>> live from new york where business never sleeps this is squawk box. >> good morning, everyone. welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew ross cosorkin. not able to hang on to the gains in the morning futures. right now it looks like there are some moderate red arrows when you look at the futures boards today. dow futures down by 15 points below fair value and the nasdaq close to 11. we'll have more on the markets in a minute but first breaking news out of saudi arabia this morning. a stampede leaving at least 310 people dead. hundreds more injured. this crush happened about three miles from the holy city of mecca. this year's pilgrimage began tuesday.

we'll continue to follow this story throughout the morning. >> other big stories this morning as we switch gears back to business. on the agenda going on, a number of key economic reports at 8:30 eastern time, weekly jobless claims and durable goods. we got new home sales in the kansas city fed survey coming up as well and janet yellen has a speech scheduled for 5:00 p.m. eastern time today. the title inflation dynamics and monetary policy but no q and a from the audience. if you have questioning, we'll see whether she has answers. >> on the earnings front, quarterly results before the bell and then coming up this afternoon we'll hear from nike, bed bath and beyond and pier one imports. >> ford is unveiling a new pick up truck line today. the auto maker says the materials helped to take up to 350 pounds of the truck's weight and this makes vehicles more

fuel efficient and increases towing capacity. we'll talk to ford president of the americas joe hinrichs at 8:15 eastern time. >> and chinese president xi jinping is on his way to d.c. where he'll have a official state visit tomorrow. he'll speak privately with president obama. he met with u.s. business leaders and visited microsoft's headquaters yesterday. eunice yoon joins us now with feedback from china so far. >> thank you so much andrew. here in china, the pr machine is in full tilt. the chinese press is full of stories about how the chinese president has been winning hearts and minds in the united states. there's been a lot of discussion about the boeing deal and also about how microsoft will be working with baidu despite security concerns and a lot of buzz about how mark zuckerberg was speaking chinese to the chinese president.

>> sounds like we're having some problems with eunice's feed but this is a trip we'll be watching very closely. meeting yesterday with many business leaders here in the united states. he'll be moving on to washington today. michelle was there. >> had an interview with hank. i think that was on tuesday though. >> i saw them talking and then also andrew so she was talking with several of the leaders either on their way in or coming out from some of the comments. >> i want to hear more about the prooif privacy conversations. you saw people there with issue and questions. >> and also copyright infringement, protecting their business things. there's apparently apple knockoff stores up all over china and these are stores designed to look exactly like the apple store down to the uniforms that they wear. even in some cases advertising that these are authentic apple products being sold inside so it's hard to imagine what's going through tim cook's head

when he's sitting there listening to what they promise to do from china. >> hopefully we'll get eunice back and find out. >> in the meantime, a check on the markets this morning. there's moderate declines with the dow futures down by about 11 points. let's check out what's been happening in europe today. at this point, europe is also in the red. the dax is down by about .5%. that's the biggest decliner among the major averages there. if you check out what happened overnight in asia, you'll see the nikkei finally opened after a couple of days off for the holidays. closed down by 2.75%. the shanghai was slightly positive, a gain of less than 1% though. also take a look at oil prices. wti was under some pressure yesterday. it settled down by 4%. you can see this morning a rebound of 1%. that's a gain to $44.98 barrel. there's a story or op ed on the

wall street journal today that took a look at why oil prices have come down 60%. part of that is regulatory in nature and the idea that it's so difficult to build a new refinery but a lot of people asked questions about why gas prices haven't come down quite as much. maybe we can talk more about that later. let's look at the bond market. the 10 year note yielding 2.148%. check out the dollar, it looks like the dollar was down against the euro right now. it's trading at 112 to the euro. also take a look at the dollar yen right now which is 11994. gold prices up by just over $2. >> markets unable to find a sure footing. unsure if anyone knows which way to break out from here.

i don't know whether we'll hear more clarity on last week's move or whether she'll just, you know, confuse everyone even more. joining us now is senior global equity strategist at wells fargo investment. part of wells fargo's businesses investment institute and senior market strategist and $215 billion platform. again looking through your comments and i'll start with you. i don't know whether you buy the dips but you say diversify. stay invested in equities. >> the market is going toward the path of normalization. >> the market or the -- >> the market -- >> interest rates? >> the market in general. if you take a look. people have gotten used to just no volatility. they have gotten used to it going up, up, up and now they're saying wait a second, the market doesn't just go up, up, up and markets follow the paths of

earnings and earnings this year they haven't done much. the first quarter earnings were slightly positive growth year over year. now here second quarter it's not done yet but they're not looking too good and third quarter earnings aren't looking very good either. there's a lot of head winds. there's the strong dollar. there's low oil and that's good for the consumer but right now we're seeing the front loaded bad news of all the head winds and corporate earnings have been struggling and that's why markets have been struggling. >> so sooner or later it all comes down to individual companies earnings. >> it always does. >> it always does and we're seeing that now. the fed did not raise interest rates and the market was a little bit disappointed in that. >> why? >> because that's more the path of normal and markets are looking for the path to normal. they have been expecting that. we were talking about that would be lift off in september and then the fed didn't pull the trigger. >> so you think it's december now? you're another person?

>> absolutely, joe. what we have been talking to our clients about for the last four years is the pull backs need to be bought. we've been positive. that hasn't changed. i think december, you know, in our team, we thought december had the highest probability of an increase and probably the way it's going to play out we see an increase in december, maybe only two hikes next year. so this is going to be a very hard process. janet yellen is going to start to pile on a little bit. the fed was surprised by the market reaction going into thursday's close and on friday, i think people were talking at the fed on friday and they decided to come out over the weekend in force and start to lay the ground work for that december meeting. they need to let the market noel in advance what's happening. >> and not people going rogue. >> i think it is. i think from now on we're going

to hear chairwoman yellen. we're going to see that hike. we're going to see the market prepped for a hike in december. >> i don't see it happening in december. i don't see anything changing from now until december. the fed said they're going to take a look at global conditions. what is really going to change in the next couple of months? i don't see anything happening from the beginning of 2016. >> i think you're not going to see a lot of changes. i think the fed has a little credibility issue on the line and this is the year but if you look at the fundamentals you can make the argument that they don't need to do anything this year. and probably really well into 2016. >> they're looking at the inflation. inflation has an absent. as for employment, take a look at employment, check that box off. the jobs market is one of the best jobs markets we've seen in sometime with the number of

opening jobs, job openings, it's just really a good jobs market. we haven't seen those labor wages increasing. >> that i think is the problem. >> we're starting to see that but we'reaying the ground work for that because we see that tightening job market. so the inflation, the seeds of inflation are starting to be sewn but we haven't seen that. i think that is the way that janet yellen can justify not raising rates and i don't see anything changing between now and december. i'm thinking 2016 will be the first rate hike. >> we'll see what she says today about inflation. >> you're saying nothing is going to change so obviously the law of diminishing returns is very apparent and probably here and abroad for qe, for

accommodation and everything else and for policy makers to see that nothing, you're not getting anything for staying at zero, you don't know what the risks are, from staying at totally unnormalized rates. you have no idea what's looming ahead. >> it's an experiment and you're not getting a positive benefit and you saw the markets last reaction. the market wasn't like -- the market didn't, you know, it was supposed to rally if you stay at zero. it's been rallying when you stay at zero and they pay attention to it. they probably did have a bad week. it's like our manipulation of the stock market didn't workout as planned. >> it's lack of clarity. >> well then if it's lack of clarity go up a quarter. neither one of you want to raise until

>> the markets will depend on corporate earnings. that's the bottom line. if companies can get over the hurdle of the strong dollar and low oil and move forward we'll see the market move forward. that's what they're looking for is that direction. >> i wish they would start ignoring the fed and not rally until they hear dovish talk and not sell off when they hear hawkish talk. >> that could have been the start. you know? >> it's hard to argue the counter factual but maybe the start of that already. >> the only thing we have going for us is i can't think of anything to move stocks higher at this point. they usually move higher.

>> they are sitting on two more cash at least in our opinion. that's been the case really for four years so when you see this kind of volatility that doesn't make them feel any better and even though we're trying to encourage them to step in, that's easier said than done and probably what most of our clients have done, the vast majority is sit on their hands and just wait and back away a little bit. >> god forbid that there's some type of event that causes weakness. no one can see a recession or slow down, maybe china. but nothing real substantial. we'll keep plugging along. we're good. we're good. 2.5 or maybe up to 3 or something like that and you never know. that's what scareds me because we have nothing in the tool kit. >> well, they pulled the lever. it kept us in the game moving ahead modestly but it certainly hasn't accelerated us to the level that many thought we were going to see.

>> all right. moving into october too which is a -- >> it's always fun. >> one of the greatest months. >> yeah. >> thank you both for coming. >> leaves are changing and falling and look out the window and it's dreary and the leaves are coming down. >> but i like the changing colors of the leaves. >> for awhile. >> for awhile and then they fall and then it's just desolation and the trees are all bear. >> you don't know. you don't know. >> but it's great here. >> shot behind you in the summer, see when it gets lighter out it always looks very nice with you know. >> thank you. >> with the trees but then the trees go away and they put lights up. >> i like when that big bus that says master of sex parks right behind you. >> that's pretty good. >> and people think that you have that parked there. >> i have friends by the way and family members that now think there are companies who have decided to park behind us just to -- >> that's a show -- masters of

sex is a show. maybe it's pointing at all of us which would be -- >> laughable. >> that's what i was thinking. all right becky. >> thank you. >> tha you guys for coming in. >> thank you. >> volkswagen in an emissions scandal. ceo martin winterkorn stepped down and shares dropping in european trading. market watchers there pointing to chatter about a report on an emissions test. phil is following the story from chicago and could this possibly be spreading to another auto maker? >> we'll talk about that in a second becky. there's reports suggesting it has spread to a german auto maker. we have new developments we want to bring you up to speed about. first of all, the german transport minister said that volkswagen admitted to manipulations take place in europe. remember it's only been alleged and essentially admitted to that it took place here in the united states. volkswagen prior to this said look we think there's 11 million

engines worldwide that might have deviation in the software. now the transport minister is saying it took place in europe and volkswagen admitted to it. that's one piece of news that came out and the other piece of news sending shares of bmw lower is the report by the auto trade magazine suggesting some bmw diesel models in europe may exceed emissions limits. bmw denies that allegation. still shares down more than 4%. all of this coming after a day yesterday when there was a whirlwind of activity involving volkswagen executives and the board of directors. the board of directors met with former ceo martin winterkorn for 8 hours. they wanted him to tell them what was going on with the emissions scandal. the vw board said proceedings may be relevant. winterkorn re-signed saying he

is not aware of personally having done anything wrong. having said that the focus is not only on what he and other executives knew but who will replace him to run volkswagen. the ceo is expected to be named tomorrow. three people that i've heard from folks in volkswagen as well as those that work close to the company that are the most likely candidate, herbert diess came over within the last year from bmw. considered an outcider if you wanted to send a message that you were going to have a fresh start. mueller is considering the leading candidate. he runs porsche and ryu bert that runs audi is a candidate as well. meanwhile for folks here in the united states watching this, either if they own a volkswagen diesel model or were thinking about buying a diesel model there's a lot of frustration. here's the commentary we heard from some folks about what happened and the allegations that volkswagen has manipulated

emissions here in the u. s. >> i think it's appalling, honestly. i was shocked, the fact that they would put software to cheat testing is unbelievable. >> i don't think i'd buy a vw any time soon. >> before i thought of them as the peak of the peak of auto makers, really great. very trustworthy good quality cars and now i don't know what to think. >> may have been a little hard to hear those folks but we heard comments as we were putting this piece together. basically they were saying they don't any trust in the fact that we were told we were buying a vehicle that was clean burning and turns out it was not clean burning. shares under pressure. so are the other german auto makers. we expect to have more developments today and to recall and another note, according to patrick allen in europe that works for cnbc he's been told

that vobllkswagen plans to name executived engaged in the manipulation. they expect to have that tomorrow as well. we'll be following it all day long and keep you up to speed. >> i want you to respond to this. i don't know if this is hysteria, this is an economist saying all of a sudden -- this is this morning in reuters, wits a bigger down side risk for the german economy than the greek debt crisis. this will not only have an impact on the company but the german economy as a whole. they employ 270,000 people in the home country and more working for the country. >> i'm skeptical about the u.s. sales plunging hurting the german economy. i do think that if you see a big drop off in either sales or production in europe then you're

talking about the economy. look at this rationally. only 21% of the vehicles sold in the u. s. are diesel models. they're still selling their other gasoline powered models at their dealerships. there may be fewer people going into the dealerships because the brand is battered. >> when we've had crises not like this but of course different types of crises whether general motors or toyota pretty quickly we've seen a rebound. the flip side of this is, the cost of this, meaning how much they're going to have to give back to customers, what kind of lawsuits go on and what that does not only to their profitability but their ability to employ the peel in germany, whether it actually takes a cut out of the company. >> you wonder how much they can insulate those costs primarily focused in the united states at least for now -- if it's primarily focused in the united states they'll not only go after

volkswagen of america but they'll go after the company in germany. can they isolate and contain the costs of volkswagen of america. could you say let's push toward bankruptcy as a subsidiary if the cost become so high, so exorbitant that they were really taking the company down? that's a question that remains to be seen. i think what's troubling for investors right now andrew is this report from the german transport minister saying there was manipulation of emissions in europe as well because now you opened up a bigger can of worms. when it was just in the united states you could come what contain it if you're voblg yolk volkswagen. >> i don't know if you got to see it and the journal is probably always going to come down -- they can actually get mad at the epa, they'll blame the epa and emissions testers which i get that.

i'm used to it. now they do say if it was you knew you were doing that. >> but you also point out that defeat devices that turn off the emission that they have been around forever and that they're part of this weird -- >> there's this scandal. >> there's this weird thing going on between the epa and auto makers where they looked the other way for years and maybe this isn't the first time that there was a wink and a nod in previous times when it was done and it does boost horsepower and boosts torque and allows for better performance. i'm not sure what exactly they're saying but seems like there's more to it. >> i do know that i heard from a lot of people that said look this is what you get and i say you as a united states. i heard people say this.

this is what you get by driving up the emission standards and putting them so high that you're forcing auto makers to try to manipulate and fool around we missions. to me, that's a completely separate debate from what's going on with volkswagen which is clear manipulation of the emissions in the united states and now it's been alleged also in europe as well and we should also point out that all of this started because there were transportation officials in europe saying how is it that the cars are cleaner running and cleaning burner in the united states than in europe? they couldn't figure it out. that was the genesis of this all so that's when they contacted the epa and california air resources board and they said can you do some tests? can you figure this out? >> i'm glad the journal is here to do that because, you know, the new york times wants to send the executives to the gallos or walk the plank and run them out

of town. it's a nuisance at least a little bit. >> the thing that bothers me is they're saying if this happened. the company already admitted they've done it. >> there's a lot of defeat devices over the last 50 years that they put in for a lot of different reasons. >> the journal's point is that there is a trade off to epa emissions. >> you're with the walk the plank. >> i'm not with the walk the plank. >> keep going, keep going, there's sharks down there, jump, jump. >> if you're going to break the rules and you're going to lie about it, we have problems. >> by the way that's an unfair playing field. >> the journal will tell you that broken glass in a bag is fine. but i'm glad there's someone there to do it. >> coming up, thanks phil. coming up when we return fortune magazine is unveiling it's annual 40 under 40 list. find out who made the cut. we'll talk about it next. speaking of the future, our

special squawk anniversary celebration continues today and this morning's focus will be leadership. we have a graeat list of guests. jack welch and kevin plank and tim armstrong. all in a moment. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

this is not the old mark zuckerberg list? >> it's not. there's a lot of household names like mark zuckerberg and we just decided those guy versus been on it enough. let's move them on. we actually have a hall of fame so we have put our distinguished alumni on a hall of fame this year. we wanted to make it 100% brand new. >> introduce us to the top five. >> okay. number one is adam newman. it's a company that provides temporary office space. it has a tremendous amount of funding. and this is helping 1400 companies act as a start up. that's why we decided to put him at number one. >> who is number two? >> jb straubel. you get to go one layer beyond

elon musk so he helped persuade musk to fund tesla and start it. he is an interesting person. >> have you ever taken a look back at these people? do you know what happens to them? >> we did another version of this list long ago during the first.com boom. michael dell was at the head of it. but there were also names like that were in the first.com bubble but a lot of them are still here believe it or not. >> number three. >> it's a tie. so we put ryan grave who is is the svp of operations at uber. he was the first employee of uber. travis hired him from a sweet promising big equity and he said i've got a tip, hire me and then -- >> how much is he worth? >> network is said to be around a billion dollars. >> good for him. >> good to take that risk.

and then we have the lift co-founders. people talk about it being the number two to uber but they had a strong year this year including money from carl icahn and now the third in the slot, they're president and ceo of this company which is the uber of china but 80% market share. they merged this year. >> and outside of the united states for the first time in number five. >> number four is the vp of finance and treasurer for gm and 36 years old from india. >> so so far this list is a very u.s. sen tri u.s.centric list. >> it's global in scope. >> who is the youngest person on the list? >> taylor swift. 25 years old.

>> not bad. >> a lot of people are in their late 30s because to accomplish what these people have accomplished it is usually a little bit later. taylor swift is obviously an exception. so a lot of people 35 and above. >> dare i ask the wealthiest person on the list. >> we didn't get into that. there's lots of people, james park of fitbit his stake is worth 700 million or roughly around that. so there is a lot of wealth on this list too but that's not what it's about. innovating, disrupting, it's about ambition. >> how do you come one the list? >> it's a long, tortured process. >> but is everybody proposing themselves for it? are there people at each company that are trying to get -- >> no, it's a reported list. i have a fantastic team of reporters. everybody goes off and just digs and shakes the trees and reports and talks to sources and comes back with tons of ideas and it's

very, very difficult to get it down but we do. >> thank you. >> go check out the magazine. >> the biebs is not on there? >> we don't often put artists or celebrities on there. >> what about katy perry. you're going to start another fight. >> taylor is on there because she stood up to spotify and apple and became a business leader. >> that seems arbitrary. you're not a believer. it means i can't talk to you. >> sorry. next time maybe. >> he's your idol. >> yeah. >> yeah. if i ever put on short sleeves you'll see.

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♪ welcome back, everybody. we're in the chairs taking a look at the stories that caught our attention and we talked a lot about the visit of xi jinping from china. he's been here meeting with business executives and from there he's going to washington to meet with the president but what strikes me is through all of this the platitudes that will be thrown out. the conversation and trying to make nice beneath the surface. business leaders and government leaders are trying to figure out how to deal with china. we talk about knockoffs here and you think maybe you see some of these knockoffs on the street. a $40 purse. every once in awhile authorities will clean up the fakes sold out there. you used to be able to go to china town and get those things. it's a very interesting situation. a story just lays out when you're talking about fakes

you're talking about a whole new level when you go to china. they're trying to sell fake iphones and fake ipads. in some cases they're the real thing but sold by unauthorized dealers. this is not just people standing on the street doing it. there's 30 iphone stores, at least 30 of them on one street. apple only has one official apple store in the entire city. and these knockoffs have created these and look like the actual official apple store when you walk in. it's down to the shirts that they're wearing. >> none of them are not -- none of them are not not iphones are they? >> i think they're actual -- >> are there any made that are -- >> they're unauthorized dealers. >> remember that we had our own correspondent that came in and brought with her one of the fake

apple watches. these i think are selling the actual things. >> how are they selling these 6s for $5. do you see that? >> it's $5 above the lease price. >> that just worries me. are they that available. >> i don't know. >> what do you mean? >> get your hands on these things. >> discounted to that extent. they're subsidizing. >> i'm more worried about t-mobile. >> it's scarce. >> you know, my only point about yogi, a lot and i'll just show you because we've got the pope in town. >> yeah. in the united states. he cannonized a guy for the

first time ever on u.s. soil and you have the chinese president and both tabloids, this is what they decided to lead with today. it happened too late to adjust this yesterday. happened too late the day before. same picture even but both of them have yogi, the same picture. both of them decided to use the over thing. one says it ain't over until it's over. i'm interesting. i'm not saying they shouldn't have done it because in 90 years this guy touched so many people and is such an icon that you can move the pope and the chinese president off of the front just to do him justice. >> this is the guy. they don't know who xi jinping is. trust me. >> the tabloid? who is they? >> if you were to go out in the street and interview people. >> they would know the pope.

>> they'll do the pope tomorrow, they'll do the pope saturday and they'll do the pope sunday. the pope will get his air time. >> it is endearing to see the spe secular mainstream media is so -- >> who are you looking at? >> right at you. those that never liked catholics or popes much before. it's nice. it's nice. don't you think. >> there's been a lot of coverage. there has been a lot of coverage and i've been watching it. >> the first secular -- i won't say godless media but certainly more secular than religious media. it's nice to see. >> we're going to come back in just a little bit. the come back of the cocktail. big business behind whiskey and soaring sales, check out the dollar right now. squawk box returns in a moment.

big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern. prge! a manufacturer. well that's why i dug this out for you. it's your grandpappy's hammer and he would have wanted you to have it. it meant a lot to him... yes, ge makes powerful machines. but i'll be writing the code that will allow those machines to share information with each other. i'll be changing the way the world works. (interrupting) you can't pick it up, can you? go ahead.

he can't lift the hammer. it's okay though! you're going to change the world.

welcome back to squawk box. you can call it the come back of the cocktail. american rye whiskey soaring in popularity skyrocketing 36% in he is master distiller and what brought about this resurgence? >> manhattan's old fashioned and the biggest thing that i see is the younger generation.

21s, 25, 26, my grandson is 26 years old and this is something i've never seen before. normally rye whiskey has always been mixed drinks and they're drinking it on the rocks. >> why? i would assume it's in mixed drinks because it's not as high quality as the other. >> no it's high quality product. >> why has it always been in mixed drinks? >> it was something we started many years ago. always mixed drinks. it's more spicy, more peppery and more bourbon is more caramel. >> the difference is standards. they have is to be -- they can all be used once for bourbon or rye whiskey. >> right. there's regulations. bourbon has to be at least 51% corn, distilled under 160 proof and put in barrel at 125 aproof

or less. you use corn rye and barley malt. rye is same stipulations. nothing can be added to it. it comes out of the still and looks just like water. just as clear as can be and all the color has to come from that barrel. >> and what about whiskey itself? >> whiskey has no regulations. they can use the barrel over and over again. they can do different things to it. but it's not as strict as bourbon. >> well, i don't know if i've ever tasted rye straight. >> you've never -- >> first time for everything. >> but that's the thing, you know, it's always cocktails. rye was the first whiskey made in america. the east coast was dominant rye grain and then in kentucky corn

was the dominant green and it got it's name from bourbon county, kentucky. >> what does that mean in terms of what you have done? are you upping production of the rye whiskey? >> yes. we were making enough to do about 10,000 cases a year. now we're making enough to do about 80,000 a year and i hope it continues. if it don't, we're aging it 6 to 7 to 8 years what we're making now won't be sold for 6 to 7 to 8 years. >> so you have to look down the road at future growth and demand for the product. >> we have been short of rye. we have been on allocations for a long time because we didn't know it was going to make the big jump and we can't turn it on overnight. >> to southwest airlines the county was named bourbon. >> named bourbon county. >> french guy or something? >> french name, yes. >> and they named it kentucky bourbon and the whiskey became

bourbon whiskey. >> it's like champagne. >> this is a very good interview because i didn't know that. >> well, the town bourbon county is paris. >> paris, kentucky. i've heard of paris, kentucky. like versailles, indiana. >> a lot of people say versailles and they don't know what you're talking about. >> we have a baghdad, london, glasco. all of those towns. all in kentucky. >> thank you for coming in. >> interesting. >> thank you for having me. appreciate you. we have a kentucky bourbon trail. come to kentucky and we'll show you around how we make the bourbon. >> we'll take you up on it. >> pope francis becoming the first pontiff to address a joint meeting of cone guegress but hea look back at this date in history.

♪

40% of the streetlights in detroit, at one point, did not work. you had some blocks and you had major thoroughfares and corridors

that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world, but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank. citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town, the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back.

welcome back to "squawk box" this morning, pope francis on

the way to capitol hill this morning set to address a historic address to congress. we have more. good morning. >> reporter: good morning, andrew. pope francis will be the first to address a joint meeting of congress, not the first religious leader to do so, though, that was queen elizabeth ii, the head of the church of england. he accept an invitation from john boehner and extended inviations to his predecessors. there's speculation what the pope would say in the address and whether or not he'll criticize our markets and economies as harming the poor. yesterday, at the white house he gave a hint of what the speech might focus on. >> during my visit, i will have the honor of addressing congress where i hope as a brother of this country to offer words of encouragement to those called to

guide the nation's political future, fidelity to its founding principl principles. >> reporter: in that vain, likely to touch on immigration and the catholic church is very involved in the issue maintaining those born here in the united states have a right to citizenship as per the 14th amendment. after addressing congress today, francis will go to visit catholic charities in washington, d.c. to feed the homeless, and later this evening, flies to new york for a service at st. patrick's cathedral where luminaries in the bids world attend including the bank of america, brian moynihan, and, again, this starts at 10:00 this morning, and we'll have updates throughout the day. back to you. >> before you go, though, there's all sorts of rules, right, that have been given to those in congress and others who come in contact with him today or going to be in the audience? they are not supposed to clap? what are the rules k exactly?

>> first of all, look, but don't touch. there's blocking members of congress along the aisles so people don't reach out to touch pope or shake his hand. no standing ovations as well or no up and down with the republicans and democrats. again, it is supposed to be, again, i guess you could say a quieter event than you've seen in things like the state of the union and other addresses in congress. but, again, they are supposed to be, i guess you could say, on their best behavior today. >> thank you. all relative. >> it's all relative. i don't know if you saw president obama yesterday said because it was a press conference and the roars were asking all the questions, and he said, usually, they don't behave this well. all right, when we come back this morning, more of this morning's top stories, and a special "squawk" anniversary

celebration, conversations for the next 20 years. this morning's focus is leadership. our special guest, jack welsh, aol's tim armstrong, and kevin plank, three leaders on set for an hour. we'll be right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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>> today, lessons for the next generation of leaders, tackling the biggest management challenges leading effectively, working with activists, ceo pay, and weathering the crisis. >> here to take on the challeng challenges, the master of management, jack welsh, aol chairman and ceo, tim armstrong, and under armor founder, kevin plank. the special hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." welcome back to "squawk box" here on cnbc, first in business worldwide, i'm joe kernen and we have and are celebrating the 20th anniversary of "squawk bx"s

having conversation about leadership over the next 20 years. we'll do that today. i'm not saying who is here today, but i'm planked by star power, including andrew -- >> thank you. >> who will get you caught up on this morning's top stories. >> other hitters here as well. volkswagen is going to name those responsible for manipulating tests. reuters reporting that they will release names tomorrow and begin firing people. the board is announcing a pick for ceo tomorrow. separately, the germany's transport minister says that volkswagen admitted manipulation toopts also in europe. more on the story later this hour. we'll get weekly jobless claims at 8:30 a.m. eastern time, and new home sales and kansas city fed survey, and at 5:00 p.m. eastern time, giving a speech at

the university, entitled inflation dynamics and inflationary policy. i know jack will be -- >> you're not going out? >> i'm going to miss it. >> i'm beginning to miss it. >> you're going to miss the program. it may be available on -- may be streaming or on this network. markets setting itself up for this morning, we should tell you red arrows in japan overnight with the nikkei closing at a two week low, coming back from a three-day national holiday. u.s. equity futures on this side of t atlantic are down, opening off 110 points off, nasdaq off 35, and nasdaq down 11. that just happened. >> again, we continue to see volatility. today's conversation for the next 20 years, leadership. how to achieve it and how it's changed. joining us now are two generations of ceos. jack welsh, the youngest chairman in 1981, wrote four

best selling books, three coauthored with his wife, suzi, founded the institute at strayer university. and kevin plank got the idea for the company in 1995 while playing football at the university of maryland. annual sales for the company, by the way, grew to $2 billion over the 18 year since this time. it endorses athletes like seth curry, and tim armstrong from aol, rebuilt a declining asset and turned it into a major media brand, selling for $4.4 billion to verizon. i welcome you all three here, but, jack, your name is synonymous with leadership. you're the person that generations of business leaders look to to try to figure out what to do with leadership, but it's something you've been working on for years, but is it fair to say this is constantly

an evolving science? >> totally. two guys we brought today will represent the current generation of real leaders and we'll talk about that today. >> these two ygentlemen are her at why request. what do you see in them in. >> all the stuff of the leader, giving to the employees, purpose to work, engaging them, and engagement is the styling point of every winning company, and if you don't get that, you don't get alignment around leadership, around the mission. you don't give purpose to the work. you get nowhere. if everybody's going in ten directions, and these two are guys that see them really representing that. i saw tim this summer as he integrated his team with the verizon team, bringing them together in incredible fashion. i've watched kevin and admired him from a distance for the last several year, and i love his

winning attitude. he's going to beat nike's ass, and it's an exciting thing to watch. >> jack, when did you consider leadership? something you thought of before being in the top position at ge? >> i never thought about it that much, i just sort of did it, and now i've been able to -- i hope, to be able to write about it, but, you know, the janet yellen thing today, her speech, there's something going on here that no one talks about. it's the change in the supply chain. kevin can talk about it. tim can talk about it. you know, it used to be the purchasing agent was a pot bellied old manufacturing person that didn't quite make it. you bought them two tickets to a ball game, and you made a deal to sell the product. today, supply chape managers are mbas, worked at mckenzie, compressed it, there's data, they are i.t. savvy, so the

pricing is compress, compress, compress, so it's tough to get a great manager as it is an i.t. performance. they are scarce. they are hard to find. that's changing the pricing of business. it's pressing through the system. nobody talks about that. the intellect changed the inflation equation in the country. i'll guarantee you. guarantee you. when she talks about it today, she won't mention it, but that's management again. >> kevin, jack has said that he didn't think about leadership when he was actually running the company. he just did it. is that something you do? you just do it at the risk of bringing up one of your competitor's slogans? >> no, i wouldn't do that, and thank you for the nice comments, jack, that you gave earlier in the likelihood of the marketplace. we agree with you whole heartedly, but in doing things like i was reading jack and suzi's book, going through it to

prep for today, and it was, you go, yes, yes, you do that, yes, yes, and you didn't read a book for it or go to school for it either, but it does. things become second nature to what you do in running a company. we chatted in the back earlier, and, you know, on some of the things, truth and trust is one of the values that jack really espouses in the book, and we were talking about managements and meetings, saying, you know, we have meetings because you get corporate and see companies get big. we're dealing with that, going from young, small, entrepreneurial, fashion, and all the sudden, we're encroa encroaching on $4 billion in revenues this year, growing 32% last year, not slowing down soon. last week, we told the market by 2018, 3.84 billion company this year, that we'll be doing 7.5 billion by 2018. be ready for change. what you can have is meetings, meetings, meetings. we meet the same way. this is what i heard. make sure people know they are listened to.

this is what i think. make sure you have a point of view. finally, this is what we're going to do. somebody's got to call the play, and too much people say, you do this, who is up? that without lack of accountability leaves you with lack of responsibility and then people point and say this is why it does not happen. very often, success has many fathers and failure has few. you see those things creeping into the company. beating that down, breaking that down, making sure that we're running hard a very, very important. >> something you do systemically without running the risk of micromanaging everything? >> micromanagement is vastly undervalued. it should be more, frankly. think about it. >> absolutely. >> why aren't you, you know, involved in a decision? look, i believe in empowerment, number one, and people need to know that, but people you look at and say, you trust where they go because they know how each other thinks. again, the opinion is not, you know, do you think it's interesting, particularly a

founder led organization is what would i particularly think, and you want to be away from the third person all together, but, you know, the idea of what would our consumer think? you know, you want to train my culture. companies started by people, by individuals, and the great companies are ones that evolve and create a great culture that that starts making decisions for you. it's no longer what do i think? do i like the music for the commercials? that has no bearing whether i like it or not, but i think on behalf of the consumer. don't think what i like. if you want to be informed, think of the consumer, and then make a decision. >> everybody here is relatively 24/7 person, and i would say up until a couple years ago, being 24/7 was looked upon fondly. now there's work/life balance, things going on when amazon gets accused of being too mean to its customers, you got accused -- >> oh, that's the "new york times," come on. >> so the question is, do you feel pressure to -- >> sometimes it's true. >> yeah.

>> if it's in the "new york times." >> to get soft, dare i say, how do you feel about that? >> jack came to the meeting this summer in integrating verizon and microsoft to go to aol. it was a surprise. stop the meeting. there's a change in the meeting. someone's going to speak to us, and jack came in, and it was like michael jordan came into the room. jack was authentic, 20,000 feet versus 20 feet away. he was 20 feet away from our leaders, and from a micromanagement appointment, it's not that. people are passionate about what they do. reality is you have to have balance in the life, but everybody shows up at work to basically want to succeed to win to do those things, and whether or not you're working 24/7, we live in a 24/7 business culture now, and leaders like jack, kevin, and i, recently shared an office in baltimore, and when i went into aol in the worst possible situation six years

ago, i showed up in baltimore, went to park in the parking lot, and people from under armor were flipping giant tires over in the parking lot. by the way, i didn't know kevin at that point, but i saw that, and i said whoever is running that, the culture there is about basically being active and moving forward. i think that's -- people don't show up work for work/life balance, but show up to win. >> to win. >> a lot of things we'll talk about today is winning is good. ? right. >> winning -- >> you know i'm all for winning. >> it's wonderful. >> it's earned success. live to work and work to live is the eurostyle, and as we slide into a euro socialist state, this is going to be what the "new york times" brings up. >> first of all, i'm not taking you there. >> i wouldn't have brought that up. that's not my question. should we work left? can i take august off?

>> go back to the mainstream media. if you watch television, read all publications -- >> that's the point. >> it's reported. >> the point is everybody, all sorts of people talk about the issue. i'm not saying it's right or wrong. >> professors and reporters, gang them together, hang them out. >> exactly. be in the middle, snap. right in midtown. get used to it. i'm trying. >> kevin, what were the employees doing flipping tires over in the parking lot. what's that about? >> love. what else? this is what we espouse, no, it's team building, exercise and fitness is our life, why not part of the country? it's a massive miss as we are the fattest country on the planet, and there's no reason for it. we're the most informed, educated, and, frankly, we should have work/life balance, but if you don't love what you do, a challenge that everybody should love what they do. it's not the easiest thing in the world, lucky to have it, and

i believe that more than 11,000 employees that we now have, we call them teammates, that they love it too. there's not a line -- you know, one thing we eliminated was the auto reply thing. did you get it, sorry, out of the office, i'll be back. who doesn't have e-mail? who doesn't check their phone every five seconds? the idea i get -- >> i don't buy that. >> we look and say, that's a loser mentality. >> i don't check my voice mail. >> you realize common administration is trying to change the exempt and nonexempt rules so that your home on your iphone, you're basically overtime. >> right. >> and we are, the staff, paying you for that. they had 8,000 lawsuits up 300% this year -- >> what? >> on that basic of exempt, nonexempt, and it is stifling

company after company. retailers getting killed by this. it's unbelievable. so this whole idea of working at home, people no longer come out of the assembly line, go to the time clock, punch it out to get the hours. >> yeah. >> they are treated like adults. they work at home. they do everything. now they want to change the classification. >> jack, i have to ask you, trying to figure out the point on yellen and inflation. >> it's nonexistent. >> the point is that they shouldn't raise rates or that inflation is different now so you shouldn't -- just want to understand. are you saying it's jurundersta now? >> i'm saying there is no inflation. >> stay at 0 forever? >> well, that's an argument we'll find. you had nobel prize winners on here in the mornings saying we have to go up a quarter point. i'm giving up. i don't want to argue the point.

if all these smart people that get up everything morning thinking about rates, a majority on here all want to have a quarter appointment rate. as an industrialist, i look at this thing through a long -- >> you look at currency translation reports. >> i don't think you need it. >> yeah. >> you look through reports. even though you're not a ceo, you can't get over that the dollar goes up and you can't sell abroad. >> like the pope, he sees the world through arian gene tee that. >> right. >> you got the seeing. >> you see it through a ceo. >> a ceo lens of a global player. so maybe i'm wrong. >> all the ones we have on, we had caterpillar and honeywell both on, no, no, no, not a quarter point. >> i'm off that argument. you brought it up. you brought it up to nobel prize winners. >> the nobel prize winners we bring on are shiller. we can't bring on friedman,

unfortunately, to offset it. the economics dr. >> you got enough smart people saying we have to have a quarter point. it's not going to change the world. let's put it that way. >> jack, to your appointment, though, about how managers are better and better, there's a story out today walmart is pushing back on the suppliers very heavily in terms of what's happening with the chinese devaluation. they want some of the savings from the guides. is that what you're talking about? walmart, home depot, toys "r" us. >> if it was smarter, people with more information, they know, for example, today, you got a global supply chain manager. he or she has a data base that's enormous. knowing when somebody is buying in china in this, selling at this price. they are different. used to be a guy in a bull pen waiting for tickets for the yankee' game, and they buy the product from you if you gave the the tickets. it's a different world. supply chain leadership is smart

first class people. they are on it every second and know when a price is moving, that the economy, the gap of commodity pricing, which is down, and selling pricing, used to be able to hold the gap for a while and be able to get the low price from oreo, sell the product at a higher price. today, that compression is insta instant. instability. people know. industrial companies that buy copper cheaper, supplier, customer's says give me that copper spread. you don't keep it. you used to keep that. >> right. >> you raised prices, and you live nicely. >> right. >> that's gone. that's compression. it's changed the game. >> right. >> and i don't think they understand that. >> right. >> all right. we're going to continue this conversation with our panel. they are sticking around to talk more about the biggest challenges that ceos face today,

and, first, boeing's plan in china and accusation in the craft beer market. look at the u.s. equity futures because they have been under additional pressure throughout the morning. right now, dow is down 140 points below fair value, s&p futures off by 17, and nasdaq down by 46. stick around "squawk box" will be right back.

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welcome back. a developing story from saudi arabia this morning. a stampede at the annual pilg m pilgrima pilgrimage, leaving 310 people dead, hundreds more injured. the crush happened in three miles from the holy city of mekkah. this year's pilgrimage started tuesday, and we'll continue to follow the story throughout the morning. more to talk about and to follow there. joe? >> thank you, andrew. in business news, boeing announced orders and commitments from china for 250 narrow bodied 737 aircraft and 37 wide body aircraft valued at $38 billion. the order was announced as the chinese president toured

boeing's factory in washington and announced to build the first offshore plant in china as part of a joint venture with a chinese manufacturer. they probably already have all the technology. doesn't matter. they will have gotten it another way. workers in china install interiors and paint the exteriors of 737 airliners, and a beer deal to tell you about. anheiser busch is buying golden road, operating a brewery and pub in l.a. financial terms are not disclosed. it's not the beer deal i throughout was coming, but craft beers are hot. well, hot -- well, how do you serve beer? i like it cold. coming up, we'll get back to jack and kevin and tim after the break, tackling challenges ceos face from corporate structure to shareholder activism and ceo

pay. "squawk box" will be right back. time now for today's aflac's trivia question. what museum is the largest in the u.s. dedicated to the work of just one artist? the answer when cnbc's "squawk box" continues. aflaaac. aaaa-flaaaac. someone's sandbagging. i'd be tired too. he paid my claim in one day when i got hurt. one day? serious hustle. serious duck. in just one day, we process, approve and pay. one day pay, only from aflac. ah!

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♪ welcome back to "squawk box," continuing our

conversation for the next 20 years on leadership. focus on the biggest challenges ceos face now and in the future. the hoes, jack welch, kevin plank, and tim armstrong. this is a case study in what you would do as the ceo, volkswagen. if something terrible like that were to happen inside your organization. i know you would say that nothing like that could -- >> right. >> what would you do? >> you signed that piece of paper with the cfo once a year, and you basically, you're certifying that everything is as its presented. you know, i heard the news. i countldn't believe it. the word "culture" is underused here, saying is it one person, how far up the chain did it go? questions come out, but, i mean, i, obviously, sick to the stoma stomach, but i can't imagine.

indescribable. trust is built in drops and lost in buckets. you have to build it in time. recovering from that, and when one buys our product, it's not because of the given product, but because we built a reputation over 20 years that if we put the logo on it, it's the last thing into it. the product begin with the form, fit, and function and begin with the point of view. why did we make it? does it hit the mission system of making an athlete better? if we participate because we can sell logos because it's hot. game's over. when it comes down to the fundamental piece of the company, it's how the consumer trusts you. that's our brand. wow, the sure worked or they knead shoe, did if work for me? did i buy the product, and what they gave me, given information, they violated that information. >> what do you do when an employee tells a white lie? >> bottom line, trust is two ways, trust from the employee base to the leader to the leader to the customers, those things, and look at the case they are

dealing with right now, there's an authentic piece to get it information out right away. people are forgiving if you say, look, we messed up, made a mistake, we'll fix it. those things, but i think the bottom line, andrew, dealing with an internal or external thing, and something is amiss, you have to deal with it right away. i think that -- when you don't deal with things right away and they fester, that's what happens. you know, when things fester, you get bad advice, do this, don't do that. as a leader, you know, look, we messed up, i missed up, the company messed up. get out there, take care of it, and the more you hold it back, seems to be happening in this case, the more it blows up, and i think the trust goes further and further away quickly. >> crime's always a coverup. >> jack, is there a way to fix this? if the board of volkswagen calls you, i need council here, what do we do in. >> they made the right -- this is such app egregious act that axing the ceo had to happen. had to happen.

they did it fast. they didn't do it by a thousand cuts. they didn't do a bp. they did it right there. now they got to go in and get a whole crowd of them and get them hung in the town square. if you talk about truth and trust in an organization, this is a place where truth and trust didn't exist. you can't believe people were forging the data on an item like this, and it's got to be so widespread. how did it stay quiet for so long? >> right. >> doesn't seem possible. >> doing it for -- they have crazy, what are they called? talked about it, default devices, used for 40 years for different reasons to boost horsepower and torque. someone figured it out that if we put this on emission testing, we have all this power on the road, and no emissions when you're tested. i think it -- this -- someone thought it was a good idea and wouldn't get noticed. jack, did you read the journal

piece today? >> no. >> talking about the epa, how difficult it is to deal with the epa on a lot of senses. not justified -- that they -- you know the journal tries to make it one like the times tries to make it, they want the guys tarred and feathered. >> well, i would tar and feather him. >> i know you would. you're in the tar and feather category. activi activism. none of you felt wrath in a real way. you have of activists. have we reached peak activism and in a point where companies have started pushing back in a way they have not before? >> we were one of the first companies to really push back overall, and i think there's two real clear cases. one is you have a management controlled company or founded controlled company. kevin's in that situation, and activist has a hard time going against the results kevin's had, his vision in what he's doing. the second piece is when you see activism, they had better returns in some cases in other funds, so they have some leverage from investors behind

them, but i think what happened is the tide has gotten to a appointment where there's an even conversation. we got in our battle activism running the table, and i think the environment's changed a little bit, but also the companies they are going after now have different corporate structures, and that plays into whether an activism works. >> shareholders broadly, though, more active, it feels like, than they used to be in terms of how you think about it. do you want to think about the shareholder or just think about the business? >> i am the shareholder. that's the most important thing. i'm the largest shareholder in the company, and that hopefully translates with sitting on the same side of the table. with any negotiation, you know, you try to get someone to shed the same shared interest that you do, motivated by the same things that you are. in our company, bonuses are an important part of it. performance is an important part of it. like, i have white boards in the office, three panels across, five deep, over promise, deliver, take the tempo, walk with a purpose, and one says,

done, done, done, like employees get things done, partners get things done, done, and owners get things done, done, done. it's ownership. are you doing things in the best interest? talking about mistakes, everybody makes mistakes, but they bet ere be full speed mistakes. we live through the ride of 2008 and 2009 and felt that, and having the conviction to come back from that and having the leadership to come back from that, so incredibly proud of the management team we've had where you have difficult times, but a rising tide raises all ships and lowering tide does the same thing. >> is this intuitive? jack just did it. intuitive to know it, and you read the book, and oh, check, check, check, but -- >> i did. like, i read -- i mean, you -- i read "good to great," but i'm not reading a book. there's not a manual you follow. i was getting crushed, and we celebrate the 10th year as a public company this november, and i remember in year two, we

heard, are you the right person to run the company? i said, who are you going to hire? we do 32% last year alone on a $3 billion base or $2 billion base. there's no road map. you know, we -- the invester data, the theme i use for investors was years, you know, leadership is an important part of it. i have a guy named eric olson, known as a bull frog, first four star admiral navy seal, and he, you know, an incredibly cool guy, and, you know, one of the sayings he has, like, ask the guys, tell me, go left, right, do you think, asking the question one time, and what leadership is, it's not about him having opinions. . s are bad. perspective is good. that's difference between good and bad directors. opinions are i hate the shoes, and my grandchildren don't like orange shoes. perspective is should you make shoes at all. i asked the question, and he did not answer things with a

straight yes or no. you know, left to right. he just said, you know, i told our soldiers that when the map differed from the terrain go with the terrain, you know? like, think about that. like over the last ten years, like, there's been -- we were -- when we started, we were doing international in four countries, one canada. we didn't have international, we had one website, four factory stores, today, over 300 global stores, 23 websites, our businesses, you know, exploded, and, you know, we think we've got a line of sight to $7.5 billion, but there's one thing to tell people. there's going to be problems, there will be trauma. bad things are going to happen in the world that external factors you cannot control, but focusing on things we can control is the most important thing, and, you know, i want a team that's demonstrated that, a team that's comfortable, you know, being in uncertain situations with uncertain circumstances and finding a way

to make the best decision, not the right decision. like, that's act vicivism. you actively improve something to be right, or, b, allows to be a wrong decision. that's what leadership is. >> don't you feel from a standpoint in business is there's a quotient to figure out it, you dealt with the navy seals, and they helped us out, saying, we have a plan, the plan always goes wrong first 20% of the mission, but the job is to figure it out. one of the things that, you know, activism, when you're the ceo, your job is you have to get to a destination, you zigzag, and the environments and things change. great leaders and people on your team basically, they know the end point in getting to, and it zigs and zag, and you get there, even though from the outside it looks like it's pretty, but that's a huge piece of leadership. >> just that question, when i was involved with ge, the

largest share were the employees. i told all the leaders all the time, look to the right and left. if you don't get it done, if you don't deliver, if it doesn't happen, go look at your offices and go look at the fact tory, those are the employees looking for you to deliver. i've seen that in spades in private equity as ownership is spreading in a big way to the management. dedication and commitment and alignment of share owner interest and the top management is unbelievable. they get up every morning and live the company. >> right. >> and so it multiplies what we try to do with ge with thousands to hundreds driver equity, and that's why private equity succeeds over and over again. >> do you think the public markets are broken? this idea of democracitizi dede

project? >> i think it's a huge project. >> i agree with him. >> i was the largest shareholder in aol. sitting down with an invester, our stuff it more personal than investors. if you're an outside investor, you want kevin, jack, basically drilled into our success as basically their success. that's the alignment. >> alignment. >> 100%, but brian moynihan campaigned to keep his chairman title, for example. >> because you have a bunch of flakey organizations. >> we bereted it day on and day out here. we knew it was not going to pass. >> the silly things in main that vote these things -- >> i agree. >> you would have been a big shareholder of ge, other than there's 10 billion shares outstanding. you couldn't own 10 billion of them, could you? a couple billion. >> the employees were.

the employees were the larger shareholder. >> i know. >> 10 million shares outstanding. >> you had a lot too. >> there are frivolous things that happen. >> i did. i did, thank you. i did. >> stop complaining. >> sorry. mr. -- i don't think you're in charge anymore, are you? once in charge, always in charge. we have to slip in a break. do you want to make the point you were going to? >> there's frivolous things you deal with, and i'm a big believer that the bar that's here is, you can complain about being public, you better be growing and making decisions and better have performance. that's a part of what you do. >> okay. you'll stick around, we'll comet to have the conversation, 20 years of corporate leadership, back in a bit.

excellent looking below the surface, researching a hunch... and making a decision

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changes you'll notice. wherever you are in the world. sheraton. oh, you know, it constantly happens, a good conversation, and then the camera turns on. welcome back. we'll look at the stocks to watch this morning. we had these guys here. let's do it quickly, accenture posting better than expected results, a stock buy back and

raising the dividend by 8 % to $1.10 a share. ralph lauren upgraded. they argued it's near the bottom of the valuation range, and new initiatives could drive top line growth, ralph lauren. much better. >> than lauren? >> no. >> well, that too. when we come back, jack and tim armstrong, and kevin plank look ahead to the next 20 years of corporate leadership. right now, though, headed to a break, let's look back at an aol ad from 1995, that's the year that "squawk box" started. you get all that with american online? read it before it hits the newsstand, update your portfolio and play fantasy football. need to hire fast?

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we are back with the panel on the conversation of leadership in 20 years, talking about the future and business leaders of the next two decades, and i would still say, guys, that the more things change, the more they stay the same in terms of probably ceo prinprinceiples way things work, being tech savvy, changes of a purchasing

manager, being a key employee, so there are changes, but you have to inspire people to earn their own success. there's nothing in the world that's more satisfying than succeeding and earning your own success, app i'm thinking about this again because of the constant discussion we have, and we have the pope here now and people say he's put forth socialist leanings, and look at capitalism and what earned success has done for prosperity and people's lives around the world, and there's just no debate anymore. why are we debating it? we are still, but the point is in the next 20 years, management won't change, will it? >> it did accelerate. >> evolve? >> i don't know. there's a lot of changes, demographics are going to change, technology brings in new changes. >> would you be a good ceo now? could you use the same things you did -- >> look, i do every day. i have 26 companies in private equity. >> do you see a difference? >> no. that's why they are here. you get in the skin of an

employee, you give purpose to work. you get rid of the clutter that slows things down. you have a generosity gene. you do all these things to excite the hell out of the place, and you win. >> so if every u.s. company were to employ these things, then we wouldn't have this kind of -- >> a bunch of steps behind the desk hiding, to have them be engaging everyone. >> how do we make it prevalent so we don't have the discussions we have in the country that no one is making money, it's skewed, unfair, and, you know, skewed to the -- >> one of the things, actually, that's interesting, the country right w is at basically there's no one-page vision document that says this is where we are going. when you go to other countries in the world, they have a vision document. we do these five things, and i think when jack came to the offset, by the way, asked at aol verizon management team, jack was a top three highlight in the

entire career speaking to them, and that temperatures you how much the principles that, you know, jack and other ceos like him have put into place, and i think the bottom line is if you don't have a vision document and not willing to get behind it every single day. at our company now, we run 8:00 a.m. meetings, that's europe, asia, california, all on the phone, top 30 people, and -- >> that's for companies. >> wait a minute, why don't you tell them your vision of the aol-verizon deal. every employee in that place have it on their foreheads, walking with it. that's what you do, they are on the same page. you get in alignment. talk about it. >> biggest thing for us right now is that digital is going to change everything, and i think the gap between online and digital was tremendous, huge companies got billed, talent changed, all those things, and difference between online and mobile is a much bigger gap in general, and what reare doing is translating the entire media business, which is a $600

billion to trillion dollar industry if analog to digital to mobile, and deal with verizon is attacks in three to four years, $80 billion in mobile and video content that goes to everybody's phones. this will be the first time in the world in the next five years we have 7 billion people with a machine in their hand dealing with two people, the person and their machine. that is a tremendous business opportunity, so, you know, verizon built the most reliable network in the world, and we built the most reliable way to monetize and put content brands in the company. those two things will be really, really powerful. >> the great philosopher, winnie the pooh, when you don't know where to go, any path will do. when you think about leadership, you know you need a set vision, a mission of where to go, but the fact is, you have to make decisions every single day. one of the things everybody's plagued by or feeling, it's easy to throw it to government, but in government, it's prolonging these decisions, and not showing

up. it's not one big decision, it's that you can't have, you know, soap boxes are dangerous. people sing and declare because then you're in a corner, and if you change your mind it's because, look, any great leerpd can change their mind. you can't jerk the chain around, but everybody has to be on the bus, make small decisions every single day, because, again, it's not about -- i can't look back and think of the one thing, like, what was the turning point that made under armour go, go from $285 million when we ipo to $4 billion five years later. it was not one thing. opposite effect, no one wakes up, by the way, we're now deciding we want to suck. it's a cut. it's a death of a thousand compromises. it's a compromise here and there. then you wake up, what happened to us? that's central leadership, the north star says this is where we go, this is how we get there. you need to drive. it is not easy. we celebrated the 21st

consecutive quarter of 20 % revenue growth. talking to the leaders, i had someone in the office giving me this song and dance about what they did in the job and trial and tribulations. can you imagine what we dealt with to go through 21 quarters, 24% growth. thank me for what i'm saving you i don't tell you to make that happen. like, that's just -- of course you do those things. >> it's a game of inches, and reality is the decision making, when your company competes against nike, we have facebook and google. >> it's great to hate at some level, but we don't root for somebody to loose, but we don't root to win either. >> you want to win. >> yeah. winning is okay, jack, but, look it's 10 yards, it's a sport analogy, but the goal is to move chains, not score a touchdown on every play. they celebrate every catch. yeah, nine yards. you know, you turn the ball over. the goal is to just keep moving

the chains, and, again, it's more important to have small wins every day, but winning every day is a culture like losing is. we felt that. we felt it for nine years before we got to profitability, and we didn't know that. you saw it in the team, their emotion, you saw it in the culture of the company. they come to see our company in baltimore, they have this, you know, they'd see people and have this sense of they want to contribute and bring things back to harvest as well. >> and you have no turnover. people love to win, excited as could be about winning, and they step differently. they come to work differently. they hang around their desks differently. it's just a better place. i mean, it's -- that attitude that you get in that place is what every company in the world has got to go get. that attitude of winning, a positive attitude, a positive expression. look, if you take that out of amazon, amazon's nps of their employees is 67%.

apple's is 45%. that's satisfaction in measure. >> well, we got -- you're staying, good, i want to talk to you about -- i want to talk to all of you about this, but you're leaving. why are you leaving? oh, you got to win. >> he's got to win. >> thank you for being here. >> thank you. >> see you, sir. >> thank you so much. >> thank you for being here. we'll take a break because we may talk politics next hour. probably. thank you. hate that. just you and me. k4r awe believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks. active management can seek to outperform.

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jack welch straight from the gut. >> supply chain leadership is first class smart people. >> now sounding off on the race for the white house. donald trump and the crowded gop field. heavy duet goes high-tech, a look at ford's new f-250 and how the company is changing the game when it comes to trucks. first on cnbc interview, ford's president of the americas is minutes away. wall street on edge ahead of yellen's speech today, sending a markets a signal on when rates start to rise? we key in on jobs data, the state of the economy as the final hour of "squawk box" begins right now.

♪ live from the most powerful city in the world, new york, this is "squawk box." welcome back to "squawk box" here on cnbc, first in business worldwide. we are less than 90 minutes from the opening bell on wall street. look at the futures. they look to open down. dow looks like it opens up 125 points, s&p down 15 point, and the nasdaq off about 42 points. checking out the markets in europe at this hour as we put that board up, red arrows as well, dax off 2 %, and cac over 1.5%. everything else down marginally as well. let's get to the stories investors will be talking about today. janet yellen speaks at 5:00 eastern time at the university of massachusetts. the title of the address is inflation dynamics and monetary

policy. wall street watchers watch this one fairly closely, but they have to read between the lines because there's no q and a from the audience. weekly jobless claims and august durable goods due at 8:30 eastern time. the chinese president is on the way to washington for an official state visit tomorrow. tonight, he speaks privately with president obama. key stocks to watch, blackrock substantially cut what had been a roughly 5% stake in bhp in that monitor, and this is an irregulatory filing. the stock fell sharply, obviously, in recent months, a miss these slumping commodity prices, and coca-cola announced a formation of a new national product supply system designed to streamline the production process for its bottlers. okay. let's turn back to the guest host, jack welch, and i know you

and quite a bit of everyone in the country watched the first two debates, so you're ready, probably, prepared to talk about the issues that are covered. you know that cnbc is having a debate. >> are you a questioner? >> maybe the stuff beforehand, the two hours before hand. i don't know if there's an after too, is there an after? we are still deciding. we may need to consult with you. >> post game. >> a little post game joe. >> i don't know if there is a post game. we may -- you know what they do after super bowls, put on a new show, who knows what. you got all those eyeballs. jack, a lot of issues have been covered, but because it's cnbc, there's one that is always paramount for me, and that's just the way we can, as a country, feel like opportunity

is there for everyone, exceptionalism, we take price in american exceptionalism, and it feels like right now not everybody is able to share in it. that's what the republicans should be talking about exclusively is how to do it. do you agree with that? >> absolutely. positive message about inclusiveness and bringing everyone into growth. >> the word success, where a person lives not to subsist -- nobody, i think, wants to be on -- all social programs are important, but they should be a bridge to where a person has the dignity of a job and of earned success. that's what we want to do. we had cody on from honeywell, and the idea is government provides sustainable, but the private sector is there to provide growth, almost taking away the government's ability to enhance prospects for growth is

the way i read it. i'm just wondering, you have this plan, every company needs a plan where you have the vision, the five things, we don't have it right now. is that the government's role to do that, or is it the private sector's role to do that? >> look, you know i'm a big -- and i have been on a steady drum beat -- about regulation. you're not getting 3-4% growth rate in this economy. these people in this administration are putting in every roadblock you can find against growth. they wake up in the morning in these departments with five rules here, okay, they are trying to propose that do nothing but squash growth, and they are out there -- >> you brought them in, jack. you brought in andrew, different times where jack's not here talking about regulation, not setting you up, but you talk about it, and you have a hard time -- i don't come up with the

individual specific regulation. >> i got them. >> i know. go for it. >> do you want to go for it? >> yeah, totally. >> let's go through it. now, i'm not talking about energy and all this problem on global warming. i'm talking about things that affect everyday factories, everyday workers. one, the nlrb and the ambush election proposal. we can now have an election in two to three weeks rather than eight weeks all aimed at more unionization. >> right. >> that's number one. >> might be a good thing according to a lot of people. >> well, it's not. we've proven that over years whether it's gm, or steel, go back to where you go. >> listen to biden and hillary. that's backing play, whether it's good or not. >> the microunit rule they propose where you can now take a department store and you can organize the cosmetics department so you -- they go to

small units within the department store so you you have a union organization in the cosmetic group at the counter, and that's counter to the whole organization that's trying to do that. >> now, this hits home for us, andrew, right? with the cosmetics, because we wear a lot of makeup. >> you know what i'm saying. third is the nonexempt, exempt rule, which is incredible. i mean, they are trying to -- it's all about increasing over time and lawsuits. taking care of the claim. employees who used to get overtime by going through a turnsti turnstile, going out the factory door, punching how many hours they had to today, they are after the rule of people at home on their computer working at night, most people don't work in factories, baa they work out in the service industry. they changed. what's an exempt employee? used to be 23,000, and now it's 50,000, so all the store managers, et cetera, are now

nonexempt. that's billions of dollars. >> i got one for you. what do you think of the situation in california with uber? all the guys are considered contractor, other than the government in california now wants you to be considered an employee. >> right. >> how do you feel about that? i don't say -- on either side, i don't know what to think. curious where you stand. >> i don't know enough about the issue, but once you become an employer, your overtime rules and often the other things come in effect. is it as efficient? cost effective? you -- i don't know the answer to that. okay. but these rules are killers. there's an 8,000 suit this year on exempt, nonexempt. we are with a jewelry store lady as the manager of the store and has the inspectors in the place

tearing through her records for some 20 years to see if she paid the right amount of overtime to exempt, nonexempt people. she's not going to hire more people. she's not going to do things in that regard. >> the one thing -- >> the fourth one, okay. >> go ahead, they all have one thing in common. go ahead. >> the joint employer rule, where mcdonald franchisees are part of it. that affects all kinds of temporary employers, people like -- you talked about overtime, et cetera, with part-time workers. the wellness plans is the fifth one. it goes against obamacare. this is one where you can't punish employees for smoking, and, otherwise, there's a rule now that you have to pay a fine if employees are wellness programs will give you -- costs

this much for a health care plan, but if you smoke -- >> fix it by going the opposite way, you get a discount if you don't smoke, is that allowed under the rules? we're not penalizing you, but offering you -- that doesn't work? >> the delta. you can't have a difference. now, you can have a difference, but there's a cap on the difference. >> jack -- >> what i'm saying is everywh w you turn, there's a nut and some bureaucr bureaucrat. you see all these things are designed to be more worker-friendly in the eyes of the people that -- >> and -- on this point, for six or seven years now, we've kind of gotten lulled into the notion that what's good for big business isn't, you know, aligned with what's good for workers, and right now, all of the things you talk about are

well-intentioned president or nlrb, whatever he does, they are theying this is the way to narrow the income gap by being worker friendly. the employee feels like they are in with the corporate. that's not what we talk about now. >> it's all dividing it. >> it is. it's dividing, worker against management. how do we change that? >> situation to attack income inequali inequality. how do you do it? >> growth, growth, growth. >> but it's within the company, which is not where we are right now. >> i talked about the supply chain this morning. the fact that supply chain now is so important, supply chain people have no problem. everyone's calling them, trying to get them, and key people going mbas to practice it. it's a demand situation. that's what happens. now -- >> so there are going to be people who will never be able to qualify for that level of work who doesn't have the education

for it, and in some cases, don't have the ability for it. >> okay. go to i.t. some people don't qualify for that, but to get a great i.t. person costs you a lot of money. it's supply-demand on labor. we have to get more growth. >> i guess the key to that is education, which has to come back to the bottom because you're not going to have the blue collar worker jobs you get out of high school with a high school degree and your qualified to do some of these things. >> no. we have to train people, much more training within companies even on that regard. i mean, it's growth. when there's growth, all kinds of things happen. >> when up employment was at 10% at the beginning of the first term, i always thought that the president would eventually come around to notice that the corporations and private sectors are the answer to him lowering the rate to 10. what's good for the private sector and what's good for business is going to be good, and they are -- it's symbiotic,

and if you believe government is sustain ability, you don't connect growth with the government. i think we all forgot. as least that's the discussion we have every day. you listed ten things that are worker friendly that the left says this is the answer to narrowing income inequality. >> no growth. >> you just called them, highlighted them as terrible things, and they highlight things of checklists of things to accomplish. >> not if you want growth, not if you want dplaemand, not if y want to create jobs. >> this election, eight more years, that's all going to be -- well, you know. we'll continue this discussion. >> jack will be with us the rest of the hour. when we come back, ford's superduty tech is high-tech. we have a first cnbc interview with ford's president of the americas. that's next. right now, as we head to break, look at shares of ford. markets under pressure this morning. shares of ford down 1.25%. we'll be rights back.

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the ford f-series has been a best selling vehicle for decades, and now the superduty is getting a super makeover to retain that title. phil lebeau has a special guest, phil? >> the president of fort of americas to give us a look at the new super duty from ford, and, joe, this is a 2017 model, doesn't come out until late next year, introducing it early. is that as indication how competitive the super duty or heavy duty pickup market has become in terms of you want the newer model out in front of as many eyeballs as quickly as possible? >> well, it is a competitive market, and we're proud to be the leader and have been since launching the truck in 1999, but we use the texas state fair in the heart of truck country to showcase this pride for the

world, and a year in advance is typically what we show a vehicle given the time to test it. good timing for us and excite b time to be in the truck business. >> yet, that truck business for you, at least in the heavy duty market for pickups, the market share dwindled relative to the competitors, still the leer, but there's more competition and people are nipping at your heals more. how much will a lighter truck hold them off a bit? >> well, phil, that's right. we had a dip in market share in the late spring, early summer with no availability of the f-150, but now it's out in the dealer inventories and selling extremely well, selling 71,000 last month. we've been the leader for trucks of 38 straight years, 39 this year, and, of course, this truck helps us next week make it 40. we're proud of the trucks, selling well now that we have the inventory. >> joe, i want to shift gears talk about what's happening with

volkswagen. not expecting you to answer for the company because it's their own set of issues they are dealing with here, but the broader question asked right now is the issue of vehicle emissions testing and whether or not this system that's employed here in the u.s. and slightly different in other markets, where auto makers mostly are regulating themselves, reporting their results to whether it's the epa or to other regulator agencies. does that system need to change? is it a flawed system having you guys come back and say, look, we guarantee we are meeting x standards with fuel emissions and fuel economy. >> we follow standards and do the test testing, but that's right, we certify through our labs, an ice test, the epa, or others, because it's important and magnitude of tests that have to be done by the manufacturers. we support ongoing work with the government to ensure the tests match what's happening on the road, but in our case, clearly,

we sign and certify they meet the intent and the restrictions that are on there for the epa testing, do not use defeat devices, and understand what it means from an integrity standpoint to make sure they perform on the road like in the lab. the process works. obviously, companies have to fulfill all requirements out there and follow the testing to the t. >> i understand that, joe, but, you know, a couple years ago, you had an issue with the epa in terms of the mileage and fuel economy you stated on some vehicles, said, look, it was not on purpose that the mileage was overstated, and you adjusted it. it gets to the broader question, and i hear from a lot of people as you do too. people come back, well, they say the mileage is xxx on a model. i don't know that i buy that. how do you reassure the public that what they see on the sticker on the lot is actually what they get when they are

driving? >> well, it's important to consumers, that's right, and it's important to government partners as well. in our case, we identified a calculation error, we want to the epa ourselves, there's a problem, let's work together to get the right numbers and went out to make right for our customers. the process is so complicated because there's so many vehicles, so many configurations of the vehicles, we work with the government very closely to ensure we can physically do all the test, and we'll work with the government to do that, and we want our customers to know what they get with the label on the vehicle and make sure it matches how they get in the real world experience. that's an issue for us all to work on together. >> joe, quickly, what do you expect in terms of industry sales pace for the month of september? 17 17? >> september's off to a good start, labor day, our sales strong this month. the industry sales look strong as well. we had a last couple months of

very strong sales in july and august and september will continue. it's a good time right now to buy a vehicle in the united states. >> no number? no estimate? >> no number yet. the close is important part of it, phil, but we'll have a strong number in september like we had in august and july. >> president of ford of the americas joining us in michigan where the company is unveiling the new super duty, unveiling it at the texas state fair, where, andrew, if you unveil a new truck, that's the place to do it, largest pickup market in the u.s. >> thank you for that. when we wureturn, no world worl in the 100 meter dash, and breaking economic news, jobless claims, durable goods data minutes away. the numbers and market reactions. >> andrew, take a shot. >> get rid of that u.s. futures for us. right there. >> masters of sex, they got that

right, jack and andrew. >> futures in the red. back in a moment. [ laughter ] you're watching "squawk box" on cnbc. first in business worldwide.

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broke his own record as a competitive sprinter one day after turning 105 years old. he had a time of 42.22, but he fell short of the personal best of 30.10 which was achieved when he was, yep, 3 years old and remains unbeaten. we are all look forward to that. >> andrew, there's going to be a time this is more than just a general interest news story. for me, i see that, and that's enspir ration. >> i'm working at that. right there. wow. awesome. 105, why not? remarkable. you know with science and everything else going the way it is. >> japan has enough 100-year-old woman to fill yank's stadium. say that stat the other day. >> wow. >> eat more sushi. >> better diets. breaking news on jobs and the economy. look at u.s. aekty futures in the red. dow looking to open off 130 points. back in a moment. at mfs investment management,

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folks, you can see the roadblocks behind us in reparation for the pope, disresulting things in new york today, and disrupting things potentially in washington. we're supposedly just a few seconds away from weekly jobless claims and durable goods data. rick santelli is standing by, but there may be a delay. >> absolutely. the pope's visit is causing issues on a number of logistic fronts, not the least of which is how different news services carry information, so, basically, it's going to be on websites whether they can get it or not. i still don't see anything for durable goods in august. initial jobless claims, 267,000, so 267,000 is the new jobless claims number that's versus a prior of 264, so we see -- wow, we're getting something else here -- anymore durables? no. 267's all i have at this moment. of course, we're going to continue to monitor durables. maybe the big news continues to be that all the hand ringing

about normalization by the fed brought us to a point where many don't like the outcome. here we go. well, that was continuing claims. oh, here. okay, here we go now. durable goods down 2%. if you strip out food and energy, it's unchanged. e-defense, nonaircraft orders down 1%. that is a bit of a disappointment. so finally we get the data. it's not nearly as strong as we were looking for, but, remember, at this point, many are going to be not only monitoring the data, but maybe more important, how markets are adjusting to a world where that greatest fear prior to wednesday and thursday of last week was the fed would normalize and remove accommodation, and the market's having no party with the result which was what they wanted. they didn't get removal, but removed a good chunk of value from the equity markets. back to you.

>> all right. rick, thank you. steve liesman has more as well, and digging through the numbers and realizes janet yelp is speaking later this afternoon, what is it that jumps to your attention? >> well, as i understand it, the consensus was minus 2.5%, a little better than expected. put the number in context. there's two strong months in june and july and know the adorable goods sector, the manufacturing sector in the united states is hurt by overseas global weakness and the second thing is the stronger dollar which hurt exports. both of the things are challenges to u.s. manufacturers and exports. i bet jack has thoughts on overcoming that. interesting in thinking about it, but there's an adjusted period going on, and when you get two months in a row, never had three months in a row of the number being up. it's not that big a deal. it's in line with the decline that was expected by most economists out there. the jobless claims numbers in the 260 range is a pretty good

number. it's, again, i sound like a broke p record on this, but this range we've been in of say 265-300,000 has been consistent with job growth around 200,000. looking at yellen today, we have not had a true speech by her in a long time, but last week spoke at the press conference, and looking for her attitudes on inflation and how far away we are from her being confident that we're going to hit the 2% goal, and i was fascinated by what jack said earlier today about changing the supply chain and effect on inflation. >> the fed guys said we have to go back, revisit how it's done. we've seen news flashes from that, right, steve? which ones, bullard said it? >> he said it with us and lockhart said it, and there's a lot of people talking about this, what bullard is talking about is a dallas trim meat that

does not just exclude energy, and something richard fisher started in dallas with the staff there. there it is right there, hitting 2%. that does not just exclude energy and food, but says anything that is above and beyond the normal movement of prices, rid of that on a routine basis so we look at the core of inflation. six months of the year, 2 %. jim cited the year over year, 12 month average, closer to 2% for a while here. the question becomes yellen's confidence with the idea that you have things working in the system to put downward pressure on inflation over the next several months and has to do with the overseas weakness, the overall decline in commodity prices, and the extent to which she's confident of to look through that, you know, we have to hike rates despite the downdra downdraft. >> i lived through 18% interest rates. i did not live through the

20-year deflation in japan, so, for me, i don't think the fed should ever try to actually orchestrate higher inflation. their key should be to make sure we don't get wage price sprieir. >> jim says, hey, we're close enough. >> that's what i mean. >> the question of the micromanagement and fed to use tools to land a plane on a dime, you know -- >> exactly. >> runways are wide because planes do not land in the point where you try to put them down. >> guys like jack and ceos have different mandates. in this case, it's the currency effect, and we've already had currency, you know, had exporters hurt, and, you know, hurt the economy, and why make it worse with a stronger dollar. let's bring in another voice into the discussion. joining us now is liz ann sanders, senior vice president, and jack's tired of us talking about raising rates. i'm afraid to bring it up. i don't think i should do that,

but do you think at this point that the u.s. economy is ready, finally, to get above where we've been and move higher, or are we worried about -- >> i think we're absolutely ready, and i think, actually, the suppression of rates has confidence. when you think of the economic patient like in a trauma room, and it's not just trauma room. if you're a business looking at long term capital investment versus borrowing short term buybacks, if you are a potential mortgage borrowers, it sets up deflati deflationary mind set. where we are right now. >> are all those things just making it harder to export? doesn't that offset some of it, jack? >> well, i told you that i've heard enough that it's not going to change any life one way or another. >> yeah, you see no reason to do it, though? >> i see no reason to do it because from my stand point, but

all the technical people have a reason to do it so let's try if. >> right. >> i'm not going to stay up all night over it. >> a quarter point. >> it's not going to make a difference. i mean, it's crazy debate back and forth. >> right. over a quarter. >> not doing it didn't have a nice reaction, so maybe try it. >> we're dealing with that still. >> yeah, deleveraging in the private sector on a gross basis, there's more money in the economy than pays interest expense. now, you got the distribution bias from a wealth perspective, but nonetheless in absolute terms, more money that earns interest income. >> look at the oil sector, all that borrowing, the other things, there's a lot of debt out there, and companies are weak and what's going to happen to that? >> right. that's why credit spreads go out. i mean, it's bias to the energy side, although it's filtering into other areas. sure. there are places where rising rates hurt. i just think in general the economy can handle it.

>> what's the -- do you have an s&p next year on earnings? >> i don't know where it's going to close today. >> no, no, s&p earnings -- >> no, no. i think -- >> are they going to be good? >> i think we'll have an earnings recession, but i don't think it's in conjunction with an economic recession. it's rare for that to happen, but happened a few times. >> what's the stock market do? >> happened in 86,' 80, and -- >> earnings recession, but not an economic recession. what's that do? >> the four times it's happened before because oil prices went down and the dollar's gone up a lot, and the market has had volatility and choppiness, but it's not brought on a bear market, and i think that's the environment we're likely in now. >> to we're down -- i mean, will we test the previous lows because of this? >> a decent chance, but if we do, it happens a little less tramatically, and what i watch

for is opposite of what we saw headed into the highs with a lot of distribution and weak breath. i look for the opposite of that, and accumulation in better breath. we started to see that a week or two ago, but the most recent couple days of rallies have not seen that, so i think this retest process is ongoing, not to mention the weak systeasonal. >> you buy dips then. >> i think if you're normal allegation to equities, use it. >> okay. thanks. >> thanks. >> happy birthday by the way. >> thank you. >> up next, a papal visit to new york city is a boom for the scalpers. details after the break. plus, the futures after the jobless claims and durable goods numbers, yeah, pretty much the same as before. you are looking at the dow futuring down 135 points below fair value, and nasdaq down by 41. we'll have more on the markets from jim cramer in a couple minutes. we'll be right back p.

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welcome back, everyone, the pope's u.s. tour is about to shift to new york and philadelphia, and the ticket scalpers are taking advantage like they always do. on craig's list tickets that organizers gave out for free are now going for $100 or more. some people listing papal tickets for charitables giving them away because they did not want them to go to waste. one seller offered a set of

three tickets to the festival in philadelphia for exchange for $ 500. he said it was donated to charity. but, of course, we know charity begins at home. church and civic leaders are angry at scalpers. the mayor is calling the sale of the tickets, quote, disgusting, and, of course, you know you're going to hell if you scalp the tickets. >> right. >> how do we turn from there? >> what do we do now? >> can we talk about the candidates? >> yeah. >> specifically by name? >> yeah, if you want to. >> it would be fun. >> yeah. >> we can start on the business side because i'm curious how you feel about donald these days and carly fiorina and we can move on from there, but -- >> you're going to do bernie and hillary clinton too. >> oh, i have views on them. >> yeah. >> they are good people. >> no, no. >> either one is fine, but the poer guys -- >> no, no, there's more of a race on that side than the other

side. >> really? >> i'm not sure of that. >> we'll see what joe biden steps in, then we have something going here, right? let's do republicans first. you consider yourself a republican. >> yes, absolutely. >> so who are you voting for? >> a winner. >> a winner. >> whoever i think is a winner. >> is donald a winner? >> too early. he certainly has touched a nerve in discontent republicans like i am, and he touched a nerve, and, i mean, he's saying things that a lot of us would like to say, so i'm -- i'm not -- it's not that donald is not going to happen, no way, no way. it gets more serious by the dayiday i in terms of nomination. you know, is he a winner? i don't know. >> is carly a winner? >> she's certainly done a magnificent job, so much better than i dreamt in terms of her debating skills, her interviewing skills, her knowledge of the issues, and her ability to articulate them, and

she, on just pure debating skills, articulation interviews, this is the beginning. she has been the biggest surprise to me in the whole -- >> reagan said i'm not a good community cater, but a communicator of great idea, and she is communicating very well great ideas. i don't know if the individual -- if you know exactly what needs to be done in terms of -- and it's like a textbook of private sector, freedom market, and freedom, and it sounds impressive. >> there's not an interviewer yet that stumped her. >> right. >> she's buried every one of them. >> as a former ceo yourself, how do you measure her business experience? >> well, she -- as she points out, she was in a tough environment. about her severance pay, i use that in a lot of examples. carly was doing her job. you can decide whether it was

good or bad. i don't know all the facts, but the idea that she got a severance package was because they had to buy her because hp did a lousy job with the board. they bought her to have her come out there. so the idea she's criticized for that, who is going to turn down -- they went out and found her. they had her. they paraded her around with the severance package before she was severed. the idea she's criticized for that severance package that the board put on top of her is crazy. >> the board said that too, and who knows if it was any good, and he hired a soft core porn star. the place was a mess. >> a mess. >> mess. >> go back to donald trump for a minute because democrats have been gleeful about him in the race because he's a distraction, doesn't think he wins the nomination, and if he does, can't win in the election. what do you think about that?

>> i think he has rallied republicans. look at the ratings. he's made it more interesting, more people are looking, more people are evaluating him and the candidates. we'd be talking about carly fiorina to this extent if trump was not there. would we talk about rubio? it would be a very low level conversation with 4 million people watching. or 24 million people are watching. >> you have not mentioned one name, which is jeb bush. months ago, people thought the conventional wisdom was he was going to be the nominee. >> he's a nice guy. i think he's from a great family. i think he's done great things in florida. but i don't think he's got enough stuff to make the presidency. >> you have watched chri chris christie, governor of new jersey, and i'm from new jersey -- >> e love him on show. >> so do i. >> love him on this show.

>> he's up to five now, was down to two and three and others as six and seven. is there a difference between five and six and seven? what is it that holds -- people say that trump stole the bluster, the blustery individual that tells it like it is, that he took that mantle from christie or is it the obama hub or what -- conservatives don't trust him? what do you think? >> i don't know. >> i don't know what it is. >> you like him when he's on? >> i like him, and i always liked him personally, and, in fact, i told him i would rather go out to dinner with him than about anybody, but i'm not sure i want to vote for him. he's going to be a winner. we have to win. understand that. if you're a republican, you have to win. we have an ineffectual congress although we won the leadership positions, i'm totally disappointed in boehner and mcconnell. >> a weakness -- no one that we've said, as you said, can

win. can rubio win? >> i think he might win. cruz might win. i think christie might win. a lot of people are. it's 16 months away. we've got a lot of good candidates, and i think, you know, the republicans, they just -- the danger is trying to knock hillary clinton out. i mean, hillary is beatable. >> you think biden's going to come, and if he does -- >> he's more difficult to beat than hillary clinton. i mean, good ole joe, quote, they all call good ole joe, a sympathy vote for what happened to the family, he's a nice fellow, no one disagrees with him as a nice fellow. >> you might. >> he might be tougher to beat than hillary clinton. >> you want to watch the clinton machine grudge up the anita hill

hearings because they will e viz rate him. >> they have other stuff too. >> how they operate. >> they are already throwing out the scandals. >> they operate. >> the fbi has some interesting e-mails, supposedly i think she is going to be easier to beat. i want to win. we have to win to get rid of some of this stuff we are talking about to get growth. >> we'll be back in just a second.

we're now at the new york stock exchange. jim cramer joins us now. what might be another down session today. we will watch for some kind of making a stand? >> this is one of those days between 4:00 and 5:00 in the morning, it lookeded really good. europe was fine. th then, urieurope turns down. 70% of the german economy is relateded to auto. we take our cue from the worst market in the world. it doesn't matter. listening to jack welch tell it straight, you have to take a little longer view than what we are seeing on our screen.

holy cow, do we take our cue from whatever is bad. >> almost like it is straight in the gut. that was one of your books. >> one of my names. >> jimmy, what is your s&p earnings for next year? whether you think the consensus is too high or low for what the s&p 500 can do? >> i am looking at the multiple. >> if we get the dollar to stay strong, we are going to have earning cuts.

>> i was going to ask jim about it. i have sort of relented. i want to foe how strong jim is hanging in there with me. >> i feel like we are lending too. i think enough is enough. i am so on your page. i'm about a month away from going where you are. >> good, then, let's do it in october. >> thank you, jack. always great to see you.

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welcome back. let's turn back to our guest host, jack welch. you said, you are done, you have capitulated to everybody who wants a 25 basis point. what is it that you see in the economy? you have been great about giving us a heads up on where it stands. >> i think the economy is a 2 to 2.5% economy. i don't think we are going to have a recession. inflation is nowhere to be found in my view. commodity pricing around the world is just wacked. as i said before, with this supply chain management and products, i'll take advantage of

that commodity. i don't see any labor shortages. i've talked to all of our ceos in the last 48 hours to get a handle on labor shortage. there is none. we have 26 of them. i have talked to all of them. basically, there is no shortage. if you want a supply chain executive, a new head of i.t., you are going to go out and pay for him but as far as hourly labor is concerned, there is no pressure on wages. >> you have been through a lot of different economies as somebody who was running a big company. how quickly could you see things building up? could that turn on a dime? >> this isn't going to turn on a dime. there is no way with commodities where they are and with the real unemployment where it is. there is no -- it is not going to change on a dime.

i don't see anything but solid 2, 2.5%. we can't get a healthy economy and clothes the wage gap without more and these regs. i continue to pitch about regs. >> thank you for 20 years. make sure you join us tomorrow. "squawk on the street" begins right now. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla. david faber, jim cramer. you might call this the busiest day of the week as pope francis addresses congress and flies to new york and chinese president xi flies to d.c. ten-year, 2.11 is going to be the lows for the month.