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 and q-3. we wrap up both today with a

clear focus on financials. deutsche, the euro, spreads after the worst day for stocks in two weeks, europe lower on pressure from the banks, euro under the same fate. oil taking a backseat for now largely unchanged. road map will begin with what else, deutsche and capital concerns rattling markets around the world. the ceo attempting to calm the waters, will that work today? >> it's not just overseas, of course here in the u.s. wells fargo is back under fire yesterday after ceo john stumpf faced angry lawmakers in the house of representatives. >> and the last day of the quarter, tech leading the rally. what does q-4 portend? but first up, deutsche shares slumping to all-time lows in frankfurt trading taking the european banking sector with it, that's on concerns about deutsche's capital position and reports that hedge funds are reducing their exposure to the bank. the ceo john cryan defending his company in a letter to employees saying due to ongoing rumors,

talks about their liquidity reserve saying there are forces in the market trying to rattle trust in that institution. >> well, i think that's true. i think that we're in an asymmetrical world as commentators. i think if i said this is going to be like lehman brothers and in the end it's like lehman brothers i look like a smart guy, but if it isn't, then no one cares. in other words the tenor of the rep portage is really very negative because it's safer to be negative. it's safer for me to say that bank has issues than for me to say it doesn't. but i will actually give you a scenario some people are talking to me about that is a more positive scenario. the problem here aostensibly, justice department reports to the president of the united states. i'm not saying president obama is nixon and we can have a massacre at the justice department. that's something nixon did, he fired the people investigating. i'm saying at a certain point

obama and merkel are friends. this is a -- what's known as a national champion, deutsche bank. they are not going to wipe out a company with 100,000 employees when president obama is in good relationship with merkel on the way out it is not going to be his game, set, match to wipe out this company. so what i'm saying is the $14 billion now from what i understand is going to be reduced dramatically. and you're not going to find this company in as much trouble. of course they can't talk about a backstop because then the shorts take it to one and the backstop kicks in. i think this is more like a potential bank of america situation in 2011 where you're able to get a preferred that has a very high rate, which is very good considering the negative interest rates in germany, say 700 million warrant at a certain price to have 700 million shares, a short squeeze ensues not unlike the $5, $7 that happened in 2011, and the shorts have to scramble. but this all has to unfold in a negative environment where we hear a lot about how they're in trouble before you get that exquisite moment where deutsche

bank might be saved. >> so your point is doj doesn't want blood on their hands. >> obama doesn't. in the end the doj. the doj does 17 billion for bank of america because you can do bank of america. all right. they've got the reserves. they can do it. they had the reserves. even though they had very good attorney. j.p. morgan could afford $13 billion. citi could afford seven. this is -- do you take one of the largest employers in germany and wipe them out while you're finishing your career as president of the united states and angela merkel is your number one ally? >> i think the number one words taken out mean different things. i don't like to anybody here i look to the credit markets and the credit itself is not being priced in any way for liquidity event. so when you talk about wiping out, jim, first of all, that doesn't mean this bank is going away if that were to even happen. second of all, they've got $43.5 billion of core equity tier one -- excuse me, 43.5 euros.

>> $220 billion in cash on hand. >> and their credit mean the two and three quarters of 23 are trading up 46 basis points. this is not showing itself in their credit. so let me just continue, the point is -- yeah, i'm going to, i think people are more concerned about equity delusion than anything else. >> that's what -- >> and there's virtually no one who really believes that the german government would let this go down with the derivative book it has, with its importance to the german economy. and so the road seems to much more likely be that you get equity delusion hence why the stock is going down but not really playing out in the bonds. >> i am agreeing with you. i'm saying if you were a commentator and you came out and said that this could go and it went, you'd look like a genius. but that perhaps what we ought to do is separate the reportage,

so to speak, as a matter of fact it might be an opportunity -- >> not to buy the stock. >> no, an opportunity for saudi arabia, an opportunity for warren buffett, an opportunity for someone deep pocketed who goes in and makes a sweetheart deal to get that preferred, i mentioned, and the warrant. i am in complete agreement. i'm just saying it's very hard to say something positive and then have it on youtube. did you see cramer said deutsche bank was good? did you see that? >> it's already being written as you're speaking. >> right. cramer's a clown. did you hear he said deutsche bank survives? >> we should mention stock's up from yesterday's lows. >> yes. >> david's point on the bond is important. for more on deutsche we want to go live in frankfurt talking about this cryan letter and more. annette, good morning. >> good morning to you as well. of course the focus also is on relief. we are seeing shares trading not that badly down as they were in the opening. but of course the other focus is

the letter john cryan is writing to his own staff, trying to increase the morale inside the big two towers behind me where the headquarter of deutsche bank is. and of course that is also reflected in a way -- it wasn't the biggest story in the markets here today. if you look at the biggest daily handle they are leading on china. if you look at like the most read daily newspaper like the general one, they're leading on charlie roads. and the tabloids are leading on how much actors are paid, so it's very dear to our hearts, isn't it? so by in general i'd say the heat is not over for deutsche bank. over the weekend, i guess the media will take its time to digest what happened to the lender, the share price for the first time since 1983 at that level below ten euros.

and i guess the bad press will only start over the weekend. back to you. >> annette wiesbach, thank you. lowest here since they were listed at the nyse in 2001. why would you want to own it going into the weekend given the vacuum in news we may have here? >> i think that, again, going back to david. this lehman analogy everyone remembers they were trying to find the korean bank, this weekend, that was like the first weekend of september and korean bank did not come to and stock got spanked on that monday. i still think that 11 is too high. but i do think that if you were -- this is a very clubby country, if you were a large investor and you were in touch with the government and you were able to do a substantial cash infusion for a preferred, then i think that you wish you were not short the stock. >> right. you might want to take a look at the bond. so your point about lehman, if there is a run on this bank, which seems unlikely, and they

have a great deal of liquidity, by the way, even over 30 days if they get no funding, but then if that were to happen and then if they weren't bailed out as we didn't bailout lehman, we'd have a different conversation. >> that was also time when there was tremendous stress -- >> yeah, the entire system was in trouble. >> germany's got the best balance sheet in the world. they do. they're better than china, i think. >> they're certainly strong. >> and you could actually envision a world where germans might actually start spendi ini some money to build their country back up, little fiscal. not just monetary. from the eu. but i think that they're six down and five up from say from here. >> sure. >> but that at a certain point the six down you're going to have to cover because i do believe there could be an investor, not like the koreans that didn't want to be with fold and lehman, but i just think that the german government. if you knew the justice department was not going to

pursue them at this pace because perhaps maybe there's a little bit of politics involved with the justice department, you will wish that you have covered. you will witch you have covered. how is that? >> if that's true, why did deutsche appear to be so stubborn in their willingness to negotiate an amount? and, two, how can merkel even appear to be helping them when she's been the tough cop against the greeks, the tough cop for the ecb? >> 100,000 people work there. remember what this fellow cryan's been saying. he's been saying we think the justice department is fair. saying, listen, we think they're fair. which is a negotiating ploy in itself. you didn't really hear a lot of our banks say, oh, they're fair. >> right. >> but i do think at a certain point, you know, you get a little bit of politics involved there. is it so odd that, look, everyone will deny the scenario i'm about to lay out, but maybe it's someone in the obama white house that said, you know,

angela merkel is kind of our friend and that 14 billion, is that fungible? the justice department talks to the president. it's not like the justice department in "narcos". >> which you just finished season 2. >> i didn't want to give anything away. but there's a separation of powers between the supreme court and the president. but the justice department, they are allowed to talk. remember when bobby kennedy talked to president kennedy and said get hoffa? well, i mean, they talk. and angela merkel is a very valued ally. and they don't want to destroy their ally because of 14 billion when it could be fungible. you agree with any of this? >> yeah. yeah. i think there's a possibility that it won't be 14 billion certainly. >> how about 4 billion? >> all right. >> all right. 4 billion. >> two to five is in the range people talk about. >> yeah, i think maybe 3

billion. maybe, hey, we get together and figure it out over some we-- >> it is oktoberfest. >> you know, how about -- you want to know how poor at one point we were? how about some -- there are germans out there who know it, that's horse hoof, it's not as bad as you think. hey, mcdonald's used to put it in. >> oh, man -- >> no, the old days. i had buffett on -- >> saw you tweeting with easterbrook. >> i think easterbrook is king. dividend boost, mcmuffin, anniversary yesterday, stock goes higher. >> when we come back, it was tough enough for john stumpf on capitol hill. stick around to find out what buffett had to say about the wells fargo ceo. also ahead, the biggest vc backed u.s. ipo of the year. nutanix going public today. worst day for stocks since the 13th. financials and health care now negative for the year. we're back in a minute.

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environment included. learn how you can save at pge.com/save together, we're building a better california. it was another rough day on capitol hill for john stumpf, the wells fargo ceo grilled on

thursday by the house financial services committee about the bank's unauthorized account scandal. check out this exchange between stumpf and congressman gregory meeks of new york. >> your bank, you, ceo, chairman, violate -- basically for me was on top of what's basically been a criminal enterprise. >> there's no question we don't do everything right. and we've made mistakes. we're upping our game -- >> so who should pay for it? if you're not doing everything right, who's accountable for it? >> we're going to make it right for every one of our customers. >> you're v.p. made $100 million bonus package. who is paying for it? who's taking responsibility for it? don't come tell me you're sorry. >> that bite made all the evening newscasts. now our becky quick reporting. buffett's take on his interview, stumpf's interview with you on mad and how that could have gone better, he says. >> yeah. always great that warren buffett watches. i'll take that.

>> he didn't give it great reviews from mr. stumpf's perspective. >> yeah. i don't know. i mean, becky spoke with him. >> but it's what he didn't tell becky as opposed to did tell. and this based purely on having read the transcript from becky's reporting. >> right. >> that seems interesting, i guess. he department really give an endorsement of stumpf, did he? >> i think the phone call must have been a tough one. i said some people say you should resign, he said no. i talked about how his hero is vince lombardi and vince lombardi would never blame the offensive line coach. you have to take the heat. and i don't think warren buffett liked the way it went. i don't want to put words into the oracle's mouth. it was a tough interview. i wasn't mike wallace and essence, but it was a tough one. >> listen, you know, when you speak to people who are expert in these kinds of things, the

majority believe stumpf will have to step down. >> yes. >> certainly prior to the end of his term two years from now but more likely in the near-term. that's a board decision. unclear what conversations if any are really taking place, guys, in terms of that or how they're thinking about it. but you've got to believe they're thinking about succession to some extent right now, whether they go outside or can look inside and what they have to do. >> right. >> this is also for becky's reporting yesterday just in terms of whether or not buffett had spoken to the board, which some people had suggested had taken place. >> well, look, having been in some situations counsel comes in and here's what counsel says. it's a standard speech. the institution must be preserved. if anyone thinks they're bigger than the institution or anyone tarnishes the institution, they must leave. it really doesn't matter who's tarnishing it, even the founder. doesn't matter. in this case it's not a founder. so you can tell that's what they say.

i mean, i've been there, you know, when the firm comes in and says, hey, guys, let me tell you our advice, the institution must be preserved. so then the board members say i guess what he's saying is we have to separate ourselves from -- >> once you become a distraction more so than a help. yeah. >> you know. >> yeah. >> and then they say get your own counsel, my friend. >> we'll see. you don't want to predetermine anything. >> no, you know, look, i had talked to him many times. i think he is a great -- i like john stumpf. with that i guess they'll lynch me. congressman lynch will lynch me for saying i like john stumpf, but john stumpf under this period is tarnishing the bank at this point. and when warren buffett says he didn't like the way it went on that, what does he think it went like in front of congress? it's a time when banks throw over people. they do that. companies throw over people, people we respect and like and they think the institution's not

going to be preserved. it's the standard speech and it's a frightening speech when you're giving it to the board. i've given it myself. it's not a great speech. >> next week is the eighth anniversary of the wakovia purchase, believe it or not, time flies. 2008. >> wow. >> anyway, we'll watch that and we'll watch for a price action on wfc today. we'll get cramer's mad dash, we'll countdown to the opening bell on this friday, the final day of the quarter. more "squawk on the street" from the nyse is straight ahead.

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all right. we got about seven minutes before we get the opening bell for this final trading day of the week. when i saw your tie this morning, i immediately said i like that tie. >> and what did i say? >> you turned it around. >> it's a kirkland tie. who is kirkland? that's costco. and costco had a mighty quarter. here's what we're finding out. now i know ignore the chart which is a hideous chart. costco's going to be up today. it was a good quarter, not a great one. but there's a big issue here, david. actually two issues. one is they transferred from american express to a visa card through citi. i have reason to believe america's best left this thing in tatters. they made it very hard for visa and costco. they blew it up. now is the first quarter that they really may have gotten it together. but it was a horrendous handoff from america's best to citi. horrendous. >> right. >> now we're starting to get in to the point where things are a little better. raised the cost of the costco card, not international, but

yes, an exchange between one of my favorite cfos and a fella by the name of oliver chen where he was talking about amazon. the cfo said, listen, my family does amazon prime. and he said i hear some people think we're unamazonable, they can't get us, we don't buy that for a minute. we know we're on the red hot griddle, basically he's saying. so he is at war with amazon. and he's saying they can't do fresh like we can, even though there's great food deflation. he does say that being said a lot of deals getting killed in apparel. david. >> there it is. >> i feel like an atavistic. >> you're not atavistic. >> i'm not? >> no. >> all right, okay, but i do think this discussion of amazon must be read by everyone because it's what the merchants will eat. galanti is actually sure enough in his shoes to discuss amazon.

>> you take encouragement from that even though it doesn't necessarily mean that they're in a position to win. >> he says that atsmazon is winning at a lot of things and prime is fantastic. this is the elephant in the room for every retailer. and mr. galante, who i've spoken to and i love, i love, is willing to speak truth about how amazon has destroyed a lot of retail but it's not going to destroy costco. it's not. i bet i am a costco member, my wife is an executive costco member, and we're also amazon prime. and they can co-exist, david. this is not like the soviet union, it's not an evil empire. they can co-exist. we're like merkel and obama. hey, would you drop that thing with the deutsche bank? okay. >> all right. speaking of deutsche bank, of course we'll be watching those shares closely given the broader market ramifications. it certainly seemed to have late yesterday. got a lot more of course on that broader market. a lot more. >> do you have nhpi? >> we'll talk a lid lttle nxpi.

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you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell just in a minute on this friday, last day of september, last day of q-3. we've had five straight triple digit moves on the dow and yet for the month the s&p has moved less than 1%. least volatile september in a decade. >> it's unbelievable. where did people go? i mean, there's no players. i'm just shocked when i see the volume, other than for certain stocks, it's just nonexistent. big cap stocks proctor, 180,000 shares trade at opening, used to be 1.8 million. i don't know what's happening here. what are all these people doing? thank you. thank you. >> right now they're going to ring the bell. let's get that. the s&p at the bottom of your screen down here at the big board today med equities realty trust focused on health care

operators celebrating its ipo, which happened yesterday. at the nasdaq nutanix celebrating its ipo. we'll talk to the ceo later this morning on "squawk alley." we're going into the month of october, which over the past 20 years, jim, s&p up 70% of the time. q-4 80% of the time. >> yeah, when it's up, it's good. when it's down, it is so bad that we just have to remember that some of those octobers have just been brutal. so, yes, if we get through this period, then we're through. then we're through. we're okay. yeah, if we get through this, gold medal if we get through this next period. >> next period being what? sorry. >> the election and earnings. >> past the elections. >> look, pepsico, con agra, accentura, did anyone read that conference call? these are three big companies that deliver great numbers. they were just congratulations

gentlemen on a good quarter numbers. those are some important companies. don't forget next week's dream force, love force. >> are you going out there? >> i'm going to get on the love train. >> you are? >> yeah, the love train. the marc benioff dream force love train. >> right. >> they got shopper speaking, tony robbins. >> i'm sure you noticed salesforce's efforts to sort of -- >> that's why i brought it up. it's not a love train. >> it's not going to happen. >> it's not a love train. >> microsoft already gotten approval here in the united states and number of other places for acquisition to linkedin, but salesforce decides to -- >> that was war. >> -- to file sort of -- or at least publicly call them out in europe before the eu weighs in. very highly unlikely the eu has any issues with this deal. so why are they doing it? >> this is so not marc benioff. >> what happened to the love between sacha and --

>> it's a hate train. >> what happened? i thought there was love. >> i don't know. >> worries microsoft is going to launch a competing product in some way? >> i don't know. it read so nasty. it was nasty. >> yeah. it did pressure shares of linkedin yesterday. you can see up a bit now, not very much. but it's really highly unlikely it has any impact. >> do you really think there's -- the tweet that marc put up is very negative. >> at least many of the experts believe so, although they've been wrong before. >> marc's frenemies with larry ellison. i think he's now a frenemy with sacha. they were like this. >> it's odd, more so because of that than anything else. again, it doesn't really seem likely to lead to anything, but he chose to come public and sort of make it known he's creating some hostility. >> hostility is right. yeah, i thought that was hostile. it wasn't mindful. >> when you go out next week you'll find where the love is. where is the love now?

>> that's a great song. >> it is. >> where's the love. that's better than love train, right? >> all you need is love is better than all of them. >> jim, speaking of aququiztive companies, journal seems bullish on the situation. >> we've been backers of nxpi, we've been criticized for loving nxpi. he believed the company was undervalued. they're looking for 120 is what i'm told. >> that's the number i've been hearing too. >> yeah? >> i mentioned this strange report that came out from bernstein. yesterday morning unfortunately i failed to mention this 20-page report about nxpi buy kwaqualc m qualcomm -- excuse me, the other way around. we get news they're in fact in talks, jim. most importantly to note, i think, in many ways if you want

a market check as we call it on these kinds of things, in other words it gets out there, you see how your investor base reacts, qualcomm has to be very encouraged. >> qualcomm up again, but qualcomm wants cash flow, which is bountiful, qualcomm wants the auto. nxpi has a hammer on -- >> right, chips. >> this is a deal that must happen for qualcomm. >> and many other things where they talk about potential for growth possibilities putting chips in everything whether it's airplane engines or anything else you can think of. also they have a great amount of cash at qualcomm, most of it's overseas. this is a dutch company. >> it's a dutch company. nxpi fixed up that balance sheet. what people don't understand is nxpi has an inferiority complex. inferiority complex, come on "mad money" and say, listen, don't people understand we are not just apple. we're not just near field communications. we are dominant. when you go to speak to the auto

companies, it is true that nvidia has a lot of content. but it is free scale that dominates the auto. everyone wants to be in the auto. nxpi dominates the auto. this stock it's 120. 120 is the price. >> autonomous automobiles will have even more. >> oh, my god, do you see how much -- >> then we'll all be just giant chip running around with an engine. >> true. so this is today. on thursday, it was the potato chip. >> incredible. >> today it's the semiconductor chip and it's amazing. >> looking at year-to-date gainers on the nasdaq 100 nvidia tops followed by amat followed by qualcomm. >> there you go. one of the things people don't realize, nxpi has cracked china better than any semiconductor in the world. chinese government likes them, 20-year relationship with the chinese government. qualcomm needs that even more. remember, they've done the emv for -- they created that

technology and brought it to china. now just in fairness, my trust did sell a little yesterday. why? because the rumors if they don't come true, then nxpi will retreat. >> right. i have no insight. i haven't done reporting on it. >> we don't think it's several months. >> that's what the reports were. i'm relying solely on the other reporters on this one because i have no knowledge of what's going on in terms of conversations. >> a lot of it is the domicile. a lot is just saying, listen -- remember the private equity guys bang the stock down 79, 80, 79 -- >> they were selling. >> they needed money so bad. >> remember free scale was a private equity controlled company. >> yes. >> but this is a deal that will happen, i believe. and i was amazed at the bernstein piece which you showed me was like, wow, that was -- >> well, it's not that we haven't talked about this, jim. >> i have had more complaints about talking endlessly about

nxpi. why does cramer every time in lightning round nxpi, welcome to nxpi, welcome to cramerica. >> covered at the wall. >> i think they're going to raise price. am ex trashed visa. they were so negligent in the way they handled -- i think they said, hey, you're with visa now. but a lot of these people didn't even know their cards were blocked. it was really just a terrible handoff. but costco put it behind. i love -- i'm going to costco tomorrow -- no, i probably can't. i'm going out west. but i like costco. >> they did say food deflation would continue for three to six months. at least that's what buyers are saying. >> that was a negative, but they did say fresh, fresh keeps amazon at bay. and the crab claws everybody knows are unbelievable. and, david, when you go with me to costco. >> yes. >> i want you to fast the night

before. >> okay. >> because we go free sample to free sample to free sample. and if you can't handle it, go home. >> i will. well, there's a day coming up where i'll be doing that. >> we'll break the fix at costco. >> i got to join. i got to join. i don't belong. >> you're not a costco member? >> never. >> 90% -- >> i don't have room for all that stuff. i mean, where do you put it all? i don't have a second place to put it. >> yeah, that's true. i'm embarrassed that i'm just gold star, but my wife's got the black card so i always feel good, i feel like king when i'm there. >> what does that run you, a black card? >> i don't know. she pays for it. actually, anything she pays i pay. she doesn't want the show so i don't know. >> that's how things work typically in a marriage. >> the dogs watch the show more than she watches the show. everest really likes the show. >> deutsche adrs up 6.5%. how do you square that with the

feeling, the mood yesterday? >> because the stuff we said on the show, i guess. look, warren buffett watched, so -- >> makes sense. >> look, i think it might have been over -- there's fear of what david said, which is that this stock may not be reflecting the side that you always told me. have we watched the bonds for lehman. >> the bonds were lows, but they aren't off as much in any way, shape or form as you would expect or being priced for liquidity event. >> right. >> they just aren't. so whether or not they're going to get massively dluted as an equity holder that i think is a fair question. >> well, i think you want to be that person that steps up to the plate and gives them that -- gets that preferred back. >> right. >> if warren buffett wants to make a fortune right now, he calls deutsche bank and say, listen, guys, i think i can arrange something. >> he typically stays here in the u.s. though, doesn't he? >> well, isn't there like a german -- they got a lot of warren buffetts over there. >> is there a european version of warren buffett? >> remember when i bought the

citi stake? >> yes. >> he's a bright guy. i bet you right now -- i know he watches the show closely. i bet he's making the call right now to cryan. >> selling that stake for a long, long, long time. it looked great for a while and then didn't look very good for a while. >> he can crush it on this. i always say hi to him because he never misses the show. he's our biggest fan. he'll call in if we get him. you know -- >> yeah. >> but maybe two people have a couple bucks and a third who could make it happen. >> yeah, it's a short list. the last day of the month has been positive three times this year. we're going to see if it happens today. let's get to bob pisani. >> good morning, carl. and we are sure starting positive. this was a very big open 7-to-1 advancing to declining stocks. we're down about 0.9% on the month. up 0.4 today. we could go positive for the month. take a look at germany because part of this rally we've been seeing today i think is due to germany doing a lot better. you see that? started down notably but moving

up all throughout the morning largely on the strength of the banks doing better. if you take a look at deutsche bank. and i think jim has a point about it. if it started moving when we were talking about the possibility of maybe somebody stepping in buying a high paying preferred stock as one option for deutsche bank, you see that starting to turn around. that happened earlier this morning as well for us. so deutsche bank is trading on the upside over in germany, i believe, right now. the important thing is it's been off of the lows right now. take a look at some sectors here in the united states. energy stocks, consumer staples, banks all doing a bit better. none of the bank stocks are down. most up 1% right now in the united states. these are the u.s. bank stocks, industrials, also rallying as well. it's the end of the quarter, and while we're down just fractionally, this would be two down days in a month -- in the last two months -- two down months, we may go positive, as i mentioned. so this quarter has belonged to the semiconductors. and you can see that in the nasdaq 100, nvidia, marvel,

micron, all had a fabulous quarter overall up double digits. small caps did well, s&p very respectable gain 2.5% here. going into the fourth quarter, you all know the fourth quarter is traditionally a very strong quarter. here's our friends at kensho, up 81% of the time since 1990. the average gain for the s&p you see on the bottom there 4.5%. big movers are consumer staples, health care industrials, fairly broad swath of the s&p does well including consumer discretionaries. what traders want is volatility, they haven't had other than a brief spike on oil in the beginning of the year and brief spike on brexit, and there were bets made there would be. there were big bets made in september, for example, that there would be volatility around two particular events. one of course being the fed meeting, and the other being the clinton/trump debate. none of them happened. neither caused any volatility. traders were a little disappointed. what did cause volatility is something nobody thought of

which is mr. rosengren not on anybody's radar suddenly causing a brief spike in the vix and brief decline in the s&p 500. so three major things caused volatility in the last few years, one is recession fear. that's not happening. the other is the fed, that's very much on everybody's mind. and the other shocks that are out there we can't figure out right now. so the volatility bets here is that we'd hope there'd be some volatility around election, particularly if trump wins and december fomc meeting. but bear in mind so far a lot of these bets haven't panned out. the vix futures aren't that high for october and november and december. not dramatically higher, indicating a lot of people are just hedging bets right now. we got that ipo, nutanix, it's going to be open in the next hour, open priced at $16. that's well above the price talk. and that's very, very important because the last round of funding for them, their series e a while ago, $14.40. if that would have priced below that everyone would have said

this is very disappointing news for all those unicorns that are out there. so an ipo price at $16 values at 2.2 billion above the last round of private funding. we're going to be watching the opening very, very carefully. guys, if it's opening above that price, that will be a big flashing green to all those unicorns out there. guys, back to you. >> bob, we'll see you in a bit. bob pisani on the floor. let's get to rick santelli, chicago pmi just a few moments away. hey, rick. >> hi, carl. let's do the charts real quickly. obviously the deutsche bank issues at least for the moment seem to have dissipated. look at a two-day 10, we could clearly see that these yields seem to be mean reverting, same as a 10-year, but look towards august 1st for 10-year, this is the key. we're back in the range and it's a powerful range in the 1.50s. truly. if we look at a july 1st of bunds, little different scenario. not that they're somewhat in a range, but their range is right at the bottom of where their

yields close as they dabble and flirt with this minus 15 minus 14, remember minus 19 is the all-time low yield close. if we look at what's going on in currencies, it all depends on which direction you're aiming at. dollar index virtually unchanged. euro got smacked on deutsche bank coming back. that's what you really want to watch. and the dollar/yen, watch that 100 level it's very significant. and as i pointed to the september read of chicago purchasing managers is now out. it is better than expected at 54.2. keep in mind we're looking for maybe this to reflect more of the adjective we've seen in other isms, think service sector in particular, but this manufacturing index now, well, it's the highest going all the way back just to july. july was 55.8. keep in mind we had two sub 50 reads this year. they were in may and february. so this is indeed good news. and sequentially pretty nice move in from its 51.5 to where it now stands at 54.2. back to carl and the gang.

>> rick, see you in a little while. rick santelli, we will keep an eye on nutanix as bob said the much anticipated cloud ipo opening trade and live interview with the ceo is coming up. meanwhile, this would be a sixth day of triple digit moves. dow up 117. back after a break. now that fedex has helped us simplify our e-commerce, we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave. good point ted. you're living proof that looks aren't everything. thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce.

waiting for enterprise cloud company nutanix to open for trading. we'll have that live followed by a interview with the ceo later this morning. speaking of the cloud, cisco's chuck robbins on last night telling jim where the situation. >> everything is moves faster than it ever has. which is going to require us to move more rapidly than we ever have. requires us to embrace more technology transitions at one time than we've had to do in the past. and we have a tremendous focus not only on taking advantage of these transitions but also transitioning our own business to what you talked about with

iot, with software, cloud, security and i think we're going to have to do it faster than we ever had. >> yeah, this has to do with the fact we always thought of the old cisco as this switching and routing hardware company. and what chuck's doing is making it proprietary software, cyber security, internet of things, backbone of those connections in which there's so many millions and they're gaining. so he just doesn't want to be caught up in the old days where they're just hoping to get the att contract. it's a much bigger bet but requires deferred revenue, requires a reading of the balance sheet. how hard is it when you do this kind of software as a service to understand the accounting. looks like it's not doing as well as it is $66 billion in cash. >> wow. we hear so much about the internet of things whether it comes up on the qualcomm and nxpi discussions, sofbank and not to mention questions of security. >> yes. >> interesting "the wall street

journal" story today about all these different things that have been hacked apparently including your router, your cameras. >> i know. look, he offers a soup to nuts just like john chamber soup to nuts offering but admits that hackers they're aggressive. he will have to do more. >> security's going to be paramount when it comes to this completely connected world we're talking about. are you paranoid? >> if you're not, you're crazy. >> you were born that way though. >> no, i was born very giving and loving. >> well, you're open to communicating on new platforms, i would argue, right? >> i am. >> you're not one of those who refuses to send an e-mail. >> no, i like them. i recognize that e-mail can be tricky and get on the front page of "new york times." before you send an e-mail, remember it could be on the front page of "new york times." remember, ransom is a big thing in hacking. they have your e-mail and they'll threaten you unless you pay. but chuck does much more of

institutional. >> well, we're out of time, but interesting how he talks about how quickly things are moving. >> oh, yeah, he said he had to -- >> constant from technology executives things are moving more rapid pace. >> you don't want to be a ceo in technology right now. it's happening too fast. >> we'll get stop trading with jim in a moment. dow's up 109.

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♪ time for cramer and stop trading. >> you know, the other day there was a very critical piece about alphabet by wedbush and really said, look, google's really finished, we don't like them, we don't use them anymore. i don't know how he gets his information. this morning mark mahaney comes out with 20% growth, revenue up maybe 30% to 40% on youtube. mark mahaney, this is a line in the sand saying basically wedbush, you are wrong. and this is a battle. this is claymation death match. two go in, one go out.

this is tina turner versus the master blaster, and the master blaster doesn't come out okay, if you recall. master blaster works at wedbush. >> some deep sub references right there. >> in the end you have to go to classical either do shakespeare or mad max. >> mad max. >> much ado about mad max. >> yes. that last one was great by the way. >> jim, what's on mad tonight? >> we have a company called viva systems, which is very controversial. cloud base for global life sciences. i always felt this company is a good company. the shorts have leaned on it forever. it's kind of the deutsche bank of the cloud, so to speak. how many pieces of e-mail did you get saying don't i know about the world ending at deutsche bank while we're on? these people have made it a cottage industry. >> this is their time. >> yeah. >> and those who think that the justice department has to get a call from obama. no, it doesn't work like that. there's like mind melding. you remember how spock, he did mine melding. you didn't have to --

>> wait, where did he put his hand? somewhere, right? >> you don't really have to say it. i mean, it's not like, hey, dolan, you're a genius. >> jim, see you tonight. long day ahead. >> tonight is kind of special. 6:00 p.m. eastern time. when we come back, we'll watch nutanix, we'll watch deutsche. dow's up 97. don't go away. 't selling guys... what are we gonna do? how about we pump more into promotions? ♪ nah. what else? what if we hire more sales reps? ♪ nah. what else? what if we digitize the whole supply chain? so people can customize their bike before they buy it. that worked better than expected. i'll dial it back. yeah, dial it back. just a little. live business, powered by sap.

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ok, ricky... ♪ good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with sarah eisen and david faber at the new york stock exchange. last day of the quarter, last day of the month. market trying to hang onto some gains here up about 100 points. deutsche we're watching closely up about 6% this morning on the adrs. we have some economic data crossing the tape. let's get to rick santelli with those numbers. hey, rick. >> yes, our september final read for university of michigan sentiment survey comes out at 91.2. that's the best read since june

when we were at 93.5. and of course the 89.8 was the mid september read. that gets tossed out. but what's fascinating here is guess what the august final read was? yes, 89.8. so even though the mid read goes away, that is the sequential comp, so we move from 89.8 to 91.2. we've had two sub 90s numbers this year in august and of course in april right around 89 as well. so these numbers aren't looking too bad. everybody paying attention to the cocoas, you know, those convertibles, and those have rebounded. so we're watching all that is deutsche bank today and markets seem to be at least for today looking past it. back to you. >> thank you, rick santelli. you mentioned deutsche bank, those shares as you say are up a little over 6% right now. wilfred frost is here with more, of course been following this story closely. >> david, thanks. good morning, guys, just to kick this off let's revisit the basics. as we all know capital is assets

less liabilities. liquidity is percentage of assets in cash. db has lots of liquidity, wor worringly little of capital. yet yesterday it was liquidity fears that mainly moved the market. the fear a few clients could pull out and that could proliferate. however, goldman sachs says liquidity position is stable highlighting that they have 223 billion euros of liquidity reserves which is 20% of assets. that's way more than lehman during the crisis. plus, central banks are more prepared for this. d.b. can tap emergency funding, for example, from the ecb at negative 0.4% and get paid for it if they need it. capital though is a massive issue. and that is what has understandably driven a 50 cent share price decline year-to-date. in the short term, it all rests on the potential doj fine tied to mortgage backed investments during the financial crisis. the leak of $14 billion for the financial figure of that fine

and selloff since has hurt them. they need a settlement, fast and as small as possible. quickly, if we did get disaster scenario, i think it could be serious, certainly for europe and also the u.s. goldman sachs says deutsche bank stands at the center of the european financial system. it is a major counterpart for all european banks and broader. and in a report in june the imf described it as one of the most important net contributors to systemic risk in the global banking system. so nerves certainly calm today, but if they spiked up, it could be systemic risk. >> well that's of course been the concern of the overall market. i want to bring in a couple more people. wilfred, you stay with us. also talk to managing director at guggenheim securities, more about the u.s. banks, and philippe, senior credit analyst at ermise investment management. start on deutsche bank, the bonds are moving but not that much. doesn't appear to be effecting

the credit at least, these concerns, as much as the equity. what's your take? >> yeah, the bonds haven't moved a lot, but move quite a lot over this year so far. almost making historical lows trading in the 70s. backing up which is always concern may suggest some counterpart long deutsche bank bonds they may be trying to hedge their position. been moving in sync with the shares ever since probably the doj news was leaked out to the press last week. >> right. all right. but as a credit analyst, when you look at, as wilfred brought up, capital is one thing, but liquidity's another. what do you find? >> yeah, well, liquidity it's at the last official date which is the end of the second quarter the 30 of june this year they have 225 billion euro liquidity

which is 19.7% of the balance sheet. it's a lot. they have disclose d -- of balance sheet it could use on top of those. so liquidity at the moment doesn't seem to be the problem. the only thing is in this type of situation of course depletion or liquidity and things can accelerate quite a lot. we don't know what the psychological limit for the, for example, the depositor in germany, how low the share price can go before potentially pull out. >> eric, you cover the u.s. banks, we've had you on many times to talk about them. and i think you're a fan of some of those stocks right now. what's the exposure and the risk level to american banks from what's happening over there? >> well, certainly deutsche and all of the major european banks are a significant counterparty to the u.s. banks. so they're certainly keeping an eye on this circumstance. but i think what this gets to is that and one of the reasons these concerns may be rising is

that capital or the erosion of capital is something that kills a bank slowly. ill liquidity is something that kills it overnight. >> so whereas i'm thinking back to all the conference calls in q-1 where we wanted to know how much energy was on the books, are people going to be asking the same question this quarter about d.b.? >> yes, certainly. i think the bigger issue of course is the off balance sheet exposures and the derivatives market because those of course require very little capital and high level of liquidity. so that factors into this analysis. >> wilfred, you mentioned the goldman note. they also made the point that the fact the stock and the adr yesterday had such a severe reaction to one piece of news flow that in the context of everything going on wasn't perhaps that big of a deal just shows how vulnerable it is to a vicious feedback loop which is something john cryan talked about in his employee letter today. >> absolutely right. i think going back to eric's point saying liquidity fears can kill a bank overnight, yesterday was a liquidity fear. so people reacted strongly to it. there's also a lot of muscle

memory, particularly stateside. don't forget this happened in the adr to the likes of leman. yes, deutsche has retail exposure. but predominantly this is a wholesale funded bank. not seeing a big run on depositors and i think today the bounceback in the share price is largely focused on people realizing this is much more capital issue, an ongoing issue, a massive capital issue, that like eric says doesn't kill a bank overnight. >> filippo, crisis in confidence, getting -- and to that point. i mean, the european banks in particular have always been questioned in terms of their balance sheets because they didn't seem to take the marks on a lot of the assets we did in our country quite a few years ago at this point after our first few rounds of stress tests. are those balance sheets in europe in any better shape than they have been in the past? >> i think i would say

marginally so. as you said european banks were very quick to write down the bad loans on their balance sheet. but i think since lehman we have seen an increasing capital in the european banks. i think probably capital's gone up from say 5% to some feel like on average 12%. there are some laggards, there are some banks that have to act, deutsche is one example. but i think on the asset side low they're taking marks -- the much lower on the books. >> only thing i would add to that is that european banks have tried to boost capital a number of times since the financial crisis, but they have been pegged back so many times, the eurozone crisis, greek crisis, various moves the boosts haven't done because share prices fallen but maybe have to boost again at lower levels. so there's been the intention

and it just hasn't worked to any length as it has in the u.s. >> i remember in 2007 christine lagarde had just took over, she was the french finance minister before that, she entered jackson hole, gave this huge speech about how european banks need to urgently recapitalize. and the europeans did not meet them well. there was a lot of political backlash about how she deserted europe now that she's at the imf. eric, how dire of a situation -- it's not just deutsche bank, but the entire european banking system in when it it comes to needing to recapitalize? >> i think there's a very significant contrast between what was accomplished here in the united states from a regulatory perspective and switzerland and the uk and everywhere elsewhere the governments stuffed the banks with capital then forced them to raise common equity to replace it. and in the process of that cleans balance sheets. in continental europe most was about fore bearing for these institutions to earn their way out of the problem which they've clearly never been able to do. >> well, we're certainly most

likely going to be speaking more about this. gentlemen, thanks to you both. eric wassestrom and filippo -- >> and wilfred frost. >> oh, i thought he was staying. >> we'll see him later, i have a feeling. when we come back, the impact of the election on your portfolio. and we'll go to iowa and hear from the top gop donor there. as we go to break last trading day of the quarter. apple, cat, intel. a lot more "squawk on the street" in just a moment.

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as election day gets closer, implications of a tighter race may weigh on the markets. for more on the election's impact on investors, let's bring in municipal strategist at morgan stanley. michael, good morning to you. >> good morning, thanks for having me. >> 39 days to go. so it's time to start thinking about this stuff seriously. you say the markets may not be reflecting trump odds as efficiently as they should. can you expand on that? >> well, we really think investors need to think about both candidates because both candidates have proposed pretty meaningful policies in terms of market impact, whether it be fiscal tax or trade. but the question is if you can put those into practice, clinton winning probably comes with divided government which makes it more difficult to put those in practice. trump winning probably comes

along with a republican senate and congress, and considering that he's tightened the polls lately, notwithstanding some of the more recent polls this week, think that if that continues then markets are going to have to start pricing in his early policy path. we think that path likely leads to things like tax reform and trade protectionism, two areas where he has both the motive and the opportunity to act. >> which assets would you look to see pricing better? is it equities? is it the dollar? is it the peso? what are you watching? what's on your screen? >> so we're watching equities rates and the peso. i don't know that there's a way to give a strong directional view on where those go because the trump on both those plans fatter tails, wider dispersions on both sides. for example, if you believe he can get a tax reform package through, then it's highly likely that's something we're calling

accidental stimulus whereby it actually is additive to the deficit and most economists that we talk to will tell you that that's something is hypothetically good given limitations of monetary policy right now. under that scenario you could envision risk assets doing better and yields going higher. however, if you're mixing that with trade protectionism, tariffs and the like, you can undo a lot of those benefits potentially even more than offset those sort of pushing policies the other way. so what we've been telling people is rather than taking strong directional views on markets, volatility hedges in those areas tend to make more sense. particularly since this is just one scenario out of many, most scenarios still point towards divided government. >> michael, i get why you and a number of other analysts are focused on tax policy and trade, as for the market impact. but isn't the real implication of this election for the markets going to come in the form of federal reserve? especially given the fact that donald trump is already calling out the fed specifically for its monetary policy?

>> yeah. so our interest rate strategy team led by matt hornbeck has weighed in on this and obviously to the extent that donald trump is not just lip service and truly does want to replace janet yellen, that's something else that creates a substantial amount of uncertainty. again, very difficult to determine the directionality of that uncertainty, which is why we think hedges make more sense. our team likes curve steepeners in that regard because one tends to track well with interest rate pickup and volatility, and capture some of the curve steepness picking up on both a mix of fed policy, leadership uncertainty as well as uncertainty created and/or stimulus. >> it's hard to have a conversation about dynamic scoring and budgets when the media at least is running with

lewinsky and machado, sex tapes, it's all over. how do you operate with a vacuum of serious policy -- >> the dynamic scoring point i think is fascinating because it is a way for stimulus to happen without it being sold as much. so the way that factors spinto r calculus is if we assume republicans control the white house and both houses of congress, dynamic scoring is a way for house republicans to sell something that might be additive to the deficit but without actually claiming it adds to the deficit because it will reduce the expected impact. so for example, the current trump tax plans have been scored as adding anywhere between $3 trillion and $5 trillion to the deficit over a ten-year timeframe. but one might wonder well why would the fiscal hawks in the republican caucus go along with something like that. but if you can use the power of dynamic scoring to mitigate that impact, perhaps you can sign

onto a policy that given the dna of the republican party there's more to want to support anyway. >> yeah. well, we're in an environment where we're just happy to have the government funded for a few more weeks. so that tells you a lot. michael zezas at morgan stanley. michael, appreciate your time. we'll talk to you more over the next several weeks. >> thanks very much. appreciate it. speaking of the election, early voting is underway in many states. and we're traveling to some of the most important swing states. our andrew ross sorkin sitting down with the biggest gop donor in iowa. he joins us from des moines with more on that. hello again, andrew. >> good morning. this is a battleground state, i should say donald trump does look like he has the edge in the state right now by about 5% to 7% depending on what poll you're reading. but hillary clinton was here physically in town yesterday. tim kaine was recently in town. pence was here. so a lot of movement trying to persuade the voters to swing

their way. we did sit down with bruce rasstetert try to understand what are the biggest issues that are effecting both this state and the way farmers are thinking about this election. take a listen. >> if you look at for instance a couple weeks ago, china instituted 35% tariff on distilled grain, didn't matter if we had a trade agreement. they decided they were going to have a 35% tariff. if you're someone relying on that market, that's really a bad thing and an 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 a little bit older, 16 years is a long time in our lifetime to wait for a fair level playing field. >> you know, guys, we talk a lot about policy and what policies and issues -- the big issues. we always say we want to focus on the issues. carl was mentioning some of the big issues that get put to the side as we talk about what's on

twitter. but we talked about personality this morning and that was an interesting one because bruce did have some misgivings about donald trump's disposition. take a listen to this though. >> 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. >> and i would say if there's any lesson in the conversations we've had over the past 24 hours here in des moines, as much as we do talk about the issues and policies that i just said, it is so much about the personalities. it is so much about who people like and who they don't like, who they trust and who they don't trust. and we've had a number of pretty fascinating conversations here, guys. >> where will you go next? which swing state, andrew?

>> so we're off to florida -- we're going to do this every friday until the election. so next week we're off to jacksonville, florida. after that we're to arizona. and we're actually going to make some selections about where we want to go after that depending on exactly what still is a battleground. we will see. >> i vote for ohio. >> andrew, is it just you? or do becky and joe also have to travel? or is it solely you traveling the country? >> it's, it's, it's, it's little old me. >> oh, it is. okay. i thought maybe i asked a tough question there. okay. it's just you. sorkin on the road. well, good travels back to good old new york city. >> i think they call it squawk the vote. >> yes. he's apparently the only guy squawking it. >> squawk the vote. >> all right. >> i'm squawking it. >> andrew ross will vote. that's what it is. >> hey, look, we say good-bye to andrew ross because we're showing you qualcomm there and you can see it is up of course importantly in part because those talks to acquire nxp semiconductor or reported

yesterday. and shareholder seem to be responding very positively. there's a look at nutanix by the way. we'll keep an eye on that. that's a cloud-related initial public offering. we'll speak with the ceo coming up on "squawk alley." we got a lot more ahead coming next here on "squawk on the street." stay with us.

want to get a market flash here on cognizant. we'll go to seema mody. >> cognizant falling as much as 15% in early trade. the i.t. consulting company is conducting a probe into whether payments in india violated a federal anti-foreign corruption act. cognizant's president has also resigned. the company has notified the justice department and the s.e.c. that it is conducting an internal investigation. cognizant shares hitting a fresh 52-week low on this news. we'll keep an eye on shares as we progress throughout the day. sarah. seema, thank you. another stock we are keeping a close eye on, deutsche bank. it is the story of the day, of the week really. there's the adr which trades here in the u.s. rebounding up about 6.5% after a sharp selloff yesterday. and as you can see over the last

year or so. we should also note that the german dax, the stock market, just flipped positive as sentiment recovers here. it closes in about an hour. so what could the global fallout be from deutsche bank? we're wondering the economics and global financial system reaction. joining us with that is vincent reinhart at standish mellon asset management. vincent, thank you for phoning in. we've seen before in 2008 and 2009 when there's real stress in the financial system, it ripples into the broader economy. are you looking at that type of risk here with deutsche bank? >> obviously it's a risk. 2008 and 2009 was a very important reminder when things go wrong. but it's also a reminder to policymakers. and so i think that they will be doing everything they possibly can to avoid the lehman moment. >> my other question has to do with the european central bank. clearly it is active.

it's providing liquidity, which is helpful, but it's also adopted this negative interest rate policy, which is very painful for bank profitability. so is the ecb making matters better or worse? >> i think that the last few quarters were not an advertisement for negative interest rates. the bank of england governor was right when he admitted he was not a big fan of them. at the end of the day the amount of reserves outstanding in the banking system is entirely determined by the central bank's balance sheet. if you decide to have a negative deposit rate, you're taxing those reserves. and in a bank centric system, taxing reserves is an impediment to the economic progress. >> that hasn't stopped bernanke from writing for brookings that it's something we should not toss out, maybe even consider over other alternatives. does that make any sense at all? >> it's probably on the list, but it should be pretty far down

on the list. if you think about the conversation in jackson hole in august, chair yellen at the press conference. it doesn't really feel like federal reserve officials view it as a viable alternative. it's on the list because you can't rule out anything. >> so is there a role here for the ecb at this point? >> the problem is once you do something that you say is accommodative and you have support and it's very difficult to take it back in terms of policy, where the ecb has a role is they've hemmed themselves in on their asset purchases. they're going to have to do something soon, whether it is to change the capital key, you know, portion of different assets they're buying across the different sovereigns, or their own self-imposed limits. or else they're going to run out of room for asset purchases next year. so it would be reassuring if they told us soon what they're going to do. >> you know, the politics are certainly at play here.

as always in europe this has become a political problem with merkel facing an election next fall, what do you think she's going to do here? one of her claims to fame is keeping the eurozone at least together and muddling through economically through what have been a series of shocks and crises. >> i think clearly one of the first victims in this sort of financial war is going to be a principle, ie, no bailout perhaps. chancellor merkel has made enormous efforts, a lot of resources committed to keeping the european project together. and one would presume they will keep doing that. but they also have to protect their sovereign national financial champion. and so they're going to have to, you know, find a way to thread a very, very narrow needle. >> certainly going to be an interesting few months ahead. thank you vincent reinhart weighing in this morning on

deutsche bank. >> thank you for having me. we'll have much more of course on d.b. and we'll head to the bank's headquarters in frankfurt next. as we head to break take a look at the dow laggards for the third quarter. exxon, coca-cola and verizon. "squawk on the street" will be back after this quick break with the dow up 119. the infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound) mobility is very important to me. that's why i use e*trade mobile. it's on all my mobile devices, so it suits my mobile lifestyle and it keeps my investments fully mobile... even when i'm on the move. sign up at etrade.com and get up to six hundred dollars.

good morning everyone. i'm sue herera. here is your cnbc news update at this hour. former israeli prime minister shimon peres was laid to rest in jerusalem. leaders from around the world including president obama and former president bill clinton were in attendance. president obama praised peres in his eulogy. >> to the people of israel, i could not be more honored to be

in jerusalem to say farewell to my friend shimon peres, who showed us that justice and hope are at the heart of the zionist idea. >> israeli prime minister benjamin netanyahu and mahmoud abass, shared a peace prize for attempting to resolve the israeli-palestinian conflict. back here at home, ralph witworth pioneer in investing who sparked change at companies died on thursday after a long battle with cancer. he was the founder of relational investors, whitworth was 60 years old. you are up-to-date. that's the news update this hour. i'll send it back down to you, carl. sue, thank you very much. sue herera. financials are getting crushed

as the health of deutsche continues to worry investors on this final trading day of the quarter. the sector now necktigative for year. gabrielle -- happy friday to you. >> thank you. >> we hope. we're going to find out. are we back to a period to have to worry about balance sheets going into a weekend, headline risk on a sunday out of europe. >> we would say we're in much better financial and capital shape than we used to be just a few years ago. i think this issue with deutsche bank is symbolic of some of the challenges facing the european financial system rather than a systemic issue we need to worry about all the way over here in the u.s. >> certainly, david, they've gotten their share of criticism all yearlong. draghi specifically. is this going to be a payback of sorts? >> well, i do think it's a payback, but maybe not the same one that everybody's talking about in the market. i really think it's a symbol a bit of the stress trade relations globally. it wasn't that long ago that

apple had a little bit of a tax issue over in europe and low and behold a very similar number pops out from the doj for deutsche bank. so, yes, it's deutsche is in a weaker position and has been than many other banks, i think fed stress tests even indicated as such. but i actually see this whole story line that's developed with deutsche as much more symbolic of deteriorating trade relations, which you can trace back maybe even to our election here and some of the trade discussions that are taking place in our debates as well as in our body politic. >> and, david, it's already starting to show up in the numbers. world trade is back to levels we haven't seen since after the financial crisis. and that really takes a bite out of global economic growth. so how as an investor do you navigate what looks to be a higher protectionist kind of environment? >> yeah, we've really looked at the brexit template and one of the biggest financial movers in the move to kind of close the uk down if you want to call brexit

that, was the currency. so we think here and we've been pushing our investors along this line that if the u.s. were to go to a more protectionist stance that really the escape valve for that move would be lower real returns on capital and a lower dollar. the u.s. dollar is really the story for us. and it has been way back since february and march when we were talking about currency war detaunts. but since brexit and since the upped trade rhetoric we've had, the story line for a suppressed and now weaker dollar is really gaining traction for us. and that's what we're talking with our clients about. >> you go along with that, gabrielle? >> well, when we think about the trade issue and how depressed trade has been, we bring it back to the issue of productivity. productivity's very much related to global trade volumes. so if we continue seeing such weak trade, we can continue expecting weak productivity. and as a result weaker long term growth, which has been such an issue here in the u.s. and around the world. >> are there certain sectors or industries to stay away from if

trade does continue to pull back here? >> we're not at the place where we would say that. we're just making a broader generalization about the continuation of 2% growth versus 3% and as a result we're taking down longer term return assumptions for equity markets and interest rates as well in the developed world. >> but you are looking for second half gdp to be stronger than first half? >> we are. the first half in the u.s. was very depressed at 1%. a lot of headwinds from inventories from experts and those are drags starting to fade in the second half. we see consumption remaining strong. numbers this week this morning pointing to that. so we're expecting a bounce to 2.5. >> hey, david, you know your way around systemic risk. i can remember your voice being an important one during the crisis for example. i mean, what about this argument in deutsche bank and these concerns that certainly seem to show themselves in the equity yesterday, perhaps not in the debt. is it real or is it imagined? >> you know, i think it's a lot more imagined than real. and, look, i spent a lot of time

thinking about this stuff in '07, '08 and into '09 when i went back to the federal reserve. i think we changed the collateral system so much, we could spend a lot of time talking about it and maybe confusing a lot of people on the show, but the way the collateral markets are intertwined today is just nothing like the way they were intertwined back in '06, '07, '08 and the sort of forced selling, the repo markets, the rehypothecation, all the buzz words that were really confusing everyone at the time. and we didn't really realize how interconnected this was. all of that stuff is really been the kabosh put on it by regulators and the balance sheets are a lot cleaner. so i think the story line of some sort of forced selling doesn't really resonate with me. we could see, you know, capital call from deutsche bank. we could see equity dilution. we could see some forced mergers. we could see a lot of other ways to deal with the $14 billion

fine they might have to pay. but i don't think this is one of those forced selling trades like we saw beginning with a lehman moment or any of the other things we experienced in '07 and '08. >> i'll let you respond to that. have the last word. >> we would agree again it's not a systemic issue but again it is representative of the challenges facing european financials and one of the big reasons europe has understood performed year-to-date. so we need to see improvement in sentiment there in order for europe to start pmping b inperf again. >> can i just add one thing, you don't expect a weaker dollar or a lot of stress from this, do you expect the federal reserve to raise rates? or does the fact this is rippling across markets give it another excuse not to next quarter? >> they certainly love to find excuses. and they slash their forecast for '17 and '18 by 50 basis points each. and i think that if they were to raise rates, which it's very possible they could in december

if the data come out okay. i think it will be one of the most dovish hikes you've seen in a long time. and the expectation for significant rate rises going forward will continue to be marked down or suppressed. so i don't see that as a significant driver for dollar strength. to me the trade story and lower real returns on capital are a much bigger driver for the dollar. >> that's some good work right there. david, gabriela, thank you so much. deutsche as we know is rebounding this morning. what's the sentiment though on the ground in germany? our annette weisbach is outside company headquarters in frankfurt. and joins us again. annette, good morning again. >> well, thank you so much. after a little bit of a panic mode in the morning when we also had shares opening up sharply lower, as we were seeing those losses have been less and less during the course of the trading day. we are soon at the end of the trading session here in germany,

more or less an hour to go. and the mood in general is really sober. if you speak to people here on the street, they even don't really know what happened to deutsche bank. they're not aware about the problems the bank is actually having. of course we have the occasional headline that the banking shares -- the shares of deutsche were falling below 10 euros a share for the first time since 1983 here in the german market. but nobody really is extremely concerned about the health or the stability of the lender. of course inside the bank things look different. if you talk to the staff, they are concerned. they're afraid about the future of the bank. they are of course afraid that they might lose their job if the bank would have to restructure to sell assets, et cetera, but that sober mood in general in the german society is also reflected in the headlines here. for example, the biggest business daily they are having the biggest headline on china.

then we have the biggest daily here, they are talking about toll roads in germany. then we have the biggest tabloid which is actually read by everybody here in the market and they are leading with pay for two actors which are very famous in germany. so you see i guess there was a lot of panic mode, but this panic has receded. perhaps over the weekend we might see more bad press for deutsche bank as the media is only digesting what actually happened. but i guess it will be more or less concentrating on the fact that there are some hedge funds from the states who speculated against the bank and not essentially talking about general instability of the lender. with that, back to you. >> okay. all right, thank you very much annette weisbach reporting for us from germany, of course, on

deutsche bank. coming up, we're going to speak with the ceo of the opener on the nasdaq, you can see the name is nutanix, there's a picture of that ceo. and it's the last trading day of the quarter. the s&p stocks leading the way. seagate, nvidia and chesapeake. we got a lot more ahead on "squawk on the street." hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim.

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according to one top trader, there are three big reasons to buy apple stock right now. what are they? go to tradingnation.cnbc.com to find out. more "squawk on the street" coming up.

welcome back to "squawk on the street." consumer staples standing out as one of the leading spite of s i sectors. costco providing boost to consumer stocks improving consumer sentiment data this morning and a number of positive analyst notes on retail this week also helping lift the sector. shares of spice maker mccormick,

retail giant walmart and snackmaker mondolese up more than 5%. david, back to you. thank you very much, seema mody. now let's send it to rick santelli with the santelli exchange. >> good morning, david. good morning, beeterman, beeterman, beeterman, aloha. >> aloha to you guys, from new york. >> oh, you're in new york. sorry about that. i want to know what are you seeing on the major sectors, bond or fixed income inflows, what are you seeing on the equity side, charles? >> well, the fascinating thing and last month we saw massive outflows from equity mutual funds and not as big an inflow into etfs. so that means that people are taking money out of managed accounts and putting less back into the market via passive etfs, which really means like the same thing like the bond

market, there's a hollowing out of capital available to buy when there is a downturn. remember that markets do go down at some point when the central banks stop levitating everything. and when that happens there's no buying power underneath. hedge funds have redemptions. equity mutual funds are losing money. whatever money's going in is going passive. >> all right, now, charles, having said that, and let's remove the biggest fundamental, central banks, we're in between meetings. we know that has a huge influence. but just on the merits of your statement, what do you think the outlook is up to the next fed meeting with regard to the level of the s&p 500 and the 10-year note relative to this tight range in the 1.50 area? >> well, as you've said many times money is fungible. if the central banks globally do not tighten, then the markets will probably be okay. that said, if it looks like the

numbers that the u.s. will tighten in december and it gets closer to december, i think we'll have a tough time, you know, next month, in november, if people really expect it. >> but you see a green light. we know it's only your opinion, but the s&p 500 for example, you know, if we're revisiting the august ranges as most markets seem to want to do, it should be for the moment a rather positive outlook all things considered, correct? >> yes. well, the most recent actions by central bank has been to ease. there's been no tightening globally. so right now we're in an easing mode. >> charles, i want to get one other topic and we're running out of time. deutsche bank, everybody wants to talk about deutsche bank. what does charles biderman think about deutsche bank? >> let me ask you a question. has there been any major bank allowed to go broke by its government? >> i knew you'd get to the heart of the matter. >> lehman was a brokerage firm. >> exactly. so it's a bit of ka boo ki

theater. there's a lot of politics in this country. thus we not forget there's a lot of politics going on in the ecb areas, like germany. your final comment, please. >> well, i think, you know, we're actually going back to flows. we're seeing no seeing outflow global, europe, american investors are taking money out of the global markets and the global -- there's a lot of concern about there's no growth -- >> listen, we've got to go. charles, you know what i hear? i think the u.s. is going to benefit from all of this. and by the way, congratulations. trimtabs relaunched the flow edf. you were the first to start talking about flow buyback. congratulations. thank you for being our guest today and we're going back to "squawk on the street". >> thanks for that lively conversation, as always. coming up, newtannics about to start trading. we'll hear from the ceo first on cnbc. the dow is up 111 points and financials are in the lead.

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the super rich are going to

vote republican, right? well, not this year. according to the recently released insos affluent survey, among those making the $250,000 a year, 53% plan to vote for hillary clinton. just 25% are backing donald trump, and surprisingly, 14% are still undecided. joining us at post nine to help break down those numbers is ipsos's chief executive officer, steve krause. you look t as these households making $250,000 or more and more than half support hillary clinton, even though she wants to tax them more. >> that's correct. >> we look at a group we call the ultra affluent. that's the top 4% of the country. they hold 48% of the net worth. you might think of them as skewing really, really republican and we don't see. about half will vote for hillary, one out of four for trump and the other one out of four are going for gary johnson

or saying, i don't know yet. >> do you get the sense that the why is they're doing something other than that's best for their own finances. >> even a majority of the wealthy hillary voters that we talk to believe that their own taxes are going to go up and they feel it's the right thing to do. it's particularly interesting if if we look back a couple of months, we saw these ultra affluent were evenly split between voting democrat, split between hillary and bernie, and the other 50% were split between the three republican candidates, trump, cruz, and rubio, at the time. since then, as the election has sort of evened out a little bit, hillary picked up all of those bernie voters, whereas trump only picked up about half of the cruz and rubio voters. >> and they instead went to? >> either gary johnson or saying they're still undecided on what they're going to do. >> do they express any concern at all about the penalties they'll pay in additional taxes? or is it outweighed by social concerns? >> they feel that raising taxes on the wealthy is the best thing

for the country at this time. and their concerns about trump run the gamut from concerns about his judgment, lack of experience, and quite importantly, feeling that trump isn't really grounded in conservative values. >> i would assume most of these people are also college educated and i know a lot of the polls show similar numbers, at least, when it comes to that group in terms of where they fall. >> and certainly if you look at a lot of the trump support in the general population, it comes from lower-income, less-educated consumers, as you go up and up in income, you get a more educated consumer. >> is there any correlation that the wealthy actually determine what happens in the election? i mean, usually, yes, they give a lot of money in terms of ads and that helps, but everything's being turned on its head during this time. >> certainly, the wealthy do give a lot of money. the wealthy also vote, in much greater numbers than the general population. are much more engaged with the political process. >> finally, do you expect these numbers to vary, move around at all in the next 39 days? >> i think if you look at the really wealthy, they're pretty set at this point on who they're going to vote for. >> steve, thank you for joining us with the results of your

latest survey. that is steve krause from ipsos. up next on "squawk alley," we'll speak with the ceo of that highly anticipated ipo, a key litmus test for tech ipos, nutanix, first on cnbc. the dow is up 125 points, s&p 500 rallying more than half a percent. we'll be right back.

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good morning. it is 8:00 a.m. at salesforce headquarters out west, it's 11:00 a.m. on wall street and "squawk alley" is live. good friday morning. welcome to "squawk alley." jon fortt with me at post nine along with sara eisen, who joins us for the hour. sara, good to see you.