tv Squawk Box CNBC September 10, 2013 6:00am-9:01am EDT
it's also tuesday. this is "squawk box" and we start right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. senate majority leader harry reid is delaying a senate test vote to authorize the use of force against the syrian regime. he says he consulted with the president, fellow democrats and republicans before delaying the vote. >> you have to take it with a grain of salt initially, but between the statements we saw from the russians, the statement today from the syrians, this represents a potentially positive development and my preference consistently has been a diplomatic resolution to this problem. >> the president was referring to an idea that got started by secretary of state john kerry
when he made an offhanded comment about what it would take to solve this through diplomatic reasons. we'll talk more about that. >> just a moment. but a new cnbc "wall street journal" poll finds 60% of americans are against striking syria. john harwood will join us with that in a moment. but first, andrew has a rappup of the day's headlines. >> the big one being apple. apple holding a major media event today. it's expected to update you with its lineup of iphones. the company will likely announce it has penetrated the world's largest mobile carrier, which is china mobile. in the run up to the party, in the past two weeks, apple has made buyups. twitter is preparing to get public. they have purchased public advertising company mopub. the deal is expected to help
automate ad buying on tweter. unclear what the means to advertise on target. china's factory output grew at its fastest pace in 17 months. and investment and consumption beat market forecasts. let's get back to the story of the morning, which is syria. president obama will be addressing the nation at 9:00 eastern time. john harwood joins us with a preview now and a look at the new "wall street journal" poll as becky was saying, showing 60% of americans do not favor striking. john. >> not surprising, andrew. that's wa we've seen in other surveys and that's what we've heard from members of congress. when you ask people, should the united states strike syria? you get about six in ten says first of all, they want their
congress meven giving the authority. he says he has the constitutional authority. another 60% say now, if you define it as cruise missiles launched from navy ships, the support creeps up, but it's still under 50% with a majority opposed. and when you talk about president obama's ratings on handling syria, two to one negative, and lo and behold, they're looking at a pretty good picture here and i think they're going to take it and ride it for a while at least while they test it and see if it's credible. >> you said that really well, john. stumbled on -- yeah. and michelle, first lady, i am checking to see whether -- who the source of that was. the source of that was the president, so i guess he knows,
right? he kind of alluded to 245, that his wife is against it, too, right, john? >> well, look, the president was against -- he spent two years trying to stay out of syria. >> yeah, right. >> but he's always had this reluctant to be involved. his hand was forced. he went right at the last minute when everybody expected him to use force unilaterally, he backed away from it. and i think a lot of that was from inside him. he decided to go to congress. congress said, hey, we don't want this. and lo and behold, you can't tell what happened exactly yesterday, but the president said he talked about this idea with putin at the g-20, the kerry simply throw it off-the-cuff not expecting it to be taken up? i don't know. but this has not be a strong period of the president's strong
leadership over the last couple of week and he's landed in a place that seems to be purposeful? >> what kerry has done? >> yeah. >> that's really hard to tell. the understand cases were it's something he never intended to be taken up. he kind of snapped. he said well, i'll tell you what they can do -- >> but then he followed up by saying he's never going to do that. >> richard haas, the former bush national security adviser told me yesterday, this is worth testing. >> could you do it? that's the question. do we know where they all are? can we identify them? >> it's not easy to see quester them. >> could we get them under some kind of international -- and the longer it takes us who firth out
the logistics, it puts off a senate volt and -- >> all true. all true. which is why one of obama's foreigner advisers was telling me yesterday, it would have to be coupled with some sort of a commitment to a political conference. the united states and russia have been talking about a geneva conference to end this war. if you have a real move talking about something credible on chemical weapons, then you might have something. certainly, we're going to explore this for a while. they're not going to vote in the senate this week, which i can tell you you is a huge relief for all these senators saying, yeah, if we have to vote for you to do the authority, i guess we can do it. but we really don't want a vote. and just as the president didn't want to go ahead, the members of congress didn't want to vote for it, either, and now they don't
have to for a while. >> france wants if people who were responsible for the last chemical attack to be brought to justice and brought up against charge in front of an international court, as well. and i guess those are things maybe more complicated, but, john, take a lot of time to put together. >> yeah. and i'm sure people are going to add more on to it to give it the appearance of credibility. >> asadz might not want to appear in front of a court on that. theoretically, it goes up to him. i think they're over there laughing, kind of, but i don't know. i don't know, john. we'll see. but you know what? no one really wanted -- me included, no one relate wanted to open the hornet aes nest. so weird. everybody is sort of get what they want, but it doesn't feel
like a vick toir for some reason. >> it certainly does not feel hike a victory. it's like a game where there's 20 turnovers and your team ultimately wins, but it's ugly. the team is going to by taking president obama's address to the nation live 9:00 p.m. eastern time and you can see it right here on cnbc. >> the president has a lot more gray hair than in that picture now. let's check on the markets this morning after a big day yesterday. a lot of it was on john carry. >> yeah, that's right, the idea that there might be a way to get out of the bulls without having an attack. it was the best day in almost two months nrt dow. and yesterday we couldn't tell, andr andrew, whether he was serious with the weapons ban, we couldn't tell whether he was sardonic, whether he was surprised, because his face
didn't change. nothing changed when he said that because he can't move any part of his face now. i've given you 24 hours to come up with something. >> why don't you say there but for the grace of god go you, groupie kernen? >> something. i've been thinking about it. >> it's in the front of my mind all the time. >> never mind. let's check out the -- that would be too entertaining if you did. let's look at the oil boards this morning. oil, this is not entertaining when it's still above $100. but it's down $1.06 on this. let's get to ross westgate who is standing by in london. ross, good morning. >> good day. good to see you.
we've taken our phones from you, tweer 9 to one advancers outpacing dexwlieners. the uk market yesterday was around around service points. really about is% now. we are doing better in germany and france, as well. the ftse mib is up 1%. we'll get into that in just a second. let's show you what's driving us firmer this morning. we've got autos doing very well. 2.5%. frankfurt motor show is on at the moment. all the executives there as you mute expect coming out with positive noises. the key thing is, besides they talk about key things in asia, we for the first to him they pointed some rooshgs about the
inn market, as well. chinese industrial product up 10. 4/%. it's the best performance since 2012. a lot of that investment, growth, retalt sales edging higher, as well. those two things helping fears about any kind of hard landing in china he's away. resources doing well. there are those sectors at the moment in negative territory, either. as far as bond markets are concerned, this is interesting. spanish yields, 4.48% on the ten-year. the italian yields, 4.501%. it's the first time span yash yields have lower than the others. sylvia berlusconi is looking at being kicked out of his party. that could mean the government
will collapse. most people think they won't, but you have to keep your eye on that over the next day or so. that's where we stand in europe. with that, back to you. as we mentioned near the start of the show, it is a big day for apple. the company hosting its first major event since june and a possible announcement with china mobile is waiting in the wings. is there any surprise we're going to hear about today at all? >> that's a great question. it's become such a sport to redifficult wh predict what apple is going to do. the last 40 years, this company has reinventsed how you incident every act with computer twice. how many people are out there -- you just said 40 years? >> 30 years.
i was thinking -- >> i'm getting ahead of myself a little bit. >> i'm looking out the next ten years and saying this company is going to regenerate the computing industry. but the point is, everyone is so unlike apple. they're completely done, they have nothing new in their roster. the effe the engineers have nothing else that they're testing out. i can't prove it because, oh, they haven't had any new products in a whole year. >> wait a second. can microsoft be reinvented, too? >> yeah, it does not seem particularly likely. clearly, they understand that they nationwide to reinvent. so they're transforming and becoming a hardware company. but i think it's going to be a pretty tough rode to hoe from microsoft here.
>> you just said a parity video of a new commercial for the 5s apple iphone, you said you didn't think there was a lot goc on. >> here at apple, we have break boundaries. we have a found a way to save millions. we call it the iphone 5s. the s sands for same. we think you're really going to love it. take a look. isn't it revolutionary? >> this is sort of the great critique of apple, which is that every year they come out with the same device and they put a new name on it and it's marginally better. >> but that's my point. in the last ten years, they have three new segment that's came organically. they didn't acquire entry into
the phone business. they didn't acquire becoming the biggest media seller outside of walma walmart. so i don't subscribe to that view that the company isn't innovative. there's not a tech company that i know, not even google, that don't produce any revenues. but everything that happenel has done has created new revenues and real earnings. today will be interesting because i think that, you know, the critique is reasonably fair. there's not likely to be any leaps and boned. >> what is the factory worth? >> we work it's worth 700. and you don't have to get a whole lot of earnings growth. when the stock was 700 the last time, it earnings had grown 60
pir60%. earnings are down 0% year on year. so the real question is not how well china mobile does in the first quarter, how will the 5s does in the fist quarter, but do we have a couple mr quarters of sustained groth and when is that new segment for apple going to come out? >> we will see if it happens today. throw it sounds like it's unmriekly. thank you for coming in this morning. appreciate it. when we come back, why some of the nation's biggest banks are warning of a slowdown and cutting jobs. fist, sports news. in movend night football, the philadelphia eagles won their first game under chip kelly, beating the washington redd skins. michael vick had a pair of touchdowns he ran in. he ran seven dimes for 55 yards. then the houston texans rallied for a 31-28 victory over
the san diego chargers. randy bullock fired a 21-yard field goal. in tennis news, are a fayel nadal won his second u.s. open tennis title beating novak djokovic. this is the 13th grand slam title for nadal. right now as we head to a break, let's check on the national forecast with the weather channel's alex wallace. alex. good morning to you. hot times ahead through the middle of the week. temps well into the 90s as well as st. louis and chicago. we're going to see some of this heat building to the northeast. highs here will be 10 to 15 degrees above average today. d.c., 94. we'll see the 90s spread up into the boston area as we head into tomorrow. but there is some relief in
it's time now for the executive edge. shareholderses are urging the tech gientd's board to consider allen mulally. this is a name we have been talking about for over a week. and mike lawrie. we talk about mulally in the past. lawrie is maybe someone you don't know quite as well. but he is at cfc right now. i think he just joined last year the first year for a first year
turn around. >> i like mulally. i liked him personally, but i wasn't sure this is the right thing. i thought you needed a tech vision. but i've talked to some more people in the business and i think what they need is an inspirational leader and it doesn't matter whether they understand how to code or understand any of those issues. we'll see. >> i like the idea of going back to someone who is almost like a lou gershner type. i liked it from the get-go because i think he's the type of guy who could really sit down and take a different look at the place and maybe bring in some new blood and i think that's a good thick. >> who is the cfc? >> mike lawrie? he has worked at a variety of different positions. he was in europe at a company there. value act, is that the hedge fund? he knows, he was there at value act for i think about a year or
so. so those guys know him pretty well. i think the biggest problem they're going to have with that is he is only about a year into a multi year turn around at cfc. i think it would be harder for him to walk away from that than someone like allen mulally who has gotten things under control and did what he set out to do. >> who is the other guy? woz or whatever. >> wozniak. >> he chased the ledgeend of steve jobs a little bit at this point. and he points out that he never wrote any code, either, i don't think. >> great. >> steve didn't write any code. theette he was a marketing guy. yes chased at jobs being, you know, all the accolades because he was -- i mean, it's the same thing. exact same thing. >> exact same thing. >> maybe the iphone -- is to be the iphone 5es. >> people will point on to all-skully as a play where that
was supposed to work. >> he went to -- the most amazing thing about him, he comes on the show now. >> yeah, he does. >> and he looks good, too, if you notice. he does. >> he was going to do what we do all the time. they're going to do what we were able to do now. i don't think you can do it with your blackberry, but we can do it with an iphone. send things, print things. >> oh. >> can you? >> yes. >> i love that piece. >> i've got good reasons for this. let's talk about another story on the front page of today's "wall street journal." it takes a look at mortgage lenders and home buyers being squeezed by a rise in interest rates. a number of banks are cutting jobs and they're warning of declining profitability in the home loan business. just yesterday, wells fargo said it expects mortgage loan originations to drop by 30% in
the third quarter. jpmorgan warned that it expects to lose money on its mortgage origination business in the second half. bank of america laid off 2,100 employees largely because of its decline and refinancing activity. gentlemen, i guess we had to know that this was coming. the average mortgage origination for a new one on 30 years i think is about 4.75%. >> i chalk this up to breaking news, air has oxygen in it. this is what happened when interest rates go up. >> yeah, but 30%? >> but it's a short time decline. you're going to see it bottom out next year and then they expect it to pick back up in 2015. >> jpmorgan, what did they say? they're not even going to make money? >> they're laying off thousands of people in the mortgage business if you look at these companies. >> but these are just the mortgage divisions. it's not like the bank is going under or -- not about going under, but they're still very profitable enterprises. >> yeah, but you had a mortgage bubble, a mini bubble that built up and people were trying to get
in before rates went higher. >> bank of america is laying off people as part of their larger -- >> part of their strategy. >> larger strategy. and i sometimes think issues like this become cover for larger strategic alternatives. >> that could be the case. plans that they've had in place for some time, anyway. our next story is for all you road warriors out there. there's a column in today's "new york times" that talks about growing pains for the airport check program. this program was designed to give eligible flyers a quick past through airport security. it's only operating through about three airports and it's only available at certain terminals, as well. last week, the is the sa announced an expansion of prechecks. it will add 60 new airports by tend of this year in addition to more airlines. have either one of you signed up for that? >> it's precheck on global entry. this is one of those cry me a river stories. i used it. when it works, it really works.
when it doesn't, it doesn't because the airport doesn't have the service. which is fine. it's going to get there. i don't understand the -- >> you said it worked once. >> there's a guy in the piece, it didn't work for him. i don't know where he's traveling. it didn't work for him at new york. 50 times a your. >> certain terminals at new yar and term terminals don't. >> that's one of the major airports around. but if you're at one terminal and you change planes to another terminal, the poirnt is like, that's great. >> the guy at the airline said it's not my problem, it's the tsa's problem. >> if it's the government side running the precheck program, what do they care? >> are you precheck? >> i'm not. >> i'm not. >> they more or less check the i.d. >> now i know what fbo is.
>> oh, yeah. >> there were so many letters being talked around. what does private even mean? >> i'm not even lying. i didn't know what the fbo was. >> you know the great line when the father bricks his son into the jet blue plane and the kid looks around and going, what are all these people doing on the plane? >> who are these people? >> who are these people. >> can i order a coke from any of them? we have details, first on cnbc, right after this. and then at 7:00 iron, our newsmaker of the morning, sandy weill will talk about breaking up the banks. what he told tuesday last time he visited us just about 13 months ago. we'll talk about new regulations five years after the financial crisis and his plan to change the world. first, though, as we head to a break, take a look at yesterday's winners and losers.
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see the difference all of us can make... together. good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. we're about 20 minutes away from our newsmaker of the morning, former citigroup boss sandy weill. let's talk about some of the day's top stories. harry reid is delaying senate
vote to authorize the use of force against syria. he says he consulted with the president, fellow democrats and republican leadership, all of those people, before slowing the timeline for the vote and it came late yesterday as the president did a round of interviews with the major news networks. >> you have to take it with a grain of salt initially, but between the statements that we saw from the russians, the statement today from the syrians, this represents a potentially above development. and my preference consistently has been a diplomatic resolution to this problem. >> you savannah was so nice, but she was tough. she was good. maybe the president hasn't told susan rice or john kerry or on nancy pelosi or -- because they're all confident that the vote is done. but when she asked him, are you confident? he copped to it immediately and said no, i'm not confident at all that i can get the votes. so i guess -- >> good.
nobody wants -- >> he's the one that can admit it. all the others have to -- all the cards fall. >> i guess the cards did fall because he admitted it yesterday. and then he even said something been you know, his family and himself. so meantime, an nbc news "wall street journal" poll this morning, it's a better number than it was before. 60% are against striking syria. i thought 70%, 75%. and then the congressional calls, 90/10 we're talking about. president obama so going to address the nation tonight at 9:00 eastern and -- >> i wonder what he's going to say. now he's got to rewrite it. >> we have a new picture with the gray hair, too. >> that's better. that's better. have you seen the -- >> i probably would have preferred the old commercial. >> the picture where the guy starts in the kitchen and it works all the way up to where he own tess restaurant and someone walks by and throwing flour in his hair.
and the president is definitely -- >> i think the president does. >> i'm shocked i don't age. but people that don't see themselves every day, they might notice i on do look different. >> term-two presidents age in eight years. >> it hasn't been eight years yet, but it's been five. it's a tough job. courtney reagan joins us with details. >> good morning to you, becky. apple is not the only big company making an announcement today. walmart is going to announce the largest brick and mortar smartphone trade-in program in the u.s. just in time for consumers to trade up to the new iphone, whatever it may look like when we get it. starting september 21st, in 3600 walmart and sam's club locations, consumers can trade in their old smartphones and obtain credit to be immediately applied to the purchase of a new smartphone. >> over 60% of customers are now telling us that the program of trade-in that a retailer offers could influence where they
purchase their next phone and over 50% of customers are telling us that they're going to do a trade-in the next time they get a new phone. so the time was right for us from a customer perspective. we also have built a program that we think is the lowest cost and the best value and the simplest program in the market. >> the smartphone consumer is a valuable one to many retailers and right now it's a growth spot. the category has been an under performer for the category. they have taken share in each of the last three increments. walmart isn't the only one offering a trade-in program. others offer cash or credit for used smartphones. jeff summers, vp of ebay marketplace says the iphone 5 is now selling for an average of $430. sellers can do whatever they want with that cash. it's not just tied to having to be used for the purchase of a new smartphone. >> and we have seen serious changes.
providers are shaking things up. people want to be able to trade in the phones more quickly and get back in the store, too. >> exactly. so with walmart's program, they're hoping you trade in that incentive for that crash trade-in value right away. they're hoping that we know that food foot traffic. i don't think they anticipated that they hold so much value. an iphone 5 going for $430 on he auto bay or $300 at walmart -- >> aren't you worried on ebay that the stuff is stolen? >> iemp sure that's an issue. walmart says their program is is he have easy. is it broke.? does it turn on? is this screen cracked? >> what this they doing? >> though they send it to an exchange partner and they recycle or refurbish the phone. so walmart itself does not resell the phones. coming up, fast were faster and fastest.
welcome back to "squawk box." a big day to explode, so is silicone. silicone is approaching its computer limits. our next guest offers a solution, quantum computing which could handle the tidal wave of big data coming our way and can do it thousands of times faster than today's computers. his company created the first and only commercial quantity item computer in operation today. good morning to you, vern. >> good morning, andrew. >> explain this. i always thought moore's law, we could keep going and keep going and keep going and i thought we could do it on silicone. when do we hit the outer limit on silicone? >> there's a variety of opinions on that. some people say it could be five years, it could be ten years, but it will happen. you get down to such tiny increments, it will run out of the ability to adapt.
>> and in terms of what you can do with quantum computing, one of the questions that came up as i was thinking about it talking to you is this idea that the ns is a, for example, has been apparently able to sort through all sorts of data over the past decade that we didn't know about. do you think they're doing that with regular standard chips or do you think that there's something going on that we don't know about? because it sounds like there's a lot of data that has to be competed. >> yeah, i really can't speculate on that. but i know that algorithms are a very important part of the computing mix. so i think part of wa folks like the nsa have done have developed clever algorithms to do things. you can put a lot of smart people on a problem and achieve a lot that you can with just algorithms alone. never underestimate the power of good developers. >> and in terms of what d-wave can do, you say a decade ahead of basically all of your
competitors. how is that possible? and wa do you mean by that? >> well, we are. we've built the first commercial quantum computer. most of the -- all of the other quantity item computing efforts are laboratory efforts and they're moving science forward. it's important. but the inspiration of our founder, majoritidy rose, was to basically build a quantity item commercial computer with venture capital. take it to the venture capital market, raise money, have a sustained effort. we've shipped our first computers to nasa, wells fargo. >> you can draw a logarithmic straight line on human achievement. one thing that gets exciting is when machines can do the planning and the design of new machines. some of the design, i know.
is that feasible in ten years where we can sort of pass the baton to things that are perhaps even smarter than us and more able to go where we don't even know we're going to go? >> well, it's start to go some extent now where you have a field called machine learning, which is a branch of artificial intelligence where you're actually using the artificial intelligence to program a computer. so it's very -- >> i remember as a stockbroker, a company calls symbolics. >> i remember them well. yeah. >> never worked. and it's taken much longer. it's hard to do. there are other people that say that there's an evolutionary copyright on the brain that we'll never be able to simulate that. >> no, i don't think that's true. and i think the ai field has made a lot of improvements. it was earlier, back in the symbolic stage. but today, companies like google, they use an enormous amount of machine learning and that's how they achieve advantage. so it's a really important
technique today. so you're seeing the reemergence of artificial intelligence. quantum computing a technique that will help that. >> how big are these computers physically? people are talking about we keep reducing the size of on these chips. i want to know what a d-wave chip looks like. >> our chip is the size of a normal chip, the size of your fingernail, but the apparatus is a 10x10 room. there's a lot of shielding. it has to be at almost absolute zero in a magnetic vacuum. so we have to have this very rare environment. so the size of the machine is really all about the shielding and the cooling. the chip itself is very small. same size as the normal chip. >> look ten years out. do you see a time when you don't -- i don't remember because i wasn't there, the bick vacuum computers, is there going to be a day when you don't need
a 10x10x10 room? oh, yeah. we'll reduce this over time. the exciting thing about our technology, it's super conducting. that means it generates no heat. as this computer sails over time, and he could with have millions and millions of bits, it adds no more heat. that is the problem with moorer's law, the heat generated by that. this could be revolutionary in terms of heating and cooling and providing a solution to data centers over time. >> okay. president, ceo of d-wave, thank you for joining thus morning. >> thank you. >> silicone valley is up in northern -- you know where silicone valley is. >> yes. that set the tone earlier. >> that's in beverly hills. that's literally silicone valley. that's not dirty. normal people get implants. >> i thought you were going to the movies and then i thought you were going to unemployment, the unemployment rate had a
little to do with the adult film industry. >> who is the fourth guy? >> which is feeding the silicone industry. i wonder how the doctors are doing. it is related. >> honestly, but someone did blame some of the bad employment reports on -- >> on the adult film industry. >> right. >> did you see the latest is -- but it isn't totally -- >> and the latest is there's a fourth hiv case, apparently. >> yeah, with -- >> okay. a number of squad ward moments. still to come, the newspaper headline that had us squawking this morning, including a squirrel cooking contest. but first, let's take a peek in the green room. look who's here. former citigroup boss sandy weill is here to talk about breaking up the banks. no topic is off the table. he's going to join us for two hours starting at 7:00 eastern time. [ tires screech ] ♪
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welcome back, everybody. we're in the chairs where we get to talk about the stories that have caught our eye this morning. and i don't know if you saw it yet, but on the front page of the "wall street journal," there's a story about how walmart is a little worried that they're going a little too cosmopolitan. there's a store manager who wants to try and make sure he
gets back to the red neck roots of this company. and to do that, he wanted to make sure his store in arkansas actually comes up with this whole cool thing of a squirrel cookoff. this is the second year they've done this. they have a squirrel cookoff there and came up with all different ways. >> confirms. >> cooking or -- >> no, men cooking squirrels. men cooking squirrels. last year -- >> tastes like chicken? >> last year the dishes included squirrel hajalapeno squirrel poppers. this year, the winner was -- had things like caribbean jerk squirrel, but the winner was squirrel sausages. and the guys who won last year won with squirrel sliders. they said, look, i don't think people like eating anything that looks like a -- they don't like eating food that looks like a rat. so the clue -- the whole key to this thing is making sure you grind it up. >> what do they say the taste is like? >> i don't know. i have a lot of questions. >> it would be gamey, i'm sure.
but my question is how many squirrels -- >> does it take? >> two, hopefully you're using fresh squirrels not squirrels that you find that have already been hit on the side of the road. >> here are the rules. for the contest, each two-person team had couple of hours to prepare. no less than 80% of the meat must be made of squirrel. >> no squirrel -- >> yeah, why would you eat brains of anything? >> no, you wouldn't. that's a dangerous game. >> they're scary. and you saw some of the disease. >> yeah. >> there were people exposed to it. >> by instruments and hopefully they were autoclaves. but never been an example, i don't think, a transmission of that from one person who had it. >> but the brains, never get into that. >> they're scary enough because they're not alive. they're kind of like viruses but they're just pieces -- little
pieces of chemistry. it's a column today about -- >> what paper would the column happen to be in? >> it would be in the "new york times," it would be my column. >> your column. >> it's a hypothetical game. what would've happened if we saved lehman brothers? it's five years later, the anniversary. how would've history changed had we done that? and we always think about in the context of dominos, right, that if lehman fell, what would happen to aig, and merrill and everybody else. gave a talk at the university of chicago and said we are thinking about it all wrong. it's not dominos at all, it's like popcorn and that it didn't matter if you saved lehman brothers or not because ultimately if you just take one of the kernels off, all the others still pop. >> that's interesting because you're right, we that thought about it as dominos and talked about it for dominos. >> i think it's correct. i think more i thought about it and spent time on this column, i
think if we had saved lehman, how hard it would have been to save everybody else. the politics would have been that much more difficult because by the time you got to aig, you would have expended more capital and then you would never have been able to get t.a.r.p. or at least the number or the magnitude. >> my daughter has a column in huffington post today. it's called i don't have one. so if i'm going to shamelessly self-promote one. she's the head of a nation. she gives all the information. >> i'm going to be competing with her. >> and it's funny because they found reasons that they're more creative, they're actually doing something more important with their time when they're putting things out. it's the same enabling blackberry thing. i actually -- it's good i have a blackberry. >> i am a member of that -- >> it's pretty cute. >> and she's the president of procrastination? >> she's the president of that entire procrastination. >> i thought i had a lock on
that. >> it has to do with knowing homework on a thursday and doing it on a monday morning. sandy weill when we come back. stick around. ] staying warm and dry has never been our priority. our priority is, was and always will be serving you, the american people. so we improved priority mail flat rate to give you a more reliable way to ship. now with tracking up to eleven scans, specified delivery dates, and free insurance up to $50 all for the same low rate. [ woman ] we are the united states postal service. [ man ] we are the united states postal service. [ male announcer ] and our priority is you. go to usps.com® and try it today. [ male announcer ] and our priority is you. especially today, as people are looking for more low, and no calorie options. that's why on vending machines, we're making it easy for people to know how many calories are in their favorite beverages, before they choose. and we're offering more low calorie options, including over 70 in our innovative coca-cola free-style dispensers. working with our beverage industry and restaurant partners, we're helping provide choices that make sense for everyone.
he shocked the business world a year ago. >> i think what we should probably do is go and split up investment banking. >> now sandy weill is back. we'll talk banks, dodd/frank, the financial crisis and who he thinks should leave the fed. a special interview you can see right here on "squawk box" and it's only on cnbc.
along with joe kernan and becky quick, we have a great show for you this morning. we're going to get to the main event in a couple of minutes. see how the market is setting itself up this morning. the dow looks like it would open up about 52 points higher. the nasdaq up a little over 13 points. let's get you through the morning headlines. president obama conceding he may not win congress gnat support for military action against syria. the president was asked to act without congressional approval. >> i think it's fair to say i haven't decided. i'm taking this vote in congress and what the american people are saying very seriously. >> the answer is no. >> that was what we were talking about just before, joe.
eamon javers is going to join us shortly with more on the president's interview on nbc and what people can expect in the president's address to the nation later this evening. >> i don't know. but the comps are out. >> the comps are out and it's weird, looks like global comps were up 1.9% which was above the estimate of .4. in the u.s., comps were up .2% which was below the 1.1% that analysts were looking for. global is above, u.s. is below. europe is the big surprise. supposed to be down -- .7%, and it was up 3.3%. and i have no idea why. >> they benefitted from the
introduction of blended iced beverages in the uk, strong premium food events in the uk and in russia and emphasis on core products in france. even in france. >> you know what their core product for france. >> freedom fries? >> yeah, french fries. they make these french fries that, yeah, that was big over there. >> in the u.s., the comp sales were up 0.2%. they say it was dampened by the challenging environment in the united states. >> people going to mcdonald's because of -- maybe it's gas. >> dollar menu? >> we'll look at the mcdonald's situation. >> up 1% in the premarket. >> as the program progresses, in the meantime, apple's big event is about six hours away. expected to release new versions of the iphone at an event in cupertino. also, jc penney now being sued by upscale coffee press maker. do you have one of these?
claims penney promised to showcase the product at the so-called store within a store. the strategy that was at the center of former ceo ron johnson's vision for the retailer. it says that penney failed to deliver on that promise. so far, no comment from penney this morning. >> do you not have a keurig? i don't. >> we have an espresso machine. >> no surprise. >> no keurig. my wife's the coffee drinker. >> oh, that's right. tea. >> tea. >> herbal tea or something. >> i have a coffee here and a diet coke. let's talk about twitter. twitter making the largest acquisition to date with purchase of the mobile ad company for a reported $350 million. that purchase will bolster twitter ad sales as it prepares for a potential initial public offering. estimates twitter will make over $100 million from
advertisements. that's more than half of the global advertising revenue. >> mopub. >> i made that up, i never heard that. >> you know that firm, right? the engineering firm. i'm not kidding, morrison forrester and they advertise -- >> oh, mofo. >> no one at that place said anything when they were -- they hired the firm, advertising firm, we're going to put a big campaign out we're going to call ourselves mofo. >> win the future? >> yeah, win the future, that was a good one too. wtf. >> walmart trying to get a piece of the smartphone upgrade pie on the same day apple's expected to introduce a new iphone. the retailers announced a new smartphone trade-in program that's going to start september 21st. customers will get credits of $150 to $300 credits on their mobile. at the same time, walmart is trying to go down scale, right?
>> right. >> i think, you know, if you are what you are. be comfortable with what you are. you're not target, you're walmart. >> a guy in arkansas worried they're getting too far away from what he called the redneck roots. not too comfortable with it. let's get to our newsmaker of the morning. it was over a year ago that wall street legend sandy weill sat on this set and shocked wall street and us with his call to break up the banks. listen in. >> i think what we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that's not going to risk the taxpayer dollars, that's not going to be too big to fail. >> joining us onset this morning is sandy weill, former chairman and ceo at citigroup, also the
chairman of the overseers, thank you for being with us. >> my pleasure, becky. thank you. >> it was 13 months ago you sat down with us and andrew and i -- our chins kind of hit the ground when you talked about breaking up the banks. >> we had nothing to say. >> we were stunned into silence. >> it was terrific. >> a rare occasion when you can make us shut up. i just wonder, what reaction you got when you came out as someone who built up the banks who was the guy who created this. who then turned around and said it's time to break them apart. what reaction did you get? >> a lot more positive reactions than i thought i might. i didn't get many reactions from wall street, which i think is very understandable. i think when you think back over 15 months since i was here the last time, a lot of the things we talked about have happened and gotten even worse. like, for example, the attack on anybody called a banker. i mean, that continues today and it really continues to progress
and not a very good way. and second, we still don't have any regulations. there is no volcker rule. dodd/frank isn't completed. so nobody knows what the rules of the road are going to be. >> and that's a bad thing, i take it. >> well, i think it's always good to know where you're going. and we as a country don't know where we're going in a lot of different places, especially in the financial industry. >> would you still say the banks need to be split apart? >> i think i would say the same thing i said before that if the way the regulations come down do not allow entrepreneurship and do not allow people in the financial industry making mistakes. then, i think -- and because of risking taxpayer money, i think that's going to make our financial industry completely in effective. and we really -- in the financial industry led the growth in the whole world.
we help convert capitalist countries. more than 1 billion people have come out of poverty into the middle class. which is helping everybody. >> you could do that with the investment banks. you could have the commercial banks going back to doing medical repoortgages and busined things like that. >> yeah. i think that if the rules come down so that banks can't really perform this function or investment banking parts of the bank can't, then i think they should have the option of being able to split apart so that they can do -- >> but there would be carve outs for when they need to be part principal for whatever amount of time. and what would be procolluded -- >> you won't have -- without them having the risks. >> how do you determine? there's certain times where you're not trying to be part of the --
>> well, it didn't go in 1999. >> and you've -- and elizabeth warren has admitted it would not have stopped the financial crisis. maybe some good lending standards for commercial banks might have stopped the financial crisis. >> well, i think a lot of things might have stopped the financial crisis. >> right. but this wouldn't necessarily. i was looking for an analogy when you first said because i wasn't in that day. >> that's why i said it that day. i was like that's like so and so saying -- that's like -- because you were such -- i said off camera, i watched you build shearson and sell that and i was a stockbroker and i watched you do it again with a can company, basically, right? the way you did it. it's incredible. but you're the one that brought the investment banks to the commercial. they didn't think of it. you did it, you're responsible for this. i finally came up with, that's like anthony weiner saying no more texting of selfies anymore.
i thought it was really -- >> is that what you think? that's what i did? >> no, i'm saying i was trying to come up with -- that's like so and so -- you were almost the father of the super bank. >> well, i think the super bank -- >> so have you found religion? >> no, i think you've got to look at what the world is like -- >> you wouldn't have done that -- you wouldn't do it again if you had to do it? >> not in this environment. >> so the environment's changed. >> help clarify one thing. this is something i've been thinking about literally since i saw you last. you've made the case that we should break up the banks on an economic theory that it's actually better for the banks, better for the industry. but at the same time, you've commented that we need to do it to save the taxpayer and the potential risk. >> i think that the taxpayer and the potential risk can be mitigated great degree by good regulation. it's not very hard to do. we have a book that's 800 or 900
pages called dodd/frank in very small print. my eyes are corrected to 2020 with glasses. i can't read it it's so small. >> you were saying, you don't agree, for example, with elizabeth warren, or at least you don't agree with elizabeth warren's reasons for breaking up the banks, but you do want to break up the banks. i'm trying to understand. >> what i'm saying is that if the banks cannot perform their function, which i think help lead the united states to be a leader in our -- in the global economy and in the world, we're going to lose that position to other countries. if we don't do something. if our government puts in regulations where we can attract the best and brightest people. look, the united states is really a creative place. look what's happening in silicon valley. the people that went to wall street, a lot of them, were bright, creative people. >> now you're arguing against regulation, sandy. >> i'm not arguing against -- i think regulation -- >> it's more than that.
>> bringing it back would be a lot more regulation. are you saying that's what we should do? >> i think good regulation is important. >> go all the way? is that what you said last time? >> no, what i'm saying -- well, it's been a year later and the problems have gotten worse. the banks have had a very good financial period in time because interest rates have been at zero. they've been very steep yield curves. so it's not hard for a bank to make money. but these interest rates at zero is not a very good thing for the country long-term because it's killing retired people's incomes. it's killing the pension funds which have big deficits. and these deficits are only growing because they can't make the -- >> so dodd/frank is the wrong way to do it? is that what you're saying? >> well, i don't know what dodd/frank is going to do yet. what i think is we should have regulations, for example, that
look toward what the leverage ratio should be based on risk weighted assets and be able to understand those assets because the fed now has oversight of all the institutions so they know everybody, what everybody's doing and one of the things they should look at is concentration as it relates to how you value those assets. >> off balance sheets. >> there shouldn't be any off balance sheet. >> you can do all that without -- >> yeah, if the rules are right. for example, there's no reason for off balance sheet. the problem with the financial industry is you need more transparency. if you don't have transparency, people aren't going to understand. when the confidence goes, which we saw what happened with lehman brothers. all of a sudden, there was no markets and that broke the buck in the money market fund.
>> i said, why do you think he decided to come out then and say it. how did he get to that place in his head where he wanted to change his view. i went back and was looking. there was a time when john reed wrote an editorial. >> 2009. >> and you were quoted as saying i don't agree at all. >> i don't agree with his reasons. >> can you walk us through some of the permutations of how you got to this place? >> yeah. i think very simply, what i saw was people in the industry really feeling terrible. i mean, everybody participated in this great recession and the development of the great recession. whether it's the regulators or rating agency or wall street. >> individual. >> people not paying attention. and a tremendous excess in one specific area. but people were shooting at this industry, it became harder to attract people. people were leaving the
industry. and i basically felt that the united states should be a leader after this great recession which we helped the world get into. you would think we wouldn't be given another chance. but no other country could rise to the front and be the one that was leader. everybody wanted the united states to be the leader again. and i felt that for us to be in that position, we really had to go and make the financial industry vibrant. they were going to be killed because they can't make a mistake. >> i don't understand where you are right now. once and for all -- it sounded to me, if you just raise lending standards and capital requirements, we wouldn't need dodd/frank. >> it could be in dodd/frank, should be in dodd/frank. >> you're not saying we need to separate all investment banking from commercial banking. >> we don't have to if we have the right regulation.
if we have the wrong -- if we have regulation that precludes investment banking operating in a way that it can be constructive, then i think we should do something different and let them split up if they figure that's the best way they can provide their services. >> okay. >> because it is hard to -- there are some advantages to letting commercial banks do some of the things that investment banks do, right? if you could -- >> there are. but the cultures are very different. >> right. well, you were the one that decided to put the cultures together, right? >> right. i did. and the company did really great. i mean, in the five years after the merger, citigroup's earnings went from $6 billion a year to $18 billion or $19 billion a year. >> i have my own ideas on how that happened. you weren't there anymore either. and someone there that probably shouldn't have been there. >> i was there for the first five years. >> a lawyer, wasn't he? >> a name that shall not be mentioned. >> don't say it.
>> listen, i made a big mistake. >> okay. >> all right. >> you got me. >> i'm starting to understand. you didn't like my answer. probably just -- i bring him up wherever i can. >> chuck prince? >> no, anthony weiner. >> sandy's going to be with us. >> yeah. >> let's get off the weiner business. >> all right. all right. fine, usually we have a little bell. i love that when they ring it when you said. john kerry statement during a news conference sparking the idea of putting syria and letting some international inspectors actually sequester the chemical weapons. apparently the president talked about this with putin at the g-20. not with everyone around, kind of on the sidelines. anyway, he's going to speak to the nation. and the futures right now are looking pretty good up about 60 points after an up day yesterday back above 15,000.
and i admit it, i -- we saved monopoly money for a medium fries. >> we saved the monopoly pieces. >> but if we went when we were on vacation and forgot the medium fries at home, we thought about -- medium fries, it's pathetic, but it's free. >> it is, it's good. but despite the monopoly. >> didn't do as well. >> didn't do as well as expected and blamed a difficult environment here. >> right. >> right. >> oh, this is me. president's push for a military strike against syria taking a bit of a detour. yeah, i guess that's -- we'll see if it's just a detour for the eventual end. i'm starting to wonder. after russia and syria embrace the suggestion made by secretary of state, john kerry. watch this during the news conference yesterday. >> he can turn every bit of his chemical weapons to the international community in the next week, all of it.
without delay, full and total accounting before that. but he isn't about to do it. >> you could -- that's good instead of the quote, eamon, we're joined by eamon javers joining us from washington. if you read that just as a quote, you wouldn't really see what he was doing there. he was kind of like, oh, you want to know one thing? well, he could do this totally unlikely impossible thing. and now it's turned out that we're talking about him. >> yeah, look. it felt very much like an off the cuff comment by the secretary of state yesterday. sort of throwing it out there. he's not likely to do that. well, now he is. we see the proposal from the russians tentatively embraced by the syrians they might do that, come up with some mechanism whereby they could secure the chemical weapons in syria, take them out of that country. whether or not that's a stalling tactic, a delaying tactic, some kind of negotiating gambit, sort of up in the air right now. last night when the president talked to savannah guthrie of
nbc news, he also tentatively embraced this idea and it might be a diplomatic way out. take a listen to the president last night. >> you know, i think what we're seeing is a credible threat from the united states, supported potentially by a number of countries around the world has given them pause and makes them consider whether or not they would make this move. and if they do, then this could potentially be a significant breakthrough. >> the president also said, though, that you've got to take this with a grain of salt. he's going to wait to see what the details are there. meanwhile, the french are moving ahead with the resolution in the u.n. that would put some legal underpinning to this proposal. and here in the united states, the senate is delaying a planned vote scheduled for tomorrow that had been expected on this war resolution in syria. the president scheduled to address the nation tonight.
and as of right now, it's unclear of what exactly he will say. are we at the brink of military action in syria or not? . it's going to depend on a fluid and diplomatic situation around the world, guys. >> all right, eamon, thank you. >> you bet. >> we'll be watching tonight. cnbc's going to carry president obama's address to the nation. it'll be live right at 9:00 p.m. eastern time. when we come back, we have much more from our guest host. former citi chairman and ceo sandy weill. including a closer look at how philanthropy has changed the world. a major new donation that sandy and joan weill are making. this is $100 million donation. it's launching a $300 million campaign coming at an incredibly important time because we're watching cuts coming from the government to the sciences. when we come back, we have sandy weill and the dean of the medical school. we'll talk with both of them when "squawk box" comes right back.
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now the answer to today's aflac trivia question. who edited michael jackson's autobiography moonwalk? the answer, jackie kennedy onassis. >> i did not get that one right. welcome back to "squawk box" this morning. in the headlines, mcdonald's is reportedly -- their august global same store sales increased 1.9% well above analyst estimates. europe saw much better than expected sales. also, president obama set to address the nation tonight on possible -- possible military action against syria. he told nbc news he may not have enough support to win congressional approval for such a move. did say the possibility of syria surrendering control of the chemical weapons is a positive development. and microsoft being urged to put chief executive alan mallali on
the possible short list. that list comes from three of microsoft's top 20 investors who want to see a turn around expert at the helm when ballmer steps down. the futures are indicated higher this morning. this comes after a gain of about 140 points for the dow yesterday. that was the best day the market's had in two months. all the way back to july 11th. it's the first triple digit gain since august 1st. and the dow futures up above fair value. oil prices have continued to decline. down by another 1.5%, still up at $107.88 for wti. but, again, as syria looks like it gets put on the back burner for the moment, that brought down oil prices. the yield on the ten-year note back at 2.96%. and if you take a look at the dollar, you'll see at least at this point the dollar is stronger against the euro at 1.3241. gold prices, with all this talk
about syria, starting to sound like we're not going to see anything happen immediately. down to 1,367 an ounce. when we come back, we have the dean of the medical college. she'll join us with sandy weill to talk about philanthropy and how it can help the world. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today.
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welcome back, everyone. this is a new feature we're adding to "squawk box" this morning. this is way to profile large philanthropic efforts in attempt to change the world. joan and sandy weill are announcing an additional $100 million donation to the cornell medical college. to date, their donations amount to over $600 million. that's the most given by a single donor. joining us to talk more about it is the dean of the cornell weill medical school and, of course, our guest host this morning, sandy weill.
let's talk about this donation, $100 million. what made you decide to give this money to the cornell weill school right now? >> well, i think really simple. about two years ago or just under two years ago, lori became our dean. she was introduced to me by jim robinson who was on a board of pharmaceutical company with her. and when one looked at the tenure on this board and how this company went from being also ran in the business to a company having the best pipeline of new products. i said, this is terrific. if we can get somebody who really understands research and knows how to evaluate it and knows how the money should be directed. this makes it much easier to think about investing in that kind of enterprise. i think she is that person. and i think that a lot of us
really believe in her ability to attract the best and brightest scientists and have a communication build a society of new researchers with no walls between working on metabolic diseases or i'm working on cancer or cardio but they all talk to each other and work together. i think it's done phenomenally well over the last 15 years, 17 years. we finished a campaign where we raise $1.3 billion and had over 150 donors give us over $1 million, which i think is an incredible broad based support. >> really, sandy, you raised over $2 billion over the last 15 years. >> $2.7 billion. >> excuse me. >> who's counting? >> right. >> one of the most wonderful things about being weill
cornell, is our overseer sandy weill who is immensely engaged with the school. sandy gives resources but, you know, he really gives his heart. and he and i get together all the time, we talk strategy, we talk directions to the school, we talk about the financial constraints we have now -- >> this is an interesting time, government is cutting back on spending. >> this is a scary time. you may have seen francis collins comment in the "new york times" that 2013 is the bleakest time we've seen at the nih, the government funding agency. we have a decrease of about 20% in real dollars over the last decade in funding. so we have scientists who can't run their labs anymore. we are going to lose the next generation of scientists because they're looking at the environment saying why should i do this? i'm going to spend all my time writing grants, trying to raise money and i'm not going to raise money.
what sandy has understood is we need -- and what we need is not to count government support for the majority of our funding. we have to diversify -- we have to partner in innovative ways with pharmaceutical companies with the private sector. and, you know, we're incredibly dependent on philanthropy. our board of overseers, our donors have been unbelievably generous to us. >> when you hear of the sequester talk, does it concern you to see across the board cuts like that? you think this is just the new reality? >> i think we're really in a new reality. i mean, if people don't recognize that our federal government doesn't have a lot of money to invest in new things anymore, there's no state, no city, no governmental entity has that money. so it's not just medical science, but there's less money for education, there's less money for the arts as well as for science and health care. and if that's going to be the
case, there's really a need for public/private partnerships more than ever. and people are going to find out when you have a partnership with the private sector, they are much more demanding. and they're going to want to see a return on their investment. >> when you hand over $100 million, what do you expect to see back? what kind of checks and balances and what kind of results do you see? >> i would -- well, you're going to see it over time. and these things don't happen in a short period of time. but i think we want to see we're going to hire really bright people. we just spent $650 million building a new research building. and that building is just bricks and mortar. what we really need is the right people there. and i think that i believe and i think our board believes that -- excuse me, that lori's going to be able to attract the right people to do that. but also i wanted to say that a
person's first gift to any institution is really just the beginning. if the institution doesn't perform, they're not going to get the third gift, the fifth gift and the seventh gift. and that's really how it works. >> just a little pressure, that's all. >> there's a lot of pressure. >> this gift is really transformative for us. i kind of feel like a kid in a candy store because this $100 million is going to let us really take breakthroughs that we make in the laboratory and research and translate them into new cures and treatments for patients. and this is actually a remarkable time in medical research. we now have next generation tools, next generation imaging capabilities that will actually allow us to do this, to take what we learn in the laboratory and bring it to our patients. >> laurie, talk about precision medicine. >> so what i'm really excited about, becky, is precision medicine, and precision medicine is the approach that now really
is the future of medicine. so based on your genetic profile, we can come up with drugs tailored for your unique genes, for your dna to treat your diseases. we're doing this first in cancer, it's been done in cancer. and we were recently fortunate to recruit the head of our cancer center. you'll be able to do this in all diseases. we'll have kids coming in and getting their genome sequenced and we'll figure out their risk profile. we'll say to a kid, you have the genes that might predispose you towards -- >> like angelina jolie has talked about. >> that might predispose you to diabetes. let's keep your weight low and blood pressure low and check your blood sugar all the time to treat this as soon as possible. >> thank you very much for joining us today and sandy, of course, will be with us for the rest of the program. but thank you for making this announcement here today. when we come back, new
colors, new app, and rumors about a cheaper phone. what will apple actually reveal today at the big event? we have jon fortt there. keep an eye on shares of blackberry today. apparently approached several large canadian investment firms for funds to take the smartphone maker private. but new reports say those efforts are being rebuffed. "squawk box" will be right back. lecoca-cola is partneringg. with nashville parent and charlotte parent magazines, along with the mayors of those cities, in the fit family challenge.
a community wide program that offers free classes that inspire families to get out, enjoy moving together, and even track their activity online. it's part of our goal to inspire more than three million people to rediscover the joy of being active this summer. see the difference all of us can make... together. you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love? ♪
welcome back to "squawk box." at 1:00 p.m. eastern time, jon fortt is there waiting for the unveil. he's joining us now in cupertino, california. good morning to you. >> yeah, good morning. we're looking for apple to strike a balance between something that will gain market share and something that will maintain margins. take a look at the chart and the stock is testing the highest level since january on hopes for new products with a little assist from carl icahn and his twitter account. what should we expect? well, the iphone 5c, the worst kept secret from apple in a long time. there's been images of those floating around the internet
about five colors. that's going to be the star of this show. a lower priced iphone. where will it be priced? the iphone s, due this time of year. usually that gets a better camera. maybe some enhanced wireless capabilities. we expect details of exactly where and when this iphone will launch. the quarter ends at the end of september. any days of shipping they get in before that are positive. then, of course, the ios seven could be launched as soon as a couple of weeks. needs to be cheap enough to gain market share for apple and strengthen the ecosystem, but not so cheap it depresses margins and that's the trick. so there's a range of potential iphone prices. here's the scenario. usually the latest iphone, the top of the line costs around $650 before it's subsidized by a carrier. the one that's a year elold, is usually $100 less, that'll be
the $550, maybe the 5c around $450. will they keep the 4s to gain some share in emerging markets maybe offer a version of the 5c that's 100 bucks cheaper with low grade wireless? we'll see. >> thank you very much. when we come back, we'll continue our exclusive interview with citi chairman and ceo sandy weill. market moves and, of course tonight's presidential address, "squawk box" will be right back.
welcome back to "squawk box." our guest host this morning is banking legend sandy weill the former chairman and ceo citigroup. and i wanted to talk to you about a couple of names in the headlines these days. people you know, i imagine some viewers would like to get your views on. the first is larry summers up potentially for mr. bernanke's job. he's often sort of put in the bob ruben camp. is he the right choice? >> i think larry summers is terrific. i think he's incredibly bright. >> he gets criticized, though, for being part of what some people describe as the deregulatory of the 1990s. fair, unfair? >> well, he was the head of the
treasury secretary. the reason it didn't go before that is that ruben and greenspan were having a big fight as to who should control the national banks. and rubin felt it should be the treasury because that's political and that would help the president getting reelected. and greenspan felt it should be controlled by the fed which is more independent. and larry, i think, was able to work out a compromise which worked for both. >> that's interesting. that's not something people have explained. >> and it happened very fast. >> so that's a little counter to what people say to him not being able to build a consensus. >> or if you say he's controlled by bob rubin, his position was entire entirely different. he can weigh positions. i think he would be a great innovative leader. and i think that's what we need.
>> let me ask you a quick question about bob. you mentioned before our last break or two breaks ago that you thought that chuck prince was one of your greatest mistakes. >> right. >> where do you put bob on that? and do you put him in the same camp? >> when bob worked at citi when i was there, he was in the office next to me. i think he was fantastic. and the reason i think his thoughts about most things were very different than mine. he got me to think more about decisions that i was making and before i made those decisions, he didn't have -- he didn't tell me, he told me what he thought but i didn't -- most of the time i didn't do what he thought. but it helped me doing something better. >> unfair that he gets blamed or lumped in, then, with chuck prince? >> i can't tell you because i wasn't there then. >> let me throw out one other name in the headlines, jamie dimon and jpmorgan. >> right. >> and they are consistently in
the headlines these days for all sorts of problems. how do you look at what's happened to jpmorgan? are they being -- the attacks on jpmorgan, is that fair? is that unfair? >> it's a hard one. i think that jpmorgan did better than any company through the recession and came out of it stronger. i think jamie made some mistakes and statements that he made about, you know, tempest in the teapot and stuff like that. he got people coming after him. and it's i think fashionable to go after bankers. so jamie, jamie's turn about is now. and he's got, you know, learn how to handle it. >> if you could go back, would you wish that some of what happened hadn't happened and that he had been there instead of chuck prince? >> oh, i think no question. >> you wish? >> sure. >> did you ever talk about what
actually happened? what was it? >> with jamie? >> yeah. >> in my mind, i think very simple. he was doing very well, and he thought he was ready to run the company and he probably was. but only problem was i wasn't ready to retire. and, you know, so began to not cooperate and that was not a good way to try to run a business. and when i was 65, we did the merger with citi, which i think turned out to be -- >> you guys were a great partnership. is that really true? >> yeah, it's true. >> it's true. >> what's the story? >> a little fight on the dance floor. >> shoving match, fight on the dance floor. >> you still think he's a great manager? >> i think jamie is very smart, and i think he knows the business probably as well the whole business as anybody that's in the business. >> there was a debate last
spring about whether there should be a chairman or whether he should split those roles and there should be other oversight over the bank. where would you come down on that? >> having been the chairman and ceo for a long, long time, the boards are very, very powerful, and a chairman understands that he serves at the pleasure of the board and shareholders. so i think it's much better model to have the same person being chairman and president and ceo or chairman and ceo than splitting those two positions. and if you look at -- they were trying to copy something in europe which where you look at the countries in europe that have the split relationships, they not only haven't done better, they've done worse. >> you've got the test tube results. we can see how it worked over there. we want to be european. they seem so european.
>> sandy, what was your experience as a chairman? >> pardon me? >> what was your experience as a chairman? >> it was terrific. because we -- we really had very good people on the board. we got the boards to blend between the old travelers and citi to really be one board by and large. >> bet you like being the chairman and ceo, better, right? >> oh, absolutely. because you can set the agenda. also, it's very important to have a very strong lead director who understands the business. and it's your job to educate the board members. and if they don't understand the business, they shouldn't be on the board. and the financial business is very difficult. >> have you talked to jamie? >> not recently. >> no. >> but i'm open to receive a call if he calls me. >> jamie, if you're watching, you've got the phone number. we're going to have more with sandy throughout the 8:00 hour and got a lot more to get to talk to you about but we're glad you're here. >> that's right. more with sandy weill in the
next hour. also, is apple right for the picking. the stock and the company's big event in cupertino today. and syria in focus in washington and on wall street. the president will address the nation tonight. we get you up to speed on any developments on a possible deal from the country to give up its chemical weapons. "squawk box" will be right back.
then i think they should have the option of being able to split apart. the problem with the financial industry is you need more transparency. if you don't have transparency, people aren't going to understand. the whole system is based on confidence. >> we'll talk about the future of banking in america five years after the financial crisis. a special hour of "squawk box" starts right now.
welcome back to "squawk box" here on cnbc. first in business worldwide, i'm andrew ross-sorkin. our guest host this morning, sandy weill the former chairman and ceo of citigroup. and, of course, lots more to come from sandy. but first, your morning headlines. the big one being president obama set to give a prime time address tonight making his case for military strikes in syria. the president telling nbc he hasn't decided whether to strike if congress says no. meanwhile, a russian solution that would avoid military action is now gaining traction. the plan would require syria to cede control. and later expanded by kerry's russian counterpart. syria's foreign minister said the government is willing to comply with the plan. president obama talked to nbc's savannah guthrie about the proposal last night.
>> you have to take it with a grain of salt initially. but between the statements that we saw from the russians, the statement today from the syrians, this represents a potentially positive development and my preference consistently has been a diplomatic resolution to this problem. >> president obama's going to be addressing the nation at 9:00 p.m. eastern tonight, which you can watch right here on cnbc. also in corporate news this morning, walmart introducing the largest brick and mortar smartphone trade-in program in the united states. starting on september 21st, consumers will be able to trade in their old smartphones at 3,600 walmart and sam's clubs locations, an instant credit from $50 to $300 to be immediately applied to the purchase of a new smartphone. >> over 60% of customers are now telling us that the program of trade-in that a retailer offers could influence where they
purchase their next phone. and over 60% of customers are telling us they're going to do a trade-in the next time they get a new phone. the time was right from a customer perspective. and we also have built a program that we think is the lowest cost and the best value and the simplest program in the market. >> apple, verizon, at&t, ebay and others also offer cash and credit for used smartphones. and you can get those phones, they're selling on ebay, by the way, for an average price of about $430. and finally speaking of smartphones, apple's big event is about six hours away. the company expected to introduce new versions of the iphone at an event at 1:00 p.m. eastern time and apple could be announcing a distribution deal at an event in china later today. two apple analysts in about ten minutes about all of that. and finally, watching shares of mcdonald's, the fast food chain's august same store sales rising 1.9%, beating expectations of .4%. u.s. sales, they fell short of
analyst consensus. becky, over to you. >> thank you. why don't we take a look at the markets. yesterday, the dow up yesterday, the dow is indicated to open up by about 70 points this morning. yesterday's run-up was the best in almost two months. you've got to go back to july is 11th to see a run of 140 points. yesterday, the nikkei up sharply. and overnight, closed up another 1.5% higher. shanghai composite up by about 1.1%. in the early trading in europe, you'll see that, again, a lot of the same sort of momentum. in germany, the dax up by 2%, ftse up by about 1% and all coming as the thought that any action in syria is going to be further not sooner. >> it was 13 months ago that wall street legend sandy weill sat on the set. with his call to break up the banks.
>> i think what we should probably do is go and split up investment banking from banking. have banks be deposit takers. make commercial loans and real estate loans. and have banks do something that's not going to risk the taxpayer dollars. that's not going to be too big to fail. >> more from our guest host sandy weill, of the weill cornell medical college. hopefully you saw that interview we had a little while ago. i'm glad i'm here this time. you do have a much more nuanced view. i'm going to try to summarize a little bit. it provides a capital that allows us to deliver the prosperity for this country. i don't think if you could figure out a way to do it quickly and easily with good
regulations, you're open to a lot of different things, basically more capital and, you know, better lending standards. >> absolutely correct. >> but the -- to tarnish bankers and put them all in the same penalty box, which we talked about earlier doesn't help anyone. >> or they can't trade and they're not going to be able to trade. what will happen to our capital markets? >> right. >> how do you determine what is for customer and for your own account? >> i also picked up on -- listen closely and, you know, people that are saying, look, the sequester's killing basic science and it's really bad for science. you said this is the new reality. >> right. >> we need public/private partnerships, with need philanthropy, the corporate sector to step up. you also said the private sector, they hold people accountable for the money they put into things. sort of implying it isn't the accountability with the public sector. >> there'll be more. >> yeah, there'll be more. with all of that in mind, i look
at the fed. has there ever been a fed that's been this activist? and do you think it has been a net posztive to be this involved with the private sector? has it gone beyond the point of helping where it's hindering the private sector? >> i think if the fed and treasury didn't act the way they did in the bottom of the crisis -- >> right. >> our conversations would be very different. >> and when did they overstay their welcome, the fed? >> i think they're doing keeping rates too low too long. >> a year too long? >> i don't know. >> there's qe-1. >> but keeping short-term interest rates zero and having the return on six-month treasury bills being one basis point is not a good way. we're forcing people to take more risk. and we're forcing the wrong people to take more risk. we're forcing the pension funds in the united states to take more risk, to get the kind of return they need.
we're forcing individuals to take more risk because, you know, they're not getting a return over the rate of inflation. and they should. >> when they announce the -- as a banker and someone who knows -- >> i hope they start tailoring this thing back. >> do you remember what your thought was when -- that was shock and awe. >> i think that was good then. >> this was only how long was that? six months? >> more than that. >> a year? so we've had 12 times 85. >> and the deficit has gone from 1.3 trillion to $500 billion. >> that was a sequester that everyone hates so much. >> they're not going to raise rates. >> no, they're going to stop the taper. >> maybe another year and a half away. >> i think they should loosen the short-term rates. >> that's way off. they're talking about 2015 or 2016 for that. >> i think keeping rates that
low affects everything else. and how steep a yield curve can you have? and i think it's really unfair to savers. savers are paying the price. >> front page of the "wall street journal" today, lenders, buyers feel rates squeeze. some of the big banks are saying that actually they're going to start losing money, laying people off as a result of all this, right? that's the flip side. >> well, i think of the, you know, if they go back on the buyback program, qe-3, i think you'll see even a steeper yield curve if they keep rates at zero. >> ultimately. >> well, we've seen the ten-year go from 1.6% to 3% in a very fast period of time. once this thing starts, you know, and 3% ten-year is way below the long-term average. >> what about -- >> which i think was more like 5%. >> you've seen the size of the balance sheet now. >> u.s. balance sheet. >> the fed's balance sheet and
what it's grown to. >> it's big. >> it is very big. >> it's profitable. >> it is profitable, but what if we start losing money on it. if freights went up enough, all the bonds they're holding would be worth much less. >> correct. but i don't think they mark to market. >> yeah, probably not. >> the other banks -- >> but can they -- we're not past the point of no return. we can extricate ourselves from this? >> i think so. >> and we'll be okay? >> i think our economy has done incredibly well. when you think about all the uncertainties about taxes, ability deficits, about what the government policy is going to be, how much free cash is in corporate balance sheets today that they're not spending because they're unsure of the future and yet the economy's growing, it's not just housing market going but housing prices increasing, automobile sales are terrific, what's happening coming out of silicon valley and other places with new ideas and new products, it's unbelievable. happens nowhere else. >> if you were in charge of the
executive branch and the legislative branch -- >> that would be good. >> it would. how would you fix things? you think the economy's doing pretty well and it's being held back. is it being held back or self-inflicted? >> i think i would look at the tax code, which everybody -- >> so we've got to fix that? >> is a problem based on the world today. >> corporate tax code. >> the corporate and the individual tax cut. i mean, there's too big a spread between the bottom level of workers and the top level. i think you don't make that better by taking money from the top and giving it to the bottom without any benefit which is what we talk about sometimes. i think if you want to really squeeze the difference, we should change our immigration policy and let these people that get their ph.d.s in the united states from foreign countries, give them green cards, you'll
have more bright people competing for those jobs which will drive down the top, create more new companies, more new places that can hire people. and reduce the spread between the bottom and the very successful. >> well, we're going to -- when are we going to do the corporate individual tax reform? are you optimistic? >> god knows. >> i'm not optimistic. >> i think we have a couple more elections maybe to go through before republican party becomes one party again. >> and then they're going to be the ones that need to help orchestrate that? >> well, usually it's been the opposite party that does the things that makes things better. so -- you know, maybe you'd have a democrat in the government that understands more and leads the reform with -- >> a guy that talks like this with, perhaps the republican
congress. you want to go back to the clinton years? >> i think the clinton years were pretty good. >> they were pretty good. he loved -- >> the best years -- >> we now know, i think he understood the private sector and valued the private sector. >> and look what he's done with his foundation. >> right. >> and, you know, he is very, very, very good. that's the smartest family in america. >> all right. sandy, we'll have more time, like all this, we don't mention certain people, we do it -- the names -- >> you don't need to name him. >> what are you going back to valdemort? >> yeah. apple expected to unveil the latest iphone later today. rumored to announce a distribution deal later today. "squawk box" will be right back.
you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love? ♪
cutting the current quarter earnings and revenue outlook because of weakness in the americas region. crocs does say it expects a recovery in 2014 based on prebookings from wholesale customers. >> i don't understand because my children wear crocs. >> i don't wear those crocs, they make other crocs that look like -- >> the real shoe ones? >> they're like canvas, sneakers that don't have the ties and they got a bottom and they're dorky but i wear them every day. and i got a new pair. you're shocked -- not like giligan shoes, skipper. so you could go out in cargo pants and crocs and your wife is going to -- >> she likes to walk 20 feet ahead or 20 feet behind with the kids. it's not a good situation. >> i agree with her. >> thank you, sandy. let's talk about apple. it's, of course, their big day.
the company expected to unveil its newest iphone. an announcement may come with china mobile limited. tom fort, the technology and telecon analyst. good morning. >> good morning. >> tom, i'm going to go to you first. is there any surprise we might get today at all beyond the s, the 5s, the 5c, and maybe this announcement this evening which may be more important about the foray into china? >> it doesn't seem like there's going to be many surprises. i would have thought they would have had a bigger screen on the 5s, but that doesn't look like it's going to happen. i guess the big news is they're going to come out with a lower end device, the 5c, we'll call it "c" for color and potential a distribution deal in china.
>> is that big enough? if there's no surprise today, the stock has already run. i've always looked -- historically, it seems the stock runs and on the announcement, people sell because they're depressed it's not even more surprising. >> yeah, you see -- oh -- go ahead. andrew? >> you've seen how the company can pull back. but at the same time, we think about the long-term story here. by any valuation measure, the company's patently undervalue still. short-term pullback, this is still a buy, even if there's a one more thing type moment. the 5c, the potential china mobile deal, being able to access emerging mobile markets for the first time in a way should be good thing for the stock no matter what. >> tom and andrew, here's the question. for me, at least. forget about what's on the table today. since we're going to assume we know. both of you seem to think the stock is undervalued based on where we are today, do they need
to do anything else? is the answer they don't need to do anything else at all? >> the way i think about it is the $60 billion -- >> i would say that you can see the company -- >> it's going to drive it higher -- >> we're jumping on each other, tom? >> apologize. the $60 billion repurchase creates a floor for the stock but really it's going to be innovation that drives the stock higher. i'd still like to see something potentially in the watch category or in televisions because i think those would be new verticals for the company and could make a big difference. but i think today's a good start for apple on the innovation front. >> i'll throw a little curve on it which is carl icahn. does he matter in terms of where the stock goes? >> outside the fact he can make headlines, i don't think so. the stake he has in apple isn't enough to effect board room change. but at the same time, i think he's right. the company is too cheap. and, so, you know whether or not
the market will recognize that or not, i don't think that's something that carl icahn can necessarily influence, but at the same time, this is a company that i think is worth buying in a market that's been on a run lately. >> if tim cook were to give back a boat load of cash to shareholders, how would that change the perception of the company? andrew? >> well, i think it would obviously help. i think the company's cash balance is -- has been one of the biggest drags on the economy so far. especially a relatively low share price, upping the ante is a definite win. you can look at this company and the potential uses for cash when you have an undervalued stock like apple. just buy it back. >> tom, andrew, we're going to leave it there. thank you for your perspective. we'll see what happens at 1:00 p.m. eastern time today when apple makes its announcement. thanks again, guys. >> thank you. >> so the a.p. says the foreign
minister, syrian foreign minister has accepted the proposal, russia's proposal to place the chemical weapons under international control for subsequent dismantling. >> wow. yesterday they said it was a good proposal, i guess today is actually accepting and saying they would agree to the terms. >> exactly. >> and i guess the question becomes how do you enforce it? >> and you know why syria accepted. >> dismantle? >> yeah. and the reason syria accepted it is to uproot u.s. aggression. i don't know. again, though, it's the foreign minister. does he speak for -- and then how do you do it? and how long does it take to do it? remember the weapons inspectors in iraq? i mean, they were in and out -- >> that's why the markets are up today. yesterday and why they're up again today because they figure this is going to be a long time coming if ever. >> i would hate to get played by assad, wouldn't you? >> oh, i think so. but i think we got ourselves in not a great place. >> i'd hate to get played by
breaking news for you. the first krispy kreme shop will open in moscow on wednesday. partnering with a russian restaurant owner to open 40 moscow locations. the opening on thursday brings krispy kreme's international presence to 22 countries. when we come back, it's been five years since the fall of lehman. so has dodd/frank banking regulation made the industry safer or crippled the government's ability to respond to crisis? do we know what all the rules are yet? steve liesman next with a special report. [ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box.
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welcome back to "squawk box" here on cnbc. first in business worldwide. i'm joe kernan along with andrew ross-sorkin and becky quick. our guest host is sandy weill former chairman and ceo of citigroup. lots more to come. heard from sandy quite a bit. first let's get a check on the futures this morning. s&p indicated up about eight points so far.
the dow jones industrial average, of course, comprised of 30 well known stocks, up 66 points on the session today. up 86. but fair value is up 19. and then we have the nasdaq up about 16 points or so. and today, you're going to want to keep a sharp eye on the dow jones because there are three new stocks in the dow jones. it's not 33, though, it's going to be 30, but look at what's happening. goldman sachs is being added replacing bank of america. visa is replacing hewlett-packard and nike prespo chango. is alcoa representative of anything, really, in this economy? nike, the biggest apparel maker on the planet. nike, goldman sachs and visa are going. >> the index changes, the company's saying we're prompted
by the low stock price of the three companies slated for removal and index committee's desire to diversify the sector and the industry group representation. >> it's the bow tie man. it's david who is going to join us and i bet he is wearing a bow tie when he comes on today. and maybe some of his picks will fair better than putting aig in right before the financial crisis. that was like a homer simpson, doh! and hewlett-packard. how does hewlett-packard represent the dow at this point? but you know who's still not in? google or apple. >> how much do you think this is worth to those on the up side or the downside? >> i don't know how it works. >> you have to sell -- >> there's more s&p based funds. >> the stocks -- the ones going in are more volatile than the ones going out. >> the ones kicked out. sandy, you've been there. dow component. in and out of the dow, you know
what happens when stocks move in. they don't consult you on it. but is it a big deal to be part of the dow? >> i think it is. it's great pr. you're known everywhere, you talked about all the time because it's an average of 30 not 500. >> it's why we talked about alcoa even though no one thinks alcoa. >> visa and goldman are well in the hundreds too. they have some big daily moves. nike, i guess nike has split recently because it's down in the 60s. but if you like markets that go higher, don't you feel better about these stocks than the old ones? who wants to have hewlett-packard in the dow? >> i don't think that's the way they look at it. maybe -- >> they don't. they want it to represent the current economy. >> and bank of america also jpmorgan. that sort of balances that out. >> there are people who think they've put in stocks -- they put in stocks that have good prospects. >> the indices go up.
>> is alcoa ever going up again? is hewlett-packard? that's -- >> it's an open question. >> and bank of america, you saw what happened there, that was, what, a $50 stock that, you know, now struggles to stay near the teens. >> what were you going to say? >> i don't remember. >> okay. as we continue to mark the five-year anniversary of the collapse of lehman brothers and the aig bailout, we tackle the most important question, what happens next time? joining us right now with a look at whether we are any safer, how the law has changed and whether dodd/frank can prevent another disaster is steve liesman. >> thanks. >> regulators insist the banking system is safer than it was in the dodd/frank financial reform law will make another panic like lehman less likely. if it happens, they say it'll be more orderly. critics contend the banks are bigger now than they were around lehman. the law isn't finished and as written does not end too big to fail. here's what is, indeed, different now. more capital is required of the
banks. greater liquidity is required, stress tests are now institutionalized. they happen every year. there is an army -- an army of financial monitors out there and financial monitoring. resolution plans are required. so-called living wills and there's now authority. what is known as title two or the bankruptcy for banks. pretty much the only bipartisan part of dodd/frank. i asked paul volcker about this and he's a big fan. >> the institution would have failed in the sense the stockholders will get nothing, managements will be replaced d and -- maybe secure creditors too. but unsecured creditors will be at risk depending upon what asset value is left when the thing is unwound. that's pretty plain language. and seems to -- >> but nobody believes it. >> well --
>> nobody believes it. there's still a subsidy -- >> nobody believes it. >> so here's title ii, guys. management is removed. holding companies are thrown into a receivership, the subsidiaries put into new companies. creditors bear losses, there's a clawback provision, they can go back to the banks and claw back money for the taxpayers and the fdic treasury provide a liquidity facility to finance those subs over the time while they're doing the workout. that's the part where critics say you've essentially entrenched a taxpayer bailout. now some dodd/frank critics also contend they're concerned they have tied the governments and fed's hands too tightly and won't be able to respond the next time there's a crisis to which the response is, hey, that's the whole point. here are the new rules that tie the government's hand. the fed is prohibited from individual bailouts, so-called
13.3 emergency authority. we said a lot of that during the crisis. the fed needs the treasury approval for broad bailouts and treasury prohibited from using that economic stabilization fund which was used to stabilize the money markets. more criticisms include the failure so far to deal with the wholesale funding market like money markets and whether too big to fail has ended. and it's great we have sandy here this morning. let me ask you this question, do you think investors in banks, the providers of the secure or unsecured creditors debt. are they trading as if there will be a taxpayer bailout next time? or trading -- do you think they're aware of that title ii, that bankruptcy process for banks that calls for them to be essentially wiped out? >> i don't think it's really a big factor at the present time. i think nobody really knows what to do until we finally get the -- what is dodd/frank going to say, what is the volcker rule going to say and what other regulations going to be that relate to how a bank has to
operate and run its balance sheet. i think a lot can be helped if we develop bonds that banks could sell that would be automatically converted into equity if there was a problem that could preclude that kind of stuff. >> it sounds like what you're saying is backing up what jack lew told us at our summer conference is let's get the rule in place and see if too big to fail has ended and if we need other stuff. do you agree with that idea? >> i do. >> i think it's fascinating but i ultimately think that no matter what it's actually harder to bail out a bank today than it'll ever be. >> why? >> the politics make it impossible. >> that's what you want, right? it's a very difficult corner. >> i think it's great we did the bailout and the government got all their money back plus a profit on the financial -- >> now have we tied the government's hands too tightly so they can't come in? >> i don't think we know whose hands are tied. we may have tied, you know, depending upon what the volcker
rule says a bank can do or investment bank, it's going to determine how they run their business. what is the leverage ratio? does everything have to be on the balance sheet, do you need complete transparency. do we look at the model for bank reserving against loan losses, which is a stupid model. the banks will all cut back their loan reserves right before the crash. >> steve, thank you. >> my pleasure. was it interesting? >> it was. >> great. listen to this, when we come back, we'll have more on the three dow components being added to the dow. goldman sachs, visa, nike. that is today's move even though this doesn't happen until after the close of trading on friday, september 20th. three dow components on the way out. bank of america, hewlett-packard and alcoa. sandy's right. much more volatility for those coming in than those going out. when we come back, the chairman of the s&p 500 index committee. plus, lessons from the financial crisis five years later. we will talk with the former
chairman and ceo of national financial partners. by the way, also happens to be the daughter of our guest host sandy weill. welcome. [ music transitions to rock ] make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account. [ male announcer ] these days, a small business can save by sharing.
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financial partners, firm she sold earlier in july. also the daughter of our guest host, sandy weill. do you like chairman or chairwoman? >> chairman. >> always go straight chairman? >> i did. i did. >> what were the lessons for you? you did bring this business truly back from the brink. >> our whole management team did. but i just remembered being in chicago with all of our firms when aig was blowing up. so if you're in the business of selling multiple insurance products and the big carriers have lost the confidence of the buyers, that's a bad place to be. but we really hunkered down and i think a lot of it happens before you go into a crisis. and we really had three big themes. one was be relevant to our clients and our employees. did we matter in the scheme of things. and providing insurance and risk management and 401(k), that all mattered. the second was we were on a big mission to build up our recurring revenue. and so when we entered the crisis, we really had the kind
of cash flow that we needed. and the third was to be diversified because any one business can change. your planning has to begin before that. but we saw our life insurance business erode prior to the crisis. so we actually as it occurred, that meant that our debt structure was really getting out of whack. so we hunkered down, used our cash flow not for acquisitions, which was a big part of our business. but instead to pay down that debt as quickly as we could to cut expenses, to do everything we could to right size our capital structure. but at the same time, we had people out with clients. we rebranded ourselves, reorganized ourselves to really make it and continue to make it an exciting company to work for even through the crisis. we needed the banks and the banks being nimble with us was critical too. and we financed our whole
structure. >>. >> it's interesting, i would say generally, yes, dad. i do think that entrepreneurialism and the ability to move is very, very important. i think that's a key part of it and i think the banks are being strangled. you know, there's no question in that. what's been so interesting to me is dealing with small companies. i left the big banks in 1997. and i think another reason to be kind of optimistic about the u.s. today is that managers that came out of that crisis were incredibly seasoned. they're budgeting, thinking about higher interest rates, stress testing themselves in a much smaller environment. they can move, they can be innovative. there's real quality. >> the flip side is people now feel emboldened, survivors, got through to the other side. >> i think they know they're seasoned. nobody cared whether mfp failed
or didn't fail except for us. the businesses we acquired, the management team, the kids born in the environment. we cared but everybody's talking about lehman and aig. i would disagree with that. i think good managers came out of that seasoned and understand it. >> i don't think anybody feels emboldened in the industry. >> i agree. i think quite the opposite. and i think one of the reasons i'm optimistic on the market -- not just because of the innovation, but i think companies can deliver so much quality to their clients by being more innovative and we did, unfortunately, downsize the company. and that's sad when you're losing jobs. at the same time, we won't hire some of those jobs again because it's so much more efficient. forces you to rethink how you do things. so i actually think people are not emboldened, they're smarter. >> there was a little hesitation
as if you agree. have you been talking about this issue for aening lo time? >> we've talked on and off? >> and debate? >> always. that's why we're so much fun together. >> don't you think i'm lucky to have a daughter like that? >> absolutely. >> we're all lucky. >> we've been talking about it. three had to leave to make room. goldman sachs is being added, visa and nike, the three being kicked out, says it right there, bank of america. it should say replaced, fired, no. hewlett-packard and alcoa. joining us now david blitzer, chairman of the s&p 500 index committee. how much more will the markets be moving around with these high-priced stocks, david? >> i don't think it's going to move around that much. realize that we've taken out the 3% weight with this move. i think we have made a big step in terms of improving the index.
it's price weighted and it's only 3%. the average price across these three stocks about $14. compare that to the average cost of the index which is probably 50, 60 thereabouts and the high-end about $180 some odd at ibm. >> you added one in the mid-60s. >> that's right. >> that's going to be exciting. >> well, it'll give us a better index, i think. >> david, why did you swap bank of america for goldman sachs. they're both in the financials. why goldman sachs over bank of america? >> looking at the financials in there, you've got bank of america, jpmorgan chase. these two companies are very comparable. they're quite close together. yes, they both do investment banking but both do a number of other things. goldman sachs continues to be focused on investment banking. and this gives us a broader representation across the financial sector than we had before. >> you still got a lot of tech.
and it's probably a good idea to get rid of hp. but you know where i'm going. so we've got microsoft, intel, cisco. but one is missing, two are missing. >> ibm? >> yeah. ibm. that's kind of tech still, i guess. but google and apple. google some day, had more of -- less of a consumer stock, but that is a big part of our economy now. you had to think about it, didn't you? >> we had to think about it but the arithmetic doesn't work. there's about eight or ten stocks well north of $200 in the s&p 500. when you look at them all, you can tell me about priceline, but that's got a four-digit price. >> berkshire would be better, i'd love to see you do that. >> yeah. the arithmetic doesn't work. i guess we could build a price weighted super colossal index. >> if google split, you'd put them in? >> split two or three times,
google's around 800 -- >> you'd put them in then? i'll tell them. >> we'll look at it but we never tell anybody in advance. but definitely we'll look at it. >> why not change the weighting, that would allow you to do some of this. >> we've talked about that. and when you've got an index out there for 100 and some odd years, you'll have to be careful about what you do. but in the long-term, they're not talking tomorrow but in the long-term, i would say there's nothing that's off the table. and, you know, we're willing to talk about that. we've talked about it in the past and we'll keep talking about it. will i be back here tomorrow morning telling you we changed the weighting, i'm quite sure i will not be telling you that. >> what happens in terms of price stock movement on those that get added and taken off in the short-term? >> in the short-term, you probably see some impact that's a little bit similar to what you see in the 500. the ads will pop up, not permanently, but for a few
weeks. it will drop down. it all sort of comes out in the wash over time. dow changes happen far less often than s&p changes. so it's much harder to have a statistically sound kind of a statement. on the other hand, a statistica sound kind of statement. on the other hand, seeing two or three stocks go in and out at the same time is much more common in the dow. back in 2004 i think it was the last time we had three in, three out. we've had a number of two for twos since then. >> sometimes you -- i just worry that you've seen stocks get universally loved and you can see how often that calls the top of the market and you guys unfortunately with aig and maybe a couple other situations and even hp to some extent, you pick them when things are good and you're calling the top of the stock, that's one of the problems. but finally with alcoa, $8 billion market cap and it's not
a part of the u.s. economy anymore, is it? what did it do for us? >> probably is brought down the average price, which is not what you want it to do. >> no. >> alcoa, materials -- >> nichol used to be oo dow ca component, didn't it? >> yes. >> you can go way back and find all kinds of strange names that came in at times. the economy evolved. that's why we're looking at stocks now that are established. visa, which is a big technology company, one of the two leaders in international payments technology -- >> i thought a disney-comcast switch would have made sense as a bigger, more tentacles, more powerful, more, you know, just a better business model, better management. that's neither here nor there. >> that's the kind of thing if i
proposed a company that i'm closer to in that sense. we stay away from that. >> i forgot. you're right, i should have recused myself. coming up, much more. the dow swap, visa, nike, alcoa, hewlett packard on the way out. you know who is going to love this, cramer. without the thinking that makes it real? what's a vision without the expertise to execute it... and the financing to make it grow? whatever your goal, it can change more than your business. it can change the future. that's why, at barclays, our ambition is to always realize yours.
. welcome back to squawk box. the dow looks like it would open 50 points, the s&p a little over 8 points and nasdaq 15 points. recapping the stock story, three new stocks in the dow industrial average, goldman sachs, visa and nike. coming up, we'll get the last word from our guest host sandy weill. back in a moment.
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>> i think goldman and visa broaden the financial participation -- >> over bank of america? >> over bank of america, certainly. >> do you ever buy any stocks besides citi? >> yes. >> which ones? >> none of your business. >> i thought i'd try. >> can you help us grade michael kovack? >> i think he's terrific. i think he's the right person for the job at this time. i think he knows all of the businesses. i think the leading -- the top people in the company respect him. >> was he there when you were there? >> yeah. i know him very well. >> and is he running the place -- you're finally happy? >> because? >> with city's management. we could have owned wachovia, couldn't we? shouldn't we have?
look at what happened to wells fargo. >> wow. >> and we kept it in business without a contract. >> okay. sandy weill, thank you for being here today. >> it's good to be back. >> it was great and we hope to have you on more frequently. we appreciate it very, very much. you looking for a job? i'm sure we can give you a job. make sure you join us tomorrow. "squawk on the street" begins right now. good tuesday morning. welcome to "squawk on the street." what a day we have ahead of us. the president speaking tonight on syria, futures reflecting hopes that war perhaps is little less certain, an apple announcement, a shake-up in the dow jones, in asia, more upbeat economic data from china and take a look at oil as well. big selloff as
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