which if i'm correct the last day of september. yep. and "squawk box" begins right no now. ♪ >> announcer: live from new york where business never sleeps this is "squawk box". good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew ross sorkin is kicking off our new squawk the vote series. he's live in des moines, iowa. andrew, good early morning to you. >> hi. >> hey, becky, we have six big electoral votes here that are up for grabs and we'll be telling you about it. joe is giving you a hard time already, fly over country. this is real america. we've been spending some time at gentlem java joe as. not a lot of people here.

>> tie fell out of your pocket again, andrew like it did the other day and no one there -- that looks good. >> i figured today was one of those days. we spent some time on a farm yesterday, joe. >> that's right. >> you head back out to the north 40. north 40, andrew, is a term that people out in that part of the world use for the 40 acres that are -- north 40? >> yeah, andrew is going to be bringing us up to date on everything that's happening in middle america right now and give us a real view from the front lines on all of this. we'll be back with him in just a few moments. joining us is the u.s. managing editor for the "financial times". we'll get to her in a moment because we have to talk about deutsche bank and what's happening. thank you for joining us. first let's get a check on the markets. take a look at u.s. equity

futures. yesterday was a down day. dow down by 200 points on concerns about the deutsche bank. s&p was down by 20 points yesterday. and the nasdaq was off by 50 points. this morning things are in slightly positive direction. dew futures up 16 point. sapp up by 1. nasdaq up by 1.5. overnight in a shah, nikkei was down by 1.5%. hang seng was off by 1.9%. again concerns about deutsche bank really worrying markets around the globe people wondering if this is a lehman moment. we'll talk more about that in just a moment. let's look at the european markets this morning in their early trade. right now you'll see that the dax is down by 1%. the cac off by 1.3%. ftse off by 1.3%. crude oil prices, they saw a big gain once again yesterday. you see right now that crude oil prices are down by 1.5% but

still above $47. wti at $47.12 still as the market tries to get through to make sense of this opec meeting. to have a deal to cut production or freeze production but it's good for shaking out a lot of the shorts this week. >> deutsche bank, where it's indicated today. it was a $31 stock and now down around $11. at $11, quick with that. where else can you get this? at $11.40 pretty big move. all this on concern about the bank's stability and news that hedge funds that cleared derivatives have withdrawn some position from europe's largest investment bank. although got 600 billion or sign assets. >> also a line they can draw on from the german bank, german central bank if they choose to.

>> apparently still doing business. >> it was a grouch hedp of hedg funds. the important thing to remember with deutsche bank, partly because of all that's happened since 2008 is liquidity coverage ratio, the amount to have liquidity on hand is is a lot higher than a bank like lehman brothers during the crisis. the collapse is dramatic but not the lehman moment everybody is talking about. >> it's been eight years but we remember. even if you're a millennial you know something happened to a bank a while back. we have someone at the headquarters. annetta joins us now in frankfurt. we'll get it right from you. good day. >> reporter: yeah.

it's late morning one could argue here in germany. for nervousness inside deutsche bank is growing. they are very alert about the fact that even bond markets are nervous about their capital position. look at their cocos. these bonds playing as if they had to raise capital in the future. that's actually really negative news. i would like to talk also about that letter of john cryan, the ceo of the bank has been writing to its staff where he writes this morning, urging the staff to keep their calm, to actually consider how strong the bank is. the letter is saying, he's saying in the last two decades was never that strong financially, also liquidity position is very strong and that those rumors in the market, those certain forces he's saying trying to destabilize consideration that the bank needs fend off by talking to the clients, convincing them that

the bank is in a stable position. of course what he fears is that this is a downward spiral. this is self-fulfilling prophecy to happen if a little group of clients start to withdraw funds, big ticket clients might to the same. we're nowhere there. for a moment a lot of nervousness, hysteria in the market. also looking that deutsche bank share issue is rattling also other markets. look at the swiss franc, look at the other equities. also the absence of another big story. talking about, of course, in that relation about a potential government involvement from berlin, last week we had reports that berlin is working on an emergency plan for deutsche bank. of course behind-the-scenes the institutions involved, the ecb, brussels and berlin are working on plans. we're nowhere there.

it's not that we're close to a bail out of deutsche. back to you. >> thanks. our guest host this morning is gillian temp from the "financial times". this is not the same situation as 2008? >> it's not quite like lehman brothers in 2008. what's worrying the markets is the fact that deutsche bank will have to raise capital or if it doesn't raise capital it will have to get some kind of support from the government. it could also try to claw back on some of the bonuses and money that was given the bank in the past. write a column this morning that could be one way to sling that big back. >> how much could they claw back? >> some analysts were suggests 1.45 billion euros. others think it could be a lot more. this is a bank that used to pay

6 billion a year in euros a year in bonuses. >> why did they wait? if you're doing claw backs do you that not because you need the cash, it's because something was done wrong and you're punishing people. >> it would look bizarre. you could argue a bank is unprofitable. you could start looking at things like investor stock compensation. >> that changes a lot of contract law. you haven't done something wrong and facing claw backs it's a different situation you deserve to be punished because you lied, there was fraud, there were things happening that you set us up. that wasn't there. your suggesting they take it back -- >> right now deutsche bank executives are not talking about claw backs. the reason the bank is in this crisis the department of justice had threateneded to impose $14 billion for wrongdoing.

tissue right now is they have this hole, if doj does go ahead with this fine how do they get it, get the money. people are not keen to give deutsche bank money. will they get it from the german government. can they sell enough to raise cash. the bigger issue, though, and this is why the wider market is bound is the fact that here we are almost a decade after financial crisis and europe has still not got its act together with the banks. and it is a tremendous irony a financial crisis that started in america with subprime mortgages ended up benefiting the american banks compared to the european banks. >> they took their pain early. >> exactly. sweeping things under the carpet as we saw in japan a couple of decades ago, as we're now seeing in europe, if you sweep problems under the carpet and don't deal with them it comes back to haunt you. >> the american banks were

forced to deal with this. >> now they look stronger. we're not seeing a situation where people are panicking. >> people have warned in europe, it wasn't just a liquidity issue, also a solvency issue. how do you cure a solvency issue. >> first you have problems that you do not have what you have in america which is an fdic to provide reassurance and guarantees. you don't have a single body of people like the treasury or fed who can go in there and make decisions like let's recapitalize the banks. do you remember the 2008 top crisis. you basically had 3.5 people running the financial system. they took quick decisions and acted. in europe it's so fragmented there's no one in charge. on top of that you have this horrible situation of a business model being smashed to pieces because of low interest rates and massive over capacity. >> no one accepts hair cuts. you keep issuing new debt to payback the old debt.

>> it's a classic situation, sweep the problem under the carpet. >> kick the can down the road so many times. you try to figure out a new depression for saying it because we used it so many times. >> how do you say kick the can in german? >> i know the v sounds like a w. >> look what's happening with commerzbank. the italian banks. quite a widespread challenge right now. >> okay. this is going to be fun because we're going to look at the markets. we're joined by chief economist at deutsche bank. back in the, we had the chief economist of bear stearns -- bear stearns was on. so he's on and first thing he's asked, god what's happening at

bear stearns. he's like, got so mad. we don't expect -- you're not here. we got reference it. but you're so famous now. if you were a private citizen at home woe have joe on. deutsche bank is relevant. let's shift gears. you're great too, simeon. i love all my children equally. in terms of -- let's talk, though, start about whether this is the beginning of something that makes us question our economic assumptions about gdp growth going forward. >> absolutely. if you're in an environment where the u.s. is going at only 1.3 and in the eighth year of the business cycle and brought forward a lot of demand like motor vehicles you have to worry about negative shocks. tightening of financial conditions as it refers to institutions in europe is a concern for investors. we saw it in greece.

this time around anything that hits confidence will slow growth. i'm worried about recession. the u.s. is vulnerable. >> deutsche bank before. >> it's about that now. it hasn't changed much. the equity market certainly rallying significantly has been a factor underpinning some sentiment. but look we have monetary policy which i argue globally is hurting. and we're in a point where fiscal policy is totally paralyzed because of the election. if you get fiscal stimulus it won't hit until next year, late next year at the earlierest. i argue the s&p itself is vulnerable. >> here we are, it's like october again. not quite but going to be tomorrow. halloween and leaves and scary things. why do these things happen now? >> i would take a slightly more

optimistic macro view. >> ratings. >> earnings have stabilizeed a little bit. energy prices have stabilized a little bit. there are key distinctions within the equity market particularly as you look at sectors in market cap. just like we lived through in 2008-2009, for example, in the financials. small and mid-cap financials will do reasonably well and have got this flag we'll help you from a regulatory environment. >> they don't rely on international flow? >> more local businesses. they don't have the exposure to as much counter party risk and more local businesses and if there's any steepening in the yield curve it will be a quick beneficiary. there are distinctions twin these markets. >> joe, can i ask quickly. other joe. you said that monetary policy maybe hurting at this point but given your outlook on the economy is this the right time for the fed to raise rates.

>> fed missed its window. sfwhunt raise it at this point. >> they can't. if you look, by the fed's own admission, you look at the flow of funds data household net worth is over six times. and yet we look at the consumer and these wealth effects -- we haven't hit 4% consumption. so what you got this extraordinary accommodative monetary policy. asset prices are fairly valued. but you haven't gotten the benefit of the stimulus. not as if the economy has done well which people could point to in the late '90s. we haven't gotten that benefit. you come back to what bernanke said a while ago, qe doesn't work in theory it works in practice. i'm not sure it works in practice at least in terms giving the growth people want. >> we got to get started. >> they lost credibility.

>> who knows? it's not even october. we have all this time between december. should we listen to anything they say about whether they will do it in december. >> i started the erthey would go in december and there's a chance just because they are so pig headed and they want to move. look. the thing is, joe, you don't raise rates this late in the cycle when job growth, the momentum is lower and yet they haven't normalized it. what i would do to make sense and they won't do this. allow the balance sheet the mature. let the curve steepen dynasty that way. >> we'll make them feel okay. nerve to show up today. >> i never back down. you're very nice. thank you. he was nice. when we come back wells

fargo ceo john stumpf grilled on the hill. there's a couple of big takeaways. we have that story. >> is this field of dreams for donald trump or hillary clinton. we'll find out when we "squawk" the vote right here on "squawk box". guess what guys, i switched to sprint. sprint? i'm hearing good things about the network. all the networks are great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50% on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers?

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>> welcome back. wells fargo ceo john stumpf facing his second hearing on capitol hill nine days yesterday. coming two days after he agreed to forfeit over $40 million of

his pay. his challenge yesterday was to provide more detail. some said their investigation found number of fake accounts 2 million actually could be as much as 75% lower than that number. this is an investigation that is just now taking place even though they've known about this for years. the full board is being investigated internally and stumpf said that he had spoken to warren buffett. berkshire hathaway is the largest shareholder in wells fargo. there was a lot of speculation about buffett why he's been silent on this. people speculated he had gone to the board and expressed his extreme displeasure to the board and said he wanted radical overhauls. that was enough for buffett to break his silence. he spoke a little bit what his thoughts were. he said it's dead wrong he spoke to the board directly. he admitted he talked to john stumpf. had about a five minute

conversation with him about two weeks ago. two weeks ago today. after he watched him on "mad money" with jim cramer. said he was not impressed with that performance on "mad money". so he went ahead and said he did give john stumpf a call. he talked to him as ceo not chairman of the board. nothing that he thought would be given back to the board as advice on this but did say he told thamt he thought the problem was much bigger than stumpf thought. he opportunitied out that $180 million fine of not a metric to be using in determining public reaction pep said stumpf essentially acknowledged that he underestimated this problem at first but said he didn't at that point. this was before he actually testified before the senate and you saw how well that went. so, obviously, this has been something that's been out there but buffett did say he's been going around and trying to get the board to change what's radically happened there.

that's what he's done in the past. if you look what he did with coca-cola. there's speculation buffett guaranteed he would be staying in his stake. he said i never told anybody whether i would stay in wells fargo or not. he doesn't go around and talk about things like this. also the idea they would be buy be more shares. he says we can't buy more shares because that would require the federal reserve approval. it did file with the federal reserve about three months ago to own over 10% of the company. they did not buy a single share of wells fargo. wells fargo has been buying back stock and has share ownership position. so that's what we've heard so far. i'm not saying he's condoning any of this behavior, done seem like that. but he's a little more quiet about this and a little less involved. we are kicking off our new squawk the vote series.

andrew is taking the political pulse from swing states across the country. he's first with us from his first install meant today in des moines, iowa. andrew, what can you tell us? >> we're right here at java joe's in des moines. every week leading up to the november 8th election. we'll be in battleground states until november. we'll talk about economic issues that matter to them most. we came here in part because this is one of the big battleground states, punches its weight when it comes to electoral votes. six electoral votes up to grab. a number of economic issues on the table. ♪ >> every four years iowa's cornfields become battlefields. 2016 is no different. early voting ban thursday and the rest of the country is looking to the hawkeye state which has voted democratic in five out of six past presidential races.

iowa didn't gain its status because it's representative of the rest of the country. the state's population is more than 90% white. economy driven by farm and commodity crops. as a result candidates shift their focus to agriculture while campaigning here and especially on the trillion dollar farm bill. trade, another hot issue for iowa farmers. many support the transbe pacific partnership which the american farm bureau says would increase net farm income. both presidential hopefuls called it into question. immigration policy will have a huge impact on agriculture. iowa farmers have their eyes on wind tax credits. environmental protection agency and the state taxes. hey, guys, i should tell you hillary clinton was just here yesterday actually. as i was flying in. roads were closed off as they were making their way back to tarpt. mike pence was here on sunday. donald trump was here at java

joe's and here with the owners of java joe's. when was he here last? >> january 15th. >> thank you guys for hosting us they're morning. trying to get a pulse, get outside of our own bubble, try to understand what the big issues are. i asked you guys off camera since you guys live together if there's any disagreement on politics and where you guys stand. let's stand there. where do you guys stand? >> we tend to agree a lot on what we do and here at java joe's we welcome people from the republican, the democrats, independents. we host lots of different events. and we listen to lots of different points of view. donald trump was here on january 15th. don jr. and eric were here and then mike pence was here on sunday. >> if you go into the booth, what your going press? >> at this point we're supporting donald trump. >> supporting donald trump.

tell us why. >> well, you know, actually a lot of it is about the policies but also when he was here he spent time with us as people. and off camera, away from the press, he just so genuine, spent time with our children. don jr. and eric both spent time with our children, talked about how it is to work for parents and then governor pence was also here. he spent time -- he wanted to meet all of the staff which de. he met every person in the coffee house. and we know our clientele. many are republicans. sorry democrats. and everybody got along. >> when you think about tissues that matter to you most how do you rank them? what's the most important thing you're thinking about right now? >> for a candidate >> for a candidate. >> i go by personality who they are as a person. i look at them as people with a different job. >> what have you noticed between some of the folks here in des

moines, the city because it seems to be a little bit more split. the more rural you go, clearly the support for donald trump is much, much higher. we're out in some of the cornfields yesterday. we'll show that tape later. you have a lot of people that come through here every morning getting a cup of coffee and a newspaper. what's the conversation? >> you know, it's just -- we don't get so much about talking about the candidate but just about the issues. certainly security is a hot topic for many people. i want to have a safe country. we want to have safe cities. we're pretty blessed to have that here in iowa. but, you know, we're not immune from those type of issues. >> donald trump did call the people of iowa stupid. i don't know if you recall this last year in relation to ben carson. but it made a number of the editorials here in the papers here. >> you know, certainly i don't have any opinion on that. we certainly -- there's a lot of

things said. you look at social media and we see all types of things that are being said about both candidates. so you certainly have to filter south. >> up own four coffee shops and you're going to open a fifth? >> yes in dubuque, iowa. >> what's the biggest economic issues you face. >> when you look at it as a small business owner certainly there's issues around the affordable health care act and those issues. you know we just recently received our health insurance renewal, 35% increase. that's big you know when you're in the restaurant industry. you have small margins for employees so it's very tough. when you look at other expenses, certainly when you look at minimum wage, certainly that should be adressed. but some of the numbers being tossed around especially in the restaurant industry certainly brings pause of what we're thinking about. >> we want to thank you for hosting us this morning. if there's any viewers that are

local come on down. come say hi to us. thank you very much. we'll be here for the next couple of hours and meantime we'll send it back to new york. >> andrew, i don't know whether they know six or seven years ago trump was actually rooting for ohio state versus iowa in a football game. i don't know whether you want to -- don't mention that to them. i don't want to bring up things like that. >> you want to comment? >> i can tell you. if we're going to dig up stuff. he was against the hawkeyes. it was horrific, andrew. anyway, thank you. look how good he looks in a tie. i'm just saying. coming up shares of deutsche bank plummeting this morning and it's weighing on the european markets. the latest on the struggling bank coming up. as we head to the break here's a look at yesterday's s&p 500 winners and losers. >> it was wonderful.

>> bravo. >> it was great. >> parts weren't great. >> could have been better. >> pretty terrible. >> it was bad. >> awful. >> announcer: still ahead -- we're kick off our "squawk" the vote series in the hawkeye state. andrew is in iowa and he's taking the pulse of politics from the state's power players. still to come, dr. andy mcguire. she's the chairwoman of the iowa democratic party. plus, the state's republican team maker. more "squawk" voting when we return.

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♪ where i come from rain is a good thing ♪ ♪ rain makes corn ♪ corn makes whiskey we're going to do this. i got a flyover state. there's a song fly over state. i guess i was thinking about andrew out there. welcome back to "squawk box" on cnbc. u.s. equity futures at this hour are now positive. i mean soaring. i would say up actually less than a point. >> am i not seeing that? >> it's up half. s&p even less, nasdaq down 2.60. that was weird. it was all deutsche bank yesterday. >> yeah. >> really. because oil was not the problem. >> oil was up. >> and banks are -- >> dragged down the whole

financial sector. >> yes. >> kate, you're here. >> i'm here. i'm making my presence known. >> intro you properly. >> we're here to talk about deutsche bank. that's what kate has been covering and following so closely. lot of concerns. hedge funds trimming their positions on the bank. >> so interesting day yesterday as you guys were saying and the shares really took a whooping after this midday report suggesting hedge funds were pulling or lowering thain capital balances within the prime aspect of deutsche bank. i made the rounds yesterday and got some clarity on that but let's just look at the shares. they took a beating yesterday. they were way down in europe this this morning. credit default swaps which are insurance policies basically that you can buy to pay out in the event of some sort of default. can you buy them over a one year period, five, ten, and so on. they were up yesterday and from

what i read up just slightly this morning. so clear lly concern in the markets. what happened in the hedge fund might have been overstated. a couple of things are happening based on what i'm hearing. number one some hedge fund that are primary brokerage clients are lowering their investments. one was mentioned in the story yesterday as part of a group of ten. there's a reduction. they continue to do business with the bank. others are frankly taking advantage of the situation as the hedge fund wants to do and negotiating better commercial terms. to the extent they are using the prime services to borrow shares to go short a stock or asking for ways to lever up their long positions and other positions that's another thing that they are doing. finally there are some credit agreements that are being renegotiated or having added safe guards. one example and people may remember this from the financial crisis is that when you don't want to face a bank as a counter

party in this case deutsche you may ask for someone else to step in and be the counter party on a bilateral trade. there were tri-party agreements being arranged. i don't know how that works. you have a different counter party but where does deutsche bank fit in. >> you bring somebody else in the mix. the reason why this is bringing so much panic in the markets because all of this sounds horribly reminiscent of bear serns, lehman brothers and the cds spread widening dramatically again, looks terribly like 2008. the challenge of deutsche bank is to convince ordinary people this is not a repeat of history. >> how difficult is that to do. they talk about how they have sophisticated investors and sophisticated partners but some of those most sophisticated ones are pulling their money.

they are saying it they are doing it because of pressure from their customers from the hedge funds. how do you stop a panic, a run on the bank. >> it's classic financial equivalent of a food poisoning scare back to 2008 where basically people know there's some big problem in the system they can't identify where it is. at this point what needs happen is deutsche bank needs to indicate how it will plug a potential gap in its capital. they could face a big fine from doj. they will have to raise money in the markets. >> on that note, wilfred frost, i don't know if you hit this on "worldwide exchange," got an english transition of john cryan's letter today. to him the key point was we completed the disposal of the british insure abby life and the sale of our stake in the chinese bank. they are looking to raise

capital and making asset sales and by the way the $14 billion punitive u.s. justice department settlement that they might be talking about is not a done deal at all. in fact the bank is looking for 2 to 3 billion. there's quite a spread there. >> this morning in the "financial times," let's imagine the finance being up to 10 billion. assuming deutsche bank offers investors 25% discount for their troubles essentially what you need toish for $1.2 billion shares which doubles the share account. it deals with this issue and see if it can raise flown asset sales let's be generous maybe increase the shake out by 50%. you begin to understand why many investors saying there's going to be a massive dilution and share price will fall. >> we'll focus on this. kate thank you for being here. folks check this out. this is one of the best high light of this year's golf

season. it took place during the ryder cup practice yesterday. joe, if you haven't seen this, check this out. the fan in the red sweater team u.s. supporter. he was heck technology the european players rory mcilroy and andy sullivan claiming they were missing a shot he could make. they called him out. henrik stenson pulled him from the crowd and invited him to make the putt. you saw right there he did it. and he did it. justin rose added pressure. he placed a $100 next to the ball. johnson gets the putt, wins the 100 bucks and gets rewarded with chants of usa. best moment. he really is milking this. >> can you imagine? actually makes it. >> that would be fun. had plenty of chances to do that in front of a crowd. i think once in eight years. coming up later in this morning,

john stumpf had a rough day on the hill yesterday. god these guys love yelling, don't they, sanctimoniously. admittedly wells fargo has problems. facing stiff criticism. this guy was really yelling. representative craig meeks will join us at 8:00 a.m. with his reaction to the hearing. but first, first andrew is squawking the vote in iowa. andrew what do you have coming up now? >> we are squawking the vote right here at java joe's. when we come back we have two report frers this newspaper "the des moines register" here to break down how this is break down in this battleground state.

here i am... building a jet engine. we've been hearing so much about how you're a digital company, so you can see our confusion. ge is an industrial company that actually builds world-changing machines. machines that can also communicate digitally. like robots. did you build that robot? that's not a robot, that's my coworker earl. he builds jet engines with his human hands. what about that robot? that is a vending machine, ricky. john, give him a dollar.

welcome back to "squawk box". we're live from des moines, iowa this morning and we're "squawk"ing the vote. we're here with seasoned political reporters at the "des

moines register" and we're here to talk to them what's going on here at this battleground state. help us understand what's going on here and who looks like they are going win. you guys have not had a new poll done yourselves recently, but it looks like it's about five to seven points ahead for trump >> over the last several weeks trump has opened up a consistent lead of five to seven points over hillary clinton. >> has that changed at all? do you see a marked shift? clinton was here yesterday. pence was here over the weekend. trump was here the week before. >> iowa is a must-win for trump. a serious part of his strategy to get to 270 electoral votes even though iowa only has six very important part of his strategy. hillary clinton has other paths but they would like to dheep away from donald trump. in addition took a typical battleground state iowa has been overrun with presidential

candidates. >> tim kaine was here as well. have you senseed a shift in the wake of what we saw in the past couple of weeks. one way or the other? >> the polls were tied up over the summer. and i think that what started to break trump out was hillary clinton's very bad week when she had pneumonia around 9/11. he took a jump. everybody predicting, though, this will be a very close election and there are turns, especially with this first debate and if hillary clinton can hold on to the other debates that she could have a very good chance. >> do you think the be debate changes things. i want to read you your headline. contempt for clinton tops passion for trump. >> yeah. that was my story out of his event a couple of days in council bluffs. i went down to council bluffs before the event and went to a couple of coffee shops and chatted people up. that's what it heard over and over. sort of this uncertainty and little distaste for trump, but

very, really contempt for clinton. they thought she was untrustworthy, didn't belong as president. >> on the other hand my headline on the debate was prepared clinton clobbers trump in debate. i thought that she -- >> in terms of economic issues you have people here in the city, some of which seem to be leaning towards hillary clinton. however the owners of this place want donald trump. we went out to some farms yesterday and the more rural you go it's clearly trump. trump land. >> one really interesting development we've seen in the last few weeks unlike several, many other states, ohio, the republican establishment in iowa have fallen behind trump. he's gotten support from the governor, business leaders, chuck grassley and jodi ernst. >> what people don't realize about iowa most people live in

cities now and the urban areas are going more for hillary clinton especially in eastern iowa. so you got a real interesting demographic picture in iowa where people think iowa is a farm state. >> tpp and state taxes are big issues. if you pop down a quick list before we go what are the biggest economic issues for families? >> tpp is a really interesting issue here in iowa. do you have a lot of manufacturing towns, kind of labor, the labor vote here is strong. they might be opposed to tpp. but the farmers, the agriculture, that depends on exports and exporting soy beans to asia and they are usually for free trade and like idea. >> again, you got to break down in the rural areas in small towns, the taxes, a lot, iowa is a manufacturing state so a lot of those manufacturers are looking for lower taxes, better

trade and in the cities people are looking for wage equality, they looking for health care. they looking for a lot more issues than hillary clinton is after. >> thank you guys. appreciate it very much. meantime send it back to becky and joe in new york. >> thank you. we'll see you again in a few minutes. when we return checking up on chip cards. it's bean year in the united states that retailers have been switching to these cards. has it made a dent in credit fraud cases? we have that story next. guess what guys, i switched to sprint.

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it's been a year since shoppers began making the switch from credit card swiping to those chip cards. it's definitely a more sophisticated technology. it's supposed to cut down on fraud, but the transition has been costly, slow, and confusing to many consumers. contessa brewer joins us with more. >> what? the legend? >> the legend? i'm not old enough -- >> i watched you when i was growing up. >> you would not be the first person to tell me that, but it was like you started watching me, what? 18? 19? i was 20? >> that was a total joke. people know it was a joke. you obviously probably watched me when you were growing up. >> i watched you as soon as i started in television. that's when i started.

>> this is awesome that you're here. great to see you. >> thank you. >> welcome. >> do you want to talk about chip cards? i'm prepared to tell you about the transition. >> it has been a difficult transition. >> you stick them in, it takes forever. >> actually, that might be -- wait for it. 600 million chip cards are now in the hands of consumers. but they're high-tech cards, right? and they can't be used as 2/3 of the nation's stores. the chip technology known as emv creates a unique code for each transaction. it has a tiny microcrosser on the card. that cuts down on the possibility of fraud at the point of sale. but mastercard and visa say fraud has dropped by roughly half at retailers who have embraced this emv technology. overall, though, fraud is actually on the rise this year expected to reach a record $4 billion because thieves are looking to cash in on the

magnetic stripe cards that are still out there. perhaps the hardest part of the transition has been changing joe's attitude or consumer behavior. because after 40 years of swiping, turns out there's a ton of griping. >> sometimes they wrk and sometimes they don't. >> you never know. oh, the chip reader doesn't work. and you try to insert it. >> i think it's funny that something's that's supposed to advance us slows us down. >> so despite the complaints, four out of five viewed chip cards positively and half prefer using them to make their purchases. >> well, absolutely. duh. in europe everyone has chip cards already and they work well. the idea of a swipe or a signature to buy something is just so risky. and so this is one area where actually i'd say europe is leading the u.s. >> it's funny you say about the europe leading the way because the national retail federation says, look, the real problem here is signatures can be easily

forged. it's just not a great security concern. why didn't we go right for pins every time we make a transaction? you think it takes a long time to dip. >> i never use my pin number because i don't trust these guys. they store it on their systems and they get hacked. you shouldn't use your pin number. >> what? >> i'm fine with putting it in but never use your pin number. that could get hacked. >> which places? >> any retailer. >> don't ever use a debit card? >> no. i use it as a credit card. >> what about your signature? is your signature hard to forge? >> no one even looks. >> exactly. that's why the pin number is not perfect but it's better than a signature. >> rarely even when i use my chip card, there's something stuck in there that says no chip. they're not ready. >> that's because they have the terminal in place. >> i'll be glad when it's there. i don't have to do that. >> they're wrapping us out right now. thank you for being here for the hour. appreciate it. "squawk box" will be right back.

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deutsche bank shares slammed. questions about the firm's stability this morning after hedge funds cut their exposure to germany's largest lender. the latest on the firm and market reaction is straight ahead. the future of health care in focus. guest host toby cosgrove is here to talk the future of obamacare after the election. it's harvesting season in iowa and presidential candidates are here to harvest votes in this swing state. the second hour of "squawk box" begins live from des moines, iowa, right now. ♪ live from the beating heart of business, new york city, this is "squawk box."

>> welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick. andrew in the battleground state of iowa today trying to convince people to change their votes. speaking to voters and business leaders about the issues that matter. but did you get anywhere there, andrew? get anywhere with those two? when they said contempt for hillary clinton, you almost looked -- you looked like you swallowed -- like contempt? contempt? if you had any success -- >> if i had any success, i'm looking to see what people think. >> that doesn't mean you have to swing the entire guests. >> we have great guests over the next hours. we have a couple great guests in the next couple of hours about what people really think here. i think it's pretty eye opening on all fronts, joe. >> you could still hop a plane

to massachusetts. and everybody will just -- everything you say they will -- you can make it up there. >> this is the first of six trips that he's going to be making every friday to give us a different swing state along the way and it's a real feel for what's happening. >> you miss me, andrew. he's away. you'd miss me if we didn't do this, wouldn't you? >> yes. i'm sure. >> i would. i would. >> okay. like you'd miss -- >> hemorrhoids. >> in studio this morning to talk health care and the election, toby cosgrove. president and ceo of the cleveland clinic also in a flyover state. >> yes, it is. >> where people are salt of the earth and -- >> and a very important state for the election. >> a very important state. you like portman don't you? >> portman has done a great job for us. >> how about kasich? >> kasich has done a great job as well. >> ohio has a lot of things going on. >> it's amazing. it's not really reflecting the

demographics of the united states anymore. and not as many latinos. not as many asians. >> it's 90% white. >> you've got cleveland which i liken a lot to the east coast. and then you've got sort of cincinnati which is where i'm from. >> very different parts of the state. >> right. speaks volumes. welcome. we've got a party. hard to make up for andrew. >> we're glad to have all of you here today. we'll get to all of these stories in a moment. quickly let me tell you about other headlines this morning. it's a busy day for economic numbers on the final trading day of the week, the month, and the quarter. that's right. it's september 30th and this is it. spending for august will be out. and later on we'll get the purchasing managers index and sentiment index. in the meantime, alcoa says that its split into two companies will happen on november 1st. that news follows the approval

of the split. it separates the aluminum business from the jet and autoparts operations. and let's tell you about this story too. investigators have recovered the black box from the train at the hoboken station yesterday. one person died and a hundred others injured as the train ran into the station. it could help investigators figure out what caused the accident. we will be watching the trading premarket. deutsche bank has been a factor the past couple of weeks. made the point it's down 40 cents. but that's like 4% all of a sudden. at 30, it's not. but that's another bad move today. another big percentage move in the shares. >> i point out the 4% move today. european trade is better than the 6% they finished yesterday. because europe finished flat yesterday. in total we're down 4% from yesterday morning. >> today's trading that we're looking at premarket. >> no, no. we're looking at the european

trade. >> premarket. what is that right there? >> 4% is the european trade right now. so the adr ended down six yesterday. >> this is not premarket in the u.s.? >> this is not adding to yesterday's 6% decline. it's improving on it essentially. but we're still down for the week, down sharply for the year. let me just sum up what's happening and go back to basics, if i may, just to explain deutsche bank's plight. capital is assets less liabilities. liquidity is percentage of assets and cash equivalents. deutsche bank has lots of -- than liquidity is for them. yet it was liquidity fears that moved the market yesterday. the fear a few clients could pull out and that could proliferate. let's dive in a little bit more to that position. they have over 200 billion euros of cash or cash equivalents which is 20% of assets. that's way more than at any

point during the crisis. plus the world has moved on. central banks are far more prepared for this than they were back then. deutsche bank, for example, can tap emergency funding from the ecb at negative 0.4%. capital, however, is a big issue for them. it's a major issue for them and now but however it is a one off unlike that self-proliferating issue. the leak of the $14 billion doj figure and the share price fall since then makes this absolutely crucial. they need it to be as small as possible though any settlement at this stage will help a lot for global markets. just to finish as a side point, that letter that we've already reported this morning to his employees, the most news making part of that was that the sale in the chinese bank was still on. investors feared it had fallen

through. it's worth about $4 billion and it's the reason shares are off the lows this morning. opened down 6% and now at 4%. that's around that chinese sale that could boost capital about $4 billion. >> let's stay right here and talk a bit more about this. rebecca patterson is joining us. she's from bessemer trust. you can kind of point back to this and say this is what took down the dow, the s&p all across the board. what's happening? >> well, i think it just reminds us that people are still scarred from 2008, 2009. the world is so much different. i mean, it was interesting to me to see how much u.s. bank stocks got pulled down yesterday. u.s. banks generally speaking are so much better capitalized now and they did it early. they took their medicine early. even in europe there's so much diversity in terms of their health. so it's just when in doubt, get out. everyone's taking profit on banks and it's pulling the market. and it's not surprising when you think really since february, but

especially since brexit. we've had a nice run-up in equities. you have the election coming up. now you have greater fears in the short-term. maybe it's time to take a few chips on the table. >> jeff gundlach said yesterday this is unanalyzable. when in doubt get out. that's what we've seen. does this mean this is a buying opportunity? what are you telling your investors right now? >> we've been underweight financials and europe for quite some time. there might be some opportunities out there. i think popularly in some of the better capitalized u.s. banks maybe than in a few european banks. but a lot of what's hurt the banks happens before this. it's expectations for lower, for longer interest rates. that is definitely a pressure on the banks. you see strong positive correlation between the european banks and bund yields. so it's hard for me to see a huge upside on the banks.

i'm nol terribly enthusiastic it's going to come overnight. >> the difficult part is trying to figure out how to stop a run on a bank. it's a panic when you get to those points. they can point out we still have a lot of hedge funds here. does ripping effects who know less about it. >> definitely these things can clearly get out of hand. we've seen that before. there's a couple of points i'd offset that with. so far the clients that have been mentioned. they're deutsche bank is big in commodity currencies. they're still top three or so in the world on that. if you saw big macro guys leaving, that would be a concern. at the moment, though, they're still doing a good job for those clients. we're not seeing them leave. we're also not seeing a run on the retail bank. this is not an immediate short-term cash liquidity issue. >> right. and it's a very different -- they have $250 billion worth of

assets that are liquid that they can sell. we should point that out. that's different than what we were dealing with with lehman. >> $223 billion to be precise. it's 223 euros, you're right. so in the whole prime brokerage part, this bit referred to yesterday, the assets is 300 billion euros. and they've got 223 billion ready. >> 600 billion in assets. >> they've got a total of 400 clients in that area. the report yesterday said it was ten clients. all of that is in perspective. but the other point is in tells of going back to is this a buying opportunity or not, i think they've got strong liquidity. if you get big moves based on that, you could argue that is an opportunity. big moves based on the capital issue. fearing that the find is going to be 14 billion that is a big issue for them. >> and that can directly affect the stock price. that mean it's not a buying

opportunity. >> but the capital issue is a one off, a doj issue. the liquidity issue yesterday people were fearing was self-proliferating is a different thing. so they're two separate areas. i think that's what people have to focus on. >> i'd add to that that this is not a surprise. people have known that deutsche has been facing that for years. there aren't a ton that have to be unwound. the risk of a huge exodus from deutsche or european banks in general is not big. people don't have a lot of exposure to european generally. i think the risk is relatively low. >> thank you very much. in -- we're going to totally change. you leaving, wilf? >> i am. i'm off. >> got more to do today? >> i've got a lot to do. i'm assisting you again in about an hour. amazing we didn't talk about wells fargo. >> pretty busy these days.

>> our gain. yeah, some of our guys look like parliament. the lower house yesterday. screaming, yelling. >> i have to say, compared to the week earlier i felt a little bit sorry for mr. stumpf. he was better prepared and had answers. >> i'm telling you, a lot of these guys, they're just -- usually they're getting questioned, some of these guys, about some of the stuff they've done. so when they get to do it to somebody else they love it. but not a hint of irony there. >> we got a lot of life stories as well. >> yeah. i love those guys. in the u first presidential debate, one issue the candidates barely touched on was health care. in fact, the -- we're much more interested in the media talking about universal health care. toby cosgrove is the president and ceo of the cleveland clinic and he joins us this morning. we got to get right to just what's hitting the newspapers on a daily basis. and that is what kind of year we're going to have next year

with obamacare. your mike just fell off. justin, will you help him quickly? it just fell off. okay. i'm going to -- now, we got plenty of time because my questions take a long, long time to get out. you know, number one, the exchanges. we saw how well that worked. there's not very many left. only sick people sign up for it. they didn't get the young people they needed. i don't know how we fix it. but in your heart of hearts, was this designed initially as a steppingstone to single payer? is that the only answer to this? >> i don't think it was. and i don't think anybody thought that it was politically possible to get to a single payer. >> it still isn't. then how do we fix it? and i don't want to go there, believe me. but we're already on this sort of this -- we can't go back. we can't get it back in the bottle. >> what i think we're going to see is an increase 1% per year more people being -- getting their payments from some sort of government.

right now for example cleveland clinic is 60% medicare, medicaid, and no pay. and we lose money, obviously, on all of those. and so what we're seeing is the exchanges have not been very successful. see more and more people getting out of the exchanges. united, et cetera out of the exchanges. so those have not been particularly -- >> i saw -- >> you lose money on 60% of your clients essentially? >> yes. >> was it blue cross that wants to go up 50%? the ept to go up 50% -- >> i've seen 35%, 45% too. >> you're seeing that. and if you talk about the exchanges, for example, i think all of the exchanges were underpriced to start with. they thought once they got people into the exchanges, they weren't going to change. and then could ratchet up over that period of time. and so the insurance company lost a lot of money. >> you always point out that there's some things that were in

the aca that were beneficial. did we need the entire thing? the things that are just hitting the fan right now. couldn't we have done the other things without ruining the health care system in this country? >> well, you know, i think we have to say what was the main reason that we had the affordable care act? i think the main reason was the first word. affordable. we had to control the cost, expanding cost of health care. now, the question is are we really going to do that. >> now we know at the prices that were affordable we thought they were going to do, those were faux prices. it cost a lot more to do what we're doing than we pretended. >> but we're seeing two things that are driving up the costs of health care. one is more people are being covered. and two, there's more things we can do for people. and the pressure on the health care providers is enormous. and if you stop and thbt it right now, it's divided out that 20% of the hospitals in the country are for profit.

another 20% are sponsored by their local government and the rest are not for profit. and hospitals are getting paid and doctors are getting paid less all the time for what they do. and so ultimately the cost has got to come out of health care and we have to make it more efficient. >> can i ask you? 60% of your patients are not profitable. what was that five or ten years ago? >> it was closer to 50%. >> so the number of patients you're losing money on has gone up? >> yeah. >> wow. >> and it's because of an aging population. >> we need doctors. they're all -- >> oh, aging population. >> they're all opening biotech hedge funds and things like that. that's not great either. it's great when anything becomes free, it's free but no one has access to it. that's the only problem, right? >> well, i think -- you know, i think what you're seeing is more and more consumerism coming to health care. people are being asked to pay a bigger and bigger percentage of their health care costs.

and that's true with high deductibles. it's now 30%, 40% of people are having high deductible insurance. and so they're paying the first part of that responsibility. >> so how's the next president going to fix this? i have an idea. i have a name for it too. >> what's that? >> hillarycare. we tried that once in 1992. may rear its ugly head again. >> toby is our guest host. he'll be with us for the rest of the morning. when we come back we'll also head back to iowa and hear from andrew. he's in the battleground state today talking to voters and business leaders. >> it's harvesting season in iowa and presidential candidates are here to harvest votes in this swing state. "squawk box" returns live from des moines in just a moment. guess what guys, i switched to sprint.

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welcome back to "squawk box" this morning. i am live right here in des moines, iowa. i'm at java joes for our squawk the vote series. we'll be in a different city each week every friday for the next couple of fridays before the election. iowa, of course, is a key farming state in the u.s. when clinton and trump visit here, they often address the issues affecting those who make a living off the land. we are here right now with craig

hill. you do live off the land. >> i do. >> you are the president of the iowa farm bureau. we're thrilled to have you. i want to thank you for getting the memo on the shirt. that's probably the most important part. the blue gingham. help us try to understand what the farming community thinks about this election and these two candidates and the issues that matter most. >> well, keep in mind, andrew, that america is a global leader in agricultural exports. iowa is a number two leading state in agricultural exports. so trade is incredibly important. >> so tpp. >> tpp. transpacific partnership reaches 40% of the global economy. it's a rules based, predictive rules based program that allows trade. >> what are you going to vote for with both of them against it? >> well, this is a difficult problem. because we've battered around trade to such a degree, it's going to be difficult to get a debate about trade. that's what we're seeking is lower taxes on trade. >> you leaning one way or the

other? >>'m the leader of a farm organization and we don't endorse candidates. but we have 159,000 families in iowa belonging to the bureau. >> on the trade issue? >> on the trade issue, it's hard to ascertain because of the conversation we've had. i mean, it's about blasting nafta, blasting all elements of trade on both sides. without giving a true, honest depiction of what it means for america. >> do you think that one candidate is blasting trade more than the other? >> possibly a little more from donald trump. >> so does that impact your thinking? >> slightly, it does, yes. but it's hard to sort this out because we have some previous history of support for trade. >> what about taxes? >> taxes? >> estate taxes a big issue? >> it's an important issue. it's not number one in ranking, but it is an parent issue.

all taxes, important. new rules and definitions that have never been used before here in iowa. imposed regulations that would require permit farming. >> mid-america, we should say plans to get this state to 85% wind. >> renewable energy is very important in iowa. and we do, we have about 35% of iowa's power now devoted to wind currently. we have 43 renewable factories here in iowa called ethanol plants. >> who's better on that? >> they're both positive on ethanol. >> immigration, does it matter to you? >> it does. >> the factories and farms in this state? >> well, we have a lot of processing of agriculture products and that needs to be done by, you know, legal immigrated labor. and so we have a lot of people doing the work in iowa that need the opportunity to do work. do it legally of course.

immigration is important. >> we want to thank you for coming in this morning. there's a lot of interesting issues here. and guys, we'll talk about it in the next hour. despite all of these policy issues. when you go around and talk to people here. it has so much to do much more with personality even about who they like and don't like. irrespective, perhaps, of some issues. but back to becky. >> andrew, thank you. and we will see you again in a few minutes. still to come this morning, deutsche bank shares hitting a 30-year low after hedge funds cut their exposure. we'll have the latest on germany's largest lender. thap is straight ahead. d aflac . aflac! isn't major medical enough? no! who's gonna' help cover the holes in their plans? aflac! like rising co-pays and deductibles... aflac! or help pay the mortgage? or child care?

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folks, let's look at the futures this morning. dow was down 200 yesterday. it's up about 18 above fair value this morning.

s&p up by two. "squawk box" will be right back. coming up, it's time to squawk the vote. andrew is in the hawkeye state speaking to voters about what matters to the economy. we hit the battleground state and hear from ceo of hyvee supermarket chain. "squawk box" is back after a quick break. i'm anne. i'm a scientist. why don't you let me... and me... help you out? ♪ you're gonna hear what i say... ♪

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welcome back, everybody. among the stories that are front and center this morning, sales force lost out to microsoft in the bidding to buy linkedin but apparently it is not giving up the fight. it's calling on regulators to investigate anti-trust issues related to that deal. sales force says it threatens innovation and urged the eu to go beyond for the good of the people. coke and dunkin' donuts are teaming up. enterprise cloud company nutanix expecting to debut today. an initial market value of more than $2 237b9 billion. did i say that right?

>> i don't know. what do they do? do they make nutella? >> it's an enterprise cloud company that you talk about at -- >> probably not then. so it's a cloud company? >> cloud company. >> enough said. i'm buying. back to our developing story. the health of deutsche bank worrying investors and leading to speculation that angela merkel's government may have to step in to shore up the bank. you're not going over there. >> to germany? i don't think so. >> you're not? >> no. >> i'm not asking. i'm saying you're not. >> i see. because becky may stay for the rest of the show. >> michelle caruso-cabrera, still our chief international correspondent hence why i said you're not going anywhere. because we would send you. >> i don't think you'd send me in this case. >> maybe not. not yet. >> right. why is deutsche bank systemically important and

risky? why isn't this a lehman moment? basically deutsche bank is large and interconnected. it's the largest bank in europe's largest country. it's extremely interconnected to the imf when they were talking about deutsche bank. it's also very big in foreign exchange. lots of different counterparties in the world. however, we spend so much time talking about when we talk about hedge funds taking money out of their prime brokerage, it reminds us of lehman and bear sterns. remember lehman brothers was liquidated. deutsche bank will not be liquidated. the lehman number we all remember suddenly had all this money locked up in there for month ifs not years and couldn't get it. so you were worth a couple billion on paper. not going to have that issue

because deutsche bank. there's 10 million steps before we get there and the german government is not going to let that happen. when we speak of hedge funds leaving, this could be the start of a run on the investment bank. >> right. >> by deutsche bank is a much bigger bank. they do many, many, many other things. if hedge funds decide they don't want to do business, then deutsche bank ends up with another crappy unprofitable business. but they still stand as a major commercial bank in the world. remember they have sticky deposits. they don't fund themselves overnight. >> we should be separating the share price outlook from the systemic risk issues. >> yes. absolutely. if you're a shareholder, it's going to look and feel like lehman. it's not good for you. but we're trying to answer the broader question. are we all going to be brought to our knees like we were with lehman brothers. as wilf has pointed out many, many times. the question is will they need

to raise capital? we don't know if they're going to need to raise capital until we know what the number is the doj has fined them. once we know that number, then you can start to do all the calculations. how do you raise capital? the reason they have to do that is they have enough capital for now, but they wouldn't necessarily meet the stress test scenario. >> but if that number comes back and has a higher than expected number. and it's that much tougher to raise capital which may be wie why they're trying to sell. >> options to raise capital. bring up that full screen. point number one, try to sell assets. you can do that. if the number's very small, assets would be enough. the next thing is you can sell more stock. very, very difficult at where the stock price is. worse scenario, debt to equity possibly even. and this would be, like, far out on the chain, a possible bail in where they have to start moving through the capital structure.

but ultimately deutsche bank stands. the chances of them having to do a bail in at this point, it's not good cable television for me to work through all the calculations, but equity 62 billion. then the senior bonds. and then the uninsured deposits and deposits. a lot of capital structure to get through. right? so that's why this is not lehman and not bear. that doesn't mean that it's not going to be messy to watch europe's, germany's largest bank figure out how to fill the hole. any questions? >> no. yeah. who's your favorite foreign leader? >> who's my favorite? i have -- there are so many leaders and so little leadership in the world, i don't have a favorite. and i think it's ridiculous that a libertarian should be asked to name -- they're isolationists.

they don't care. >> you may not care but you're responsible for dealing with everyone. >> i think he should have come back with berlusconi or trudeau up north. >> because of their looks? berlusconi is too short for me. you know that. come on. but not -- you don't remember that joke? >> you know what? i didn't want to -- now i'm nervous. because you're as bad as i am. trudeau is a socialist, dude. >> i thought you were going with -- okay. yeah, yeah. >> i'm much more principled than that. he must be tall. >> so all he could come up with was the former guy from mexico. >> couldn't remember his name. >> he couldn't. >> wilf was able to come up with merkel. >> you know who i like? nigel farage. >> me too. but -- >> i know he's not official. >> we're soul mates on that. >> thank you.

>> i can name leaders. just not a favorite one. >> i think gary johnson thought, i know of putin -- no, i can't say putin. it was horrible. awkward. terrible. let's talk more about -- get more insight on deutsche bank. we're joined now by morgan creek capital's ceo and cio. mark, we heard what michelle just laid out. this may not be a lehman moment, through there are a lot of shareholders trying to figure out what this means. how would you break it down? >> we would agree with most of what michelle said in the sense i think there's more sound and not that much fury here. i think they have a lot of capital cushion at this point. i don't think they have a lot of terrible assets like we had in the credit crisis back here in the u.s. you know, comparing deutsche bank which is the largest bank in europe and largest bank in germany to kind of also ran investment banks in the u.s. i think is kind of silly. >> silly from the perspective that it's less important or more

likely that deutsche bank is going to survive and get through this and that's why it's not going to be systemic? >> well, i think both lehman and bear sterns were wildly out of balance in terms of their funding. they had no deposits to speak of. so i think it was really -- >> yes, but it was a much bigger issue for the financial system at that time because so many people were doing business with them. so many people had capital that was locked up. >> for sure. and lenverage was so high. they were highly levered at the time which they shouldn't have been. because they were bad loans. i don't think you have that problem in germany today. >> our guest host brought up the question in the break that i thought was the right one. >> what's the long-term influence on the united states banks? >> is this helpful to the united states banks at some point, mark? >> you know, we feel that the u.s. banks have been dodd/franked. they have been turned into utilities by the excess

regulation. i'm a fan of bringing back glass/steagall myself. i don't know that deutsche bank's woes helped the u.s. banks. i think the banks are going to struggle for a long time. i think growth globally in the developed markets is very low. and that's going to make it difficult for banks. i mean, banks are really a proxy for economic growth. where there's a lot more growth and upside. but we don't really think that deutsche bank is really going to have big woes. i think they are going to certainly struggle from this lack of confidence. and banking is a confidence game. so it is possible there could be a little bit going on here. but i think in the end things are going to work out and that stock's actually going to be a good long-term buy around here. >> mark, thank you very much. >> thanks for having me. >> the best question from the heart surgeon. you know? about deutsche bank. you're like a renaissance man, you know what i mean? >> well, thank you very much.

let's get now to andrew who is in iowa this morning. andrew, i want a column on your experiences in the heartland at some point. will you think about it? if you don't have anything else next tuesday. >> i will absolutely think about it. >> people are nice out there, right? people are nice. >> wonderful people. this is not flyover country. i promise you. we are live in iowa where farming and politics intersect and clinton and trump are both focused on agriculture while campaigning here. trying to court iowa voters as early voting kicks off in des moines. coming up next, we're going to talk to the ceo of supermarket chain hyvee supermarkets about key issues for employees. $10 billion supermarket company. "squawk box" returns in just a moment.

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for their customers in return. digital works for banking and financial services. lets talk about how digital works for your business. ♪ welcome back to "squawk box" this morning. we are live from des moines, iowa, and for employers around the country, critical issues like minimum wage and health care are at key -- quite key in this election. our next guest is the president, ceo of hyvee, a mid-western based supermarket chain. operates 400 stores in eight states. nearly 80,000 employees.

$10 billion in revenue. >> right. 242 stores. i wish there were 400. but 83,000 employees. >> 83,000 employees is a lot. tell us this. state of the economy, in your mind. >> i think here right now people are concerned about the economy. i think there's -- you have a deflationary situation in commodity markets which is driving our comp numbers down and sales down. and also you have this kind of angst about the elections, concern about the economy. especially with folks i think more in the boomerang. they're more concerned about the economy that maybe younger generations right now statisticicly. i read some numbers around that. and i think there's a lot of angst about world situations and that plays itself out in how they spend money. >> when you think about your business, single biggest issue about how you're ultimately going to vote? >> i think there's a lot of things that -- you know, we have a very diverse company with 83,000 folks.

even my senior leadership team i mentioned to you earlier, it's about a 50/50 split how people view things. i don't think there's any chance of bluer red this time. i have folks on both sides that are unsure about the candidate they would typically vote for. so i think there's a lot of angst. so i think it just brings us indecision which kind of stirs things up and keeps things going. biggest issue right now, i mean, obviously some of the tax issues are huge for us. you know, minimum wage is a big deal for us. >> you guys pay typically over minimum wage. >> we do. i look at minimum wage as market driven. you go to the stores, part-time kids starting their first job we start at $10 an hour. because that's what it takes to get the best kids. we have a simple kind of policy hire right pay right to get the right people to do the business the way we want to do it and be excellent. you have to pay right. so you're going to have to pay.

so minimum wage does play into it. we want it to be a serious conversation. we think that's a state level conversation. and not a -- you know, city to city. it's a cumbersome process. >> what about food stamps? how does that relate to your business? >> well, food stamps are huge. obviously we service customers from all different walks of life, all different needs. and lots of people have been in the position of need. we see that. we want to service customers equally. we think it's an important part of taking care of the systems and, you know, we -- there's a lot of conversation about the fraud in food stamps and so forth. you know, we don't want to be the food police of the world with a 16-year-old, 18-year-old kid standing at the check stand being forced to make decisions. so we don't want that process to unfold that way. we think that the s.n.a.p. program is needed in cities for folks to get a hand up. >> you want to tell us when you

go into the booth what you're going to click? >> i am not in a position to disclose that today. we don't endorse candidates. as i've worked capitol hill and here, i take it as the individual goes. there are people that are good for business on both sides. and when i am speaking for hyvee, i only talk about our business. >> how much do you think of the decision -- when you talk to people locally here is about -- is it about the issues. we talk about all the issues and everyone's talking about the issues. how much do you think it's a how many sort of just visceral reaction to one or the other and either affirmative or negative? it used to be people were voting for somebody. the more people here it's voting against somebody because they don't like them. >> i think that most things in life as deep as we think that they are, they come down to emotion a lot of times. i think likability is a huge part of it.

you determine if you like someone or if you're turned off by someone. that drives a lot of decision making. not just in elections but everything we do. >> want to thank you for -- you said you didn't wake up early. so i'm not going to thank you for waking up early. >> 6:00 every morning. >> i hope watching "squawk box" every morning. >> of course. >> you have an open invite to new york again. good luck with the business. >> thanks. >> guys, i'm going to send it back to you. >> thank you. we definitely want to see him back here in new york. tell him to come on in. join us on the set. when we come back this morning, dr. toby cosgrove on the future of obama care, zika, and of course drug pricing. we're also going to talk about regulation because this is a man who has dealt with a lot of it over the last few years. also at the top of the hour, congressman gregory meeks grilling stumpf on the hill yesterday. we'll talk about the hearing and what he wants to see done at the bank. here are the futures this morning after a dow day with the dow down about 200 points yesterday. futures this morning looking a little better.

stabilized above fair value for the dow. "squawk" will be right back. guess what guys, i switched to sprint.

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welcome back, everybody. happy friday. it has been a busy morning right here on "squawk box." we have our special guest host this morning who has a lot more to tell us about. toby cosgrove is the president and ceo of the cleveland clinic. we talked about obamacare and what it's meant. what we haven't delved into is

what it's meant on a day-to-day basis. regulations are fast and furious with this. tell us about the experience. >> we're now seven years into this and we see several things happening. first of all, the number of quality metrics we have to report to the government every year has just gone up like crazy. we're now reporting over a hundred quality metrics. and the amount of regulation that we're seeing is the paperwork and keeping track of it is just amazing. >> how much? >> 16,000 pages, seven feet high of regulations for this. and it changes on a regular basis. so the landscape for this industry is completely unstable. >> the doctors in particular i talk to can't afford to be small doctors offices. the only way to do it is merge with doctors. because nobody can single handling deal with it. >> that's for a couple reasons. one is because of the complications of doing business. it's also because of the huge

explosion in knowledge. i ran across a piece of data the other that said by 2020 the total amount of knowledge and health care will double every 73 days. >> that's amazing out there. that's why you see things like watson that will supposedly help people. >> there are 800,000 papers in health care written ever year. there are 4,000 journals that report this stuff. no one's going to be able to keep track of all that. that's why we have gone very hard towards watson to help us do this. in fact, watson has learned how to take the history, the physical studies and give us a problem list better than we can do as doctors. >> maybe this is the good side of watson. you complain about the evil side. it's a place where you can keep track of stuff. >> would you not want people to think you're benevolent and looking out for living things? if you were trying to get to the point where you could just totally get rid of all --

>> joe, joe, joe, how are we going get rid of -- >> i'm just talking about watson. i've heard it in his voice. he's malevolent. >> he's serious. >> i'm kidding. 2001 reference. wouldn't let the guy back in. >> but keeping track of it is part that way. what it's also led to i think with not consolidation not only with doctors offices. which creates a problem for the hospitals doing business. >> well, let's look at it, for example, i think that's a great question. because you've seen the consolidation of doctors coming together. because they have the business reference to do it now and 60% of the doctors now are salaried. hospitals are coming together and 2/3 of the homts are part of the system. insurance companies are doing this. you're just seeing the consolidation of this industry

happening the same way the consolidation has happened on airlines and bookstores and pharmacies. >> you have to compete. >> tough compete because it's a big back office to support all that. the data centers, hr, the supply chains, the purchasing. all that stuff has got to be more efficient. >> toby is going to be with us for the rest of the morning. when we return, gregory meeks ripping into wells fargo ceo john stumpf yesterday over the banking accounts -- the bank's accounting scandal. he'll join us after the break. plus much more from andrew who's in iowa this morning squawking the vote. a live report from the battleground state is straight ahead. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. ♪ yet a lot of people still build portfolios with strategies that just track the benchmarks. ♪ but investing isn't about achieving average.

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the this morning, shares of deutsche bank in question. john stumpf grilled on the hill. >> your bank, you, ceo, chairman was on top of what's basically been a criminal enterprise. >> representative greg meeks will join us on set and he is not holding back. is this the field of dreams for donald trump or hillary clinton? >> is this heaven? >> it's iowa.

>> we're squawking the vote as the final hour of "squawk box" begins live from iowa. ♪ 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. andrew ross sorkin is reporting from the battleground state of iowa this morning. he's speaking with voters and business leaders about the issues in this presidential election. is that an un-tucket? i thought it might be, the shirt. >> it's j.crew. >> all right, man. >> thank you. >> that one guy that you interviewed, you guys had the same -- you fit right in. >> we were matching. >> fit right in. futures right now, take a quick

look. futures are after a rough session -- really rough yesterday. oil is up. that was deutsche bank. >> financials were down. biotech was down. >> rebounding a little. i don't know if we'll be there the end of the day. we'll see. european markets took it on the chin too. correct me if i'm wrong, it's a european bank. >> it's a german bank. >> toby told me that because he asked that great question earlier. hence the deutsche. >> very good. today's top global story is deutsche bank. the ceo trying to reassure employees and investors this morning after that rough session yesterday. and another rough session today. check it out. the stock is down by another 4.3% in german trading. of course that's off the lows as wilfred frost has pointed out. wilfred is covering the story for us. >> thanks. hey, becky. db share price declined this year predominantly because of capital issues, not underplaying

that. it's a massive issue and it will rest a lot on the doj settlement. but yesterday's selloff as we said earlier more about liquidity concerns which are less of an issue. the hedge fund clients i think are aware of deutsche bank's strong capital position. less likely to walk out of the door because of liquidity fears. but let's look. what could make those same clients leave over, say, a year-long period is if deutsche bank stopped being good at their job. especially in fisk. their market share has slipped to 10.5% over the last 18 months. most of that coming in the last six months. that for me is the key thing to watch in prime brokerage business. but it's not a this week issue. it's a six to 12 month issue. one other i wanted to talk about is the chance of a state bailout. i don't expect disaster, but if it's struck, i think people in the u.s. are overestimating the likelihood of a german

government bailout. for jerny to do so would be the biggest example yet that europe are run by germany for germany. big political grief would come down the line from the likes of italy and greece. and merkel really would like to avoid that. so overall we're not expecting disaster immediately. i just wonder if it did strike if people are overplaying the chance of a state bailout. >> wilf, stay right here. obviously the financials have been a busy beat to be covering over the past few days. we're going to stick with the theme and talk about something else that wilf was covering yesterday. wells fargo ceo john stumpf grilled on capitol hill. >> the whole board needs to go if they're going to allow someone to be in charge when time after time you just talked about you fired 5,300 employees when you found out they were doing something wrong. they were fired.

because they were doing something wrong. well, something is going wrong at this bank. and you are the head of it. so shouldn't the board then turn -- from your own admission, if the buck stops with you, as you came out here and said i apologize, the buck stops with me. and you have to also admit that criminal activity was going on in your bank, then you should be fired because it stops with you. >> joining us right now on set is the fiery congressman himself gregory meeks. he's a committee member who had a front row seat to the fireworks and made a few of his own. congressman, thanks for being here today. >> good being with you this morning. >> so john stumpf went before the senate last week. there were a lot of people who thought his answers were lacking, that he wasn't prepared. he did change things before he came before the house committee yesterday. probably he biggest example of that is that the woman who is in charge of these banks has left the bank. she's been looking at clawbacks. she's not allowed to spend a lot

of the options that came his way. john stumpf himself gave up $41 million in shares that he was holding onto. is that enough at this point? >> no, it's not enough, in my opinion. number one, i agree with you. he did do what donald trump hasn't done. he prepared for the second hearing. he wasn't preparing for the first. that was obvious. but i think what has to be done and you are -- he came in, he admitted that the buck stops with him. and when that's the case, if it's truly the case, then you would want to restore confidence back in the bank and into its climate. the only way to do that at this point is have a new ceo. he's not the one that can restore confidence and what angered me is i'm one that understands. we're in a global economy and the significance in the importance of the financial services industry. it is our strongest industry. talk about on trade.

we have more trading and financial services around the world where we have surpluses more than any place else. but we have this break starting to happen where folks will understand. and some of that is because they don't have the trust in some of these institutions. >> we've offered some criticism of what john stumpf has done, how he's handled the situation since it came out. i think what was key to me was the idea this was happening over a number of years and it never tipped anybody off at the top. what was the moment you decided he went from being the guy who could clean this up to be the guy that had to get fired? what was the tipping point? >> well, when you look -- we did some research and you look at that year after year after year after year heavy levies have been -- >> not relative to other banks. we've seen much bigger fines. >> still it is systematic to -- the climate was that those 5,300 employees, they all were basically low level employees

that was given incentive bonuses. if you didn't make those bonuses, you were fired. >> my point, i guess, is that if you look at any of the big banks, they've paid big fines a lot bigger in some of these situations. a lot of times for fraud that was much bigger. this is widespread and it hits at the basic consumer level. is that the difference here? >> it is. it is the average -- it's a fraud where accounts are open. people are paying fees they didn't realize they were paying. it affected their credit rating. it affect what had they were doing on a daily basis. that's a climate that cannot be accepted. and is and seems to be widespread and therefore you want to restore accountability. others say break up all the banks, get rid of them. that's not the solution. the solution is to get integrity in them and let's fix them.

>> congressman, some of your other colleagues did suggest that other bank ceos should come in front of this hearing based just off the wells fargo wrong doing even before any other banks may or may not be shown to have similar issues. is that something you agree with that other bank ceos need to testify to show this hasn't happened to them? >> what i think should happen at this point is the regulators do need to look and make sure that this is not happening other places. i don't believe in throwing the baby away with the bath water, putting everybody in the same water until you know what the facts are. so i believe that the regulators should look and make sure it's not a systemic thing with all of the banks. and if that's what they find, then that's fine. but the regulators need to get more involved and look and see if this scenario is in other locations, other places. >> how do you rate the job of the regulators? it was division amongst you and your colleagues about whether they had done a good job. >> the fine is small.

but i think that we've got the regulators have to step up more always. it was back in 2012 or 2011 when this first was uncovered. and, you know, initially some of my colleagues wanted to blame cfpb. but they had just started then. so they really had not. you had an acting person that was chairing the cfpb at that time. so hopefully they learned a lesson from this. we can make sure. self-regulation in that regard is not going to work. you have to have a regulator that's focused and can detect these things. >> i wanted to bring back to the issue becky touched on to start with. on this show yesterday, the chairman of your committee mr. hensarling said the issues of pay and whether mr. stumpf should keep his job is an issue for the board. not for lawmakers. you disagree with that. you called loudly he should resign. is that dangerous if lawmakers

are separately telling companies who should run the company opposed to just looking at whether laws have been broken or not? >> what i'm saying is basically the perceptions are important. if you're a base manager, et cetera, something goes wrong on a consistent basis, that individual is generally fired because of it. because it happened on his or her watch. the same thing is here. i am arguing on behalf of my constituents i want to restore confidence in wells fargo to make sure we maintain confidence with wall street and main street to make sure that gap doesn't continue to open. because that would be a problem for us all. >> you know, congressman, the one thing i thought watching yesterday and we've offered a lot of criticism to how the bank has handled it. yesterday i thought though it was a series of speeches and people kind of preaching to him. he didn't really get a chance to

talk. if you're going to hold a hearing and ask questions, maybe give him time to answer next time. >> and congress's approval rating is 7% and it's not going up after yesterday. a lot of grand standing, a lot of people that seems to like to hear themselves talk. >> i think what you heard is some frustration. people like me who have constituent who is lost their homes and some of them still out -- >> not condoning anything the bank has done. >> so we've got a low rating. press has a low rating. >> we do. >> i'm getting tweets now saying i wish that congress was as indignant about government wrong doing as this. >> this is not to say that anything the bank has done is -- that we're condoning it. because we have been very critical too. that's the one thing. i do feel like he mishandled when he went before the senate.

but i don't think that he got a chance yesterday. >> there's some carry over from eight years ago too. >> there's no question about it. >> and there is a long of anger. >> no question about that. that's my frustration. i'm a new yorker. i know wall street is important. i know our financial institutions -- and i see this divide is getting wider and wider and wider. we shouldn't be fighting one another because we need one another. that's what my frustration is about. if it wasn't for the way we do mort gagages on a regular basise wouldn't be the country we are. so we can't throw that away. and so that's -- and i see the divide happening. that frustrates me. >> yeah. there is a lot of frustration out there. i think it's channelling what people feel back in the districts. but thank you very much for joining us, sir. >> good being with you. still to come this morning, breaking economic news. personal income and spending at 8:30 eastern. we'll bring you the data and the market reaction. plus when we return, squawk

the vote from des moines, iowa. back in a moment. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley

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welcome back to "squawk box." we are live in des moines, iowa.

we are squawking the vote this morning and in person early voting kicked off in iowa yesterday. we should tell you democrats doubling down to try and close the gap in this swing state. battleground state. joining us now for more is dr. maguire, the chair of the iowa democratic party. and we're happy to have you here this morning. >> thank you. >> i have the ballot here. you filled this out yourself here. she's at the top of the ticket here. >> she is. >> butly tell you having spoken to people here on the ground, there's a trust deficit. there seems to be a real sense of distrust about hillary clinton for those who are voting for donald trump. is there any way to close that gap in your mind? >> well, i think she's doing that. and i think -- what i think about -- i know hillary clinton. i have spent much time with her. and i tell people all the time i think other people who know her tell them this is really an issue we should get rid of.

because she is very trustworthy. i think for a presidential election, this is a woman with policies that are going to lead us forward. this is a woman who you saw at the debate has such control of the issues and such a leadership quality. this is someone who could be commander in chief. so i think that's really what people are looking at. >> depending on which poll you look at in this state, between about five and seven points off, trump is ahead at the moment. are you doing on the ground? tell us about what happens here. >> i would say we have polls that say it's even. it's always been a tossup state. it will always be a tossup state. but what we're doing we have people on e the ground. we have 33 office ace cross the state. we have hundreds of volunteers and organizers. we are making a push towards early voting to make sure everybody gets their voice heard. we believe if we turn out our people, we win. >> it seems there's a big distinction between the voters in the cities like des moines and the rural areas. and do you say to yourself i'm not going to even focus on the rural? i'm just going to go city? how do you do it?

>> i think hillary clinton is talking about people that matter to all the people of iowa. when i talk to people and we go rural every day. i don't know if it's as much divided, but people are talking about college affordability. people are talking about the economy and what she can do to bring jobs to america. we are talking about those sort of things or minimum wage or whether we can get equal pay for equal work. these are the issues that whether your kitchen table is in rural america, these are the issues. >> you're talking about issues. >> yes. >> and policy. and yet so many people look at this election as one of personalities. the owners of this place, we're at java joes this morning, talked about how much they liked spending time with donald trump. they liked him as a person. i got a sense they didn't like her in the same way. >> i don't know what to say to that except when you run our country, i want to make sure we have someone who has the kind of intellect and the kind of policies and the kind of steadiness to make sure we have a foreign policy that's appropriate and an economic

policy that's appropriate. and i got to tell you, whether donald trump is a nice guy or not, he looked unhinged in that debate. he looked unfit to be our leader. that's where i go. >> usa today agreed with you this morning in an editorial. so there is the trust issue. they called him a liar. but i did want to understand this. one of the biggest issues in iowa when you tick down the list, top issue that you're trying to address? >> i would say economy. >> and it's a tax issue for people? how are they thinking about about that? >> i think it's a jobs issue for people more than anything. i don't know if you saw, but mark zandi who was an economic adviser for mccain, he says in iowa specifically hillary clinton's plan would increase 100,000 jobs in iowa and donald trump's plan would decrease by 33,000. that's what people are looking at the economy. >> over the next couple of weeks b we have the debates. you think that's making an impact? >> i do. people are really excited about who -- they really saw hillary

clinton and who she could be. >> really quickly we talked about tpp with a number of guests this morning. both candidates say they're against tpp. you could argue he's more against tpp or has bigger trade issues. but how do you think about that given that seems on both sides of the aisle at least in this state they want tpp? >> i think what hillary clinton has said is she wants fair trade. she wants to make sure that we're not getting unfair trade to our country. i think that's where our farmers want to go too. so i think that works with them. >> thank you. >> no problem. thank you. appreciate it. >> we wish you luck over the next couple of weeks. >> we're going to have it. coming up, we should tell you squawk heading to the farm. we're going to talk about some of the big economic issues for the state living off the land. much more coming from iowa as we squawk the vote. still to come. m hearing good things about the network. all the networks are great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50% on most current national carrier rates.

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♪ welcome back to "squawk box" this morning. i am here in des moines, iowa, where we're squawking the vote. the beginning of our series iowa of course is a key farming state in the u.s. and caught up with a handful of farmers yesterday. and asked them about the top issues on their minds. >> one of the important issues for us is getting more trade. agriculture is one of the things that has the most to gain from

tpp. and nafta's been good for us too. we need more exports. >> and as farmers, we're really good at producing. and so that means we have more product here than we can use. i was in japan this summer and i saw just how vital our products are for a place like japan. you see the u.s. beef, you see the u.s. pork over there. it's good for them. it's good for us. let's just be careful about making smart trade deals that protect american interests but also can benefit these trade partners. >> how do you guys think about taxes? a big part of the argument over both of these candidates is how they're going to approach taxes and how they're going to grow the economy. >> being taxed to death is no way to grow an economy. it's like if i wore stiletto heels out to the corn field. it doesn't make sense. >> how do you look at donald trump the businessman and how does that influence your thinking? >> i think we need to run government more like a business. we need to cut the corners and reward the people that don't spend their entire budget instead of rewarding people who do. >> if you have somebody who has

more of a business mind about how to negotiate rather than spent their life in government, it could very well be better. >> when you go home either to your families or talking to friends, how split do you really think this state is? >> i think it's definitely holding up to its tenure of a battleground state. >> i have been talking to friends life long democrats that are saying i'm going to vote for trump. i've had enough of no action, no results. you see it on both sides of the aisle where people who always voted one way, they're mixing it up this year. >> and we were for the most part in trump country. i should tell you two of those farmers voted for donald trump. the third on the left still a little up in the air about what he ultimately wants to do. but as much as we did talk about the issues as i've said a number of times this morning, a lot of this seems to come down to personality. sort of a visceral response to who they like and who they don't like. but we've got a lot more coming

up from java joes. if you're a local come down to say hello. >> we see the sun coming up and the people coming in behind you too. >> yes, the sun is coming up. yes. and you got rain though back in new york it looks like, right? >> yeah a little bit of rain. >> it's a little dreary. when's your flight tonight? are you doing other packages? drive out to the country. >> i'll be fine. we're going to do some more stuff from here during the day. i'll fly out tonight. >> you were in a corn field? cool. >> we just saw where he was. >> we were in the corn field. >> we're going to check in with andrew back in the heartland. >> you know, you didn't do what everybody always does and that's the cow milking thing. that works every time. you know, we sent guys out -- >> thank you for not stereotyping. >> they try to milk a horse or something. do you know how to do it? i don't.

be d you try it? you know which end to go to, right? >> i did not try it. we had a couple of cows. they to to bombed a couple of our shots. >> make sure it's a cow and not a bull. that's my advice to you. >> we'll see you in a few minutes. when we come back, we'll dig into numbers and bring the instant market reaction. "squawk box" will be right back. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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we're just seconds away from august reports on personal income and spending. and rick here? what are you doing here leisman? >> i am. i do this differently than rick. >> i can tell you u.s. consumer spending. >> it's up 0.2% in august. that was the consensus. july unrevised. there's the table. >> you think differently than rick. thanks for telling us that. glad you -- >> you know, joe, i'm doing you a favor here. i'm filling in for rick and there you are just ragging on me one after another. but what's really nice is people notice it joe. they notice how cool i am in the face of --

>> yeah. >> waging up 0.1%. that was big. disposal income. i believe that's a miss right there. let me go to check that out. do you know what that is, becky? we were looking for 0.1%. look at the savings rate which is up. and then we also should have an inflation number in here somewhere. the price index up 0.1%. and i believe we get a year over year. i don't see it. >> i'll tell you the latest figures do show a little bit of caution according to the wires. the hint of slowdown in purchases of autos and other big ticket items. spending on durable goods down 0.3% from a month earlier. >> that's right. becky, i know you're sick of it, but i want one more question on deutsche bank. >> okay. yes? >> so the only thing i care about here -- i mean, i care about deutsche bank. i think it matters. does it show that all the

gyrations and hoops we've jumped through since the crisis are working or not working? >> this was toby cosgrove's point earlier. the surgeon and ceo of the cleveland clinic got the question earlier. >> brilliant question. i wrote down a list of things i want to look at. does it show they have enough capital and liquidity? does it show there's more transparency out there? is there before oversight? and do we know about the counterparty limits? >> and did we do things right here in america. >> i don't know if they have the second chart. mike just sent it to me. you guys are great in the back there. take a look at this. let's ponder this for a second. okay? the red line is the u.s. -- federal reserves minimum for all u.s. banks after a stress event. 4%. now look at every european bank underneath there. every single one of them is below it. what this tells us is we've done some work here in the u.s. we followed a path. we raised equity. and by the way, chris whalen

points out it was a post-t.a.r.p. thing. when we switched the government ownership back to private hands, they had to raise equities. so the shareholders took it on the chin then. the europeans went to this thing called cocos. and they are the equivalent of what dustin hoffman in "rainman" said about kmart. >> it sucks? >> yeah. i didn't know if i could say that. that's what dustin hoffman said. jamie dimon was apoplectic about this. they convert to equity in a crisis. we rejected them in the u.s. >> only in a crisis. because a lot of debt converts to equity. >> this is special -- i forget what it stands for. something convertible obligation. we rejected that in the u.s. there was a push to make it happen. it didn't happen. i'm not saying that, you know, obviously a lot of talk in congress about needs to change.

dodd/frank, make it easier on community banks, small banks. because of the regulation. but when it comes to the big banks, what we did in raising capital. we'll point out one thing. the deutsche bank cds is only and there's quotes around that. only 240. what happened to morgan stanley in the crisis? a thousand. so the concern or fear about the thing being wiped out or going away is not quite there the way it was. so there was some progress. the level of fear is lower. >> okay. great. >> i know you don't want to do anymore. but i think that's what it's working or not. do we have a single bank problem or a systemic problem. >> steve, thank you. our guest host this morning cleveland clinic ceo dr. toby cosgrove. one thing we haven't talked about is congress getting involved and it's interesting to watch epipen or martin shkreli.

it's fun to watch them one off the industry. but then again, i've at least made the point that we can either have innovation or you're going to have some serious profit margins for years because of patent protection. and shareholders of that company is going to benefit. or we can have, you know, much lower prices for everything. is the innovation worth it the way that we structured it to give? >> i think we're dealing with two different things here. i think you've got epipen and mylan. and those organizations really have taken advantage of generic drugs which nobody else produced. >> and its regulators are part of the problem. because there's no -- >> there's no competitors. because there wasn't enough financial incentive to be competitors for a drug that's been around for four or five decades. in which were used a great deal. but this is rolled over into us and huge increases in our

expenses. then if you look across the entire pharmaceuticals, we've seen our costs go up 10% annually. that's a little bit more than inflation. so we are really struggling a great deal with our pharmaceutical costs. >> drug companies say it's the cheapest in town trying to treat someone. no hospital stays, no doctor visits. if you can find a miracle drug, it's well worth it. >> and i agree with that. i don't think there's any question about that. but the question is what is the profit margin on it. >> right. so lipitor. everybody's taking it. okay? or a lot of people are taking it. think about if you didn't have that patent protection. and then, you know, a lot of these companies do extended release or try to extend it some other way and spend a bunch of money on that. >> exactly. >> so what if -- is that the way it should work in the private sector where shareholders are rewarded by investing in that

company? or should the people that are taking it have a break and hold all of our inflation and health care inflation costs down? >> i think you have to have a balance there. >> do we have a balance? >> no. i think what we're seeing is we are paying for the innovation in the pharmaceutical industry here in the united states for the rest of the world. >> right. >> and in the same devices. for example, there's the heart valve manufacturing in the united states which sells for $300,000 a heart valve. in japan it's $10,000. and it's $300 in europe. >> what? >> they are not selling the heart value in egypt at a loss. you see the same thing with others in the pharmaceutical industry. there is a tremendous premium we pay in the united states which is not paid in the rest of the world. so they are obviously going to a market that will absorb that sort of price increase. and that rolls over into all of us. that rolls over into you and all of us who are having to do that.

we're struggling to bring down the cost of health care and make it more affordable. and not see our insurance rates go up. and it's -- and i frankly think it is a national priority for us to control this. because it's hard for us to be competitive if we don't have a healthy and affordable health care. that's going to affect all of us. just one piece of it is the pharmaceuticals. >> another one of these nuanced issues -- >> it's a very nuanced issue. >> you need innovation to lead the world and don't want to ruin that. but some people game the system because of -- >> it's a green industry that has lots of innovation and has saved a lot of lives and we support it. but you can't have excessive abuse of the pricing. >> all right. thanks. when we return, we're going to head back to iowa. we're not stereotyping. there are some farms out there, right? there's cows and stuff. we're not saying that's all there is. where andrew is.

what does that even mean squawking the vote? have we defined that? >> it's like rocking the vote but we're squawking the vote. we are here live in the hawkeye state and joining us next is a long-time gop donor and member of the trump transitional team. we're going to talk to him about what's going on in this swing state when we come back in just a moment. for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities

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well i'm retired now. so i just sit here watch nothing. if i were you, i'd work as long as you can, son. get nfl sunday ticket - only on directv. and watch live football anywhere. switch today and get $100 reward card. welcome back to "squawk box." we're squawking the vote this morning. we've been talking politics and

business here in iowa with the trade and key concern for the state. farmers say ineffective trade agreements can put a burden on export crops. that's something our next guest wants to see fixed in a donald trump administration. joining us is an agriculture adviser to the trump campaign. we're thrilled to have you here this morning. >> great to be here. thank you. >> so it looks like your man donald trump is down about five to seven points in this state. are you worried at all about the change in the next couple of weeks? >> i think everything can change. but it feels like he's up five to seven. it feels if he stays on message he should win the state. >> what is the single issue for you? >> i think the big issue is the change in the direction in the country. i think a lot of people feel that the next generation isn't going to have greater opportunity than what we've had. and decline and quality jobs,

income levels, opportunity of trade. and government over-regulation. >> do you put yourself in what i call the affirmative or negative camp? i affirmatively like donald trump and want to vote for him or i really hate hillary clinton? >> no, i would say that i affirmatively like his stands on issues better than i do hillary clinton. i don't care for hillary clinton's accomplishments or lack of. but i do think that for agriculture, for iowa, for job creation, he's the better choice. >> what do you say when you see there's an editorial this morning op-ed from "usa today" first time they've come out and written about anything so strongly. unfit to be president. they called him a serial liar. >> you know, it's really interesting to me that they can say that when we have 20 years of the clintons from the foundation to benghazi to e-mails that she's never accountable for.

you know, so i think that it's again a disconnect between the establishment, the media, and what real americans are thinking that get out to work every day. >> let's talk about getting out to work every day and the big issues there. when it comes to growing the economy and growing the economy in this state, what needs to happen? >> i think two things. i think one if you think about agriculture a enfaand farming, e harming income levels. not putting others in the u.s. on a fair playing field. two, we have over-government regulation that's increasing costs and creating uncertainty for your business. so the combination of those two is not a good thing. >> and you don't see hillary clinton, you think working hard enough on the regulatory issue, i imagine. on the trade issue, they're both in the same place on tpp. but clearly donald trump has been stronger on those. at least more outspoken. >> if you look at, for instance, a couple weeks ago china instituted 35% on distiller's

grain, it didn't matter. they decided they were going to have a 35% tariff. if you're someone relying on that market, that's a bad thing and unfair thing. same thing on japan on their tariffs on beef and pork. they have 16-year tariffs that will go off 16 years from now, andrew. and some of us being older, 16 years in a long time to wait for a fair level playing field. >> to the agree there's a critique about donald trump in trade it's that there's a worry there could be a trade war. >> i don't think so. i think that the practicality of just having smart trade agreements. and when you have disagreements, having options in the trade agreements that they can be solved. i heard someone say we took it to court. 18 months from now it'll be okay. a banker isn't going to wait 18 months for something to be okay. that's unfair. >> if he wins, do you have a place in the administration? >> not that i know of. what i want to do is i want to see good sound policy. i want to see practical things happen. and i think all of us should

make a difference in that. >> final question and it has to do with what some of the farmers we were talking to yesterday called disposition. what do you think of donald trump's disposition as a supporter of his? there was a little bit of a debate around what he may or may not say in the next couple of debates and how that may impact things. >> you know, i think sometimes we often cringe a little bit at some of the things he says, but at the end of the day a lot of us think those things and say those things privately. he happens to just say those out publicly. and that's not a bad thing. he doesn't apologize for his wealth. he doesn't apologize that we need to make this country a better country. and he doesn't apologize for sticking up for america. and i think that's the key. >> okay, bruce, thank you. >> thank you. >> wish you luck the next couple of weeks. bruce, that was a terrific conversation. now, when we return, we're going to visit with our friend jim cramer who's at the new york stock exchange. we'll get his take on today's top stories. we'll talk deutsche bank with him as you might imagine. "squawk" returns live from des

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welcome back to "squawk box," everybody. let's take a look at some stocks on the move this morning. shares of printer maker lexmark

are moving this morning. the u.s. agency that investigates foreign acquisitions of u.s. companies. stock is up by almost 14%. costco reporting quarterly profit of $1.77 a share for its. that's four cents better than the street was expecting even though sales came in slightly below forecast. costco says it benefitted from its switch to visa cards from american express. they say the deal gives a better financial terms but it was one so closely watched a lot of people wondering what it means for am ex too. spice maker mccormick earning $1.03. raised full year forecast as productivity improves and stock up by 1.6%. let's get down to the new york stock exchange. jim cramer joins us now. it was all the deutsche bank yesterday. it's weird, i get scared of consensus and nobody really thinks it can devolve into anything that frightening, jim.

that makes me a little nervous. i guess at this point that's probably true, right? >> well, i think yesterday people felt that it could be very frightening. and i do think it's very disconcerting. the problem is of course that for anyone to say they're going to backstop them, if the government says they're going to backstop them, short to kingdom come. i do think that the justice department at a certain point will react to some politics. i don't think president obama wants angela merkel, who is one of his closest friends, to get in big trouble because of the justice department. i think the justice department will make this thing go away in a way that is not -- >> that's interesting. that's a really interesting take, jim. you kind of wonder about that. >> they're best friends. this is a politicized justice department. obama's not going to let merkel go down the drain. obama's about to leave. there's 100,000 people on the line here, why is he going to destroy merkel and her party? that's what this is -- i mean,

look, this is a political situation. the justice department's been political about these the whole time. this is president obama and chancellor merkel. and i don't think chancellor merkel is going to lose her election because president obama on the way out says i want deutsche bank down. but everybody thinks that's what's going to happen. it's not going to happen. >> that's really interesting. >> i predicted $17 billion for bank of america. i predicted $13 billion for j.p. morgan. i predicted $10 billion for citi, i was wrong by three bill. i can tell you the $14 billion number goes down very big if you think deutsche bank is on the line. how do you think they picked these numbers? out of due process? no, they pick them to punish banks. you don't want to punish merkel. this is a national bank. this is a champion of the german people. and it's not going to be obama on the way out that's going to wipe this company out. it's not going to happen. >> jim -- >> so what's going to happen is warren buffett -- the warren buffett type is going to come in like bank of america when it's five, going to get a prefer,

yield percent much better than negative rate. this is what's going to happen, but it's going to have to go down first. >> i love that take it makes a whole lot of sense. we're out of time but i want to throw out props quickly. it was jour interview with john stumpf that made warren buffett finally break his silence. he admitted he did call him up because he told him he didn't think he did very well in that interview. >> thank you for mentioning that. it was a hard interview. i thought if that went poorly, then the congress would, you know, kind of like a try run, except i didn't want to lynch the man because -- >> people were watching, and that was definitely the takeaway that they had. >> the fact warren buffett watched made me feel great. i went to my executive producer said, do you see that, warren buffett watches the show, maybe we have made it after all. thank you. >> we'll see you in a few minutes. thanks, jim. coming up, our guest host call on the state of health care, you got one? >> i got it. >> all right. stay tuned. we'll be right back.

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welcome back everybody. our guest host this morning has been cleveland clinic ceo dr. to toby cosgrove. it's been a pleasure having you here. we asked for a state of the health care industry right now.

what kind of report card grade would you give? >> health care in total flux right now. it's chaos, but it's slowly putting itself back together. it's consolidating. the quality of the health care across the country is gradually getting better. >> it is? >> yes. >> after getting worse for a while or something? >> no, i didn't get worse. but we've seen over the last ten years gradually the improvement in the quality metrics across the country because pay is associated with it. and when pay's associated with it, they generally focus on it and it gets better. >> the big worry is when you -- if you don't increase the supply and you vastly increase the demand that the quality would suffer. and that when people are pushing back at seven, six years ago that that would be the outcome. but each person that would have it would have less good health care. that hasn't happened? is it possible to manage through

that? >> you know, i think what we've seen though if you look at the metrics across the country, they've gradually been improvement in health care quality. it's been slow, but you see in fewer readmissions, lessinfections -- >> because of obama care or in spite of? >> we don't know, but we're measuring it now. so people are a little safer in the hospitals than they were. the real question is what are we going to do with the demand and the supply of people who look after and that's going to change. who's going to treat you, where are you going to get treated, how you're going to get treated is all going to change. it's changing in the fact that you're now having pas and advance practice nurses looking after you more and more. >> many times it's fine. >> yeah. it's fine a lot of times. and where you're getting treated you're going to be treated outpatient more and more as surgery moves outpatient and you see people -- >> a lot of people are going to urgent care clinics.

>> yes, they are. >> i just got my flu shot, one from walgreens and one from local pharmacy. >> that's about access. many people coming into america people recognizing this is a huge industry and trying to pick off bits of the industry from the hospitals. >> is that a good thing? >> well, i think it's a realistic thing. quite frankly, we don't have enough primary care physicians to look after everybody with a sore throat or ear ache. so the cvs of the world if they begin to interdigitate is a good thing. >> it's been a pleasure having you here. >> nice to be here. >> you're sitting in andrew's chair and, you know, i always miss my buddy. andrew, i'll see you monday. >> i love when toby's sitting in the chair. before we go real quick, i want to thank the folks at java joe's. tim and amy have been terrific. red straw, guys, green straw with apologies to howard schultz

at starbucks, had drinks at a place last night called rocca's and had a drink called spontaneous horny. >> what? >> that's the name of the drink. didn't work out really well, i returned the drink. it's a great restaurant but the producers always like me to do silly things so here we are doing silly things. anyway, it's been terrific to be here squawking the vote. we're going to do a lot more of this over the next couple fridays as we get towards the election day. >> did i hear him correctly? >> yes, you did. >> i did? >> yes. >> andrew, wish we had more time, but see you monday. make sure you join us monday. "squawk on the street" is next. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. say good-bye to september a