2016, "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box." good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we've been watching the u.s. futures, dow futures down about 15 points. s&p down by about 3, nasdaq off by 4. this a day after the markets, equity markets, staged a ral limit dow up by 133 points yesterday. picking up a lot of the losses it made in the session before. you have that session from friday hanging over things, but the s&p up by 13 points. look at what happened overnight in asia. you will see the nikkei closed down by 1.3%. the hang seng slightly positive.

shanghai composite down by a third of a percent. in europe, already seeing that there are some advances there with the dax up by 0.9%. cac in france up by 0. %. ftse up 0.6%. watching treasury prices. ten-year yield on the treasury hit another two week low. we have been keeping an eye on crude oil prices. yesterday down by nearly 3%, settled at 44.67. this morning a gain of 20 cents to 44.87. in political news, a stop gap spending bill that would prevent a government shutdown this weekend has stalled in the senate. a number of democrats voted against the measure because it does not provide money to fix drinking water problems in flint, michigan. some republicans opposed the bill because of lack of zika funding, and oversight of the internet. senate leaders said they would

exemplmroplore an alternative. and john williams argues the u.s. economy can hahnal a rate hike, it's hard to justify rates being so low. williams addressed fears that a hike would cause volatility. he said an easy way to convince markets of something is doing it. today we will hear from janet yellen testifying before the house financial services committee. that is at 10:00 eastern time on bank supervision and regulation. also hearing today from the presidents of minneapolis, st. louis, chicago, cleveland, kansas city federal reserve banks. as for economic data. august durable goods at 8:30 eastern time. pay checks and blackberry reporting earnings before the opening bell. >> that was for john williams. you know, that was "indiana jones" this heroic, courageous swashbuckling guy. he goes in and handles things without fear. >> this guy just raises rates

without fear. >> no. yeah. i'm thinking -- if you didn't realize it was john williams it was like we were playing that for a fed guy. that is so ironic to play courageous -- >> as a long-term viewer of the show, people know why. >> i know if we played it every time someone from the fed talks, it would -- >> with the action that we're seeing? >> this fecless hand wringing. i was going to say something else. i was thinking about the market. the s&p is 2160. this has been like paint drying for the last three, four, five months. i don't know what will move it before the election. i can't imagine. >> nothing. >> nothing. >> probably not. i don't know how i feel about it. i don't know whether earnings are improving, whether gdp is

going up. >> that's the market action, how most players feel. >> we heard about oil prices. you read the "journal," shale produce verse weathered this fine. they're switching it back on. speaking of earnings, shares of nike are trading lower. the athletic apparelmaker posting better than expected earnings in the latest quarter but slowing demand for the future orders number of sneakers and apparel was a drag. nike has been losing ground to addidas and under armour and is seeing weakness in its basketball division. mark parker defended the company on the earnings call. >> it's a great time to be in the business of sports. as a market leader, this is a great time to be nike. we're on the front end of all this growth, a driving force behype tb behind the expanding market. we not only see the upside

across the landscape, we have the scale and skill to act on it. >> to the sure about that hipster beard. shares of nike down 14%. >> this is the worst dow component. >> it is? >> the worst performing dow come poechbt f component for the year. >> the headline for that is it was a dow component. because i had forgotten. the biggest apparelmaker in the world. i knew that. >> visa. >> visa's there? news just breaking, air bag maker takata is reportedly in talks with the justice department to resolve allegations of criminal -- criminal wrongdoing. u.s. officials are said to be considering various charges against the japanese company. of course this is in connection with its handling of the faulty air bags linked to 14 deaths and more than 100 injuries.

>> we do have other news that broke overnight. former israeli prime minister shimon peres died at the age of 93 in tel aviv. his death comes two weeks after he suffered a stroke. back in 1994, peres won the nobel peace prize for his role in negotiating peace according with the palestinians. we'll have more on the life of the statesman coming up in a bit. wells fargo ceo john stumpf is forfeiting millions of dollars, and wilfred frost joins us with more on that. >> thanks. that's right. $41 million to be precise. the bank also announcing last night that the company's independent directors launched an investigation into the company's retail banking practices, and that former head carrie tolsted will forfeit about $19 million. this was announced by steven sanger late last night. of course the decision comes

some time after the issues were first discovered by the bank a couple years ago. some weeks after it became public knowledge that the fines were announced, $185 billion to be precise. the timing making it intentional to come out before lawmakers quiz mr. stumpf again, which begins tomorrow. that issue of executive claw backs has been crucial. so they're trying to preempt that. speaking late last night in a statement, the head democrat on the senate committee making it clear that this was a step in the right direction. but there are many more questions to be answered. many unanswered questions, he says. those unanswered questions, no doubt, will be on the agenda for the house finance committee, which will be grilling mr. stumpf tomorrow. >> you know, this is -- we talked about this a lot, i know

you and andrew were talking about it a moment ago, these are the type of things that would have helped much more if he did this a week ago before he went in front of the senate committee. the blistering responses from both sides of the aisle stepped up the pressure in terms of coming up with a significant response to show the pain was felt at the top levels as well. >> answer ligbsolutely right. not just a week ago, but three weeks ago if they could have announced the frine was coming r two years ago when he first became aware of the issues. they could have gotten ahead of this. the size, $41 million, is huge. >> i think it's 25% of the compensation he's taken in in his 35 years at the bank. this is not a small number. this is not some little number. >> no, but probably necessary, he thinks, to hold on to his

job. as you say, this has not been managed well from a pr perspective. that's the question, will this and his performance tomorrow be enough to stop the momentum of what has been a massive snowballing negative pr issue for them? >> i talked to sources on both sides of this last night for quite some time on the phone. fascinating part about this, just sort of looking through the headlines, the idea that the independent members of the board feel -- they're furious with john stumpf. that's what's really going on. they think they were kept completely in the dark about this. on the over side, if you're in the john stumpf camp, you think the board knew exactly what was going on and you're being thrown under the bus. but the true sense of acrimony led to this as much as the upcoming hearing. >> you said the john stumpf camp of things. so he's not on board with these measures? >> let's do it this way, this was not -- this did not start as

john stumpf's idea. >> that will create a problem, too. if that narrative is out there, if this is not john stumpf realizing and recognizing -- >> i think now john stumpf recognizes and realizes his job is on the line. i wouldn't suggest to you that john stumpf -- if you read the press release, it says that john stumpf agreed to this as if he -- there's sort of an implication he went to the board and said, guys, i screwed this up. that's not what happened here. >> that's an important narrative. if it seems like he's not contrite over this and still is not going along the way, even these big moves -- >> holeman jenkins points out maybe the person in charming of the compensation, maybe she hit certain mile stones, but it didn't add to the profits of the bank. it had nothing to do with

stumpf's pay going up. the 41 million is punitive that has nothing to do with claw backs. >> it was something stumpf touted, cross-selling, they can make it more profitable as a result. on the bottom line numbers it didn't, but this was a huge issue where he had over 5,000 employees -- >> you could say the aura of wells fargo doing everything right helped with the stock price trading at a premium. >> if you look at the wells fargo board, all good people, but relatively weak compared to other boards, they -- >> they didn't need to be. the bank had a sterling reputation. >> when this first came out, john stumpf told everybody this was a small piece of the puzzle. he tried to say this was effectively a big nothing. avert your eyes, don't worry. clearly that strategy and even

thinking about how -- what was going on didn't work. now i think the board is embarrassed by this. >> i think there is an important -- >> that's why you're seeing acrimony if you really understand what's going on behind the scenes. that's what's happening. >> that's an important story line that will impact what happens. >> whether he keeps his job or not is another question. >> even if this is enough to keep his job, the outstanding issue is the employees. that's going to probably be the focus of the questions tomorrow. there's two lawsuits gathering pace in california and a labor department investigation. that's the big question outstanding for the company as opposed to stu opposed to stumpf's tenure, on whether employees were forced to work longer hours. >> the ones following the rules, not opening fraudulent accounts, trying to keep up with the sales goals that were incredibly ambitious. >> there's two lawsuits, one

from those sorts of people, and ones from people who were fired and feel they were mistreated in being fired in the first place because they were following the pressure around the company. so that could still hurt the bank, the fines and claw backs much more about the potential tenures of the people at the top. >> i hope you're not -- as a uk individual, i hope you're not trying to lower our -- the reputation of banks here, bankers, pay, everything to the level of the uk. bankers over there are one step below bookies and -- just -- just over here it's different. do not try to take us all the way down to how, you know, most people in the uk view the bankers. you're doing a good job already, i think. >> i didn't know if that was a question or a statement, but, no, i'm well aware in the uk how much even tougher the pr image is. but i think -- >> you're all over this.

that's why we put new charge of this. >> mr. stumpf led to a lot of heat on his part for misdealing with this issue. >> i remember poor bob dimon over there. he had to go out, he had to be in disguise just to go have dinner. worouldn't eat like we do. person, more mr. fred goodwin, he was really victimized by the press for a long time. former head of rbs. bob dimon also. he got a lot of heat, too. >> thank you, sir. >> pleasure. >> see you in a bit. >> shares of deutsche bank rallying in europe. that's because the firm is selling its abby life business for $1.2 billion. earlier this morning a german newspaper reported that berlin would rescue deutsche bank in what they're calling the worst case scenario shares initially moved higher, but signaled potentially lower fines for deutsche bank than the $14 billion initially mentioned. that's one of those banks.

this is one of the riskiest banks still out there. people talked about how overleveraged they are. here they are. >> all right. well, staying with financial issues, janet yellen is set to testify on the hill later this morning. presidential hopeful donald trump attacked janet yellen for the delay, the fed's delay in hiking rates. joining us is the chief investment strategist from raymond james, and jay ablin. so, let's start with you. you're not particularly excited about either valuations or prospects necessarily. you think i kind of -- i hate to use the word colloquialism, neh -- >> neh. >> but it's not something -- you're not sitting here thinking

this market is ready to go to 28,000 any time soon. i think if fundamentals were to improve they would. the good news is analysts are expecting revenues to increase year over year this quarter. hopefully we'll see earnings follow along. it's a slow and steady process. if you look out at the economy, i'm not sure where a lot of the big revenue increases will come from. and so we've got a stretch valuation thanks in large part to this fed safety net out there. >> i'm reading fundamentals are improving slightly. momentum, eh, kind of positive. you know, there's things that are relatively cheap in eamericaemerging markets. none of this stuff sounds exciting what do we need to get through? we need the fundmentals to

improve. that's why you're here, to tell us whether they will improve or not. >> yeah. i guess in terms of visibility, i don't see going back to 3%, 4% sales growth unless we could get some inflation. if inflation moves higher and interest rates lag, you know, that could be the catalyst for a move higher. i'm not suggesting we're in a bubble or anything, but we just need to continue to push this monetary situation. the only other thing we could do, looking to japan for this, is if they start monetary policy makers get involved in fiscal policy. if it happens there and the world doesn't blow up in japan, then, you know, perhaps other policymakers can start helicoptering money in their countries. >> jeff, listening to that you're more bullish or less bullish on the u.s. stock

market? >> i think the u.s. stock market is transitioning from an interest rate driven secular bull market to an earnings bull market. that will be quite apparent as you go over the next 12 months. when you look at third quarter and fourth quarter earnings comparisons year of year, they will be quite sunny. i do think that valuations are not all that stretched. if you believe s&p's bottom-up operating earnings estimate for next year is correct. >> jeff, relative improvement based on energy issues, not being tough comparisons anymore, just relative improvement that you're talking about as they drop off and as we go past four quarters, that's enough to make you think that earnings are really improving? or just sort of we don't have those headwinds, so it's a bit better because we're not looking at that, but still nothing gang busters. we've been waiting so long for that year where gdp and corporate profits suddenly

recover robustly. we've not seen it. we never see it it seems like. >> i don't know if you will see it robustly. but at the margin you will see it improve. i think the pension funds are going to come to the realization with the low fixed income yields that the only way they can get to their targets of 7%, 7.5% is through dividend paying equities. i think you'll see the big switch is going to happen over the next 12 months, the flow of funds into equities. >> 7%. they better do some stuff on the side. what is that thing we own with the football fantasy? they'll have to do the draft. 7%? that seems -- seems positive in the rest of the world. 1%, if it's up instead of actually paying, it's good. i can't imagine 7.

they better lower expectations to 4%, 3.5%, 4%. >> yeah. but the targets tend to be somewhere between -- >> never do it. >> 6.5% to 7%. >> here i am, i used to disagree with people and say we deserve more than 7%. now i'm not sure we can get that. >> good luck with that. >> financials are cheap. there are parts of the market that are -- >> not cheap. >> wells fargo -- >> are you recommending wells fargo? >> am i recommending wells fargo? >> i'm recommending financials in general. i would say buy them all. >> all right. >> it will work its way out in the wash. >> okay. gentlemen, thank you. >> all right. >> fanduel. fanduel. >> fanduel. >> fanduel. >> yeah. when we come back, the debate setting a viewership record. the numbers and the political fallout after this. "squawk box" will be right back. guess what guys, i switched to sprint.

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million for the debate between jimmy carter an ronald reagan in 1980. that does not include the number of people watching the debate online, via streaming. john harwood is back in washington with more on the aftermath from that great debate. >> everybody is sort of breaking down what happened in the debate, what's going to happen next. you had donald trump coming out on fox yesterday and saying some of the questions had been unfair. that he thought he had done fine. he renewed the criticism of the miss universe beauty pageant winner, that hillary clinton poked him with in the debate. that the clinton campaign came out with an ad. donald trump also put out a tweet citing online polls including ours, users survey, saying that he had won the debate. he went to a rally in florida here's how he assessed the situation. >> the american people rendered

their verdict. the post debate polls, as i said to you, were so great. >> now, donald trump also, his campaign announced, he raised $18 million in the 24 hours after the debate. all of that is positive. however you have to weigh that against the widespread criticism he got from political analysts in both parties, significant republicans thinking he had not helped his cause. did he have two more debates to go. nobody expects the polls to move in a dramatic way from this. opinions are very well baked into the cake. but donald trump seems to be inclined, at least according to some advisers, to maybe do a little bit more preparation for the second encounter, which will come in early october. on friday, by the way, there's an interruption from the campaign trail for hillary clinton who is going to join president obama and her husband at the funeral of shimon peres of israel. and i have to say, even though

that's a completely unplanned event, the sight of hillary clinton with other world leaders at that event is an image that her campaign will be happy to contrast with donald trump. she's trying to run as the person, of course who is more presidential than donald trump. >> i find it -- some of it depressing, just in terms of the issues that are front an center. it takes me back to a pre-9/11 mentality. so i can't just blame it on social media for the things we focus on. i remember chandra levy, everything was 24 hours a day. and then all of a sudden those planes came out of nowhere t refocused everything we think about on much more important things. was that miss universe pageant -- was that a long time

ago? >> wa >> it was a long time ago. >> then i think about the positives hillary clinton did glean from the debate were mostly putting trump on the defensive about things that are -- may or may not be important to everybody's daily lives. you know, we didn't -- i don't know anything more about immigration, security, just all the things that we always promise that we're going to talk issues, we never do i even say -- the front page -- the lead story in the "new york times" is about miss universe. >> trump didn't help himself yesterday. >> i know that. the whole thing i find -- just -- i guess i'm hoping for a better -- something that's not going to happen. >> i think social media added to it. people are much more willing to say crass things. they do it anonymously. >> he does say crass things.

>> he does. everybody in the world says crass things. >> not everybody in the world says crass things. >> part of the appeal -- >> the twitter feed says crass things. >> he says crass things, people are willing to say more crass things. >> then on the other side you can't trigger something on a college campus now. we have gone too far the other way. when i think about hillary clinton's best moments, even if i wanted to find her best moments, they're not where i'm saying wow, that's a great idea. it's just she's -- >> joe? >> go ahead much. >> how about trigger warnings for the next debate? >> yeah, i guess we need them all the time to make sure nobody is ever offended again in our lives. i better watch out. i got a hair-trigger. thanks, harwood. coming up, amazon's shipping

plans may be more ambitious than anyone thought. fedex and u.p.s. -- that story next. a new read on china's economy. the independent china beige book doesn't rely on government data we'll get the first look at the new numbers straight ahead.

welcome back to "squawk box" on cnbc. u.s. equity futures at this

hour, i'm telling you, when i was coming in, they were up 20 points. >> but i think it's without the -- >> no, no, fair value wasn't it today. >> john leland is here. >> it's moved. what? >> he's here. >> it's gone down? >> china. >> let me tell you this first, ab inbev and sabmiller, horrible names, both. shareholders approved the $103 billion takeover deal. i hope with some of that 103 billion they pay someone to come up with a name. regulators signed off. the combined entity will produce nearly a third of the world's beer. i think, andrew, that's not on antitrust grounds, just on -- in case something happened. they were not able to produce that third, that's too much power in the hands of one organization.

a third of the world's beer? >> with such an important product? >> think if something happen ed. >> call the regulators. >> you have the connections there. amazon may have a secret plan to beef up its shipping network to replace fedex and u.p.s. amazon aims to build a full scale logistics network that will ship products from its site as well as products from other retailers. some amazon executives are calling the plan con sometime the city. the "journal" says amazon has been testing deliveries in los angeles, miami, chicago, and hired a form uber executive to head the global logistics unit. in the beginning everybody said this was an effort to put pressure on u.p.s. and fedex and lower prices, but this is another project. >> i had one of these vans pull up at my house yesterday and hand deliver some things. if you look at amazon's

financials, there's a reason for this. it's been an increasing number in just how much it costs for shipping every year. last year, 10.8% of sales. >> but this is a capital intensive way to do it it is, but when it comes to world domination, i wouldn't put anything past amazon. i get it, when it's such a massive part of your cost structure, i understand why they would want to have other options. let's talk more about politics and how it's been playing out when we look around the globe. donald trump charging at the presidential debate that china is using the u.s. as a piggy bank to rebuild itself but that country is facing economic problems of its own, including what might not be such a stable economy. leland miller joins us, ceo of china beige book international. you have new numbers, not government statistics, what you put together yourself to see what's happening with china.

what have you found? >> all you have been hearing is stable stable stable. the last week every single headline has stability in it. you will see that in the pmis and other data sources. people who focus on manufacturing, they focus on a property bubble. they say things are well enough. they're very intent on creating this narrative around stability. when you look at our data now, the headline number looks relatively stable, underneath the surface things are not in great shape. >> like what? what are some examples of things that are concerning when you dig deeper? >> profits are weaker. cash flow is weaker. that's a major problem. but the real dynamic here is that this growth, this quarter, was led by the old economy. manufacturing doing well. property doing well, commodities doing well, another leat least surface, services not doing

well, transports. >> does that mean the chinese consumer is losing confidence? >> does speak to the chinese consumer. one major mistake is people look at alibaba, they say that's doing well. the chinese consumer must be in good shape. alibaba is not the retail sector. e-commerce is not the retail sector. what people are underappreciating is how much e-commerce is vulturing growth from the traditional bricks and mortars. as long as you have that, the sector is not in trouble. this is one quarter of weaker data, but not the same engine that everyone sees when they look at alibaba. >> what drives consumer c confidence in china? here's it's headlines, perceived risks. i feel that's more closely managed in china. what's driving it? >> foreign policy. people look at the macro outlook, but when you look at how the economy will look going forward, people are

wondering is there loser policy going forward? the right types of firms what will the currency look like, are the chinese going to do do something they shouldn't like they did last august, last january. so i think they're looking at how much the government is intent on keeping stability up. >> that sounds like a high level problem, high level issue. you can understand how some of the wealthiest chinese are concerned. what you're telling me with these numbers, sounds like it's trickling down to every level of the economy. >> something happened on the back end of 2015. there was an inflection point in terms of the way the chinese look at their economy. >> they cut down on bribery. >> that's a good thing. >> a good thing but a short-term and medium term problem. so they are look to the eyes of the government, how much will the government need to keep this narrative of super strong growth. when they see the government

faltering -- >> were polls that suggested that the chinese liked donald trump. they think he's a strong negotiator, and that that appeals to them. how do they feel today about the two candidates? >> we spoke about this before. i maintain my view that the chinese would rather see donald trump as president. hillary is a known. they don't like her. donald is threatening a trade war, that's not good, but at the same time, some other things he said, tear down the post-war security structure in asia, limit our relationship with japan and korea. let's not focus on trade agreements out there. this is music to the chinese ears. i think they would be happier with trump than clinton. >> mixed views. it's interesting. >> thanks for coming in. >> pleasure. coming up, the underdog of undershirts. tommy john taking on big underwear in a david versus goliath situation. the company's founder joins us next to talk about getting a foot hold in an established

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tommy john the disruptive

underwe underwear, as its founders call it, they continue to fight off competitors. the ceo, tom paterson is here with us on set. we talked about this company before. i wear these undershirts. joe, you wear an undershirt? >> of course. >> of course you do. >> do you care about your regular dress shirts or just -- >> exactly. these are expensive undershirts. these are great. i wear them every day, i love them. here's what i want to know, a couple years ago, i wrote an essay -- don't know if you remember this. >> i do. >> about how much i love these undershirts. one thing i said in the article, i said they were prohibitively expensive, which they are. $40, right? >> they are. >> i said i wished that warren buffett's fro

buffett's fruit of the loom knocked them off and made them cheaper. now they're trying to do it. they're trying to rip you off. i should be happy about this they're not as good. i checked them out. what has it done to the business? >> i think competition is great. the men's undergarment category is a $4.1 billion category in the u.s. alone. men's undershirts $1.3 billion category. we have the first u.s. patent on our undershirt. we will never be the cheapest but dollar for dollar we provided the best value. >> this undershirt goes low. most undershirts, they come up, bunch up, they make you look a little fat. not good. the reason why i always liked these undershirts, they are almost like -- my wife calls them party dresses. >> he just called men's underwar undergarments, had i was uncomfortable about. >> but these stay low, the

untuck part. how do you get that patent? >> it's a utility patent. our new video online, the -- >> what is the patent cover? is it the length? material? >> it's a utility patent. it combines the length, multi directional stretch fabric. you put it on, put luggage in an airplane, it stays in place. >> can you call up fruit of the loom and say you owe me a licensing fee? i'm not joking. you have to protect this patent. >> i don't understand how that patent works. the length of a t-shirt is patentable? >> it is. it is. like the utility of the product, once you put it on, it stays in place. the functionality is what it's tied to. >> have you found others that are now infringing on the patent? >> not that we found out yet.

>> but you have to protect the patent which means you have to go over all these undershirt companies. >> we pride ourselves on continuing to innovate, focusing on delivering the consumer a better product. i think patents do things to protect the business, but you have to move, continue to evolve. >> for a $40 undershirt, it is a great undershirt, you can't understand the value component. how much does it cost you to make? you don't want to say? i need to ask these things. >> less. >> yes. >> i'm trying to understand the margin. >> why don't you buy fruit of the loom anymore? why do you wear tommy john? it does something you can't get from other brands. >> that is true. >> why did you start wearing undershirts in. >> because the lights in here are very hot. you don't want to sweat through the shirt. >> the exciting thing is men' underwear is one of the only categories -- >> undergarments. >> that has continued to grow year over year.

it shows customers voting for quality and value. >> how much does it cost to put the show on? what do you think we charge advertisers? what if someone asked you that -- >> that an unfair question? >> this is my contribution to this i have gotten some new undershirts. i notice when i put on the dress shirt, there are creases and overlaps on the undershirt that i can see through on this shirt. i find myself reaching -- look in the mirror, reaching up, smoothing it out so they're not there. that's been my recent problem. i guess i wouldn't have that with my $40 tommy john. >> wouldn't have it. if the market shows, look, we came out selling our millionth undershi undershirt? >> isn't that amazing? when we first met him three years ago, a little company. >> there is a market for this. the consumer is voting up, trading up.

>> are you going to go public in is there an eventual sale? >> there are no plans to go public. if you're having the opportunity to go public or not, it's a great opportunity to have. we're focused on making profit. >> has anybody reached out to buy you? >> we get inquiries often. but we've raised $2 million to date. that's the thing -- one of the exciting things we're proud about. we hardly raised any money compared to what we're doing in revenue. when you look at the market today, a lot of companies have raised more money than revenue. it's not easy. by brands take a long time to build. >> have you sued -- there's tommy john surgery, too. they use that, too. they had it first, didn't they? >> so we're a registered trademark with the brand. >> nobody can -- >> i've not -- >> are they allowed to use tommy john's surgery? >> no. my middle name is john.

>> undershirts and surgery, we have to refocus. >> undershirt surgery. >> exciting to see a company like this grow. >> you got a big, weird thing going on with men's -- you just do. >> i like the undershirts. >> nothing excites you like this. it's nice. coming up -- he needs residuals. political fallout from the debate. free underwear. >> no. >> we have a big lineup to talk about. the candidates plans for the economy. first democratic senator chris coons, and then "wall street journal"ist holman jenkins. and then john barrasso and what he expects to hear in the next presidential debate.

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time now to explore some of the best cities for small business. today we're headed down i-95 from the big apple to the city of brotherly love. kate rogers joins us now from philadelphia. hi, kate. >> reporter: hey there. good morning, joe. start-ups like revzilla are ramping up here.

they sell motor part accessories online and here in philly. they have more than 1 million customers. what's amazing about that, they haven't taken any outside funding. they've boot strapped the entire operation and market heavily on youtube posting the professional product demos and reviews for their subscribers. they say launches here in the city of brotherly love which is a top 20 location for small business growth has shown them what it's like to be part of a community. >> philadelphia is a unique mix where you have a personal touch and feel, you can be part of the community, but you don't get lost in the community where people really support each other. >> reporter: and joe, i know you and i are huge "sons of anarchy" fans so i'll see if i can hook us up for discounts on motorcycle equipment. >> really weird that you said that because i went back to it yesterday. i didn't quite finish. and i finished "better call

saul." >> second season. >> no, first season. didn't really love it. so i went back to season seven, episode four. i'm almost done. but then i'm going to need something. and you are recommending to me -- >> reporter: all right. when you're done, we're going to have to have a tv club review. >> "the voice." >> becky said "the voice." >> reporter: thank you, becky! i'm loving "the voice." if alicia keys is watching, i want to hang out. >> and i like miley cyrus on it. >> i love "the voice." i'm talking something like "narcos" or something. some drama. "homeland". >> there's drama on "the voice." blake was really mixing it up last night. >> it's an nbc show. >> i know that. it's great. i love it. i have time for other things. how's that? i need a serial -- >> after you watch "the voice." >> i'm watching "bloodline" too. but do you have anything else?

>> did you finish "the night of"? >> of course. >> i couldn't make it through. >> they're not up to terms of production and lighting. >> you're planing about -- >> i'm not complaining. it's cheaper production. >> i was going to say something to take you down the wrong path. >> i didn't think think it was up to par. when we come back this morning, after we finish figuring out what the next thing we're going to watch is, we've got new housing data due out at the top of the hour. weekly mortgage apps just moments away. plus john brown is here to talk about the rift between business and society. we'll get his take on that and the scandal at wells fargo. "squawk box" will be right back.

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a developing story. wells fargo ceo john stumpf is temporarily foregoing his salary as they look into practices. lord john brown is here to discuss that. the interview straight ahead. is trump ready to lead the nation? questions rising on both sides of the aisle after the debail. holman jenkins is here to explain why voters will have to decide between a very flawed outsider and a very flawed insider. and "squawk box" is ready for takeoff. neil degrasse tyson is here to talk about putting people on mars. buckle up. the next hour of "squawk box" begins right now. ♪

live from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. this is our new music. >> this is for neil degrasse tyson and space. >> he uses this? >> we do. talking about space. >> we're going to do that consonant vowel thing you always do. the thing that teaches you about vowels. >> i'm just a bill up on capitol hill. school house rock. they're great. >> look at the futures. the dow up 11.70. and then the nasdaq up 1.75. we were down 300 on friday and

monday. so i don't know. ever since the last five or -- when we started getting some volatility, it's been triple digit days up and down but we're where we started. >> right. same story, just more dramatic moves on a daily basis. >> like running in place. frantically in a rocking chair. >> there's a good reason for that. people aren't sure which way the economy is headed. they're not sure which way the fed is headed. >> when are we ever sure which way the economy is headed or the fed is head snd. >> if you had to bet right now, which way would you go? up or down? >> on the market? >> yeah. >> i always fall back on you don't short a dull market. and i fall back on when i started in the brokerage business, it's 780. it's now -- >> as long as you're not worried about making a profit. >> it usually eventually is going to go up. unless you live in japan. >> what do you say, becky? >> i agree with the long-term strategy of it. i wouldn't try and place bets on a day-to-day or week-to-week or

month-to-month basis. but i need it to go up for college funds. i've fully funded the other three kids for the year. and this one -- you can't do it until you get a social security card. >> this guy is not in any rush. >> speak for yourself. >> i got to do the opposite today. >> i don't feel like coming in some mornings. >> let's get you caught up on business headlines. we're watching shares of deutsche bank as news headlines swirl. told the german newspaper that the bank did not need a capital increase or government assistance despite the prospect of a multi-billion-dollar u.s. fine. but a second paper says the german finance minister was working on a contingency aid plan for the bank. now the bank has denied such a plan is in the works. if you like fed speak, today's your day. janet yellen testifying before a panel. starts at 10:00 eastern time.

no less than five fed presidents have public appearances today. including mester, bullard. just out, the latest data on mortgage applications. falling 0.7% last week. but refinancing activity fell. the average 30-year mortgage rate now fell four basis points to 3.66%. all right. shares of nike today are trading lower. posting better than expected earnings and revenue in the latest quarter. slowing demand in future orders of sneakers and apparel is a drag on the stock. shares down 3% in the premarket down 9% over the past 52 weeks. and sears holding is teaming up with uber for its customer loyalty program. riders who link their uber accounts with sears' shop your way plan now can get up to $2 in points for every trip.

new uber drivers who sign up can earn up to a thousand dollars in points. also tyson foods is recalling more than 130,000 pounds of chicken nuggets that are sold primarily at costco after some customers found small pieces of hard, white plastic in the product. the recall is for 5 pound bags of tyson fully cooked panko chicken nuggets. and sonic said fourth quartquart quarter will come in lower than estimates. falling 15% so far this year. some breaking news overnight if you are just waking up this morning, former israeli prime minister shimon peres has died in tel aviv. back in 1994, peres won the nobel peace prize for his role in negotiating a peace deal with the palestinians. they will hold a state funeral for him on friday in israel.

preventing a government shutdown this weekend has now stalled in the senate. failed a procedural vote 45-55. a number of democrats voted against the measure because it doesn't provide money to fix drinking water issues in flint, michigan. and some members on the other side opposed for different reasons that varied for issues for lacking funding on zika and oversight of the internet. senate leaders said they would explore alternatives to avoid a shutdown. >> that's what i was going to say earlier when i forgot. there's got to be a better way to do this government stuff. i mean, you wonder why they're at like 9%. >> approval rating. >> zika, xm bank, control the internet, flint water. it's all got to be in one thing and voted on all at the same time? why? why? why? who thought of that? how would you run a business like that? if you had to -- >> wow would not. but this is a sign of how things have stalled in congress --

>> no, it's not just that. why have that as the method to do it anyway? >> it's stupid, but they have not been able to balance the budget. >> the way we're doing it is bound to fail. and bound to be stuck in the mud. >> there's ways they don't think individually they could get the votes. >> every time you try to do something, one of the 400 or 500 in one body, they stick something on at the end that someone else doesn't like and it doesn't get done. look. this needs to be dealt with. okay? >> agreed. i'm not going to argue with you on that. i agree. >> it's frustrating. >> yes, it is. turning now to the presidential race, we are just 40 days away from the moment of truth in the presidential election. hillary clinton and donald trump are running neck and neck in the latest quinnipiac poll. joining us to talk more about the race and what's at stake is delaware senator and hillary clinton supporter chris coons. thank you for being here today.

>> thank you, becky. >> we are just 40 days away from the election, but we are only three or four days away from the government running out of money. i think it caught a lot of people off guard that this bill didn't make it through the senate yesterday and we are suddenly looking at a potential government shutdown this weekend. first of all, how did you vote on the bill? >> i voted against the procedural motion yesterday because, frankly, we have had months and months in which the republican majority could have and should have addressed the zika crisis or addressed flint's water challenges. we have water problems, water quality problems not just in the city of flint but across the country. and president obama asked for for more than a billion dollars to address zika back in the spring. the fact that the republican majority in the house did not send us bills months ago that funded these two priorities was why a number of democrats me included opposed moving forward with our continuing resolution that would fund the government

for the next couple of weeks until we come back from the election break. >> it's been a huge frustration for a lot of people, myself included, that we haven't seen things like the zika funding, things for flint water. but you're willing to shut down the government over this? >> frankly, if we're not able to do our jobs as members of congress, then we shouldn't be proceeding with the government. this is the sort of moment that democrats have been saying we would get to this point for months and months. i have got teenagers. i don't know if you've got children. you get to a point, becky, where you said we're going to have a problem, we're going to have a disagreement. we've got to resolve this. and eventually you have to put your foot down and say it's just unacceptable for us to have thousands of cases of children poisoned by lead in their water, of pregnant women suffering from zika without taking responsible steps to address it. >> so what do you think the odds are of a government shutdown? is this -- >> i think they're very low. becky, i think the odds are very

low because frankly the last time the republican majority shut down the government of the united states for 17 days, they were hammered by the electorate. because they control the congress. they control the house and the senate. and our inability to come to a positive resolution on these basic public health issues are something i don't think they're going to risk this close to a general election. >> let's step back from partisan politics for a moment. every time we get into this, it does lead to a lot of finger pointing. what do you think got us to the point we are talking about a government shutdown potentially every year where people can't work across the aisle for things that seem like they are very clear issues that are of importance to the american public at large. what happened? >> well, becky, partly we've got a lack of a positive relationship of trust between our leadership. we've also got a lack of a process here in the senate whereby the republican majority can move over the objections of

a small minority. there's a small number of senators holding up progress on our appropriations process. but because of the rules of the senate, we get to the point any one can object and that prevents us from moving forward. i continue to work with republicans and get bills passed. the president signed two bills that i helped author with a republican co-sponsor. one in july, one in august. and i'm optimistic another one i did will be signed into law this week. there are senators republican and democrat continuing to work together. literally just before this shot began, senator gardner of colorado walked by and i told him i'm going to join him as a co-sponsor in a bill we're introducing this week. so there is positive work being done here. but when it comes to fundamental budget issues, we still remain pretty far apart. think about how hard it is to grasp that we don't have a functioning export/import bank. that's really because there's one senator who refuses to allow

members of the xm bank to be taken in. >> which senator is there? >> senator shelby. >> it sounds there are still some cordial relationships. the american public would love to hear more about that. let's get back to partisan politics at this point as much as i hate to do it. we ares facing an election that has been a very bitterly fought election. a very uncivil election in a lot of ways. a lot of people in america is up in arms about this. half of america is not going to be happy no matter what happens in 40 days. how do you deal when partisanship is running so high and whatever happens in this election is not going to resolve that? >> you mentioned just a few minutes ago the volatility in the stock market over recent days, the volatility over recent weeks. and i think that's because when

the average american looks at donald trump, when the average investor or business leader looks at donald trump, they don't know what his plans are or policy would be. i watched closely the debate between secretary clinton and donald trump monday night. i came away thinking he's frankly unprepared for the role. that by temperament and policy proposals he is just simply unstudied, unlearned, and unprepared. >> is that what you thought going into the debate though? >> it reinforced a strong impression i already had. i'm on the foreign relations committee, becky. things he has said about our nato alliance, about our potential future relationships with other countries, his stance toward putin and russia have all struck me as ill informed and potentially dangerous positions. cnbc was reporting this morning that not one ceo of fortune 100 companies is publicly supporting donald trump. >> i think that was a "wall street journal" story from the

weekend. >> i think that says something about whether or not he's laying forward the kind of plans that would lead to the sort of predictable future, the sort of positive agenda for growth for this country that would be embraced by those who lead the largest companies. >> if he does win the election, how do you work with him and the other side? this gets us back to this point of government that is much more divided than one that can potentially work across the aisle and get things done. >> that's right. becky, i've worked hard to build real relationships, positive relationships with republican colleagues in the house and senate. just yesterday i had lunch with a house republican from pennsylvania. with whom i had traveled to eastern europe this summer. that's part of how we can begin to bridge this divide that is so sharp in this body. but frankly the american people also need to hire folks for the congress through this election who want to get things done. who want to listen to each other rather than just giving partisan

speec speeches and threatening to shut down the government. i think it's time for the american people to send us a message to work together to get this business done. >> sorry we went a little off topic for what you were expecting but we appreciate your time and playing along. when we return, john brown is going to join us. we'll ask him about john stumpf and leading a company through bad times in the public eye. if you recall, he was at the helm of bp when that explosion happened and raised safety concerns. he's also the one that expanded the company and guided the merger with rival amoco. remember that? wow. speaking of oil, check out the price of crude this morning. back in a moment. at boll and branch

welcome back to "squawk box" this morning. vice president joe biden writing an op-ed this morning titled how short-term -- so much in stocks puts executive focus on share price instead of the long run. wells fargo announcing it will be clawing back millions from ceo john stumpf following that sale scandal. it's the latest controversy amid public outrage. joining us now to talk about that is lord john browne

executive chairman and ceo of bp. he was at the company during that city refinery explosion in 2007. so he's dealt with crisis before. and he's author of "connect: how companies succeed in engaging radically with society." great to have you here. >> good to be here. >> i want to talk abouting to you about this joe biden piece. it's interesting. but you look at what's happening at wells fargo having lived there your own crisis, if you will. what are they doing -- well, i was about to say what are they doing wrong? but is there anything they're doing right at the moment? >> it's a matter i think of how they're operating in totality. seems to me when things go wrong, whether it is in wells fargo or bp or pfizer, lots of little bits and pieces everywhere. it's when people lose the plot. they have activities that don't tie with their core purpose and they're not engaging -- really

engaging people with the right incentives. >> if you're the ceo and now you have this situation where they're doing the clawbacks, he went to the hill already, had a tough time. should of he resign snd should of he -- i was making the argument had they done anything two weeks ago they wouldn't be the same spot. i don't know if that's true. >> when crises occur, you have to move quickly. then you've got to suffer the right amount of retribution and give the right amount of contrition so people see you've taken seriously what you've done and hurt society. >> that makes it sound like a game almost. that you have to appear contrite and look like you're doing pit. that's what i wonder about the situation with wells fargo. if he had said this a week ago and come up with a lot of these issues, that's one thing. andrew on his own reporting has found that potentially this is a board that's making him do that. if that's the case, it doesn't

read true, doesn't feel like contrition. >> it has to be authentic contrition. people really have to do things. and if he feels it's up to him and the board if he feels that he can no longer serve, then he should resign. >> let me ask a compensation question given the joe biden piece. it says executives are being compensated too much in stock. right? we over the past 20 years people said skin in the game. rather than pay people cash, we need to actually give them stock so they're aligned with shareholders. now we've decided -- i don't know if we've decided but joe biden has decided that actually this has been a great mistake and an overstep burden of proof do you land on it. >> well, it's a balance matter. this started with stock options being awarded to executives -- so i think there is a reason for very senior executives to have

stock as part of compensation. but locked up for a good enough time so that they can actually see the results of their activity. but remembering that it's more than just their activity that affects the price of shares. >> tell us about this book. what does it mean when you say to engage radically with society, that companies need to do this? >> quite simply, to engage on society's terms. not just on the corporate terms. so in everything, a strategy, an operation is to look at all the people involved and actually engage them in what you're doing. but not just say this is -- here's my plan, this is what we're going to do, isn't it a good idea? which is what a lot of people do. go back and say what should we be doing and take that into account in formulating your plan. >> but how do you prioritize your constituency. meaning are the shareholders still your top constituency? the group you're talking about is a much larger group. >> yes. but my point here, i think, is

that if you engage all of them, there's a very high probability to increasing the value of the firm and increasing actually the operating profit of the firm by getting everyone aligned. that's what happens. >> lord john browne thank you for coming in this morning. coming up, tiger woods gets kicked out of a ryder cup team photo. that's not as awful as it sounds. we'll tell you why. details after the break. "squawk box" will be right back. man, i'm glad aflac pays cash. aflac! isn't major medical enough? no! who's gonna' help cover the holes in their plans? aflac! like rising co-pays and deductibles... aflac! or help pay the mortgage? or child care? aflaaac! and everyday expenses?

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picture. the official photo features the 12 golfers who have been selected or qualified for the team. and the 14 time major champion had to be awkwardly shuffled out of the picture. he was invited -- >> they had to tell him that. oh geez. >> he was invited back for the extended team photo. and i don't -- maybe i don't need a new tv show this weekend really. because that starts on friday. >> golf. >> ryder cup golf. and already davis love said this is the best team ever assembled. and then johnny said the euro team is the worst team ever assembled. >> so maybe we stand a chance this time. >> there's trash talk on both sides. when you think about it, look who they have henrik stenson who just won. they have justin rose -- >> we'll be right back. space, the final frontier. or is it?

astrophysicist, koz molgs, author, and really cool guy neil degrasse tyson joins us for some star talk. "squawk box" spanning the universe and kicking asteroids. we're back after a quick break. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. ♪ yet a lot of people still build portfolios with strategies that just track the benchmarks. ♪ but investing isn't about achieving average. it's about achieving goals. ♪ and invesco believes doing that today requires the art and expertise of high-conviction investing. ♪ translation? why invest in average?

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welcome back, everybody. among the stories front and center this morning, a busy morning for blackberry. the company reported a break even quarter compared to expectations of a 5 cents a share loss. revenue, however, was below the forecast. and the company also announced that its chief financial officer is departing for personal reasons. stocks up 6%. read into that whatever you want in terms of why. takata is reportedly in settlement talks with the u.s. government to resolve potential criminal charges. that is according to "the wall street journal." the talks are said to center around the handling of the faulty air bags. those air bags are linked to 14 deaths and more than a hundred injuries. and we are watching the price of crude oil once again this morning. wti's been adding to earlier gains on optimistic comments about a production deal coming out of the informal opec meeting in algeria. if you've been watching this, it's on again, off again, and

skeptics about whether a deal like this could be pulled off. right now wti is up by about 66 cents to $45.31. monday's debate showed a contrast in this next guest's view of a very flawed outsider versus a very flawed insider. holman jenkins doesn't come on enough. but comes on more than he used to. good to see you. he pens the twice weekly business world column for the journal. he joins us now. are you with -- this is entitled the donald abides. are you a "big lebowski" fan? >> i love it. >> so this is a take off of the dude abides, i think. i had a -- guess what kind of a drink at a bar mitzvah over the weekend? >> a white russian. >> a white russian. >> how about a shirley temple? >> is that in "the big

lebowski"? >> no. it's what you have at a bar mitzvah if you're a kid. >> anyway. it's fattening and you shouldn't have it. i read it and one of the quotes is the pervasive in politics is something that we should all assume is going to be there. donald trump has untruths. there's up truths that elizabeth warren started one. and people use them for their own ends. >> sure. of all the things that caused the crisis, to say it's trickle down -- of course it didn't enter her mind at all to see if it was a meaningful. of course it's not. just said it because it worked. >> and you don't cut any slack

to mr. trump at all in this either. because there's untruths left and right and some of them don't even get him anywhere in your view. >> yeah. do they matter is the question you ask yourself. people have been listening to trump do this for a year now. everybody knows the things he says aren't true and they don't care. as somebody put it, people try to take trump seriously not literal literally. he does focus on issues that working class people care about which is immigration and trade. who knows what he's going to do, but he is communicating to those people that he's on their side. that's something hillary did not do in this debate. of all the opportunities she had, she didn't reach out to his followers at all. the deplorable leading the deplorabl deplorables. >> people think hillary clinton talked a lot of policy. whey take away from it is a huge frustration that now we're on to a miss universe, that we got

to -- that'll take three or four days for the news cycle to get past that along with the birther and tax stuff. we didn't talk anything about the issues facing the country on monday night, i don't think. none of them. >> that's right. and hillary likes it that way. she wants donald to be disqualified on the fact that 20 years ago he said a tasteless thing. >> donald trump doubled down on it yesterday. he's not helping himself with trying to get this out of the headlines. he's saying yes, i did say that and i had a reason to. >> but the whole idea of a beauty pageant is antiquated and probably should be -- they should be shelved because the whole point of it is that -- >> check it out. i know. >> that they're thin people with superficial looks. >> but he's not helping himself. >> 20 years ago if you won it on the basis of whatever the parameters were back then and then you totally -- >> it just reads so wrong today. >> i know. but in this day and age, any

type of beauty pageant by definition is, you know, not a safe zone. and it's a trigger event for anyone involved. they probably shouldn't even have them. i really can't believe we still have them. >> i agree. >> wasting time on talking -- here we are talking about it right here. >> well, for hillary to talk about her whole wish list is a waste of time. it doesn't deal with the realism she's going to face a republican congress which is not going to vote for anything that she wants. >> does she care if she gets anything she wants? she wants to be president. that's all. >> maybe. she spent 30 seconds saying if i have to face a republican congress, here's what we can move together to. that would have meant more. >> a few times trump agreed with her. when it came to gun control, a few issues. >> child care. >> right. there's a couple points where i thought wow they're admitting that they are on the same page and it started with trump. >> yeah. and trump also mentioned he was against republicans on certain issues. >> do you think it's going -- >> no.

>> if it's over and you liked trump before, you like him after. if you liked hillary before, you like hillary after. >> and we keep talking about these other voters. >> i don't believe that the undecided people exist at this point of the game. >> they don't like either of them. >> that i agree there are people who don't like either. but i think they must lean one way or the other. no? >> there are a bunch of people who would like to vote for trump but i don't think can bring themselves to do it. something between now and november 8th might move some people in his camp. i don't know. it could be a terrorist attack. it could be a good speech he gives. >> do you think there's another group of people who can't bring themselves -- are trying to vote for hillary but can't? >> those people will vote for hillary because they have something to lose in this economy. that's why she's going to win in the end because she's the safe hand and trump has not shown those people who have something to lose -- >> you're still convinced of that. i'm not so sure. >> is that a statement on where the american people are, that there are more haves than have nots right now? >> even at the depths of the

crisis, 95% of us still had a job and were doing pretty well. you know? there's a whole bunch of people who have been left out and things are going to get worse if we don't change course. right now the balance of people are people who have something to lose. >> i don't know what to blame whether it's social media, the internet, the overall media. but we focus on a lot of frivolous things. i said earlier you weren't here, but i go back to shondra leavy until a couple of planes hit. and now i watch comey when we squeeze isis and the spread across the world. they want chemical weapons and all this. there are things facing us that we don't have any idea that are going to be a lot. >> if trump became president, you'll be glad we aired out the overweight beauty queen because you want that out before the white house. >> speaking of -- not about speaking of overweight. but if he were on the ticket? >> i don't think he can be in

the ticket or the administration now. >> right. >> why does trump want to bring that into his administration? he doesn't need it. >> you say hillary's going to win though. 70%? >> i would think so, yeah. and i think it's the fear of the unknown. if donald can cure a little bit of that. he is not a crazy man. he's not going to get in there and do destructive things. he's a sensible business person. i think if he can cure that impression in the minds of waiverers, he could do a lot better. he could make it close. >> all right, holman. thank you. we'll see you -- the dude abides. there's a lot of -- and we lost -- it'd be hard to do a remake. there's no philip seymour hoffman. the actual lebowski is gone. he just died a couple weeks ago. >> julianne moore. >> she's still around. and jeff bridges.

would you want to see it? >> no. i think that would be a sacrilege. >> i'm going to abide with that as well. good to see you. thanks. coming up when we return, "squawk" heads to space. elon musk laying out his plan to get people to mars and the price tag. and neil degrasse tyson joins us. "squawk box" light years ahead of the competition. we're right back in just a moment.

welcome back to "squawk box" this morning. elon musk presenting spacex's plans to colonize mars. this is the interplanetary transport system. and right now optimistic costs per person, $10 billion. that's with a "b." but musk does plan to drive down costs, he says, by making everything reusable and sending as many as 200 people permission. the goal, a price tag comparable to buying a home. >> the very first flights would be fairly expensive. but the architecture allows for a cost per ticket of less than

$200,000. maybe as little as $100,000 over time depending upon how much mass a person takes. >> musk says it needs to be fun and exciting to get people to go. so cabins, restaurants, and movies will be included on the space shuttle. >> i think the first flights should be cheaper. that's where you're really risking things. >> yes. we are squawking in the stars this morning. neil degrasse tyson out with a new episode of "star talk" nap is the themed late night show on national geographic. and the first national science themed show. people like hope solo, whoopi goldberg, jay leno. neil degrasse tyson joining us. >> when will you get han solo? he's a tough booking. >> especially now. >> oh, he's dead.

i forgot that. you're going to have to go real fast and go back in time because i think he's dead. >> spoiler alert. after the fact. neil, thanks for being here today. >> sure thanks. i love coming on. it's good to be here. >> i say this as -- >> by the way, i have to say the little bit where elon musk said the cost is dependent on how much you want to bring with you. >> he wasn't talking about mass of the person. it was the same thing i thought. >> i think he's saying -- >> if you bring luggage. >> if you want to bring an extra pound of something else, take a pound off your belly or your butt. i'm reading between the line there is. >> that's what i heard too. >> every pound counts. right now it's $10,000 a pound to orbit. >> so maybe he is talking about how much you weigh too. >> yeah. you want to trim your belly and butt before you go. for sure. >> let's talk about "star talk." look, i say this as a nerd myself, but i think this is the rise of nerd culture. people love this stuff. they want to hear the science.

they want to hear how things work. >> yeah. and the success of "star talk" is not the only thing out there. go to comic-con and there are hundreds of thousands of people that show up. yes they're dressing like clingons or whatever, but they do know the difference between -- >> most of them. >> nearly all of them. one of my fears is we've been visited by aliens but they accidentally landed during comic-con and nobody noticed. >> and they wandered down the street. >> and went unremarked upon. what we've done is merged science and pop culture. that's why my -- i'm the host. i'm the scientist and my guests are hardly ever scientists. they're people from pop culture. when you do that, then you can come in with a pop culture scaffold and we clad the scaffold with it and then you go home with a deeper preex of all the ways science touching your

life. >> although the woman from "big bang theory" she is a scientist. >> she not only is a neuroscientist, she plays one on television. that was fun to speak to her about her arc of trajectory. because she went -- she was an actress before she went back to school and then got her ph.d. in neuroscience. that was fun to speak with her about this. >> people want the real story with the science on things. if you look at all the movies we've seen recently whether it's "the martian" or something else -- >> or "interstellar" or "gravity." >> which one of these is the most rooted in reality? >> can i boast far minute? the author of this movie "mars" is andy ware. he's an engineer. he's writing the story about how mark is going to survive bringing his scientific and engineering wit to this task. and what he said was when he was writing the story, he was imagining that i was looking over his shoulder.

what would tyson say? nope, i got to get it right because tyson might tweet about this. i think we're in a time we can celebrate the urge that creative people have to get things scientifically right. i think it's a new era in which people are recognizing the value and role of science in our lives but more importantly in our civilization. >> two elon musk questions. any chance we're living in a simulation as he described? >> yeah. i think -- this idea came forth back in the 1990s. it was a philosopher, forgive me i've forgotten his name. thought as computing power -- >> like we're living in the matrix. >> i'm getting there. i got this. i got this. so if you have tremendous computing power, you can simulate everything that could occur. including the neurosynaptic firings.

what's to stop yourself from thinking the characters you created are themselves real. if you created this world and the world has built into it a pseudofree will, maybe they will say i want to create a simulation. they create a simulation within the simulation. step back and ask how many total worlds will there out there? there's only one real world and everything else is a simulation. which are you likely to be in? >> i'm in the real world. >> the rest of us are simulations to you. >> is it possible i'm a character in somebody else's simulation in a video game. and we're all -- >> just think about it. if you play mario, there he is jumping and going off a cliff and coming back. there are laws of physics that apply in that world that don't match these laws of physics. it's still a mystery why we have these laws and not others. >> i'd rather the two of us live to singularity where we could somehow download everything onto hardware where we could be immortal. i don't think we're in a simulation now. >> i have a concern about that.

not a concern, a thought. if we were able to sort of upload our brains into the silicon based computers, will that still be us is the question. >> i know. >> you wake up every morning and you are you and you're not anybody else. but you are you even if you had an identical twin with identical dna. you're still you. >> i thought of all this. it almost makes you religious because we wonder whether we can do the soul too. whether that seven grams or whatever it is, if we can download that. then you come back to being a scientist that maybe believes in god is even possible. >> if there's evidence, scientists would be all over it. and so it's why religion is called faith. because otherwise you just call it evidence. >> most people don't -- you know, for faith you might use almost a dichotomy of light. it's a wave and a particle. so i can be a scientist but also have faith. >> tons of people do.

in fact, is it a 40% of western scientists would claim belief in a personal god. >> i would say if something looks so amazing it implies a creator, there probably was one. but anyway -- >> but consider that there are things that look completely amazing until we learned how they worked. then we moved on. >> i got to tell you being pregnant right now, it opens your eyes in ways you think this can't be a coincidence. just watching the process. >> we know how you got pregnant. what do you mean coincidence? >> the miracle of life and being able to grow that and watching that happen especially when you're looking at ultrasounds. >> more of a miracle when we don't understand it fully. that's all i'm saying. >> i think it's more miraculous. >> knowing "the martian" had some basis in fact, i definitely don't want to go there. >> that's an important -- doubling back on the elon musk story. if you go to mars and you're living in an earth habitat in a space suit, you're not -- you're

putting earth on mars. you're not actually living on mars in that sense. >> that thing he lived on in mars or ritz-carlton turks and caicos. i'm thinking -- >> somebody had to think -- however skeptical i am, i'm glad somebody's out there thinking this stuff up. because otherwise tomorrow never comes. >> straight up question though. is elon musk a realist or is he is pied piper? >> elon musk is tony stark. no, i -- he's putting his money where his mouth is. so if he was just out there just writing books and just talking about it, talk is cheap. but if you're a multi-billionaire and you're building spaceships and you've got engineers you hired to do so, you got to listen to this guy. and these frontiers that he talks about, the biggest one he's trying to breach is the cost of access to space. something you're doing in a governmental large program way

reducing costs becomes less of a priority than just getting it done at all. he wants to make a business out of it. >> i love it. >> got to move forward, but it's a lot nicer here than any of the planets we know about. >> well, that's true. but it's nicer on the base of a mountain than at the top of mt. everest. doesn't stop people from climbing. >> would you go to mars on a mission? >> after a few million people went. i'm not the one that would be putting my life at risk to say i've been to mars. i would look at the data first. and i would want elon musk to send his family first on the first mission. >> richard branson told us he didn't want to go up on the first flight either. >> when people start talking that way -- but as an astrophysicist when nasa says we're going into space, that's like the distance from here to boston just vertically. and on a school room globe, it's

only 3/8 of an inch. >> there it is. it's a book. >> we're loving it. loving the universe. >> check it out. >> don't forget to check out "star talk" on the nat geo channel. everything you need to know and neil, thank you for coming in. love having these chats with you. >> thanks for having me here. >> got a future on qvc there. "squawk" returns in just a moment.

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new this morning, wells fargo ceo john stumpf forfeits millions as a company launches a probe. your money, your vote. hillary clinton and donald trump duke it out on the economy at the most watched debate ever. stephen ross is here to talk business and politics. plus not so fast, a new survey finding customers aren't ready for a self-driving revolution. the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. see if the futures have changed. i'm interested. oh well.

they're up. they're up almost nine points. >> i'm actually interested. >> no, i am. because we've been going up, down, up, down. we were right where we've been for like the last year. 18,000. we're somewhere around there. 17,500 to 18,500. one of these days something's going to happen. could be today. s&p basically unchanged. nasdaq up three. oil prices are up. they weren't up a lot earlier. we'll take a quick look. among the reasons, the production deal coming out of the opec meeting in algeria. up just under 1%. but again, our brilliant oil strategists have said that we're in a trading range between $40 and $50. >> they've been right. >> they're right. we're at $45. nike posting better than expected earnings and revenue. but with nike, you look at future orders. always. and they were up less than expected 7% resulted in the dow component down 2%. and it's the worst since january

1st in the dow? >> i just read this last night. that it's the worst performing dow component this year. >> really? >> i'll go look it up, but that's what i read last night in one of our notes. >> you did? >> yeah. i'll find it. in other corporate news, wells fargo's independent directors are launching an investigation into the company's retail banking practices and ceo john stumpf will forfeit $41 million in equity awards, stock he had following the bank's recent sales scandal. >> i'm wrong. it's second worst behind disney. i read it last night, but somebody just corrected me. >> they did? okay. andrew, you know a lot more about this wells fargo thing than we just said. you were on the phone talking about it. >> it's sad. but i was trying to understand what was going on. with the board and with john. and why they not only formed this independent group but how we got to this place completely.

there's some acrimony they -- there's a whole sort of a back and forth going on here. >> that is kind of -- that's your kind of thing. >> wait a second. i did read this last night. according to the story, it is. i'm going to run the numbers on both of these. >> we've got to get to the bottom of this. >> sorry. a little obsessive. there is another financial giant in the headlines this morning. wilfred frost joins us with what is running deutsche bank. good morning. >> good morning again. becky, let's have a look at sum up the recent moves. so first off we got a one-month chart. shares fell a couple of weeks ago because of news of a doj find that was expected beating way larger, potentially way larger than analysts had thought. that was the fall two weeks ago. we then stabilized last week before falling sharply on monday. let's look at the one-week charts. coming sharply as you see.

that was on news of a story in a german newspaper that "a," the bank had reached out to the government for state support. and "b," it had been denied to them. largely discounted now. we then stabilized yesterday including a nice rise intraday. that a doj official had said when banks are open and they self-close, they get a better overall fine. deutsche bank wasn't mentioned specifically, however investors took it to be positive news. very nice move at the open today. up some 3%. if we come to the intraday chart which is here, nice move of the open up 3%. that was on news that they sold a subsidiary for 1 billion euros. a nice boost for the capital because they said in the newspaper article this morning that they have never reached out for state support and also that doj find would be smaller than expected. almost wiping out all of today's intraday 3% move.

that was when it was reported in a headline coming in tomorrow's papers that they had reached out and there was going to be a government bailout. that quickly discounted by both the bank and the finance ministry saying that no discussions were taking place about a potential bailout. so we're back up some 3% today. let's sum it up and look at the full year chart. still down sharply some 52% year to date. the initial move january/february. both capital concerns and profitability concerns. the most recent moves, much more focused on the capital position. a rally of 3% relative to small declines. we won't see bigger rallies that the doj find is smaller than the muted $14 billion. >> all right, wilfred. keep an eye on that. a lot of -- spent a lot of time talking about two banks. wells fargo and deutsche bank. elsewhere, the -- this is new i think. a missile went down that brought

down mh-16 was brought from russia. missile struck a boeing 777 flying from amsterdam to kuala lumpur and it killed 298 people. moscow maintained it was shot down by the u crakrainian milit. let's talk some other stuff. we've got news makers at this hour. guest host mary ann tighe is here. and stephen ross, chairman of related companies the owner of me miami dolphins and the gym i go to equinox. that's very important. i may become a tier four member. it's very expensive too. >> don't you have a trainer? >> i do have a trainer. >> why don't you dop that? >> i do. a guy named nick. >> hey. >> a guy named nick. he's great. >> does he hurt you? >> no.

>> he's supposed to hurt you. >> if you go to equinox, that will change. >> can we just talk politics and real estate together? which is i'm curious whether you think that this political season has had any effect on the real estate market. >> you're in the midst of all the big capital flows. have you -- this is a man spending how many billion dollars building the arts? have you felt any impact at all from the political season? >> not really. i mean, right now you can look at the markets and i don't think you can really correlate that to the political season. i mean, today the market is a little flat. and i think probably the office leasing market is a little flat at these times. people aren't making those kind of decisions. now, is that because of politics or because of the economy? >> but do you have a view -- there is a view that the election unto itself slows the economy down. things just sort of -- people press the pause button. mergers are slower, the financial markets. right? >> i would say that's probably

true. >> yes. i would say we feel it and i think particularly given the nature of this election where the positions are so extreme that no one knows really what's coming, you know this better as well as we do that uncertainty is always a negative feature. >> the other thing that's happened on commercial real estate, the high end has gotten hit. but it's starting to trickle it feels like all the way down. >> it's very strong at the -- you know, the middle part of the market, the lower end of the market. the lower end is still pretty high in relation to anywhere else. today in new york which would be the highest prices anywhere else. like $1500 to $2,000 a foot. that is very strong. so the middle market is in new york is very strong. there's probably a little over-building in the larger apartments. and there's probably more apartments over $10 million and above than there's ever been

before. but the market, you know, it's -- in that area it's pretty flat. >> you know, the thing and steve sort built his career on affordable housing. i was in brooklyn day before yesterday and affordable complex george kline park towers building. they've had a thousand applications for every one apartment. i mean, so it's really about price. and i think the way you've adjusted the hudson yards pricing has been reflective of the fact it's not going to be a billionaire's row situation. >> i want to ask this question. we talk about interest rates all the time and how low they are and whether it's creating bubbles. when you look at all of the buildings at least what's going on in this city, do you say to yourself this was in large part of a remarkable low interest rate policy and whether that is creating a bubble of some sort? >> well, i mean, there's a lot of -- i mean, developers will

build if they have the cash. and it's really the availability of money. so today there's been a lot of availability of money. there's been a lot of interest in real estate because people are looking for yield. and they think they can get it in real estate. so there's been a lot of, you know, rental construction across the country especially in new york. so i think the rental market's a little soft. i think it'll catch up. because there really is a demand there. but i think it's more the availability of money and real estate in terms of development not necessarily, you know, purchasing. >> what's going on in miami? >> miami is an area that is really kind of overbuilt at this point in time. the condos. but the difference this time is that it is the buyers who really have put up most of the money. not the banks. so what will get hurt are really the buyers, you know, anticipating that their prices would continue to appreciate. so miami is well overbuilt in terms of condos. you know, the question is those

buyers have 50% to 60% deposits already in. so they're not going to forfeit typically. and the banks aren't going to lose any money. so it'll be absorbed over a longer period of time. everybody's going to be trying to rent them. >> is the threat of zika doing anything to business down there? are people going to games? are people wearing deet? >> it's really hurting miami right now. it's one part of the country where they already discovered zika and it's there. if you talk to people in the hotel business, they're suffering tremendously in all of the future availability. it's there. let's put it that way. so i think it's something really to be concerned about. >> can we get you to weigh in on the election? you know donald trump. >> i think the most important -- >> you're a real estate guy. >> right. i know donald. i mean, to me the most important thing is who's going to have congress. you know? because i think we really need a

government that's divided twoo -- between the republicans and the democrats. being a republican i think the most important selection they retain the house and possibly the senate. and i think if we have that, we'll have a balanced government and be able to really continue to flourish as a country. >> so if the democrats take the house and the senate, we're really going to need trump to balance what you just said? >> i don't think that could happen. >> okay. that's what you said. we need divided. if the republicans lose the house and the senate you need trump to compete it -- >> that's right. but i think it's more likely the republicans will retain the house and the senate. >> you just said you were republican. who are you supporting? >> for president? i mean, living in new york, my vote doesn't really matter. trump is going to win new york. i'm really spending my money and my time in the country retain at least the house if not the senate. >> does that mean you're not

supporting trump? >> i didn't say that. doesn't really matter. >> you still think it's a -- it's profound that well known people that have lots of customers on both sides of the aisle are hesitant to say anything about trump. you think any fortune 100 ceo is able to back trump? >> let's get into something that's less controversial. >> but i like donald. >> she's got 11. >> let's talk about something else less controversial. what do you think about kaepernick and taking a knee? >> i respect what he did. you know? he really raised the conversation in this country that needs to happen. you know? and i think, you know, today i think it's good that people are really talking about things people wouldn't otherwise be talking about. it's something we have to be concerned with. and the way you have to do it, it's unfortunate that it takes controversy to create something. i was very much -- i think that's a good conversation to have.

>> what? what? what are you looking at me? >> i think because he is a very public person. he's got a company that he's got to say the right things. >> i really believe in this. i set up a nonprofit called rise. it was really the ross institute in sports for equality and working across the country to deal with racism. we set that up a year ago. we have commissioners of all the sports and sports networks as part of it to deal with this issue. because sports is the one area that is really where there is equality. and if people look up to sports, the role models, i think we can create change with sports. i think it's an important thing. >> when are we going to be able to hang out -- can we do a show at the yards? when is it going to be up and running? >> we'll open the retail and the plaza in fall of '18. >> great to see you.

>> and of course mary ann tighe is the guest host for thes re of the hour. let's take a look at the worst performing dow component for the year. here's where the confusion steps in. nike is as of this morning down by 13%. 13.6% for year to date. disney was down 12.45%. now nike is the worst performing dow component of the year. mystery solved. that's where we stand. when we come back, your money your vote. the first presidential debate breaking the records as the most watched in u.s. history. both hillary clinton and donald trump are declaring themselves the winner. we'll talk to senator john barrasso after this break. guess what guys, i switched to sprint. sprint? i'm hearing good things about the network. all the networks are great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50% on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers?

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we're less than two weeks away from the next face-off between presidential candidates hillary clinton and donald trump. trump saying after monday night's debate he might not take it so easy on his opponent in the next showdown. joining us now senator john barrasso who has endorsed donald trump. we've cynically talked about, you know, we can argue about the winner, the loser, who looked

better, who put the person on the defensive. but i still think, senator, that maybe the 80 million people that watched are the real loser because we didn't talk about anything. we didn't talk about how to fix any of the problems that face the country right now. we spent more time on, you know, these superferlous issues. it's frustrating for the viewing public. >> i will tell you when i watched the debate, i think when trump focuses on jobs and getting people back to work on the economy, making sure we have a strong and healthy economy and national security in terms of energy security border security he does the best. because this is a change election. it's change versus more of the same. i didn't hear hillary clinton say anything that was any different from what heshe's bee saying over the last 30 years. the american people don't need another four years like the last

eight years. i'm looking for a president that i can put on the president's desk conservative legislation to move the country forward. i believe donald trump will sign that legislation. i'm concerned hillary clinton will veto the things i think will help our country grow. >> we've had a -- you know, it takes a guest that comes in here -- jack welch was on last week -- with a point by point comparison of eight different areas and the proposals from trump, the proposals from clinton. and the differences could not be more stark. and yet none of them, i don't think, were really highlighted to anybody on monday night. >> well, i agree with you. you know, i chaired the platform committee at the republican national convention. and when you take a look at the republican platform versus the democratic platform, the republicans talk about growing the economy. the democrats had nothing about growth. they had a lot about income redistribution. and they had a lot about new

regulations and putting unelected bureaucrats in charge and harming energy in this country. i think there's a huge difference and we have opportunities to continue to make that point. i think donald trump will do that in the next debate which is a town hall style debate. >> senator, you've talked a lot about your worries about the national debt, about entitlements and things of that sort. and one of the things i've been trying to understand around the trump plan which yearly is trying to address growth in this country but i have yet to find an academic, an economist, a nonpartisan on either side that looks at that plan and says that we don't end up with $1 trillion to something like $5 trillion of additional debt over the next ten years. even with dynamic scoring, it's very hard to make that number look great. how do you think about that? >> i think about really tax policy, regulations that continue to stifle growth in this country. if you look at "the wall street journal" editorial for today, for the fifth year in a row and

it talks about another win for the cowboys. wyoming has been rated for the fifth year in a row the best business climate in terms of taxes. it's a great place. and we know how to do it right. limited government, lower taxes. don't spend all the money, balance your budget every year. i think those are things that are a winning combination. i think when donald trump talks about growing the economy, talks about eliminating so many of the regulations that stifle our ability to grow the economy, i think those are winning messages that the american people will embrace. >> do you think the math is wrong? meaning if i told you at the end of ten years you're going to end up with $5 trillion worth of debt or under the hillary clinton plan you'd have little growth but end up $200 billion of debt which is the way it's currently being scored. which would be a more palatable version to you? >> you can look at the issues of scoring. when you look at what we need to do at the tidal waves that continue to come at us, social security and medicare. until we really fundamentally do

the kind of entitlement reform we need in this country, we're going to continue to add to the debt. the amount congress has to control spending is very limited. because of the mandatory spending concerns that are already out there. so we have to work together to get that done. you would have thought we could have done it with barack obama and the white house and the republicans in charge on capitol hill. barack obama wanted none of it. he wanted $1 trillion for extra revenue in government to do any tax reform and welfare reform, entitlement reform. and we did not get that job done. >> so if president obama added $10 trillion in debt in eight years, is $5 trillion -- that's less than $10 trillion, isn't it? have i got that right? are my numbers right? >> it is less. it is less. >> all right. you okay with that $10 trillion? >> not thrilled by it, but given -- hold on. >> given where we were?

okay. oh -- >> context matters. >> yeah, we needed that trillion spent on the union pension. anyway. yeah. all the shovel ready -- that was shovel ready. i'll tell you. there was a lot of shoveling going on. >> by percentage basis, it's come down. >> thank you, senator. say good-bye to the senator. >> thank you, senator. car companies are doubling down on the future of self-driving cars. but most drivers are hoping that technology stays in the slow lane. we will explain when "squawk box" returns.

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coming up, breaking economic data. we'll bring the numbers in the instant market reaction if there is any. now that fedex has helped us simplify our e-commerce, we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave.

good point ted. you're living proof that looks aren't everything. thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce.

sharing a ten by ten room,ng threestruggling.nding, i rent this place and then i started home sharing. my roommates help out all the time. they are glad to meet the guests and that opportunity that airbnb has given me is such a priceless gift. i was able to take three months off to take car of my family during a family tragedy. the extra income that i get from airbnb has been a huge

impact in my life. we're just seconds away, seven to be exact, now six. from august durable goods. rick santelli standing by at the cme in chicago. rick, the numbers, please. >> all right. the august preliminary read on durable goods unchanged. we're looking for down number so unchanged actually in this instance is better than expectations. our last measurement that tried to peg this was 4.4% it now stands at 3.6%. let's do the exes shall we? very close to what we were looking for. and we lost 0.2% to 1.1% on our last look. let's get to the important stuff. business spending. capital investment potentially. capital goods orders nondefense aircraft, much better than the down 0.1% we were looking.

me we gave it back. and if we look at orders, down 0.4%. that is definitely about a half a percent less than we were looking for. and also minus 5%. these don't instill lots of confidence in me. we're unchanged on the 10-year. we continue to monitor all that is negative in europe. of course they're negative out to the 10-year. two year option today. went off the lowest yield, the most negative yield. and we continue to monitor deutsche bank which is definitely the canary in the coal mine for really wrong headed policies. you need banks, you need the transmission. unless you can set up new ones. markets are for setting up new ones. various ways to finance. but for the most the banks are needed. and they need some capital.

and policy certainly isn't putting an extra euro in any of their pockets. back to the gang. >> okay, rick. thanks. steve leisman is standing by listening at cnbc headquarters. i assume you have a good reason for not being here, steve. you got other stuff to do? you know, it's always better to be sitting on the set for, you know, just -- >> so you can take the grief before you sit down in the commercial breaks. >> to enjoy our moments together when we're not on air, don't we? >> it's so much nicer to be there, joe, all the time. it's just much nicer to be there. >> dripping with sarcasm. >> there are reasons, joe. ki get to those -- >> is it a fed thing? >> it's a fed thing. it's a fed thing. doing my job over here. but let's talk about the number here. the story is that investment capital investment in this country has been in a pretty strong slump. and what you have is even a 0.6% on the -- i love the way rick

says that. nondefense good ex-aircraft. that's not enough to turn that around. and the conversation as to why business spending is in the slump it's in has barely been joined. there was some discussion and debate the other night. we do need to think about that. when you talk about things that wour the fed, the decline in productivity which is probably linked to the decline in business and capital spending in this country. it's lukly a major culprit. going through the new orders numbers here. unchanged. ex-transportation, down 0.04%. many of them are negative. computers down 5.8%. transportation up 0.6%. anyway, it's going to take several sustained months of this number being higher for anyone to think that either the manufacturing slump in this country and/or the overall business investment slump has come to an end.

>> all right, steve. said something earlier i thought was fun new. if you're a true fed speak addict, today's a big day. >> it's a huge day. >> yeah. and i was wondering, what other things would we know about someone who's a real addict for fed speak? and then i thought about you. because that's a weird thing to be addicted to. >> he's a fed head and a deadhead. >> nothing ever happens. they just talk. blah blah blah blah blah. i mean, if you're interested in that every day, you have issues, don't you? >> nothing ever happens, but the market keeps reacting. and the market keeps moving on every single whisper. i would be very happy, joe, to get out of this -- what do you want to call it? hamster wheel we're on here. >> roach motel. something like that. >> i think you're 100% right. actually 200% right if you were possible to point out we keep talking about it, nothing ever happens. if the market didn't keep reacting to it, we wouldn't keep talking about it. >> yeah, you would. >> well, maybe.

maybe to myself or to somebody. i'd call you up on the phone, joe. but i want to tell you something which is very important, joe. >> all right. >> tomorrow morning from kansas city we will have esther george. >> that's cool. >> i will be at a very cool conference tomorrow on minority banking and the issues surrounding that tomorrow at 8:30. and we're going to come to there from kansas city. >> we've been waiting for esther george. >> very excited. and you joe -- becky i'm sure would be. but joe, i'm sure fed speak is what you're after. >> and it's the missouri side, right? >> we were there, are ebb? >> no. we were in st. louis. not all mid-western cities are the same. you remember the arch? >> i remember the mcdonald's under the arch. that's where we used to stop all the time if we were good. >> there's no arch in kansas city. good steaks though. bring a couple back. that's a good idea. barbecue. >> steve is also a fisherman.

it's patient which is why he's good for following the fed too. >> you're right. they're both very boring. >> or very interesting as long as you're patient. our guest host this morning is mary ann tighe. she knows everything happening with real estate in this area. we focus on the numbers here a lot. we look at the economic numbers. they tell us a bit of a picture. i think what's really happening on the ground is a better definition of what's happening. you've seen what's been happening in real estate here. we're trying to figure out if this is a strong economy or not from where you sit how does it play out? >> it shakes out in many different ways. for example, the retail real estate market is hurting. this can't be a surprise to anybody because retail isn't reinventing itself. so in certain sections of the city like madison avenue classic retail environment, you're seeing for sale signs all over

the place. if you go downtown, if you go to brooklyn, you'll see that retail is growing there because it's trying to accommodate new waves of population that are coming all over. on the other hand, the office market is strong. it -- we've hit rents that are record rents in all of the submarkets of manhattan and we've invented a fourth submarket. it's extraordinary to see that we went from 14 million square feet of office space to 50 million square feet in brooklyn. but regardless we're seeing a growth probably now of flattening, but we don't see anything suggesting decline because one of the other things that's happening is old office stock coming off the market and being made into apartment buildings. and at the right price, steve ross was talking about it. at the right price, everything rents, everything sells. in new york. >> at the right price.

do you think there's too much inventory? >> i think there's too much high end inventory. it's going to take awhile for that to burn off. but as he observed in the price range, it's selling. >> should we all buy real estate in queens, by the way? they say that. that's the new thing. >> here's what i say about queens. i have a colleague of mine saying long island city, long island city right now. i say it will boom in the next cycle. whenever we have a correction and come back, that's the logical place. because that's where land will be affordable. everywhere else it's hard to buy a piece of land at numbers that make sense. >> mary ann is our guest host. she'll be with us for the rest of the morning. coming up, s.l. green is here. we're going to get his case on luxury property and building trends. "squawk box" will return in a moment. this woman owns this house, with new cabinets from this shop, with handles designed here, made here,

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welcome back to "squawk box" thorn this morning. let's take a look at stocks to watch. at&t downgraded at ubs who said earnings growth is slowing. also tempur sealy cuts outlook. >> that's confusing. you said tempur sealy and then said mattress company nap is a

separate company from tempur sealy. >> that's the mattress firm. >> no firm mattress sold by the -- >> who does the number bed? >> meanwhile -- >> fill it up with air or whatever. >> you see that story? down 21%? >> tempur sealy. >> yeah. it was not a huge miss, but, man, talk about a volatile trade with some of these things. >> that is weird. back to where it was. >> down 21% because it said it was going to be down slightly. >> uh-oh. they're moving us on. they're sick of mattress talks in the control room. okay. this must be better. banking on the self-driving revolution. a survey -- we should just skip self-driving cars. go to the self-driving drones. right? >> self-flying drones. >> self-flying drones. why even bother, right? why bother with the self-driving cars? >> i want to be beamed in. i want to skip that whole thing. >> beaming is even better. i've done that before. i've seen it on tv.

anyway, survey by kelly blue book finds consumers are still skeptical of autonomous vehicles. 80% of those polls said that humans should always have the option to drive themselves. 64% expressed the need to be in control of their car. 1/3 of respondents said they would never buy a fully autonomous vehicle. companies like google, ford, or uber are working on self-driving. people remember that one incident where the guy didn't even brake going into the side of a truck at 60 miles an hour. >> only a few months ago. we're not going to forget about that soon. >> everybody has a vision of just sitting there not really paying attention and not even slowing down when you see that. >> here's a question quick. 36,000 fatalities in america each year from cars. >> right. >> what number does it have to be lower that you would accept it? it's the computer that's going

to make the mistake. >> it's 36,000 versus how many people driving how many miles. one fatalities or two fay it'llties. >> i'm saying if i had to get the number down to 5,000 a year, that's great. but if i tell you the computer makes the mistake, then it's wrong. >> because we all think we're better drivers. >> that's the calculus. >> plus it's when the computer decides to start killing you. >> touche. >> they don't need us. you've heard watson's voice. you hear the voice on those commercials? they make it so nice. that guy's not nice. real estate is on the rise as we've been talking about this morning. especially here in new york city where commercial properties grow in high demand. mark holliday is joining us ceo of s.l. green corporation. our guest host of course is mary

ann tighe. mark, we've been talking a bit about the commercial properties. and what's been happening. mary ann just gave us a brief synopsis of what's been happening. but what do you see? >> you can look at two fronts. on the leasing side, we expected a lit of a slowdown in 2016. but that hasn't really materialized. we're having one of our best years ever to our surprise and to our high expectations. 2.7% -- >> comment about marc and leasing. when he speaks, his company does basically 250 leases in manhattan. >> we do a lease every business day. we have over a thousand tenants in the city. we span the spectrum from the very affordable end of rents up to $100 a foot and over. we have 28 million centered inmin manhatt manhattan. and as i said 2.7 million square feet leased to date. i expect to go over 3 million

square feet for the year which would make it one of the best two or three years in our history. >> you expected things to slow down this year. why and why has that not materialized? >> well, back in december there was a -- >> so it was a reflection of the stock market? >> well, i would say the economic factors. not just the stock market. i think a lot of real estate investors watched the stock market but a lot of real estate investors watched the fundamentals. for me the fundamentals start and end with job growth. in new york city, we've had extraordinary job growth since 2010 adding a hundred thousand private sector jobs annually to a record almost 3.8 million private sector jobs now. but for commercial landlords and commercial brokers like mary ann, we care about our office jobs. we've been adding about 25,000 jobs annually. that's 3 million to 5 million

square feet of absorption. >> is this something you've been seeing in new york? >> new york city traditionally outperforms almost all other u.s. markets. and that's because we have 400 million square feet of real estate in this city. that's more than the next five cbds in this country combined. >> cbds. >> commercial business districts. combined. so this market really sets the standard in terms of attracting foreign capital and serving as a home for fortune 500 companies like no other city in this country. >> both of you, what do you make of the trend of employees now working in offices where they come in with their laptops. they don't really have their own desks. you can actually consolidate a lot more people in a particular space so they may not be taking up as much floor space as they used to. >> you're building a building now that's designed for exactly that. >> i'll say two things.

one, as a landlord i love it. everybody thinks densification. the act of putting more people in the same amount of space to lower cost per employee. i think it's very healthy. it's what businesses ought to be doing. >> good for the business, bad for you though. >> not really bad for me. as long as i have job growth, what i've got is still enough demand to keep vacancy levels below 10%. and with that we're able to have healthy diversified job base in the city that isn't any longer relying on the financial sector. new york for too long has relied on the financial sector. we now have a diverse job base with technology, advertising, media, health care, education. all high demand sectors of this economy. picking up the slack for what used to be a finance driven market. in response to that, what we're building is the most iconic special development project that midtown has seen and i think will see in the foreseeable

future right in the center of midtown at 42nd street. adjacent to grand central. it's going to have interconnections down into the system connecting to five different modes of subway transit. metro north, westchester, stanford, and soon to be long island railroad completing the spur that's going to put another 160,000 communities a day into grand central. and we'll have a development that's really a blueprint for the 21st century. >> can i say something about the desification? one thing people don't correlate is when you bring more people onto a floor, older buildings can't sustain it. the elevators don't work. the bathrooms don't work. the air conditioning doesn't work. you actually are seeing a migration to newer, more expensive, high level space. they may make the space denser, but at the end of the day you actually need a different environment to support it.

that's why new construction actually is -- even though it's significantly more expensive rentwise than existing buildings, that's why new construction is attracting more in the city. >> it's really the value proposition that tenants want. in older buildings because in older buildings you can't get what we deliver in a building like one vanderbilt, 16 1/2 foot slab-to-lab. all these elements enhance the employee work experience where they want to come and work and they get 85% daylight, natural light, which you can't achieve in older buildings. >> marc, thank you so much for coming in today. >> thank you very much. go to a cocktail party talk about 16 foot slab-to-slab. >> let me tell you another thing -- >> the trade-off is as much as they're getting less space, they're loading up on the amenities. >> no, i like that. 16 foot slab-to-slab. >> knowledge of the capital markets is -- in addition to everything else, he's one of the

biggest lenders in the city. >> talk about interest rates and real estate. >> there are no interest rates. that's the problem. >> but we need real estate price cap rate 4.5%. >> jim cramer, you got to mike up. stay with us for a second. then we'll take this off and rip your suit -- joining us from new york stock exchange, jim cramer coming up. "squawk box" will be right back. okay, so what's our latest data say? our customer is a 21-year-old female. heavily into basketball. wait. data just changed... now she's into disc sports. ah, no she's not.

since when? since now. she's into tai chi. she found disc sports too stressful. hold on. let me ask you this... what's she gonna like six months from now? who do we have on aerial karate? steve. steve. steve. and alexis. uh, no. just steve. just steve. just steve. live business, powered by sap. when you run live, you run simple.

let's get down to the new york stock exchange. jim cramer joins us now. jim, what are you -- anything to extrapolate from nike, or is it under armour? >> i think when you look at nike, nike's in a bit of denial, i felt, in terms of what happened in the u.s. they really continue to say, listen, performance and innovation will equal better sales, but those sales were not that good. that wasn't any real growth. i think you play it with foot locker because it's not clear if it's with under armour or reignited adidas with stan smith. it is a little retro stan smith. but foot locker wins in this situation. and i think nike has to change its narrative a bit. nike acted as if it was a great quarter. but people know better. and i think that mark is

sensational but do a little soul search about what happened in domestic. >> i thought -- i picked under armour to talk about. i didn't even -- is adidas a real? they're resurresurgence? >> yeah, adidas is back. >> really? >> yeah, look, nike was amazing in asia, china, in europe fantastic, i know nike has a lot of expectations in these futures orders. they did try to dispel the notion futures orders should be what should be your focus. in the end, this was a quarter that they had a lot of things going for them and still didn't make them a lot of money. a lot of right basketball shoes. and i just felt that upon further reflection this is a company that stalled right now. and they've got to fix domestic. and i don't know how they're going to do it because i know foot locker is pitting all of these against each other. there's just a lot of share being taken influx, nike did not explain well what happened this quarter. >> jim, we got to go. see you at 9:00 flat, 9:00 a.m. sharp. not flat, sharps and flats.

anyway, program note, don't miss an exclusive interview with imf manager christine lagarde on "squawk on the street." that will be at 11:45 eastern. that's "squawk alley," isn't it? any way, "squawk box" will be right back. ♪

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welcome back. our guest is mary ann thieg thrilled to have her for the past hour. do you want to give us a little bit of prediction of where things will go in the next year? >> i think you'll see commercial rents be flatten, relatively stable. i think you're going to see the new construction gobbled up. i think you're going to see developments slow because land prices are too high. and i think it's going to be awhile before retail recovers. >> are interest rates going to go up? >> you know better than i about real estate, but the realty is interest rates have to go up significantly to impact real estate in any meaningful way. >> dr. hidalgo. >> but i'm saying he's your significant other.

>> yes. >> anything he can do with this? >> let me say what he would say to me at this moment if david were sitting in the room. by the way, senator barrasso and my husband are dear friends from undergraduate and medical school. he called my husband every year on his birthday. you know what he would say to me? he would say, dr.ty, i'll call the new england journal of medicine is and let them know what your insight is. >> anyway, great having you. say hi to him for me. i don't want anyone to know if i'm going to see him. make sure you join us tomorrow. "squawk on the street" is coming up next. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. the major indices not too far from fair value this morning as we await janet yellen on the hill at no fewer than four of her colleagues set to speak today as well. europe's positive as deutsche's ceo tries to reassu