>> 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. yesterday we did see a big surge towards the end of the day for the equities markets fueled by the oil price increase. we'll talk about that in a moment the dow was up by 110 points yesterday. s&p gained 11. the nasdaq was up by over 12 points. in asia, the nikkei up by 1.4%. hang seng closed higher. ha shanghai was up. you do see green arrows across the board. look at europe. some of the early trades. concerns about deutsche bank have been affecting some markets

up to this point. after the gains we saw here, gains in oil prices, this morning the dax is up by 0.8%. the cac and ftse 100 up by better than 1.1%. italian market, spain market, gains across the board better than 1%. let's check out currencies right now. you can see the dollar is up across the board. euro at 112.11. dollar/yen at 101.40. all of this is because of what we saw with oil prices. >> that is the big story we're watching now. watching it quite closely. prices spiked yesterday on word that opec agreed to limit production, meaning the cartel would cut for the first time since the financial crisis. today traders are focusing on the lack of detail, that's putting pressure on prices. goldman sachs saying the opec deal should add $7 to $10 to oil prices the first half of next

year but longer term the firm is skeptical. the analyst says if this proposed cut is strictly enforced and supports prices they would expect it to prove self-defeating medium term with a large drilling response around the world. goldman sachs sticking with its forecast of wti crude at $43 a barrel the end of this year, then $53 a barrel the end of 2017. >> the weird thing about this deal is it would be a million barrels per day. it could be 200,000 barrels per day. they haven't decided who is cutting what and it doesn't take into account what russia and the united states do. >> how much was it down earlier? it's down 20 cents. that entire thrust -- you' >> you're not buying? >> how much was it up yesterday? >> up 5% yesterday. >> the way i would characterize the story, it's hanging on most

of the gains from yesterday. >> are you skeptical of what was p put in place yesterday? i thought it was a strong deal until i started reading the details. the take is that the saudis are caving at this point. this has hurt them much worse. even if they go along with this, even if opec goes along with it, which i'm not convinced entirely of, it doesn't take into account what the united states or russia will do. >> pretty big move yesterday. >> the biggest move i think since april. >> are you surprised goldman still thinks we're at 43? >> no. ever since the 300, i don't listen. i think -- that was 2007. that was goldman's london office in 2007. >> then they said 15. >> maybe 25. i forget. >> who should we listen to?

anybody? >> john kilduf. >> look. >> here he is. >> we have juergen coming up mu. >> we do. >> tony blair, i can come up with a few. de gaulle. >> charles de gaulle? >> yeah. isn't he a foreign leader? sarkozy. >> he's trying to come back. >> he is. >> that's bad. >> this guy -- i won't say it, but he kind of looks like he's got a far away look in his eye at times. >> gary johnson. yeah. >> gary jo. is there a j.lo? >> gajo? thanks for letting me fall into that one. >> some mens from the fed president esther george. >> the things that happen when i

follow your lead. >> but seriously, aleppo, remember that? >> yeah. >> are we going to show type of him? i done want to do that. >> aleppo? >> the latest thing. will we so he shape of that? >> probably. >> do we have to do that? we are. i don't want to do that. it's too uncomfortable and awkward. >> as opposed to everything else we talked about. >> exactly. >> notable comments from esther george yesterday. the voting member saying she wants to raise interest rates slowly but surely. but she doesn't want to put the brakes on economic growth. george was one of three policymakers who dissented on the fed's decision last week to leave rates unchanged. she'll join us at 8:30 a.m. eastern. all the cut scuttlebutt about j

yellen. someone conceded the hand wringing. they all -- i think they all do sit there, like 16 of them all at once and go like this. all right. everybody now. everybody now. >> wring together. >> three, two, one. i think they do. i think they sit here like this every meeting. >> they do feel the weight of the world on their shoulders. >> they shouldn't because we have gotten by for years without every single thing in the economy being micro managed. >> but they're in unchartered territory. >> whose fault is that? >> now they have to figure out how to get out of it. >> congress is sending president obama a bill to keep the u.s. government operating through december 9th. that averts a possible shut down of the government this weekend. this after top lawmakers broke a stall mate to help the water crisis in flint, michigan and to combat the zika virus.

it contains $1.1 billion in zika funding. this measure is congress' last major to-do item before the november election. before that, of course, you have one other issue that we expect them to be sticking around for. >> this is it. wells fargo's ceo john stumpf back in the hot seat this time facing the house financial services committee after giving up $41 million of his pay already. wilfred frost is covering the hearing on capitol hill. >> reporter: good morning. despite wells fargo's ceo john stumpf agreeing to forfeit $41 million in pay late on tuesday, under any comparison that's a massive amount. pressure on him and the company increased yesterday. even before the move had time to resonate, senator elizabeth warren tweeted that stumpf should still resign and return every nickel he earned since 2011, which, by the way, would

equate to $175 million. the day ended with the state of california suspending business relationships with wells fargo for one year. it's a major symbolic move rather than a hit to their earnings. about 0.1% of 1% or $22 million to wells fargo. california state treasurer john chang highlighting that things could get worse still if they don't improve. >> these sanctions will be in place for 12 months. however, should wells fargo fail to comply with settlement agreements it reached with federal and local regulators or evidence surfaces that they reengaged in the same behavior, the sanctions may escalate up to and including a complete termination of our business relationship with the chiang wi lunch" today. the bottom line is mr. stumpf

heads to capitol hill still under intense pressure. joe, you said there was a lot of this yesterday when janet yellen was there. i'm sure the same will be true today. >> i just looked it up. i tried to get a video of what actual hand wringing looks like. i think maybe it's squeezing them together. >> do you know? >> joe, i'll take a video today and i'll get the definition. >> let me know what they're doing. i think if you look up hand wringing, there may be a picture of the fed. >> i thought it was like this. >> i think it's like a church -- >> yeah? >> what am i going to do? what am i going to do? what if there's another bad employment report? i don't know. i'm not sure. >> i'm feeling anxiety, though, from the -- it's backwards. >> from doing it? >> yes. >> so it doesn't help? >> no. >> thanks. >> thank you, guys.

we should tell you the chairman of the financial services committee, jeb hensarling will be joining us before the grilling begins to tell us what he's looking forward to. and then live coverage of john stumpf's testimony starting at 10:00. >> if i were him, i'd be like i'm out of here. >> not enough money to keep you around? >> no, he's made enough. >> he would still go to the hearing. the problem is, even if you were to resign, you would -- >> you might as well stay. >> at this point. it is the busiest day of the week for economic data. 8:30 eastern, weekly jobless claims, and the final estimate on second quarter gdp. joining us now is j.j. kinnehan, and christian lamonty.

j.j., in gem,neral i look at yo and i think vix. we got a brief move that made us think something would start happening. now back down to things not really happening. >> got all the way to 14.39, pure excitement. >> back down to 12. >> back at 12 now. i think it's a tough time for retail investors because we waited around for the fed forever. now it's like, okay, now we will wait for the election. the fed meeting in november, let's face it, i don't think anybody expecting anything to happen because of how close it is to the election. 11% probability of a rate raise. december, 54% probability. with all that, it's sort of hurry up and wait, hurry up and wait. we're continuing to see the same cycle. one thing i will say, october is the most volatile month of yoal

months. top to bottom volatility usually 9%. because you have 87, 89 in there, the strange thing about it, october also has a positive return. >> even with 87. >> even with that. so it's like in boxing they say you get knocked out by the punch you don't see. i think the thing that's there for volatility is probably an event we don't know about right now. not on anybody's radar. >> what else? that's sort of someamentals the, too. we've been at 18,000 by n.as faa range for five months now. >> we are going higher. much of that we can talk about central banks. central banks do drive things. bank of japan put a marker on the ground and said they will keep the japanese ten-year rates at zero. so effectively they're anchoring

the entire yield curve. if the japanese yield curve is stabilized and anchored, the rest of the world is anchored as much. that reduces a rate's volatility and that's good for the markets. >> they're already failing at that. the japanese government bonds are already below zero percent. does that mean they have to change their strategy more and start selling bonds? >> it's below because they have not gone full force with respect to maintaining the rate anchor they are talking about. over time it will unfold. i think the expectations in the marketplace is that they will be reasonably successful with respect to anchoring the ten-year note. they will be doing it. again, the question from my perspective is not necessarily whether they will succeed with respect to reviving economic growth. that's an important issue that we should talk about. however, as far as markets are concerned, it's really what

they're doing and what the impact of that is. that's positive for equities on a global basis. with the opec agreement potentially, that's another positive. we weren't expecting that at all. >> we talked a lot about politics, the two candidates, buying building up debt. you can see the worry about the central banks going, just turning, the dollar worthless, all that rampant inflation, we've gone so long without inflation that it almost seems like time to just throw out everything. in japan, wouldn't you throw everything out? >> after 20 years? >> you can't print enough money. >> that's their issue. what's left to throw? >> i'm ready to throw. i can't believe -- it just seems like demand is so weak. we can't engender the slightest

bit of inflation. once you do it -- >> how do you stop it. >> for now -- >> is the genie out of the bottle? is the toothpaste out of the tube? >> they're far more -- >> we thought volcker was the greatest in history for getting rid of inflation, now it's harder to ingender? >> especially in a world that's levered up and demand short. that brings us to the key important i would like to make, there's a way to get things going that requires fiscal action on a coordinated basis. the political will to do that on a global context, it's not there. >> andrew, that's why that trump thing. you had 5 trillion. you though who the greatest president was for adding 10 trillion in eight years -- >> obama. >> suddenly that looks like a

smart thing. that stimulus we did in '08 should have been 5 trillion. >> you know who we have coming up? maya mcguinness. >> she will be mad. >> we will hear about the problems with deficits and what she thinks about -- >> it is incredible. i dent fon't know what it is, demographics? >> it's a conundrum for the rest of the year. that's why people have to look at portfolios now, if something does happen, they're not taken by surprise. >> or they have to read this book. >> there you go. >> which would probably help. >> great book. congratulations. >> thank you. >> gentlemen, thank you for coming in. >> look at this. >> he signed it. >> that's nice. when we come back, a red flag on our country's debt. the president for the committee for responsible federal budget

says neither candidate has a plan to fix the debt. "squawk box" will be right back.

welcome back to "squawk box." in political news, an nbc news pole finding 52% of voters who

catch watched the debate or followed the coverage in the news, thought clinton won. 21% said trump won, 26% said neither candidate came out on top. this is a bit more of a scientific poll than some stuff we saw immediately in the aftermath of the debate where people did these sort of flash surveys online. still, at least antidotally the people i know who saw it, if you were a trump supporter before, you were a trump supporter after. >> 8% -- >> undecided? >> it changed 8%, 9%. >> good luck trying to find them. >> that's a lot. >> if someone is changing their mind at this point, that's a lot. >> we heard from the presidential candidates this week about how they would handle the economy if elected, our next guest says neither candidate has a plan to reduce the debt. joining us is mayya mcguinness from responsible federal budget. great to see you. this is an issue we have been

talking about with you for years at this point. >> it's an issue we've been talking about for years. not an issue the candidates are talking about. despite the fact that the country faces fiscal challenges, the debt as a share of the overall economy is the highest since world war ii and deficits are once again growing. neither candidate has a plan that would put a single penny towards slowing the growth of the debt. in terms of getting the my going, which is the bigger picture challenge here, you can't do that with such a significant debt overhang that's going to be lasting and effecting the economy going forward. >> i would argue the conversation has turned to such an extent that the majority of the conventional wisdom at this point is that the central banks have done all they can do. it's time for legislatures to pick up and increase spending. that's the way conventional

wisdom goes that we will see our way out of what has been a subpar economic recovery. this idea there is more splendisplenending to come. what do you say to people who have that idea? >> i find it on both sides of the aisle and i don't entirely agree with it. i wasn't mad as i was listening to your last segment talking about the need for more fiscal spending and a coordinated need globally. the fed is in many ways tapped out around the world, we need to look at the short-term and what to do but also in the long-term. because spending money or cutting taxes is so much easier than the reverse, getting the debt under control, what we can do in this country and around the world is walk and chew gum at the same time. that means put in place the short-term measures to get the economy going. and more importantly focus on the structural changes that will help promote growth, whether it's tack reform or public

investment spending. but you also need to couple that with a plan that's going to make it clear that our debt won't be growing faster than our economy. what we have now is an unsustainable situation. if your debt is growing faster than the economy, you have to get your economy growing but also make policy changes. not one plan that come out of either the trump or linton administration that would slow that growth of the debt. >> what you're talking about are the entitlements, social security, medicare, those ballooning programs that take up such a significant amount of what we're able to raise in revenue. >> by far the biggest challenge is the entitlements. one loss of opportunity is we have known the aging of the population is coming. it's no surprise baby boomers are moving into their retired years and doing so without us having made a single bit of progress on stranging structurally the programs they rely on for retirement. if you look at the debate on

monday night, healthcare programs and social security take up over 50% of our federal budget. they account for over three quarters of the spending we're facing. how much time did we discuss them at the debate? the budget discussion at the debate? zero percent of the time was devoted to that. nobody wants to talk about entitlement reform because it's difficult. if we don't make those changes you won't get the fiscal situation under control and the debt will continue to grow. >> maya, i know you're talking about this in the context of both candidates, but at least according to your own numbers, it seeps one candidate on this issue is much worse than the issue. >> yeah. >> you want to speak directly to that? >> i not even close. >> i don't want to beat around the bush here. >> we're a very bipartisan organization. our numbers are unbiased. we found that hillary clinton has a plan that she would offset the cost of all of her new spending. there's a significant amount of

spending, and middle tax class cuts. all of those new priorities would be paid for by tax increases on the well after and business tax increases. it's the pay as you go candidate. she wouldn't make the situation worse, but she wouldn't make it better, even doing nothing we'll add $9 trill $9 trillion on to . donald trump's we find would add over $5 trillion to the debt, on top of that 9 trillion in the next ten years. so the debt would balloon under the presidency -- the policies that he's talking about having in his presidency. he's talked about how it would generate economic growth but there's a number of constraints on economic growth, the largest being as the demographic shifts we won't have the growth from labor, so the productivity gains

you would need you that scenario are unprecedented. so we need to be more reamilist about the policy reforms. and donald trump said he would not touch social security and medicare, the largest challenges to the fiscal situation. >> just hearing raising taxes on wealthy, and raising taxes on businesses, i mean, many people maya at this point think near-term we worry about social security, even larry kudlow. even near-term, we try to get out of this muck, 1.75 gdp growth and worry about entitlements down the road. we have to cut corporate taxes. we got to. so we don't blow out the deficit under hillary clinton. we have another that sounds like more of the same for the next four, eight years which nobody wants at this point. i've heard the supply side,

trickle down is bad. the on thing that gets us going is the private sector. adding ---iving the government more money to blow from both corporations and high net worth individuals is not the way to go. >> what is frustrating is what we clearly need is a comprehensive economic plan that deals with a lot of different parts of the economy. we need a plan to grow the economy. we need a plan to deal with how that growth is shared. income inequality and we need a plan for fiscal sustainability. none of them work in isolation yet the candidates and political parties compartmentalize it. >> we talk about 5 trillion, austin powers, what is 5 trillion when obama added 10? >> that's on top of 9, don't forget. >> he's taking a victory lap on how great things are by adding 10. i'm ready to try 5. >> a surprise move from opec.

the group agreeing to a production cut for the first time since -- oh, i just sniffled. i hope howard dean is not watching. i swear i didn't -- dsh from bank of america to earn 1% cash back everywhere, every time. at places like the batting cages. ♪ [ crowd cheers ] 2% back at grocery stores and now at wholesale clubs. and 3% back on gas. which helped him give his players something extra. the cash rewards credit card from bank of america. more cash back for the things you buy most.

you know what, guys? there's a lot of tree branches and dry brush over here. we should probably move the bonfire over there. [smokey whistling a tune] i'm guessing smokey liked that idea.

. welcome back to "squawk box" on cnbc. u.s. equity futures at this hour. the dow up about 2 points. nasdaq off by a point. s&p 500 off a little over a point. pepsi reporting just now, we'll dig through this real quick. a couple of highlights. looks like they beat eps

estimates by 8 cents. core eps of 1.40 versus 1.32. beat by about $2 million. net rev due of 16.027 billion, versus an estimate of 15.82 revenue. looks like they're increasing the full year -- their full year core constant growth objective. it was at 9%. this is what they were projecting before. it's now at 10%. that stock up at least marginally now. we'll dig through the numbers and talk to an analyst at the top of the hour. you can see pepsi's cfo, hugh johnson on "squawk on the street" at 9:00 a.m. eastern time. just weeks after rising to the dominant role in her father's $40 billion media empire, shari redstone is set to

undo viacom and cbs. they will send a letter proposing a merger of the two media companies before the market opens today. this a decade after sumner redstone split the companies up. shares rising in the after-hours session on that news. shareholders are concerned that viacom could be a drag on cbs' performance, but the combination could help cbs when negotiating with cable an satellite distributors. we'll see where this heads. opec members reached an agreement to limit production to 32.5 million barrels a day. crude prices jumped 5% on the news yesterday. the gains tame ppered off on th news that the deem coual could enforced. joining us is john kildof, cnbc

contributor. we're the swing producer now, they've lost a lot of the clout they had because of our domestic success with horizontal drilling, everything else. previously market forces are pretty strong. opec was successful for a long time. but usually market forces, you say you will do something, if you start losing market share because you stay too high, you almost feel compelled to abandon these best-played plans. >> i think you could say opec abused their position in the oil. and saudi arabia blinked. they thought they would wait everybody out. turns out they couldn't fight father time any longer on this. their final situation deteriorated quite rapidly and they find themselves in a weakened position versus iran, who is actually doing okay, because of the sanctions relief

and other things they undertook. >> the fear is if they lose -- if they don't sell enough at the low prices, that's high they were selling more, they'll sell as much as they need to. how does selling less make their -- >> fix the budget problems? >> yeah. >> it's desperation. they need the petro dollars. i think they think this will enable them to get prices up and stabilize the market. try to deal with the shale players in some other form. >> do you think they're right? you have russia as a while card. the united states, which can't be controlled because it's independent players making their own decisions on these issues. are they going to take all the pain themselves and bear the brunt of these cuts for opec for the rest of the cartel? . they're going to have to. first of all, the number that has been put out there in terms of 500,000 to 700,000 -- >> i saw as little as 200,000 barrels.

>> this is the decline of saudi arabia duproduction as we get later in the year. >> so you're talking about a freeze. this is not a cut in production as much as a freeze. >> and the numbers don't work at all. the russians in particular ramped up production 400,000 barrels a day from august to september. >> because of the new fields. >> the caspian plays coming online and also fracking there is also on the rise. they're reviving a lot of their old oil fields the way our guys are here. so the market will stay out of balance for some time. the market rewarded yesterday the discount in prices for opec being in complete disarray. >> i look at this the same way as i look at the fed, not just our fed but other central banks, too who keep saying look out, look out, this is what we might do. at this point everybody is like

show me. prove it. >> opec's track record on adhering to production cuts, quotas, is ridiculously poor if not nonexistent. you can't believe they'll come through on this one either. again, the play now is to the iranians seeing an opportunity to squeeze the saudis the way the saudis saw an opportunity to squeeze the iranians in 2014. a lot of pieces on the chess board. >> good luck with that. >> i keep watching the situation in syria as an indicator as whether or not these folks can work together. >> on the chart we just showed, it looks like -- i don't know, when it gets like that, the range is getting narrower. usually -- see right there? you can just draw that. >> the last time we were here we called it a wedgy. >> that's right. usually that means it will do something. >> there's competing formations.

a definite uptrend. >> how does that resolve itself? down or up? >> i believe it will resolve itself down. >> there was disagreement that came out -- >> yes. we didn't necessarily violate the down trend channel. >> when you say down, is that ala goldman sachs's view that we get back to 43 an then back up to over 50 next year? >> i don't necessarily see that happening. i don't see recovery for prices until late 2017 at the earliest now. the market will stay out of balance, prices will be under pressure. this chart action shows a breakout one way or another, in my view, to the down side. >> and a recovery in your view is $52 or higher or $55 or higher? what's a recovery? >> 55 to 60. the shale producers are scrambling to lower their own costs. this is one reason why i don't even care for the mlps, they'll have to lower tolls.

you can't charge the same high price toll for something that was $100 a barrel that is now 50 or lower. >> ripples through the entire oil services industry. >> the drillers, the services companies, they have been given massive discounts to keep the game alive. i think that will persist. you'll see the shale producers come back. yes, we are the swing producer now. no doubt about it. >> late 2017. like next time we get a rate hike probably. >> might coincide with that. >> might coincide with that. >> could be joint fed opec action. >> or not. i weshish i was kidding. >> the elections is coming, so there will be good jobs numbers. >> probably. >> john, thank you for coming in. when we come back, wells fargo's ceo back on the hot seat meeting with the house

committee. jeff sonnefeld has some advice for john stumpf before that hearing, and jeb hensarling will tell us what he plans to ask the ceo. at 8:30, don't miss our conversation with esther george. right now, a quick check at the european markets. they've been up across the board. gains of 1% or better for the ftse and the cac. jobs disappear?can goodg it's what the national debt could do to our economy. if we don't solve our debt problem 19 trillion and growing money for programs like education will shrink. in just 8 years, interest on the debt will be our third largest federal program. bad news for small businesses. the good news? there's still time for a solution. ask the candidates for a plan to secure our future.

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welcome back to "squawk box." wells fargo's ceo, john stumpf, will be back on capitol hill today. days after being grilled by senat senators. joining us for a look at what we can expect is jeffrey sonnenfeld. his latest commentary in fortune magazine, how wells fargo's ceo could have avoided his senate belly flop. good morning to you, jeff. can he avoid a belly flop today or is it already too late? >> good morning, andrew.

good morning, becky. good morning, joe. it's pretty far down the line now. i think it's hard for him not to have crashed and burned or to use the fortune line, the belly flop. he could have prepared much better for some things last week, such as having a timeline available for people, explaining why they didn't do an investigation. not started until now. until this weekend. six, seven years after the problem broke and three years after he knew about it why he didn't anticipate questions on claw-backs and why he blamed the 5300 lower employees and nobody senior. >> jeff, given where -- given the table stakes now, where we know things are, is there anything he can do today, both perhaps to save his on job and to persuade lawmakers that wells fargo is in the good or is prepared to fix this in a meaningful way that would placate the folks on the hill? >> i'm afraid what he's going to do is what he did last week,

threw the comp issue and other issues on to the board's lap, surprising directors. this week he has a chance to take some responsibility, give us a timeline. tell us why did you know for a full year and conceal this from the board of directors? nobody we have on this show, unless it was dennis kozlowski, would have done this. would have hid from the board such material, irrelevant information. that's amazing. >> >>ly i will play devil's advocate. his side of the world would say it wasn't concealed from the board. two, in terms after materiality, this is such small potatoes -- i'm not saying it's small potatoes -- >> because of the size of the fine? >> because of the size of the fine and materiality in terms of how little the dollar terms

were, they did not see it the way we now see it. i'm not saying that as a defense, that's what i believe is going on through the mind of management. >> i believe that's how it eventually got presented to the board. on the first part, he didn't. he admitted to congress last week, to the senate, he sat on it for a year. didn't think it was worthy of the board's attention. systematic falsification in the reports. there could be a sarbanes-oxley 301 violation here where they had to certify to the accuracy of the financial reports. there's something not right here. the test of materiality? look at the impact. customers are closing down their accounts. lawsuits. major lawsuits. >> i'm not disagreeing with you, jeff. i'm saying this was the clear mistake -- >> you're taking the devil's advocate. i'm saying he did conceal information, and we have class action suits from employees who

were fired for not using these schemes. >> who do you want to run wells fargo? can you take somebody internally or are they all tarred because they might have known something about this? do you go outside? a strong man or woman inside who is not just competent but has the leadership qualities to take and fix this situation? >> i'm partial to the cfo, i'm praying he's not complicit, john shrewsbury. but tim sloan, the chief operating officer has only been on the job ten months. there's a chance he has not been involved, but he's been a 29-year employee of wells fargo. he should be on a very short leash. he's lost legitimacy and credibility to lead. that is a sear yorious erosion

trust. these are all serious issues what they will hide behind today, he will defer action further than the pretty significant pay cuts, which i admit he took. he is still walking away making roughly 20 million a year, each of the last few years. and the woman who is being punished, three years after he found out she was responsible, he left her in place there and rewarded her with $120 million. so they took back that 19 million. i would take that 101 and call it a good day. he needs to find an alternative. when we saw tom mozier in '91 and '92, the head of securities trading at salomon brothers, he told goodfriend about the fraud. he didn't tell the board. there was no resolution. >> should we separate the chairman and the co?

historically you have said as long as you have a strong person on the board, who is a lead director, it's fine. does this say anything about that particular issue? >> you know, i don't want to blow into the break and ruin your morning, but i could go on for a long treatise on that. it's irrelevant to that. many friends will disagree. you name any major fraud other than this one, they already had a separation. enron, worldcom, they already had the separation. >> fair enough. >> bp. there's nothing preventive or nothing predictive about that you look at united airlines, they replaced the chairman without problem. they were able to -- >> i take the question back, jeffrey, thank you. appreciate it always great to see you. >> good to see you. >> we will be watching mr. stumpf's performance again today. quick programming note, we will be seeing mr. stumpf and we'll bring that you live. the chairman of the financial services committee, jeb he

hensarling will >> yeah. >> you think her nan's got enough? >> the jumble messes that up. >> you look at the world a little differently. when you do the jumble puzzle every day like we do, you start to move the words around and try to create a new word. stumpf doesn't make any other word. when we come back this morning, gary johnson with the second aleppo moment. we'll show you his gaffe after the break. >> no, i can't. 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 yo bill, invest it in your small business. wouldn't you love more customers? i would definitely love some new customers. sprint will help you add customers and cut your costs. switch your business to sprint and save 50%

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indiana jones. talking about lego video games. indiana jones is a good one too. libertarian presidential candidate gary johnson said he was having an aleppo moment yesterday when he struggled to name a single foreign leader during an msnbc town hall. >> name a foreign leader that you respect. >> i guess i'm having an aleppo moment in the former president of mexico. >> i'm giving you the whole world. >> i know. >> anybody in the world you like. anybody. pick any leader. >> i know he was thinking, you know, i've heard of putin but i can't say i like him. you know what? the last gaffe as he just alluded to came on "morning joe"

when he was unfamiliar with aleppo. but it's bad when you cite your own -- >> your last gaffe. >> yeah. there's now a name for a gaffe. it was because of me that the name came about. it was like mother of all -- >> he should have said this was my oops moment and blame it on somebody else. >> you don't think he drops out of this whole thing? >> i don't know. the three government departments that you'd eliminate, that was -- i forgot which ones we're going to eliminate. >> what he should have said? >> all of them. >> i don't understand the supporters. what is the view? >> they're looking for an independent candidate. they're tired of the two-party system. >> i get that. >> not someone that's going to add to government and raise taxes other than donald trump. >> and they like the legalization of pot. and, look. the two candidates have have been up by the two major parties. >> i don't want to be accusing people of things like that, but

i think there's a reason he wants pot legal. i think he might -- you know, i don't know. there's times i think he may have -- i think he -- >> what state was he in last night? >> in a very nice state. a very relaxed, comfortable state with where you like chipotle and fritos. >> it's part of the process. it's a pretty tough vetting process when you look at the final candidates who are left. they go through a lot to get through. >> is it really a tough process? >> that's not that hard. i mean -- >> well, that question's not that hard. >> you saw me come up with de gaulle and putin. >> could have done merkel? >> who? coming up, pepsi reporting in just the last few minutes. they beat on the top and bottom lines. and the stock now moving up. they're also raising their guidance pulling off a nice quarter. going to talk to an analyst about that report in just a moment.

markets rally after opec reaches an historic deal to cut productions. the dow up triple digits yesterday. "squawk" market master muhammad el arian is here. his interview is minutes away. john stumpf back on the hill for another grilling. this time in front of the house financial services committee. jeb hensarling will join us to talk about the state of the bank and what he hopes to hear today. and another gary johnson interview gone bad. >> name one foreign leader you respect and look up to. anybody. >> having an aleppo moment. as the second hour of "squawk box" begins right now. ♪

live from the beating heart of business, new york city, this is "squawk box." >> welcome to "squawk box" right here on cnbc. good morning. i'm andrew ross sorkin along with becky quick and joe kernen. we are looking at down arrows. dow looks it would open up off about 16 points. s&p 500 off close to three points. i don't know if we're going to chock that up to oil at the moment? >> maybe yes, maybe no. we have seen a pullback today. let's tell you about other headlines we're watching as well. pepsi beating the street's expectations by 8 cents. revenue also coming in above forecast. and pepsi raising its full-year outlook as demand for snacks and beverages increased. we spoke in the past about how that's a lot of times a reflection of the jobs picture. so it'll be interesting to hear more about where they see this growth and what's been happening. we will have more on pepsi's quarter in just a few minutes.

also patrick harker says that he wants to see rates normalize sooner rather than later. he is concerned about the potential for monetary policy to distort financial markets. it's a similar market that we've heard from eric rosengren. he made his remarks from a conference in ireland. this is just more added into that entire echo chamber. >> that's why they initially started qe. >> to boost the markets. >> so now he finally realized it's what they've been doing for five years. hp in the meantime has issued an apology to owners of its printers. this comes as a software update that stopped ink cartridges that were not made by hp bricking them to a point. they would remove the restriction. so i did see some frustration on twitter yesterday who had printer cartridges they got elsewhere and got bricked out. a bit of pushback.

>> it's legal, though, right? >> sure and you could understand why they make all their money on the cartridges. not on the printers themselves. so they want you using -- it's like the razor and razor blades. >> they want you to use the real ones. >> now they're folding. >> all the customers are trashing you, tends to make people react. >> i wouldn't fix that. you use my stuff. >> guess who else tried that tactic at first? >> yeah. so wells fargo ceo john stumpf facing the house financial services committee. and wilfred frost joins us from washington. he's covering today's hearings on capitol hill. hey, wilf. >> reporter: thanks, joe. and we are expecting the hearing to be tense if janet yellen's appearance yesterday is anything to go by. here she is being grilled about the roll in the issue. >> don't you think it's time the fed does something? how long does this stuff go on

before you get outraged and take action? >> well, as you pointed out, we have done something. the action you described in 2011. >> you know an $85 million fine to this bank is laughable. i know you know that. >> we are very concerned with all of the compliance problems and violation of laws. >> you know they're laughing at you, right? you know they're laughing at you. >> the time of the gentleman from massachusetts has expired. >> reporter: that has led to questions about whether the wells issue will hurt the wider sector. and there are a few contrasting points i would make. firstly, no criminal wrong doing found in the cfpb investigation. this is an oversight issue. no other banks have been found to be doing anything similar. it is a wells fargo-specific issue. and finally, a different too big question this time around for the banks. it's not should jpmorgan or bank of america be doing both investment banks and retail

banking. wells pretty much is just a retail bank. thus, this is still just a single company oversight and management issue for now. at least. guys? >> i want to give you big props, wilf. because i know you write all your own scripts. you're a smart guy and you put this together. because you're still writing whilst and thus still in your reporting. >> reporter: that's true and that's being despite being told i shouldn't use them. i double down when people tell me not to use them. >> wilf, whilst is more limited in scope than while and can only be used as a conjunctive. you use it correctly. this goes back to the late 14th century -- >> are you going to start using this too? >> i am. i read when it can be used. it can only be used when it's appropriate. and that's only the time you use

it. yes. whilst i may not always use it correctly, i'm going to start using it. >> i know that bill wilf writes his own scripts and i give him props. >> reporter: the only one i stand corrected on when i moved here i used the word naught instead of zero. >> wait, wait, wait. >> you were talking about a jumper. that you were going wear a jumper. >> reporter: a sweater. that's on twitter. that's not live on air. >> but it can be beaten out of you if sarah's already succeeded. >> reporter: yeah, but that was a lot of effort over nine months. >> do you take a lift or an elevator? >> reporter: i take a lift. but that also confuses people. i have to adapt some. at home i said are we going to watch the soccer today and he looked at me aghast. >> you got to take it from both sides. >> this may change your mind. while is actually older and whilst was a development of

while from middle english. so you could go back further. >> all right. >> reporter: there we go, joe. you know more than i do on this. >> google is amazing. google is amazing. anyway, thanks wilfred. el-erian's waiting. let's talk to wilf some more. >> would you stop? >> okay. a quick programming note. the chairman of finances committee jeb hensarling will be joining us at 7:40 a.m. eastern time. >> probably taking the tube on the way -- >> the president called him jim because he didn't like him. and cnbc will have live coverage of john stumpf testimony starting at 10:00 a.m. eastern time. >> i've messed up names and it's not because i didn't like people. in other financial news this morning, news from the financial sector. we have watching shares of deutsche bank. the german government refuted a state aid report. meantime draghi saying they cannot be blamed for the bank's woes. >> if a bank represents a

systemic threat for the eurozone, this cannot be because of low interest rates. has to do with other reasons. >> deutsche bank stock has come under pressure from short selling. notably some large hedge funds. according to regulatory filings earlier this year. and all of this goes -- in italy, the government wanted to try to back its banks and technically you're not allowed to. so it becomes very complicated in terms of if you want to -- if we get into a situation where these banks need to be rescued. joining us now on the markets, fed, and election, the aforementioned muhammad el-er n el-erian. we had a long discussion earlier. i know you watch when you can, but we're ready to just pull out all the stops to try to get some inflation anywhere in the world. you know, none of us are deficit hawks anymore. we're just ready to go. is that dangerous if we let the

genie out of the bottle and can't get it back in? >> sure. if all we do, joe, is fiscal stimulus and nothing else, we're just going to shift the problem. it's going to remain an economy dependent on injection rather than growth. the key issue here is to move from a very imbalanced policy stance to a more comprehensive one. it's a political issue. >> is it just -- and it's global too? >> it is. because the politics of anger have become global. especially in advanced economies. whether you look at brexit. whether you look at what's happening in germany, in france whab you're getting is the anger. and what that does is paralyzes governments and it allows central banks to step in and central banks feel compelled to step in. >> i mean, you're now someone that thinks the fed is behind the curve, aren't you?

and they need to go. >> yes, i do. >> they need to, but do you think they'll do so in december? >> it's interesting what you reported earlier. the economic argument is balanced. and i understand that. but what governors and presidents are starting to realize is there's also the issue of financial stability. and the longer we stay with these artificial rates, the greater the risk of financial instability down the road. so you're starting to get fed officials talk about market distortions. and that shows you that that can become the tie breaker. because economic argument is balanced. but i think the financial argument calls for them to hike. >> has anybody got it right right now? and i'm talking about any country have it right in terms of what the government is doing, not their central banks but what the government is doing? anyone doing better than anyone else? >> some are doing better. >> like who? >> so china is doing better. china's managing a very tricky

transition. but the key thing to remember is that no country is big enough to overcome what comes from outside. and they're living in a global economy that's growing slowly. and that's a difficult economy to navigate. so domestic policies come under pressure. if you're looking where to invest if you're looking at companies, remember what you need. you need strong balance sheets to be able to absorb the shocks. especially if we come out of this lackluster period of growth. also the agility to position yourself. >> we always hear that demos aren't favoring growth. maybe it's different this time in terms of automation. i've always thought about creative destruction, that we always find a way even though things get -- you know, you take -- obviously you take people out of the equation with farming and manufacturing and then you've got to find something else. but maybe this time is going to

be more difficult. you got a bunch of people living to be a hundred now. which is a good thing for when you start getting up there a little bit. what should happen? we need to just get a bunch -- we need more kids? japan being produced? higher birthrates and higher death rates to ever get back on track? i don't understand how we get out of this demo trap. >> so, undoubtedly you're having these super secular issues. you talk about aging. that's one. you talk about the impact of technology. that's another. that's demographics. there is also whether you like it or not climate. but they're not the principal issue today. the principle issue today is we continue to operate well below potential. we are frustrating politically the policy response. and we're starting to see the coming together of economic tensions, financial tensions, social tensions, and political tensions. remember, you cannot run a

complex economy at low speed forever and not expect things to break. >> i'm not even go to go there with you mohamed, i don't know what you're talking about. but when we can figure out a way where humans actually can control the climate, that'll be a great thing. that should be any day now when weathermen can't even tell me what's going to happen later this afternoon. >> one of the things that was interesting i read was you tried to point out for the lehman weekend. your least likely scenario was that lehman went down and went down hard. that is what happened. you'd only given it a 5% probability but had a plan. what is the most likely scenario now? we're going get out of this deflationary policy some way but it could go to a super inflationary. it could go to super deflationary. how do you think it breaks and how do you play at those scenarios? >> so it's absolutely critical. because the probabilities have

become so fluid. i think the least likely -- if i can start with you, the least likely is we continue in this slow but stable growth. that has been a very special period. it has depended on central banks doing more and more experimental things and i do not think we can stay in that paradigm for the next two to three years. something's going to break. now, we could easily see a situation where low growth becomes recession. artificial financial stability becomes instability. why? because of the underlying tensions i mentioned earlier. but if governments step up and that's why the election is important, that's why what's happening is important. if governments step up, we could transition to a higher growth scenario that validates prices. i think the key thing is build up cash right now. do not think that this dream team of higher growth, low volatility, and favorable correlations will last forever. we are in an artificial period

that we'll come out of at some stage. >> okay. we got to go, i guess. if i were going to just delve into some what if scenarios, i would think that immigration stress in the middle east, isis, terrorism, conflicting cultures and the possibility of loose nukes and chemical weapons. climate change, really? instead of immigration and terrorism? you mentioned that first for real? >> joe, if we talk about what if, what if the mets make it into the playoffs? >> i'm a lot more worried about a loose nuke than an inch higher sea levels in 2100. even if that were to happen. thanks. >> nice to see you. pepsi reporting earnings this morning. we'll get a breakdown of the results in just a moment. "squawk" returns.

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welcome back to "squawk box." pepsico reporting third quarter earnings this morning. they beat on tops and bottom lines. nik modi is joining us now.

>> great quarter. can't really poke many holes. you know, there was some mismatch in terms of consensus versus what they delivered by division. but i think that shows the power of the portfolio. they have snacks, beverages. snacks was a little bit lower than consensus on volume. beverages was much better. so they delivered a great -- >> how much of this is about pepsico operations versus how much is this about the economy and the way the consumer is looking at retail right now? >> i mean, the reason why the stock is going to be strong today is a lot of people coming into this quarter believed the consumer was weakening. we've seen some economic data and this number basically says things are fine. >> but is it things are fine because pepsico is spending more money on marketing, doing -- they've invested in some of the product? >> claire taking share. >> okay. so you look at pepsi now and look at coke. >> right. coke we won't know the results for another three weeks. but what i would suggest is

probably they took share pretty broadly across beverages, all beverages globally. there are a lot of companies out there they compete with. >> that's going to be maybe a new high today. all-time high. >> yeah, look. the stock's out performed the market. >> what about the activists -- what'd they want to do? they wanted to sell off the snacks? >> they wanted to separate the company and potentially have frito get purchased by another large entity like mondelez. >> this is looking like the right move to stay. >> that was kind of our view as well. >> as a joke we always, you know, peanut butter company should buy a jelly company. but you've got salty snacks and then you've got drinks to quench your thirst. in a simplistic way, i always thought that was a pretty good idea. >> it absolutely makes sense. and when you think about scale at retail, the bigger you are, the more leverage you have, the more opportunities you have for merchandising. that's the key really. this is a knife fight in the store every day.

and so the more you can sell. >> as you look through the earnings, is there any highlight in terms of geographic area? i was looking at emerging markets. they were up 8%. >> they were basically -- latin america is where they delivered upside which is surprising given how tough it's been in latin america. europe, asia, africa, that all missed relative to consensus. it was a tale of two cities. >> why do you think they did so well in latin america if that was the surprise? >> due to some of the fx issues. that might have weighed in on it. so maybe we just weren't factoring in that to the degree that they came in. >> where do you think the stock should be 12 months out? >> so we were at about 102. obviously we have to go back to the -- >> 110. >> yeah. and it's going -- >> you were sitting at one or two yesterday? and still at this moment. >> right. exactly. yeah. the real is a big cap staples --

>> stock was over 102 yesterday. >> we have to ask ourselves the question on how are he stocks going to react in a rising rate environment. we can talk fundamentals, but the rate environment is going to be critical. >> when are rates going to be increased? you know? if you know, tell us. >> hang on. yeah. >> spending money on innovation on drinks or on snacks? i think they need to spend more innovation on -- >> spending money on marketing. >> they're doing both. i mean, they're innovating -- >> i love snacks. i love them. they're carbs. everything that ends in tos i like. doritos, fritos, tostitos. i like them all. >> they're all good. and they're coming out with new flavors. >> i think they can slash that marketing budget and just let joe do it. >> did i miss anything? and then it's frito-lay. throw in all the lays stuff which is all awesome. ruffles and jalapeno chips,

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coming up, the case for clinton. steve case cofounder of aol is going to join us. and later, another grilling on the hill for john stumpf the financial services committee chairperson jeb hensarling is going to join us. as we head to a break, take a look at u.s. equity futures. marginally in the red at the moment. back in a moment.

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welcome back to "squawk box" this morning. it is a busy day for economic data. hour from now we'll get the latest revision of second quarter gdp as well as the initial jobless claims. then at 10:00 eastern time,

national association of realtors is out with pending home sales for august. it's also another busy day for fed speakers. and esther george is on the next hour of "squawk box." joe's giving me a look like i must have done something. >> no. what i don't like is when realtors use the nuclear option. i just don't think -- >> the way i pronounced realtor. >> you did it begin stop. >> realtors. >> then we can -- is it finance or finance? that's a separate question. >> it's insurance. >> congress has approved a stopgap funding bill that keeps the government from shutting down. lawmakers will have to deal with the issue in the lame duck session. is it finance or finance?

>> that's a good one. i don't know. is it consortium or consortium. i think it is consortium. >> what's the one you always make fun of me for? vigilantes. we all have our quirks. >> we do. robot. just weeks after rising -- and dunky. >> what's that? >> it's an ass. >> oh donkey. >> weeks after rising to the dominant role in her father's $40 billion media empire, sherri redstone is now poised to undo her father's strategic separation of viacom and cbs which it's really a long time ago -- >> a decade. ten years ago. >> i remember talking about it on this set. not on this set but on the "squawk" set. it was supposed to be cbs that was the slow moving stuff along

slow. >> except and i hate to say it, cbs had less. >> right. >> i hate to admit it. because he's just so talented but he's such a -- >> talented guy. >> national amusement, the redstone family holding company plans to propose merger before today. i think you can say both of those words. >> but separately. >> okay. i take it back. anyway. this is you. let's talk about another story we've been watching in the markets this morning. scottrade is looking at a sale. drawn interest from rivals including ameritrade. earlier this year scottrade was trying to move to more based accounts. music streaming giant spotify in talks to buy sound cloud. this according to the financial

times. last valued at $700 million. raised $70 million from twitter. spotify was last values at $8.5 billion. >> moonves, you know, really survivor number 28? seriously? are you kidding me with that? >> who's the ball buster in this relationship? >> you say that -- like seriously? that's still on -- or big brother? >> just understand -- >> you know what he says to me? he says your demo doesn't matter. >> you're out of my demo i don't care what you think. >> yeah. you have no bearing on what we program. all right. let's talk more about what's been happening in business and politics. hillary clinton getting another endorsement today this time from steve case. case writing an op-ed for the washington post saying why he is voting for clinton come election day. joining us on set is steve case. great to see you.

>> great to be with you. >> you have been actively involved in washington policy for a number of years. you've been involved in a lot of these across the aisle initiatives to try and get jobs started, to try to focus on the entrepreneur. and through that you've intentionally steered clear of endorsing anybody. why is this different? >> i think it's a pivotal time for the company. when we talked about it in the book, we need to get the policy right to remain the most innovative. some of that relates to immigration. some relates to investment incentives. some relates to the right regulations in place. i think clinton would be a much better president than trump. >> in your first sentence on talking about the endorsement of clinton. you are great. >> thank you, sir. thank you, sir. >> what was it? what was the name? >> the third way. sorry i didn't bring copies. >> available on amazon. >> the viewers remember what it looked like from last side. >> joke aside, when i did the book tour a few months ago including with you folks, one of the chapters was around the role of government. people said based on that which

candidate do you think would be better? >> i read your rationale and i got to say, everybody has their own reasons for things and you're not -- you're actually reasonable about it. and there are things you worry about. you're not necessarily thinking that the growing government is going to be the answer all the time. >> correct. >> that's something that you worry about. but i think all things -- whoa! >> wow. >> i wish i could have done that. >> a little push eject button. >> all things considered, this is what in your heart of hearts, this is the conclusion you come to. >> yeah. trump has been very successful in business and in some ways people who are more business oriented you think they would be more supportive of trump. clinton has been more focused on got a government regulation thing. but she's done a great job in laying around a framework for how to support start-ups. how to make sure the technology policy is in place. and trump hasn't. i've been surprised in the last

couple months that he still the at the level -- i don't know him well. i've met him a few times. >> welch has came to a different conclusion just looking at eight different things. regulatory, taxes -- one of your points is that wealthy people don't necessarily need a tax break. but on the other hand a lot of the subchapters, they're small businesses that pay at the high rates. regular corporate taxes that are definitely too high. bringing the money back. those are all things where i think trump's probably in a better position. >> everybody agrees you need to start over with the tax code and a fresher approach. one thing she talked about is having even kind of different capital gains raised depending on security or how many jobs you create. i think there's ways to create the right incentives. particularly focusing on start-ups. i think trump has been backwards looking saying we need to get back to where we were 50 years ago. i think we need to focus on 50

years from now. i love the fact that she's been focusing not just on silicon valley by all over the country. how to get jobs back in places. and a bus trip going to nebraska and new mexico and places like that. building great companies. we need to support them and make sure the president recognizes that job creation comes from those start-ups. how do you create the right environment for that and recognize it's a key part of driving that. >> how did you support those though. when you say support for them are you talking about special tax breaks for certain hubs or how do they work? >> there's a mix of things the clinton campaign has put out. some relate to the hubs creating a center of gravity, ecosystem development which was part of our start-up america efforts. some of it is tax incentives. there was a provision with the start-up investments. there's no capital gains. there's different ways to incent

that. and recognizing that you have to lean into the future. there's a lot of anger and fear out there. there are millions of people who feel left behind by globalization. i don't think the answer is trump turning back the clock. i think it's clinton moving things forward. >> do you think there's an opportunity to bring manufacturing back to the united states? or do you think that ship has sailed or do you think the technology has overtaken it? >> i think there's an opportunity to bring some manufacturing. particularly advanced manufacturing. technology has had a lot of jobs there. but as a result of ten years ago there are companies starting to insource. but it's not going to be the way it was before. not going to be the same with thousands and thousands of jobs. so you can bring some of it back but you got to focus on -- >> where do you come down on the trade pact issue? >> i think the tpp should be

passed. i think trade policy is one of the things that also helps entrepreneurs and small businesses. >> where do you think she really is? because she sort of gives lip service of being against tpp but also has talked about trying to have -- >> by the way, elizabeth warren doubling down yesterday. >> tpp is one piece of it. then she'll talk about nafta. she seems to have a different view. >> hard to say. we'll see what happens there. i think that's an area where both are anti-tpp. i'm in favor of it. i think she's much better on immigration. trump talking about building a wall. right now the net immigration from mexico is zero. the wall doesn't make sense. we need to be instead of viewing immigration as a problem, an opportunity. how to become a magnet for talent including the innovators and entrepreneurs and create the jobs of the future like a steve jobs. and the rhetoric trump has used which is harsh and making people

anxious about that saying we want to remain the most innovative in the world. obviously people talent is part of that. how do we continue to be a magnet for the people -- 40% of fortune 500 companies are founded by immigrants. not just a problem. >> maybe that's the tape that people get from it. but we also want to know who it is coming in. just like in europe they want to know who's coming in. and the southern border is ripe for not people necessarily from mexico from people just happen to come up that way. >> i understand. and immigration is complicated. >> we've got to know who's coming in. >> it's not just viewing it as a problem and talk about building a wall and mexico paying for it. it's how to attract people -- >> if you were jack dorsey and running twitter, what would you go d.o.? would you sell the company? >> actually was with jack a few nights ago in d.c. >> tell us what he told you. >> i'll stay out of that. i do not -- i'm not going to give him any advice.

i don't know all the details. i think twitter is a fabulous success. started ten years ago it didn't exist. now it's a global utility. whether it stays or is acquired i did -- >> cuban's already beat you to this. you going on the road with him? >> i've not talked to mark about it. >> couple of internet guys. you had aol. he had whatever that was. >> let's get us out of here. >> you're not going on "shark tank." >> i'm not. >> not yet. >> great to see you.

welcome back to "squawk box." john stumpf will once again be in the hot seat. stumpf faces the house financial services committee. to answer questions about the opening of the unauthorized customer accounts. joining us now is chairman jeb hensarling. >> good morning. >> try to help us understand what you want today. >> one, when mr. stumpf appeared before the senate last week, he didn't have a lot of answers. he was uncertain. so he's had a week to refresh his recollection, to check his records. and the bottom line is we want to know how did this take place? why did this take place? who is being held accountable because the american people are

outraged. you got 2 million people who now have been ripped off by their bank, probably let down by their government. who's going to be held accountable? had so this is the first part of our investigation. but we are demanding documents from both the regulators and wells fargo. we will do transcribed interviews but plan to get to the bottom of this. it has a familiar ring to it. a financial institution engages in egregious behavior. and no individual is held accountable. that's got to change. >> chairman, when you look at what took place this week, john stumpf foregoing millions. does that speak to the accountability issue to you? >> well, i think so. but personnel decisions, compensation decisions, that's the business of shareholders. i'm not a shareholder of wells

fargo. but if i was, e certainly would have commanded claw backs and determines. in government ours is the business of making law, enforcing law, applying penalties civil and criminal penalties. and that's our business. and so we're trying to make sure that the laws have been written properly. one of the things we've done in my committee is pass the financial choice act which increases fines and penalties for deceptive and fraudulent behavior. and sometimes two to three times what it is today. so listen, i think it was probably an encouraging step. i'm not the pr firm for wells fargo. but i suspect it is a step in the right direction. >> chairman, you just said that in terms of termination or something similar to that, that would be the responsibility of shareholders or the board to decide. was it appropriate last week for elizabeth warren to call for his resignation? >> listen, i've got better things to do than comment on

elizabeth warren. again, the business of government is to apply civil and criminal penalties. and in all probability, we have now seen probably the breach of the truth and lending act, the truth and savings act, the electronic funds transfer act. but listen, at some point the buck has to stop somewhere. it stops with mr. stumpf. part of what we're going to do today is what did he know, when did he know, what did he do about it, and who is being held accountable up the food chain. somebody either directed the activity, condoned this activity, or turned a blind eye to this activity. >> policy question then. when you look at the various regulatory agencies that oversee wells fargo, did they fail in not spotting this sooner and doing something about it? this came out from a los angeles times article. >> absolutely. again, i think a very good case can be made again that people were not ripped off by their

bank, they were let down by their government. and so we have questions. the occ had examiners embedded in wells fargo. cfpb had examinations going on for years. yet why did it take the l.a. times to break the story? and once the story broke, why did it seemingly take almost 18 months before the federal government started their investigation? ultimately it was the l.a. city attorney's office. so we're going to have questions of the regulators as well. were you asleep at the switch? and again, i'm not quite ready to draw firm conclusions. we're in early days in this investigation. but again, maybe they deserve a pat on the back. it sure doesn't look like it. it looks like they deserve a swift kick in the pants. >> you know, congressman, it's nice to see the bipartisan agreement that this horrific private institution here and these terrible greedy bankers are -- you guys agree that they're so bad we got to spend so much time. the total was $2 million?

the only point i'm making is i look at the things that go on in congress and look at the approval rating of congress at this point and, you know, i look at k street and the clinton foundation. you know, i look at what goes on in the government consistently. and just -- it just rings a little hollow with me the outrage and ire that both sides of the aisle, they're able to demonstrate on this and yet physician heal thyself. >> you haven't been watching our committee then. we try to keep both accountable. >> seems like a lot in washington are -- >> again, how often does your media outlet cover outrage in washington? there's plenty. >> i did it. i called you jim for a second like obama. >> yes, you did. >> the whole total was $2 million here. >> but that's not the point. >> if lauerette university was

$14 million and you look at the influence buying and the access buying and k street and everything else. i'm just saying, it's nice that you guys on both sides of the aisle got your -- you know, you got this target here, john stumpf and wells fargo. it's nice to divert attention from all the problems at your own institutions. >> what i would say is when we have cfpb before us and we're investigating the taj mahal they're living in, when we are investigating what they are doing by making mortgages unavailable when we investigate what they're doing to make auto loans more expensive, it would be nice if i was invited back on your show to show the outrage well there. you invited me here. i don't know why you don't invite on others. >> you have an open invitation. >> you know what i'm saying jeb. >> some think these turn into theater. they're not fact finding missions or things to think about what policy should be and how to prevent these things from

happening in the future. it turns into these efforts by some of your colleagues to grab a quick sound bite. how do you avoid that and can you actually given your role as the chairman of the committee? >> well, individual members of congress don't work for me. so i get to preside over the committee. but the bottom line is a hearing is just one aspect of an investigation. so as i said earlier, we are doing transcribed interviews with wells fargo individuals and management. we will probably have to subpoena documents. we're doing the same thing with the occ and the cfpb. this will be an investigation that's ongoing for months. a hearing is one aspect of it. in a free and democratic society it is important for the business of government to be done in the open. and so that's what we're doing with this hearing. and also last week mr. stumpf -- >> based on the notion, should john stumpf resign? >> listen, that's not my decision. i need more facts. that's a decision for shareholders who have seen a lot of equity value fall by the

wayside. they're the ones that have to make the decision to hold him accountable that way. we will hold him accountable for any violations of the law civil and criminal. >> chairman, great to see you. and we do have open invitation for you to come back. >> we'd never say no. >> call us. >> thank you again. quick programming note, everybody. cnbc will have that coverage of john stumpf's testimony live starting at 10:00 a.m. eastern time. when we come back, gary johnson's latest oops moment. >> oh, no. >> plus check out the futures this morning. after a big day for the markets yesterday thanks to crude oil prices, this morning we're relatively flat. down slightly. stick around. "squawk box" will be right back.

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welcome back, everybody. we've been following the presidential election very closely. and libertarian presidential candidate gary johnson said he was having an aleppo moment yesterday when he struggled to name a single foreign leader during an msnbc town hall. >> who's your favorite foreign leader? any one of the continents or country. name one foreign leader you respect or look up to. >> mine was shi mon peres. >> i'm talking about living. any continent, country. asia, south america, africa. name a foreign leader that you respect. >> i guess i'm having an aleppo moment in the former president of mexico. >> but i'm giving you the whole world. anybody in the world you like. anybody. pick any leader. >> the former president of mexico. >> which one?

>> i'm having a brain freeze. >> who's your favorite foreign leader? any foreign leader. >> merco. >> okay. fine. can't argue with that. >> all right. that was a little tough. >> more than a little tough. >> yeah. >> could have said abe. >> lincoln? oh shinzo abe. >> merkel. >> you know, it was interesting to watch him try to save him. >> came up with merkel, but obviously in the last six months the -- >> she's had a much rougher run. she's been reversing her position saying if she had to do it over again she wouldn't have done what she did in terms of immigration. anyway, another day, another turn in the election cycle. >> there's a new one.

and he's a hunk. >> yeah. >> have you thought that? >> you know, he's very charming. >> pictures with his shirt off and everything. >> the boxing match went through a few things. he's a young guy. when we come back, trump backer and former owner and publisher of "the new york post" will join us to talk about the race for the white house. and oil was up by better than 5% yesterday. this morning it's flat. guess what guys, i switched to sprint.

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crude realities. opec agrees to cut production, but is the cartel's deal for real? we're going to ask oil expert dan jurgen. kansas city fed president esther george on the record. she will join us live. plus hit the links. it's the ryder cup about to tee off. and it's a big moment for the u.s. a live report from the course as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky

quick and andrew ross sorkin. the futures this morning have been mildly weaker. down two, almost three on the s&p. three economic reports up ahead. at 8:30 eastern we'll get jobless claims and a final revision to gdp. also get the trade deficit. what are we expecting on gdp? >> got to ask leisman. >> yeah. we'll ask leisman. but certainly not what we wish we were doing. >> no. it's already well below what people had been anticipating. >> eventually it's going to go up. the second half of the year, first half of next year. depending whether in the first half of the year, second half of the year. >> it's coming. >> always right around the corn ever. let's get everybody caught up on the other big stories we're watching this morning. oil being perhaps the biggest one. prices this morning crude climbing yesterday as opec agreed to cut output for the

first time since the financial crisis. you're looking at wti crude now at $46.98. and the fed speaking out in force again today. we'll hear from dennis lockhart, jerome powell later today. earlier this morning during q&a in europe, harker said he wants to see rates normalize sooner rather than later. and at 8:30 eastern we'll be joined by esther george. she'll sit down with steve leisman in a cnbc exclusive. and in washington today, we talked about him before. john stumpf. he's going to be back in the hot seat on capitol hill. he's going to testify before a house panel at 10:00 eastern time. that's where we find our good friend wilfred frost who joins us with what to expect. >> reporter: following your conversation just there with chairman hensarling, let's look at the areas where wells is improving on. first of all, the clawbacks, the major issue of last week's hearing. and wells has responded in a big way.

if we compare it to the jamie dimon issue, he had his current year pay cut to $11 million for something that cost the firm $6 billion. stumpf on the other hand has given up $41 million of past pay and this year's salary for something that cost the bank in relative sense only around $200 million. big response on that. the second big concern last week was lack of detail. his prepared remarks today give way more detail in terms of timings and actions in particular this line where he says in 2013 once he knew about it they took actions that meant workers wouldn't be fired from missing sales goals. if the committee buys that, it's a big step to answering one of the other big questions lawmakers have had about the environment workers were put in. of course plenty of other questions to be answered, but i sense he's better prepared this week than he was last week. 10:00 a.m. eastern time all eyes on the capitol. >> hey, wilf, thank you for

that. a reminder cnbc will have the live coverage of stumpf's testimony at 10:00 a.m. eastern time. meantime, breaking news at this time. national amusement issuing a statement with cbs and viacom. asking the two to reconsider. viacom and cbs were part of one company before splitting in 2006. a couple of mentions from this letter. they say that they believe that the combination would offer synergies by allowing the combined company to respond aggressively to the challenges of the changing entertainment and media landscape. the three board members of national amusement say they will not vote on this matter. now, they're on the boards of these things. the other thing that's fascinating -- >> does that mean national amusement won't sell shares at all? >> they will vote as directors in the krrgs of this. >> that doesn't mean they're not

going to vote its stake in it. that just means those three won't vote with national amusements. correct? because that sounds to me like that is not removing national amusements from the picture. it's just going to say that these three on the board will not. >> i'm not so sure about that. it says none will participate in the deliberations either. i think they're effectively saying they will not be voting at all. >> it doesn't sound like national amusements -- >> however, national amusements will not accept any acquisition by a third party of either company. which is to say by making this statement they're not putting these companies up for sale and that any transaction that would result in national -- not end -- >> not saying they're pulling out of the vote on this. it's just those three board members aren't going to be involved in the deliberations on it. right? >> i believe because they own controlling interest if they don't vote, it doesn't matter because they still own the whole company. so i think they are leaving it

to the other shareholders. >> synergies. i like that. what about 2006? >> you could argue that the market has changed so drastically since then. look how other companies have built -- >> that's what the bankers would tell you. the same ones that said these two companies don't belong together. and then ten years together -- >> but look at a comcast and part of its strength is how big it is. >> do you think there is an actual letter bankers have, here's the splitup letter and use the same reasons? here's the merged letter -- >> it's like mad libs. >> but they have a blank for which company. you need the splitup letter? okay. here's the important part. the fees down here for us. >> i'm not defending the fees, but i would say the market has been. >> you got to be scynical about this do you not? what was it last time in 2006? >> it was the opposite. >> but you could also argue what

they want is a manager who they trust and who has built -- >> this is as much i think about les moonves as anything else. >> he was there ten years ago. right? >> maybe they regret not putting him in charge of both at the time. >> i feel bad for -- i don't feel bad for the bankers. >> i don't either. i don't know they even need bankers. >> -- benefit managers. pharmaceutical companies have got to have one of those. until you get one, then you got to get rid of this. split this up. >> do you even need bankers to tell you to put these two together? the idea they pay anybody fees is insane. >> maybe only to decide to split apart. >> for what it's worth, they are promoting the idea of an all-stock transaction. it won't be cash only for obvious reasons. let's talk about some other stocks to watch this morning. mcdonald's raising its dividend to 94 cents a share from 89 cents. that is a significant move as

joe was pointing out earlier. joe, what'd you figure on this? >> well, if you go up -- >> 5 cents. >> yeah you go up 5 cents on 89. now it's averaging 3.2. >> you can see that stock is up by about 22 cent. also commerce bank is slashing 10,000 jobs merging two large units and scrapping its dividend. the partially state-owned bank is going through a major overhaul. pepsico posting better results on the top and bottom lines. also raising full year forecast as demand for snacks and beverages increase. and you could see that stock is up by 3%. much better number than the street had been anticipating. beat by about 8 cents on the bottom line. conagra foods topping estimates but the revenue was a little bit short. this is expected to be the last report before the food producer separates into two different companies. sales dropped as it tried to reshape its portfolio to create

the revenue base. and check out inter-cellular plunging. the stock is down almost 65%. releasing disappointing test results for its lead drug candidate. that was a treat for schizophrenia. it had the same effectiveness as a placebo. cut the shares by more than half. down 6 4% today. now back to politics. hillary clinton's attack on donald trump has focused on his character. joining us now someone who has known the republican candidate for years. president of leading new york real estate firm and also the former owner and publisher of "the post." when i say "the post," we had other people on -- >> "the washington post." is there a "washington post" a too? because what i'm really talking about is "the new york post." what's this other? oh, i know.

i call it the washington compost. >> we don't pay attention to "the washington post." >> no. not good to read too much of that. especially if you're reading andrew's paper at the same time. >> making friends with jeff bezos this morning. >> all right. get some free shipping? i get to go to mars? >> might be on the first flight. >> you were a kasich guy, peter. >> yes, i was. >> so it's not like you just are with trump all along. and you disagree on immigration. >> yes, i do. >> but you've known him 40 years. so the democrats, everybody's going to be a racist during an election, right? ever seen any evidence of trump being a racist? >> no. and that's what i tell people. in a 40-year period if you have those tendencies, you're going to make a slip. you're going to say something. i've never seen that and i've never seen his actions with women ever be anything but

respectful. >> doesn't play into the narrative, i'm sorry. >> because when he said something on the howard stern show. have you ever been on that show? he can make you say anything he wants you to say. he was having me defending whether i had sex with jerry knackman. he got me to defend that. >> you stop beating your children. >> so i would disregard what he says about -- >> but it's not just on howard stern that he's brought up these comments. he's had a long life in the public eye. there's a lot of material to go back to. but some of this has been self-inflicted. >> because he's authentic. he's real. he says what's on his mind. that's what the public likes about him. >> you know stuff about real estate, i guess. >> a little bit. >> you've got a successful company. >> right. >> loser businessman, terrible businessman, fraud, listen to mitt romney -- >> no. i think that he's one of the best. he was the first one in our business that marketed a brand. trump is a brand worldwide which

has value -- >> doesn't get credit for that. because it's a bad brand for the left. it's a bd brand for elitists. >> but before he got into politics, it was a good brand for everybody. and the point was that he thought about that way before anybody else did. but his name was on the building and that meant it was going to be better or -- >> golf course. >> -- nicer or more up-to-date. it was just something that meant something. >> do you think that it would be appropriate for him to release his taxes? >> you know, everybody focuses on taxes. if i was running for president, i would imagine that i'd have to release my taxes. but there is no law that says you need to do that. >> right. i'm just asking you as a citizen -- >> it doesn't bother me, no. >> are you borts ebothered by s the relationships the clintons and clinton foundation have had? >> i like the clintons personally.

i may get myself into trouble, but i am a contributor to the foundation because i do think they did good work. i kind of like to -- >> were you trying to buy them off? >> no. >> do you have a lower -- because you're in real estate, there's a lot of deductions for mortgages, interest, whatever. do you have a lower nominal tax rate than a lot of other people? >> i don't now because i'm not building. >> but when you're building, what would you think your tax rate could be? >> it could be anywhere from 35% which is the top rate to 5%. >> trump releases his tax returns, he's building stuff. he releases them and it comes out he's paying 5%. what is the left going to do with the 5%? what are you going to say about that? even though all the deductions are legal. even though it's not tax evasion, it's tax avoidance. let's say he taking advantage of every single deduction like all

americans do. like all americans do. >> there is going to be clearly people on the left who are going to say that policy should be changed. they're not going to say he's doing anything illegal. >> but you know what i'm saying. >> can i say this? >> the left for six weeks right up to the election, they're going to be talking about 5%. >> they very well may be. the issue, though, is if you call for transparency for the clinton foundation, all these other pieces and you say to yourself how is the government related to private business, right? that's a good argument. you want to know what your -- if trump is going to be a president you want to know what he owns, what the relationships are. >> how much is available in that hundred-page financial disclosure? >> but also remember the tax avoidance is only a postponement. vemp eventually you pay it all back. at an ordinary rate. >> not to bring it up again, but so he's got -- let's say he's got a low tax rate. that comes out. you know how it's going to be played in the media. so bill clinton gets the $16

million from lauerette university for four years. he pays full ordinary income on that. so you feel holier than thou that they were able to prop up the university to give this guy $16 million? you can sit there and judge -- >> no. i'm just saying as a citizen you want to know if this man's going to be your president if whatever the policies are that he's going to promote, how they're going to potentially benefit him. hold on. >> the tax plan in relation to him. >> this is part of the decision making process that i would argue every citizen should be able to have. >> except at this point with 45 days left, the entire narrative given the way the media operates would be on oh he didn't give enough to charity. he said he did. he didn't give enough to -- >> the narrative is already there. >> "the washington post" had a report out last week that suggested there was a fee from comedy central that he should take as income. that's what you should be doing. and that money ultimately he's

pushing to his foundation in ways that would be very similar, frankly, to some of the allegations that have been made about the way the clintons have used their foundation. i just think as a citizen who's voting, you want to know as much as you humanly can. whether it's ultimately used to bash one candidate or the other i think is irrelevant because we're playing in a world where we're trying to seek transparency. that's all. >> if i was a citizen, i would want to know where he's taking us as a country. because to be respectful to you, most people don't care about that. they care about their paycheck friday. and is it going to be here and am i going to get one the next friday. they don't really care about these other things. they say they do, but they really don't. >> i mean, if you're a public servant that suddenly has a $200 million net worth and yet you've paid your taxes, as a government -- someone that has been a public servant. and now you are worth $200 million. i don't care you paid your taxes. i care how you were able to do that and how that makes sense. >> i would like to say i'd like

to hear more on the issues. >> i wouldn't feel so holier than thou when hillary is talking about his taxes versus hers. >> it's a mess. thank you for coming in. >> thank you. when we come back this morning, opec taking action in algeria. the cartel agreeing to the first oil output cut in eight years. is this deal for real? there's still a lot to be worked out. we'll talk to dan yergin after this. "squawk box" will be right back. for decades, investors have

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welcome back, everybody. oil prices pulling back this morning after surging on initial news of an opec production cut yesterday. dan yergin is vice chair at ihs market. they pulled back initially and now are relatively flat. how much meat is there really in this deal at least in what we've heard so far? >> i think that if there had been no agreement, it would have been a festival to the shorts. so the longer they stayed in algiers, the more urgent they became to come up with something. i think what this really is is an agreement to agree at some point two months from now. and there are big questions around the allocations. is this is a freeze or a cut?

what's the real deal with iran going to be and who is absent was the russian oil minister who left. there's a lot to be worked out in the next months. >> they could have somewhere from 200,000 barrels per day up to a million barrels per day. they didn't decide who was doing what cuts. saudi arabia said they would great to cut if iran would freeze production. what are the odds of that? >> yeah. and i think what even the saudi oil minister said that, you know, iran, libya, and nigeria will be uncertainties in here. i think they looked at finally said they were sort of locked up in this algiers. and they weren't going to be let out until there was some kind of agreement, some kind of signal. and so i think, you know, if you take the lower numbers, the saudis will in any event go down about 400,000 barrels a day for seasonal reasons. that's why -- maybe this may look more like a freeze.

but as you say, the question of iran and iran saying where you want to be only at 4 million barrels a day but we want to be at the same level as iraq is going to be one o of the big issues that they're going to fight about over the next two months. >> i have so many questions around this. i guess part of it is how powerful is opec at this point? that are the two other huge producers. and you're not going to be able to lock them in on any of these issues. >> i think on the russians, they were actually the original advocates to freeze. they got burned when there was no freeze. i think what you're doing is pointing to the fact because a different paradigm now to the oil market. you have the big three. saudi arabia, russia, and the united states. and of course u.s. producers will respond to price and will turn around pretty fast. >> so that brings us back to the fair price for oil. you point out that that big move

was because the shorts really got squeezed in a lot of these issues. if the shorts are kind of washed out on this but then we see nothing develop potentially over the next couple of months, where is the fair price just based on supply and demand right now? >> well, i think you sort of say that it's been a sort of $40 to $50 range. if they were to work something out, it's more like a $45 to $55 range. but i think that, you know, the last two years since opec saudi arabia resigned their job of managing the oil market, it's really been the financial markets that have been cooped of determining the oil price and what the producers have said we may get back in this game too and be part of the management along with wall street. >> dan, it's great to see you. coming up when we return, breaking economic news. three big reports when we come back. romantic moments can happen spontaneously,

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coming up we've got breaking economic news. the numbers and the market reaction coming up next. still to come, a one-on-one interview with esther george. we'll ask her about the rate hike timeline, the economy, and donald trump's attack on the fed. that exclusive conversation is coming up.

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we're just seconds away from a trio of economic data. take a quick look at the futures

before we get to it. dow off about 46 points. s&p 500 off about six points. the 10-year note at this very hour, 1.584. rick santelli standing by at the cme in chicago. rick, sir, the numbers. >> all right. and the survey says -- the buzzer. the numbers should be populating but they're not populating. let's see what we get here. all right. here we go. if we look at the gdp numbers, let's start out there. we're up 1.4%. that follows a 1.1%. this is our final time around the block. third time around the block on second quarter gdp. and 1.4% is definitely a bit of an improvement. if we look at the preliminary august number, that was down 0.1%. a little different than expected. if we look at the initial jobless claims, 254,000, that's up 3,000 from a revised 251,000.

let's go through some of the internals on that gdp number, shall we? if we look at the obviously 1.4% but if we look at quarter over quarter, 1.8% as expected matches our last look. consumption, 4.3%. that's a tenth light from last look at expectations. at 4.4%. now, these are all very interesting numbers, indeed. but maybe the thing that gets me the most, of course, is that the third quarter that we're in, so one month from today we'll get our advanced look has definitely deteriorated a bit. we're in the twos. many expected in the threes. don't get too excited about that. there actually is another number that just popped out. let's look at our trade balance. we know it's a deficit. we were expecting a number well over 60. this is pretty decent news. 58.4 is the deficit following a slightly revised 59.3% that ends

up at 58.8%. it's below the 62 billion we were expecting. yes, we've sold off in tens. we're all the way up to 158 and of course bund yields had a massive selloff to only minus 12. boy, i wish i was on the desk today with you guys to talk about the fed and how it was brought up in a debate. i remember a couple years ago talking if the fed wants to be this monster control entity they're going to end up above the radar screen. here you go. back to you. >> certainly succeeded, haven't they? that's the only thing on the radar. >> well, the only thing they succeeded in is getting a whole lot more eyeballs to see that they have pushed the limits of their charter. those aren't my words. those are paul volcker's words from right after the crisis. >> you know, the biggest worry about statism, rick, is that you think that you can find the 15

smartest people that are smarter than the markets. and that's -- you know, the whole idea that we should have learned long ago it's probably not a great way to structure something. >> no. and i'll tell you what, joe. it isn't about the intelligence of those people. let's just make an assumption. they are the 15 brightest people that ever walked the earth. it's still not enough. the reason markets are good and has a hiccup but the reason the markets are good is because of the aggregate smoothing factors. marktss, economies, fundamentals of the globe especially in a time with all the global trade going on, it's a monster mouse trap. to think 15 of the smartest people in the world can tweak it and control an outcome to their benefit is just childish. childish. >> well, we have global trade for now. we'll see about that. anyway, thank you. >> on that note, steve leisman joins us right now with a special guest. steve, good morning.

>> hey, becky. good morning. steve leisman here from the kansas city federal reserve bank, one of the nicer federal reserve banks i've had a chance to be in. i'm here with esther george the president of the bank. >> good morning. >> three breaking pieces of data. trade, jobless claims, and gdp. tell us how you as a fed president processes these when they come out like this. >> we're always watching to see what revisions come out, whether it continues to confirm the outlook. whether it causes us to change a bit. so i think today's news on the whole tells us that the economy is going to continue its forward progress based on the outlook. >> so we had a second quarter gdp that was pretty lame. it was down in the 1%. now it's come up 1.4%. you have that weakness there but also the jobless claims have been in the 250,000 range. what does that tell you? >> i think most encouraging has been looking at various aspects of the job market.

as you know not every part of the job market is fully healed or where you'd want it to be, but it does suggest that that momentum is continuing and that's going to be important to the outlook. >> i want to shift gears to what's happened, some of the comments that have been made politically about the federal reserve. how do you react to comments that the federal reserve is making policy from the republican nominee, making policy based on politics? >> so steve, i don't comment on any politician comments or members of congress. but i will tell you that these are not factors for the federal reserve. and that is intentional. this institution is a-political. it's important that we keep our eye on what's happening in the economy and stay focused on what benefits the economy as a whole. so both by design of our structure, our governance, the format of the fomc meetings, politics is not a factor for us. >> one of your colleagues, though, federal reserve governor

gave the maximum donation politically. how do you feel about that? do you think federal reserve officials that sit on the fomc should be giving political contributions? >> so the law allows for fed officials to make those kinds of donations. there's nothing illegal about that. we are always sensitive to what appearances are and that's built into our code of conduct and other things. so it's -- it is to the individual's discretion and legal for them to make such contributions. >> i have to ask. the law allows for a lot of things. it doesn't mean all of them are necessarily the right thing to do. is that the right thing to do? >> so, lail and other fed officials make those judgments for themselves. we know in today's environment there is a lot of attention on the federal reserve and a lot of questions about how it operates. so i for myself try in many matters to think about these issues of appearances.

and i understand why it's sensiti sensitive. >> let's go onto federal reserve policy. a pretty big split at the last meeting. three dissents. i guess you have to go back quite a number of years to get to -- does that talk about a fractured fed or a divided fed? >> well, i think the committee by design is intended to bring forward different views. i think that's healthy for debate. it's healthy for deliberation on issues that are really challenging right now. so you want those views to come forward. and you want there to be that kind of attention on what arguably are difficult choices. >> you look at -- obviously you wanted the federal reserve to hike at the last meeting. but you also have i'm assuming because there's a couple dots in there that are up there, you have built in more than one hike this year. do you think the fed should be not just this meeting but at subsequent meetings bring it up above 1% for this year? >> so i've felt that it was time

to begin to remove some accommodation. i based that off of looking where the job market is progressing, looking at the progress that inflation is making. and thinking about various policy prescriptions that sort of guide you to think about where you are today. and i think as i look at those things, they've argued for continuing to remove accommodation. we're late in the year now, so how many moves we can make is going to be a function of the calendar. >> but you think if the funds rate were up, say, near 1%, for example. that the economy could still grow near its potential and we would still be adding a good number of jobs if you raised the interest rate up higher? >> that's my outlook. that's built into these forecasts to say under higher interest rates can the economy continue to perform? none of us want to see the economy slow down. this is not a question of trying to slow down an overheating economy. >> and you still think the 1%,

it -- >> under my forecast it would still be accommodative and the economy could still grow. >> let me talk about we're here at the conference which you guys have put together. tell us why the need for a conference like this. >> so i think this conference is very important. and it's the kind of conference where in the past we would bring bankers together, ceos from commercial banks to talk about issues in the industry. as you look out in the audience, though, and for the past two years, we believe that focusing on women and minorities is going to be key. because those are the future leaders. those are the individuals where more visibility, more networking, and the opportunity to really develop their leadership by talking about these issues is important. >> the fed has been criticized on the front of federal reserve banks. bank presidents that there's not enough diversity there. do they need to do a better job of bringing minorities, for example, into the top spots on the federal reserve? >> oh, i think we do. we've made progress but both in the reserve banks and board of

governors when you look across, there is opportunity to bring more diversity to that body. >> to switch now to some of the international headwinds that have been out there, europe seems to be doing a little bit better. japan, i can't even tell. if you could tell what's going on in japan, it's difficult to know. how much does what's happening overseas still influence what the federal reserve is doing now? >> so i think by nature of how our economies work today, we are always going to be thinking about what are the implications, what's happening around the world on the economy. those are not outsized risks today in my mind. things we have to watch. things that we'll be looking at going forward. but i don't think they pose some particular risk to the outlook today that would cause me to change how i think about the economy. >> maybe quite the opposite. some people look at what's happened overseas and say you know what? it shows the u.s. economy is pretty resilient. got through the scare back in january and february. fears of china causing recession

in the u.s. and then brexit seems to be a non-issue. did everybody overreact to that? >> with el, i think we're sensitive to the kinds of unexpected shocks that can ripple through the economy. being attentive to those. but i'm delighted that we didn't experience those worst cases. and i think as we go forward, you have to continue to not overreact but to be mindful that things can happen and weigh the risk. >> it's worth pointing out, you're not a monolithic dissenter in the fact that you dissented and then you paused because you wanted to see what happened with brexit. then in your opinion in september you were ready to go again. >> that was my view. in june i did not dissent because in addition to the brexit vote, we also had gotten a jobs number that looked strange. and so i thought the combination was worth waiting to see what the next month would show. but since then i continue to have had a similar outlook for the economy and i think it's time. >> for your colleagues, the

three quarters of around 1%-ish growth spooked them. but you're not concerned. you're less concerned about that? >> i understand growth is less. i wish it were higher. but on the whole when you look at how labor markets are continuing to move forward in the context of lower growth, it suggests that there is opportunity to remove that accommodation. and again, to make sure that we keep pace with an evolving economy. >> the push back against your outlook is that this continuing concern about this inflation that never quite shows up. does it cause you to think maybe i have the inflation dynamic wrong in my head? or in my models about how it works? >> so i think watching the things that have pushed back against inflation have been important to account here. so between oil price shocks and other things happening around the world, we have seen lower inflation. but it's not far off where we

need to be. and given other factors in the economy, when you see growth, when you see the labor market moving forward, it puts some context around that inflation number. so i suspect it's going to continue to move in the direction of moving toward 2%. >> esther george, thanks for joining us here. >> thank you, steve. >> i guess that's back to you guys in englewood cliffs, new york city. >> new york city. thank you very much. and our thanks to esther george. when we come back this morning, the ryder cup teeing off tomorrow and america has a lot at stake as golfers hit the green. we're going to tell you why. "squawk box" will be right back.

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a new study out this morning from fireeye takes a closer look at the hacker group the vendetta brothers. and eamon javers joins us now with details. i saw you were tweeting you're a little bit under the weather, dude. you have the sniffling. >> i'll try not to pull a donald trump. >> i hope howard dean isn't watching this morning. and you also get that grandiosity. i heard him say that. very grandiose when you're a user. >> i'm grandiose generally, joe. >> even when you're not using. all right. >> especially when i'm covering cyber security and that's what i'm doing this morning. this new report is from fireeye.

this is the report here. it's called the vendetta brothers and it shows how routine and businesslike credit card theft has become online in many ways. it also tells us a bit of how difficult it is for law enforcement to crack down on all this stuff. here's what fireeye says they know about this hacking group called the vendetta brothers. they say it's two people operating out of spain and eastern europe. sort of the amazon.com of stolen credit card numbers. there's up to 9,000 cards available for sale on there at any time. it's called vendetta world the website where you can buy all of these. they say the group actually outsources the actual hacking to criminals around the world. so it's a little bit difficult for law enforcement even if they catch one hacker, they might not be able to actually catch the central clearinghouse here. and they also engage in phishing e-mails. that's when they send legitimate looking e-mails to businesses asking for information. if you click on the link it's

dangerous. here's an example of one. it says hi there. it's a request for an internship. i was hoping there was a possibility of internship. as you will see from my attached resume. but if you click on that resume, it is an executable file and you will have malware on your system. that's the thing people in business have to watch out for is the legitimate looking e-mails that might be just a little bit off. and what fireeye says about this particular group is they say they expect that these are english speakers but non-native english speakers. it's the kind of thing that might trick anybody clicking on a resume request from an intern. >> malware. i love that name. thanks, stuff. >> i made it through that whole hit. >> yeah, you did. without sneezing. by the way, cnbc is partnering with the aspen institute for the cam bridge cyber summit next week. you'll see a lot of stories like this. that is october 5th next week and if you want more information or would like to register, go to cnbc.com/cyber jen summit.

the 41st ryder cup tees off tomorrow. the u.s. will try to win back the cup from the europeans. i think it's eight out of ten. dom chu has the difficult assignment to travel to cover the event. is it eight out of ten? isn't it? losses? >> reporter: it is eight out of ten, you're right. this is the 41st time they've played. eight out of the last ten times, it's been the europeans that have come out on the winning side. it shows the emergence of the european side of the golf story. but here at hazeltine it's about trying to grow the game. this is a domestic venue here in the united states. one that the pga of america who put this tournament on is hoping catapults things forward. as we talk about the records, they speak for themselves. the u.s. over time has been 25-13-2. it's been dominant just not in

the last 10 or 15 years or so. if you look how the course is setting up here, it's one they'll have a lot of spectators. estimates are a quarter of a million people will come through between friday and sunday to come see this event. see this e. so this is arguably the most spectacular and biggest event in the world of golf. you guys were talking with eamon about grandiosity and being grandiose. there's no bigger spectacle in the game of golf than a ryder cup. you can talk about the majors like the masters, u.s. open, open championship and the pga championship, but this one draws all kinds of drama. yesterday on the course a lot of guys practicing on the driving range trying to hone their games. and for that reason the pga of america's looking for this event to be the real catapult for momentum in the next season. we sat down with the ceo of the pga of america, and he said a lot is riding on this ryder cup. >> the ryder cup is the biggest event that the pga of america runs. it really is part of the

financial engine that keeps our organization going and really allows us to fulfill our mission of serving our 28,000 members and growing the game. we run the pga championship, so we're lucky in that we run two of the five biggest events in golf. but a ryder cup, in particular a domestic ryder cup, allows the pga of america to grow the game. >> so, joe, guys, it's going to come out to these 12 people, 12 team members for the u.s. trying to get the cup back in u.s. hands. it's going to happen here at haze ltine, we'll be here all day with coverage at cnbc. and of course be sure to tune in to our sister networks, golf channel tomorrow starting at 8:30 a.m. and all weekend on nbc sports. if you're a casual golf fan or want to get more into it, i suggest you watch this weekend because it really is a dramatic way to watch the game of golf, guys. back over to you. >> absolutely riveting and nerve racking. we may have been dominant in the past, but nobody feels that way now. we feel humiliated and embarrassed and really itching to bring it back here.

anyway, thanks, buddy. >> go team usa is all i've got to say, you got it. >> when we come back -- >> the song. >> jim cramer's going to join us live from the new york stock exchange. we'll get his take on stoed's top stories right after this. 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%

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get down to new york stock exchange. jim cramer joins us now. so no coke, pepsi? >> pepsi looked great, con agra, 3 for 3, can't ask for more especially when everyone's so negative. >> but pepsi better than coke? >> well, pepsi is very little soda. it's 12% of soda. and coca-cola's maybe five times that. so when you're snack food worldwide, people love it. that's where the money is. >> i love all the toes. i said that earlier and people think i'm rex ryan now, but i love the fritos, tostitos -- >> these are almost billion dollar brands. the sustainability side of pepsico is really unbelievable. no one's talking about it. we will today. >> all right, jim, thanks. in a programming note, cisco ceo

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welcome back everybody. news this morning national amusements issuing a letter to

cbs and viacom. julia boorstin joins us with more on this. julia, good morning. >> good morning, becky. national amusements wants cbs and viacom to merge saying it would offer substantial synergies to deal with the changing media landscape. they also say they don't want to sell to a third party and don't want to give up control. whether or not this merger happens is up to cbs ceo les moonv moonves. he said he'd only do a deal if it's beneficial to cbs shareholders. cbs market cap would likely draw a big premium to make a deal happen. analysts have raised concerns about viacom's cable network, struggling ratings and higher than average costs which would weigh on cbs's growth. but there could be cost savings and being a larger company could give cbs power in more negotiations for cable distribution and more content for cbs's digital apps. we'll see what happens in these closed door meetings. but certainly the power seems to be in the hands of moonves. guys, back to you. >> it's so obvious.

those companies need to be together. it's so obvious. except i guess it wasn't obvious in 2006. but it's obvious the synergies. >> you're doing your captain kirk impression. >> well, a decade ago when these two companies split everyone thought viacom would grow faster. >> everyone thought. we don't want viacom, it's growing too slowly. it will hurt cbs. anyway, julia, thank you. make sure you join us tomorrow. "squawk on the street" is next. ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer skb david faber at the new york stock exchange. big day for financials and economy as wells fargo ceo goes to capitol hill, again. four fed speakers including yellen tonight. europe's following through on our gains from yesterday. final q-2 gdp 1. just above estimates and oil is flat after that ope