they're saying, you know what? we won't embrace technology here i don't know. >> you know who we can ask quintanilla. see the big house in "the new york post" big, new mansion he's the hamptons. >> speaking of carl -- >> okay. we are going to say good-bye we'll see you all on monday. we hope you have a great weekend, everybody "squawk on the street" begins right now. ♪ good friday morning. i'm carl quintanilla with michelle and mike. cramer and farver are off. tax reforms in focus iphone debuts today. europe is mixed ahead of germany's elections and more fed speak, as well road map begins with apple

new iphones go on sale as the stock feels pressured this morning. >> plus, geopolitics over the market, north korea leader is say he'll test a hydrogen bomb over the pacific. >> first up, though, stocks are looking to regain momentum after the dow snapped a nine-day winning streak and hit an interday high early in thursday's market. war of words between the president and kim jong-un. we had the sanctions yesterday of the u.s. and china and now a threat over the pacific. the escalation is notable this week, michelle. >> journalists know that the statement of kim jong-un came from him directly. usually north korean media, et cetera an escalation certainly but still not that much response i mean, considering what donald trump, the president said on the floor of the u.n. general

assembly on tuesday, not a huge reaction yet over the concerns -- >> markets are putting it in that file that says, it's been going on for decades maybe an incremental escalation and there's no clear path to handicapping where this goes and what the economic or risk appetites of this are long term. >> the result is easily overshadowed what turned out to be a historic week for the market this is the week that the federal reserve announced officially, they're going to begin the great unwinding of the huge policy experiment we are now about to go through something that is untested and thus far the markets are very calm but i think over time that's the bigger, bigger story. >> it's certainly a bigger story in terms of inflection point i think the lesson, too, though, when the fed first raised rates, a year and a half -- >> caused a tantrum. >> so long in coming and, yes, you did have a little bit of a

market tantrum but i think we were -- almost talked it out before it actually happened and that might be the case, too, with balance sheet and a very, very secondary background psychological effect. >> we'll see if the dynamic works in reverse on some policy. graham/cassidy may come to a vote next week "the washington post" this morning leads with tax reform. gaining steam. goldman this week said if this corker/toomey deal helps, that could mean next year is a base case so we have talked about that for a long time. >> yeah. >> is there a surprise built in here >> i wonder how much the health care vote even matters to ultimately what happens on tax i know there's a sense it goes in train and it should help the way but i think if all of the sort of triangulation of how it plays out goes to a tax cut, not worrying about revenue neutral, as long as it stays out there in front of the markets i think

it's enough of a beacon to say it's a net positive maybe some day. >> i think you were suggesting to some degree it is not built in at this point right? so little hope for any of this and then suddenly this week, boom b maybe signs of it and could lead to upside risk. >> it depends on the magnitude i think people are saying, well, a little bit of a tax cut here and there. >> maybe not get to 15 or 20. >> we have a pretty good economy to brag about in 2018 anyway and a tax cut. look what happened i think that -- i'm cynical about it and say that. >> we do want to keep our eye on north korea. for more on the president and kim, let's get to eamon javers. >> there's an imposition of new sanctions on north korea her's the details of the treasury department in terms of the specifics, both on trade and financial institutions on trade, they laid out a couple

of dee details including targeting shipping and trade networks 180-day ban on vessels and aircraft visited north korea from visiting the united states. that's an interesting one and targeting specific industries here, including construction, energy, textiles, information technology, mining and manufacturing. they're giving the treasury department now the authority to impose sanctions on any foreign financial institution con conducting business with north korea and also authority to block any funds that are originating from, destined for or passing through accounts linked to north korea. that not very popular in pyongyang. kim jong-un firing off a statement as michelle was saying in his own voice saying this about the president of the united states. saying, on behalf of the dignity and honor of my state and people and on my own, i will make the man holding the prerogative of the supreme command in the u.s. pay dearly for his speech calling for totally destroying north korea.

i will surely a-- and that met from the president of the united states this morning saying kim jong-un of north korea who is obviously a madman who doesn't mind starving or killing his people will be tested like never before so a fiery war of words here a rhetorical escalation, certainly. but not necessarily a military escalation and we're waiting to see whether the north koreans go ahead with another nuclear test, a missile launch or something else to show their objections to these new sanctions and the president's rhetoric at the u.n. general assembly, carl. >> eamon, is it clear how long it may take for some of these financial sanctions to bite and how much they bite feel it >> well, it could be a process of months because the treasury would have to identify particular institutions that are violating the sanctions and then impose those sanctions on them designate them individually so

that can be a complicated process to wind through. the encouraging sign of the u.s. perspective yesterday was that the chinese central bank sent a memo to its banks in china urging them to comply with the u.n. sanctions that seems to be a bit of cooperation we are seeing between beijing and washington fit's real. if it is not just done with a wink and a nod and open up a new channel for the u.s. diplomatically to work with the c chinese to cut off north korean financing and just to maintain control of their economy which has been suffering under sanctions but they have not buckled so far >> eamon in washington, we'll come back to you later on this morning. >> thanks. >> miriam webster saying a sharp increase in searches of dictionary.com for dotard meaning senile old person in case you wonder. i did the same thing. >> trying the back it up, had to come out of an effort of

translation. right? not just come upon that word it's a pretty fun. >> yes twitter makes all things possible. a big day for apple. iphone 8, 8 plus and new apple watch start shipping today and also hit stores. josh lipton at the apple store in california with the latest. josh >> reporter: thanks, michelle. so actually just caught up with a guy camped out here on the sidewalk since last night waiting to get his hands on the new phone. he says when the doors open to the store behind me here he'll buy the new iphone 8 plus. >> well, one is wireless charging and got the same internals as the iphone x but cheaper and faster to open with touch i.d. >> reporter: now that young man tells me he was disappointed hoping to see a big line here today. there really isn't a line. so he was a bit disappointed wanted to commiserate with fellow die-hard apple fans and analysts say they expect smorter

lines, one we know, obviously, consumer shopping habits changed. people are buying those phones now more online. and also, remember, this is a really different kind of rollout this year. this is a staggered rollout with that iphone x coming later that could be having an impact as for the new features and capabilities of the iphone 8 and 8 plus, new glass and aluminum design apple said it's the strongest yet. deeper camera technology wirlless charging and, of course, that new faster processor. and analysts estimate there are now more than 330 million active iphones out there that are at least two years old so bulls have to bet that a lot of consumers are going to want to upgrade do the new devices back to you. >> wow josh, thank you very much for that by the way, piper today taking the apple target to 196 on the premise of rifzing asps. maybe not immediately with the influence of the x over the 8 as

people perhaps wait but if you're looking at higher blended average selling prices, like morgan stanley earlier in the week, they think the stock goes higher. >> everyone's staking out their positions on this because you can read it both ways. you can basically say, kind of a disappointing launch the stock told you not a lot of excitement and drag on the nasdaq on the other hand, an extended upgrade cycle maybe not the worst thing for investors. >> the kid that josh interviewed did very succinct analysis and compared to the analysts said that the difference of the 8 and the x, not so big that some have said we don't think they'll sell as many xs and not that much better and that, you know, they spend ten pages explaining that and that kid did it in 20 seconds. right, yeah, exactly. >> which is weird because jean munster, for example, thinks 20% of new buyers will opt for the x. right? so that is -- we just don't

know. >> we don't know the margins at this point right? restaurants, if you order pasta, it's cheaper than the expensive steak but the restaurant makes more money because the margin is so much better what is it between the 8 and the 10 where do they make more money? do we know yet phone to phone so - >> big day for the company when we come back, a london rejecting uber's application for the license renewal. we'll take you across the atlantic for a live report another look at the premarket. was the worst day for the dow in couple of weeks and a lot of news this weekend, especially out of europe. we are back in a minute. stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker.

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to more companies, in more locations, than at&t. we do business where you do business. ♪ ♪ amid pressure of capitol hill, facebook is handing over russia-linked ads to committees linking interference after the social network admitted this month that russian agents purchased ads on the site. yesterday, on facebook live, mark zuckerberg said the company is taking steps to prevent interference >> i don't want anyone to use our tools to undermine democracy. now, i wish i could tell you

that we're going to be able to stop all interference. but that just wouldn't be realistic. there will always be bad actors in the world and we can't prevent all governments from all interference but we can make it harder, much harder. and that's what we're going to focus on doing >> president reacted to that news indirectly this morning tweeting the russia hoax continues. when about the totally biassed and dishonest media coverage in favor of crooked hillary of course, facebook outlined nine steps they're taking to improve transparency, working with election commissions and allowing you the key one here allowing anyone to look at an ad targeted at a subset of users. >> the president gets upset regardless because he thinks every time this story is covered underlying it is the premise perhaps he won because of russian interference and makes him so angry, wants everyone to believe he won on his own merits and that hillary clinton lost so

that -- this every time it comes up, classic response you get from him. >> that's the reflex even if that's the impetus of looking at this, it's circumstance latting in congress of trying to regulate, make mandate this kind of transparency coming to political ads for a lot of platforms and clearly, you know, facebook's whole premise of it's got to be your identity, i mean, the principles that they created at the outset -- >> unlike others - >> anonymous and kind of just say, hey, a free for all and plus zuckerberg clearly really important that facebook is seen as a force of global good. right or wrong this is the effort that's -- it's not really about let's figure out who rigged the election. >> here's the thing. if you live on advertising, like we do, we face all kinds of rules coming to election advertising. those are -- if those are election ads, they have to start doing something. it seems to me regulation is

inevitable at this point. >> wild west right? political advertising standpoint, the wild west. no question about that. >> nobody says i approved this message on facebook ad. >> right, right. >> why isn't anyone -- why aren't investors pricing in a change to the model that relied on open connection between individuals at all costs >> russians spent $150,000 you know i'm making a joke but it wasn't that pervasive in terms of the dollars spent. right? either in the context of political ads or in facebook. >> sure. i can only imagine that investors feel like just the overall trend of everything going digital is such a powerful force that if you have to tweak around the edges to be less virtual and automated it's not a risk but the stocks have stalled out a little bit. >> bigger risk to the stocks is that constant questions. is there advertising effective does it actually produce sales for retail companies that's what dogs them more than anything else. >> evidence on both sides on that argument. >> right. all right. finish line among the retailers

in a deep slump losing more than half of the value this year. we'll look inside the chains' earnings miss. the futures suggesting to see a slightly negative open dow opening lower 14 the nasdaq by 15 the s&p by 3 more "squawk on the street" straight ahead dynamic performance,

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♪ less than a month after issuing a profit warning finish line posting quarterly result that is missed estimates courtney reagan is at hq with a look hi there.

>> hi. the market cap shrunk over time and under $400 million and watching it for trends in footwear and apparel and say the retailer posting the final second quarter results today after you mentioned giving that warning in august so earnings did come in at the higher end of that lowered guidance despite shares falling nearly 20% after the warning, down further here today in the premarket now, the retailer is maintaining that lowered guidance for the year what happened? c ceo says it was a promotional marketplace and punished sales and margins. the company expects the industry's promotional stance to continue so it's not looking good for holiday total comp sales fell 4.5% though sales edits of 500 macy shops and shops of 6% growth finish line expects the comparable sales between 3% and 5% lower for the rest of the

year kids shoe sales weaker than men's and women's. lifestyle shoes, that was a weakest group. but it could have been worse without stronger sales of new adidas shoes, basketball shoe sales also fell. retro jordan styles particularly weak and ceo said that vaper max of men and women was stand out running shoe with nike and a handful of shoes from adidas strong with the exclusive adidas pure boost quote on fire in the quarter. but you can see there shares for both indicated lower premarket back over to you, carl. >> court, i'm thinking about the sort of weekend review, downgrades of underarmour, negative notes on nike, foot locker the biggest s&p loser for the yoear. >> that's right. that's why we follow this despite the fact that the market cap fallen there we know that nike reports next

week so there were some sort of cross currents going on for nike right? some of the sales were strong but some weren't and that's what a lot of analysts parsing through on the call trying to figure out what it means brand by brand because within each brand some weakness and also some strength. >> yeah. what is going on here? is this a shift away from physical retailers or people aren't wearing as many sneakers? is there a new style trend i missed or sfwhoet. >> you know what seems to be a combination of things seems that the trends are changing faster than what these retailers and brands can keep up with both in the production and in stocking the right inventory. so the ceo's talking about the influences that consumers are getting from around the world on social media so as soon as they think something is hot, they order it, stock it on the shelves and by the time of the store it's not hot anymore and behind the trend and part of the problem. finish line is doing it can with the investments it's making, trying to improve the in-store

experience with beacon technology and rfid technology and a story told to you digitally. will it work i don't know i mean, certainly people are still buying shoes and we are still wearing shoes and keep up with the speed. >> just sounds like they have to get more zara-like. >> exactly, michelle exactly. >> nike has an investor day next month. thanks. >> yep. opening bell in about six minus.te

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watching cnbc's "squawk on the street." opening bell in just a few minutes here as we have espn college game day ringing the bell this morning. you will see excitement on the floor and in post nine because art cashin is with us. happy friday to you. >> thanks. you, too. >> how are you and how's anyone supposed to digest the war of words between the u.s. and north korea right now? >> well, i think people are kind of putting it on hold as long as

it's staying a war of words. the high risk here is an accident you know the north koreans shoot off a missile and somehow it disintegrates over japan or hits some popularized area. that will be the problem for now, it's -- i was really intrigued with the chinese central bank if they follow through on what they did, that could be a game changer. there have been about four or five chinese banks that have been carrying north korea. and if they stop, then he's going to be in really big trouble. but i think today the market will be consumed with apple and how sales look, when's going on, speculation. traders are a little concerned that the latest move from alphabet that they may be preparing for a real war with apple.

and that could be big. you know, apple started out with siri and then kind of dropped the ball and the feeling is that alphabet might want to use the digital assistant which is reputed to being leagues better than siri or anything else so -- >> referring to the fact that apple is talking about producing a physical phone once again. >> absolutely, absolutely. after the fiasco with motorola but this -- this bears watching. it is not anything to affect the market right now but will affect the market is how the initial sales seem to be going and people extrapolating from there what things look like. >> people have been tracking how apple fares in the week prior to a product launch and this is one of the worst ones. >> yeah. i think everybody, though, got very used to the idea that they peak on the product launch and the pattern is getting very closely scrutinized here what's interesting to me, i have often argued that apple as a

stock doesn't act as a true bellwether and down while the s&p is hanging in there, art s&p just sort of rides this 2500 line for a while. >> like this every day how do you do this every day it's so loud >> most of the time we just nod at each other. we don't actually hear. >> what can you hear >> there's the opening bell. and the s&p and the bottom of the screen. >> business of screaming behind tv broadcasters. >> what's that >> okay. >> palace game day. >> the big board, lee and the host of espn's college game day doing the honors at the nasdaq asian online platform secoo celebrating the ipo. you mentioned china, art yesterday s&p cuts china's credit rating. today they cut hong kong's credit rating. china responds saying it's mind

boggling that they don't understand the economy do they? >> well, the chinese have still maintained that the special kind of control capitalism and, you know, i think the central bank there is still pretty much in control but the rating services have to do what they have to do. they got accused of being asleep at the switch going into the crisis in 2007 so this time they're going to be on the alert but i would watch very carefully. north korea over the next three weeks. if chinese banks are going to stop helping them out, they're going to be in dire straits. >> they did once before, in 2013 there was a similar move that the chinese banks did voluntarily and didn't last very long this time, more teeth because the u.s. treasury now has explicit legal right to send warnings to certain ones regardless of china itself wants. the u.s. has tools to impose sanctions, cut them off at the

financial industry and they're weighty and toothy. >> i agree but china is growing concerned about the possibility of an accident you know they don't have him under complete control in fact, he is not on their favorite list. yet to be invited to be beijing and usually they reach out to say you're our partner they're not doing this with him. he is a different case for china. >> are we to read much into china coming to these industrial metals selling off, art, as well copper is down pretty severely in two weeks obviously, they have made efforts on the bitcoin are they back in that mode of trying to staunch capital flows and the rest of it >> yeah. i think they may well be and some of the movement in their central bank, you have to remember that in china, things like copper and iron ore are basically banked people get warehouses full of them borrow money against that. so it's -- they're pseudo

currencies to a degree and why china is important. >> something to talk about with china coming up is the party congress which is a huge event i don't know if you're reading analysis of what they're planning but, art, seems to me they're moving backwards, more government control, more -- they want the state owned enterprises to get bigger and more control of the economy less capitalistic and more cronyist i don't know if -- hold on loosely but don't let go right? when you have a dynamic economy you're much more likely to grow faster. >> well, the congress is important every time they have one but this is critical to xi and i think he is really trying to fortify the ground and i think a little of what you are talking about is action there. deeper control, let's get past the congress and then decide what to loosen up. >> really quick, art potential surprises in the next week we have germany election on

sunday mcconnell appears ready to bring the graham/cassidy to the floor. tax reform, we think we get some details monday or sometime next week. >> i think it's critical to see what happens with the health bill they have it two or three mavericks they have to bring back in. if they can bring them back in, they may be able to get something done on the infrastructure basis there's an outside chance that they could, in fact, work with chuck schumer. so it will be interesting. >> thank you, art. >> thank you. >> good to see you art cashin here watching the opening bell in terms of movers, guys, scattered and retail strength out of carmax. numbers out. looking at ge once again. >> yeah. >> a leader today. >> laggard stocks doing well in september. the bottom eight performers in the dow year to date almost all up in september and this week so there's definitelythat kind of

pickup what's been left behind type of mode this month. i was going to point out from a broad market feel perspective, s&p last friday closed at 2500 yesterday closed exactly at 2500 if there's any suspense of an up or down week, could be related to this week after september onyxes expiration almost always been down. so if we buck another one of these seasonal tendencies it will embolden people to say, look, this market wants to grind. also, if you have a new record high in september and any year the rest of the year tends to actually go to further highs so a lot of that stuff is working at least in terms of the almanac in terms of stocks. >> here three weeks in september and not scary, right historically, baited breath like historically this is bad and thus far no which means maybe worry about october instead. >> that's what happens to 2015 we had the gut check in 2015 and then a huge come back -

>> saen that claus rally. >> and then fell apart again. >> apple has been under the 50-day for a couple of days. today under the 100 day. but we'll see whether that lasts. >> yeah. getting flagged by some technicians. i saw that jeff degraph saying it's in an up trend and oversold and a good idea to buy the leading stocks when they get to one of these pullbacks like the 50 day however, it's really given upmost of the relative outperformance year to date just in the last month, month and a half so it's tough to figure out whether the stock is kind of stuck in this area for a while. >> art highlighted alphabet's move to try to go back to a physical device. >> that's interesting. >> you could see why they want to apple is profit wbl the iphone and why not capture that can they do it on the second try? right? we have seen microsoft try to do it it's obviously very hard but i

don't know if that's adding to any of this weakness in apple recently but certainly people keep trying. very high margins, you attract a competitor to eat at them. right? >> yeah. it is -- they have bucked it for so long. >> i know. >> maybe reminds people for everybody but apple smartphones are commodity business and nobody makes money on. >> apple is once again the worst performer on the dow really quick, we did get a cut in steel stocks over at cowen. they cut "x" target from 24 to 20 and mt goes 32 to 27. as we -- that sector has just been roiled by the different issues. >> there had been optimism that by the end of the year steel was really going to rally in the united states. china was finally going to reduce capacity. there was going to be less supply waiting. >> yeah. i was going to point out netflix, not that there's been much news but fang, it's an odd

ball much smaller, not really one of these all encompassing platforms and outperformed by 10 percentage points. nasdaq 100 by that much and been a monster and kind of goes on its own and i don't know if it's benefiting because people are nervous about the other platforms or its own momentum but it's the one that's kind of taken over i think in terms of momentum. >> certainly the international story continues to be discovered. >> pin yourself. see the past in subscriber growth opposed to other big platforms with billions of users. not sure where it goes. >> no fake news and advertisements. >> everyone chooses to be on there and wants the content. >> what i would like to see is uber and the wake of london saying it won't operate there and a battle and who knows what the final outcome is but that stock would be lower today as a big, big deal on a huge market for them. >> mark to market every day, that would be -- >> fun, wouldn't it? >> let's get to bob pisani on

the floor. hey, bob. >> good morning, everybody happy friday about flat on the week even on the advance/decline line at the open. we have seen a little bit of a reversal of the weekly trends right now in some of the sectors. let's take a look. we talked about consumer staples all week it's been ugly but they're basically flat today industrials have been okay energy had a nice little rally flat today banks had a terrific rally in the last seven or eight days and as you can see that's on slightly to the downside little bit of a reversal of a trend. three things matter. dominated the conversation affecting markets and difficult to define ways and north korea jitters and i think a lot of discussions, i heard a lot this week about puerto rico and all of the storms and what the impact would be on third quarter numbers. we just saw this morning some comments from carmax saying that six stores closed in houston so i think there's some economic impact and fourth quarter maybe it helps on the reconstruction

bigger topic i think is rate rises that we've seen this week and affect on bank stocks, underperformers throughout the year citigroup with a great year, eight-year high and regional banks with a great move this week and see if it continues reits with a tough time. anything interest rate sensitive had a tough time big names down this week be careful talking about the reits and not just an interest rate story but a paradigm shift. all the ones i'm showing all shopping center companies. they have been moving down all throughout the year and rates move up, another whammy on top of them and multiple things sometimes with reits depending upon the sector. a stunning nine-year run and held on to the boring utility stocks, up 150% or so in the last 9 years and they're now in the middle of a little bit of a sputter. we have seen this a number of times. i don't know a long-term trend but great yields the companies four, 4.5% yield

still but a little bit of a move to the downside as you're seeing here we have been talking about how ugly it's been in the food stocks and going on all year as a big shift, of course, with people not as much emphasis on branded names. we have seen these declines accelerated with the whole foods announcements. we took another leg down this week essentially we are again at 52-week lows on most of the big major names and declines notable for the food stocks here finally, i just want to note, we have another ipo trading today on the nasdaq. waiting to open in less than an hour this is secoo. china's largest online upscale retailer and priced very well, 8.5 million shares at $13. the price talk of 13.50 to 14.50 and chronicling how much average investors have been pushing back against high prices on ipos, basically demanding lower prices

and for the most part they have been getting them. many companies pricing below the range or the low end of the range recently and as a result after market prices and ipos have done pretty well investors have been doing well and demanding lower prices this is the high end of the range. big luxury retailer and talking about this more in the next hour and what it means in the effort to woo upscale luxury retailers in china it's a very big market alibaba, as well they have a slightly different angle. they're claiming to deal with exclusively authentic upscale goods. right now, the dow, michelle, on the flat side. down just 8 points back to you. >> yeah. that would make them different in china, bob. good point thanks. let's head to the bond pits and in chicago with rick santelli hey, rickster. >> north korea is figuring in prominently. sometimes hard to decipher exactly what channel markets are paying attention to.

this one's not as difficult. but it's also sort of enlightening looking at intraday of 10s, safety issues there. they jump out at you and i like to use the weekly charts and especially considering the moves we have had the last couple of weeks and the fed and the ecb, bank of japan. one week of 10s, paints a little bit of a different picture yeah, down basis points on the day sitting here at 224. but remember, we closed at 220 last friday. 30s closed at what 271 i believe. yeah 271. they're 278. so we see on a week to week it gives you a glimpse, the intradays give you a geopolitical feel at the moment and looking to foreign exchange, this is with a battlefield this really is if you look at one week of the dollar-yen, not a super lot of movement but the dollar's had a nice move and it held unlike the euro verse the dollar. pretty much sideways here but

granted we are still darn close to 120 pound verse dollar, the pound and the guild have been big markets to pay attention to. bank of england maybe switching gears a little bit and virtually unchanged. here's one that was kind of exciting the dollar/yuan. holding the gains and not sure it's a lot to do with rating agency issues. not that it isn't a good topic but like the u.s. traders, they sort of know this stuff any way and i think the rating agencies more than anything just want to make sure they're in the right part of the playing field sort to speak now, when we look at a bigger chart of the dollar verse the chinese currency, we can see it's a nice move developing. off lows we hadn't seen with respect to the dollar against that currency. really going back to april pay close attention to the dollar index, too. i didn't mention it as strongly as i should have we had some historic bounces but here at 6 at 9202, not really a

big move and even though treasury's moves aren't big, it's not a fulcrum of price of activity just trying to survive carl, back to you. >> all right rick, thank you very much. rick santelli. oil is steady and unchanged. let's get to jackie d. >> good morning to you a meeting of opec and nonopec ministers in vienna today some speculation of an output cut extension and others saying a compliance assessment. countries like line yeah and nigeria, increasing production and undermining the countries to cut production "wall street journal" calling them opec's problem children remember that libya and nigeria not part of the original agreement enit appears they're not taking action to curb anything right now these are the country that is need the revenue presumably, they're going to act in their own interests, especially as oil prices are over $50 a barrel. the russian energy minister out

with his usual rhetoric saying that the market fundamentals are normalizing and combined issues with incentive of the shale producers to pump and this is the biggest risk to the market wti trading just around 50 and change this morning. managing to hang on this that critical level, carl. >> jackie, thank you still to come this morning, as you might have heard, london has rejected uber's application for a license renewal in that city we are going to take you to the uk for a live report people don't invest in stocks and bonds. they don't invest in alternatives or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get

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sapphire reserve, from chase. make more of what's yours. another setback for uber london's transport regulator announcing it will not renew a license to the ride hailing service. gemma? >> reporter: it's not a popular decision here in london. i'm here during people's lunch break speaking to them about the decision remembering, of course, that uber says up to 3.5 million londoners use the service out of a population of only 8.8 million so around half the adult population and try as i might to find people who are supportive of the

decision i haven't spoke on the a single person yet who is a lot of the anger's directed against black cabs, official alternative and people saying that black kabls cost around three times as a uber cost and slower, sometimes a drivers are rude that sometimes they won't accept card payments which people see as unacceptable in 2017. so a lot of anger there. there's also a boycott black cab twitter h twitter hash tag set up and uber e-mailed the london customers to sign a petition and 23,000 people have had signed it. i'm sure those numbers would have swelled since then. uber has said to take advantage of the 21 days it has in order to appeal the decision so, the license actually expires on the 30th of september and then they can keep using it until the appeal is finalized. so many are wondering whether this is really just an attempt to get them to raise their standards rather than to block

them outright. remains to be seen with regards to why transport of london said they're taking the measure, they said they're looking at the safety and security of customers in addition to the exploitation of drivers. as for the drivers, around 40,000 london earls here employed as drivers and we spoke to a uber driver this morning say that he and a lot of his friends are already reaching out to private hire companies to see about work should the ban go ahead. also concerns about all of those who have leased cars and are stuck now in contracts forced to keep paying for the car lease and no longer have a source of income i'm going to point out an interesting thing on the timing. the labor party conference on sunday and this is a big political issue and x effect that might have something to do with why it was announced now. back to you. >> thank you, gemma. i think it is easy or intuitive for people to say they're hard on facebook and tech and google. maybe hard on uber

traveling all over the world, taxi drivers are powerful in every major city in the world. they fight uber everywhere you can do a whole documentary about, you know, the barriers to entry, vested interest and facing this over and over again. i don't think you can equate it with other moves we have seen. >> miami alone. >> vegas. >> ridiculous. >> london, though, you have the mythology attached to the driver and professionalized and not easy. >> remember, effect ily banned in france. >> still use them all the time. >> yeah. >> i mean, i do. >> when we come back, what amazon is saying about a nfl streaming debut next week. dow under mild pressure. down 1wi2 th apple big laggard back in a minute

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quality so we're really focused on that. beyond that, there's a couple different things to see. one of which is we'll have multiple audio streams so there will be brazilian, portuguese, spanish and a uk english feed which is really geared to the fans outside of the u.s. and the uk, for example, who are not quite up to speed on the ins and outs of american football and a little bit more explanatory and trying to explain to them exactly what's occurring during the game it's going to be interesting to see what they do we know they'll spare no expense on the packaging and all and actually a debate this morning, a podcast wondering whether the nfl, whatever truly give tv rights to digital with the number of people in this country who still do not have bradband and rely on antennas or cables. >> eventually? hit critical mass. right? they have the same thoughts of

cable at one point. >> you have to think the leagues view it as an addition to and not instead of and let them play and figure it out and not hand it on over and the nfl's its own network. >> yes >> better have no buffering. buffering? that would be awful, right >> right. >> no, exactly the quality is - >> crucial. >> tantamount. >> when we come back, the record run taking a breather. we're to explore the risks to the stock market rally now she can't become a guitar legend just by playing air guitar.

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♪ good friday morning. welcome back i'm carl quintanilla with michelle and mike at post nine of new york stock exchange david and sarah are off today. limited range in the markets dow's down about nine points oil exactly unchanged. a lot to watch today, though. >> yeah. especially because opec's meeting in vienna. the road map starts with north korea threatening to test a hydrogen bomb, putting traders especially in the treasury market on high alert and geopolitical risks rise.

uber, losing the license in london we'll take you live for the latest. and apple's new lineup with debut going on sale today. are the new products and updates enough to wow investors. apple weigh on the dow what are the risks joining us, yuri timers. it's good to have you back happy friday. >> good morning. >> i had to take note of what you tweeted the other day. the fed doesn't want to shock the system but unwinding a balance sheet at the qe we have had is a major thing what do you mean by that >> well, you know, the qe era started in 2009 and when you add up the four major central banks, in '07 they owned about 15% of their government's debt. and today they own about 35% of their debt so that's an increase of, you

know, 20 percentage points so that is not an insignificant thing. so as the fed starts to unwind and presumably the ecb will follow suit at some point, you have to ask, you know, how did this amount of qe affect financial assets at least their valuation and what will do that when it starts to get unwound? it is a major milestone in this whole qe story or this era of modern, unconventional monetary policy but, you know, over the near term, the outcome of the fmoc was expected and maybe more hawkish through 2018 but, you know, my take is as long as core inflation stays below 2, the fed takes it pretty slow and if they take it pretty slow financial conditions will not probably tighten materially. and that's really been the key to or one of the keys to this whole rally because it is pretty unusual for the fed to be tightening and financial conditions to be easing.

typically tightening is tightening for a reason. and so, this is a very unusual cycle. >> still, you bring up a good point. if you believe that asset prices rose because of qe, the unwinding of qe leads to the question, well, does that mean you see asset prices fall? that's the bigger question but i think of it in terms of transmission mechanisms in the market and they are going to buy less treasuries, fewer bonds as we're probably going to see all over the world everybody tells me, don't worry. there's tons of other people out there who want to buy that stuff. so interest rates aren't going to go up that much which would presumably be a threat to stocks do you buy that? >> there certainly sort of demographically a lot of buyers of bonds, but those buyers will be there regardless of whether the fed is buying more or is not buying more. so at the margin, it should have some impact. i mean, if you think about what the ecb has done over in europe,

you know, they're buying corporate bands that has depressed corporate spreads or credit spreads so there's going to be to be some impact. question is how much and that depends on how gradually the central banks remove this accommodation and, you know, this is kind of a geeky concept but if you look at the term preem numb, the premium that investors demand for lending over the long term, the term premium is a negative on the 10-year and whereas normally positive, maybe one or two percentage points, so you can pretty clearly point to central banks as having played some role in the valuation of financial aseths, certainly bonds but also equities and ek tills are priced indirectly off of the risk free rate which is set by nominal treasury yields so you can see it but the question is, to what degree will they withdraw the stimulus or completely reverse the balance sheets probably not is my guess and so

the more gradually they unwind the more gradual the price adjustment will be for financial assets i think >> brian jacobson, wells fargo center strategist, joined us for the conversation here. brian, do you buy into this idea that it is a major turning point in terms of supply and demand for financial assets, the fact that the fed will dial back? how much does it matter on the day-to-day when you have a world where the net supply of treasury securities and mortgages can swing by tens of billions of dollars and how does it feel to you? >> much ado about nothing, really i don't think it's a game changer as far as the direction of rates federal reserve, they just lowered the terminal rate to the long-term target to 2.8% for the federal funds rate that probably helped compress that term premium that the guest was just talking about a little bit. you have to kind of understand within the context as you point

out, mike, about, you know, with the fed trimming back maybe $6 billion per month with the reinvestment with the treasury securities, it's not going to really move the needle you have plenty of insurance companies, banks, sovereign wealth funds that are looking at the u.s. as a high-yield market. 10-year treasury at 2.5% is significantly higher than what you can get in europe on an equivalent let's say 10-year german bond which is closer to about .3% or .4% and not worried of the fed's unwinding of the balance sheet. >> finally, when you look at the long-term projections we got this week and we are talking out to 18, 19, 2020, longer run of 4% unemployment, 2% inflation for as far as the eye can see, do you see any value in that at all? >> well, so if you look at the

2019 dots, they're all over the place and there's not even a cluster of more than two dots in each sort of rate segment, if you will so, basically, nobody knows where we're going to be in two years including the fed. so, the 2017 dot, sure 2018, dots that's a pretty good indication and there is some value in the terminal dot to tell us where the fed at least thinks the whole cycle is going to end. but i wouldn't pay too much attention to the 2019 and now the new 2020 dots. because basically, nobody knows. you know, chances are that the fed -- sorry, the market in terms of how the fed funds futures curve is priced is probably too dovish but chances are that the fed is probably too optimistic about where it thinks rates will go and indeed the tendency over the past four years or so has been for the median dot to continuously come down to get closer to the market

so i wouldn't look too far past let's say 2018. >> brian jacobsen and jurrien timer, thank you good to see you. tensions with north korea continuing to escalate eamon javers has the latest. eamon? >> good morning. we saw the president unveil new sanctions yesterday in the form of an executive order. we also saw fiery rhetoric exchanged between the north korean leader and president trump on twitter this morning. here's what kim jong-un of north korea said last night in a statement responding to the president's speech at the united nations. he says, trump has rendered the world restless through threats and blackmail against all countries in the world he is unfit to hold the prerogative of supreme command of a country and he is surely a rogue ian a gangster fond of playing with fire rather than a politician to that the, president responded with a tweet of his own saying that kim jong-un is clearly a madman, obviously a madman, who doesn't mind starving or can i

recalling his people, will be tested like never before not clear what the president's referring to specifically saying that kim jong-un will have tested like never before and also not clear here is the question of whether or not north korea's going to respond militarily beyond the sort of rhetorical tit for tat between the two leaders with the potential hydrogen bomb test or another missile flyover of japan or something of that kind that we have seen over the past several months and tense situation and some very fiery rhetoric over 24 hours, guys back over to you. >> eamon javers, thank you for that in washington, d.c. when we come back this morning, apple's latest products hitting the shelves as the stock continues the multiweek slide. bad news for ub uber, banned in london. we have details on how the company is fighting back dosqezw ueed back to the flat line back in a minute not how your money will last through retirement.

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store of apple ceo tim cook known to make an appearance and wait to see whether that happens again this year. this store's just about to open here at 8:00 a.m. local. a dozen people waiting to get in thinner maybe than usual i was talking to people earlier today waiting on this line they were disappointed and hoping for more of a party, more of a chance to commiserate with the fellow die-hard apple fans but for analysts, many of them were not surprised by the shorter lines because this is really the trend for the past couple of years here gene munster pointing out if you look at the apple store, for example, on 5th avenue in new york city, there are about 400 people on that line last year. that's compared to nearly 2,000 in 2014. in part, that really just reflects the changing consumer shopping habits, more people are more comfortable ordering online importantly, though, munster says he's not using the lines as

a really true proxy for demand and he said he'll look for iphone unit growth of 9% during this cycle versus 3% in fiscal '17. back to you. >> all right, josh thank you. we'll come back to you. for more on apple stock price, let's bring in walter pisek and andy hargroves thank you for being here walt, how would you characterize what this upgrade cycle is looking like right now folks are saying it might be kind of less of a burst and more extended are people just waiting for the 10 >> depends on your expectations going on if people expect a massive super cycle, it is hard to see that right now based on the iphone 8 alone, wechb the x, the operators not gearing up for a lot of promotions. so i think there will be a natural aging of the product there's a change in the form factor obviously with the x coming out

next quarter that should help the thing that apple has to rely on right now if you don't get a massive increase in units, by the way, it is great they're growing, you know, 5% or 10% on you knits given the large size, but they really need an increase after asp and saw that with price increases this year. >> andy, josh lipton interviewed a buyer who was in the line and concise analysis of buying the iphone 8 and respond after we play it for you. >> wireless charging and got the same internals as the iphone x but cheaper and faster the open with touch i.d >> so it's got the wireless charging, internals are the same and it's faster and it's cheaper. boom, boom, boom, boom i hear that and i worry about the x. >> well, yeah. i think the x will sell a ton of you knits and worry that the

incremental innovation surpassed what the mass market consumer wants and that point extract pricing power out of your high-end customers and lootz it out of middle and lower end customers. >> but his analysis is that suggests that the 8's going to sell better than the 10? >> yeah. i mean, we have a close i guess. and what we have to remember is there's a lot of customers that buy apple products sort of for fashion purposes in addition to just utility and for those people the x is still going to hold a material amount of value. >> walt, where does the carriers come in on this? you keep a close watch on that especially in light of the reports here that we may be going from three big players to two if sprint and t-mobile can strike a deal. >> sprint did offer an incremental promotion on monday and the wireless carriers in monday not pushing it that hard and no indication from them,

from the early preorder sales to think about much higher upgrade rates so far again, we'll see what the x brings us as far as interest and also important to keep in mind that the one-year upgrade cycle is not really -- it is something that died many, many years ago so you have to think about in terms of the 8 or the x relative to phones that are two and three years old because there's still a very large percentage of customers carrying a legacy product and the 8 relative to the 6s or the 6 is much better product and the x relative to the other products is improvement and things that factor into the upgrade rate and i think it's inverting up the replacement cycle is shortening and a matter of how much it will shorten and maybe not a super cycle but upgrade activity, you know, throughout the carriers here and across overseas, as well >> google -- go ahead. >> andy, coming the stock, it is obviously showing perhaps a little bit of misgivings about the strength of this cycle, maybe just got priced in with

the big year to date gain into august so where does that leave you? >> yeah. you know, i think we downgraded a couple of months ago based on that thesis starting to price in basically the full extent of the cycle. i think from a unit perspective, we are definitely there. i haven't seen anything here that suggests to get massive share gains to drive upside. there might be a little bit of upside in margins because the pricing action but i think we priced in quite a bit of that, as well. >> walter, sorry -- go ahead. >> walt, i'm wondering, we always read into these lines outside the store completely anecdotal. would you argue that the short quote/unquote lines reflect people waiting for the x >> i think the interest level is definitely a bit lower and i'm not necessarily convinced the x to drive massive activity so i don't think if we come back in a couple of weeks and look at those same lines on

5th avenue given the changes that you mentioned and josh lipton mentioned in the lead-up to this to expect lines around the corner like the 6 and the 6 plus it is not the way people are buying the product the upgrade cycle is different and very expensive phone how many people buy a 64 gigabyte iphone x? you are spending $1,150 plus tax for that phone the monthly charge, it goes in the bill but even the operators are pointing out that there could be some fatigue and number of incremental charges of people seeing on the phone and there's a factors in the x to launch in a couple of weeks so i think what you need to focus on is how ap sl pricing the product and how expensive it is and generate revenue and as far as the stock is concerned, i mean, it's a high single digit free cash flow margin and growing the business, growing earnings people are really negative about the watch again. and yet, you could see an

upgrade cycle there to help with rev new. there's r&d budget, $2 billion a quarter. so to not like the stock with a free cash flow yield like that with growth is wrong call right now. >> all right often has looked cheap both going up and going down. walt, andy, thank you for weighing in this morning when we come back, another ipo, chinese luxury retailer what it means for the retail and international consumer chocks at this hour not changed mu dow's up 1/5 of a point. back in a minute t suit my needs t suit my needs and i get back to business. ♪ dad: molly, can you please take out the trash? (sigh) ( ♪ )

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experience amazing at your lexus dealer. yay! it is friday i do love it chinese online luxury retailer secoo going public priced at $13 a share. bob pisani on the floor with more on how it's trading

hello, bob. >> hello, michelle several chinese ipos this week, take a look here she is right the biggest online retail marketplace in china right now $13. price talk was $11.50 to $13.50. that's encouraging you know how much pressure there is to lower the price. near the high end and opened at $12.10 and right now, trading just right around that area so we'll keep an eye on that important thing is, $10.57 you can see it's down $2.43 here so maybe priced a little bit too high at this point secoo is interesting because they're a big market for luxury market in china. mostly new 25% market share now trying to get into being exclusive distributor. china's online luxury market worth about $38 billion a year growing 18% a year according to

renaissance capital. interesting thing is there's fake goods in china and alibaba is under a lot of pressure recently to get rid of the knockoffs they have had. alibaba with a great year. about 100% move in the year. secoo claiming they're more authentic because they have authorized deals directly with the company. and that's certainly very interesting here so the -- it's an interesting angle given the concerns that we have had about fake goods over in china and now we'll see if there's a real market to develop these kind of so-called authentic relationships with all of the big retailers guys, back to you. >> bob, thank you very much. when we return this morning, the administration making the pitch for tax reform but are investors holding their breath it will, in fact, get done this year we'll talk about that. stocks largely unchanged dow's down about 3 points. s&p at 2501.

good morning, everyone i'm sue herera tensions escalating with north korea. north korean state tv reading a statement by leader kim jong-un in which he called president trump a mentally deranged u.s. dotard trump fired back tweeting that kim was, quote, obviously a madman and will be tested like never before. hurricane maria nearing the turks and caicos as puerto rico tries to recover all power is out on the island maria's death toll rising to 19, nearly all of those deaths on the hard hit island of domnica. search and rescue efforts in mexico rus keyers find survivors in the rubble of collapsed buildings. they are applauding hearing

proof of life from one survivor. did death toll rising to 273 and british police charged a 18-year-old man with attempted murder and causing an explosion over last week's bomb attack on the london subway. ahmed who is san is accused of planting the bomb injuring 30 people. you're up to date. that's the news update this hour carl, back downtown to you. >> thank you very much. let's get to dominic chu watching finish line this morning. >> we have been hearing from courtney with regard to finish line, the disappointing numbers out of there the stock reversed course and moving higher by about 7% to 8% at this point in the morning session. as we talk about the conference call wrapping up, there was a sense of some traders out there that perhaps the rit ration of unchanged of 3 to 5% and maybe a catalyst for short covering. we should note, carl, that the

short interest in the finish line about 29% of shares outstanding so as we talk about some of the conference call elements wrapping up and then traders stepping back in here, we'll wait to see whether it's a staying momentum but traders are certainly paying attention to the fact it's up and boosting the other retailers out there on sporting goods take a look at dick's and happening with foot locker, both of them up by a percent or more in early trading and finish line perhaps a short covering squeeze here maybe not but that's what traders are seeing right now after the big down move this morning, guys. back over to you. >> thank you very much, dom. mike, you have mentioned before how some of the laggards for much of the year, bottom 10%, did well in september. >> in september. a move also, i mean, you always want to look at the really blasted groups like retail if they seem to bottom or reverse on some bad news, you know, often does mean finally they priced in how many kind of false dons have we seen in chain retail? >> several opportunities to get

a very short, strong run almost 20% but it's -- never been a long-term trade and something to watch very, very closely and you can -- when moments like this come, with a sentiment so bad, paying attention - >> even the big companies, macy's, all moving 2% in a day of a market generally moving hardly at all. meanwhile, uber may be thankful it's not public right now an getting the boot in london the city's transport regulator saying it will not renew the license. our gemma is live outside city hall hi again, gemma. >> reporter: yes this is a shock decision to many londoners and uber, i expect they have been expecting to renew the license without any hassle and now indeed transport for london saying they won't do that and the reasons citing saying they have concluded that uber is not fit and proper to have a private higher operator license and also said that uber itself

demonstrated a lack of corporate responsibility and a couple of thing that is really doesn't like that uber is doing it says is an inability to report serious criminal offenses and also a software of gray balling whereby to prevent regulatory authorities from having full access to the app. uber itself has 21 days to appeal the decision. they have already confirmed they'll definitely do so and furthermore, they have a petition going and garnered 19 million and growing at a rapid pace and speaking to people in the hours and difficult to find anybody particularly supportive of the idea. this is in the public, of course london mayor khan importantly come out very strongly in support of transport for london and the failure to renew the license for uber he's really harped on the points of safety and security for customers. another point raised by some other union supporters is that there's been an exploitation of

drivers. customers are really asking, look, what are the alternatives? black cabs are too expensive they charge around three times as much as a uber. underground train system doesn't run 24 hours, doesn't run 7 days a week and people saying it's impossible certain times of the night to get home if you can't afford a black cab so a lot of backlash here and backlash and anger against the black cabs themselves lobbying very hard for the change to come through and so, quite joyous there very much looked on as a political decision and interesting timing given that the labor party conference and mayor is part of the labor party kicks off in two day's time and expect it to be an animated topic on sunday and next couple of days and the conservative party conference, the governing party with a conference in a couple of weeks and expect it to be a live issue then so as while uber's appealing and during the next 21 days and however long it takes after that, uber can still operate as

normal in london and keeping going for the time being back the you in the studio. >> gemma, thank you for that does raise the question how much they can change the culture as uber with call nick involved. >> that's an overriding question all the time for the stock to gemma's point, interaction of people on the streets of london, uber has made people's lives easier many many cities around the world. transportation costs gone down new york city trying to fight back against it, again, a labor -- a city council that was dominated by the equivalent of labor, they got massive pushback from the public. they get frustrated when they can't get a cab in certain parts of the city and surprised if it stands because politically i don't think it works for anybody. >> it is amazing if you were a uber fan, you say this proves -- in five years been in london or so, people think it's a necessity right? >> right. >> london underground never been

24 hours and been around for 100 years and now a big deal and decided maybe you could live in five years based on the availability of uber. >> exactly just like in new york, they tell you frequently, the black cabs tell you, i don't take credit cards. it's not true. they want cash instead you never have that issue with a uber driver. >> we'll continue to watch it as we'll watch the markets, as well slipping from that record run, apple dragging the dow down. tax reform is going to be the focus as we move into next week. wait for details out of washington president renewing the push for that comprehensive and permanent tax plan we're joined by michael zisis at morgan stanley good to see you again. good morning. >> good morning. thank you for having me on. >> "the washington post" leads with the headline of picking up steam. gop seeking unity on the goal. what are your expectations for granularity, details coming up next week? >> yeah. so first -- i don't know that i

would characterize it as picking up steam and making progress and quite slow and as far as next week, what we think we know based on the discussions that have happened from the various negotiators and the media last week is there's quite a bit of disagreement still when's the level of the corporate tax rate disagreement there corporate integration? loss of interest deductibility still major disagreements. you pile it on top of pushing back on the idea of there's a wave of bipartisanship and we don't think it makes sense here either and a very loaded calendar between now and the end of the year, you know, this is not something we think is 2017 story. we think very much 2018 story and then the point of what to watch for next week, i would say that to the extent we get details, particularly on the corporate tax rate, what you see is probably the best you're possibly going to get because you will get the good stuff and all of the pay fors to be added in later by congressional committee probably are going to have to end up with a higher rate so in order for the

corporate rate or come out with something lower, we think the over/under is more like 25%. >> yeah. would you advise viewers to have their radar tuned to the big six say or hatch says or something else >> i think you have to go with all of them right now, unfortunately. i don't think it's more precise than that. because they're all influential here i think the senate in some ways has the view of tax reform as perhaps the most different than the blueprints we have seen and they seem to be huing more back to the dave camp plan from 2014. so to the extent they're bringing up provisions of that plan i think you should take them more seriously because we haven't really talked about them as a market in a couple of years by they're potentially going to be part of this, as well. >> the repeal of health care or obamacare i thought was dead but it keeps coming back headlines suggest that maybe actually they might do something. do we see that as a sign does that give us a signal as to the ability of getting something

done on tax reform, one? two, isn't that market positive because it would reduce a lot of taxes? >> so, you know, on the first point, i take these sort of resurrection of the attempt of repealing obamacare as both taking up some time from the tax reform process and kind of a sign that the feeling that bipartisanship is coming back was overdone and, you know, if you look at the deal, quote/unquote deals felt bipartisan over the next couple of weeks, it was a rearrangement of a legislative calendar based on democrats' demands and daca deal, there's no legislation to tell you that the president is limiting the agreement to execute on them after the fact and the health care coming back which is clearly the democrats oppose and run through reconciliation, not through regular order, not a bipartisan way sort of underscore that is and underscores that which tells

you that the republicans are basically when it comes to tax reform undertaking a kind of single party massive rewrite of the tax code despite a lot of disagreements. again, just telling you that all those sort of momentum shifts that the media is communicating right now, the story is quite frankly a lot more muted as we see it. >> so if tax reform is a single party effort, is it going to act as a single party or going to be very fierce resistance among, say, budget hawks for the pay fors you mentioned on the tax reform debate? >> so, ironically i'd say no although with some important caveats. so again, i think the notion that we are hearing from investors a lot over the last couple of weeks is a bipartisan approach was going to open up the potential for bigger deficits and therefore this being a bigger fiscal stimulus and it is the other way because what's signaled by the conservatives, the most conservative parts of the republican party is they're okay with expanding the deficit a little bit because they're willing to put faith in supply

side economics and going the other way. the template coming out here is seems to be tacet agreement of an expansion in line of the temporary bush tax cuts in 2001 did and if you kind of think back to that, a lot of people perceive a massive deficit expansion to be considered, fiscal stimulus, big positive shock to the economy and numbers suggest the way we calculate it, it's a deficit expansion of half to maybe a percentage point of gdp. translate it to economic terms, economists say you get .1%, .2% uplift in gdp and the story is different than tax cuts delivering this big, positive shock to the economy >> michael, i hope we get to talk again next week a lot coming our way thank you very much. have a good week michael zezas at morgan stanley. when we come back, opecs and others gathering in vienna

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let's get to the cme in chicago, check in with rick and the santelli exchange. good morning, rick. >> good morning. thank you, carl. you know, once again, a great guest for the times that we're going through right now, all tough do is look at treasuries and see that north korea and the issues there having an impact and like to welcome a special guest, william reince. bill, thank you for taking the time, sir. >> thanks. glad to be here. >> okay. executive order with regard to north korea, of course, china gets pulled into this. although not specifically. anybody who has certain

activities that in any way facilitates certain issues in north korea drawn in first tell me your feelings about this executive order and then maybe we can get more into the trade aspects. >> well, like all these, it is hard to make it work the big issue is with financial sanctions because you're right it is not just china it is any rogue bank anywhere. that wants to continue to help north koreans finance their trade and other activities you know, obama and bush made that work, made the sanctions work on iran but it took a lot of patience and it was very labor intensive. they literally sent people all over the world to talk to every bank and foreign minister to try to get everybody in line to all do the same thing. i'm not sure we have that kind of time with north korea and i'm not sure the president has that kind of patience. so we'll have to see. >> i tell you, bill. you bring up some great points but my pushback would be, you brought up president obama, president bush and what happened

with iran. but i say we still don't know the final outcome of that and with regard to what's going on in those administrations regarding north korea, what you say is true. it is really difficult but 30 years worth of appeasement didn't work. i would think the ant them is action this is more along the lines, isn't it >> it is a fair point. you know, 20 years ago it would have been a much easier problem to solve nobody took it seriously 20 years ago. i didn't everybody thought it was kind of a joke, this little country over there but here we are. and you're right it's a serious problem and, you know, the dilemma, fine to talk about action but, you know, what do we got besides what we're doing you know if you want to talk about action, beyond what the president has just done, you get in the military action and there's a whole bunch of issues surrounding that beginning with - >> now, bill, as scary as that is, though, i know they don't teach history in school it is way they used to when i was

young. okay but i do remember a detail, two words come into my mind when i read all about north korea and how many are upset about this executive order those two words are neville chamberlain. 1938 germany in czechoslovakia. the prime minister gets treaties doesn't have to have a strange application here nobody wants war nobody wants bombs to fly. but in the final half minute here, isn't there some type of step along these lines that has to be made you finish up. >> there may be. that may be the only choice we have got i mean, i wasn't alive in 1938 i was alive in the last korean war. and you can see how that turned out. it wasn't a slam dunk for the united states. what you're talking about ends -- i mean, military action, you end up having a lot of potential consequences the people that looked at that think it's a lot more difficult to actually do it than you

think. i think the right thing to do is to try what he is doing, try the financial sanctions. spend a little time trying to get everybody else lined up. won't work unless everybody's on the same page and see if that basically starves them into submission. >> excellent bill, thank you for your thoughts one thing to tell you for sure, everything you're saying, i think treasury traders are thinking it right now as they continue to buy a little protection of form of not being short for higher rates thank you, bill. mike, back to you. >> thank you very much. now jon fortt with a look at "squawk alley. >> food delivery inside prime now, we have the ceo coming up on "squawk alley."

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opec met in vienna today rumors they were going to extend a production cut, didn't happen. oil is still trading around $50 at this point, but one of the key things we were watching to see if it would have any kind of impact >> yeah, it's been firm. firmer than people expected. journal has a good piece talking about the spread between west texas and crude, historically why it's about $6 right now and really has spiked since the storms, which is really boosting u.s. crude exports, so everyone around the world, pays if it's more than a $4 spread, apparently, so that's been supporting west texas. >> john joins us john, did you expect anything out of this opec meeting what do you think is happening with the oil trade today in light of that? >> it's been quiet, michelle, in the aftermath. they were trying to talk up and come to an agreement on extending the production accord through the end of next year,

but that didn't happen i will say, though, the russian oil minister in particular, his arm must be hurting from patting himself on the back so much from the success they claim to achieve, bringing down inventories, which is an inaccurate view. >> but still we don't ever seem to move above $50. isn't that what they are hoping for? every time the price rises, u.s. production rises, as well. >> that's right. they always want a higher price, no matter what they say. right now they are praying for $60 a barrel that's what the nigerian minister said at the meeting today, but it's hard to see how they get there look, they've enjoyed a very almost honeymoon period over the last several months, because in the summer demand is strong and you have strong european economy and our economy has been robust, as well. now the test comes, though, over the next several weeks and months, really, until we hit the holiday shopping season. do they get demand, does the

demand hold up the numbers don't indicate that they will all that well, so they won't get the price rise and they are going to be back in the same box that they are in. i will say, though, that the price when it gets down to the low 40s is a similar support point for whatever reason you do see demand pick up and you do see value buyers coming into the market, so that's sort of the torturous range we've been in for quite some time. >> what about hurricane harvey and the effects from the refinery shutdowns when it comes to gasoline supplies >> the hurricanes have been a remarkable catalyst to get prices up. the knockoff on refinery utilization persists, particularly along the gulf coast. we're still mired with 20% of that capacity offline and probably going to be offline for a while, and it's actually developing potentially now into a problem, not so much for gasoline, but for the heating fuels and diesel fuel and even jet fuel for that matter that's called the distolative

inventories and they are quite low. we're looking to go into the winter tight for the first time in several years and those prices have really spiked up they are trading about $1.80 a gallon versus $1.60 for gasoline, so that's really the one to watch here, and could become problematic come winter, because we are exporting so much of that to the rest of the world. >> super interesting we're showing the heating oil chart and speaks to the price hikes you're talking about thanks, john >> thank you, michelle when we come back, political pressure is weighing on tech as you now know, facebook ceo says he'll turn over russian-leaked ads to congress when "squawk alley" continues in a moment ♪

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welcome back to "squawk on the street." i'm dominic chu. as you can see there, energy standing out as one of the best performing sectors so far in early trading, as crude oil hangs below the $50 a barrel mark we've got conoco phillips, vallero among the leaders. for the week, energy up about 2% keep an eye on that. that's it for this hour of

"squawk on the street. back downtown to the new york stock exchange for the start of "squawk alley. back over to you guys. >> dom, thank you very much. new apple products, the iphone 8, apple watch go on sale today. this is the scene at an apple store in palo alto, which will open in the next minute or so. our josh lipton is there and we're going to await to see how the lines shape up in palo alto, as we are doing all around the world. good morning, josh >> good morning, carl. as you can see behind me here with the apple store in palo alto on university avenue, you can see the store about to open. typically this is a store where apple ceo tim cook makes a guest appearance to welcome people we'll see if that happens this year i'm going to step outside the way so you can get a live shot interesting, i was talking to some of the people in line early, first guy got here actually last night to make sure he got his device and i asked what excited them about the new iphones. i heard a range of opinions, some talked to me about wireless technology, others talked to me about the improved camera.

so apple promising better images, better video remember, that is a big significant reason people do upgrade, is that camera. ben and his team over at creative strategies actually did some prelaunch survey work and that camera was the biggest reason people thought about upgrading. we also heard about augmented reality, a.r., some people told me they were real excited about that, as well. a lot of technologies that tim cook's excited about, but none more so than a.r., guys. we give you criticism, i know on your show this week we heard some reviewers saying the iphone 8 represented in their judgment more of a slight upgrade to the iphone 7, which will cost you about $150 less, but other people i spoke to said that was actually not the right question, that the better question was what people with a 6 and the 6s would think, because for those folks, the 8 does represent more of a significant upgrade in terms of performance and