ww granger first day. other leaders ww granger and johnson controls up 23%. that's spider industrials ticker xli hitting all-time high in trading earlier today. we'll see if that sticks through the afternoon session. now let's head back downtown for the start of "squawk alley," guys back to you. >> thanks. 8:00 a.m. at amazon in seattle, 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪ good wednesday morning welcome to "squawk alley."

carl quintanilla joining us spark capital quinn and roger, good morning to you both pressure continues to mount on silicon valley as u.n. today, leaders from the uk, france and italy will call on social media companies to remove terrorist conten from their sites within two hours or be held liable for content on their platforms facebook, microsoft and alphabet are attending today's summit roger, it is sort of a continuation of the political pressure they are getting from all sides. >> to me it's legitimate pressure facebook and google in particular take the position that they are not responsible or accountable for anything that happens on their platform. given the things that happened over the last year, i think there is a need for the conversation about exactly what the limits ought to be i would think terrorism is only

a small peaiece of the problem. >> megan, is it possible with today's technology to remove the content in one to two hours. there's all kinds of nseemly comments on social networks and stays longer than that, i would imagine. if they were liable for it, they would probably be in a lot of trouble. >> this an extremely serious issue and not one with multiple sides. these companies are all on the same side. by collaborating closely on technologies, specifically language processing and artificial intelligence, they should be able to move beyond whac-a-mole strategy to predict accounts and content before it becomes problematic. >> i would imagine it's much easier today with technology to do this, to do what people want them to do isn't it better for them to be out on the forefront as opposed to have government step in and say this is what you should do. >> melissa, i think the

challenge here is we saw last week what the pro public article about jew haters inside facebook the problem is algorithms are set up now they get paid best when people are emotional. if they are afraid or angry, that's what causes lots of sharing. the algorithm set up to create things around that guess what, the algorithm needs to be changed and fine tuned in ways that make it a lot easier to patrol and police unacceptable behavior and prevent it from happening in the first place. >> megan, a few months ago when facebook was in hot water because of people posting footage of deaths, suicide, that kind of thing, the solution from facebook was to hire a few more human curators your point is it's going to be ai that's the solution. >> i think serial to apply more humans to the problem, but that doesn't scale over time. so the companies really do need to work together across the

contingency to find scalable solutions to use artificial intelligence to identify problematic accounts and conten before they are online. >> the whole thing relative to hiring people, that's a band-aid that is a political solution to make people stop talking about the issue. the underlying issue, exactly as megan said, is the algorithms caused this to happen. it is a conscious business strategy to appeal to people's emotions one of the side effects of that is you get really ugly things going on in the fringes. when you have 2 billion active members as facebook does, fringes include essentially every nasty person in the world. you sit there and go, wow, congratulations. you've just made the platform for malcontents and bad behaviors around the world. >> so what do we in the future want to see happen with engagement or time spent, right? do those metrics need to -- >> i would like to have a conversation i think we need to have a conversation about what is the

appropriate role of technology in society and what should the limits be on their monopoly power and on the things that are allowed to take place in these environments. >> hard to argue for monopoly power when there's so many of them getting into each other's spaces if anything they seem to have a lot of influence over our attention. megan, maybe you have the last word on this subject is this the death of the idea that you can get people to post whatever and then sift it out later? does there need to be more gating ahead of time >> i think we've identified a category, specifically around terrorist content, that supersedes all traditional norms around what kind of content we want to see online if these companies, when they do normally compete for user's time and activity, they want to collaborate on technology to remove harmful content from the internet. >> we'll talk more about that in the days ahead there's a lot of news on wearables, ft reporting amazon

working on its first wearable device, smart glasses that pair with alexa also apple's smart watch series 3. will join us shortly, said new watch will let you ditch iphone. not all agree calling it unreviable wired says this year's watch looks just like last year's. we continue to wrestle with wearables and where they fit >> the thing is apple is clearly a highly motivated developer of this product they will eventually get it right. the real question is, does that make any difference? let's imagine it's perfect if you sold a watch to everybody who wears a watch, it's tiny in comparison to the scale of apple's business as an investor, it doesn't make that big a difference. >> is that the right way to look at it? you don't want to sell a watch to everybody who have a watch, but beyond, people who want to use it for health functions. they have been so slow to roll out any sort of beneficial health functions on that watch.

>> i think you're totally right. in order to sell to people who don't have a watch, first you need to sell to people who do have one, or at least that's my premise. i may be wrong on that my impression is that the software made a big leap forward here the reliability issues are fixable. they are not structural. the health things, that's the place they are getting the best reviews right now. at the end of the day, $400, i don't know how big that market opportunity is for them. we'll see. as an investor, i'm not making the bet either way. >> megan, that's my question to what extent should entrepreneurs and developers and investors care about this watch? for the iphone, games were huge. there was all sorts of money being made in the ecosystem. with the watch it seems like maybe some back end health services but otherwise it appears to be unclear, at least from i sit what do you think? >> you know, i'm very excited

about the apple watch 3, specifically with lte, because i think this represents the first real meaningful step towards the great untethering, where we know longer have to be attached to those phone bricks that we hold so near and dear to our hearts i think this is a totally transformational moment. yes, there are admittedly some bugs at the outset it sounds like that is not uncommon certainly it's something that can be fixed with software this is just the beginning >> that's largely the journal's point, even though joanna says the service is unreliable, she says there's something freeing being in the water and being able to make a phone call. >> the other thing is there's also the small factor, prevents you from doing a whole bunch of the annoying things about smart phones yeah, you can still get notifications but you're not going to spend hours watching youtube movies on it there's a wholeset of things t be freed up from that may make you feel better about your self.

>> i personally don't want to be bothered with something on my wrist yet. we'll see if apple makes this fun enough i have to have it. >> that's the thing about smart phones, i don't want to be bothered. >> i want to be bothered by my phone. i want to be able to put it down and not have something on my body buzzing, megan, maybe on the other side of that trade from you >> well, i think we're entering the area of ambient computing, where the right information that matters to you is pushed to you on the right form factor whether it's on your wrist or glasses on your face and you no longer have to constantly go out and retrieve that information from your computer. i think it's going to be a far superior user experience across the board. >> that's going to be fascinating to watch apple the laggard on the dow today with high-profile down grades of jmg and 3m, one of the reasons we're not seeing better action roger, megan, thank you guys good to see you both. >> thank you. the latest on hurricane

maria passing over puerto rico steve mclaughlin back at headquarters hi, steve. >> we had the storm max out 175-mile-per-hour winds, landfall 155 and now down to 140. that's the landfall right there. again, winds 155 that is a very strong category 4. category 5 begins at 157 that was on the southeastern coast of puerto rico so why did we talk so much about san juan, puerto rico. the reason why as the storm got close the actual eye did not make land or cross directly over san juan as the storm got weaker, the eye got a little bigger. the eyewall, most intense area around the eye expanded and clobber clobber clobbered san juan for three hours. this is a graphic we talked a lot with irma coming through miami. it's where san juan was relative to the center of the storm

if you draw an x, we've got four quadrants. it's that right front quadrant that's right over san juan when we talk about hurricanes, that is always the most intense part of the storm. as we walk this way, want to show you the storm is officially now off of puerto rico in less than six hours it came in and went out. winds right now at 140 miles per hour, 25 miles west of san juan, puerto rico, and pulling away. the next question, where is this storm going. a lot of question marks but basically three options at this point. after the turks and caicos and after the bahamas, it either makes landfall cape hatteras, north carolina, up the coast, it goes out to sea. or the most likely option, the storm goes just offshore, and it will affect the entire east coast but maybe not a direct landfall the bottom line is if you're watching right now from cape hatteras to boston, i would plan on a hurricane nearby about seven days down the road we can tell you the worst for

san juan is now over as we get pictures we'll be assessing just how much damage was done in that three-hour period of time. >> for the second time in a couple weeks, thanks so much when we come back, as we said, the reviews are in for the newest apple watch we have a first look a venture capitalist cringing at the recent tech ipos later on a look what federal watch dogs are doing to protect consumers from influences on social media when "squawk alley" comes right back not reacting to market downturns. focused on what you love, not how your money will last through retirement. let us help you with those decisions, and get on with your life. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan.

apple's iphone 8 got mixed reviews yesterday with many looking ahead to iphone x. today the reviews are in on apple's first lte enabled smart watch, also receiving some mixed reviews. "usa today's" tech column ed baig saying apple users can, quote, ditch the iphone. he joins us now for a first look at the watch really ditch the iphone or just leave it alone for a while if people are ditching the phones, that's bad for apple. >> true. only going to do it if you're running or hiking or at the gym, where it's a burden. i didn't ditch the phone

normally i wouldn't do it but took a shower, made a call went into the hot tub at the gym, made a call, and it worked. am i going to do that all the time no but that's the idea to liberate you. no pictures in the shower. >> so did you run into the lte glitch we started hearing about this morning where the phone isn't able to keep its correct cellular information. >> i didn't run into the glitch like others had. maybe where i tested it. at the gym i didn't have wi-fi to interrupt it. the idea, of course, is the watch would be smart enough to detect the most efficient network to connect to. obviously it did not work well in some instances and apple has acknowledged that. >> so we just had megetingagan

on from spartan capital, who acknowledged there may be bugs in it. does that change everything? >> i don't know if it changes everything i wore the older apple watch, last year's model. i like it for simple things. notifications. oh, i better deal with that now or ignore it apple pay. i use it to buy stuff. pretty easy. cellular will be a nice situation when it works well for those instances you want to ditch the phone because you're working out. i don't know that i would go as far to say it's going to change everything it's a convenience it's a convenience you're going to pay for the watch itself is more expensive and $10 more on your cell bill. >> when you look ahead and the future of apple watch, what can you see whapg once untethered. a broader app for the watch. all of a sudden the elderly can have it on, call for help, kids can do that. more applications in the health arena where you can actually

call the doctor right away without being tethered to your phone. >> health and fitness obviously a big deal you mentioned health one of the things apple add here is the idea it's going to notify you if your heart rate gets above a certain level when you have not been working out. obviously if you're working out, you would expect it to be. if not, that could warn you. those kind of scenarios are important. again, is this going to change everything i think it's going to take time. no pun intended. i think people are still going to look at these things as the phone in my pocket is essential. this still not essential >> aside from the fact that you don't have to have your phone nearby for the watch to work, was there anythingdifferent about this model apple said it will continue to take your heart rate constantly and show it to you on the face of it. do you find any of those features compelling? >> it's a nice upgrade that upgrade coming through software to older watches as well, a lot of it. there's some fancy new watch faces. i like this kaleidoscope here,

for example. there's a toy story character. little things like that. the fitness app is better. it's better, faster, largely incremental. i think the cell phone -- taking the phone away is the big deal for right now. again, if you already have an apple watch, by all means upgrade the software because there are some nice improvements. >> overall at apple people were circulating a chart of the product count in iphones which has gone from 2 to 16. are there too many iphones right now? too many models, products? >> this is against what they have done, they have segmented we have the x coming, $1,000 iphone on up we have sc at $349, i think i have that right. they have now segmented from -- i spent a lot of time with the 8, the new one i'm thinking it's not that different from the 7, last year's model it's got small improvements, wireless charging.

but is it really the phone you should buy should you hold out for that 10? apple will say we have a model for you and model for you and model for you. that's not been their model in the past. >> maybe you don't buy 10, go on a watch instead. is there concern about cannibalization of the product line, there being so many products and so many price points, especially when the differentiation between 7 and 8 is so little. >> i think going from the 7 to the 8, it's hard to make that case going from 7 to the 10 maybe you're still not -- >> paying a lot for that difference. >> that's right. you're still not going to ditch your phone entirely for a watch. obviously we all need the phone. not everybody needs the watch. >> it's the wireless charging that will lure you to the 8 if you care about that thing. ed baig, thanks for joining us. >> watching movers, mostly lower. bed bath & beyond hit the

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. fedex helping dow jones transports let's get to dom. >> transportation stocks, carl, outperforming. index up a percent and a half, on pace for best day since mid august leaders include fedex, american airlines, united, continental as well fedex rebounding after last night's first quarter earnings report american airlines hiring at raymond james. those stocks to watch. transportation closely watched, carl, as leading economic indicator. back to you. >> thank you for that. when we come back on "squawk alley" why latest ceos making dow cringe dow up 13 points and did set a record high today. back in a minute

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good morning, everyone i'm sue herrera. here is cnbc news update at this hour hurricane maria making landfall in puerto rico early this morning with 155-mile-per-hour winds. the video shows flooded streets in a city on southeastern part of the island where the eye of the hurricane first hit. maria expected to hit turks and

caicos friday. it will hit the atlantic saudi where it hugs the east coast too early to say if it will make landfall in the u.s. but some impact is likely. pena nieto visiting. >> ceo metzger apologizing after profanity-laced tirade it came after long-term boyfriend called lapd to complain about a gathering at mezger's home. just the latest in disputes between the three. that's the news at this hour back to "squawk alley," carl, down to you.

>> close ahead of the feds. >> most european markets are lower ahead of the fed decision and policy statement under the most pressure jpmorgan says it expects third quarter to be weaker for spab bannish banke to seanality you can look at them all in the red. let's switch over to fashion because the world's biggest fashion retailer falling the parent saw a rise in first half profit but sales margin eroded by stronger euro. meantime data released today shows uk retail can sales 1%, 2.4 from a year ago helped buy stronger demand for department store and home improvement items. see there kingfisher, marks & spencer, kingfisher saying it's on target to meet s.e.c. year of five-year restructuring plan

germany's thyssenkrupp and tata steel. separately finnish utility says it's in advanced talk to by 47% stake in fossil fuel business uniper an unsolicited takeover offer is not in line with uniper's strategy a lot of big movers in today's trade. carl, back to you. >> thank you, seema mody. recalling a time in the early 2000s a company that exited for $200 million was considered a success maya is a partner and joins us this morning at one market good to have you, good morning. >> hi there. >> your quote here stands out. what has been sent out into the market, ugg.

i've read s1s and cringing at the lack of profitability and lack of convergence to profitability. why is this happening? >> there's been a rush towards alpha in the market. institution a little investors have had a really hard time getting high returns in the last several years off s&p which is at an all time high and looking for companies that will break o out. profitability, the spate of ipos that have gone to market over the last year. >> so do you have a concern then about the health of overall ipo market what is your reaction to the move to social capital to sort of change the way companies even approach that moment of going public. >> so venture capital is a long game as you know we're in these companies for 10 to 15 years and expect them to

incur heavy losses that entire time up until the public offering the difficulty is many of these companies, and i'm sure you've perused through more than one s1 in your time, many have more willingness to concierge to profitability over time. that's the troubling thing, i auto look at companies that have gone to mark in the last year and frankly the ones that are looking to in the next quarter. >> maha, i'm wondering, we like to talk about bubbles in the market are there bubbles with too much money chasing after a particular kind of sector company >> this is a cross-enterprise and consumer, so there's not one sector that is immune to this bubble-like atmosphere certainly with things like softbank's vision fund that's been announced over the last couple of months where they have been investing billions of

dollars into these companies, it really does harm the valuation climate we're seeing right now ultimately as a venture investor we make money when we buy low an sell igh right now the choices is to buy high and sell higher. >> you say you're not just talking about blue apron, who are you talking about? >> gosh, do i have to name names? you can look at 90% of the ipos that have gone to market in the last year. >> 90% >> yeah. it doesn't take a genius to do the math here. >> that's not just -- that's an indictment of the entire process. >> it is a concern about what we are sending to market and what investors, institutional and retail investors on the public side are craving they are craving alpha

they are craving growth. as a result for these companies that are tackling multiple billion dollar markets and trying to disrupt themk it does take capital so i understand why companies are doing it it makes sense but eventually at some point in time, not net income lines have got to come into a rational space. >> do you think some of this is -- we talk about amazon every day. you talk about going public with no hopes of near term profitability. that's the big giant example of how it can be done and sustained for 15 years is it just overgrown influence out of what bezos has done that scale. >> what jeff bezos has done is remarkable he's attacked so many industries and succeeded across multiple different lines what i'm talking about is not near-term profitability. i'm commenting on the long-term profitability, long-term

sustainability of these businesses take amazon aside, many of these businesses are attacking one industry and disrupting it but disrupting it to the point where sales and marketing expenses exceed or equal revenue. that's just not sustainable at any point in time unless capital is free in the system, which it seems to be. >> maha, i wonder, what's the real impact day to day on what you do and entrepreneurs in silicon valley then. we always hear, there's never been a better time to start a company. they always say that and pretty much every time in the economy so does this matter to how you do your job every day and the way entrepreneurs approach and report to you? >> we do always say that, because it is always a great time to start a business, if you have a phenomenal idea the issue right now is everything has become more expensive. labor is more expensive.

real estate is more expensive. almost everywhere across the country. so it is a challenge in terms of starting new companies but if there's a disruptive market like in the areas of robotics or space or marketplaces, again, there are established industries like insurance or like grocery or fashion and retail that are frankly still old guard and need to be disruptive so there's always pockets of innovation that's what as capitalists we're looking for. >> finally to the overall thesis the employees in silicon valley, it's impossible to afford the cost of living you try to get to a startup that has hopes of going public. what are they supposed to do, live off w-2. >> i'm fascinated why what they are doing in social capital. effectively what he's raised is

a spac those that have not succeeded, it's their last hope of an exit. he's trying to move that up the priority chain and make it a second hope next to ipo or third next to m & a. we'll see if it succeeds the things he's getting at is what i'm touching on as well it is very expensive to start companies now. at the end of the day it's not sustainable. >> maha, we appreciate your time everyone show listen to your podcast with carey swisher thank you very much. >> a pleasure, thank you. still to come, why ftc is setting its sights on social media and what it means for the future of those platforms and perhaps the kardashians. but first rick santelli, what are you watching today >> watching the pit right after you, that's really filled with excitement listen, everything priced in seems to be the phraseof the day. but this bit is expecting the

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get ready, because we're helping leading companies see it- and see it through-with digital. than 20 minutes. let's bring in scott wapner at hq who has a big show coming up. >> thanks. we're going to talk to bill ackman exclusively today it will be the first time we hear from the activist investor regarding his campaign at adp. we're obviously interested to

hear from him, what he thinks he can do for the company, which has pretty much told him to talk to the hand. they have given him the heisman thus far in what he's trying to do he wants three seats on the board, including one for himself. it's gotten contentious already. carlos rodriguez, the ceo, has been on the network a couple of times. we have yet to hear from mr. ackman all of that, carl, will change in about 20 minutes time when we sit down with bill who is in house today. so he'll be on the set with me and we'll kick it around, find out what he thinks he can do at adp and be successful in the proxy fight. >> interesting seems to be really ramping up in terms of social media, in terms of what he can do on adp, launched a twitter handle adp rising, a video, interesting to see how he's playing it from all sides. >> he stepped it up today, released a two-minute video in which he speaks directly to the retail investor. he thinks that this proxy fight

is going to come down to the retail vote. it's auto highly owned retail stock. he looks into the camera, speaks directly to the retail investor. he put out a letter as well with a number of charts that help him make his case. as you said, the new twitter handle so he's stepping it up >> all right, scott. we look forward to that interview. scott wapner, halftime report, bill ackman exclusively on cnbc ahead. here is another story we're watching closely, hundreds dead, following yesterdayed powerful 7.1 magnitude quake in mexico. in mexico with the latest on the recovery efforts steve. >> reporter: it is a heartbreaking story because that death toll that we keep reporting on keeps rising. it is now 225 people that have died as a result of that 7.1 magnitude earthquake that wreaked havoc on this city, specifically mexico city

that's where we are. we can show you back to some of the rescue efforts that are happening right now. take a look above. this was a six-story hiring agency a normal building and a normal day just before lunchtime. so you know it was packed with people so far we've heard of pockets of people that may be alive in there. that's the work done with the crews right now. they are digging through the wreckage, trying to find any sign of anybody who might be drawing breath and they are trying to rescue those people. that is hard work, arduous work specifically for a few reasons one, half the city is out of power, about 40% of mexico city, the size of new york, has no power. that's one problem they have to deal with. two, the possibility of aftershocks. we have not seen a major aftershock in this case but those could come after you have a magnitude 7. 1, which is very dangerous for the crews doing that work will this is not the only scene there are several among the

city, around the state and region including one just miles to the south a school where 21 children have been confirmed dead and there are at least 30 more they are trying to dig through the rubble of this school, which absolutely crumbled, trying to search for any signed of life, which they have found there are some good stories of a little girl who was rescued leading to more children back in a pocket being rescued again, this is heartbreaking arduous work that will continue to be done not only today but, as you might imagine, next 24, 48 hours send it back to you. >> the whole world is praying for mexico right now, steve. we appreciate your coverage this morning. nbc's steve patterson in mexico city get to cme group, check in with rick santelli and get the santoli exchange. >> thanks, carl. it's a tough transition. all our hearts are just broken listening to the issues south of the border we hope everything turns out as

good as possible in the horrible tragedy. when it comes to the markets, telegraph, telephone, telemarkets. the notion federal reserve has been more than adequate, a plus if you were to grade it. i can't quibble with that. i think they have done a great job telling the markets. knowing what's coming is a whole lot different than living through the experience once it begins we can describe to residents what the hurricane coming in looks like, but that isn't the same as actually sitting there when it hits you can tell somebody their diet is going to lead to heart disease or sugar diabetes, but it's not the same until you get some of these health issues. living through something is a lot different than many telling you it's coming. i think this is key. you know, what does priced in mean we know most likely the fed is going to make an ongoing adjustment to try to undo much of the crisis-type policy that

was enacted in 2007, 2008, 2009. we get it. but i think as a market person, we need to understand that there's a lot of areas that are going to be affected let's take it this way we all truly hope that this is a smooth transition, but what does that even mean there's a debt channel here. okay by keeping interest rates artificially low would be like giving a family where the chief breadwinner hasn't worked in years, giving them unlimited credit at a very low price is that really the best solution when that unravels, the debt is still there. as some rates begin to go higher over time, even if it's slow, the pain of that debt is going to be experience there's been much resurge that societies that have high debt levels have, guess what, low productivity, low growth that debt channel is alive and

well no matter what type of smooth outcome we have, investors have made decisions over the last eight to ten years that are affected there's no takebacks capital went to areas it wouldn't have gone to. what does that capital do? we don't know. yeah, i do believe knowing what's happening is priced in, but there isn't necessarily going to make you profitable in the marketplace. carl, back to you. >> it is, as liesman said earlier, rick, an historic day the great unwind beginning as we speak. thanks so mump, rick santelli. when we come back stock rally pause as they await the fed on interest rate plans. we'll talk more about that when "squawk alley" comes back in a minute not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan.

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all your tv at home. the most on demand your entire dvr. top networks. and live sports on the go. included with xfinity tv. xfinity, the future of awesome. federal regulators putting social media under the microscopes, specifically a group of users known as influencers. our julia boorstin is out west julia, is this social media's version of the old radio payola issues >> reporter: well, it all comes down to the fact that the ftc wants to make sure if you're controlling through instagram or twitter you know which post are paid for by brands this is actually a very big business advertisers spending $570 million on instagram influencers posts alone last year. that's according to e-marketers, and to get a sense of how much the top-tier influencers get

paid, they average over $20,000 per post according to a company called who say the ftc is taking to twitter to explain its guidelines to explain how influencers can comply with laws that ban deceptive advertising. after the ftc sent more than 90 letters to influential instagramer users earlier this year asking them to disclose their brand relationships, in june instagram rolled out a knew feature to disclose a paid partnership. it's not in a hashtag, but it appears rather where you tag your location. now digital media director for talent resources works to connect influencers with brands. he also promotes post to his own followers as well mostly for alcohol brands and says add disclosures do have an impact. >> if i tax something as an add, the engagement goes down

they don't believe into it, it's far less invasive and assuming it's ftc friendly. you don't have to write hashtag ad and your content won't suffer as a result of it. >> the ftc is beginning to take issues earlier this month and settled its first ever complaint. they were endorsing an online gambling service on social media and they failed to disclose that they jointly owned it. guys, back over to you julia, thank you coming up, countdown to the fed just hev towerwo hours of the way. "squawk alley" will be back in just a moment. not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan.

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we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan. markets and investors cautious ahead of the federal reserve's upcoming decision today. joining us now is david rosenberg, chief economist and strategist david, always great to the speak with you. >> thanks. >> we have a market that's sitting at record highs and a volatility index down a few percent, under so at this point. are the effects of this great unwind going to be as smooth in terms. digestion by the markets as the markets seem to think? >> well, i would have to say right now it certainly appears that way

there's never been, i don't think, a more telegraphed tightening of policy, at least this way, than the quantitative tightening the fed has been talking about it for months. we know the exact amounts per month and we know the split between mortgages and treasuries so i think that's already baked in the cake to me actually the more important thing is going to be whether or not the fed spins the dial on interstate expectations and that's one thing we can certainly have an impact on because although the taper is fully priced in, the markets are barely priced more than halfway for another rate hike before the end of the year, so that's really where the impact could come via the short end of the yield give and what that could say in expectations of what rates will do between now and the end. year. >> david, you like to point out i think ten of the last 13 recessions have been the result of a tightening cycle. does this potentially count as one, as a shadow tightening, as

gradual as it may be. >> look it they have already started raising interest rates starting in december of to is a so they have already been raising short-term interest rates. they always ask the question because people say interest rates are so low they start off the cycle this time around they start it off at almost zero in you go back to the tightening cycle that started in june of 2004, the starting point was 1%, and people said the same thing back then. oh, well, it's gradual, and, you know, rates are still so low, but, you see, when you're running regressions as an economist, you're not looking at levels against the growth to roll against levels. it's rate of change against growth it's really the change and interest rates that matter the most what the yield curve is doing that still i think has the best leading properties as far as economic activity is concerned i would say that although i'm very cautious there's nothing telling you that a recession is necessarily right around the corner and the flattening of the yield corner, giving you a consistent message that growth, and i still think growth is very

soft, it's probably going to get softer over the course of the next year absent some massive stimulus package. >> so you're really not that far away from a recession callover, what, over 18 months let's say >> i think that's certainly plausible. you know, i take a look at most economists and they peg the odds between so% and to% and i think the odds are quite a bit higher. as you said before we've had 13 fed cycles and the post-world war ii experience ten recessions we had three soft landings you know what, let's pray for a soft landing we had a soft landing in the mid-'60s and the mid-'80s and '80s when greenspan started getting the moniker of maestro i guess the point i would make is this. let assume we get some sort of soft landing i can understand a soft landing, when you're running 4%, 5% growth and you slow down to three, that's a soft landing you have 3%, 4% growth, you slow down to roughly 2, okay, what's

a soft landing what does a soft landing mean today when the run rate on real economic growth is barely 2%, so that's my big concern is we may end up getting a soft landing that end up feeling like a recession for a whole host of people and i know that's not cocktail conversation today because everybody loves to -- everybody lives and breathes in the here and now, but we're looking at the lags between monetary policy and the real economy, and now we're going to layer on this experiment of unwinding the balance sheet. it looks smooth right now. it might not be smooth 12 months from now, but my big concern is economic growth is still so low that there's not a lot of cushion there in terms of the lags and in terms of what it could mean say 12 months from now where maybe we're not in negative growth but somewhere close to zero. you've got close to zero growth, it's not a contraction of the economy but rest assured the unemployment rate goes up and all of a sudden the fed will be left in a conundrum of its own of having to ease monetary policy at that point. >> david, our thanks to you. we'll all be watching at 2:00

and then at 2:30 for the press conference afterwards. david rosenberg. >> it's been a tepid early session ahead of the fed decision, but apple, we should point out a seven-week low by going back to august 1st. >> between the watch and the rosen blatt securities report, and stay tuned for ackman with the judge and the fed at 2:00. let's get to "the half." >> welcome to "the halftime report." i'm scott wapner we begin with a cnbc exclusive bill ackman live on his battle with adp, the activist investor here in studio to answer questions on his latest target, a target that has so far said no thank you. bill, welcome back good to see you. >> thanks very much. >> i think the question many people have is why adp a company whose stock has beaten the s&p 500 over the past five and ten years along with its chief competitor paychecks, a company with a 40% return on equity that's more than double the s&p.