so the jobs being created are low value, low productivity jobs and don't -- >> don't generate enough garbage. >> yeah. >> and we really need to in the united states, we need to figure out a good policy to create long-term jobs that create high value wages. >> thank you so much for being here. >> thank you. >> it's always a pleasure. >> thank you. >> appreciate it. >> make sure -- good to see everyone. make sure you join us on monday. "squawk on the street" is coming up right now. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber, jim cramer at the new york stock exchange. stocks threatening a loss for the week now as futures tumble to the red on some of these comments from the boston fed chief about a potential rate hike. a lot to cover as well interest wells, to kroger to samsung. europe's been on its heels all morning long.

oil falling back after yesterday's rally and the biggest inventory draw in 17 years. our road map begins with outrage over wells fargo. the bank settling a fraud case that said employees issued debit cards and transferred funds. >> twitter shares down after a 6% drop yesterday. the board meeting. we will give you the details. >> and more fed speak sending futures lower. shaking things up. speaking of which, stock futures are lower. the boston fed chief saying a reasonable case can be made for hiking rates. he says low rates increase the chance of overheating the economy and that not tightening could shorten the recovery. he is a voting member, jim, and historically relatively dovish. >> right. i think this is again trying to prep everybody there's a rate increase coming. i've been saying that. that's why the bank stocks have been acting well. we will have to talk about wells. that is the biggest. this is par for what they're

thinking about, not looking at the employment number or retail sales. no exon nous events, they've wanted to raise for some time and this is it. the unbelievable interview with stanley fischer where steve liesman said sure, it could be a couple. if it's going to be a couple they have to do it in september. i am prepared for it and raised a lot of cash for my charitable trust, really concerned we're not ready, because so many people, look, you talk every day about the volatility. nasdaq has been up forever. >> in fact, 44 days in a row now, the s&p has closed within 1% of an all-time high. in the week you said go elevated cash position because you're seeing weak data into a potential hike. >> right. you have the vix at 12. i mean what is everybody on vacation? the volume is low but a big seller comes in, blast it down. i looked at the retailers. ollie's bargain store the only one that has really delivered

the numbers. when focused on ollie's, well let's say it's a narrow universe. i am concerned. i think people aren't concerned enough and i think people will overlook a kroger. kroger is a national supermarket chain down 25% going in but i use that as an example, carl, of well, you know, hey so it's a bad number. wait a second. supermarket, department store, everybody other than amazon. we are not in shape, the investors are not in shape for the rate increase but the fed is. >> all right. ooi i guess. the market has been a conundrum of late, up and down, and no real direction whatsoever. >> no volatility into what could be a rate hike people don't seem to be ready for at all. everything is a strofrts day. yesterday apache. that's one stock. apache was good. i listened to a guy on squawk this morning, he likes qualcomm.

up a lot. i'm saying there's a group of stocks that people like on a daily basis, like facebook. >> but another 6,000 stocks i don't like that day. i saw the russell 2,000 up nicely and then we're right for a sell-off. >> although the banks may be right for buying as they've been higher in august, the best performing group given the expectations of a rate hike. >> 20% of the market benefits from a rate hike and 80% is negative or nothing. that to me is 20% is not a plurality. i took that class, the arithmetic class. 80% more than 20%. >> you're right. >> with me on that. >> i am on that one with you. >> look at the agreement i'm able to generate. >> consensus right here. >> speaking of stocks that could benefit from a rate hike, wells fargo will pay $190 million to settle a customer fraud case. regulators say the banks' employees illegally opened more than 2 million bank and credit card accounts, many without customers' knowledge.

the complaint says employees were under pressure to meet aggressive sales goals. the bank apologized and said 5300 employees were fired over the inappropriate sales conduct over a five-year period. here's the apology in the journal today. we regret and take full responsibility. this went on for years. >> this is a suboptimal situation with ill-advised decisions. >> i saw the decision yesterday and the employees impacted that has to be a typo. that did take place as carl said over quite a few years, five years i believe, but 5300 employees? >> okay. >> i don't fully understand exactly what happened here. we have the report. >> can i give insight. the reason why my travel trust likes wells fargo because of the cross seller. you open an account and then they do all these other things. looks like they did all of them for some people who didn't necessarily want that. now, john should come on, and just read the apology because the reason why so many, why this

is the largest bank in market capitalization because they're the best cross seller. now i'm thinking -- wow. >> i've been with them in the cross selling, done it very well for me. >> great bank. >> this was small change. small change adds up to big numbers over time. >> yes. >> we're not talking about cross selling opportunities where we're giving you a mortgage and opening up a big account. we're talking about we're opening a tiny account for you you didn't know you had and charging you an overdraft fee or some sort of a fee. >> ill-advised clearly, but this is how one of the reasons why they've been the most profitable bank. i agree, i've used wells. they're not my bank but i've used them. they're very effective. they've flents places that nobody else has lent in new york. >> do you want to go down the road of questioning the overall strategy given this news. >> that's what people are going to do. i think that's wrong. i think cross selling is brilliant, fabulous at it, and some guys got too aggressive. not unlike what we saw with the investment banks that sells mortgages, some place in norway

and bury a school board with a mortgage that's your special, i'm hyping "house of cards." take my cue. >> i'm sorry. >> norvick. >> very good. >> thought that was the best we've done. >> i probably have to agree. "house of cards." it was a great one, thank you. >> we have a new one we will talk about in a little bit. >> talking about his amazon one. >> we should point out the buffet/munger relationship. asked about wells in the past and said nobody is perfect. >> right. i think that's what joey brown concluded in "some like it hot." i do think -- >> i'm a man! >> nobody's perfect. >> but -- >> good by the way. who's jack lemmon. who had that. >> jack lemmon went to harvard. >> no kidding. >> really smart guy. >> did not know that. >> i do think that there is a belief that because buffet is done at 10% he can't be in buying because of the rules. i don't know if he's been able

to get an exception. owns 10% of wells. not like he can buy more. >> this is the largest fine that has been levied by the consumer board. >> it was bad. >> tarnishes the brand. >> i'm not going to disagree. i felt the brand was far above. some people at some of the other banks have criticized me at times for what they think is a bit of a favoritism i've liked wells. >> cheerleading. >> well, i mean i'm saying they didn't have any -- they didn't do a lot of investment. they didn't do the bad stuff because that wasn't what they did. they were bankers. i am aggrieved like others to see this. would i sell the stock? no. because there's going to be a rate hike. >> speaking of which, we're going to talk about that and the fed speak that has futures down this morning. moving the markets. still to come this morning. steve liesman will talk to federal governor daniel tarullo. the premarket, last time the s&p

went a full august without a 1% move, '95. >> '95. >> and then it did it again in september, october, and november. thanks ryan. just an amazing lack of volatility this summer. >> '95 a good year, recovery after the peso tragedy, financial, i don't mean to use that word but you know what i mean. today i am helping people everywhere do what they do... better. i work with startups like alpha modus to predict markets five times more accurately. i am helping tv networks use social data to predict what people want to watch. and i worked with marchesa to turn fan feeds into a dress that thinks. hello, my name is watson. working together, we can outthink anything. hello, my name is watson. for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't.

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. look at that. faber report. another day, no lack of drama involving the williams companies, of course. that large pipeline company that deal to be acquired by ete this summer, failed dramatically in delaware court. the latest news, of course, came out late yesterday in dueling press releases. the first from a company called enterprise, a large mid-stream energy service provider pipeline saying we made a bid, and we wanted to buy the company and williams didn't engage and now we're going away. and that's where we are. williams comes back with a press release with its own saying we did engage, we were still engaged and now they've walked away this after enterprise had actually come around right after

the failure, soon after the failure of the ete deal and came back with the latest bid in the last couple weeks. what i can tell you about the bid itself is, that, people familiar with the situation said less than a 10% premium. the big deal, spectra deal, 11.5%, with em bridge buying that over a 52-week high. williams said it's less than -- well less than that premium that's being offered and we're certainly nowhere near our 52-week high. by the way, the last time enterprise came around, that first bid earlier this summer, was even below where the market value of the company is right now given it was -- it has moved up in the stock prices. did speak to keith meister a few moments ago. large shareholderpp who is running a proxy fight to replace the entire board of directors at williams and this is what he had to say. he basically said listen, you

know what, this whole thing, is somewhat shocking. the three new directors on this board need to go out and they need to start talking to the shareholders and engaging with their shareholder base and fully understand all the benefits that could conceivably accrue from a deal with enterprise. meister saying, for example, that a combination of enterprise, even without any premium at all in his opinion, still makes sense. given all the synergies, given the cost of capital that would come down dramatically, given the scale that company would have and by the way, the offer from enterprise, was entirely in its units, its partnership units, so you would benefit as a williams shareholder in the combination. he talked about the fact that, again, these three new williams board of directors who were appointed recently should engage and fully understand on both front the and then see what they think because he views them as the only serious members of this nine-person board. >> scott sheffield one of the guys that joined, from pioneer,

and i think that -- i would love to hear what scott has to say about this. >> and so mr. meister making no bones about it in our conversation a bit ago talking about writing an open letter to those three directors saying call frank mcgig begin nis and laura suggs and see what they have to say as well. and he says there's no defense for not engaging on this bid. he believes williams has not engaged. as i said the company says differently. says it actually was still engaged but there's an idea that scale, cost of capital which will come down as an investment grade company, ability to offer higher dividends matters in this industry and why even at a low premium conceivably you would still be delivering a lot of value to williams shareholders. >> enterprise has one of the best balance sheets other than spectra and enbridge. it's a remarkable company. forward thinking. the first one to recognize they could sell natural gas liquids overseas. it's not doing that well right now but you're talking about enterprise the highest quality

of the mlps and they are right to merge these two. williams is down but you know what together this would be powerful enterprise and spectra continues to go higher. >> spectra goes higher. both stocks going higher on the deal from this week. huge pipeline. williams says they're just trying to buy us on the cheap. they weren't serious given that premium. >> well you know what, it doesn't matter. the combination would be ideal and great for shareholders. and that's why i say, i think sheffield is a guy and i think that obviously meister thinks -- >> and i forget he says enterprise is a better partner than ete. >> couldn't agree more. ete is gunslinger. >> when we come back, remembering 9/11. a moment of silence here at the big board and nasdaq when we come right back.

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the nyse and nasdaq about to observe a moment of silence for those who lost their lives on 9/11, 15 years ago on sunday. four coordinated attacks on this country in new york city. the pentagon stony creek township near shanksville pennsylvania, 2,996 people killed, more than 6,000 people injured, $10 billion in property and infrastructure damaged. took 11 years just to clean up the world trade center site alone. i know you have a he done some work on this, jim, with your documentary. >> a fabulous documentary staff here that worked with me to develop something on sunday night, 9/11, at 10:00 that is more about resilience than it is -- it's actually a more prospective than retrospective. as an honor and dignity, of course, we go and respect. by the way, david recommendnick, editor of "new yorker" says it's

our gete egettysburg. >> a difficult day for us and for you, i'm sure. we'll be thinking of the families on sunday. in the meantime here is that moment of silence.

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in just about six minutes. futures decidedly in the red after boston's fed chief rosengren says recessions don't happen, guys, because it's been a long time since the last one. they happen because of policy mistakeses and as he puts it right now it's hard to see us raising rates too rapidly. >> yeah. obviously all the data for the last two weeks has been weak, but i think they've made up their mind and they're not looking at the near term data. they're looking at a broader panoply of what's going on in the country and thinking things are fine and therefore we don't

need emergency levels we can get off of the emergency levels. i've been saying they're going to do this. i've been saying you have to be careful. wall street is not set up for it. there's been thin volume. not like people have been running for the exits and we have to deal with it. i caution people that this is -- there are many people who have forgotten what happened when we raised in december. which was we had a down leg, repause, and big down because of oil. but then still, go back and look at the tape. >> right. >> we were not ready for the rate hike when we were told it was going to be a rate hike. now we've got a rate hike coming and we haven't been told. the percentages for thinking about a rate hike last week were like very small. people went and said jim, you can't say there's going to be a rate hike because there's not. you know what, the panthers did not win last night. yeah, the panthers won, you can't do that. >> yeah. >> you want to get to a mad dash. >> i would love to. >> holy cow. what a great idea. >> all right. >> restoration hardware, the

analysts are pooh-poohing the turnaround. i think it's real. gary friedman did a called shot like jamie dimon did, versus john stumpf, figure out who you like right here, but gary friedman the ceo that delivered a great quarter and the shorts are scrambling and they finally got the membership program down right and texas, miami and canada doing better. i am in agreement with the bulls, but remember, it's in the end a furniture company and we could be going -- when you raise rates you don't want to be in that. kroger, down 25%. they made an acquisition call. this was the acquisition too far. kroger had been very good, when they built -- buy a company. the numbers here, same-store sales, the prospects here of what they're saying are it's a very big disappointing guide down. that says it's a fine company. you're not going to see this thing down 35, 40. it's down already 26. so be aware that kroger is a good company, but food deflation

is weighing on everybody. >> the halo. what happened to the halo around kroeger? >> halo. there isn't. >> no. >> that rowdy's deal was bad and in the end there's a price war in the supermarkets of unparalleled proportions. we're seeing it go to the suppliers. >> the food deflation we've talked about fascinating. >> dairy down 50%. i do the food shopping in my house. >> no, you don't. i don't believe it. >> i go to king's and buy a chicken every night. that's what i eat. >> shares down 14%. in three months. >> it's not a disaster though. >> and the full year estimate they see 210 to 220. street said 328. >> look, ex-fuel, minus 0.5 to 1.5. that is disappointing because this quarter was better and if you read the report it's not clean. they're talking about how they did e-rowdies. they bought in december. i don't want to hear x-rowdies.

how did you do x the losses you had? >> on restoration you mentioned the beat but a lot came from a shift forward in sales. >> i think they're trying to temper expectation. rh modern down 90% in the stock. they were not ready for it. membership program, wrong card. the texas, miami, canada minus 4, now minus 1. i believe this is set up, look, i don't like to buy, i recommend a stock up more than 10%, but restoration could be back here and the company just doesn't want to get ahead. they've learned their lesson. they got too bullish, too complacent. that's over. i like the membership program. new book coming. remember they go by catalog, not really a website company. i wish the stock hadn't run so much. >> william blair has a survey, take it for what it's worth, young adults and teens asking how often they're going to the mall. 41% say they're going more often this year. 37% say they're going less

often. seen as a threat -- >> that's funny. l brands would tell you the malls are alive and well. pink. it's very jammed. and then bath and body works, very good. victoria secret will make a turn. urban. anthropology and urban doing better. look at macy's. pulling back from 100 stores. wow. i mean, we can't forget that. that is -- you know, like on delivering alpha the stock did a two for one split, no got cut in half and still not right. >> big number of their store base. those are large stores. >> they are. i thought the dave and busters would move into them. i had them on. they're going to expand by one more talk about ten. >> finally on amazon, bloomberg reports they are looking at, interested in sports rights for television. >> wow. >> streaming. >> french open. some rugby. a lot of those rights are locked up for a long time. but they're expressing interest.

>> i kept thinking that alphabet would do that and put them on youtube. i want them to get the chinese right, the nfl/china games. think when those would run. talk about prime time. >> let's get to the opening bell and the s&p at the bottom of your screen. at the big board it's 9/11 national day of service. and the national september 11th memorial and museum. observing the 15th anniversary of the september 11th attacks on america. over at the nasdaq, tuesday's children, a non-profit supporting families impacted by terrorism and traumatic loss. so i guess we'll keep our eye on wells. you said earlier you wouldn't sell the shares on this and not many people will. >> do i condone it? people are saying i condone it. are you kidding me? i believe if there were criminal violations there should be criminal prosecutions. i believe they stole from people's cannot. they offered an apology and i have often embraced john stumpf as the great american banker, but this is not cricket and if

there was criminal -- if laws were broken why is there just like, you know, a fine. can anyone explain that to me? does anyone ever get prosecuted for doing anything in banking? what do you have to do? only guys that get prosecuted are guys who rob banks. >> there's not a long history of executives or other people getting prosecuted. it's a small -- >> justice department. >> it's a small list. >> how about the justice department. >> how about them. they were very aggressive and they were very successful in getting quite large fines. >> but that's the civil thing. >> and reaching those -- it is civil, yes. although remember they reached those deals. >> right. >> where they neither -- >> some people -- >> confirmed or denied the charges. >> there was bad judgment and you could say they shouldn't be prosecuted criminally. if i opened an account in your name, that doesn't seem right to me. >> right. well some of the cases where you've already said you wanted to open an account or you did, but they've done things

differently than you instructed them. >> that seems -- >> it seems wrong. >> but -- >> seems civilly wrong or criminally wrong. >> i am not a lawyer. >> it could open the door for more policy risk by a more aggressive regulatory environment? >> oh, my. if that's the case, we're really dead. i just think that what happens is, unless you prosecute someone criminally, this stuff doesn't seem to stop. jail is bad. fines are what we pay when we leave our car on tuesdays when you're supposed to get it at 9:00. >> yeah. >> and as large as the penalty is, given the history of the cfpb, it's some argue not much. >> that's why my travel trust we will not sell, we will buy it on this if it gets hit. why? the government does not believe -- i mean look i'm waiting for elizabeth warren to be, if the senate goes democrat, can you imagine?

>> i hope so. >> still in favor of using banks? because buy mattress firm. maybe that's why they bought mattress firm. elizabeth warren could be -- >> a store of value so to speak. >> mattress firm may be. what kind of rates do you get. >> if about the same in the bank. >> seleepy's gives you what kin of rate. >> a better rate than the ecb or japan -- >> you have to leave the "s" off for savings. cds. >> maybe they're selling a lot of these in japan and europe. maybe that's a burgeoning market for mattresses. >> might be. >> i haven't thought of that. remember the burning bed ohio mattress. >> of course i do. >> that was a bank that went bad. >> your thoughts on oil after that draw yesterday, jim. >> i have to tell you, initially i was -- i was shocked. some people said it was the storm. now we're talking about the greatest drawn down since '82. >> yeah. >> it's not the storm. there's a pick-up in demand.

fight it. let's stop. it's a pick-up in demand. there is definitely one. and i've got to tell you when i saw the actual size of the draw down the largest since 1999, the second biggest since the '82 benchmark you can't blame it on the store, for heaven's sake. it's import coming in, pick-up in use. it's one number. iran still flooding, libya, nigeria, but it was surprising and caught people off guard and now i've got to tell you that was one of those that shouldn't have happened. think the demand is stronger, stronger than we thought. >> shares of twitter are down again. they were down sharply yesterday. of course we did focus people on that board meeting that took place yesterday. that was last thursday when we reported on that and a number of members of the board according it people familiar with its deliberations who were moving the overall consensus towards at least trying to focus on outreach or even a potential for a process of some point in the future in which they might

consider a sale at twitter. i have nothing to offer from what took place in the board meeting yesterday. i did mention, of course, the fact that it was not lost on a number of board members. the possibility that an activist could get involved. "the new york post" reporting carl icahn is not that activist. i never said he was and he's not. we'll see where this ends up. these things take place over time. and changing consensus on a board of directors can take time. and there have been no shortage by the way of people out there trying to bet on the idea that twitter could be a sell candidate at some or who might step up to buy it. there had been no expressions of interest. when i talked about this last thursday i never mentioned that at all. but they do come back to the stock based compp issue. didn't stop linkedin but

represents about 100% of the ebitda, it would eviscerate all of it. >> geez. >> yeah. >> well look, i -- these boards are reluctant to sell underneath a new ceo and he's still a new ceo? although it's problematic in the sense he's still running two companies. that is a rare thing. >> when you speak to people who are high level at either company, they're like, what are you worried about. and i have been saying, okay, listen, really good candidate comes to see you at twitter. maybe you would say how about square. but no one, i mean when i say that people were upset with me that -- at the highest level of the companies i think that's -- what do you know. what do you know. i ran a hedge fund and street.com and let me tell you something i sleep three hours a night and i was pressed. >> and you were -- >> pressed. >> i was pressed. i was not a nice guy during that period. i was not zen-like. >> now sleeping four and you're good. >> no zen. no one talked to me about being

gandhi but it's all changed. >> it does bring to mind the power of snapchat hiring morgan stanley to do this debt financing. adding jpm, deutsch goldman and credit suisse to the list. some people argue twitter could be a way in for snapchat to public life. >> that would be something. look i said that it would be like linkedin you saw another bidder there, sales force, but you can't take the current configuration of twitter and make it a business without killing your earnings. especially if you have to pay $28 a share. >> you mentioned many times salesforce which seems to be wanting to use cash to diversify and was a follow-up bidder on linkedin made it clear that they -- you know, conversations they had meetings yesterday that were arranged by morgan stanley with some investors. they're openly saying yeah, you know, certainly something we might consider. >> but when i have mentioned to you what i think that twitter has to do, this is what i see it

as, you can't look at it is now. you have to believe direct messaging is a way for a bank to get in touch with you or a credit card company like a paypal. >> i hope so. i don't know about you but i'm tired of the haters on twitter. >> i have guys attacking me for like -- >> i'm almost done. >> really? >> yeah. i am. i'm not interested. >> i had people like -- my fantasy team is a killer fantasy team, thank you adam schefter from espn, people say you idiot. i'm an idiot no matter what i do. the only person who has not been attacked is my dog. >> david carr would have turned 60 this week, the old "new york times" media columnist. he used to say leave them screaming down a hole. that's the attitude you have to have. >> my daughter who is zen-like said you can't respond to any of the haters. period. but i have to tell you, the people who signed up with me since i stopped responding to haters leveled off. they like combat. it's like gladdaters. been to the coliseum. they show you you can see

where -- >> i don't mind consuming it. no benefit to interacting i don't think. >> you don't think so? >> no. >> don't want to just -- people have been nice about my documentary. >> i know. >> thank every one of them. >> most are. >> but dow down 140. the first triple digit drop since july 5th. bob is on the floor. >> hey, carl. finally a little bit of volume and volatility. we had volume yesterday. one of the best numbers we've seen all month here. rosengren definitely moved the markets. want to show you the s&p futures prior to the open. we were down a little bit but when the headlines started coming out close to 7:30, 8:00, that's when we moved down. that cost us five or six points immediately in the futures and, of course, the bond yields a lot of the action we saw. we 5 basis points or so up. 1.65 in the 10-year. you see there that's the highest since the end of june and higher yields in germany and japan. he's not the only one. gun locke was out talking about

this saying it's time for fixed income investors to prepare for rising interest rates. interest rates have bottomed. and remember yesterday's ecb decision to stand and not do anything. that drove rates higher as well. a confluence of things going on here today, not just rosengren himself. the sectors, the impact the comments have been having. interest rate sensitive groups, utilities which compete for yield are down, consumer staples similar situation are down. generally bank stocks are outperforming the bank index, the kbe, etf down a bit. take a look at the major bank stocks, bank of america, at least at the open, bank of america, citigroup are on the upside. jpmorgan slightly down and wells fargo only down fractionally despite the large fine levied against them. banks have done terrific this quarter. despite the fact that interest rates haven't moved up much, better loan growth, higher fee levels have been helping them. look at morgan stanley and bank of america and goldman sachs and

citigroup. jpmorgan is up about 8%. the question is, is there much room left for these stocks to move up even if interest rates move up. because they made the call on jpmorgan. they downgraded jpmorgan this morning, mccarey did to neutral saying it's a premium company and valuation but the p/e is in line with the average, 14-year average, it does have some loan growth but the low rate environment will be a tailwind for that and they said it's fairly valued right now. so that downgrade to neutral there. you mentioned the wells farrgo fine for opening an unauthorized account but look at the numbers, $190 million fine only 2 cents a share. they will make 4.03. it's min maul. the reputation impact which jim mentioned and that's what matters here. we said they would have a comment from piper jaffray and they see near impact but could have an incremental impact to

wells' capas tighty to cross stel products over the long term which jim and david were mentioning this morning. mixed market as you can see. today we are approaching the 15th anniversary of 9/11 as we just saw with that one minute of silence. i was there for that terrible day. the great thing about life it does go on. the downtown is completely different than it was 15 years ago. there are now 60,000 people living downtown. a massive increase. many of them millennials occupying the buildings that used to be held by wall street firms. there's 232,000 people who work in the private sector downtown. much, much higher numbers than there were prior to 9/11. there's a much more diversified environment down here. it's no longer just wall street really, in fact, wall street is a small part of what exists down here. there's education, there's health care, there's media companies, there's families living in the world financial area across the way. there's a much more diversified environment. i think none of us were

[ inaudible ] and you weren't jim and david and carl but life does go on and it's a much more diverse environment than 15 years ago. that is at least the good news. back to you. >> thank you, bob. yeah. the never ending ability of this city to remake itself over the years in new york here. let's goat a couple of follow-ups on the faber report. starting with monsanto which i last reported on tuesday, recall that report i said that they were getting close to a deal. it could be the next week to week and a half call it at that point. and price seemed to be close as well. what i can tell you now is, even closer to a deal between monsanto and its buyer and it is buyer, know not bay er. the aspirin. they pronounce it bayer. i will too. they are going to be the buyer of monsanto. the deal announced as soon as likely at this point to be announced next week and the price which lasts reported at

127.50, confirmed by the companies, may be a bit higher than that, but it will not be 130. so a high 120s is what people familiar with the situation are guiding me towards in terms of an expected price there, perhaps bayer does raise a bit from 127.50. the key here, though, is going to be regulatory issues. of course the scrutiny of this deal will get from regulators here in the united states and perhaps even more importantly in the eu. what specific actions will bayer contract actually bind itself to to get the deal done. not hell or high water as we say, but perhaps specific divestitures. this still an area of negotiation for the two companies, though they are getting close to ironing all of that out including what we call a reverse break fee which would go from bayer to monsanto in the event it was turned down by the regulatory authority. so that's sort of where things stand on that deal. but again they do seem to be moving with all deliberate speed at this point after a long period towards a deal again

perhaps as soon as, in fact, likely at this point late next week. we'll see no what did you think about the eu kind of basically saying they're not -- >> on dupont. >> it got a lot of people's notice, jim, including yours i know and the time itself. i mean, any deal of this type is going to take the time itself will take so long. people may look at monsanto, why isn't it going up, 108, 109 on a 128, 129 deal takes 12 months or more. that's where you end up. really quickly a follow-up as well on viacom. wanted to say there was a lot of talk about a strategic review by the board of directors this week, reporting from reuters and bloomberg, focused on capital structure, rating agencies, on their debt, on how they're staggering things, all those kind of things and they are being advised on that at the board and not dealing at all with a potential paramount deal which seems to be completely and totally off the radar or

anything having to do with link up in some way with cbs. those are issues that will be dealt with, that being forget paramount not selling a part of that, but down the road on other things. i did want to update on viacom. it was down yesterday. >> idle speculation. >> at some point it may be true but not now. the key focus is going to be who is the ceo, tom dooley who currently has the job or bring in an outside candidate. more on that we move ahead. to rick santelli going to check on the bond markets on what is not a good day for the equity markets. >> well, you know, i define good differently than most. up, down, all around, anything that's not good, it's comments like rosengren, the economy is overheating. no. it's oversaturated with bad policy, central bankers gone wild, and coming home to roost. big institutional bond managers around the globe calling for more record low interest rates are caught off sides and that's important.

that's important. remember what they said. remember where we're at and what positions are in the middle. if you look at a two-day of 2s they're a on the rise, two day of 10s on the rise as well. how much on the rise? yields we haven't closed at since june, because we've been in such a tight range. you can really see the breakout on the start of july 1st on the 10-year. look at bunds. same start. july 1st. they're hovering near zero. does zero sound like a sell-off, it doesn't, trust me it is. and that same zero rate, wow, you look at a march 1st start of jgbs, the japanese government bonds are moving too and they trade by employment and there's none around but there's still selling off. ponder that. if you look at guilds, call it the brexit fwlom rates because we haven't been at these levels basically since then. they're hovering at 85 basis points. the one laggard that may have to wake up, traders are thinking maybe what you're supposed to concentrate on is dollar index.

the start since august 1st. it's the lazy guy in the group. because foreign exchange is completely discombobulated trying to navigate the issues of the day. carl, back to you. >> all right. thanks, rick. on that note steve liesman will talk to fed governor dan tarullo this morning. dow down 132. 98,352 what's that? the number of units we'll make next month to maximize earnings. that's a projection. no, it's a fact. based on hundreds of proprietary and

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15 years after the 9/11 attacks the world trade center is open for business. 1 world trade is more than a huge new office building for obvious reasons, it had to be one of the safest. >> the unique safety features inside 1 world trade are a key reason it cost $3.9 billion. $2 billion more than any other skyscraper in the world. it was designed precisely to survive a 9/11 type attack which makes it both a shield and a bull's eye. >> the world trade center remains a target.

remains a target for the al qaeda groups, isis. >> reporter: don spent 25 years with the fbi. and helped lead new york city's anti-terrorism task force after 9/11. he's now an nbc news analyst. >> do you think there have been any credible threats even during the time of the building? >> lots. >> lots? >> i would say lots. >> unbelievable. the political hoops, the architectural engineering hoops that designers had to go through on this one. >> yes. i have to tell you that i -- of the opinion even though a lot of people took a long time, that we'll look back and be surprised given all the constituencies that it happened so quickly as bob talked about, it is a remarkable development. one of the things that did not make the doc on sunday at 10:00 is, they were thinking at one point maybe it should look like rockefeller center, all the buildings should be the same. they decided no, we have to have individual architects. the architecture over there, the amazing buildings, i don't want

to minimize anything that happened on the anniversary, but i want everyone to check it out and make up their mind whether it's the right thing. i got a nice ler from the fire commissioner saying i did a good job and i'm proud of that. i called my wife and said listen. her grandfather was a chief and i just feel like that what i see here is that this is a remarkab remarkable renaissance people should go to and make up their mind whether it's right there be commercial property there, see the names, go to the museum, but be prepared, don't go to the museum thinking that it's going to be a celebration. it is the most -- other than the holocaust museum in israel, i have never been as impacted as taking my breath away. >> do not miss jim's documentary as he said, ground zero rising, sunday night, at 10:00 p.m. eastern time. we'll get stop trading after a break.

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i see if what's on tonight? >> twlo one of my favorites, a company that has done remarkable back office work for airbnb and companies and they take a share of each they do and the most exciting ipo this year. can't wait to speaks to the ceo. >> go birds. >> 3 1/2. >> see you tonight and monday, jim cramer. when we come back fed governor dan tarullo, dow session lows 155.

♪ hello friday i've been waiting for you a long time ♪ good friday morning. welcome back to "squawk on the street." i'm carl quintanilla. along with kayla tausche and david faber at the new york stock exchange. sara eisen is off today. worst day for stocks since june 27th. we have a full 1% loss. potentially breaking that streak of having no 1% moves for about 44 days. 10-year breaking out of a range as well up to 1.66. got economic data crossing the tape. over to rick santelli. good morning, rick. >> good morning, carl. we're getting our final read on wholesale inventories for july. our mid-read was unchanged.

guess what? our final read is also unchanged. when it comes to wholesale trade for the month of july we're looking for a number slightly positive. we ended up with a number slightly negative. down 0.4 and last month we lost a couple tents from originally 1.9 to 1.7 and that 0.4 actually is the second worst trade number of the year outside of january which was down 1.9. we are breaking out of ranges in all sovereigns, pay close attention, especially if europe. carl, back to you no thank you for that. rick santelli. it's been a busy morning in terms of fed speak. to steve liesman sitting down in washington with a special guest, good morning steve. >> good morning, carl. thanks very much. i'm here with federal reserve governor dan tarullo. thanks for joining us. >> good to be with you, steve. >> unfortunately, with your brief, i'm going to displease half the audience wherever i start but i am going to start with what is the news of the morning which there is two news stories on the banking front, which is, obviously, the other half of your brief.

so many billions of fines paid by banks and, obviously, i'm talking about the story by wells fargo, about wells fargo this morning, opening fake accounts, fake credit card accounts, so my question is, after all of these billions of fines have been paid, has bank behavior changed at all for the better? >> well, i don't think it's changed enough, steve, and i think we see evidence of that in our own supervisory work. obviously, i can't comment on the wells fargo case because that was a cfpb enforcement action. >> consumer financial protection bure are for the uninitiated. >> first, what i have seen is that too many banks instead of putting in place a comprehensive system for assuring that all their employees understand what is legal and ethical across the board, only respond when there's a particular problem. and for banks that are in that situation, they really need to change. they really need to be much more proactive in stating their expectations across a range of

behaviors to their employees. it's a little bit parallel, steve, i think to what we saw in risk management, where there was too much siloing of risks in the pre-crisis period and only gradually have banks learned thou integrate all the risks. here they need to integrate all their xwlins issues. second thing i would -- compliance issues. second thing i would say there is a need for focus on individuals as well as the fines put on the institutions. inappropriate cases, i think that fines for individuals, prohibition orders, obviously, this is a much higher standard but for justice department prose kugsz, are things that need to be pursued in order to make the point that there is individual culpability as well as collective. >> you keep hearing that as a potential next level but we never get there. billions of fines leveled. companies are allowed to not admit guilt and yet pay the fine

and keep hearing if it keeps going we're going to ratchet up but it never happens. is it time now? >> there are -- it takes time for some of these things to work their way through. supervisory regulatory agencies need to make pretty careful and thorough investigations, but i can tell you that we have had some prohibition orders in the recent past and we will continue to look inappropriate cases and, indeed, on an ongoing basis are looking at instances in which either civil money penalties or prohibition orders might be appropriate. >> another news story today from the banking regulatory fund is you're out with recommendations for banks and prohibitions against them investing in nonfinancial companies. this is already been criticized by bank lobbies on two fronts. one is they say this has not led to any additional risk in the banking system and second, it's just seen as regulatory

overreach. more decisions from central planning so to speak in the banking system. how do you defend these recommendations. >> first off be clear these are recommendations we're making to congress for congressional action. this is not the fed saying we think that there should be no merchant banking authority, therefore there isn't. this is us saying, we think that congress should consider repealing the portion that allowed it. the base ek reasons for that, be steve, are first, the traditional separation of banking and commerce still has potency, i think. the reasons for it still have potency. secondly, even though a risk may not have matured to this point, because of the potential for, for example, tort liability that substantially exceeds the amount of an investment, that can go along with certain kinds of

business, for example, minerals extraction or transporting oil. >> holding physical commodities. >> certainly if you're in the business of transporting them or extracting them, absolutely. and third, this is not an easy sort of thing for financial supervisors to oversea. making a judgment as to the safety and soundness of nonfinancial businesses that may be held in both geographic and corporate distance from the main operations of the firm. so our sense is that the benefits of this to the economy have been outweighed by the potential risks. and while it is true that to date we haven't seen one of these risks mature into an actual substantial loss, i think if there's a lesson from the crisis it's that we should be trying to get ahead of potential risks and not waiting for disaster to befall us. >> okay. i have a lot of questions about that but i need to move on. one more regulatory question and

then the monetary policy story. you're on your way to basel tomorrow for much anticipated meetings by the banking industry. they have labeled the current effort a basel 4 and say what you're doing and the basel committee is proposing is an end run on raising capital standards through a complicated way. is that accurate? are you moving to increase capital standards by changing around the rules around risk rating? >> so, let me first say, i can't understand why some people in the industry have thought that this may have been a basel 4 like effort. that's not the way it was intended or the way that it will evolve in the end. what this exercise is, is an effort to wrap up as it were basel 3 by dealing with some of the risk weighting issues, increasing the sensitivity of the risk weights, dealing with operational risk measures, which haven't been particularly

satisfactory to date. the basel committee as a group, agreed that the outcome of this exercise should not be a significant increase in capital requirements across the board, and i think what the basel committee has learned is that some of the proposals may have moved in that direction and so i believe there is an effort to the original purpose of readjusting risk weights while not overall increasing capital requirements. >> you're not going to end up in a place with these new rules that's going to result in banks having to raise substantial amounts of capital? >> two different issues here. are requirements going up significantly and what are the positions of individual banks. we agree with the premise of the basel committee that this exercise was about not raising capital requirements. but if there are banks, internationally active banks, which are not meeting the current capital requirements, this exercise should not be a validation of that.

instead, it should be the occasion for making sure they bring their capital up. >> now i have to pivot to the monetary policy economic outlook, part of your brief. we've had a bunch of data of late that has raised the questions about the economic recovery, specifically the recent ism reports for manufacturing and services came in below expectations. the jobs report i guess kind of luke warm. give us your overall sense of the economy and economic momentum right now? >> well, let me say two things about that, steve. first off as you know, i've been characterized as being in the show me camp which is to say i would like to see some more tangible evidence of inflation given the background context of employment continuing to increase without the unemployment rate going down. the fact that we're not running a hot economy. the fact that we don't have as many tools to respond to a potential recession as we would if growth were to pick up. but having said all that, i think even if you didn't have my

position on looking for more tangible evidence of inflation, i think you would want to be looking as you say, at the overall momentum of the economy and even if you're looking for an opportunity to gradually remove accommodation, you don't want to be backward looking. you want to say, what's going to be happening over the next couple of quarters. and there, as you suggest, is room for a robust discussion because while consumer spending, for example, has held up pretty well and there are some indications that maybe business investment will finally pick up at least a little bit, on the other hand, the labor market is basically been flat for a while. we've had unemployment not going down for a year. some of the indicators of under employment have flattened out rather than continuing to improve and as you said the ism surveys by their nature forward looking, suggests some ground for questioning. that's the discussion that needs to be had. i want to emphasize

that people -- no one should focus on particular pieces of data and certainly not in a backward looking way. we need to be focused on the overall picture which helps us to understand the momentum of the economy going forward. >> so all of that said, if you take all of this data together and you come up with a sense of the momentum of the economy, where does that leave you on the need to raise rates, keep rates the same? what's your outlook for where rates ought to be right now? is the current level appropriate? >> i'm not going to comment on particular moments for rate increases, steve. what i would say is that again, from my personal perspective, i think we have an opportunity to continue to get employment gains in this country. remember our mandate is maximum employment, not some constructed view of full employment and what we've seen over the last year is that the unemployment rate has remained just about stable,

while we've had about a million jobs above the replacement needs in the labor market created. well that's a million jobs that have presumably been created by trying on existing slack in the economy and so i don't think anybody really knows where full employment is and i think we have an opportunity to continue to benefit from some of those gains while as i say, not running a hot economy, and, of course, as inflation in my view shows that it's picking up in a sustainable way to be at target rather than being below where it's been most of the last five or six years then would raise rates. >> a bunch of inflation indicators have ticked up, not necessarily the fed's preferred indicator the pce price index, however, when you look at cpi, when you look at even the cleveland came out this morning about 2% of a series of indicators, don't they cause you concern? >> there are things to look at, of course, but he used the right

verb which is ticked. when you look at the charts, if you see things going up and down but then you're looking over a longer period of time and what have we seen, we've seen five or six years where the inflation rate, and we do use pce, where that has not been at or really near 2%, and so regardless of what measure you use, and remember they sort of core relate differently, but regardless of what measure you use, from my point of view what is optimal right now is to look to see actually evidence that the rates, inflation rate, would continue to go up and would be sustained at around the target, because we've had so many false up and downs in the past. >> i know you don't want to peg us rate hike or rate cut or whatever. >> you're right. >> could you see rates going up this year? >> i wouldn't take -- i wouldn't foreclose that possibility. you know, and i think it's important for all of us in going

into each meeting, to remain open to the possibility that momentum has changed, that expectations have changed, and thus for us to change our own views. >> one more question. your colleague on the fomc, eric rosengren, he's a voter this year, president of boston, is very concerned about financial stability when it comes to these low rates. is that something that animates your thinking about rates that we've had rates so for so low so long we've created excesses in the financial system? >> there's no question, but that when rates are low for a long time, that there are opportunities for frothiness and, perhaps, overleverage in particular asset markets. i think we need to be aware of that. being aware of it is different from saying, therefore, the answer is to raise rates. now, i, again, myself, don't exclude the possibility that in some circumstances, the federal

funds rate increase could be an appropriate response to financial stability concerns. i think those would be pretty unusual circumstances and i don't think we're in them right now. i think we've definitely seen some movement in asset prices up. we've had some supervisory response on commercial real estate, for example, making sure that lending standards are as strong as they should be. you know, steve, over the course of the last five or six years we've seen a number of asset prices go up and start to raise some concerns, and frequently then they go down. when as with leverage lending they didn't seem as though they were going to go down, we did take supervisory action. the last thing i will say is i do think if we are going to be in an environment in which our star, the neutral rate of interest, is pretty low going forward for quite a while, we're going to have to think about a framework for financial stability that includes, obviously, supervision and regulation, but that also has to think about the framework for

monetary policy and whether we need to think differently about how we conduct it. >> thank you for joining us. >> thank you, steve. >> carl, back to you, from washington, d.c. >> thanks to you, steve. our steve liesman. when we come back, hsbc pat burke his reaction to tarullo's comments and impact of brexit on banks and a lot more as we go to break, take a look at where the markets are trading. s&p down not quite a full percent although did it get there this morning. a lot more "squawk on the street" after the break. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.

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in the midst of a sell-off all but two dow components are in the red. boeing, verizon, coke the biggest laggards. the fed speak, one of the primary culprits boston's rosengren says he can see raising rates even though he's historically dovish. >> thanks, carl. you heard fed's dan tarullo comment on banking and fed policy saying that overall momentum in the economy is an important factor and adding, by the way, there is still room for employment gains. let's bring in pat burke, hsbc usa president and ceo, but right now, he's in beijing. and he joins us from there. nice to have you this morning. you know, actually, what comes to mind for me, first, mr. burke is not necessarily tarullo's comments now but the election, of course, continued comments from both candidates, specific though to mr. trump and what he may or may not do when it comes

to trade with china. is there more concern over there about the possibility of a trump presidency and what that will mean for the relationship and, therefore, for the business that you oversee in terms of getting business here to do business over there and vice versa? >> so look, i think the clients that we're dealing with on a day-to-day basis, they're just more focused on the market opportunities and i think the advice that we're trying to help them understand, whether or not they should be investing in certain places or not, that tends to be their focus. to be honest, i don't get much in the way of feedback on what's happening with the presidential race in the u.s. >> no. so you're not really hearing that from any of your clients in terms of the concern from what might arise there? >> yeah. i think the clients, particularly i think the chinese clients here that are looking to invest in the united states, they're thinking in a fairly long-term horizon, so i think the next election to them isn't necessarily the most critical

step in the process for themselves. >> what's the investment strategy of corporates who are trying to issue debt right now and in this brave new world actually getting a return on the? if someone came to you and said i want to sell debt for my company at a negative interest rate would hsbc underwrite that? >> so look, in the united states, of course, we don't have negative interest rates. and so i think the focus for us with our clients would be, what can we do to actually help you get a placement that's going to give you a market premium and one that's relatively affordable for what you're trying to do. >> we just heard fed governor tarullo talk about the fact that he thinks that bank behavior, while it has improved marginally since the financial crisis, he said it's still reactive to enforcement actions that are being brought and that compliance across the board at banks actually hasn't changed. what would you say to that as an executive at a bank who has been

in the cross hairs of the feds and other regulators? >> well look, we have a great deal of respect for the fed's mission to regulate the banks and so i mean i can't offer much of an opinion based on governor tarullo's comments. i can tell you at hsbc, we take very seriously the feed to comply with all of the regulations, not just the letter, but also the spirit. so i think in that vain we're working i think very directly to address any compliance, any control issues in the company. >> how much is your business in the u.s. growing these days? we all hear about, of course, some of the billionaires in china buying apartments in the sky here in new york city, for example, but overall, in terms of the cross-border relationship, what are the growth rates that you have put up and what are you looking for? >> so i think if you put them in relative terms, as we know, china itself, its gdp is growing between 6% and 7%. obviously in the u.s. we're 2%,

maybe a little bit more than 2%, little less than 2%. but if we look at our clients in the activity that they're conducting across the corridors, whether u.s. clients coming to china or chinese clients coming to the united states, we're seeing the growth rate during the first half of 2016, being north actually of 10%. so the actual growth rate of the business between the two countries is actually higher than the gdp, so again, i think that's just reflective of the notion that particularly chinese clients, very interested in investment in the u.s. market. >> right. you know, which always brings me back to the concern that there is among some investors about capital flight from china itself and continued concern about the growth of credit in that country. is there a concern of yours at all? do you know cuss at all on the possibility -- focus on the possibility of continued capital flight? >> no. i think the approach that the chinese are taking with respect to their china out strategy,

meaning they want to actually have their enterprises do more investment outside of china, i think that's a very sound policy, given the level of reserves and just the sheer amount of money they have in china today, they need to be able to put it in places where they can gain productivity, they can gain necessary technologies, they can gain anything really that helps them in their core fundamental business. and the united states is a very attractive place in that regard. >> yes, it is. mr. burke, we certainly appreciate your joining us, pat burke's hsbc usa president and ceo joining us from beijing. thank you. coming up, the football season kicking off last night with a super bowl rematch. nfl sports super agent drew rosenhaas joins us. the dow's loss escalating to 157 points. stay with us. you're watching "squawk on the street."

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charges are in there nor do we know what plea agreement is in place. we do know however from our affiliate there in detroit a plea agreement is in place. as we follow the developing story we will bring you more details as we know more. for now that's what we know. a criminal indictment against an employee of volkswagen. now on to sue herera with a news update. >> thank you very much, dom. here's what's happening at this hour. north korea says it has conducted a nuclear warhead explosion test to counter what it called u.s. hostility. in a written statement president obama condemned the test saying the u.s. will never accept north korea as a nuclear state. the united nations security council will hold a closed-door meeting this afternoon to discuss that incident. secretary of state john kerry arriving in geneva for face-to-face talks with his russian counterpart on the syrian crisis. russia is a key ally of syrian president bashar al assad. french police arrested three women after a violent standoff in paris last night.

they were linked to the discovery of gas canisters found in an abandoned car near notre dame cathedral this week. one of the woman, a 19-year-old, stabbed a police officer with a knife and then was shot in the leg. she declared her allegiance to isis. and the last 17 people who were trapped in cable cars dangling above the alps overnight have been rescued this morning. four helicopters were deployed after 110 people became stuck when those cars stalled due to a technical snafu. yikes. that's the news update this hour. carl, i'll send it back to you. that's a long evening i'm sure for the people. >> indeed, sue. thank you very much. we will look at live pictures here of the house of representatives, holding a ceremony to mark the 15th anniversary of 9/11. which, of course, is sunday. on the steps of the capital. there's speaker ryan. if we get headlines from that we will bring them to you. in the meantime we want to check on the markets. the dow down 170 now. the s&p down 1%.

once again ubs director of floor operations art cashin joins us at post nine to talk about today and whether or not it is ushering in a different kind of market than we've had all summer. >> hit with a one-two punch of gund lack and rosengren who had been a dove but turned a bit hawkish in the immediate prior appearance. so these guys baffle me. they're supposed to be data dependent and the data is not that good so they're changing their mind again. it's a little dangerous. if they insist on pushing something through in september i think they cannot begin to imagine what kind of market shock there may be. >> yeah. >> market is not ready for it. >> that's been certainly cramer's thesis. so much near term uncertainty. ecb, bank of japan, fed, first debate, over the next couple three weeks, is the market paralyzed by that? >> well, you know, you're right.

you've got all that going on. you've got pillebillions and bis of dollars in variable rate mortgages that will be re-set at the end of the month based on libor that's another wild card in there. if they want to do something this year fine, but aim for december. september could be a dangerous month to do anything of this stuff. >> -- any of this stuff. >> that's why people have been bullish on three month lie bore because they've been positioning for the move. we heard governor tarullo acknowledge there are opportunities for frothszyness in the -- frothiness in the market but he said the answer is not to raise rates. what is the answer? how does the fed or anyone cure frothiness? >> i think you've got to see where it is occurring. the signs of frothiness, equities, the nasdaq is at an all-time high, but away interest certain pockets of the real

estate market there's not a heck of a lot of frothiness around. it's been a surprisingly firm summer, but, you know, turned out not to be sell and may and go away but sell in may and ruin that day. it has not worked out. that's again because of the fed. many of the seasonalities in others things have been turned on their head. so, we will see. i think the fed still has opportunities within the present framework. they're paying a half a point on excess reserves. they could tamper with that. they could free up some extra reserves if they needed them. heaven forbid if the economy slowed down. they could opt to pay a quarter. and i think people would then say, well let me see if i can lend some money in here. they have latitude. they're not as cornered as they make out to be. >> have you noticed the german 10-year today? >> yes.

>> positive yield for the first time since late july. does that mean anything? >> i think it means that they've noticed every central bank appears to be reviewing what's going on. we hope to hear from the bank of japan. everybody had assumed they were going to go full blast and keep moving down. they're still waiting on the review. there are some people who believe that draghi was no move and disappointing yesterday because he got a signal from the fed that they were considering september, and not to have the markets pull two ways. so i think you're looking at a period of central bank reassessment here and why any moves that come out will be very important. >> we will see where this day brings us now. good to talk to you. >> thank you. >> with 60 days until election day what effect the rhetoric from the 2016 campaign trail is having on investor sentiment and

market action some joining us is cnbc contributor jared bernstein, former economic adviser to vice president biden and donald trump's economic adviser peter navarro from uc irvine. >> jared, i'll start with you economic hasn't been the center of this week's discussion on the campaign trail. it was supposed to be the week that both candidates were able to show their foreign policy and national security chops. i'm wondering if you think either candidate really rose to that occasion? >> i think as usual, the news cycle has been dominated by controversies around stuff that trump has said largely praise for putin and speaking on russian tv and all that sort of thing. i must say i'm much more focused as i suspect we all are on the economic issues and some of the implications for investors and broader economy, middle class households and it is true that those issues haven't been elevated as much and i really

think they should be. i think they need to be. i think trump's tax plans really needs scrutiny because i think it's going to be hurtful to the middle class where i think hillary clinton has a much more middle class working american agenda. >> there was a "usa today" poll this week that asked respondents if they thought the outcome of the u.s. election, regardless of the outcome, if the outcome of the u.s. election would cause a recession. 55% said yes, 45% said no. what do you think that means about the concerns of people voting this year? >> well, let's talk about what's going on with the markets and economy now. what i see is, the slowest recovery since world war ii and basically because interest rates are so low, money is going into the equity market so it creates this kind of paper bull market. it's not -- it's an illegal. every time the fed talks about raising rates that raises the

prospect of money going back into the bond market but the underlying strength in the economy not there to sustain it. so what's going to happen, depending on who gets elected. you look at donald trump, he says he wants to cut taxes, cut regulation, lower energy costs and reduce the trade deficit. that seems to me a recipe for a very strong economy and a bull market. on the other hand, if you look at hillary clinton, she's on record raising taxes, basically, raising energy costs, basically been responsible for those trade deficits, and that seems to be a recipe for a bear market, so there's the choice. >> why then has so much of the money that has been contributed from executives in the oil and gas industry, gone to secretary clinton instead of going to donald trump? >> if you look at the corporate money that's being allocated between clinton and trump you see the corporate money that

loves to take their faktss offshore to -- factories to china and mexico that's going to clinton because she's cut the trade deals that allowed that to happen. if you look at silicon valley, the folks there like the design stuff maybe here in america but they always like to make it in places where they can get cheaper labor and pollution havens, so where the corporate money is not telling you where the american people are going. >> mark zandi, i think a widely respected economist -- >> no, he's a democrat -- come on. >> i did not interrupt you. show me the same respect. >> don't play the z card. >> we'll give you an opportunity to respond. >> thank you. >> so mark zandi released a report where inn he evaluated the economic impact of both hillary clinton's plan and donald trump's economic plan. now this gets to your question about recession. now he forecasted that the trump plan would lead to a recession and the hillary plan to growth and jobs. i'm not going it bank much on a

10-year forecast and i think peter has every right to criticize the forecast. however, there is this, what was the basis of zandi's forecast was the deportation of 11 million people out of our economy and labor market. if peter wants to defend that as good for the economy go ahead but on cnbc, i don't think you're going have a lot of -- >> there's an invitation. two things. one, zandi is a democratic shill and major contributory hillary clinton. he has zero credibility. as far as -- the immigration issue, the black community in this country has been at the tip of the spear of illegal immigration and they understand that -- i'm addressing that. >> no, you're not. >> illegal immigrants are taking jobs from the black and latino community here in the u.s. it's good for america to have a closed borders, hillary clinton wants open borders. very clear. >> we can play he said/he said

all afternoon but we're out of time and have to leave it there. jared and peter, have a great weekend. >> thank you. >> bye-bye. >> as we go to break take a look at where markets are trading. dow down 186. awfully close to session lows. more "squawk on the street" after this break. they say the world does not revolve around you. but today, maybe it can. i am helping 1-800-flowers find the perfect gift out of trillions of combinations. and working with the new york genome center to find treatments as personal as dna. and i am helping sesame street make education unique to every child. hello, my name is watson. working together, we can outthink anything.

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the s&p 500 is doing something it's never done before. find out what that is and what it could mean for your money on tradingnation.cnbc.com. more "squawk on the street" coming right up.

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the denver broncos eeking out a win against the carolina panthers the start of the 2016 nfl season and marks the first since '97 with both peyton manning and tom brady missing kickoff week. manning retired, brady with the four-game suspension. joining us with what to expect from the season is famed sports agent drew rosenhaas. good morning. >> good morning. here in denver. >> well, i'm from denver, so i'm happy about last night, although it sounds like we're going to continue to have discussions about officiating and concussions. i wonder how long you think newton can play a season like this? >> well, he is a very physical quarterback, and he is a big, big man. probably the biggest quarterback in the history of the nfl and he is -- he's very physical. and he takes a lot of hits because of the style of play that he has. the referees have to protect him like they would any quarterback. it doesn't matter how big and

strong he is. he deserves to be protected the same way. >> did that happen last night? >> well, i'm a little bit surprised that the referees, the officials, did not stop the game after the hit towards the end of the game, to check him for a concussion. i thought that would have been merited and i thought that was unfortunate. apparently they consulted with the doctors for the panthers and the independent concussion people and felt that he didn't need to be evaluated, but i thought that a break in the game would have made sense to check him out. >> so many interesting narratives running through the league this season. whether it's kaepernick, newton, just general strategy decisions. i wonder what do you think are going to be the main stories at least for the first half? >> well, it's always going to be the product on the field. the nfl is -- the number one

form of entertainment in the united states and it's going to be a great product. the games are going to be fabulo fabulous. the game last night was unbelievable. it came down to the last second. >> yep. >> on a missed field goal. you know, the super bowl champs, they won in stunning fashion. wonderful drama with some of the best players in the game. that's what this league is all about. the kaepernick stuff, concussions, it's all important. player safety and players' rights to express themselves, hey, that's going to be a part of the game and -- but it's always going to center around the drama on the field, will take center stage. i'm glad the games are back. i, for one, prefer the drama on the field than the drama off the field. so to speak. >> yeah. i think a lot of people agree and would probably argue we've been robbed the past few seasons by a lot of exogenous events. who do you think is going to

stage the best revival team wise? >> well i'll tell you what, revival wise, i would have said the philadelphia eagles. i like the fact that the eagles made a lot of moves this offseason. but that trade of sam bradford and handing the keys over to the rookie, carson wentz, is tough. i don't blame the eagles for making the trade. they got a king's ransom. i give the minnesota vikings a lot of credit for salvaging their season after losing teddy bridgewater, their great young quarterback, and acquiring sam bradford. >> finally, drew, we're getting some early overnight ratings on last night's game. but we're also going to be paying attention to twitter and whether or not they can leverage this content on their platform. do you think people are seriously going to watch games differently over the next few years? >> oh, absolutely. look, if you're not in front of

your tv, if you're on the road, and you have the ability to watch a game on your phone or on your laptop on twitter, that's awesome. i love that idea. you know, when >> i think it's absolutely tremendous. the more ways fans can connect with the game the better. the fact that you can watch the gail on your phone on wifi. on a flight. the technology is unbelievable and kudos to the nfl for tapping into that. it's going to be great for them. the nfl is such a great product. i'd like to seek access to it in as many ways as we can. >> we can't wait. drew joining us in denver.

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comcast business. built for business. >> we told you about the indictment of a vw engineer tied to the teesel emissions scandal. i'm holding the unsealed indictment against that engineer and he pled guilty. we do have headlines and reports now that volkswagen itself is in talks to settle related criminal allegations against other employe

employees. >> morgan is live across from the port of newark and tells us more about this story. morgan. so we have nearly 80 vessels filled with clothes and toys and frozen meat refrigerators and stranded at sea and at least four of those vessels have been waiting along u. s. coasts. we have three hoping to come into one of the southern california ports. including one scheduled to refuel today and another making circles here in the atlantic ocean that was scheduled to arrive here at the new york new jersey complex right behind me

across the water here we have a second one underway in this area started at 10:00 a.m. eastern today. still these ships continue to be stranded. it's either not coming into these ports and one of the biggest reasons is cargo handlers not willing to off load that cargo. they're afraid they're not going to get paid. i have sources up and down both coasts telling me they're looking for up front handling costs before they even touch this cargo. that's largely going to fall on the he retailers and other shippers that by the way already made those payments so they're essentially going to be making those payments twice. that really adds to their status as credit ors.

also i'll note this has been a game for other carriers. according to online freight shipment marketplace the average price for container has spiked 56% over the past week. back over to you. and also we're going to check in with two big board members that just joined there and walt has some thoughts about the design of the iphone 7 and what he says might surprise you. all that and more coming up on squawk alley.

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good morning. it's 8:00 a.m. at twitter headquaters and squawk alley is live.