone is on
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vacation. what happens in september in. >> for me, the driver for the markets really coming unglued is the u.s. it's not europe. europe has been sort of this constant problem, even the last couple days, the spanish credit curve got worse, right, and the markets are sort of okay with it, but when we've gotten into real trouble with global markets has been when the u.s. has had an issue, either a public policy related uncertainty, or the growth outlook deteriorating. what i think is necessary for any fall rally is that we come back after labor day, the generic congressional polls look like they're widening out. at a minimum, a republican congress with a democratic president, which some would argue is the proper setup to do entitlement reform. i argue perhaps not. >> not this president. >> probably. but that notwithstanding, the markets have to believe we have a chance to get to this and other issues which you laugh off
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and others do as well. there is a group of investors i talk to that believe we can get to this stuff and get to the more bullish u.s. story in time, which is energy, manufacturing sector, better demme grarvegogr we can't get there if we don't get tax settled and the debt on a sustainable path. >> glass half full. >> i'll tell you why i'm thinking about this in a second. say just for argument sake that the republicans just swept. would that be a good thing for financial markets? >> it would be from a short term perspective, and then every president is going to get a major policy bull tote fire straight away. reagan cut tax rates. obama did the stimulus program. clinton raised tax rates, so assume in the first quarter mitt romney gets his comprehensive tax rate and you've got the corporate tax rate, then i would guess the market has to play a role in entitlement reform so you probably sell the market then because we're not getting
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entitlement reform without the markets playing a role. coming up the holidays maybe the last thing on your mind but this year's drought could have a huge impact on the key symbol of the season, you're looking at it. time for today's aflac trivia question. how much did the original apple i computer retail for? the answer, when cnbc's "squawk box" continues. aflac! ha! isn't major medical enough? huh! no! who's gonna help cover the holes in their plans? aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac! and everyday expenses? huh?! blurlbrlblrlbr!!! [ thlurp! ] aflac! [ male announcer ] help your family stay afloat at plegh!
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now the answer to today's aflac trivia question, how much did the original apple i computer retail for? the answer? the eerie price of $666.66. >> aflac! summer christmas talk, it's beginning to look a lot like hard times instead of christmas for tree farms. the ongoing drought is having a negative impact on saplings, the most popular fir tree has been hit the hardest. the good news is that this year's tree harvest should be sufficient. in seven or eight years from now, we could see a possible christmas tree shortage, so
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that's sort of some coal in my stuffing -- coal in my -- >> my guess is at that point we'll have so much natural gas we can make so many artificial trees. >> and you get a tree. >> i do. >> you get how much for hanukkah? >> eight nights. >> and you have a tree in there, too? >> i think of it as a great american holiday, not religious. >> we just want more presents. we love presents. sweaters, shoes with straps, right? >> the sorkin family loves christmas. >> we do, too. >> comments, questions about anything you see here on "squawk" shoot us an e-mail, and follow us on twitter, @squawkcnbc is your handle. i'm a christmas loving jew, what do you want? >> you said coal in my stuffing. >> in my stocking, because it was a sad story about christmas trees. coming up, david walker is getting ready for a big bus tour to explain the burden barometer.
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welcome back to "squawk." coming up on 7:30 on the east coast. fresh read in the labor market in about an hour, the weekly jobs report on initial jobless claims expected to show 370,000 new claims for last week, slightly higher than the week before. we're also going to be getting june trade deficit figures with consensus forecast calling for a trade gap of $47.6 billion, comparing to $48.7 billion deficit back in may and finally, china's factory output growth slowed to a more than three-year low in july, the figures came in below forecast and with consumer inflation now at a 30-month low, expectations are increasing that beijing could institute easing moves to support the chinese economy. >> i love this. wow. the burden barometer. david walker is here. you heard of the debt clock. how about the burden barometer? this isn't just our national debt which is, when it started, david, i think in 1980, we started measuring it in '89 $2
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trillion. we're at $16 trillion but if you add in all of our liabilities, unfunded social insurance programs, various commitments and contingencies that the government has, medicare, all of these other things it's 16, is that really a number? we need scientific notation $69 trillion. >> it is and by the time we roll on this bus tour on november 7th, it will be $70 trlgs 4 trillion. that's $50 trillion higher than 12 years ago so we've gone up $50 trillion or stated differently the federal financial sink hole has gotten deeper, $50 trillion in the last ten years and getting deeper, $10 million a minute. >> wow. you've been, see, this is what i always ask you. three, four, five years ago you were coming on here doing your damnedest to prevent this. i think you're causing it.
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>> cause and effect. >> how do you know it's happening while you're doing this? stop! >> the good news is, joe, when i first started talking about this, the american people were not focused on it, washington wasn't focused on it. if you look at it today the economy, jobs and fiscal responsibility are the number one issue. they're going to determine the result of the presidential election. if you look at washington while they haven't done anything with simpson-bowles they're going to do something about it at some point. we're not going to see any real progress this year. i think we can, we must and i believe we will see progress in 2013. >> you have been negative -- you have been aserbic and critical of romney's deal because he doesn't identify where the cuts would be. is it as bad as romney hood, robbing from the poor to give to the rich? >> first, to the day, neither president obama nor governor
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romney have been specific enough about what they're going to do -- >> was simpson-bowles specific enough? >> it was specific enough in all areas but really one, and that's the most critical area. >> health care. >> that's health care. >> medicare. >> right. they had some targets but not specific actions that would achieve those targets and you've got to be able to do that. i don't advocate a particular plan. i think that's a mistake. what i do is i talk about the facts, the tough choices, offer a range of sensible solutions that should be able to get bipartisan support. that's what we were going to do on the tour, focus a vast majority of the time engaging the public on solutions to budget control, social security, medicare, medicaid, health care, taxes, defense, political reforms, specific situations, because my experience has been the public can handle the truth, they're ahead of the politicians, they're starved for truth, leadership and solutions and it's time that the presidential candidates give
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them that. >> how do we get through the fiscal cliff, should we just do something temporary and then get to your stuff? >> we have to do three things. first we have to separate the weak from the chafe between things that should be extended and things not be, including the temporary payroll tax and the unemployment benefit issue. secondly, there are some items that we may want to extend, but we ought to pay for, and thirdly, the really big ticket items like what are we going to do on social insurance programs or what are we going to do on comprehensive tax reform, we're going to have to extend those for nine months, couple it with a specific target for deficit of reduction and debt-to-gdp stabilization, with enforcement mechanisms and give congress time in 2013 to engage the public, to use the legislative process to get a grand bargain. we can, we must, and i'm going to do anything to make sure that we do achieve a grand bargain in 2013, but for that to happen, a, the presidential candidates have to be specific, so that the
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public can make a good choice about who to vote for and so whoever wins will claim they have a mandate and can lead. >> you got it down, david, but neither one of these guys ever calls you and says will you help me. >> that's not true. >> who is calling you? >> i've talked to people, i'm not going to -- i've talked to people in the obama administration. >> don't you think he'd be a good person as a point man? >> absolutely. >> i've talked to people with, i'm sorry. >> i'm voting for him. >> i've talked to the cabinet officials and other white house officials in the obama administration. >> romney? >> i've talked to romney and a number of people i've talked to in his campaign. i don't think they've come out with specifics yet. they're waiting for the convention. frankly, americans aren't really focused on this right now. they're not going to make a decision. the undecides are not going to make a decision who to vote for until after the debates. this is similar to 1980, very similar to 1980. >> sorry, andrew, bad news for
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you. >> it's going to break late, and my personal view is, whoever does the best job of talking truth, providing leadership, talking solutions to these issues will win, and i want both of them to do it. >> you should speak at both conventions, walker. >> my phone works. >> my view on the entitlement debate has been that regardless of who wins, the markets are going to play a role in forcing this issue in 2013, that the markets gave us a free pass in 2012, ahead of the elections, but then even if let's say we extended the bush tax cuts and we agreed on cutting the corporate tax rates, i shouldn't call them the bush tax cuts, we agree not to hike taxes, right? and congress is patting themselves on the back, the administration's pleased, stock market is rallying. the next day fitch, moody's, s&p all announced we're on credit watch for downgrade and then probably we have another august-like event, last august that is and the markets start to
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force us to take on this entitlement reform. >> but here's the problem. the problem is this. right now, the federal reserve is buying 70% of our new debt. secondly, a vast majority of the balance of the debt is being purchased by china and japan, who have positive trade balances with us. the result is, we don't have a real market. we don't know, there is no -- >> but we have a real credit market and stock market and those are what sold off last august so the same thing happened in the early '50s, and by the way, until the fed stopped monetizing the debt the fed treasury, march, 1951, pe multiples kept going down and down, finally bottomed and went up from 7 to 20 by the time jfk was elected. for me the fed is monetizing the debt. we have to start the entitlement process and we can't get to any of the other side of this until that happens. >> the fed is doing what it can because it's the only game in town, but its actions frankly are a problem over time. >> of course.
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>> the congress and the president need to start working on tax and spending policy. we are living on borrowed time. the purpose of the burden barometer is to show that our problem is much worse than the politicians claim. it's getting worse very rapidly by doing nothing, which washington is very adept at. here's the positive side, while we get a greater sense of urgency to hopefully get more timely action, unlike the debt clock, if we do a simpson-bowles, domenici-rivlin, this is not going to go down a down., we're at the crossroads and rapidly approaching the tipping point, we can do it but have to get more leadership. >>, that's what you say romney is acrewing in his i.r.a.? >> might be. and you know what?
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god bless him. >>. >> whoa, oh! you have a new tact. david, you want me to work that? >> listen if you can make it happily' do it. >> i'm going to make it happen. coming up, keeping your head in the game, a trader psychologist ready to share her secrets on making money and not losing your cool. >> this is serious, we can all get down on the couch. >> i'm worried she might see something in me. >> "squawk box" wants to hang out with you. we're hosting a google plus hangout with author ben mezrick and andrew ross sorkin. first go to cnbc's google plus page and add to us your circles. each day we'll be soliciting your questions, ask ben about his books or andrew about the show. if we pick your question, you'll get an invite to hang out on august 15th with ben and andrew, starting right after "squawk box." you can also submit your questions via twitter t to @squawkcnbc, #squawkhangout.
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we're back on a thursday morning. if you ever wonder how wall street's top traders and investing legends are able to bet the house in big trades and come out on top, joining us now is denise schell author of "market mind games" and principle at the rethink group. i feel like i'm supposed to get on the couch, right? >> i just asked her, both of us after the show. >> let's just be clear, what you do is you help analyze and help people with their thinking about trading. >> yes, basically, coach traders, portfolio managers, some executives. >> so biggest problem you see, sort of mental block. >> the biggest obvious easy one to get to is fear of future regret, which turns into fear of missing out, which turns into i shouldn't get out of this position, i should double down, which turns into what happened at jpmorgan, which turns into i better get into facebook on the retail side. >> um-hum. >> to oh my gosh i'm going to miss it.
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>> every retail broker marries his losers and sells his winners. you can't go wrong, and take a profit with a 15% gain and more marry the losers and ride them down. >> there's real research that shows the fear of future regret, you actually tack it on to a decision making model that says we're rational which we of course know we're not. if you tack on fear of future regret it's what we do. that's the easy, superficial thing. >> if you were going to work on me or bay to that issue, what would you do? >> first of all you'd talk to me about a news story coming out that maybe you're going to get or not get, and your feelings about what if we miss it, and i'd talk about your feelings where you maybe have missed it other times or not missed it other times. >> this is getting really deep. >> um-hum. >> i'm a little anxious. >> no reason to be anxious. what usually happens is people are happy to talk about it. >> what about the question of properly sizing your winners, right? you get something that goes
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well, and you're able to really go all in on it, right, because that's what some of the great macro hedge funds do. guys will tell you some of the big notable hedge funds say i get 70% of my trades wrong but i get out, right? i'm wrong, i'm out, i'm wrong, i'm out, but then when i start getting on the right trade, they're able to get that trade so big that they make up for all the losers and then some. i was actually in principal trading for a time and to me that was one of the challenges, not getting the idea right. i had no problems stopping losses but to get the trade big enough to make a difference. >> what are the chances that someone who bought apple at 50 or 100 still owns it at 600. it's almost zero. >> it's low. >> it's almost zero to be able do that and yet you buy a stock at 40 and still got it at 5. >> because you constantly think, and honestly it is, this is like what i believe happened at jpmorgan, when it's against you constantly think if i get out
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now, it may come back and then i'll really feel like a schmuck. >> cancel is not now. >> it plays into what i think has to be done across banks and any trading situation is psychological risk management. until we get realistic about what's going on in our heads and put the models in that, we're not going to. >> the investors you've worked with have what going for them? i assume there's weird quirks, some people? socially awkward? >> not a weird quirk out there. >> what is it? >> that they understand they're trading other people. that's the big difference between the professional and the retail, is they get that they're trading the other guys. now jpmorgan forgot that, but in general, they know that it's not about like the actual value. it's about what is someone going to pay for this tomorrow, pay for it next year. >> if i'm a viewer and i play the markets, is that the suggestion, you have to know
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you're playing somebody else? >> if you think about should i get into facebook, apple, should i get into manchester united, you have to say is my neighbor going to pay more for this, two years from now or five years from now if i'm going to sell it. if you think of that in that social context you do make a better trading decision. >> what should be i thinking about with, if i have a two-foot putt and i can do it like with my eyes closed on the putting green but i can barely pull the putter back when it matters? >> because you were nervous from the last shot most likely. >> you're right, i missed that one, too. >> so what you actually say is the exact opposite of congressional wisdom. you know what, joe, i'm nerve bus this shot, it's okay. just let yourself feel the -- >> call myself joe or idiot? >> no, don't -- i don't care. >> or loser. >> there is a huge misconception about the whole positive thinking thing. >> you're answering me
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seriously. >> i am answering you serious totally. >> she helps people with marital problems, too. did you not read the notes? there are people who come to her with all sorts of issues. >> when my wife sees me miss these putts it hurts our marriage so it is all tied together. >> it is all tied together. the truth is we actually use feelings and emotions in all of our perception in judgment but that's not what we believe, and so if you work with them in a different way, you putt better, you trade better. >> you don't lose penalty kicks and cost your team the soccer tournament last weekend. >> we have to leave it there, come on back and we'll install a couch on the set. >> looking forward to it. >> and a putting green. >> absolutely. coming up, coming off our biggest day of medal wins so far, equal to super saturday, team usa going for more today on the field, on the ring and on the track. we'll head to london for an update. and then at the top of the hour, try to get private meetings with both president obama and mitt romney, both told them the only way it's going to happen is if he paid up in the
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the u.s. is back on top with the medal count. cnbc's michelle caruso-cabrera,
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cnbc's international correspondent, somehow equates to if the olympics are in london, i need -- i don't know. i don't know how that works, but tell us about yesterday's action and what can happen in a day. >> how about the beach volleyball last night, you so he that, misty may-treanor and keri walsh dominating, all u.s. final so we knew the u.s. was going to win both silver and gold. the question was who, but this was phenomenal, and this is their third time winning the gold medal. they say they're retiring after this, but it was absolutely phenomenal. you know what strikes me the most about this, joe, misty may-treanor, keri walsh jennings, andrew ross sorkin, ow, two names is getting you pressie passe. are you feeling okay about the joe kernen? >> it's passe for winners apparently. that is true, though. andrew, you were early with this, too.
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that is amazing. you know, those, when they played both china and they played somebody else, i would have thought maybe it was more exciting. playing the other american people team i wish it would have been someone you wanted to beat. it's nice to get the gold and the silver. >> i know. >> go ahead. >> agreed, agreed. no, i agree. >> michelle, why doesn't the sand stick to their bodies? >> maybe they oiled themselves up, i don't know. >> that would make it stick. >> i don't know. >> we do know. >> oh. >> it was a test. the sand used in beach volleyball competition is regulated apparentlily. there are no pebbles or bits of shells and the size is a bit larger and the shape ensures a smoother grain and that is why the sand does not -- in case there was any viewer think being this. >> i wasn't thinking about it but i don't like the beach. >> you don't? >> i don't like the sticky feeling, the ocean or --
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>> you need to get special sand. >> right, special sand would make it better. >> there was no sand at track and field last night, guys and the u.s. was so dominant in track and field we have won double the gold medals of any other country, pretty phenomenal. there you go, this is usain bolt, i'm sure last night, i'm having trouble seeing this screen. >> crazy. >> i was at the event last night. this is not usain bolt. there's jamaicans in every single heat, but we have had a tremendous series of athletic wins and it's been, the women were incredible last night. >> that's usain right there i think. >> this is usain bolt. he jogs toward the end, you know, makes it look so easy. this is just a semifinal. tonight is going to be electric. here's the other story about usain bolt. there's a story in the british papers. look at him just jog, here we go towards the end, i'm relaxing. story in the papers he wants to
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try out for manchester united and the assistant general manager of manchester united tweeted out last night they are going to give him a go. we'll see if this is actually for real but he has told reporters he would very much like to try out, for those who don't know man chested united is a soccer team owned by an american. >> he leads himself, just kicks it once and then outruns everyone that's going after the soccer ball. >> yep. >> that might work, even if you're no good at soccer, if you're that fast. >> there's a lot of fast guys in the english premiership, not that fast, but i don't think so. michelle, are you going to go to the soccer game today, the women's game? >> i'm going to try. i'm working until almost 7:30 tonight, shamefully so it's going to be tough. >> yep. >> maybe we could sneak in, and the "today" show is right next door. guys, you never know what's going on over there, sometimes it's like at three-ring circus because they get every winning athlete every single morning and this morning i'm walking by and
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shawn johnson who won a gold medal in gymnastics teaching bobby's new tricks, the police. let's take the photo, teaching them something. this is going to be i assume some segment later on the "today" show. they look good, can't jump as high as she can, even though they're triple her size. >> have we figured out why everything else changed in the world but live olympics and live sporting aggregates, eyeballs like, what have we decided we've learned from the ratings that the olympics have been able to get? it's incredible. >> it's going to sound cliche, but we just love the human spirit. >> i guess. >> and the drive for success. i mean, we feel bad when they cry for getting silver, right, because gosh they wanted gold so bad, all of these people want to be number one in the entire world. think about saying that. i am the best in the entire
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world. it's extraordinary. >> thanks, michelle. we got to run but coming up next, we've got a self-made billionaire whose entrepreneurial tentacles touch music to drag racing, jean paul dejoria, co-founder of paul mitchell and petrone is here for the remainder of the show. >> hey, guys. >> good morning. rful collaboratn is backed by an equally powerful and secure cloud. that cloud is in the network, so it can deliver all the power of the network itself. bringing people together to develop the best ideas -- and providing the apps and computing power to make new ideas real. it's the cloud from at&t. with new ways to work together, business works better. ♪
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doing business in america. from tequila to hair care products, entrepreneur jean paul dejoria has ideas on fiscal reform and job creation but can't get his message to the white house without writing a check. he's our guest host for the next hour. breaking news on unemployment. we get jobless claims at 8:30 a.m. eastern time, plus the golden state on edge. bankruptcies, fiscal emergencies, and breakups. >> you've given me no choice! >> and will this spread to california's biggest cities, don't expect a hollywood ending for this cliffhanger. >> oh, god! >> hold on! >> the third hour of "squawk box" begins right now. ♪ say good-bye to hollywood, say good-bye my baby ♪ ♪ say good-bye to hollywood, say good-bye my baby ♪
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welcome back to "squawk box" here on cnbc, first in business world wild. i'm joe kernen along with andrew ross sorkin. becky is off this week. our guest host is barry knapp, barclay's head of u.s. portfolio strategy. foreclosure process increased 6% by last july, that reflects banks getting caught up with the whole process, after foreclosures were stalled last year because of those robo signings and all the hoopla surrounding that. nationwide settlement was struck back in february. citigroup's mortgage unit is testing a program to allow people to rent their homes back and not foreclose on them. bank of america already has a similar program. citi will offer 500 borrows the chance to hand over their deeds to the bank and in exchange the company will offer leases so that the homeowners can then rent their houses back. in our global headlines, china's annual consumer inflation fell
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to a 30-month low last month, consumer prices rising on 1 .8, well below last year's higher levels. economists say the new statistics give the chinese government more room for additional stimulus. u.s. equity futures at this hour have been trading down, now they're down actually 21 points or so where they indicated open would be at this point, about 1.6%. >> joining us for the next hour, an entrepreur spreading the message of fiscal reform and job creation at both political conventions, jean paul dejoria, ceo and co-founder of jean paul mitchell systems. you no he his face well for that and also the coo of petrone spirits. thank you for being here this morning. >> you're very welcome. >> i feel like i'm grown up watching new commercials. we've had you on the show before. >> yes. >> i don't know if we've had him, have you been here in person? >> i think on a remote. >> on a remote. >> you're truly an entrepreneur. >> this is the real deal. >> america works, yes, america works. it's interesting people say
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we're going through one of the worst recessions now. when i started jean paul mitchell systems in 1980, unemployment was 10.5%, interest rates were 18%. you waited in line for gasoline and inflation was 12.5%. >> i always talk to andrew about that. and people have decided this last financial crisis was worse and maybe it was because of credit, but if you go back just the way we felt. >> yes. >> we never thought we'd be able to buy a house again. >> absolutely correct. >> we had hostages in iran. >> that's right. >> we felt so -- it was a real dark time for america. >> and waited in line for gasoline sometimes two blocks. >> and 22% misery index. misery index -- >> exactly. >> that's why i don't -- >> so here's the question. you started a successful business during a period like that. >> in a down market, um-hum. >> is all of this conversation about what's going on in washington just an excuse ultimately, for executives and i ask that because --
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>> something happened back then, andrew, in terms of we changed what was happening in washington back in 1980 as well. >> there was also, he took a while to change, it was not an overnight situation. >> big change, though. >> how do you look at it? we had $700, i slept in the back of my car, and i just thought, we had a product, by gosh, we could get out there because we believe in what we have. can you do the same thing today? i have 10,000 people in appalachia that we taught how to garden, how to grow their own food, feed themselves and take the excess for those that are destitute and then take the excess and sell it at farmer's markets and grocery stores to create an economy. is it working? yes, it is. it's how you look at something. there's always that opportunity out there. >> you could have created this business today or no? >> oh, yes, definitely. heck, yes. >> that gives you hope, right? >> i could use some real hope here. there's a place in l.a. called christmas, i go down there and speak to them. we take the homeless off the street, food to eat, clothes to
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wear, place to stay. we teach them how to fill out a resume, give them bus tokens to go around. out of 3,500 people in the program, 1,800 got jobs in the last seven months. th're out there. they work. >> the private sector and the ability to earn your success is what we're talking about here. >> that is correct, 100%. >> the lady yesterday, a great economist from zambia. it was strange on break she said "thank god the aid that africa, this huge amount of aid has been cut back." now people are doing it themselves. they're learning about earned success, they're feeling good about themselves, and suddenly, things are moving instead of just -- >> that's america. >> that was america. >> you're saying that's america. america should be that way. >> still? >> we've been slowed down with a little bit with some socialistic ideas that just don't work. look at europe, they have these problems but i think america is strong enough and the people are becoming much, much more aware, and not letting the politicians
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b.s. them, to be in a nice way. maybe it does work, maybe things aren't do that bad. maybe i can do something. look at all of these people doing something, look at the homeless getting jobs. why can't? i in the professional hair care industry, for everyone that graduates from beauty school, there's at least two jobs minimum waiting for them, hairdressing. at least two jobs waiting for everyone that graduates. there's a lot going on out there. >> i'm confused. i thought, my understanding was that you were frustrated with what's going on in washington. >> of course. >> everyone could be frustrated but the question is how much of what's going on in washington is impacting the business xunt comy in your mind? >> it's impacting the business community but i'm not letting it impact me. people are doing things they shouldn't be doing. no disrespect in washington, d.c., several months ago you had 12 experts in a room for a week, republicans and democrats alike, closed room. get rid of $1,200,000,000, you
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have cameras in the room, of course they don't want to discuss the people that they owe because they were elected. they don't to do that, no cameras. we'd solve that and go after $5 trillion off the deficit in ten years. not $1 trillion. that's embarrassing. how can they do that? a lot of things washington does is extremely frustrating but i think more and more as people see the truth and not just one side of it, they realize something can be done. i have an answer for the next president, i'll make it very short. they won't do it. president obama, for example, when he ran said i will veto every bill with pork barrel spending. i will get rid of lobbyists if you elect me. you should have put that in writing. here's what i will do, if i don't do this, impeach me. everyone who runs for president makes all these promises, and a lot of them are never kept, they're just political promises.
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you write on a piece of paper, i will do this, this and this. if i don't, you impeach me the first year because i lied to you like everybody else. you'll have a real honest to goodness president. that's what america needs and no one will do it. i wrote both of them, they won't do it. >> you tried to get a meeting with both of them? >> the way it's set up, i went through democrats to get to obama. if you go to his dinner it's $35,000, you could present it to him personally for three seconds. romney, they're trying to get me with romney for the last two months, for him and i to have a one on one for two hours so i could fill that guy's space and energy. are you full of baloney? are you really coming from a good spot or are you just being another politician and i'm going to tell them both the same thing. i already have it in writing. they haven't answered me. >> how much in two hours? >> hopefully two whole hours. >> the 35 grand? >> the 35,000 was to go to a dinnerby ma is attending.
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>> how much does romney want? >> nothing but we don't know what's going to happen. i got one thing they called me up and said will you throw a fund-raiser for him, of course not. i'm middle of the line, not a democrat, not a republican. i go to both conventions. i represent the creative coalition. you know who they are? we're a group that keeps jobs in america, called the creative coalition, we're all about keeping jobs in america. that's what the whole organization is all about. so i'm there to talk to both groups as an independent, by keeping jobs in america and how do you it. >> do you think there's a moral imperative as a ceo or executive to keep jobs in america, meaning if you're tim cooke at apple, does he have a moral imperative not to outsource jobs to china? >> one of the best questions ever asked of me, yes, we do, everything from paul mitchell, a hair care product, liquid made in the united states. could i save money making them abroad, you better believe it. only things like hard tools you
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have to make abroad but all of the liquids for our products are made in the united states of america and i do that because by spending a little more, it's not that much more but by spending a little bit more, i have more people working. my customers. >> if it was not just a little more, if it was a lot more you wouldn't have any choice. there are certain companies that have no choice. >> remember, it was a lot more for a long time. we sent through 25 years of wage disinflation to get to the point where a broad range of manufacturing products are actually competitive, will be competitive with china by 2015, all in productivity, labor costs adjusted, but if we just mandated that in 1980, then we would have gone down the road to servedom and be europe. >> there's something called efficiency. i could save a whole bunch of money if i made things abroad. i have my people so efficient, whether it's petrone, whether it's paul mitchell, rock
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entertainment, so proficient, they could do the job of ten people. >> making a decision or moral decision? >> both. i'm going to do it here and make sure we're so efficient that i could afford to do it here. >> if you make it without the business aspects to it, he won't have a business. >> you have to do both, i'm going to do it, morally we have to but why can't i make our people more efficient than they are today? >> so now you believe that the american public actually has the stomach for debt reduction and getting our situation in order from that perspective? i think that, too, based in part on the fact that household debt-to-gdp dropped from 91% in 2009 to 84 now so the public is doing it. >> oh, yeah. >> i think they have the stomach for it and there's evidence at the state level they have the stomach for it, new jersey, wisconsin, san jose, san diego. the question is, is this the inflection point? is november the inflection point where the political class gets dragged along by the public or
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not. and put it to you. >> we'll see what happens then. people are learning, instead of needing 100 people to do a job you can do it with 70 people and you don't have to leave the nation. especially the movie industry, jobs go to other countries, why? >> we're going to continue this conversation. i want to find out what product you're wearing on your hair this morning. >> you betcha. >> that's how you appeal to romney to getting in. he's got great hair. you could probably make it better. >> we know the guys are busy but i'll get in there. >> i want to hear about that. coming up the climate for job creation and business in america is already a hot button issue for the election. up next, we'll ask andy stern what he'd like to see from washington to encourage job creation, the former president of the service employees international union, the biggest in the country. >> most interesting, he was on simpson-bowles. >> really interesting. >> at the 8:30 a.m. eastern the closely watched weekly jobless claims number, as we head to break, check out the "squawk box" market indicator.
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welcome back to "squawk box" this morning. the futures right now we've got arrows but not horrible
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just yet. the dow opens, would open about 13.5 points off, nasdaq slightly off and s&p 500 is off slightly as well. we have a deal crossing the wires just crossed a couple seconds ago, national oil well varco is buying robbins & myers, shares rising sharply on the news and opec says the world oil demand growth could fall short of forecasts next year, this could lead to a turbulent outlook for the global economy. joseph? >> sounds like ice cream, r robbins & myers. they're in dun kkin ' donuts. >> love dinkunkin doughnuts.
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joining us now form are seiu president andy stern, a senior fellow at columbia university's enrichment center and also pointed out a member of the simpson-bowles commission as well, which did you have any idea at the time that, i wonder how many hits you could get every day just on people in the news business saying those two words, "simpson-bowles" together. can you believe it? >> now i can. i wish it had gotten a little more attention as it went on but it's certainly become the favorite story post-simpson-bowles. >> you voted against it at the time and i remember we talked about it once when we were in washington, you joined us on set but can you remind me, what was it that you didn't like and could there be something done, could it be tweaked to where it would be something you think it would be a good thing? >> i believe that the $4 trillion goal was able to be met, in fact, wrote a report
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myself that outlined how i would do it. i just thought there were a series of things, one of which is about job creation, which it was the lack of investment that was really talked about. i had hoped for an infrastructure bank or some other ways that we could create a permanent way to grow this economy but i did believe we had to balance fiscal kaucuts along with opportunities for revenue. i think it could have been tweaked, something could have been done. >> i want to ask and try to understand how you feel about just overall the place for unions and in the country, because i know you think it would strengthen the middle class and something that's necessary to maybe narrow the income disparity that's been growing over the last 20 years. why do you think that union membership has declined so much? for a while, it looked like it was indirectly proportional. we had a great economy as it was declining, and everyone was doing well in the '80s and '90s, and it almost looked like you know, maybe you could correlate
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lower union membership with a better economy. now i guess you would say the opposite, that maybe as low as it's gotten, i don't know, was it 7% or something, maybe that's a reflection or cause for the income disparity. what should union membership be and would you say in the united states right now? what would be a good number? >> well, i think the good number is the way that we have to answer the question of how are we going to get a country where people are growing together and not growing apart, and i don't know where that number exactly is. but right now erin burnett says 25% of the inequality in america is caused by the lack of union power in the economy. we have america that's becoming about rich and poor, and i think what unions have to do is play a pro-quality, pro-growth, but pro-sharing in success role in the economy and i think in every industry, that means something a little bit different. >> so you still think that, unless corporate managers or corporations, unless their feet are held to the fire, the free market or the marketplace itself
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doesn't dictate what a fair wage is? you think you need union bargaining and collective bargaining to get, to hold the management's feet to the fire to where enough comes out of corporate profits that is shared with workers? >> i mean, i think you need a combination of things and clearly unions are one of them. we need a tax policy, you know, for instance, right now, when it comes to pensions, it's discrimination if you just give pensions to the ceos, but when it comes to stock options, we don't require stock options being given up and down the wage and work levels, so i think there are a lot of different factors that have to go into it, but the bottom line is this. unless there is middle class wage growth, america's going to be in trouble in the long run. >> andy, there was a story, i don't know if you read it, front page of the "new york times" three or four weeks ago about apple stores and the staffers in those stores and what they were paid, and it was a bit of a lament that they were getting paid i think something on the order of about $11.25 an hour and that given the profits that
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apple, should be higher. apple's stores are not unionized. is that a fair wage? >> well, i think it's a wage that occurs because people are desperate for jobs, the labor market has too much supply, and people are taking advantage of the situation to pay people what they have. i wonder why there isn't profit sharing, stock options something where everyone gets to share in the success. here is the issue. andy grove, who was the founder of intel, created this global revolution, says the number one job of a nation state is to create jobs. right now if you take the total number of u.s. employees in apple, microsoft, hewlett-packard, sony, dell, and apple as well, all of those companies combined have less jobs than foxcon. so the point is a global economy will work in a certain way, distribute wages globally instead of nationally. the question is what is america's plan? china has a plan. they steal our technology, they
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in a ma nip plate our currency, don't let certain kinds of investments into the country. singapore has a plan, germany has a plan. america is still worshipping the market and the market will not work in the 21st century like it did last century. >> andy, you've seen studies and people can make studies and come to different conclusions but there is the notion that sometimes unions actually hurt total job creation because for whatever reason, because you're paying fewer people more, but there's fewer overall jobs. are those patently false or are they, the studies that are done, the research done, has the wrong assumptions? that is the perception, right? >> well, i think there's two factors that go into this. one is when unions do, as we do, in the kaizer permanente, the largest health service sector partnership in the world focus on quality and efficiency, we make our companies more productive and therefore we create jobs. at the same time, when we raise wages of janitors, just like
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technology, employers look for more efficient ways to do things, and sometimes that raise of wages comes with a loss of jobs. i think you can see it on both sides of the equation. >> i want to ask you a nuance question about private sector unions versus public sector unions. one of the arguments you talked about share of success with private sector unions is, if the company goes down both you know obviously get penalized from that. public sector unions there's no such event, right? maybe citi goes under but the federal government doesn't go under. so how do you reconcile that? fdr thought we should never unionize federal government employees. >> good question. andy, sorry, we have these things called hard breaks and we have to pay all -- we have union employees at nbc so we have to pay them and got to take a break but thank you. let's do it again. >> okay. >> we have to have him back soon. you do what you do... because it matters.
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coming up a special report
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on the fiscal disaster in california. happened to us and cities have declared fiscal emergencies. cnbc's jane wells is going to tell us which cities are on solid ground and which ones are in the danger zone, and we're just a couple minutes away from the weekly jobless claims and international trade data as we head to a break. look at the u.s. equity futures. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 trade at charles schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade up to tdd#: 1-800-345-2550 6 months commission-free online equity trading tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-800-836-8799. latex beds, and now beds infused with gel? but through all the fads, 6 million people have found their best night's sleep on something else.
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we are seconds away from weekly jobless numbers. rick santelli? >> the survey says we move from 367, slightly revised from original 365 last week, moved down 6,000 to 361,000. that's the current read. if we look at continuing claims, they're basically hovering around 3.33 million, and that's from a slightly revised 3.28 million, we'll call it, from our last look. those aren't exactly synchronized in terms of initial claims on a time line but give us an importance glimpse here. we continue to compress in this
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350 to 370 area. yesterday productivity was a whopping 1.6. there's a general rethinking is the calibrations for initial claims, is that correct given that the biggest cost on a balance sheet, human capital is the cost that business doesn't want to take on. it wants to wring out every drip of productivity from the current crew and you guys have been talking this morning about maybe some of those reasons. we have inventories data yet to come, the last of the options, today's 30-year bond and it's august, europe is on vacation for the most part, a lot of traders in this country. it will be interesting to see how the 30-year option goes today. back to you guys. >> for more let's get to steve
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liesman and steve murio, and i knew you were going to be on because i saw it on tweeter -- twitter. you tweeted you were going to be on. you're also in the guest list. steve, what moved you about these numbers? you were excited. >> i have to say i've heard a lot of bad anecdotal data about employment, people laying people off and that kind of stuff and i'm glad to see the claims number. this is the second good, clean week we've had after the layoffs, the auto lay yourselves distorted the data the last couple weeks. i feel like if we're settled down at 360, it's not as good as we were hoping when we were trending down from 350. we were trending back up 373.80. the trade day is also good, i did a double take on it, we have 43 instead, this should flatter or help out the second quarter gdp numbers, going to be revised up about a tick.
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depending on the inflation number, looks like petroleum fell and non-petroleum goods also fell as well. exports rising 0.9%, imports down 1.5%. this is overall good data and i think that's going to help the rally. i've been very interested, throw this to jim or barry, the market looked like it smelled somewhat better data before the data came out of the oven. is that what's going on here? >> today? >> the rally, the last little bit. you don't think -- >> how do you know whether it's qe3. >> or it's draghi or whatever? >> not really. >> i will say one thing is that the market liked the better jobs data. >> steve, love you ought there here but what's showing here is this, american business and
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entrepreneurs are working and it's working. when exports go up and imports go down, american business is doing something really right, regardless of what the government is saying are what they're squabbling over. >> something's happened in the last month where we've moved away from think being qe3. >> really? i thought 8.3 allowed us 160 said no, 8.3 said yes. >>'s&p ever breaks 100 handles that's when qe3 comes. that's in the back of the room somewhere and now we can look at the data. it's not just a decent number now, it's a couple of claims number in a row. >> rick, you were trying to say something? hold on. >> sorry, i didn't see the trade balance and definitely that's good news down $42 billion and our guests, we all love our guest. >> jean paul. >> well, the mitchell products are of course a favorite in my house. listen, here's the thing. he said that it's good news to see imports down, exports up but the best news i think would be
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to see imports up and exports up. >> i agree, rick. >> we're looking at the trade deficit but i'd like to see the entire pie grow. >> let me add, rick, i don't know what the price effect is. you may have had the decline in imports could have been all price. i don't have the real data, the inflation adjusted data in front of me but you're right that when you have a surging imports, it could be a sign of optimism on the part of retailers and that stuff. >> that's why i think you just look at the claims numbers because the employment situation is a much bigger deal. domestic economy has got to drive everything. we're not going to get help from europe or china, so if we can convince ourselves that things are going well on that front, housing to a second, to a lesser effect but this is a big deal to me. i don't think the stock market necessarily has to rocket off of it. >> the point i want to make, i think the stock market and i think this is borne out by the behavior of the market on this data, on data in general is that the market wants good, economic news, far more than it wants help from the fed. >> that's saying something. >> amen. >> it's a big change.
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>> what, rick? >> we're close to 170 yield, steve. i find it amazing because the boom had been somewhat leading the way towards higher rates. the boom isn't as aggressive as the ten-year. these are the highest rates since may should we close up here. i find it fascinating. >> but also, steve, how about oil, too, rick? once again you don't know whether that's better economic news or whether it's qe3. >> it is being driven by the inflation component of the bond yield. break evens are moving out, not so much because real rates are moving, so it may just be there is definitely an element of expectations around fed policy and as much as until friday it was all stocks with bond-like characteristics that led the rally. you're right, since the payroll report on friday we've had a bounce in small caps and cyclicals. >> are you back to no qe3, steve? >> i'm on the fence. let me explain. >> you were no, got close to
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yes. talk to a guy like rosengren, is he allowed to say that and they don't do it in. >> you asked the right question several times, joe, which is i do not know is rosengren trying to make a reality by talking? >> because he's gotten the bounce off of it. >> or is he the leading guard of it? i don't know the answer to that. >> they don't send that out. >> i don't know they send anybody out. you're giving the fed a little more credit. i don't think they are there doing this stuff as a coordinated mechanism. >> as businessmen shouldn't we be looking at exports went up, imports went down. do more of what it took to get the exports up. it's working, simpler as a businessman. >> the question with qe is not whether or not it's going to happen, it's whether or not it's there, it's needed. if asset prices go down precipitously. if i had to bet i'd say no, but who caress? 'a put. the put is there. >> that's where i am, on qe, if
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this middling data, 1.5% gdp, unemployment rate that isn't urnlg of surge i surging, not enough to bring the fed in, i believe qe is a very consequential step. i know the fed thinks it did more by extending twist than the market gave it credit for. market yawned on the twist extension. the fed says it's a $260 billion program, isn't anything. >> rick, on a percentage basis that's a good move from 1.3 to 1.4. is that happening? >> i tell you what, i personally think that the slowness -- consider this. we all talk about the boone and the guilt is a flight to safe and it's true but i think some of the seriousage zitds in euro anxieties in europe, england and the uk, stories maybe there will be a referendum, out of the euro completely. i'm not saying whether that's right or wrong but there is a
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big subset of safe harbor buyers that's associated with europe. i think that's down a bit. and i think as the market slips, it's evident by the same symptoms of the poor auctions, i think that's the reason the secondary credit markets are slipping a bit. the real key, in my opinion, will be, you know, when we get to the second week in september, if we see the same dynamic, then i think it's something we need to worry about. >> if you were expecting qe3, would bonds be at 1.7? would you be seeing something different happen there, if qe3 was eminent? >> you know, joe, i really wish i could answer that, but my gps on where rates ought to be, how much is flight to safety, how much is the oasis in the desert, how much is the fed, it's very difficult, and this is one reason why these floors and volume keep going further down. >> i think you have to value the market. >> could be bond vigilantes going back because we're doing qe3. >> let me ask this question,
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where is the market correctly valued with a 2% yield on the ten-year? that is really i think the dynamic. >> 2 isn't higher. >> it's a half a point higher from where it's been and a lot of concern about the earnings outlook i want to know when you plug that stuff, earnings unit here. >> what else mentioned, you talked about safe haven, rick, and there was tremendous longs in the treasury and tremendous shorts in the euro. this was a week without data. it's not unusual to see people cover those positions and give a little bit more risk on perception than ought to be in the market. i'm risk on but not quite as much as it looks. >> thanks for a great conversation. coming up, more from jean paul dejoria and barry knapp, plus fiscal disaster in california, that's what the music is all about, jane wells is going to bring us the story. >> well, california's restructuring itself, one city at a time. how bad is it going to get? please, jean paul mitchell systems, don't ever leave beverly hills. we'll show you a financial heat
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welcome back to "squawk box." jpmorgan chase has formerly restated its first quarter numbers, this just happened in the past hour to account for the multibillion-dollar london whale trading loss, reduced to $1.19, excluding certain items from the $1.31. >> we knew that number as well. >> exactly. >> but we hadn't seen the final news. retailer kohl's is under pressure today, earned $1 per share for the second quarter, four cents above estimates but its comp. store sales fell 2.7% which the company calls "disappointi "disappointing" and cut its full year forecast. and finally etrade is looking for a new chief
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executive. steve fryeberg departed. the bank has formed a committee to look for an interim ceo while frank petrilli becomes interim ceo. cnbc's jane wells joins us, i don't know whether you took one of your new bullet trains to where you are, certainly got to get those things going, don't worry about cities. >> yeah, $68 billion, joe it's gotten so bad the presumed republican nominee is making fun of us. listen. >> if entrepreneurs and businesspeople around the world and here at home think that at some point america's going to become like greece or like spain, or italy, or like california -- i'm just kidding about that bun, but if they think -- in some ways. >> so, where do we stand in california earthquake of fiscal
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emergencies? the quake began in 2008, vallejo went chapter 9, emerging three years later a shelf its former self but solvent. stockton went into bankruptcy and it could cut medical benefits for current retirees. mammoth lakes and san bernardino followed, six cities declared fiscal emergencies allowing them to try to raise taxes. fairfield and hercules up north and culver city, the heart of hollywood and el monte trying to pass a soda tax. four cities are thinking of declaring a emergency or threatened to, duarte, compton, fresno, oakland, finally, san jose threatened a fiscal emergency but voters instead approved a landmark plan reducing benefits for current retirees, unheard of outside of bankruptcy, but may have kept the city solvent, though that plan is expected to be challenged in court.
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analysts point to problems in pomona and englewood. when the state took back redevelopment money to pay its own bills that's where many say the problems started. i asked one bond specialist said this can't happen in l.a. the specialist replied "are you sure about that?" that's the mind-set we're dealing with. >> thanks jane very much. we'll talk about that now our guest host california entrepreneur jean paul -- >> sounds to me like they're learning business 101. you can only spend what you make. i feel bad for the people that are going to lose their jobs. i really do, and hopefully there will be something out there in the private sector for sure in the hair care industry there's things out there but they're learning the lesson. >> what happened again and again in those cities, overpromises to public employees? >> not only overpromises, but they spent more than they took in, anticipating more taxes are coming and they'll handle it at the other end. example in california now, i heard about this bond they're
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passing that will be paid in 40 years. it's for $1 billion, but nobody pays that for 40 years. so future generations are stuck with that. in other words, it's business. they're not running the city or the state like a business. they're just spending money. they're not balancing their books. it's a hard lesson to learn, but that's why they have to do. so what will happen? they're going to be forced to do it. you start raising taxes too much, people will leave. you wonder about what do you do with those that do make money to help the state of california out, i just bought 10,000 acres over the last three years in northern california, of conservation land, so people would have that forever, and not have to be sold off because of states getting in trouble. they've got to run the state like a business. they have not been doing that. so it's all of a sudden, oh, my god, it happened. of course it happened. it's been brewing for all these years. what is the answer? balance it right now, while you still can, a few people will be hurt. we're sorry they're going to be
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hurt. let's pitch in and try and get them back in than oon their fee again. you spend what you make, not what you anticipate making. >> even the stuff you saw in wisconsin and what happened, you would say that was a, that had to be done? you're behind -- would you say governor walker, you did the right thing? >> governor walker, you definitely did the right thing, okay. >> you're crazy. none of your friends must like you. >> my friends do. >> they do? >> of course they like me, my god, because i believe in giving back is the way of life. >> but you got to be in a position. >> yes, you do. >> you have to be successful to give back. so you shouldn't feel bad about being successful. >> if you are successful everyone's responsibility is to give back. success unshared is failure. whether it's buying acreage to society, helping the homeless kid back to work again, feeding people or teaching them how to feed themselves, that works. the handouts don't. >> we'll continue this conversation. coming up we'll get more from barry knapp and jean paul
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dejoria, and stocks to watch, ahead of the opening bell, we'll also head down to the new york stock exchange. fission sad news to report, fed reserve chairman erin burnett's father, philip, passed away yesterday. mr. bernanke was 85 years old. for many years we run a drugstore that ben worked at occasionally when he was young. our condolences to erin burneb and the bernanke family. based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.
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let's get down to the new york stock exchange. jim cramer joins us now. how are you? >> great. how about you? >> great on this side of things. what are you looking at this morning? >> there's a couple things. there's, i think, this restaurant business is on fire for a lot of companies, brinker was a good number. wendy's was a good number, jack in the box, good number. if you take them along with macy's, you get a view that people are out spending. cedar fare, that's a big theme park, put that in with disney, people are spending. they're not spending big but they are spending. i like that. >> what else is on your list? >> a little bit disappointing. i continue to see google going higher, lots of buyers.
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i continue to see apple going higher, lots of buyers. look, it's not a bad morning. i continue to -- the strength's amazing. >> do we care about jp morgan this morning at all? >> no. the market will sell it off because the market is stupid as would right now. ralph lauren down 9, finishes down 1.5 because people don't listen to the conference call. they should do home work then take action. >> wow. >> the strengths we are seeing, you saw the yield up to 1.7. is this because it's coming clearer that this is a growth story in the economy that's positive? is qe3 now back off the table in your view or what? >> i think so. jp morgan calls typical to the housing. they downgrade toll, the safe play in the group. and then they're upgrading all the bad guys, the polte, the kb home.
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people keep missing it, the positiveness. they don't want to believe it. there is just a bubbling story about the consumer doing better whether it be at the retail level or the housing level. no one wants to believe it, joe, no one wants to believe that anything can get better. but the numbers are pretty compelling. >> thanks, jim. see you in just a few moments. >> we have the merger between an oil company and ice cream place. robin's and meyers. >> just possibly. >> that's baskin robins. >> final thoughts from barry knapp and john paul dejoria. they will talk a little politics. >> before we go to break, a special thank you to our three squawk interns who are completing their internships today. aerial buckman will be a senior at elk horn state university. she kept track of all the music we play on the show and wrote copy for the anchors.
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john torici will be a junior at george washington university. he conducted thorough research on "squawk box" guests and robin knapp will be a junior at the university of colorado at boulder. robin produced interview segments and conducted extensive research on our guests. thanks for all your hard work and best of luck.
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it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter.
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get some final quick thoughts from john paul dejoria, ceo petrone. one second. let me ask john paul this question. you've talked about business, business, business, running things like business. there are those who think
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government is separate from business. could you be good at government service and not know anything about business and would that be good enough to succeed? >> no. because the government is the biggest business we have. and unless you have good business principles and you're running a nation, no way. >> now, people will argue about whether the obama administration has been negative towards business or whether business is just complaining because they're -- i don't know, they like to complain. do you think he needs more people with a business background? >> you got it. that's the reality. if he had more people with business background that got something done, not just talked about it, but ran businesses, got something done, hired people and gave back and helped out, we'd have a much better government than we have today, a much better one. we'd be going in a great direction and people will be happy. the important thing is for people to be happy and have confidence in the government. >> you continue along in the equity markets here? >>


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