that's the flip side. because you've made that argument too, i think. >> if interest rates stay low, i think they can keep this equity game going longer. >> okay. >> peter, been great having you here. thank you for joining us. >> a fun couple of hours. make sure you join us tomorrow, everybody. "squawk on the street" begins right now. ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. the s&p set to erase its losses for september at the open in the wake of fed decision. and the stock rallying yesterday. japan was closed for the first day of fall, which they do celebrate. europe solidly in the green. 10-year yield down to 1.63, jobless claims were good, 252, that's the lowest since april. and that is the survey week. road map begins with dissecting the fed. they didn't raise but chair yellen stoking a lot of speculation about the next

hearings. mylan ceo answering questions about the epipen price hikes. we have the highlights and low lights from that grilling. and new election poll out as we are days away from the first big debate. we'll break down the latest data. first up, futures rising after wednesday's post federally. here's janet yellen on why the fed is standing pat on rates instead of hiking this time around. >> we judge that the case for an increase has strengthed, but decided for the time being to wait for further evidence of continued progress toward our objectives. our current policy should help move the economy toward our statutory goals of maximum employment and price stability. >> of course those three dissents, rosengren clearly was not joking around. >> no. >> she said we've struggled mightily to understand one another's point of view. >> well, steve liesman had some fabulous stuff this morning on worldwide exchange just talking about this notion of

unemployment, the percentage versus how much they've really not been able to lower to 4.9 and obviously we never really talk that much about that number. but just giving them room to do nothing. august was a very weak month. i wish she had just said august was a weak month in the country. we all know that now by speaking to individual companies. but, you know, the european markets loved it even more than we did, which is really rather extraordinary because the dollar actually went down. i would have thought that the idea that if we were to tighten it would be bad for the world. but if we did nothing, i didn't think europe would explode. because this is keeping the dollar down. so i find everything kind of quizzically possible. >> and what did you think of yellen's performance during the press conference? similarly quizzical? >> magisterial. >> magisterial? >> yes. especially that question about trump. how did she dodge that one entirely? >> basically saying the minutes are going to show. you don't go there. >> yeah. i know. look, she is data-dependent. and it's interesting from that

transition that she had in jackson hole. this is why i talk about the month of august, jackson hole she wants to basically sit tight and now it's maybe at the end of the year tighten. i wish they would say this. say look the last six weeks have been weaker. we don't have a handle on it. i say that because most of the companies i talk to don't have a handle on what happened. but it was a weak stretch. it's just not a great time versus it's an unfortunate -- if they can spot tighten at jackson hole, but data is just not that good. >> meanwhile, people still wonder whether november's possible without a presser. there was no explicit clue that there will be one this year. >> no. >> in fact, three believe there will be none for the rest of the year. >> well, i think -- now, look, there is no telling that they think they're data dependent. i think these guys literally don't know unless they see a pickup. i mean, i think they would literally like sit back and say, hey, guys, what are you hearing?

well, it's a little stronger. four weeks in a row a little stronger. let's put one through. but they don't have that data because the data was weak. i'm talking restaurant, ism, retail. >> industrial production. >> right. the actually fundamentals of our country. i don't know what happened in august. no one seems to know. i've been on conference calls where they basically say anybody know? you guys have a feel on what happened? i mean, other than the cloud, the cloud was strong. >> cloud was strong. >> cloud was strong. >> yes. cloud was strong. meanwhile, borrowing rates remain at lows that, well, we've now seen for quite some time but continue to be at lows. corporate -- well, not just corporate america. around the world corporations are able to borrow at virtually nothing. >> right. that's why you do acquisitions. >> even the likes of a viacom can come back in the bond market and refinance as they need to. from yesterday. those bonds by the way got hit hard after that news. >> really? >> yes, they did. stock not so much, but the bonds, yes. >> yeah, it is easy money.

you know, of the conference calls i was on, kb homes was incredibly bullish talking about how this is a combination -- kb homes is huge home builder in california. california's very strong. >> lennar's got the deal -- >> that's why you have to buy. lennar bought because you have to buy growth in that business unless you're in california. holy cow. but come back to what toll brothers what doug yearley said to me, great economist runs toll. he said we would take a half point increase in the fed's fund rate if the employment number were better. i think a lot of the home builders feel that way. i think it's interesting lennar goes up on a buy because the home builders should be doing great. and yet we are still building half the homes we did when our country was half the size it is. when the country was 160 million, we were building more homes. >> one more note on the fed, you'd heard bill gross going into the meeting saying it was a 50/50 shot. then gundlach on fast last night. take a listen to this. >> i think december is a huge who knows at this point.

you know, just think of how many times and the magnitude at which the fed guessing for today's move -- non-move changed over the past three months. and here we've got three months which includes three presidential debates, a presidential election thr, this highly unknown what's going to happen in december. so i'm not surprised that the work function that shows the embedded probability of the fed moving from the short end of the bond market is right about 50%. because that's probably what the -- any rational person would put the odds at because there's too much wood to chop economically and politically between now and december. >> that kind of sums it up, doesn't it? >> yeah. >> a lot of wood to chop. >> yeah. like i saw the warehouse was upgraded by goldman. >> you're out. your tomato crop has come in and gone, you should go chop wood now. >> german johnson was huge. biggest one in history. >> there's some rush this weekend.

>> may have to. i have to go to parent weekend on these college weekends. >> it's a good thing. >> it's going to be very good. guy from stanford been running buck nel taking it up, up, up -- i like colleges. i like to go to college weekend because it reminds me of when i was, you know, 40 years ago. >> wow. do you really remember that? >> drinking age was 18, my friend. >> oh, wow, so you really can't. >> move onto mylan this morning. heather bresch as you probably know got that capitol hill grilling from house oversight yesterday as she defended the company's epipen price hike. check out this exchange between bresch and congressman from tennessee. >> we're supposed to feel good because you've taken a drug that you're overcharging six times what it's worth and you're going to drop the price to $300. >> sir, we were receiving $274 out of the -- >> you think you were charging too much at $600? >> sir, we believe it was a fair price. and we've just now lowered that

price by half. >> why'd you lower it by half if you thought it was fair? if you thought it was fair, leave it where it's at. >> of course bresch arguing the balance between price and access is what they're after. not as many calls for her resignation as we saw with stumpf perhaps. >> yeah, the price to resignation -- >> is lower. >> say subdued. i think it's very interesting. the commonality here between bresch and stumpf from wells fargo is after they were caught, so to speak, they changed their policy. which therefore makes people say, well, wait a second, previously you told us the policy was good. but if it was so good, why did you change it? >> you know, the consistent price hikes in the epipen since they acquired the company in, what, '08 or '07, are extraordinary. and many people say, jim, a lot of it's always hard to figure exactly. but a good deal of profitability at the company as a result of what is still roughly about a $1 billion drug. so you're talking about a

multi-multi-billion-dollar company, but yet the margins on epipen are larger than other generics. >> and they got the other product pulled. >> and teva looking to come in as a competitor and the fda said no. not ready. >> i have the other product that carry it. a weird sardine thing made it to my blood pressure would drop from 80 to 50 during "mad money," but i refused to drop the show. the show never stops. what if you die? i said that could question whether the show goes on. so i always carry it. i was talking to my doctors, why did they pull it? said well it doesn't always work. good reason. >> let's take a listen to what brent saunders told you last night on mad. >> they're going to pay the price unfortunately. this issue is not going away. the american people deserve to be angry. and only we through self-police and self-regulation can fix it. a government takeover of health care is not what we need. we need discipline. we need responsibility.

we need companies to do the right thing. >> wow. i mean, he said it. this is something that he put it in his blog, which was very reasonable the social contract that drug companies should have with the people. and he put it out there. seemed like a very reasonable thing, and not a single drug executive joined him. >> really? >> not one. not one was willing to sign-off on his pledge. >> on his thing -- >> for reasonable increases. i thought that was the -- of the two components of this there's the mylan, valeant, teva, you know, allegedly slashing r & d and raising prices. and then there's brent saunders who a lot of people felt at one point an average domicile kind of thing -- >> first of all, valeant is key for slashing r & d, mylan and teva, they're generic companies. you can't compare that. >> in terms of raising price on something they had not necessarily improved. >> that's better. >> i said allegedly, but they regard it as like the three mus ke tiers of raising price. >> right.

but they're different companies. but his point on let's get ahead of the government before it gets really bad. >> i think he's saying, listen, if we don't agree to self-police our increases, then -- >> the government take over the drug -- that's not going to help anybody. >> single payer if the government negotiates and gets the same deal that the veterans administration gets. >> right. >> what are you looking at e.l.f. >> all these models walking around the floor. >> say the name suddenly his eyes -- >> over your shoulder. >> yeah, because e.l.f. is listing today. stay focused on -- >> you. >> on me. always. say trump or clinton will seize this and go single payer. >> right. >> that's what he's really saying. if they negotiate then we'd have the prices that the rest of the world has. how much is an epipen overseas? have you seen the prices for epipen overseas? >> i haven't. i don't know what they are. >> i have a drug i take that i

can get for one-tenth if i go overseas. >> that doesn't seem fair given we develop most of those drugs. but think about paying the price by the way, toira, did you talk to him about that? i got some background on that deal, jim, but that's a weak story when it comes to paying the price. >> the price was listed at 1.7, really 595 million. >> right, with the cbrs included. >> you know your big thing you do with medivation where you check documents after -- >> yes, yes. >> you check documents -- >> it's just the background of the merger. it's available in the filing. >> i believe when the documents come out on this you'll see multiple buyers. >> there was one big pharma company at the very least that was very much there and had them raise their price by 30% although they were at a very high price to begin with. >> they were because -- >> 500%. >> yes, because this drug works. and there's a intercept -- >> it works. phase two trial didn't work. so where's the confidence?

>> didn't work on one end point, but the second end point it worked on. that's where the government has decided to go. it's a second end point. they failed in the first. the second was good and makes the company worth every bit of that, intercept is a $4 billion company that competes and they do not according to brent have as good a product. >> there's a huge mispricing in health care going on given that number they were willing to pay. >> shocker. this is a liver disease that is not cirrhosis of the liver. i'm going with brent. all right. >> good interview last night. >> thank you. thank you. look, he's talking about -- he wants to ring the bell. david wants to ring the bell. >> david's going to make his way to the balcony in a moment. >> because it's e.l.f. >> because it's e.l.f. models. >> go to break, look around a little. >> i think this was a good move by brent and i think it's great

e.l.f. ringing the bell. all issues. >> got it all covered. when we come back, a lot of things, auto zone, bed bath, new presidential numbers are out as we countdown to the big debate on monday. take one more look at the premarket. if the s&p has a gain today, that's three straight. haven't done that in about six weeks. we're back after a break. when a moment turns romantic, why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away

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the latest nbc/"the wall street journal" poll is out ahead of monday's big presidential debate. our chief washington correspondent john harwood live in d.c. with the results. good morning, john. >> good morning, carl. this is an instructive poll about some of the day-to-day headlines that we see. birtherism, terrorism, terror attacks, hillary's health problems. most of these things do not move the needle. we've got this our first poll nbc/"the wall street journal" among likely voters. take a look at the results. in a four-way race including gary johnson and jill stein, the third party candidates, hillary clinton has a six percentage point lead 43-37, gary johnson 9, jill stein 3.

then when you look at a two-way matchup between hillary clinton and donald trump, she's got a 7-point lead, 48% to 41%. now, both of those margins are slightly down from early august just after the conventions, but not by a dramatic amount. if you look at the keys to hillary clinton's advantage. first of all, donald trump is leading substantially among whites without a college education, but he's not leading by as much as mitt romney won those voters by in 2012. he needs to do better. at the same time hillary clinton is leading by six points among college-educated whites. president obama lost that group by double digits in 2012. so hillary clinton is more than offsetting her deficit with groups of voters that trump's doing well with. and when you look at the generational battle, hillary clinton is doing worse than president obama among young voters 18 to 29. but if you look at those in that middle group, age 30 to 44, she's doing better. and she's doing significantly better among seniors 65-plus.

all of those are keys to how hillary clinton is doing as we head to that first debate. we'll see whether he can shake up the dynamic. >> john, how do you balance that national poll with some of these state polls? north carolina, wisconsin, even pennsylvania a little more competitive than that nbc result. >> some of them are. pennsylvania hillary clinton's got a pretty stable lead. there was a poll out plus nine for hillary clinton in pennsylvania yesterday. there were fox polls out yesterday that showed hillary clinton trailing donald trump in north carolina, nevada and ohio. those are significant. on the other hand, there was a poll out yesterday showing hillary clinton plus nine in new hampshire, plus nine in colorado. she doesn't need to win all the battleground states. remember, president obama won nearly all of them against mitt romney. she could lose florida, ohio, nevada and still win the election. we just got to see how all of those shake out, but if you look

at the electoral college and the average of state polls, she's ahead in that as well. >> all right. john harwood in washington. trump has five events in pennsylvania today. hillary clinton largely doing debate prep for monday. thanks, john. we'll get cramer's mad dash and countdown to the opening bell in a few moments. take a look at the premarket on this thursday. more "squawk on the street" from the nyse straight ahead. images, videos, social updates. we call it dark data. 80% is invisible to most businesses. the ibm cloud has tools that can help e dark data and put it to work. heo, my name is watson. working with watson in the ibm cloud, we can help an energy company predict pipeline corrosion. and help a start-u to use social da

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little more than seven minutes to go before we get an opening bell for this thursday. you want to talk a little bed, bath & beyond. >> yes, we'll do bed, bath, absolutely. whoa, i thought we were going to do red hat, but we will switch. >> i switched it up on you. >> oh, okay, thank you. can we go back to red hat? >> yes. >> then we can hit bed bath and then go to red hat, that i have all my data in front of me. this stock will be up the most, why? accelerated revenue growth. this is a cloud infrastructure company. the reason i wanted to do it, not just because i have the cfo on tonight, but because the one theme of this particular weird stretch of earnings is the cloud is continuing to accelerate. that was the story with oracle. that was the story with adobe and now with red hat. this is just that incredible migration out of on premise computer into the cloud. you need red hat as a way to do

it. and they had tremendous growth that shocked people because the first half of the year seemed too slow. so this is a big short name. people thought they were going to miss. just the opposite. i cannot wait to see the cfo. >> one thing i'd love to see on a chart that helped me and i think others understand exactly who all the beneficiaries are of the growth in cloud. it's not just aws where you're getting your computing power from or ibm. there are all the people who layer on the software and everything else. >> yes. >> but i'd love to understand that. will you do that for me some day? >> salesforce and cisco today announced a deal that's cloud-based. >> right. >> you hear all these deals, but, yes, i will do that. i will try to do that tonight with red hat because frank is a good cfo. you can go there. but the important thing to remember here is that this is still an early stage because the accelerated growth would not be happening if we were late in the transformation to the cloud. there's a lot of business still that hasn't shifted. it's funny because it's such a

less expensive way to do business. >> who loses as this continues to occur? >> well, they're not going to like it but the part that loses is the part of oracle that was the legacy. that was the standard. >> put in machines and then they are solely your provider. >> and you can't get off that oracle system because it just costs too much. but oracle is the guy that really was the off premise company. >> all right. >> people say ibm too, but it's really oracle. >> we'll do bed, bath & beyond after the bell. we have a lot more to get to when the opening bell hits a little less than five minutes from now on "squawk on the street."

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sn >> announcer: the opening bell is presented by power shares qqq leading the intelligent etf revolution mpkts you're watching "squawk on the street" live opening bell, busy morning with earnings, post-fed reaction and s&p market, going to make up losses for september. at worst levels the s&p was down 2.5% for the month. but that's all going to get cleaned away. >> that was when we felt that

the fed was going to increase. we've had a series of earnings that aren't that bad during this period. dollar's been pretty good so that no one has to worry about cutting numbers off the dollar. but, look, i usually don't like to be too fed centric, but there were a lot of people felt there would be a surprise. there were some on our air saying there was going to be a surprise. so a lot of shorts built in. a lot of puts, it was a september surprise working and this is what you get. >> certainly x -- the market -- fed futures were not pricing that in. >> no, there were enough people that came on that got you scared. by the way, those people -- i'm searching for the word, were wrong. >> in a couple minutes the s&p at the bottom of your screen. at the big board today cosmetics company e.l.f. beauty

celebrating its ipo today. they priced 8.3 million shares at 17. range was $14 to $16. about $50 million in sales. >> very attractive offer. >> yes. >> extremely attractive offer. >> at the nasdaq celebrating its ipo capstar financial holdings. kind of fits with your long-term thesis about ulta -- >> oh, totally. because of this. why do you need e.l.f.? because when you walk out, people take pictures of you. and you cannot look the way you look when you're in your house. you got to look better because suddenly you're on facebook, instagram, twitter. so you need e.l.f. you need it. by the way, because my wife doesn't know i have a show and never has heard about it, can i say this is an attractive group of people for this attractive offer. >> it is. >> she won't know the difference. >> definitely true. >> no one tells her. >> so far this year, by the way, we've had 64 ipos in the u.s.

nearly half of the 122 that had priced at this time last year. >> it is a dearth to say the least. the revenue stream that has typically occurred to wall street as a result of new offerings and secondary offerings is far less than it was a year ago. when you look at the peak in 2000 at the height of course of the internet boom, it's really incredible to see how little right now. companies have access to capital in a variety of ways that they simply did not even as little as five years ago. and they are taking advantage of that. and not going public. >> well, if you look at the crop of 2014 ipos, they crushed you. they crushed you. so, i mean, the buyers lost a lot of money. i think that that and then the unicorns got so overpriced no one was going to pay that for the public market. when you buy a deal, you get hurt. after awhile, like, hey, i heard every time i hammer my head -- well stop hammering your head.

>> no, but one day we may get airbnb, snapchat, maybe even uber. >> if they price things right. >> look at how much money uber's been able to raise without being a public company. >> isn't that incredible? not making money either. >> right. the billions and billions it's been able to raise. >> that's cloud based. it's twilio, when you put uber in, how is it possible you go not right to a central dispatcher but to your driver? that's twilio, it will be up again big today because it's the fastest growing company of the two ipos. acacia and twilio were example of things that would have been triple a few years ago. triple. >> s&p back to 2175. we took that shot of the wall where it's almost uniformly green. that's what a hold on rates looks like. >> that's why i was surprised at 2:00 only certain stocks really moved. and there was a lot of hesitation 220, 230. what did they think yellen was

going to say? look, don't believe the statement, i'm going to tighten. honestly, immediately we started talking about november. can we just take a breath and say september no hike? and also it's not bad. it's not a bad thing. i favored higher prices because a lot of our viewers own stocks. >> yeah. what does it mean that nasdaq's at an all-time high now? you got the s&p and dow close behind. and yet sentiment is what february looked like. >> it's just incredible. this market goes up when everybody's really negative. and money comes out of this market or it goes to etfs or miserable bonds that you always talk about with no yield. it's amazing how people keep getting faked out and that's when we have these big numbers. >> yeah, the media conference goldman's been holding last few days taking place not far from here. we've had little bits of news coming out. verizon this morning presented. i wanted to take a look at that

stock because they give you some notes from that presentation. i think it was their cfo talking about of course the change in way consumers are spending money, moving from cable to wireless, content being consumed at different ways and a need on their part at the least they see to create revenue streams from online advertising that of course behind the strategy of aol and yahoo. speaking of yahoo, synergies are ample, creates new revenue streams, online advertising, millions of users. they also mention connected cars being interesting to them and the internet of things as that emerges. there's some other news this morning on yahoo not involving its new owner, verizon. which is still yet to be its owner. that deal hasn't closed yet of course. but a potential hack i guess. >> potentially 200 million accounts were hacked. we're waiting for some sort of official statement from yahoo. although we sort of talk about them now in the past tense almost, a lot of people still have yahoo accounts.

>> you have a yahoo account, many people have yahoo accounts. you wake up and want to know what do they know. >> right. >> what do they know about you? >> and the reason yahoo keeps going up is because alibaba keeps going up. that's up another 2%, guys, to $108 and change. yesterday it had a big move as well. i haven't identified any particular news other than -- >> ubs today takes their target to 124. >> i think it's the charm offensive of which we were -- >> we were a part. >> but we were aggressive. >> we were quite aggressive with joe tsai. >> we asked a series of questions that were all the short questions. they very wisely wanted. they wanted every short question. and then they went up to boston. and the big buyers laughed it up. >> they may have. >> and i think they felt good about these questions that we raised about infrastructure spend off balance sheet. i think people felt more confident after their presentation. >> clearly something has helped, if not also perhaps some views

of the broader chinese economy and the consumer's place there. jack maud also in town briefly for the u.n. meetings. i'm sure he had some meetings too. >> i think you're right. play china. they basically gave you a road map. >> that's what they keep telling you, right? that's what they want you to think. >> you don't think it works? >> no. >> 400 million -- it's funny when tim cook talks about it 400 million people moving. people yawn. when alibaba talks about it, people buy. >> right. that's what moves yahoo. of course as joe tsai said, what is left of yahoo which will be that 15% stake in alibaba is going to trade at a discount to alibaba. and don't expect his comments that alibaba will come to try to buy it back. doesn't appear that's going to be the case. >> that's a great question to ask. >> that's why that stock keeps moving up. >> well, it's a big winner. it's a big visible winner. it's the kind of thing when you were talking about, carl, about the sentiment. i mean, here is one right in front of you and people just dismissed it. and look at this rally. i find this to happen over and

over and over again as people get very worried about a quarter point and they miss the big picture. the big picture is something like an alibaba. that's not a needle in the haystack. it's the largest retailer in the world. >> speaking of other calls on retailers, amazon to a buy target to 935. we've already talked about the four-digit targets from rbc and ever core. seize gets a buy -- >> boy, that was questionable. that was a questionable upgrade. you know what the thesis was? how great it was they got rid of the dividend. i mean, it would be better to even boost the dividend. or look at a cedar fair. six flags, they have good dividend. yes, they preserve the balance sheet, maybe they can do something, but that's been a disaster. to be fair to the guy didn't like it all the way down. i mean, wow, maybe somebody buys them. i don't know. >> i don't know. private equity was already in there and took them public not that long ago.

so i don't know who buys them. maybe the orcas can do a buyout. they're very intelligent. >> what, the orcas? >> the capital's free even for orcas. >> they're intelligent. they don't want to take down all that debt. they know the debt's cheap. >> right. >> and they'll do your own show. >> there's a whale joke in here somewhere. >> there is. searching for it still. >> iger making good reports saying effective zika was nejable, shanghai good in last few days. >> i talked about that last night is all anybody cares about is espn and look at all the things going right and people should stop yawning and start owning. and it's up for fleeting 76 cents but talked a lot of digitization, talked about up the acquisition they did for baseball tech, which i think is really good. >> right. >> i don't know. what does a guy have to do? he talked about $800 million franchises of each one of these companies that he buys, about

the new "star wars" and all i hear is someone cut the cord at espn. >> because they keep cutting the cord. and it's going to happen. there was a survey presented at the goldman conference that showed each year they done it the increase in those considering and/or doing is increased more than ever. people are aging into the mi millennials group and they don't get cable. they don't get cable. viacom, by the way, you mentioned dividend cuts. yesterday they cut their dividend or announced a plan to cut it. >> was it as positive as the cut at sea world? >> not particularly. as i said the bonds were hit yesterday. they are going to refinance debt at viacom. remember they brought advisors there to advise the board on different ways to approach the capital structure. it's time to do that. they have a lot of debt over $12 billion. fairly highly leveraged. and most importantly tom dooley, interim ceo, going to be stepping down middle of november. i did manage to try to understand what was behind that. unfortunately mr. dooley has not returned phone calls, but i do

hear that it was solely his decision. that was not something where the board was pushing mr. dooley out, but he said i'm going to leave. >> he had enough. >> he had enough. the question is why. is it either because he viewed the ability to work with this board as something that would be difficult, or is it because he believes that a cbs deal is more likely than not and therefore any tenure would really be short in nature? >> highly unusual. >> now they're going to undertake a serge. did want to add a bit there although hopefully we'll have even more as we kind of move along in reporting on this. >> this stock moved from 42 to 30, every penny of the takeover premium soap opera, took it out. put it in and then took it out. dow's up 124. this is the best two-day rally for the dow and the s&p since july. let's get to bob pisani. hey, bob. >> yeah, we've got a rally here, a continuation of yesterday's

rally. but really this is a global rally. now, remember, we kept talking about the fact only 15% chance of a fed rate hike. so why was everyone so anxious? there was just a concern somehow they might surprise. and you can see sort of the unwinding of that surprise. there were some people who obviously acted on that. so look what's going on today here. stocks are up. this is all around the world, by the way. stocks are up. bond yields generally are down all over the world. the dollar is down. gold is up. and crude oil is up. global commodities are in rally. almost all global commodities are up about 2%. so me it was obvious there was a substantial minority that had a fed surprise trade on that is now unwinding a little bit. and you can see what the weaker dollar is doing. just look what's going on in europe. you see some of these commodity names over there, antofagasta glenncore, all of them up 4%, 5%, 6%. even stuff that's had a terrible

year like the luxury names, the swatches, the deluxes, all of those even they're up 2% or 3%. most of them it's been a horrible year overall here. here in the u.s., well, it's the same influence. so the commodity plays, energy stocks are leading, interest rate sensitive stocks that would benefit if yields move down, like real estate and telecom are doing better. tech stock, which has been a leader, tech's continuing to do fairly well overall. so there's your overall picture. clearly a little bit of the fear of the fed hike unwind occ occurring. want to talk about the ipo market, things are definitely heating up. e.l.f. beauty, was just talking to the owner here, 20 to 23 on e.l.f. $17, the price talk was $14 to $16. when was the last time an ipo priced above the range? it's been a long, long time since we have seen that here.

so $14 to $16, $17 price and indications at $20 to $23. this is the second stock ipo that's done really well. remember what happened yesterday. we didn't have a chance to talk too much about it, but the trade desk came out yesterday. this was a tech platform for ad buyers. the talk was 14 do 16. they ended up pricing at $18. it closed at $30 and change yesterday. like up 60%. that's a moonshot by any stretch of the imagination. been a long time where a couple days in a row where ipos are hot. next week, if they come through, the calendar comes through, september will be the busiest month of the year for ipos. tonight, of course well known brand name be trading down here on the nyse tomorrow. that's valvoline, 20 to 23. we'll see how that prices. demand supposedly very good. you guys were talking about the number of ipos, it's been pathetic. 77 so far this year.

this is renaissance capital's numbers. but you can see that's half of what it's been, and even a third of what it's been. but the ipos that have gone generally have outperformed so far this year. and if any indications are right now e.l.f., which stands for eyes, lips, face, is going to be one of those notable outperformers. should open in just probably 15 to 20 minutes i'll be standing by and let you know what the numbers are. dow's up 125. back to you. >> all right, bob, see you in a couple minutes, bob pisani. let's get to the bond pit as well, rick santelli at the cme. >> good morning, carl. we have big data points, we have first friday employment reports, retail sales, gdp, but there's no fundamental that could ever match what occurred yesterday or about every six to seven weeks. of course that's when our central bank gets together. and, boy, what a fundamental it turned out to be. stocks are levitating again of course but at the expense of dropping rates and weaker

dollar. if you look at a one-week of 10s, you can clearly see what happened. and you can clearly see we're back into that kind of 1.60 range that was very popular in the month of august. it's as though the meetings are gone, we're going to revert back most likely to that more mundane range. if you look at bund yields, they dropped to minus.07 due to the rally that occurred. and of course we're going to monitor whether that sticks into its range as well hovering somewhere in the minus 10 to minus 5 area. gilts dropped into the low 70s. now, when it comes to foreign exchange, even though mario draghi had very little to say yesterday, it was all janet yellen and kuroda for the most part, see the euro take off. makes sense. pound/dollar very significant, leapfrogged 130 and 131 as it hovers right around that very psychologically important level, of course. and an august 1st to the dollar

index. maybe what's note worworthy is drivers that break it out of its ranges. those seem to predominantly be meetings of central banks. carl, back to you. >> all right. rick santelli in chicago. rick, thanks. still to come this morning, applied materials soaring from year ago lows. we're going to ask the ceo what's working for the chip equipment maker. if you're watching the markets, new all-time highs for the nasdaq. dow, s&p go positive for the month. all 30 dow stocks are up. best two days since july 11th. back after a break. they may want the latest products and services, but they demand the best shopping experiences. they're your customers. and by blending physical with digital,

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untraditional interview. she joins zack galafanakis. >> let's talk about trump. >> oh, let's. >> do you see -- do you ever say to yourself maybe i should be more racist? when he's elected president and kid rock becomes secretary of state, are you going to move to canada or one of the arctics? >> i would stay in the united states. >> and what would you try? >> i would try to prevent him from destroying the united states. >> zack did not miss the opportunity to take a jab at hillary clinton's e-mail controversy. >> well, this has been a lot of fun, mrs. clinton, we should stay in touch. what's the best way to reach you? e-mail? >> you've got mail. >> i said you're -- my dad loves the show. my dad loves the show. >> yeah. >> i'm like you're the funniest greatest guy in the world. he's very funny.

>> some argued it worked for the president. we'll see if this was equally effective. >> obama's very good in that kind of a setting. >> that white house correspondents was hilarious. >> well, he's very funny. >> say that now break the rules i got to say something funny. >> i don't know, if trump goes on, maybe it will be funny too. that was funny. >> exactly, messed his hair of with jimmy fallon. we'll get stop trading with jim in a minute. dow hanging onto session highs up 143. don't go away. this man creates software, used by this bank, to protect this customer, who lives here and flies to hong kong, to visit this company that makes smart phones, used by this vice president, this little kid, oops, and this obstetrician, who works across the street from this man,

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♪ time for cramer and stop trading. >> somebody in the news for something good here. he taught me there are such things as bad buybacks. if you look at the bed, bath & beyond buyback, they have bought back $6.2 billion worth of stock since fiscal year 2012. the stock was at 72. they bought back 6.2, now there's a market cap of 6.6. the stock has gone down 30 points during that buyback. so perhaps that buyback was a bad use of capital. >> ill advised.

>> ill advised. exactly right. and i just think it's important to point out when you buy back stock and you have no growth like bed bath has, this is what you get. and maybe they should have spent money on something else like e-commerce, which amazon spent. now, they are spending a lot on e-commerce now, they've made some acquisitions. but i think the analyst buyback was clearly something that brought no value. >> a lot of discussion in our own circles yesterday about microsoft's buyback and how historically those have not -- the effects have been ephemeral, let's say. >> microsoft, i think, a lot of people remember that key speech that steve balmer gave, former ceo, about how he missed all the big trends. so they've had to catch up, but he'd use the money to be in social, mobile, cloud aggressively then the stock would be much, much higher. instead they bought back stock. that's maybe another example. they do have a lot of cash. geez, they have a lot of cash. >> when you come to stock buybacks and compensation

committees which then set a metric based on eps for the pay of their senior managers, it also becomes an issue. i think that's becoming less the case, but it's still been the case. and so they're incented to buy back stock because it will help them make more money. >> you're right. one of these things we don't talk enough about. that's exactly what a lot of this year's been. the compensation committee meeting targets, giving the ceos and now ceos make so much more money than regular people in the country. that's one of the reasons. it's a shame. >> jim, what's on mad tonight? >> wow. okay. we have red hat as i mentioned, but then we have a company i think a lot of people want to hear from, lululemon. remember people think athleisure is done? wait a second, let's talk to the king, the king of a whole concept. not just clothing, it's a bigger concept. and, you know, i know i'm not a guy who's considered to be mindful, which by the way is not true. i'm really mindful. you say that -- but yeah.

lululemon it's kind of a world view. we're going to talk about that. it's kind of hard to do world view per share, but we did gilt per share when it came in front of congress. i mean, we can do mindfulness per share, okay, all right? >> all right. >> you okay with that? >> i'm fine. >> because i mean, zen, you got zen? you think zen is a symbol. zen is a way of life! >> zen desk, see you tonight, jim, "mad money," 6:00 p.m. when we come back, former fed governor randy kroszner. dow's up 145. it's scary when the lights go out.

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>> announcer: today, cnbc in boston for the iconic conference. one-on-one with america's top entrepreneurs. ideas, inspiration, strategy from the best in business. all-day coverage continues on cnbc. ♪ good thursday morning. welcome back to "squawk on the street." i'm carl quintanilla with sarah eisen and david faber at the new york stock exchange. market rally continuing here. dow's up 142. this is now the best two days since july for the dow and the s&p. nasdaq another all-time high. we're getting some data crossing the tape. let's get to rick santelli and

see what it is. rick. >> well, you could have picked me or diana. we are waiting for august read on leading economic indicators for some reason i see none of the services flashing it. so we'll come back. let's shoot out -- oh, here it goes, down 0.2 on august leading economic indicators, that's matching two other minus 0.2 we've had in january and in may. you have to go all the way back to get a lower number to december of last year of minus 0.3 so not necessarily a good number. now, we're also looking for august existing home sales. that is out. but i'll let the big surprise on that one go to diana olick. diana. >> yeah, rick, that's a big miss. existing home sales in august down 0.9% to a seasonally adjusted annual rate of 5.33 million units. and july was revised down as well. we're looking at just a 0.8% gain in august home sales from a

year ago. now, i know a lot of reports came out recently showing a big bump up in august sales. the realtors chief economist says that is due to the fact that there were two more business days in august this year compared to last year. those others may not be accounting for that. and the realtors did adjust for that. so raw counts are up, but showing weakness in august compared to july. and actually compared to a year ago barely up 0.8%. why? realtors say it's all about inventory. down 10%, 10% fewer homes for sale in august than august of 2015. just 2.04 million homes for sale. and that represents a 4.6 month supply. what does that do? it pushes prices way higher. $240,200 is the median existing home price in august. that is up 5.1% year over year. and the realtors say that is just rising too fast. it's pushing the first-time buyer out. first-time buyers at just 31% of the market in august. they should be up around 40% this time of year.

all cash at 22%. and investors just 13%. single family home sales were down more 2.3%. condos really juiced this number up 10.5% and that may be due to changes in fha rules allowing more people to buy condos. but again, that's a big disappoint. the street was looking for a gain and we got a revision down in july. back to you guys. >> diana, thank you very much for going through those numbers. the federal reserve leaving interest rates unchanged yesterday. so will they hike interest rates later this year or not? joining us, randy kroszner, former federal reserve governor and economics professor at the university of chicago. along with our very own senior economics reporter steve liesman. good to see you both. so, randy, the federal reserve holds its fire, decides not to move yesterday and preps the market for a hike later this year. how good does the economic data have to be to get us to a hike this year? >> i think unless there's something that really goes

wrong, they are pretty well poised for a hike. remember, there are three dissents. and one of those dissents was someone who's been very, very dovish in the past but is concerned about some of the financial stability issues. so i think unless things go very negative, they're pretty much on track for moving in december. >> yeah, especially coming off of that weaker existing home sales report, steve. clearly the housing data's a bit lumpy. i just wonder how high the bar is for the economic data, and for inflation between now and december. >> you know, i wish i had the certainty of randy kroszner. that's probably why he was a policymaker and i was not. actually never invited to be, i would point out. the thing is this, there's a lot of data -- i'm kind of in the gundlach camp here, a lot of data between now and then. the jobs data has been reasonably good, but i wonder if there's another metric we need to start to think about. and that's this notion that not only do payroll -- does payroll

growth remain relatively strong, but it eats away at the unemployment rate. the notion of more room to run, i don't know if janet yellen used that as a reason to be on hold for three months or be on hold for a little longer. you're looking at a chart right now that shows what she's talking about. there's payroll going up raw number on an average basis 200,000 a month over the past year, but look at the unemployment rate, remains unchanged. lael brainard brought this to the floor about a week or so ago, i don't know. maybe it's enough or we need to see the unemployment rate falling. >> what do you think, randy? >> so, well, i think janet yellen mentioned yesterday the 180,000 jobs a month or 200,000 jobs a month is not sustaining going forward. so we will be shifting down to a lower sustainable jobs growth rate. but she certainly did talk about the possibility of maybe drawing more people into the labor market. the challenge is if that's the metric, when do you ever raise

rates? it may be very, very far off. and i think there are quite a few people sitting around that table who want to move as represented by those three dissenters yesterday. >> randy, can i try to answer your question here? i'm taking the devil's advocate point of view here. >> sure. >> you then raise rates when you get wage inflation. because that would be the only metric out there for a truly tight labor market. you might layer in some anecdotal evidence in the beige book about tight labor markets and may not use wage inflation. you may wait to see if that wage inflation causes and sparks actual price inflation. >> sure, that's one possibility. but janet has also talked about wanting to be ahead of the curve. you know, the argument for raising -- doing the initial raise last december was not that they actually saw inflation yet, but to make sure that when inflation comes they don't have to move really sharply. you know, she's really averse, and i think the people around the table are averse to moving

sharply. that's why i think it's sensible to take another gentle step now. that doesn't mean that they're going to be raising rates another 100 to 150 basis points next year. they can wait and see. but i do think they need to be on that path. >> hey, randy, i want to bring the election into this conversation before it gets too wonky. she dodged a few questions about the election and whether it plays into the decision at all. they do have a decision coming early november before the election, but it's not a news conference one. do you think behind closed doors they are talking about how a trump presidency would impact the economic outlook or alter the economic outlook in this country? >> so the fed always looks at what likely fiscal policy's going to be and likely other policies are going to be. that is natural when they're doing their forecasts going forward. they have control over monetary policy but not fiscal and regulatory policy. so there may be alternative scenarios that they are looking at, but my hunch is that it's really unclear what the policies will be. i think regardless of whether

it's trump or clinton. because it's not clear what either of them would be able to get through congress. and so i think there's a lot of uncertainty on that. >> there is a lot of talk, steve, about fiscal policy, both candidates are talking about it. economists are talking about it. you think it's a pipe dream or something realistic to put into the economic forecast? >> well, you know, the committee for responsible budgeting is out today. oh, i don't know what just happened there, but all in favor of it whatever it was. and they said that the clinton plans would add 200 billion to the deficit and the trump plans would add 5.3 trillion to the deficit. i think the one thing that unites them both is they're both higher deficits, neither is dealing with a long run deficit issues. one would substantially -- i think both are tenuated by whatever congress -- i think the bigger story through the fed here, sarah, is the idea it

could be a major shock to the economy. the trouble is the fed can't say this bugs them. but i think it does. >> all right. randy, final word to you on the markets here. we're looking at a 134-point rally in the dow. i know economists don't like to talk about the markets, but if this rally is built on the idea that the fed is a little more patient and on hold with rate hikes, how much juice does it have? i would add the bond market rally into that as well. how much juice does it have if they're really going to raise rates as you would expect in december? >> so this is one of the concerns i have about the fed being so slow to raise rates that i think there's potential for some frothiness in the markets and a little too much dependence upon the fed for being very slow. i think it would be better for the fed to be moving -- it would have been better to move sooner rather than later although continue gently and then get some of the froth out of the markets. >> all right. we'll leave it there. guys, thank you. good discussion. randy kroszner from the

university of chicago school of business and our very own steve liesman. you might have heard some cheers over at post five. e.l.f. beauty now open for trade with a 48% gain. that's after pricing about 8 million shares at $17. the range was $14 to $16. latest ipo on what has become one of the busier weeks for u.s. ipos so far this year. when we come back a new nbc/"the wall street journal" poll is out. we'll break down those results. and then a new study that says trump's trade plan could cost the u.s. millions of jobs. talk about what that study finds when "squawk on the street" comes right back. ♪ 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

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a new nbc/"the wall street journal" poll is out on the election. our john harwood joins us to break it down. >> hi, carl. as we move closer to the election we switch from voters to likely voters. what these numbers show is hillary clinton has a clear advantage over donald trump. you look at a four-way race, she's up 43, 37, six-point lead. gary johnson gets. jill stein, the green party candidate gets 3. if you then move to a two-candidate race, and we do expect the third party numbers to come down as we get closer to the election, she's ahead by seven, 48 to 41. now i want to look at some of the characteristics behind that hillary clinton lead. first of all, donald trump does

have an advantage on ten points of who's the most honest and trustworthy. he also has a slight advantage on who best handle the economy. but hillary clinton breaks even with him, actually has a one-point lead on who could better handle terrorism and homeland security. that's significant because some people have thought these terror attacks were going to help donald trump. and then you look at this next screen and you see very major clinton advantages. on handling nuclear weapons, 2-to-1 edge over trump. the same do you have the knowledge and experience to be president, do you have the right temperament to be president. all these things as voters get closer to the election and view their choices more seriously and gravely are the foundations of hillary clinton's lead, carl. >> john harwood in washington. we'll see what monday night brings. certainly the poll is worth reading today. meanwhile, trump and clinton's trade policies are under the microscope. our next guest says while clint clinton's stated trade policy

would be harmful, trump's would be destructive. let's bring in adam posen who joins us. welcome. >> thanks, carl. >> a 4 million private sector jobs, people want to know how you got to that number. >> yeah. it's the number -- the number is a solid estimate, but it's an estimate. what we've done is we've taken several different standard macro models and then said, okay, if you get the baseline trump policies that he's declared, we work through industry by industry, county by county what's going to happen, and i actually think, carl, that's what people should focus on. we have it all up on our website, all the data and interactive map. people can reconstruct it. we're making tangible how santa clara, california, or it's detroit that gets hit and it's the poor working people, frankly, who get hit. if you start a trade war with mexico and china. it's not just an abstract big number. it's specific industries, specific companies, specific communities. >> how are you making the leap from jobs that are directly tied

to trade to jobs that are affected in ripple effects? >> that's a very good question. what we've done again it's all on the www.pie.com website if people want to check our work. we've built on other people's work and an input/output table. when we're exporting machinery to china or engine parts or soybeans, then those communities where those plants are or those farms are have people working them, similarly when we're importing whatever it is from china, inputs to apple iphones that the ripple effects in terms of retail workers at walmart and target. so we've tried to trace out the transparent way where the connections of the u.s. are to the world economy. and i think it's very realistic. if people stop and think about it, it makes sense. and unfortunately if you go really bad on trade, it means big costs. >> what do you say to viewers who are going to want to know,

all right, did you go back and do math in terms of how many jobs have been lost due to nafta over 20 years? >> yeah. we actually have. and we're pretty honest about that. and types of job losses, we're talking about actually from nafta are very, very small. again, whether it's our numbers for what trump would do or backwards looking numbers on nafta, these are not job losses in the sense they permanently disappear for the u.s. economy. it's the jobs that you would get in the market moving things efficiently being taken away and then these people have to find new work. and some of those people, unfortunately, don't find good new work. so there is a small amount that's genuine job loss. when we look at nafta, what we see is couple hundred thousand spread over 20 years. again, you can bait the numbers but not the orders of magnitude. when we talk about trump, again, i'm not going to give a precise number, but it's at least a million jobs, could be as many as 4 million jobs spread over two years. it's just hugely worse if he

does what he says he's going to do. all we can do is take him at his word and work it through. >> he does say it's not a base case he would slap 45% tariffs on china or 35% on mexico. that it's just going to be used as a bargaining chip. so we do have to remember it's a worse case scenario. >> sorry, two corrections on that. >> go ahead. >> first is, mr. trump knows anybody's ever done negotiations knows you have to be credible that you might actually do something, otherwise the people on the other side of the table ignore your threat. so it has to be some chance he's actually going to do it. >> fair. >> second, we go through what the number carl cited is our worse case scenario, admittedly it is a worse case. we go through what we call graduated scenarios where he only puts on part of the tariffs where china and mexico don't respond initially, you get smaller numbers but the same kind of real world dislocations by industry, by community. sorry, just to make that clear. >> no, i wanted to on that point ask you what you found in terms of the cost of hillary clinton's trade policies.

she too now wants to block tpp, something she helped sow the seeds for as secretary of state. what kind of damage would that do? >> we didn't go into this partisan. we looked at both their policies as they've stated them because both are deviating from the bipartisan consensus on trade that's lasted for 50 years. what secretary clinton has said since the campaign started contradicting what she used to say about tpp, is a problem for the u.s. it's not going to have the immediate job loss effect or disruption of business that mr. trump would, but we trace out it's going to cost, we've done studies, forgo couple hundred billion dollars a year in income for the u.s. going to forgo the opportunity to get into new markets. going to leave more intellectual property theft and more problems because the tpp includes greater protections for those things. and finally, our colleague marcus nolan is one of the authors of our study who's advised various u.s. administrations on asian security has gone through and pointed out how there will be backlash, there will be

repercussions in the middle east, in south asia because people would view the u.s. as a less trustworthy partner backing out on a deal. so mrs. clinton's policies are not good. mr. trump's policies on tpp also forgo all that but then inflict additional harm. >> adam, it's worth a read. of course it's going to have fans in the tractors like everything in this cycle, but we appreciate you bringing us up to speed. thank you. >> thank you. >> adam posen of the peterson institute. coming up, mylan's ceo in the hot seat defending that price boost for epipen on capitol hill yesterday. we've got the latest for you. and take a look at where stocks are trading, riding the post fed rally here with dow jones industrial average up 130 points. s&p 500 up more than 0.6%, all industries in the green there. and then nasdaq at a record high trading up half a percent. much more "squawk on the street" in just a moment.

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big crowd here at the new york stock exchange as cosmetic brand e.l.f. goes public today here. the stock shot up at the open just a few moments ago. it's trading up now by 50%,

25.53 after pricing above the range at $17 a share. the company's ceo joins us now. good to see you. congratulations. you must be happy with the pricing and the open of this stock. >> we're ecstatic. it's a great day for e.l.f. cosmetics. this is a journey taken 13 years to get here. this is a brand started online and it's wonderful to be opening on the new york stock exchange today. >> stands for eyes, lips and face. >> that's right. >> you sell at a number of stores including cvs, walgreens. talk about the price point and who your consumer is and why they're doing well in a relatively sluggish consumer environment. >> this is a business that's grown every single year for the last 13 years regardless of economic cycle or traffic at retailers. we have some of the best consumers in the entire category, millennials, multicultural and most importantly makeup enthusiasts, the women that love cosmetics. what they love about e.l.f. is

high level cosmetics extraordinary value every day. >> young company going up against rivals that are centuries old. what are the older companies missing about the consumer, do you think? >> i don't know what they're missing. it's more about what we're doing which is i think being able to authentically connect to these millennials makeup enthusiasts. >> who want what? >> who want amazing products at an incredible value. so most of our products retail for less than $6, but have quality that is phenomenal. and that really resonates with this core consumer as well as our approach. we were very digitally oriented, grew up in social media. our consumers are our biggest advocate. so i think there's a way really resonates with these core consumers. >> but to carl's point, p&g's beauty business has been under pressure for years, i know you used to work there as well as clorox, are you gaining share from the bigger companies like that as they struggle? >> we have been gaining share.

we're one of the fastest cosmetic companies growing in the united states. we've brought new users to grow the category. >> what are you doing with the money you're raising today? >> today we're using that money to pay down debt and then also plan for the future. >> which means what? >> which means continued growth. we have unbelievable opportunities both in terms of where less than 20% of the doors in the united states sell cosmetics, we have our own retail stores doing extremely well as well as elfcosmetics.com. so we have real great growth aspirations ahead of us. >> a high class problem, as they say, but any regret here that you've left all this money on the table given that 54% jump in the price of your stock? >> no, we're ecstatic. we're in this for the long run. we're really looking forward to building this company into a great company in the future. >> can you give us an insight into the places you sell? we cover a lot of these companies as well, target, walgreens. i know you sell a lot online. where do you see the most

growth? >> the great news about our business is we see really balanced growth between national retailers such as target, walmart, cvs, as well as our direct channels, elfcosmetics.com as well as our own stores. it's been a great growth story for this business. >> those delivery services, is that just a fad or here to stay? >> i think women in this category the great thing about beauty is it's grown for years and years and years. and i think women really do love exploring and trying new products. >> you're also talking to two men who wear makeup every day. so there's that. >> not as much as me. thank you so much for joining us. >> thank you, my pleasure to be here. >> e.l.f. beauty going public here at the big board just in the last half hour or so trading up 52%. >> thank you. shares of mylan are gaining a bit today up about 2% this morning. this after the ceo of the company heather bresch defended its epipen price hikes during a capitol hill grilling. meg tirrell joins us now and she has more on that. meg. >> david, a grilling it was. and it lasted several hours.

they actually had to break for a vote in the middle of it and came back, went into the late evening last night. heather bresch not offering an apology for the price of the epipen although many congressmen asked her for one, asked her to express remorse about this. in her opening statements here's what she did say about the situation. >> i'm honored and proud to be the ceo of mylan. and i've spent my entire career working to break down barriers to access and expand access to high quality medicine and lower health care cost. i wish we had better anticipated the magnitude and acceleration of the rising financial issues for a growing minority of patients who may have ended up paying the full wholesale acquisition cost or more. we never intended this. we listened and focused on this issue and came up with an immediate and sustainable solution. >> so a lot of questions about the actual profit that mylan is getting from the epipen. heather bresch trying to make clear they don't take all that $600 on the two epipen. she says the profit's about

$100. but really what crystallized in the hearing was a question of transparency in the drug distribution system. listen to a statement here by congressman buddy carter who himself actually is a pharmacist. >> all i know is that my computer calls the insurance and they tell me how much i'm supposed to charge the patient. i don't know how much you're getting as a manufacturer. i don't know how much the insurance company's getting. i don't know how much the pbm's getting. that's where transparency comes in. that's what we need. >> so this seemed to be something that a lot of the congressmen were sort of coalescing around toward the end of the hearing. you can see her pharmacy benefits managers not having a tough day on this at all though the conversation has shifted to the supply chain in questions about rebating whether there should be transparency, that has been a question for the whole drug industry and the whole the pbm industry as well. pbms on their part say they need to preserve that confidentiality in their contracting in order to get those good deals. but congress has asked mylan to share the information about their contracts with pbms and the rebates they're getting --

or paying, back to you. >> thank you, meg. for more on mylan's epipen pricing and the outrage it's brought, let's really see if we can find out what's driving these price hikes. we're joined on the phone now by former fda deputy commissioner dr. scott gottlieb. you wrote a recent op-ed where you seem to be defending mylan and that opaque system meg just referred to. why? >> well, mylan is sort of a victim of the system but also driving it. there's a problem growing delta if you will between the net price, the actual price that's being paid by the plan and buying drugs on behalf of the consumer and list price. that's getting larger, that spread. what's happening now also is that more consumers are being exposed to that whole list price when they go to the pharmacy counter for the first time largely because of the changing nature of insurance itself. and the fact more people are either out of pocket for their drug costs or on very high deductible plan. now all of a sudden they're feeling it.

the reason the mylan issue came up now is people are going back to school and buying epipens and realized insurance changed and suddenly paying $600. >> of course a lot of this involves the pharmacy benefit managers themselves, the growing power this they have. but you write in this op-ed that this scheme, your words, will end when drugmakers realize the current selling model is no longer in their economic interest. and they'll find a more honest and transparent way to sell medicines. what would that be? >> look, they're using the rebates -- everyone is benefitting from the rebates because they're using rebates to buy access on increasingly restrictive drug form ewe lairs. after all, money discounted today is worth more than money rebated tomorrow. the reason why drugmakers rebate rather than offer discounts is because a series of court rulings in the late 1990s that said if they offered a rebate -- or a discount to any one channel partner, so if they offered a discount to an hmo, they had to make the same discount available to everyone including the retail pharmacies. so to get around a requirement

they have to offer the same discounts to every actor in the drug purchasing marketplace, they went toward this convoluted scheme of rebates that only the pbms and health plans can make the necessary representations to qualify for those rebates. so the whole scheme was the way to get around this litigation. i think in an ideal world congress could step in and legislate in a way that it would allow more drugmakers to offer discounts rather than rebates and it wouldn't be deemed anticompetitive if they were discounting to one channel and not to another so they were actually able to price discriminate in the market. >> now, speaking of competition though, it would also help if there were generic entrant of significance in the epipen market, wouldn't it? the fda, your former employer, plays a role in that. i know there have been a couple of applicants that haven't quite made it. any thoughts in terms of whether or when we're actually going to see significant competition that could in fact bring a price down? >> well, look, i think that's the biggest issue here. we have a lot of these specialty generic categories, generic

drugs that are old but sold as specially pharmaceutical products because of a lack of competition and basically giving companies monopolies and perpetuity that the law shouldn't entitle them to. there should be competition. it's a problem not just with epipen but all what i call these complex generics. there's something complex about the drug either the formulation of the delivery system where the fda has a hard time je n nericizing these products. the fda needs more flexibility around what i would categorize as these complex generics where they can ask for more information than what's traditionally a generic drug application and the old generic drug application but still allow them to bring these things to market with what we call an ab rating, ability to substitute one drug for another which is part of what drives the competition in the market, substitutability of these generic drugs. >> right. doctor, we need to leave it there but appreciate your time. thank you, dr. scott gottlieb of course joining us.

as we go to break take a look at where stocks are close to session highs up 149. best couple of days here for the markets in several months. stay with us. ♪ there's no one road out there. no one surface... no one speed... no one way of driving on each and every road. but the is o car that can conquer them all. the mercedes-benz c-clas five driving modes let you customize the steering, shift points, and suspension to fit the mood you're in... and the road you're on. the 2016 c-class. lease the c300 for $369 a month at your lol mercedes-benz dealer.

good morning everyone. i'm sue herera. here is your cnbc news update at this hour. major companies with offices in charlotte including bank of america and wells fargo, are telling their employees to stay home today after a second night of protests following the shooting of a black man by police earlier in the week. the national guard was brought in as the governor declared a state of emergency. syrian president bashar al assad telling the associated press the u.s. is to blame for the collapse of the cease-fire deal brokered with russia. assad says the five-year-old war

will drag on because the u.s. lacks the will to join russia in fighting islamic militants in syria. iraqi forces pushing deeper into a key islamic state held town north of baghdad, they now control up to 70%, which was among the first areas to fall into isis hands during the 2014 blitz. and nike has released its launch date for its self-lacing shoes. the hyperadapt 1.0 will be available in the u.s. at select nike locations on about november 28th. just in time for the holiday season. how convenient. that's the news update this hour. let's go back downtown. sarah, back to you. all right, sue, i've tried them on. they're pretty cool. >> they are cool. >> they do squeeze your feet. >> maybe they'll be something for you at the holiday season. >> i don't think they make them small enough for me, for now, sue herera, thank you. keep an eye on this rally. dow up 150 points, stocks in the green really broad based now on track for the third straight day of gains with the fed deciding not to raise interest rates yesterday.

so where do we go from here? let's bring in emanuela senior economist at bank of america merrill lynch and good to see you both. jeremy, let's start with this market rally. it's being led by industrials, energy and consumer names. are you a buyer on this idea that the fed is going to be a little more patient than maybe the market was anticipating both this year and next year? >> yeah, we think that the fed taking a pass on september and really signaling they're going to raise rates in december is very consistent with our constructive intermediate view on long-term equities we're essentially seeing a profit recovery amid a very patient fed. so gol die locks continues. i think the key catalyst will be the earnings season in the third quarter and fourth quarter this year where we're going to see s&p 500 earnings on a year on year basis go from negative to positive.

>> it's funny because the narrative changes constantly, emanuella. jeremy said it's a very patient fed. after jackson hole it was a fed that was itching to raise rates. how anxious do you think janet yellen and this fed are to do that? >> well, i think the message from the fed is very interesting. it was a combination of the two. so in the near-term the fed's language suggests they feel more confident and more comfortable with hiking before year end. however, look at the dots, the trajectory, it suggests labor force re-entry that there's no rush over the medium term to hike. i think the key message is december does look very likely we're probably going to get a hike by year end. >> you're looking for some momentum to pick up in the back half. what was august all about then? what was ism about? what was i.p. about? just a hiccup. >> i think the data are very volatile. and looking at one single month's print is not going to give you the full picture. if we look at the trend what we're tracking for fourth quarter, broad job gains, labor force re-entry, it's a healthy

job market and economy and i think that's what the fed is focusing on. >> jeremy, if you see the fed being patient, does that mean this rotation into more industrial and cyclically oriented stocks has room to run? >> i do think that's true. i think that we've seen that over the last three months. so far quarter-to-date we've seen rotation into tech and other cyclical sectors and the big laggards of the market have been the defensive sectors, particularly those expensive defensive sectors based on the fact yields were so low and declining. it's an important point emanuella makes, fed is on track to raise in december and i think that will have implications for sectors going forward. i think we're going to see more of the same. we've seen over the last three months where cyclicals take the lead, these expensive defensives where people have been hiding because interest rates have been falling, i think that game is largely over. and i think you're going to get very low returns if not negative returns from some of these expensive areas like utilities and consumer staples. >> jeremy, are you worried that december, let's pretend that it's december for a moment, just

ends up being a repeat of this, in that data looks net okay, but the market doesn't believe them and they can't afford to change a hike that comes as a complete surprise? >> i think they've signalled pretty strongly they want to move in december. i think the status quo is just moderate growth and, you know, things moving on track with their expectations is enough now for them to hike in december. i think that the only way they don't hike in december is if we see some type of shock or down tick in growth or if inflation continues to disappoint on the downside. there are risks to december, it's not a shoe in by any stretch. i think the hurdle of the bar is quite low for the fed now to hike in december whereas i think we would have need to see a real acceleration just for them to hike this past month. >> a lot of people have said that about shocks, emanuella, let's say data turns. what if it's a cold fall and all of the retail data starts

looking weak. does that mean they're going to hold off? >> i think the fed is very sensitive to downside risk. what we've learned even if we're on track, if we get some wobbles in the data, concerns globally, they're willing to delay and defer. absolutely december is not a done deal. they're going to look very closely at the data, but i think the message we're getting especially with three dissenters is there are costs to staying on hold for a very extended period of time. financial stability is coming up as an issue. the fed wants to send a message we are on track for a hike. november, december, one or two months really doesn't matter. i think the idea is that over the near-term they're ready to go. and if we have data that supports it, i think they're definitely going to hike. >> need to see more dissenters, right? dissenters who vote, right? more than just your classic dissenters, your classic hawks. >> if we get a governor dissent, that would be a bigger deal. >> that would be a big deal. absolutely. next year we have a new set of regional head presidents who are voting, so things could change. but i think the key takeaway by seeing we've got three members looking for no hikes this year, you've got three dissenters.

i think the main takeaway is there's a big dichotomy, a big divergence showing up in the fed. you've got a large dispersion of views. there's going to be more noise and harder to figure out what the signal is from fed speakers going forward for the next couple of months. >> jeremy, the only sector you did not mention which is still a question mark here is financials which just flipped positive year-to-date after being negative yesterday. if you have this view that the fed is patient and patient going into next year, that would suggest more pain for the financials. if they get an interest rate hike in december, that could help the bottom line. what do you do? >> stay neutral. it's very ambiguous as to where the direction of long-term interest rates will go even in an environment where short-term interest rates rise by 25 basis points. chair yellen made it very clear yesterday that she believes that policy right now is only moderately accommodative. it's a remarkable statement with interest rates only 25 to 50 basis points on the short end of

the curve. so that implies that the pace of interest rate hikes throughout '17 and '18 is likely to be relatively shallow, which is a negative for the financial sector. that said valuations are low. if you do get that first rate hike, that will improve near-term earnings power. it's a very mixed bag for financials. >> all right. we will see what the data show. good to talk to you both. thank you for joining us emanuella from bank of america/merrill lynch and jeremy zirin from ubs. getting breaking news in the world of aviation. let's get to sue herera at hq. >> yes, thank you very much, carl. basically the u.s. government is declaring a sweeping victory, that's a quote from the u.s. trade representative, in the long-running multi-billion-dollar and multi-million-dollar trade dispute with the european union over subsidies that the u.s. alleged the eu gave to airbus group. basically the u.s. had filed a complaint to the world trade organization claiming that the eu gave billions of dollars in subsidies to airbus including the new airbus a350 plane, and

the world trade organization has ruled in the u.s. favor saying that, yes, indeed, the eu did violate the trade pact and gave billions of dollars worth of subsidies to airbus, specifically to the a350 plane. we'll see if any of the stocks move on this. but right now, carl, back to you. >> sue, thank you very much. as we go to break, take a look at shares of walmart moving this morning on news the company will face a class action lawsuit in a case involving alleged bribery at the mexican unit. of course the tape is broadly green. amazon crossed 800 this morning. we'll be right back.

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>> announcer: today, cnbc in boston for the iconic conference. one-on-one with america's top entrepreneurs. ideas, inspiration, strategy from the best in business. all-day coverage continues on cnbc. the post fed celebration continues here with the dow up 142. let's send it over to the cme group. rick santelli has the santelli exchange. good morning, rick. >> good morning, sarah. you just basically gave me the whole theme. hear what she said? she basically said the celebration goes on. with stocks. >> yes, it does. >> it really does go on with

stocks. >> yes, it is. >> first start with bank of japan. we'll get to our fed. >> sure. >> they want to steepen the curve. i respect that. >> yeah. >> i think it's a good thing. but when you nail the 10-year at zero, ira, that means the only way to steepen the curve is with negative rates. basically what they've done is they've gotten super glue now. negative rates are going to be with them for a while. you had a much better idea. >> oh, yeah, listen, i could do this in a heartbeat. if you want to do this, just, you know what, start, roll all the debt forward and issue two years -- >> like there's no tomorrow. >> two years and you'll steepen the curve. i promise you. because if you stop buying the 10-year -- stop buying totally, 10-year yields will go up and short end will go down. >> even if negative rates are still pervasive in that, there is still the possibility once you nail that 10-year i think all is lost. >> yeah. >> all right. why do you think having a labor economist as the chairperson of

the federal reserve may have issues? >> well, you know, i've said this for five years already. and i maintain this. from a moral perspective i absolutely agree with her. but from an economic view totally disagree and i think wh specifically? >> because she cares about wages far more than anything else. i'm not arguing with that. >> not a bad thing. but the kind of quality you should have. >> exactly, which is why she put her seal -- anybody who doubt who is runs this fed, she runs it, because you know what, i go back and you and i talk, stanley fisher, stanley fisher was on with steve liesman in an interview from jackson hole. >> that changed the market perception that friday. >> he overrode whatever she said in her speech because we saw the market action. it dictated it. for him not to vote to raise rates yesterday showed she dominates the inner sanctum, the seven governors, who i call the magnificent seven now, they are

all in line. it is her fed and she wants to see wages rise and run hotter before. and if it comes out of corporate profits, all the better. because that'll make the system that much healthier. that's where we lie. wall street is going to have a love/hate relationship with janet yellen. >> all right. we goethe both agree, the best question, and i said it on the air yesterday in "closing bell," if brexit was important not to contemplate that being a live meeting in front of brexit, why is the u.s. election not equally as important? not a political question, more of a market volatility question, but the way she answered it made everybody think she's touchy on the politics. >> applebalm who asked the question from "the new york times," i jumped out of my seat. >> a-plus, sir. >> that was a great question. once you start invoking global headwinds, which the fed has been doing, every time they don't want to raise rates -- >> i don't agree with it, but you need to be consistent. >> there's nothing that can be off your political agenda now,

whether you want to admit it or not, or domestic politics, no. because brexit was a political issue. and it played right into it. so you can't divorce it and she never answered his question. it was a great question she did not want to answer. as you say, a-plus for that question. >> ira, as always, thank you for your views. david faber, back to you. >> isle tick it, rick. thank you. rick santelli in chicago. coming up, it's "friends" 22 years later. we'll hear from the director of the first episode. much more ahead on "squawk on the street."

today marks the 22nd anniversary of "friends" prem r premiering on nbc september 22nd, 1994. we sat down with longtime director jim burrows, who directed the first episode for our digital series "binge." take a listen. >> the year's tv successes, which would not get named? >> maybe "friends." >> there's nothing to tell. he's just some guy i work with. >> come on. you're going out with a guy. there's got to be something wrong with him. >> because? >> seems like an average show, the perception of it. six people sitting around a coffeehouse talking.

also there's a problem, they test more now than they've ever tested. they have little dials that they use. they don't like a moment, they turn down the dial, if they like a moment, they turn up the dial. >> like political polling. >> yeah. it's crazy now. it never was in the old days. if they had tested like "cheers," they would have made us replace shelley long. >> interesting. we hear this a lot from directors and show runners that if you're building a successful sitcom you don't necessarily want to bring in a star because audiences project their own expectations immediately as opposed to a show like "friends" where they were basically all unknowns and the audience was able to grow along with them. that was the huge success of the show. >> it's funny he said that it wouldn't get made these days because interestingly right now, it's booming on streaming. having a whole new life. we just got that seven-part data on netflix. it was in the top ten shows. i notice it was the eldest of the top ten shows, going back to

1994, so people are still into it. he says i can't believe how young they look. >> unbelievable franchise. that interview and more streaming on cnbc.com/binge, also on hulu, youtube, and apple tv. and speaking of bingeing and streaming, let's send it over to jon fortt with a look at what's next for "squawk alley." >> can't get enough. amazon, are you really getting the lowest price when you seem to be getting the lowest price on amazon? maybe not. what it means for the business. plus the ceo of applied materials, that high-flying stock coming up on "squawk alley." who are you? i'm vern, the orange money retirement rabbit from voya. vern from voya? yep, vern from voya. why are you orange? that's a little weird. really? that's the weird part in this scenario? look, orange money represents the money you put away for retirement. save a little here and there, and over time, your money could multiply. see? ah, ok. so, why are you orange? funny. see how voya can help you get organized at voya.com.

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marriott's ceo shares his vision for the world's largest hotel company. tomorrow. good morning. it's 8:00 a.m. at twitter headquarters out west. 11:00 a.m. on wall street. "squawk alley" is live. ♪ ♪