>> this goes to what scott galloway was saying in terms of how these companies have become so big and their influence so enormous is there something that needs to be done? >>or at least pay more attention. >> exactly. >> the checks cleared so that is one of the problems, i think >> right. >> it was in rubles but -- anyway time to go make sure you join us tomorrow, melissa, are you here tomorrow >> nope. quack squawk on the street next good wednesday morning, welcome to "squawk on the street." we wait for yellen this afternoon, the president heads to las vegas europe is slightly red despite strong pmis, our own adp was

just above estimates we begin with wall street's record run futures pointed to a muted open. the dow coming off a five-session win streak. >> plus broken business model? elizabeth warren promising to follow the money when she questions former equifax ceo rick smith in a hearing this morn and pepsi shares are sinking. the beverage and snack giant beats earning but has a lower outlook. the dow, the s&p and the russell coming off record highs. the financial sector posted its highest in ten years with watches on to see how resilient the market can be. >> i think what we're seeing is a recognition that the economy is better so instead of paying low multiples for, what? >> nothing, sorry, go ahead. >> my pepsi notes. instead of paying low multiples for companies let's start with the banks. we are going to give the banks a

multiple that looks like a stock. do you know how long it's been since -- i used to speak with brian moynihan, he does a great job and i would say okay let's say you can make two bucks, what price-to-earnings multiple can you put on it? it was not the kind of relevant discussion you would have. now they get to two bucks maybe we should put a 15 multiple with the average stock. >> 15 multiple what are you thinking? >> the average stock is trading 1920, why wouldn't you >> on a financial? >>. >> consistent. >> that's kind of what i'm saying >> you were tipifying who i am saying is going to have to say well, maybe i have to pay a 15 multiple now multiple expansion my old friends said if you're playing that game, i'll buy at 25, maybe you'll pay 27 but i will say this these banks have a consistent revenue stream that comes from the raising of the fed funds rate i don't see why we shouldn't give that a higher multiple even

from wells fargo once-sainted wells fargo. >> once sainted and no longer. do you need a higher multiple? you've been arguing j.p. morgan is going to hit 100. it's not far from it now that was a low ball thing. >> that looks like a low bar. >> that was like the giants are going to win three games this year. >> oh, that was low. but 2.31 on the ten-year, why multiple expansion >> because we're at the beginning of a rate hike expansion. >> are we? >> yes. >> when cash ckashkari wants to- >> i love kashkari, he's like a chicken in every pot, a car in every garage i love that guy. he's like the other guy, from minnesota, franken. >> al franken? >> he's another funny guy, used to have that "snl" gig. >> read his books. they are hilarious. >> al franken is a genius.

>> he's also very smart. >> but they also had that great wrestler that was governor there. >> jesse ventura. >> now he may have not have been einstein, he wasn't confused with jefferson but was he great in "running man" >> now would jesse ventura want them to continue to raise? >> i haven't checked in with him lately but kashkari is a dove. he's like a nest of doves but i am saying if you have this kind of -- you have housing coming back which we know from lennar, if you have autos coming back which we know from phil lebeau, what cycle isn't working the carbonated soda cycle? last time i saw that that wasn't something you are yo you shouldn't tighten about. >> we're going to talk about pepsi. >> kashkari is creditkrai. bad debtkari. >> it's argued he is in his view the favorite to be fed chair here's what he said. >> i actually have a very

non-consensus point of view once again, i think it will be neil kashkari who is kind of a -- not a traditionally trained ph.d. economist. but he's the most easy money guy in the system today. he wrote annest say yesterday that was talking about why we should have more easy money policies and the president if he's going to have any chance of retaining his base he needs to deliver something to the disaffected middle-class a stronger dollar is not good for achieving that agenda. >> there is no chance it ends up being yellen, he said, and we know kashkari is the most prominent critic of the hike cycle. >> it's "vanity fair," not exactly cnbc it's delivering showmanship. i happen to like mr. gundlach

very much. but is he short any level of bonds? kashkari would be like why you would short bonds. he's pro -- he wants more inflation. he's not having for weimar let's clarify that. >> he's made his reputation and has an extremely good track record by being somebody who does go against the consensus. >> gundlach? very big anti-consensus. >> i doubt very much that will happen. >> but cakashkari is in rarefie air, the "vanity fair" conference what does that say is that itself a statement >> about the elites? >> a prominent bond trader and "vanity fair." >> it's called the new establishment summit and they had iger and jeff gundlach and evan spiegel and cuban, by the way. >> what's your point >> my point is sometimes when you get into that hyperbolic showman -- maybe gundlach is

trying to get on "shark tank." >> okay. >> i'm just saying it's not the venue -- it's a venue where you want to make an outside consensus call kashkari is a rigorous fellow. but donald trump has not been saying over the long term during the campaign that he favors easy money. kevin warsh, jay powell, jay powell would be one of those guys who would be like -- >> well, politico argues it's between warsh and powell. >> powell's cool. >> don't know powell. >> i've known him for a long time kne

>> i mean, if i were invited t "vanity fair" -- i'm more like "mad" magazine but i would say warsh and -- warsh and powell would move the market kne the bonds will roll off. >> you're kind of alone on the cohn thing, that love for cohn you're alone out there. >> you know what i'm an outlier like creditkari. >> can we come back to the broad market ne commodities have been moving up. >> but freeport a critical note about problems with the grassberg notions that will hurt them but alcoa can no longer weigh in so somewhere out there watching us, marveling that it will all come together but too late for claus. he's still among the living. >> you're talking about him as though he's no longer with us.

he wrote an unfortunate letter probably late one night and it's unfortunate he lost his job. >> there's not a plaque, not a sign post, nothing. >> do you think there will be multiple expansion >> do i think? have you seen what's been going on have you seen the multiple expansion in avery denison have you noticed the action in -- >> no. i've been thinking about other things >> tractor supply. >> missed that one, too. >> not to mention ism 13-year high these pmis out of europe today. >> europe is so strong just go buy the banks of europe. go buy the banks >> isn't it late. >> the clock is stilling on the italian villas i was trying to get you in with tuscany. the air side moved up more than

the puerto rico bid side moved down. >> why do i have to buy one? >> because lisa's schedule that she went to abercrombie being booked by the tuscan east conference. >> you mentioned puerto rico, jim and the 2035 general obligation bonds are at a record l low. >> i can't own stocks, i have a muni bond portfolio. smart people say they'll trade at 30 and maybe go back to 50 by there's 12 billion in gos. you can without revenue bonds wipe out gos but go is related to debt. those who own these, i think they're going to go to 30. i don't trade them i don't look at any municipals i don't look at anything other than what i do.

>> this is what the president said about puerto rico debt. he was not specific. >> we have to look at their whole debt structure they owe a lot of money to your friends on wall street and we have to wipe that out. that's going to be -- you can say good-bye to that i don't know if it's goldman sachs but whoever it is you can wave good-bye to that. >> hilarious, of course, goldman doesn't own -- it's owned by all these big municipal bond funds. >> it's a comment in passing you can't draw any conclusions about what that means. >> are you saying that the president says things that are idle and hyperbolic? is that where you're going >> i'm saying when it comes to a comment like that in particular i don't think you can draw any conclusions about what it means. >> i think he may have correct directional move on the -- >> as a wipeout. >> yes, first of all, i didn't

know geraldo was friends with people on wall street. but if you call lloyd and say "people are going to get hammered on these bonds" i don't think lloyd would say "yeah we're being into puerto rican bonds and now we're getting crushed. at 30 -- the smarter guys are saying at 30 to me there's so many -- like go buy pepsi when it trades to 102. we probably have to get that i hope it doesn't go to 102. my charitable trust owns that. >> i know people buying egyptian bills. >> remember when people wanted to buy the iraqi dinar >> or venezuelan bonds argentina worked out great for them. >> argentina is on fire here don't you dare say anything. >> i know it is. >> we'll talk more pepsi in a moment they beat on earnings. it's not helping the stock we'll talk with the company's cfo, take a look at the pre-market s&ps going for seven straight hasn't done that since may we're back in a minute

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pepsi is out with the results kicking off earnings

season an earnings beep of the company does trim its sales guidance sara eisen is here to talk about that. >> looks like the zstock under pressure for more joining us from company headquarters every quarter, pepsico vice chairman hugh johnston, also member of our cfo council. nice to see you. >> nice to see you as well, sara, good to be here. >> a lot of analysts were expecting the beverage business to be soft this quarter. think there was some surprise at the magnitude of sales declines there is, down 5% volumes for north america and beverages down 6% what's going on? >> a couple things, i think the overall pepsico portfolio worked well for the quart er we raised guidance for the quarter. north america beverage a challenge for the quart er

we were down on revenue and profits. two big drivers. first, carbonated soft drinks. we've been shifting our portfolio of carbonated soft drinks into more innovate i have beverages and it's a balancing act as to how quickly the consumer will move we probably moved too many resources from our pepsi into these new products and that cost us competitively for the quarter so we need to balance that out better over the next couple of quarters in addition to that, gatorade had a soft q 3 gatorade is a convenience store driven business and we saw convenience store traffic flatten out and that impacted that business. the good news is these are temporary conditions theetz are not structural issues they won't require investments

to get the business back on track so we are confident we'll get north american beverage business back on track quickly. >> so you're saying it's a fixable problem, you're addressing it. how long will it take before it stops weighs on overall results? because you had to lower the full year organic revenue guidance. >> yeah, i think you'll see it improve sequentially from the middle of next year, each quarter will get progressively better and from that perspective i don't think that it will impact the overall results too negatively as we raise guidance this year and frankly we see the rest of the portfolio just performing really well frito-lay had a great quarter. all of our international businesses grew mid to high single digits so this is a good example of a stress test of the pepsico portfolio and frankly it worked in spite of our biggest business having a couple of challenges. >> hugh, this is jim, always good to see you on the show, thank you for coming on. >> sure.

>> going over the ceo's opening comments, my charitable trust trimmed a bit of pepsico but we own it she does say something that was kind of difficult for me to get my arms around she goes that you're going to immediately address these problems you're going to shift resources and i'm thinking a lot of resources will be devoted to these new and fabulous products. are you going back to this process where you're going back to declining brands and perhaps shift spend from the future which seems to be short sited to please wall street and not long forecasting to please where the world is going >> it's a great question, jim. and the answer is clearly, no, we are not managing to wall street in the short term by any stretch of the imagination with these types of moves it's always a bit of a balancing act and this balancing act has been going on for years

i think we get very excited about the innovation we had for the quarter. we moved shelf space from pepsi and mountain dew into these products and we moved perhaps too much of the advertising. i don't deal with it as an either-or. we got ahead of our squeeze because we're excited about the innovation for the summer and it hurt us but that doesn't mean we're backing off. we know our strategy is right and it's been working for the last five years really, really we well. >> i know if i don't talk about the existential crisis in the supermarket and the change of consumer behavior by millennials i have to wonder whether we are at the tipping point where a company as great as pepsico has to address the fact that the supermarket seems to be losing its luster, i know you're sending a lot on e-commerce and that's great but the fact is the traditional way people buy things, buy food, is changing

rather rapidly and i'm wondering whether pepsico can quickly enough end to what is like your great company but is secular in nature and demographic in nature i think your point is very well taken and i agree. you're seeing the market evolve relatively rapidly from just traditional grocery. it went from grocery to dollar stores the newest emerging channel is e-commerce. we've been getting ahead of that curve. we generally had higher market shares in new and emerging channels and that's happening in e-commerce as well we started an e-commerce business about two and a half years ago. this year we'll do a billion dollars in retail sales. we've got a separate business unit of a couple hundred people who focus on nothing but excommerce, more like a tech

startup we talked a bit about it today on our conference call we think as the consumer evolves we'll skate to where the puck is going to quote wayne gretzky. >> to jim's point about millennials and the way they shop, it's also what they eat and we have seen a real deterioration in food stocks lately a lot of people were anticipating weakness in frito-lay on this idea that the grocery trends are getting worse. that the periphery of the store, the fresh fruit and fresh meat are where people are going instead of snacks. how is frito-lay holding up above its peers? >> i think it's a couple of things number one while the center of the grocery store is clearly challenged, the perimeter of the store, as you point out, is doing well and frankly both the beverage business and the frito-lay business do a lot of business on the perimeter.

the other megatrend that's happening within food in addition to moving outside of the center of the store is people moving to more convenience and as they move to more convenience that plays very much into what we're most capable at, both with our sales capability as well as the way our products are consumed. the good news, i think, as well on that front is as we've invested more and more in innovation we are moving into what millennials are favoring. today we have a toastup in terms of the beverage business but our strategy is working very, very well. >> i know that indra has been focused on value creation. anyone who has 50 times her salary in pepsico stock is she is feeling this business can come back this quarter isn't that too soon? why reach expectations that quickly? >> well, i think you have to separate the short term and the

long term. the short term is we looked at the quarter. we felt like both cost and mix were going to be working in our favor and as a result we gave investors our best view as to where we thought the quarter was going to land. in terms of the long-term we don't do that until next year until we get closer to what we expe expect we think the strategy is working bottom line. >> hugh johnston thank you for talking about earnings, the cfo and vice chair of pepsico "squawk on the street" continues in just a moment

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at optum, we're partnering across the health system well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade.

we got about three minutes before we get to the opening bell jim is feverishly tweeting he's going to have to stop to that to get to our mad dash. >> well, i was looking at a picture that my friend posted about marc benioff and steve jobs and story telling, upcoming dream force. >> so you felt the need to respond to that immediately? >> well, that's a bold claim marc benioff worked for steve jobs. >> but where do you want to go with our mad dash this morning >> not there by the way, he did once like twitter and there was bob iger saying twitter but i'm not going twitter.

when i talk to people they say jim, you're the tesla person on msnbc. >> i say i'm on cnbc, i'm not the tesla person but nice comments are thank ful. david, here's what we need to know catch me if you can, product and streets don't miss the farce, gross margin turnaround, david, this is a piece which basically says there's tesla and then there's just everyone else. >> really. and that includes gm which we -- yesterday of course we were talking so often about gm's sudden resurgence and you get things like autonomous driving technology, cruise automation, chevy bolt, vehicle connectivity, on star, ride sharing, car sharing, lift, maven, better position versus competition. >> it's not zero sum. >> they're talking about gm, not

tesla. >> it's not zero sum but quot g quoting, david, this is -- this is the future. is i don't want you to be blinded, david i'm talking tesla. >> yes you are. >> it's a cold stock the funniest line in this whole thing -- >> you don't like to touch it? >> it's a cold stock the funniest line is that tesla buyers -- i thought this was fantastic. one of the reasons we like the tesla buyers, they are economically irrational customer base there are irrational reasons why tesla -- but irrationality plays here what does my daughter say? she goes dad, can you get me one? [ applause [ applause ] she's irrational but she knows i

pay. maybe she's crazy like a fox. >> [ applause >> maybe, that's some soft data in the face of those model three production numbers. >> they've had not nice words for me -- musk said there was a 50% chance that i don't exist? >> yes, we all remember that. >> and that brian quickly said that's only a 28% that i don't exist so i've always preferred krzanich to musk much higher level of existing under krzanich. >> elon musk says a lot of things and all of them are worth listening to i don't know how many are worth believing. >> we admitted the model three. >> and he's going to launch a rocket from new york harbor to take you straight to london in 28 minutes.

>> and fly us around the world in half an hour. >> the president, president trump, and elon musk are both involved with rockets. one is more involved with a little rocket. >> yes right. i lon musk's rocket is fairly little the little rocket man? >> yes >> but that's not a rocket. >> stop your defense. >> my defense? >> yes. >> you want to talk north korea now? is that where we want to go? >> let's just mention at the big board capital investment group rings the bell for a blank check company celebrating its ipo at the nasdaq, it's the trade desk, a cloud base technology platform for ad buyers. goldman cuts khc to neutral. >> i think khc is deeply middle of the store.

>> they can't do anything hosti hostile. >> this is an important downgrade to neutral and carl just said cost savings are beginning to deplete of course khc, we've talked about the ability of this management team to bring margins well above the industry average is what they are lauded for and rewarded for in terms of a higher multiple than much of the group. 70% of the operating is in the u.s. where industry pressure of change is most pronounced. input cost proeessures are mounting for the company and they see greater down side risks to their estimates than upside and you're not going to have that top line acceleration possible as a result of having taken out most of the costs already. the big question for khc, as we all know is will there be a deal is there a merger and acquisition opportunity for the

company after it's, shall we say, poorly executed attempt to buy unilever very early this year where will it go without mna, there are questions about the ability of khc to continue to garner that higher multiple. >> totally right totally right. and i thought this was an amazingly important upgrade because the savior may not be the savior unilever, by the way, is buying smaller brands, what nelson peltz suggested proctor shouldn't have thrown away i come back and say what does this have to do with pepsico we had that great interview with hugh johnson pepsico is the lone survivor but it's the best house in a neighborhood that people just wake up and say zillow just said we're worth even less. we should have spencer, remember the days he used to come here? >> i do. this estimate keeps going down.

>> yes, zestimat, exactly. >> very important story. >> like nike, there are these dominant brands facing margin pressure in north america because of disruption in retail. >> let's go back to that unbelievably smart mccormick acquisition which we didn't talk about. i knew about the old bay tie but mccormack buys frank which is you can put that stuff on anything kraft heinz is ketchup they have the moderate, the lot, the this, the that, the disposable you know what? that can go away kraft -- i mean, look i happen to like kraft heinz for one reason, they have a cheese that goes -- when you go to gino's with me, you'll never do that, you want to whiz whip. and that's the last bastion of growth. >> velveeta. >> another thing investors are talking about is another threat to these companies, and that's amazon private label and what is this expectation that amazon is going to ramp that up dramatically. >> essentially saying we're

going to find a supplier and be able to sell your brand and product but not under your br d brand. they do it on batteries. >>er wirwin simon said it would be protective but you're right the kraft heinz narrative has been in decline about why you want to own this -- i remember when i was at goldman sachs we were recommending krat ing kraf oats, general foods. you remember general foods. >> of course. >> i would not recommend any of these. interest rates are going higher. what are you going to do with campbell soup? these are great companies. but holy cow the existential crisis is here, it's now.

>> i want to get on another report that's throughout. >> tesla >> no, the only big one which is sprint and t-mobile. just want to update people as things move along. they are continuing to make real progress here. due diligence has been done in earnest on both sides. they have the range that they have identified for the exchange ratio. they've locked in a range, doesn't mean they've locked in the exchange ratio but you can figure it's going to be based on the conversations i've had with people close to the situation no further premium above where sprint stock price is right now. don't forget that stock price did move up nicely after we first reported the presence of serious and vigorous talks between these two companies but there is no further premium. you can back into where that range might be then, right, on an exchange ratio figure somewhere between seven and a half to eight times sprint shares for each t-mobile share

nothing has changed in all of that but what i have been picking up lately is frustration on the part of t-mobile shareholders with even this price, saying you know for the last few years you've been running this company extraordinarily well, you've been making the point that sprint stock is overvalued and you've been getting all of the premium valuation in the marketplace for the right reason now you'll take your currency and pay at least market price if not more, really, because sprint has moved up dramatically over the last year. for sprint there's at least some frustration. that comes without any of the articulation behind the potential deal when and if it gets announced we don't know the synergy numbers or strategy when it comes to getting antitrust approval but we do know t-mobile may have made their decision in part because they think it's a good time, perhaps the best time for them to try on the antitrust front to get a deal done and they have a deal on synergy as one would expect that is quite

strong in terms of these two companies. that's where these things stand, probably still looking at a few weeks from here, let's call it third week october that might be aggressive but that's your latest update on the talks but do keep an eye on that unrest and that t-mobile shareholder base and see if it manifests itself in any way or completely dissipates because people just sell the stock as opposed to fight. >> it has your reporting which has been phenomenal. has impacted the news that -- has impacted the stock of t-mobile in a very negative way. they report on october 25, i had felt there could be an excellent quarter coming, all of that talk about the fundamentals has just dissipated as this has become the story and if they were to walk away tomorrow, david, i think t-mobile stock goes to 64 or 65. john ledger, i'm back and forth. >> they're certainly thinking

about the lodger future. >> what happens when you mix magenta with yellow? roy g. biv that's what he's going to have to wear? we have to wrap it up. >> we're short on time today not sure why. >> i know, it's -- >> pepsi messed with our commercial break sector. let's get to bob on the floor mixed market on the open let's show you the sectors weaker yields. utilities are up banks, which was the market leader on the down side health care, industrial, technology all very mixed open here the main paradigm is about that reflation trade. that's the expansion of the global economy more hawkish central banks, tax cuts, that's the stew we're dealing with for the last month. the reflation trades helped the stock market look what it's done for banks on the higher bond yields, look what it's done for industrials, the cyclical stocks are higher oil is up. even though it's only at 50, oil

stocks have held up very well. the big threat, north korea, more hawkish and people waiting to hear about who is going to be leading the fed in the next couple of weeks, that's the main focus of everybody that i have been talking to. markets high even though our main market leader technology stocks have kind of paused in the last few days. we've had cycles of other good sectors moving forward because reports have been good look what happened yesterday delta had great guidance toward september. gm had a great number for september overall, lennar the home builder had a good number overall. these individual reports keep moving their sectors forward so you get this rotation, tech doesn't have to do it everyday bottom line is lowry had it. the internals in the market are great, new highs are great advanced decline line is great lowry says investors should regard any market pullbacks in the months ahead as opportunities for new buying and of course we have people ringing the bell down here bottom line here, s&p sitting 25, 34 and a new high. back to you. >> i'll take it, bob and send it

immediately to rick santelli at the cme group in chicago rick >> buckle up, we'll go past, people 135,000 on september adp wasn't terrific we did have hurricanes potentially moving the needle a little bit it was the weakest number since 2016 and if you look at a two day and pay attention to the right side, today's action didn't make all that much difference it's a pattern that looks like it's losing a little steam but look at the scaling. everything's pretty compressed there's a two day boons. if you opened a year today to tens it's a much better picture. if we don't take out the last couple highs that are in cascading order lower, so 238 to 242, the market is going to stall until we get important data points, like friday, maybe, if you look at the tens minus boons, very important correlations it's been driving the world for the most part for the last three to five years but it looks like we're distancing ourselves our yields are moving away, this

is an important feature to pay attention to it's stalling just a bit even though it's not giving a lot back and the dollar index revealed the market has turned but that doesn't mean big upside is coming any time soon. carl, jim, david, back to you. >> rick, thank you rick santelli when we come back, what snap ceo saids about going public we got record highs on the industrials and the transports but the s&p having some trouble cracking the flat line back in a minute

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way to senate banking. we will see what senators like elizabeth warren will say to him a day after he says a, he has no opinion about whether these hackers are from another company. said the executives who sold stock were honorable men and followed due process. >> that's not true they may have followed due process for themselves but if i were senator warren, it's very obvious, the top level management, they knew there was a serious network traffic hack, they should have immediately closed the selling window. on august 1 the key cfo sold

stock. the president of the solutions who would have known it, the work force solutions would have known it, they sold, the window should have been closed, that's a violation of the s.e.c., direct violation, senator warren, i just gave you the ammo you need to refer this immediately. would it be justice department depends on what the s.e.c. thinks but it is the way that you get these people and i'm giving it to you on a silver platter because i know the law. >> she brings any heat similar to what she brought to tim sloane yesterday -- >> hair on fire. there's an s.e.c. rule if you have materiel non-public information you must close that window and the that window was not closed. >> we think this rose to the level of mnpi, material non-public information >> yes, absolutely. >> even though he claimed yesterday they didn't know they had been breached, that i just knew there was -- >> on july 30 the security team monitored network traffic and the company took off line the effective web application that day. they knew the windows should have been closed immediately the question is very easy.

you want to get these on bright line laws, you don't want to get this on he said/she said bright line law. window should have been closed immediately. how could they not have done it? bingo, refer to the s.e.c. s.e.c. should refer to justice but maybe they just keep it a civil. bingo. >> all right. >> i used to do that kind of work when i was at goldman. >> very discouraging yahoo! saying all three billion users back in 2013 -- >> make sure you tell your bank no credit line unauthorized without a pin number that's what they want to do. they want to open up a home equity line of credit. that's what the bad guys do. make sure no one takes out a line of credit i wish equifax would tell you that but no. they're bigger than that because they don't deal with customer interface, all they deal with is the banks so the banks have to play catchup. >> markets struggling to hold on to gains we back in just a minute [vo] quickbooks introduces rodney.

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let's get to cramer. >> you've seen shopify go down go to citron research on twitter right now. they put out a report that says what about shopify, the hottest

stock on the nasdaq is a completely illegal get rich scheme with a good platform. this will be before they are caught red-handed by the ftc they are like herbalife. >> shopify >> you should go, you should read the video link he's got there n there. it's amazing about someone who is a spokesperson -- well, one of the people operating shopify, he's saying this is mid-level markets, small medium size business, i'm not using the word scam but he is saying listen, this is going to be a tu road if you own this the stock is up gigantically we said it was too expensive on "mad money," we didn't know what he was saying. >> in general you're a fan of his work >> i just like to bring both sides. i didn't like his way fair call, i said yes and no, i thought his

call on value yabt was one of the single grease test calls ofy lifeti lifetime you don't want to own shopify anyway his call on another company that i don't want to talk about which is a company that may not be playing by the rules when it comes -- ubiquity. i'm not going to mention. >> there's other good work done in ubiquity but the company won't -- >> got it. >> i tried to reach out to the company. >> just go to @citronresearch. full story up now. shop is not the company wall street has sold you. the ftc is going to -- oh, the same stuff you can put franks on when they need them. >> a target of 60 on shopify. >> if you're in shopify, you're up a lot and congratulations and maybe you want to sellify to shopify. >> what's on "mad" tonight >> i have bill ackman on i need questions from you. i'm going to try to make it so

it's a little less vitriolic by throwing a lot of acetylene on the situation and doing the citi research i might throw that on the kingsford myself i'm bringing bringing c-4. no, here's the problem, i want to stop this i like carlos at automatic data, i like ackman, i think there could be bread my name is ten bears and i come in peace what movie >> i don't know. >> yeah, well -- >> i'm not talking about any bears. >> see you tonight, "mad money" 6:00 p.m as we said earlier, former equifax chief richard smith on the hill today bracing for a grilling in front of senate banking. we'll talk about that. dow is up six. e there, but you can't.

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welcome back to "squawk on the street." we have big news, and this breaking news is big news. september ism non-manufacturing, service sector, the biggest sector in the economy expecting

55.5 59.8 59.8 this is stratospheric for this series of numbers. as a matter of fact, i have to go back, it looks to me like to the high read i have on my database which is pretty long, 61.3 is my high watermark going back to august of '05. this will be the second-best number up to that. huge now let's go through some internals. new orders jumped to 63 versus 57.1 considering adp was weak, maybe hurricane, we had the big number friday, let's look at employment 56.8 moved higher, not nearly as aggressive as the last two numbers i talked about that's up six tenths but no matter how you slice it, this is a big number and i would be surprised if the markets don't stew over this and move to the upside carl, back to you. >> we are watching for reaction to that number, rick, thank you. rick santelli, welcome back to

"squawk on the street," i'm carl quintinilla with sara eisen, david faber, at the new york stock exchange dow is trying to hang on to gains up 17. we're watching the ten-year which is yields popping up a bit, 233 on that dynamic economic number out of ism services. >> our road map for the hour begins with the dow hitting another record high, the s&p 500 trying for its seventh straight day of gapeins. wipe it out. the president commenting on puerto rico's debt load but can it be done we'll discuss? >> plus p & g's ceo and a member of board of directors speaking out against nelson's peltz's possible nomination to that board. just one week to that proxy vote. >> under a week. >> actually next tuesday. former equifax ceo rick smith on capitol hill this morning, this time testifying in front of the senate banking committee. we're expecting that hearing may get heated certainly after

yesterday. the senate banking committee hosted wells fargo ceo tim sloan and senator elizabeth warren went after him here's her response to his handling of the fake account scandal. listen. >> at best you were incompetent, at worst you were complicit and either way you should be fired. >> will we see that kind of outrage, guys, for the equifax former ceo >> well, he's already been fired so he's got that going for him. >> right. >> but i think one of the questions they'll have from him is why are we not hearing from the new ceo? what systems are in place to change the culture and protect our data going forward he can just talk to what happened under his watch which was this whole debacle. >> well, it was the whole debacle which is what they're focused on here so he is the one responsible for it jim cramer in the last hour, of course, also brought up the somewhat unusual trading of stock given that they were aware

that something had gone awry and it's unclear whether or not that will be picked up by any senators who question mr. smith in terms of some executives who did manage to get out prior to what has been a significant loss of market value since we've learned about the breach. >> in the meantime, we'll keep our eye on the markets the string of robust economic numbers is remarkable. stocks are mixed as the dow hits another record high, going for six straight days of gains we are waiting for chair yellen to speak later today got the august jobs number coming up friday let's bring in the senior global equity strategist at wells fargo to talk more about the data this week, scott. i mean, manufacturing ism 13-year high the year's own pmis strong across the board now services number. what accounts for this new acceleration this is this the economy just blowing past that hurricane? >> carl, i tell you, rick was right. that was a great number on services, we had a great number earlier in the week on manufacturing. those are surveys, we'll see if

the hard data backs that up. but based on the work we're doing anyway, the second quarter 3.1 gdp number isn't the start of a new trend we'll get out of this year with 2.3% gdp and maybe just a tick higher, 2.4% next year so i think some of these survey ss were good i this i you have to take it with a grain of salt things are going to move forward but i don't think we'll see the economy meaningfully accelerate oncale a -- on a calendar year. >> q-4 seasonality generally favorable. tax reform despite the back and forth people are saying who cares if it's april of '18, it's still also as you would say moving forward doesn't that lead to better equity performance in q-4? >> well, carl, the s&p 500 is probably 100 points higher right now than where we thought the high would be this year. we're still looking for a

pullback we're not real optimistic we're going to get tax reform soon i think it's going to be watered down and really you are right, though, and i think the last 40 -- maybe 40 to 50 points up here have been on tax cut hops.s we're trying to project where the economy is going to be with what we know right now but if we get tax reform sooner rather than later that would be a surprise to us and it would be to some extent justify where the s&p 500 is right now. >> carl mentioned we'll hear from janet yellen later. do you think this question hanging over the market of who will be the next fed chair, we have another apprentice-style race and rumors and short list going on is affecting the markets? >> you know, a lot of rumors out there, sara, but i don't think the stock market right now -- i think we're a little far away from that. we might start sweating that or worrying more about that in

decemb december certainly in a couple months but i don't think whether jelsz yel going to be reappointed is driving the market i think it's macroeconomics. i think it's what the perception the fed is going to do in 2018 with rates the fed tells us three hikes next year. our fixed income team looks for two but there's competitors of ours on the street that are looking for four hikes next year so that's a head wind for stocks that's one of the issues along with valuations that we see. that's probably going to break stoc stocks b-r-a-k-e stocks. >> we'll take that over the other kind. >> top leaders in cyber security and government are gathering for a cyber summit eamon javers joins us with a

special guest on the topic due injury. >> that's right. we're at the cambridge cyber summit in boston, massachusetts, presented by cnbc. thank you for being here today the president will be going to las vegas to talk to victims, talk to law enforcement. it strikes me that here we are on wednesday morning after this horrific attack sunday night and we still don't know much about why this happen ed what can you tell us about what the fbi knows? >> this is a mass casualty event in the united states and we're trying to weed our way through it we don't have immediately accessible thumb prints that would indicate the shooter's ideology or motivation or what

compelled them to get there. that is of course what we are focused on we're working that assiduously with our great partners who have been in the lead on this from the beginning, the las vegas metro p.d. and we're doing a lot of work in las vegas and many other places to get to the bottom of that. >> are you surprised we don't know this soon why this happened so often with these shooters it's some insane murderous ideology but they do it to make a point. is it possible that this particular killer didn't want to make a point. >> anything is possible. this person was not on our radar prior to this event so we have a challenging bit of work to put the pieces back together. >> are you having difficulty getting into the devices after san bernardino there was such a conflict between apple and the federal government about whether or not those devices could be unlocked. is that going to be an issue >> we haven't had those issues to date but our exploitation has begun in the last 24 hours and

we'll see how that goes. >> what's unfolded that we don't know already >> there's been incredible coverage you've done a great job in the media of covering it to date it's the quieter and harder work that we have to do now in terms of identifying people who bhmay have known him, may have seen him or crossed paths with him in the days and weeks leading up to the event. that's where we're focused right now. >> i want to shift to cyber security which is the reason we're here in boston today at this particular summit this is a moment where we're seeing social media giants brought into a cyber security conversation that we thought was about protecting hardware and servers and now we're seeing social engineering around an attack by the russians on american democracy itself last year i want to put up something on the screen that mark zuckerberg said around yom kippur he said he has regreats about what has happened. he said ultimately to those i hurt i ask forgiveness and i will try to be better for the

ways my work was used to divide people rather than bring us together i ask forgiveness and i will work to do better. that's a remarkable thing for the american ceo to say. what does that tell you about this moment in the relationship between business and federal w law. >> it's an incredible statement. i have respect for mr. zuckerberg and the way he's handled this over the last couple weeks it's a positive sign for us in law enforcement and intelligence as you know, we have a long and productive relationship with many of the companies that serve as providers and the tech companies but that relationship ebbs and flows as issues alternatively bring us together or take us apart a statement like mark's recently i don't think would have been possible in 2014 or 2015 i think it's a good sign that we are finally coming back to the table in a constructive and transparent way to try to find some solutions th s thas tha ss

problems >> mark warner blasted twitter last week which came and presented their findings about the russia investigation to the senate saying that it was woefully inadequate. are these companies doing enough to cooperate in terms of the russia investigation now >> i'm not going to comment on the senator's position but i will say they are doing more they're doing more today than they did yesterday and the year before that and as i said earlier that's a good sign for us so we are encouraging them to do as much as we can because it's only with their assistance that we can shed light on the way they're open and performance oriented platforms have now been used by our most serious adversaries to hit us in places that we quite frankly have not seen before. >> was this the failure of emergency nation on the part of the cyber security industry broadly? we didn't see this type of social engineering attack coming >> the cyber security industry

has been appropriately focused on protecting systems and data that's important and we encourage our partners to do that everyday. i think the interesting thing here for us is that these attacks while technologically not particularly sophisticated should have been -- we should have predicted it with more clarity. when you overlay these attacks on what we've known on the counterintelligence side it fits into their play book we know what drives them and this ability to insert themselves into our system, to sow discord, social and political unrest is right up their alley and something we probably should have seen. >> so many more questions i have for you but we are out of time fbi director andrew mccabe, thank you for being here on cnbc. >> thanks, appreciate. >> it sarah, let me toss it back to you at hq. >> we look forward to more from you from the summit today.

when we come back, president trump heading to las vegas today in the wake of sunday's mass shooting as eamon just said. we'll bring you the latest dow is in positive territory s&p is down a point. "squawk on the street" will be bright back. throughout my career, i've been fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host.

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las vegas where he'll meet with victims of the mass shooting jane wells is in las vegas with the latest on that and what we know at this point, jane, in the

investigation. >> well, when the president does fly in, sara, he will fly, presumably see from air force one the concert venue behind me and see everybody's stuff still there because it's right next to the airport and here is newly released police video of what a bit of the kays was like sunday night. you could hear a few people resisting police commands to duck or runt one finally says mandalay. the shooting lasted nine to 11 minutes but it took another hour before s.w.a.t. entered stephen paddock's hotel room. >> floors had been evacuated the suspect was now isolated and con tanned within a room at the point the s.w.a.t. team made their decision when it was appropriate to enter i want to make it clear again to you that while there was that

slight delay, the suspect was no longer firing into the crowd. >> once inside the room, s.w.a.t. found paddock dead, a suicide, along with 23 weapons, 12 which bore a device that allowed him to fire hundreds of rounds a minute along with ammo. he also installed cameras in the hallway and a peephole presumably to see who might respond. last night his girlfriend returned from the philippines to l.a.x. where she was met by the fbi. perhaps she can help explain a motive 23 guns sounds like a lot and it is but monday there's a big gun show here this week. there's a lot of gun shows in nevada i'm told it's not uncommon for dealers to bring the weapons they're going to sell into their hotel rooms because it's safer than keeping them in the car as we show you a vigil in the middle of las vegas boulevard this morning, will that change in nevada, in las vegas? l will you have to declare your weapons? will they be screened? we don't know at this point,

guys. >> it helps us understand the picture a little better this morning, jane, given how little we know about his motives. jane wells in las vegas, thank you. when we come back, greg fleming has a new gig. he'll talk about his role in the new ownership t mmiofheia marlins. the dow is up 10 points. we're back in a minute

hey, you every talk to anybody about your money? yeah, i got some financial guidance a while ago. how'd that go? he kept spelling my name with an 'i' but it's bryan with a 'y.' yeah, since birth. that drives me crazy. yes. it's on all your email. yes. they should know this? yeah. the guy was my brother-in-law. that's ridiculous. well, i happen to know some people. do they listen? what? they're amazing listeners. nice. guidance from professionals who take their time to get to know you.

microsoft is announcing a partnership are long time morgan stanley greg fleming forming rockefeller capital management fleming will become its chief executive officer of the newly formed financial services firm offering more than just wealth management and the man himself joins me now nice to have you here. >> great to be here. >> congrats. you've been out of morgan stanley for a while and there are various reports about maybe it's something with blackstone, maybe other things with larger entiti entities why rockefeller? great name, doesn't seem to be much there beyond it. >> there's more than a denovo startup but we start with the name which i think is best in

class cross generational, a fantastic name to build a firm around and rockefeller today does have $16.5 million in assets and wealth management and asset management they've got terrific performance in their asset management business, really good people that may not be a household name is so there's a great platform we can build from but the story is the growth that we're going to add to the existing platform. >> >> and why do you see this as an opportunity >> first of all the combination of businesses. it's wealth management for ultra high net worth, asset management for those clients and then a strategic advisory business that fits in nicely with the you will that t ultra high net worth business. when you're managing money for high-end families, they often own companies, need strategic advice and having advice you can bring back to them. >> it goes back to your roots as an investment banker people may know you as having

run wealth management but you were a banker for many years. >> i wasment around the three businesses i've spent the most time in are investment banking strarks t.j. i can advisory, wealth management and asset management i did a lot of business with asset management companies in the 1990s in the first part of the new century. remember we took merrill lynch's business merrill lynch invested and merged it with black rock and then i sat on that board for a year so these are businesses that i'm familiar with, very comfortable with, great businesses, higher return businesses, they fit well together and under the rockefeller brand it's an exciting growth opportunity on top of what they have. >> and you believe with proliferation of etfs and index funds and the giants out there, whether it be black rock or vanguard, for example in that area and generally that there's still an opportunity for you to add value. >> but it does start with advice you're providing the advice to the clients and that might

include some of their portfolios invested in etfs asset management and active management done well can be a nice add on alongside that but one of the keys is the advice and intellectual capital behind that. >> viking big informso oinvestor i think of viking, i think of big lock short equity. what are they doing and what is their goal. >> vieblging h iviking has nearn in their pe fund today it's a big fund. these guys are strategic it's a group that i'm very comfortable with and in fact they like taking these businesses and having them step in as the leader but they looked at this independently, these areas and found them to be very attractive so i'm pleased to have them as my partner in this. >> the allure of businesses like

the ones you're talking about are predictable cash flows, that's a part of what went on at morgan stanley and moving more dramatically into wealth management when you were there globally speaking is there more of an opportunity outside the u.s. as well as wealth seems to acrete more to families in china than here. >> well, to both but at rockefeller we're going to focus on the u.s. for now which is a tremendous market with depth and breath. but there is an opportunity for lots of players. there there's. it's very fragmented, there are inspects playing in these businesses, but there's nobody who's taken these set of businesses that are talking about rockefeller and knitted them together in a way that's

compelling and powerful for high end clients. >> how quickly do you want to scale this. >> we want to scale it we have an existing platform we have a great brand, good people at rockefeller. we're going to add more to the mix. viking's committing cap tool buying a big steak in the business but more importantly to allow us to grow growing forward so viking guys will be there, i want to put it to work and our time frame is two, three, four, five years not longer in terms of putting the capital to work. >> well, you're not a youngster anymore. >> i'm not a youngster nobody calls me the young executive anymore. >> meanwhile, the "wall street journal" doesn't lead with that, they lead with derek jeter talking about you because you advised the course on the purchase you are a small owner as well. >> yes. >> do you think that team can be turned around. >> i do and just on the derek jeter banker point, i texted him and said you know i spent a quarter of a century at two great companies and had some success and i'm putting this

together two the rockefellers now and the headline is derek jeter's bankier. but miami is important for baseball it's a gateway to latin and south america where there's a tremendous amount of interest in baseball derek is the ceo of the team so he's running everything, the business side and the baseball side he thinks it's very important to have one voice, one culture across the team. he be build it ground up, he will be patient. he will make sure he puts in place a great organization capable of doing well year in and year out once he get there is you're optimistic about the miami marlins under derek jeter's leadership. >> i had an opportunity to meet his not then wife hannah davis. >> she's terrific and they have a new baby girl. >> congrats on the gig we'll watch closely, thank you greg fleming, sara, back to you when we come back. the president weighing in on puerto rico's debt problem we'll tell you what he said and whether it can be done next.

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good morning, everyone, i'm sue herera here's your cnbc news update president trump and first lady melania trump depart for their trip to las vegas. mr. trump will meet with first responders and victims of the las vegas shooting a bit earlier, he had this to say as he departed the white house. >> well, it's a very sad thing we're going to pay our respects and to see the police who have done really a fantastic job in a very short time and, yeah, they're learning more and that will be announced at the appropriate time it's a very, very sad day for m me. >> protests continuing in st. louis, the demonstrators are upset over the acquittal of a white police officer accused of shooting and killing a black man. they blocked a major highway dozens of protesters were

arrested three researchers have won the nobel prize in chemistry for developments in leelectron microscopey. it will be shared by three people you are up to date, that's the news update. over to jackie de angelis for the eia inventory report good morning, jackie. >> good morning, sue the department of energy reporting a surprise in terms of crude oil inventories. a drawdown of six million barrels you can see prices were negative, they have turned positive $50.60 gasoline we saw slight buildup of about 1.6 million but these were not in line with expectations, they were also not in line with seasonal trends the expectation was that prices would continue to dip a bit lower. intraday we got under 50 today but if those seasonal trends don't keep in place, we could see these prices creep up. remember we're trading on technicals as well the production number from the

u.s., 9.561 million barrels a day, that's a little higher getting closer and closer to that peak, that could be something that later in the season does push us down back to you. >> all right, thank you very much, jackie we are waiting for secretary of state rex tillerson to make a statement. this was unscheduled but we understand it's going to happen in the next few moments. no word on what he will address. it comes on a day where nbc news has reported he was on the verge of resigning this past summer amid what they're calling mounting policy disputes and clashes with the white house especially following a confrontation in a july 20 meeting and that he was counselled to stay by vice president mike pence until the end of the year. we don't know if this is what he's going to address but there's plenty of other topics on the table he can talk about. >> it also comes after a weekend where president trump tweeted about rex tillerson secretary of state's approach to north korea saying it's a waste of time, the

diplomacy. and someone undermining his own secretary of state when it comes to the strategy. although david we were talking about i don't know what he could announce here. it's unusual to hold a press conference either way, especially for secretary of state tillerson. >> it would certainly not be in keeping with protocol for him to frankly have his own press conference to announce something like his resignation without it being part of an overall strategy from the white house. unless he wants to be outspoken about something in particular which seems unlikely. >> most departures under this white house have come on a friday afternoon. >> yes. >> in a statement. >> the latest. a very brief statement on twitter often times and then nothing more. >> we just had one last week, hhs secretary tom price. we'll keep an eye on the state department and bring you the secretary as soon as he takes the podium we're keeping a close eye on shares of mepng between nelson peltz and procter & gamble they held a web cast yesterday

where david taylor said they're not closed off to adding new board members and in fact they are in the process of vetting new folks for the board but that peltz is not the right fit listen. >> we will continue to look for globally experienced board members who represent the next generation of leaders as the world is changing fast and new and different perspectives will be needed. digital perspective and big data analytics will be important as our ability to use the new marketing vehicles and media will only accelerate as ai and machine learning become important value contributors we will look to add cpg experience as well as specific knowledge in our categories like health care and we will continue to build a board who will flex if consumers we serve. >> going after the digital chops there indirectly of nelson peltz which is a theme we heard echoed or saw echoed by the former ceo of png yesterday who david you

covered published that note saying why he is voting against peltz for the board. meg whitman was on the web cast taking investor questions defendi defending p&g's e-commerce strategy he's on the board. this is the first time we really got any public comments from a board member although we understand that we've been working with institution members in private that try to sway thatter vote which comes on tuesday. >> nobody has embraced the idea of how quickly change is accelerating and many times i speak with her we have her on one of the key reasons why she has slimmed down the current hp inc. to its current state is to respond to these rapid fire changes in the marketplace given the size of what critics say is its decision making, it

can't respond to those changes that need to be responded to in realtime in today's marketplace. >> but whitman and taylor and john muller, the cfo on the web cast made the case this is not the same old p&g under david taylor and his reign in two years things have changed. it was interesting to hear whitman address the topic of activist investors and why this is not right for p&g's board listen to this. >> not against activists a number of us have had activists on our board and it's been positive but there's a couple things. one is what is the time frame that activist comes in at? the activist i had in hp stock came in at the beginning of the turnaround and had a play book that was quite helpful to us thinking about the turnaround. this transportation journey is well under way i don't think this is quite the right time. >> making the twofold argument against peltz on the board the timing of where they are in

their transformation and the alignment with the board i will say that p&g is ramping it up after three proxy advisory firms as you know including the biggies, iss and glass louis suggested nelson peltz join the board. so p&g is making its case and it's going to be a close vote. >> it's just a challenging time for the entire group you had pepsi's results today. downgraded by jeffries, pepsi on monday and then today goldman cutting khc, they got a sell on p&g along with smuckers and others so very difficult especially with the dollar. >> it's the elusive topline growth across the consumer packaged goods category. and interestingly peltz argues he's had experience in trying to turn around these kind of companies, these cpg companies procter has fought back and said no, he's just been in the food business though on their own board representation they have a lot of ceos and ex-ceos, some in

retail, maybe. >> their argument is it's only food not cpg. the reference that megawas making was to the late ralph whit worth he was on the hp board it's interesting to hear her answer that question because people noted she lived with an activist quite nicely for quite some time. >> and heinz has been rolled in here as a case of the proxy -- they had a proxy fight with peltz same time for more board membership and got along famously. >> it will be real close, as you said, sara that will be the key, 40% so many times is retail, how many of them will vote, what percentage will try and be able to get then the three big index funds will be the key. black rock, state street, vanguard. >> which tend to decide late as i understand. >> they decide to a certain extent on their own. they don't follow proxy advisory firms. in the case of dupont they went one way different than they were advised to by those proxy advisory firms. >> that vote on the 10th just a few days away. meanwhile the president visited

puerto rico yesterday surveying the damage after hurricane maria. he made some comments about the $70 billion debt load. michelle caruso cabrera has been watching that. >> puerto rico has many outstanding bonds because they have so much debt but let's show you the benchmark. this is a general obligation bond that matures in 2035. it had an 8% coupon. it's getting hammered today. in the left-hand corner, that's price in cents it's trading at 36 cents when everybody is convinced bond is going to get paid back, it generally trades at par, closer to 100 cents yesterday it was trading at 44 cents. to move that many cents in one day is a mammoth move for a bond and you can see a lot of the bonds in puerto rico are getting hit. a lot of the bonds ensure puerto rican bonds so they are getting punished as well mbia is off, ambac off

assured guarantee off 3% where is this carnage coming from from president trump based on what he said in an interview last night. >> we have to look at their whole debt structure they're going to have to wipe that out we're going to have wave good-bye to that, whether it's goldman sachs or whoever it is, you'll have to wave good-bye to that. >> that would suggest he thinks the debt should go to zero however it's not within his ability to do that as the president and people said -- people familiar with this market say if they believed him the debt would be trading closer to five cents however his moral situati situation does had weight. mick mulvaney was on cnn and tried to walk that back. >> the president seemed to suggest he is open to wiping out the puerto rican debt. is that to be taken seriously on

its face >> i wouldn't take that word for word i talk to the president as we flew home on air force one what we're focusing on is what you and i just talked about which is the primary focus of the federal evident ffort to mae the island is safe. >> there is a lyle pegal procest in place in 2006 called promisa, it's an acronym to figure out what to do with puerto rico's debt but today right now those stocks and bonds are getting hid very hard based on what the president said guys back to you. >> fascinating to see a bigger move on the trump kmaents than the actual hurricane which battered the island. >> they fell if i'd shown you trading, they fell another 10, 20 cents once the hurricane hit. people realized how bad it was and clearly bond holders were going to take.

now add the president's comments on that and it adds another 11 cents of pain. >> the chart is stunning michelle caruso-cabrera, thank you cnbc's all america economic survey is out. steve, how are people feeling about the it that correct? >> feeling pretty good the all america poll, we surveyed 800 americans all around the country, all income types, and what we find is that 41% of the public say now is a good time to invest. is it's still pretty buoyant the main story we take is we have this upward shift and we've maintained it. look at two different groups that's the average these are people without investments, also at or near pretty good numbers, 26 they're most optimistic about the start and they're maintaining -- although down off the highs here -- look at what their

favorite investments are housing, real estate remains the number one choice for 37% of the public in the number two position are stocks, that's our symbol for stocks, 26%, that's up a little bit. gold the shine has come off a little bit, 21%, gold is the best investment followed by savings accounts and money market instruments at 10% 38% say the economy is excellent or good. 39% the economy is getting better 42% say their wages are going to go up. other my left shoulder 43% say now is a good time to invest what do they have gold stars because the four-quarter average on these are at the all time high in the ten-year history of the survey not necessarily reflecting well on the president his approval rating is up just a point 38% but also his disapproval rating is up a

point. a little better on the economy he's net positive approval/disawe prooufl up a bit from the last survey we'll talk about these big economic issues tomorrow beginning at 8:30. we have the philadelphia fed president patrick harker and robert kaplan the dallas fed president tomorrow morning carl >> their comments mean more now than ever, steve, we can't wait to hear it we'll take a break quick you're looking at a live shot of the podium where secretary of state rex tillerson is expected to talk from in just a few moments. dow is up 12 points. we set a record high on the 'rba ia mes and the transports wee ckn mont

let's get to the cme group in chicago and get the santelli exchange with rick good morning, rick. >> thanks, carl. jerome sni jerome schneider in person you're the perfect man for the perfect day. when i brought out the number at 9:00, 10:00 eastern, ism service sector was off the charts. best number in about 12 years. i know these are considered soft numbers, it's not kind of the quantitative number we get in other areas, but a lot of these softer numbers have been strong. what do you think? >> quite honestly, the market needs to pay attention because it shows an increasing trend toward positive momentum within the marketplace. we've seen that in terms of the recent data so we're seeing data and the fed expectations coincide in the market and they need to follow and accept that the economy continues to grow albeit at lower-than-expected trends compared to where we were in the past but still a t2.5%

growth rate. >> animal spirits. underestimate that dynamic at our own peril. is does 3 1/2% growth possible? >> possible but unlikely we still think it will be in 2 to 2 1/2 range investors unconvinced rates higher propelled by growth momentum we've seen fed and market have a huge disconnect in theand we still have a relative disconnect positive isms and jobs data which continues to be well above par compared to where the fed believes their baseline is, we still have to be convinced the fed will eventually tighten the process no matter who is sitting in the chairs around fmoc table. >> status quo is an ugly thing status quo connected in some way, no matter how good these numbers are, we're going to get

pulled back in the normal part of the bell curve, so i'm going to switch it around. fad fail unexpected weakness or growth. >> continued focus on interest rates versus where we think they should be. past cycles, '92, '95, '99, zero, '04, zero 5, where they should be and where they ended up. >> viewers -- think outside the box, viewers might be highly educated, the new fed person, but that doesn't mean that's the path the market will take. >> be careful where interest rates are going and don't petition for interest rates to go higher. there's a variety of ways to do that we need to be actively maneuvering through whatever investments we have market underestimates growth and feds tight think process along the way. that's really the focal point of the next 12 to 18 months,

managing that process as we see growth. >> we're just about out of time. i ask every guest this and a lot aren't happy i ask, i'm going to ask you anyway one year from now do you think it's possible to see higher rates and higher equity markets? >> possible to have higher rates, higher equity markets it's going to really depend upon the digestion of where risk assets go. if markets focused on normalization process and look at the normalization process it will be smooth with these prices more prudent about credit risk, interest rate risk and actively maneuver how we put that into portfolios as investors. >> he's sharp, isn't he? jerome thank you very much. david, back to you. >> thank you very much rick santelli send it to john for a look at "squawk alley. he's not in the building here. >> i'm live from the cyber summit here in cambridge, massachusetts. we're doing this, of course, in partnership with the aspen

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we are awaiting secretary of

state tillerson at the podium at the state department scheduled address here was somewhere in the last 20 minutes or so. still waiting for him to appear. in the meantime the president has tweeted nbc news is fake news and even more dishonest than even cnn. they are a disgrace to good reportings, no wonder their news ratings are way down. >> which is not true. >> very strong. >> tweeted the fact they are number one in a bunch of categories but the president, who is making his way to vegas, by the way, we should mention, taking aim at some of the reporting regarding tillerson today. >> we don't know exactly what tillerson is going to say or what this is about but does come from bombshell report from nbc news that tillerson was on the brink of resigning this summer according to three people familiar with the matter, he openly called the president a moron. some pretty surprising stuff in here, of course, that tracts

attention between the president and secretary of state. >> try to sneak in a break here. dow is in a holding pattern up 15 we will not go to break. instead we'll go back to senate banking where elizabeth warren is about to talk to richard smith of equifax. >> happened enthusiastic a hoth your system identified and could have been fixed pretty easily. the whole thing is staggering. a company like equifax that has sensitive personal information on most americans should have the best data security in the industry and instead it has the worst. i want to understand why so i started to look into this one thing jumped out at me in august, just a couple weeks before you disclosed this massive hack, you said, and i want to quote you here, fraud is a huge opportunity for us. it is a massive growing business for us now, mr. smith, now that information for about 145

million americans has been stolen, is fraud more likely now than before that hack? >> yes, senator, it is. >> so the breach of your system has actually created more business opportunities for you for example, millions of people have signed up for the credit monitoring service that you announced after the breach equifax is offering one year of free credit monitoring but consumers who want to continue that protection after the first year will have to pay for it, won't they, mr. smith? >> senator, the best thing a consumer could do is get the lifetime lock. >> i'm asking you the question you're offering free credit monitoring, which you say is worth something, and you're offering it for only one year. if consumers want it for more than one year, they have to pay for it is that right? >> yes, senator. but the best thing the consumer can do is the lock product. >> let's get to state and rex tillerson. >> there are some news reports this morning that i want to

address. first, my commitment to the success of our president and country is as strong as it was the day i accepted his offer to serve as secretary of state. president trump's america first agenda has given voice to millions who felt completely abandoned by the political status quo and who felt their interest came second to those of other countries. president trump's foreign policy goals break the mold of what people traditionally think is achievable on behalf of our country. we're finding new ways to govern that deliver new victories our job is now to achieve results on behalf of america, and they are doing that. we've created international unity around our peaceful pressure campaign against north korea, including influencing china to exert unprecedented economic influence on north korea. at the riyadh summit, the president rallied muslim

majority nations to assume new responsibilities for stopping terrorism. nato members are now contributing more to shared security our approach to south asia and specifically afghanistan means building upon our relationships with india and pakistan to stann stamp out terrorism and support the afghan government in providing security for their own people isis's fraudulent caliphate in iraq and syria is on the brink of being completely extinguished thanks to an aggressive new strategy led by the president. what we have accomplished, we have done as a team. similarly, secretary mnuchin lobbied economic sanctions on north korea and related entities countries must increasingly decide whether they will do business with north korea or the community of peace loving nations. ambassador haley has spearheaded and achieved enormous success, passing th