could make language barriers a thing of the past. it will help between wilfred frost and myself it's thursday, october 5, 2017, "squawk box" begins right now. ♪ >> live from new york where business never sleeps, this is "squawk box. ♪ good morning welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen andrew is off today. time for the global markets report look at the u.s. equity futures, looking at major positive runs for all of these indices all three of the major indexes closing at record levels again yesterday. green arrows again this morning. you have to remember what we've seen here. if the s&p 500 closes at another

gain today, you will be seeing the longest winning streak in more than four years because of the numbers of gains we've seen. the s&p 500 and nasdaq gained for the last seven sessions in a row. the dow up for six this is the third month in a row that the dow put together a lengthy winning streak another day of new gains, another day of record closes >> it hasn't been a year since the election >> has not >> 24% those are numbers that have always -- i'm pining for the mid 90s. >> longing for the days. >> 35% three straight years. never happen again probably. people say -- >> never say never >> people in ray seal estate say please let there another boon.

we have been told for years, 6%, 7%, that's all you get long-term average, 6%, 7%. it will regress, revert to the mean 6%, 7% is all you get. 24%. >> things always look best before -- >> it's been a run a really good run. we saw one of the reasons yesterday was -- you heard liesman with our survey. the highest level for optimism ever it helps to unshackle american business it just does you can argue, you can say no, we need guardrails, regulations are good if you overregulate and don't allow companies to do what they do, you don't do as well >> usually pendulum swings >> the pendulum is swinging 24%. >> overnight in asia, markets in hong kong, shanghai and south korea were closed for a public holiday. the nikkei was up barely i thought it was 1.9%.

1 p it was 1.9 points. some early trading in europe, you can see things are mixed the dax is down by a quarter percentage point cac is slightly weaker in france the ftse up by a tenth of a percentage point bigger gains in spain which did see pressure earlier in the week because of the vote that went down there you can check out wti. this morning up 11 cents to 50.10. saudi arabia's oil minister saying russia helped to breathe new life into opec, and shale can be a major contributor in the market in the years to come. he was making those comments at the russia energy meeting in moscow yesterday, wti closed below 50 dollars. this after a jump in u.s. crude exports that was unexpected. a record 2 million barrels a

day. >> on today's wall street agenda, you said i probably should have said who was on the show i'm going to mention who is speaking today now in terms of fed speak. how many people total in the country do you think will recognize -- we have the best viewers in the word. >> we do smart viewers. >> here we go. >> okay. i would say 25% of the viewers at least >> our viewers will. let's say you're some other morning show or something, and you're trying to make it as compelling as you can for -- to get as many viewers as you can get, this is not what you would probably -- these are not people you mention. we have weekly jobless claims,

international trade data are out at 8:30 a.m. eastern factory orders at 10 fed speak. jerome powell. >> powerful guy. >> he has been a person who has sort of been in fed chair janet yellen's corner on a lot of the moves. >> but he's a republican >> he is he may be the next one he will talk today also if i say john williams, most people would think of somebody else. he's the san francisco fed president. he'll be talking today got the kansas city fed president, esther george talking. philly fed president, patrick harker are all speaking today. >> this is the important one >> patrick harker will be on our show at 8:30 a.m. eastern. but you have to be a nerdy business -- >> you have to be smart. the most important thing is where interest rates are

>> is there more than 100,000 people in the country interested 500,000? 1 million? >> all the smart people who realize where the market is headed based on some of these things the people who care about the economy. what motors and powers our country. >> i'm not unhappy about it, but we have to know our audience we have to be pleased. if we get 200,000, 300,000 people, are we happy we're happy. they're all the type of people that attract high-end advertising. >> this will help them in their lives. >> right okay that's populist -- you're populist >> i'm populist? >> you're converting fed speak into how people can manage their lives, do better with their retirement and pay for education. this place started as a consumer news and business channel. we had reporters squeezing grapefruits out in the super markets in 1989. >> seriously >> yes consumer news.

bill ackman says that adp shareholders are on his side as he pushes for seats on the company's board in a heated proxy fight. he sat down with jim cramer on "mad money" last night he explained why he's seeking changes. >> why is it that adp has lower revenue productivity than all of their competitors? adp has an average of -- generates $160,000 per revenue the competitors average 224,000. straightforward question, when you think about adp, it has enormous scale if anything they should have more efficiency. it's all about the opportunity for improvement. adp is a great company has done well over a long period of time but massively underachieved its potential. >> shares of adp wobbled around, but right now $111.40 was the last trade google announcing a new lineup of products

the company doubling down on its commitment to the hardware business as it tries to compete with devices from amazon and apple. the new devices are a new google home mini and google home max. the speakers run from $200 to $400 and also two new phones. the pixel 2, $600. and the pixel 2, $850. and the pixel bud head phones can translate 40 languages in real time. alphabet closed up yesterday, $967.77. >> i already made the joke i will get a pair of those when i'm talking to wilfred maybe i'll understand if someone is telling me what he's saying, maybe that will help me understand --

>> you understand you >> whatever language that is that he speaks >> the british proper english. >> proper capitalized over there. in washington today the house will vote on its 2018 budget house and senate republicans need to agree on a budget resolution if they intend to pass a tax bill without broad bipartisan support from democrats. the senate's budget vote is expected next week for more on the top political stories, kayla tausche is here >> as they work to reach that budget deal in both chambers, they are already adding some money to the deficit, specifically about $29 billion in new funding for hurricane relief that was announced by mick mulvaney last night in a form request for that additional relief funds for those affected by hurricanes maria, harvey and irma 12.8 billion for fema's disaster relief funds, $16 billion in debt cancellation for the national flood insurance program and top senate democrat chuck

schumer called the funding a good start the vice president will head to florida today to visit some of those hurricane victims. next week, we could see the fate of the 2015 iran deal come to a head last night the house said it would hold a hearing next wednesday. the president will make a speech on the iran deal on thursday that comes before an october 15th deadline that comes every 90 days where the white house would have to recertify that iran is complying. president trump has done it twice so far white house officials say reluctantly so secretary of state rex tillerson yesterday said that he would provide the president several recommendations. >> we'll have a recommendation for the president. we're going to give him a couple of options on how to move forward to advance the important policy towards iran. >> that rare press conference by secretary tillerson was part of an administration-wide effort yesterday to push back on an nbc news report that tillerson was

quite frustrated with the president this summer and insulted him directly in front of other white house officials yesterday bob corker who is looking at retirement next year, spoke candidly about some of that frustration he witnessed. >> ithink he's in a trying situation. trying to solve many of the world's problems a lot of times without the support and help i would like to see him have >> tillerson said he serves as long as the president feels he's appropriate, and the president says he has total confidence in secretary tillerson. certainly a tense situation between trump and tillerson with several foreign policy irons in the fire >> kayla, thank you. we'll see how this plays out the back and forth the nbc report was that he was ready to resign last summer, and that he's not, he's sticking around we'll see what happens

>> he said he never considered it >> you can imagine a guy running a company like exxon for -- that's -- exxon. you're the ceo, people -- you walk in the room, people turn pale he's here. then all of a sudden, you know -- >> you're in a hierarchy >> i don't know. they were strident yesterday on both sides trump, this was not a we'll see where he said we'll see what happens with tillerson this is i have cohave total con in rex >> it was a coordinated effort, i'm sure, to have him come out with that press conference if he had left in the summer, that was a bad time. >> a key cabinet member so early in the administration. speaking of key people, i feel bad because i said caffrey is on the show, i didn't mention matthew. for -- that was an error of

omission i'm sorry, you're here we're glad to have you let's talk markets and the economy as we continue our countdown to the jub jobs numbe. >> big money to move where he moved. if you do the same thing, put in your time, senior economist at deutsche bank, same thing could happen down the road, right? you think? >> potentially >> we'll see now we want to know about this jobs number tomorrow. how much are the hurricanes going affect it? will the markets look past that? it's a one-off >> yeah. definitely we think there's a big hurricane impact on the employment report. what do you think it will be >> we're at 50,000 for obs >> even though you know why, that brint will go, whoa >> immediately you write it off?

>> the ism data earlier this week, the employment sub components there were strong we are coming off of three months of 185,000 jobs the market will look through the weak report, the fed will look through the weak report. the market would look through a weak report, but if you get a stronger report that could help boost odd foos for a december h. >> then we're back to good is bad because it means a hike. don't hurricanes help with inflation? it's been too low, inflation, in the fed's eyes >> regardless of what happens tomorrow, the key question over the coming weeks is what happens with inflation data. lone inflati loan inflation has been the constraining force for the fed gasoline prices for the cpi

print, you expect a strong report there we think inflation will be strong enough for the fed to hike in december but that is the key question a lot of uncertainty around that >> jack, when you come in and see futures up, no volatility in september, 24% for the advanced, do you say, wow, the fed is still easing around the world, this is to be expected or do you say the economies around the world are getting better >> it's a two-part story it's one of earnings are the long-term driver earnings have been improving we kick off third quarter earnings next week we think that situation continues to be positive the sectors in the economy should have good earnings. energy markets reflecting good growth the technology sector, good earnings growth expected there in the short-termer term, it's a

valuation story. in that regard central banks have been helpful. they have been a bridge between trying to get to a better tomorrow and that better tomorrow arriving in earnings. >> so starting to happen >> starting to happen for eight years. >> easy money to the actual economy. >> yeah. >> plus as long as we stay low, even warren buffett says valuations can have a higher level because there's no alternative. lower rates mean higher multiples. >> lower rates are a lore hurwe hurdle rate, and you have spendinging into earnings for the future >> you have have higher earnings, you do 20 times earnings on the higher eps, you get higher numbers on the s&p. 2600 on the s&p is the next stop that's possible. >> certainly possible. >> jack, are you going to -- if

you could buy calls on dow 1 million, do you think we'll see -- do you think he can can live to see those? >> i certainly hope to live that can. >> buffett said a million. >> he said a million in a hundred years. >> we need singularity >> yeah. >> you have to get long healthcare >> right >> get long cyborgs. we need hardware we have the software >> i think you need an interface from the hardware to the software >> as a backup, i'm still praying. >> good idea >> keep both options open. >> no reason to cut off your avenues. >> thanks, guys. when we come back, does mark zuckerberg know what facebook is that's the question posed by the cover story of new york magazine the author of the article will join us next "squawk box" will be right back.

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welcome back to "squawk box. mark zuckerberg and cheryl

sandberg are unlikely to testify in front of congress next month. the social media giant is expected to face a grilling on how russia-based groups used ads to influence the u.s. election for more on facebook, let's bring in max reid, senior editor of new york magazine, and the author of the cover story, does even mark zuckerberg know what facebook is? thanks for being here. what is your point it's so big to get the arms around nobody knows? >> we're talking about a service with 2 billion active monthly users. it will pass christians before the end of the year. by the end of next year, one-third of people on the planet will be using facebook. outside of china, one minute out

of every five minutes is spent on facebook. that's something we don't have the ability to process we don't have models for thinking about how something like that works or what kind of political or social power it has. sometimes it seems like even mark zuckerberg who is at the top of this ever expanding network doesn't quite know what will happen. >> we know facebook and other technology companies have been seen as saviors who are doing all kinds of good work, trying to make sure that people are connected. there is reason for thinking a lot of great things will come out of this more eventually some potential down side has been focused on probably where washington is thinking, too. >> yeah. absolutely i use facebook i love facebook. i've been on it for a decade plus it is an amazing invention in terms of its ability to keep people connected, when you have that many people all on one

website, getting news from it, sharing news on t talking to one another, it's very easy to manipulate it. facebook doesn't have the protections in place and certainly government has not regulated it in a way that ensures that accuracy, that responsibility is at the focus >> it's scary. i have never been on it. what you're describing it like -- if you were, you know, if mark zuckerberg was an evil person -- it's orwelian in that there would be no dissent. >> the business model is to monitor you, gather data and create advertising to target you. i think zuckerberg's heart is in the right place, but this thing has gotten so big, not even a saint could really make it work

for us >> you followed him around >> yeah. i've been talking to people he has spoken with. he's doing a tour. he's challenged himself to have visited every state in the united states by the end of the year a lot of people talked about this as a presidential run, or a run up to a presidential run in talking to people he's spoken with, i feel confident he's not planning on running for president. >> what is the tour about? >> i think it's r&d. he wants to meat with peopmeet facebook people and find out how they can be placed more at the heart of their own community and group gathering and social -- >> you benefitted from that, having all those different homes, right living everywhere. >> yeah. definitely does benefit. it changes your perspective. you have a much broader perspective. >> we both know provincial people who have only been to new

york it's very telling. >> yes you do need to get out and make sure you meet with people from all walks of life. >> the flower states >> stop in >> it's admirable. probably more big ceos could stand to do this, meet with people >> right >> he's been pointing out this is a mission to understand how people live. he meets with religious leaders, with civic leaders, talks to people working he talks about how facebook can better form communities around the country. >> all admirable, all of these goals, but there's been a tide that's turned. we know this congressional hearing is coming up, which is likely going to be a grilling. do you expect the end result for the government to get more involved or can they skate past it >> it's hard to tell it depends on how much more stuff comes out. i think there's hints that there will be more revelation there's a we have not heard about yet

beyond the 3,000 ads purchased by russian affiliated agencies and users. there is a significant body of regulatory law that governs how broadcasters can publish political ads. seems easy to apply that in one way or another to online platforms. >> the internet. >> just catching up the laws to the way technology has moved it seems facebook has been much more serious about this than other companies like twitter mark warner said he was di disapointsed with the report that twitter came up because they piggybacked off of what facebook did >> facebook is so much more bigger than twitter, twitter has one thing going for it, the president reads it and tweets. if you go on, you can tell it's chock full of bots and idiots. >> thank you for being with us today. >> thank you for having me. coming up, we'll talk taxes, the budget and cybersecurity

with chris coons he joins us next and later, marcus lemonis will join us live from puerto rico where he spoke with the island's governor about the recovery and bond crisis. t-mobile never stops. we've doubled our lte coverage. we're already the fastest 4g lte network, and we just keep getting faster. and now america's best unlimited gets even more powerful when you pair it with the new iphone everyone is excited about. introducing the amazing iphone 8. it's the best iphone yet, now on america's best unlimited network. for a limited time, save up to three hundred dollars on iphone 8. and now, join t-mobile's iphone upgrade program for free.

♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning u.s. equity futures at this hour are modestly in the green. the s&p is indicated up 1.5.

the dow jones indicated up 10. the nasdaq -- >> 666 >> i just mentioned -- >> you said damian >> one of our viewers said did you have to? no, a different damian, not you. ♪ >> it's a fictional character. if you're looking for pure evil -- >> the guy is probably sick of hearing it >> yeah. apologize. the house is preparing to vote today on the 2018 budget while the senate is hoping to put its version to a vote next week both paving the way for tax reform joining us is delaware senator chris coons. let's talk about the tax reform or tax cut bill or how ever people want to refer to this we don't know the details. we know some the countdown is on to get this

done before the end of the year. what have you heard? what are your thoughts on this >> so far we don't have a bill we have a broad gauzy outline. there are some concerns already being expressed in the senate by republicans and democrats that the amount it would raise the deficit and potentially add to the debt is too large. the details are not yet clear. the process that has gotten us thus far was too much of a secret behind closed doors one party only deal. there are democrats like me who would like to work across the aisle to find ways to reduce the tax rate and broaden the base and to find a way to do that that increases tax relief for the middle class that's what president has said is his goal. we're only going to get there if we have a bipartisan and open process. >> let's be clear, at this point you're not in the game what matters is if the republicans can solidify their own base and come up with the votes to come

through with this. you mentioned in the senate there are some republicans who have concerns. what do you think the odds are that those concerns can be met and that the republicans can do this on their own? >> the outline we've seen so far includes cutting 4$470 billion from medicare in the ten years ahead. it included eliminating the deduction for state and local property taxes both of those will prove to be unpopular. senator bob corker, senator rand paul, both who have a willingness to buck their caucus for matters of principle already said they're likely opposed to it so majority leader mitch mcconnell will have difficulty rounding up 50 votes if very two expressed real concerns. this is the same thing that happened with the healthcare reform package, something done one party, without hearings, without an open process and ultimately failed. they only have a few months to get this done. actually a few weeks of legislative time so my hope is they'll get the

details clarified soon and start working in an open and bipartisan process >> they probably have a much better shot of getting this passed than healthcare healthcare is a much bigger morass, and tax cuts are in line with what the republicans can cole coalesce around. >> the core question is whether these have to be paid for in some way and whether the pay for is simply going to be aspirational economics, believing there's going to be more than 3% growth as a result of tax cuts, or having to identify an offset and pay for. >> my guess at this point it's going to be dynamic scoring, and what they think growth will come as a result of cutting taxes >> that's right. senator corker has expressed real concern about whether there will be anything like the growth required to cover a multi trillion dollar tax cut. he has a reasonable concern.

>> i think it's a toss up now whether this gets passed with republicans alone. let's say they don't what issues would make you come to the table and say i will negotiate and try to come to an agreement? >> president trump has said that what he wants is a tax cut that primarily benefits america's middle class there's things that we can and should do that i think would make american companies more competitive internationally, that would make them more likely to invest in infrastructure and capital expenditures and expand tax breaks that benefit middle class families some of those are in the broad brush document, some of those issues are not addressed in a plan that right now is skewed heavily towards the wealthiest >> so you're bothered by things like the estate tax? >> yes i look at that up front and suggests this will overly benefit the wealthy given what the president said his objective is we also don't have a jct score

because we don't have a bill and there are not details. >> we did hear there's a chance that a fourth income bracket would be added, that would sh ma be maintaining the highest tax bracket we have. yesterday we talked to chairman brady, he said none of this has been decided, if something like that were to develop where you maintained that highest income tax level for the wealthiest americans, would that satisfy some of your concerns? >> that might satisfy others in my caucus. i'm principally concerned about not having baked into this a massive cut to medicare, not paying for tax cuts by taking away access to healthcare benefits for millions of americans. and i'd like to see us do more for capital investment by making permanent provisions of the code that help to accelerate growth >> senator, thank you for your time

sounds like it will be a while before we figure out if you'll be playing on the field at all >> that's right. >> senator, thank you. >> thank you coming up, the front lines on the war against cancer. we'll talk to a pioneer of immunotherapy, a treatment that harnesses the body's natural defense to fight disease. and later, congressman luke messer will join us. u' watching "squawk box" on cnbc ♪ ♪ i'm living that yacht life, life, life ♪ ♪ top speed fifty knots life on the caribbean seas ♪

♪ it's a champagne and models potpourri ♪ ♪ on my yacht made of cuban mahogany, ♪ ♪ gany, gany, gany, gany ♪ watch this don't get mad (bell mnemonic) get e*trade and get invested there was no magic up hisgends. sleeve. he didn't have wings, or a cape. he was but just a man... with the will to go beyond.

♪ welcome back, right now it's time for the executive edge. the trump administration will keep for now an obama era rule that halted corporate tax inversion deals. tax inversions occur when a u.s. company is acquired by a smaller business in a foreign country and adopts the domicile to

reduce the u.s. tax burden the treasury department says that it planned to keep those rules that helped halt the practice with the expectation that tax reform would eliminate the needs for rules like this. secret lives of the super rich host robert frank joins us now with champagne kisses and caviar -- that was that other one. >> we will wake you up >> this is more than starbucks this is a brooklyn coffee shop, the extraction lab they serve the 227 coffee t goes for 18 bucks a cup >> why >> it's made with panamanian geesha beans we brew it ourself they have a $14,000 machine in brooklyn that makes it this coffee, this panamanian geesha sells for over $500 a pound. >> why >> won a world brewing championship in europe >> why >> we'll taste it.

>> i never drink black coffee. >> i don't either. i had a sip, and this is -- it's floral, it's a little fruity >> it smells good. >> i don't know. >> it's so smooth. >> just take a tiny sip. >> i swear, i had some p panamanian geesha out in colorado when i was in school, but we smoked it. >> was the wake and bake >> panamanian geesha, it just sounds -- >> i can't drink coffee without milk, but i can this >> it's not bitter it's smooth. >> joe -- >> how waard schultz put one ovr on all of us by charging 6 bucks. 18 -- >> that's a lot. also on tonight's show, a taco you like tacos. >> yesterday was national taco day. >> $25,000 taco.

>> what? >> we were going to bring t but they make it in los cabos, but by the time it gets here, the cheese, the truffles >> cacaviar -- >> you tried it? >> no. the crew went out there. >> was it worth it >> no. >> never worth it. >> is there sour cream hot sauce? or it's just called a taco because it's in a taco -- >> it's called a taco. it is some special cheese, truffles, calf area, viar tcavin it you pair it with a special tequila, it's a $50,000 tequila and taco combination >> the things you find are for buffett. >> not buffett >> no. he's as tiblgt ght as -- >> the guys who used to light their cigars with $100 bills this is good coffee.

>> i wouldn't pay $18, but it's good >> i would pay for a taco bell taco not 25,000, but -- >> i'll bring you some >> really? >> yeah. >> love those. >> i did eat the $2,000 pizza. what was on that truffles got to have truffles >> gold flakes >> it'singredients >> why gold makes? >> the pizza was not gold flakes it was gold strips >> so ridiculous >> that pizza was good it wasn't $2,000 good, but very good >> i was out on long island for a family event, we were at a hotel out there, they were watching your stuff at the bar loving every minute of it but also saying you have to be kidding me >> it's ridiculous it's fun aspirational >> and you can look at it and say these people are idiots. >> exactly >> right >> good morning. >> thanks for our panamanian geesha maybe it wasn't. secret lives of the super rich

is all new tonight at 10:00 p.m. eastern. >> that is pretty good when we come back, harnessing the body's immune system to fight disease. we'll talk to a pioneer in the field after the break. and a quick check of what's happening in the european markets. france is flat germany down a bit ftse is up a bit squa "squawk" will be right back. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and.

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welcome back peter thiel and sean parker are reportedly financing a secretive cancer fighting startup. a source says the company called 3t bio science raised more than $12 million in a massive seed round. the firm is working on ways to use the body's own immune system to fight off company the company is led by a company biology ph.d. student. we're joined bay pioneer of immunotherapy research, max krummel is director of pathology. today he hopes to make -- some day make us allergic to certain types of cancer. what was the mmunotherapy --

>> a monoclonal antibody, a marker on t cells. >> as you deal with immunotherapy, i think about the immune system, and that is what makes it so complex. stuff tis t we have heard of the advances of mono clonals which were b cells then you have cytokines and all this other stuff is part of the immune system and it works together, right? >> but the key about mono clonals is they're drugs that are binding the surface of cells and interrupting the conversations immune cells are having with each other while they decide what to do. >> so how well is the function of t-cells understood in mediating -- >> well, we all understand how they work but we don't agree. >> what does that mean >> that means that we have ideas about how things work and we're all rectifying those ideas and figuring out which ones are working. so in certain tumors things are

going awry in one ways and we can treat those with immunotherapies we've made but there's a different theme to how the system goes awry. >> you point out there are ten times as many bacterial cells in the body so the immune system learns it's not self but not something they need to attack. >> correct. >> somehow cancer a lot of times when you're young if there's a cancer cell that arises from the mutation, the immune system will recognize that as you get older, does the immune system age and become less effective at rising a cancer cell? >> it ages there's also aspects that cancer over time evolves to figure out the traps. >> so that itlooks like sell >> it's less that it changes the surface than it changes the gene expression that it has so it can look like something you want to tolerate. >> it keeps coming back again and again and every time it

shuts down -- >> that's right. and as long as it remains occult, then it figures that out. as we age it figures it out. >> as you point out, so much disease is either the immune system doesn't recognize cancer or it recognizing something like diabetes or alzheimer's disease where it's attacking itself. what goes wrong with the immune system in autoimmune diseases? why does it suddenly not understand that it's doing harm rather than good >> i think at some point there are patterns in nature that are recognized inappropriately so in autoimmunity your pancreas, for example, in diabetes, becomes something that looks like it should be destroyed. maybe there's ideas that maybe that's viral, you might have a virus that shows up in your pancreas and for a little while that turns on the cues that says this is an infected cell, attack it but that's a big question and we know that, for example, in families you can have genetic pre-disposition to autoimmune so there's some genetics but

there's also some environment. we don't know these. >> you think you can retrain the immune system? >> yes we are that's what the current immunotherapies are doing for cancer and i think we'll be able to do that in the studies of autoimmunities but we have to understand these patterns. we have to understand all the different ways in which the immune system can basically function to either tolerate things or get rid of them. and what you want to do is figure out how it's not working in cancer and apply that mechanism to autoimmunity to turn it off, because cancer is where the immune system is off and vice versa, you want to find the systems where it's going well, figure out where that pattern is about and apply it back to cancer, for example. >> i made the point you have t-cells, b-cells, all these other substances that are generated by both of those, whenever you do something over here specifically trying to help here don't you worry that -- >> yes. >> -- such a complex system with so many moving parts that suddenly the side effect is that

it attacks something else and you die from the stupid immunotherapy? >> we call that collateral damage and it's like when you see chemotherapy, the side effects are liver toxicity because the drugs there are very toxic to other sites in your body if you're tweaking the immune system, you have to danger of throwing the immune system into hyperactivity and you see that so some portion of the people get cancer will end up with diabetes very small portion that's treatable and i think you and i would take the point of like you get to live and you might have to take insulin. that's a good tradeoff. >> you remember you were probably young but do you remember the battle against sepsis and the biotech companies that were going to be able to do this there was sinnynergen, have we figured out how to save someone who has septicemia hugh hefner just died, i heard that was sepsis again and we figured out how to cure that >> no. >> why that's my point. with the cytokines and the cascade of these immune -- we

still don't even know how to do that. >> sepsis is a particularly weird one because it's this massive collapse suddenly your body goes nuts, every immune cell starts making tons of cytokines, you die from shock. >> septic shock. people know that term. so we've been working on it for 25 years bio tech littered with bankrupt companies that haven't been able to figure that out. >> immunotherapy is different. sepsis, i'll agree with you, that's -- >> it doesn't seem that complicated. it's just your blood has infection, kill the infectious agent without killing -- >> sepsis is a side effect of evolutionment at some point it's where everything is trying to do the right thing but everybody is trying to do the right thing at the same time -- >> everybody. >> and it blows up. >> do you have a public company that you think is exciting that -- or a couple of them that are really close that will be commercially successful. >> i like the small ones. i like the small pre-public

ones they're doing things that immunotherapy where the t-bone everyone is trying to do copy cats but we've started a small -- >> have you started a company yet? >> it's called pioneer they're t-boning cancer from other angles there's so much going on that all the things we did to release the breaks on cellt-cells, but they hit other barriers you want to push them out of the way. >> you've had amazing success with cases that looked like nobody else could help along the way. >> max, thank you. see you next time. >> real pleasure. >> maybe everything will be cured by tomorrow, perhaps. >> we're working on it. when we come back, puerto rico is still struggling to recover from hurricane maria we will get a live report from marcos sl marcos in san juan next.

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the s&p 500 on its longest winning streak since may watching very closely for more clues on whether the fed may move on rates again. we'll break down the market's move and talk investment ideas straight ahead the house ready for a budget vote today we'll talk politics and the economy with republican policy committee chair luke messer. and move over electric cars, it's time for electric planes. a look at a startup grabbing the attention of boeing, jetblue and other venture capitalists. may be a ways off. anyway, the second hour of "squawk box" begins right now. >> announcer: live from the beating heart of business, new york city, this is "squawk box."

good morning, everybody, welcome back to "squawk box" on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernan, andrew is off today. we've been watching the futures and after more gains that we've been watching with all of the major indices closing at new highs once again yesterday, you're going to see the futures have been indicated slightly higher this morning. dow futures indicating up by under 10 points, s&p by under two points and the nasdaq indicated up -- oh, my gosh, right back at 666 again. up by 6.66 points. here's what's making headlines. sonic has confirmed a data breach that was reported last week by a cyber security blog. sonic says that a malware attack may have allowed hackers to access some customers' credit card information sonic didn't say how many stores or customers were potentially affected health insurer cigna is going to

be ending coverage for the opioid painkiller oxycontin as of january 1 at that time, it's going to be covering a differently formulated opioid treatment that is less vulnerable to abuse by users. that new treatment is made by a company called collegium pharmaceutical and the white house is asking for $29 billion for texas, florida and puerto rico. mick mulvaney is asking federal agencies to estimate how much additional money they will need for long-term disaster recovery efforts. he wants that information by october 25 puerto rico trying to recover from hurricane maria, basic aid is arriving but much more needs to be done. pile on the territory's massive debt and you have a big recipe for a possible market disaster joining us right now from san juan is marcus lemonis, the ceo of camping world and host of the cnbc series "the prophet." he spoke to professor's governor about the situation after being

there, marcus, and seeing this damage firsthand what do you think the biggest challenges are right now for the island's recovery? >> you never want to oversimplify a very complicated problem, but there are three problems that exist here on the island number one, there's a logistical problem to get supplies and materials to the outskishts of the island where it was hardest hit. and number two there seems to be an exodus. when you think about the tax base here, 46% of the population is below the poverty line so 54% are actually generating the tax revenue. you're seeing an exodus of young professionals and executives that are leaving the island headed to the mainland the third problem -- and you'll hear about it in my interview with the governor -- is how they'll handle the bonds take a listen to yesterday my discussion with the governor >> the level of devastation you were able to witness some of it, it's enormous. we need an aid package so we can get a baseline, we can get a path forward towards rebuilding

and have a conversation with, of course, the stakeholders in puerto rico. >> that was the more formal discussion in the casual discussions the governor realizes that there's a problem here he initially attempted to negotiate with the bond holders through title six, it's now in title three where there is a judge and a panel of people that are involved in this but the real question is if you bring these bond holders to the table what is the collateral, what are the repercussions? most of us have seen the bonds are trading at an all time low so that's a huge challenge. >> marcus, the bonds yesterday, think fell to 30 credibilients r trading above 50 cents before maria hit. that was 25% drop we saw witnessed just yesterday after president trump came in and said forget about it, we're going to have to forgive a lot of this. made a lot of people wonder what's happening with that

what's your take on all of this as somebody who understands markets, somebody who understands business if you wipe out general obligation funds, what will that mean for the short term and the long term for puerto rico? >>. >> there's no question that the area needs debt relief they don't have the current cash flow to service what exists today so redoing those bonds makes sense but i wonder about the marketability of bonds or any investment vehicle going forward. the biggest thing i think no one is talking about is if there truly is an exodus out of this island and you couple that with what could be a terrible vacation season, the cash flow and cash base here is knenknee mick to get around the island, the roads are gone, the bridges are gone but when you come to san juan, it's almost like you're in a different place. we're in a convention center, the hotel across the street has plenty of power but as you drive four or five miles outside, it's

devastated, where is that money going to come from how will the bonds get serviced and most importantly how does the governor and other people here keep the residents from fleeing and going to orlando, miami, new york. that's what i worry about. >> a great question when you consider how long it's expected to take to get power back up and running. get water back up and running. we're talking months what's the latest estimate you heard? >> becky, what's odd object this is when you fly over the port you'll see container upon container of supplies. there's no shortage of water and supplies the challenge is getting them from the port to the outskirts of the island. i saw somebody last night that runs logistics for world vision and they were telling us this is unlike anything they've ever seen it's not a power struggle, it's a communication problem. as you leave three or four miles outside of san juan, your ability communicate doesn't work, the cell phones don't work and there's nobody organizing it

all. you would expect fema to do that, we here in the convention center where the disaster recovery is and there's no collaborative effort particularly organizations like world vision that have a history and knowledge of doing this, they're not being brought into the tent. >> marcus, it sounds like a huge issue that will take a long time to get this sorted out thank you very much for joining us today. >> you got it. >> again, marcus lemonis. in the meantime, stocks are trading at all-time highs. joining us to talk about the markets and preview tomorrow's jobs numbers are randy gwartzman who is co-portfolio manager of the baron discovery fund and james sweeney from credit suisse gentlemen, welcome to both of you. >> thank you. >> randy, we haven't seen you sit down with us and go through this stuff before. tell us about the baron discovery fund what areas do you focus on >> we're a small cap growth manager and we focus on

competitively advantaged growth companies, mostly u.s. focused so we focus half the portfolio on technology and health kcare and the other areas are industrial, consumer, small amount of energy. >> with the markets continuing to hit new highs being up 24% since the election, is it harder and harder to find things you think are a good deal? >> when we look at our portfolio, we look stock by stock and that's how we do it at baron, we do it on a micro basis. we try to be contrarian so we look for things that may be what we call fallen angel a company that sells off 30% on an earnings record but we've done fundamental research behind that and say wait a second, by our estimates this is only trading at four times cash flow so when we buy a company like that and we're confident we've done our work we can get a good return and the stock is up almost 100% this year. >> so what the broader averages are doing doesn't impact you at all? >> we try to avoid looking at

the market perisa se. it's not like an alfred hitchcock movie where the birds are attacking. we look stock by stock. >> would you agree with the assessment that we heard from warren buffett that as long as interest rates remain low none of these valuations look all that crazy. >> look, the rate environment, the gdp environment and the inflation environment are real key background variables so when we're right now low inflation and a nice steady gdp growth environment with less regulation in the background and the potential for tax reform it's a nice environment it's a good growth environment for stocks like our's. >> so, james, with that in mind, what happens with the fed is incredibly important and the decisions will be based on things like the numbers we get tomorrow what are you expecting with the jobs report? >> we're expecting a low number. so we've got 30,000 for payrolls >> why because of the storm >> because of the storm. >> that's where we're going to

see it. >> yeah, we think the wage number will be okay and we think a month later you get the detail by states and find out basically it's florida so it's a fake weak number tomorrow. >> does this put the fed on hold until they can see numbers catch up >> not at all. i think by the december meeting when we think they're likely to hike, they're going to basically have this information and know it was just the storm. there's other data that will be affected by the storm in the weeks ahead as well. >> there's so much happening behind the scenes. we know janet yellen's term is up at the end of january so you have them raising rates, you think, in december for the first time and they may have a new chairman a month later. >> >> that's true so we may need to rethink everything but i think yellen has been careful of staying out of the politics and signaling a path for the balance sheet which is not especially controversy. a new fed chairman could

continue with her balance sheet plan and there is some discretion depending on how many long-term bonds they continue to buy. there will be some they buy. there are these caps so there will be some discretion for the new chair but it's possible it could be very smooth. >> greg laid it out very well in the "wall street journal," he said "it's a binary choice." you hear these different names but the president has a choice, that is to put somebody in who is going to be janet yellen or continue her policies, like a j. powell or a completely different solution, someone like a kevin warsh, someone like a john taylor who's been highly critical of what the current fed has done game that out. the odds that -- what would that mean for economic policy. >> i think from a market perspective it's not so much whether the person philosoph philosophically is different from yellen but whether the person is willing to disrupt immediately. because it could be that the margin on what you get next year if the economy stays the basically two hikes or three and

it might be these people who are seen as hawkish will give you one more hike and there will be a little bit different on the balance sheet. where the major questions will be will be down the road if it's two, three years out. >> 2018, 2019? >> '19, the economy is still strong, maybe you're heading into an election year, do you have somebody that will step on and hike four times at that time i think that's what markets will worry about and that gets to the heart of whether you have someone who credibly fights inflation and keeps inflation low and volatile as it has been for 25 years. >> randy, i know you guys are more bottoms up versus top down but you might be spending time thinking about this. >> we want to make sure we're not doing something silly in terms of where our exposures are. a lot of people say that the tech sector is overvalued. what we do is look and say there's some megatrends in technology that are aside from

inflation and what the fed is doing, driving unbelievable things so semiconductor capital spending was $44 billion in gift $54 billion in '16 and people are thinking it will go to 70 and beyond in the 2018/2019 period that's driving huge growth 234 some of the companies that we own because we're suppliers to the big guys so we own a company called i corps which provides chemical and gas delivery equipment for major semiequipment manufacturing companies. that company can grow -- could double its size over the next three to four years and that's the kind of company we're looking for. we're looking at these big meg trends and semi is being driven not just by iphones, it's being driven by artificial intelligence and the standing up of the chinese semiconductor industry which is a very interesting background story china has been trying to buy a lot of companies in the u.s. and they're being prevented for

security reasons so what they're doing is starting to stand up and entire new industry and i think it will be a few years of very big spending over there as well to add to the growth of the industry. >> randy, james, i want to thank you both for coming in today. >> thank you very much are we doing this now? you want to -- all right president trump tweeting -- i don't know, he somehow notice, maybe he's watching "squawk box" "stock market hitting an all time high. it's been a series of awl time highs again and again and again. "unemployment lowest in 16 years, business and manufacturing enthusiasm at the highest level in decades." in a subsequent tweet i would point out, if i were him, i don't want to speak for the president, but 24% since the election up 24% since the election, the dow, we're not supposed to be able to have returns like that some people should be happy. i know -- there's a lot of trump

derangement syndrome out there but put that aside for a second and think about 24%, the entire stock market, and what that means in terms of wealth creation and everything else so there's a reason to be a little bit happy, better than down 24%. >> that is true. >> can i say that? >> tick up 24%. >> unless you're someone that likes to watch the world burn like from "batman. >> not me. >> some people -- some men do just like the watch the world burn. >> do like or dislike? >> they do like to watch the world -- >> yes not here >> no. folks, when we come back, for many young home buyers, the hardest part of buying a home is the down payment millennials are turning to crowd funding to try and help them in a pinch. we have that story after the break. later, the chairman of the republican policy committee, congressman luke messer, will join us to talk about tax reform, equifax, and much more stay tuned you are watching "squawk box" right here on cnbc

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> young home buyers say the hardest part of buying a home is saving for the down payment. that's always been the case but millennials are turning to a new place -- crowd funding that's right, crowd funding to help them get into homeownership. diana olick has that story. >> why not, becky, they do it with anything else until now, lenders wouldn't let you. down payment assistance was limited to family members, community nonprofits or your church and all of that with significant documentation. >> this is different this allows you to tell your story, it allows for folks to buy into the story of what it is you have, your loan story, your home story one of the things, our tag line is fund your way home. >> enter cmg financial, a

mortgage lender which is launching home fund me, an online platform that gives home buyers a way to market their needs and receive multiple small tax free cash gifts from anyone to finance the down payment on a home and this pilot program has the blessing of fannie mae and freddie mac which finance the vast majority of mortgages today. >> what we're doing is trying to test and learn a variety of solutions because the preferences for today's home buyers have changed significantly and there's no silver bullet to solving a problem as hard as how do you find a down payment. >> so the idea, of course, is to link this to wedding and baby registries and add to the savings that you already have which could help you avoid higher rates and mortgage insurance. not a bad idea what do you think, guys? >> i don't know. i go back and forth. i get it if you're linking it to a wedding registry i understand that the idea that says in lieu of a gift give me a money that i can put towards a down payment of a house. but sometimes is it coming and saying "i don't have money for

this so can you give me some?" >> yeah, and again, it's are people going to give it to you and my concern was do you have skin in the game remember during the foreclosure crisis and the no down payment loans the argument was well, people walked away when the home prices fell or went underwater because they had no skin in the game is this the same thing you could argue either way. >> i get it if it's in lieu of a gift that makes sense to me if it's i'm standing on the street corner with a coffee saying hey, i have something i can't afford that i want, give me the money i guess those are the variations and degrees of separation on this whole thing, right? >> i think it's more like gifts. if you look at it, the average wedding gift -- somebody told me this recently -- is about $200 plus if you're going to the wedding, you're buying the dress, buying the tux, $500, $600 if you don't go, give them $500 and if enough people do that, $3,000, you could put a good down payment down. >> and that makes sense rather than buying a new set of china or silverware or -- >> right, who needs the 16

piece. >> right, a couch you that you don't have the house to put in the, changing the traditional gifts and saying "give me something that would help me out along the way. that i understand. >> it's being more practical. >> that makes more sense to me i need to hear more but i understand your concern about look the rules are so strict you can't be giving this money to somebody but if it's being substituted for a gift i guess it is yours i'm kind of talking myself in circles. >> they want to make sure you're not borrowing the down payment because that's adding to your debt these are designed to be smaller gifts added to one big down payment. >> i get it. it's interesting new wave of the future thanks, diana. the nobel peace prize comes out tomorrow who's going to win that? literature this morning, kozuoro

ishiguro, he wrote "remains of the day. he won it says "novels of great emotional force, mr. ishiguro" uncovered the abyss with our illusory sense of the world. last year bob dylan. he's a uk gentleman that moved to the uk when he was a kid. born in japan. but it's a really -- am i not an ugly american? the movie's great. you know the knew v. is unbelievable. really. >> i jumped right in with you. remember last year bob dylan didn't show up wouldn't even comment. >> do people still read books? maybe i'll listen to the book. people do that now, right? anyway congrats. a look at google's new product line a programming note, philadelphia fed president patrick harker, eight nominations for academy awards. >> for patrick harker?

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google announcing a new lineup of new products the company doubling down on its commitment to the hardware business as it competes with devices coming from amazon and apple. some highlights include a google home mini and a google home max. so the little one and the big one. speakers range from $50 to $400. a high-end pixel book laptop is on the rundown it runs the chrome operating software plus there are two new phones, the pixel is priced at $600 and the pixel 2xl which costs $850

the most innovative product is probably the head phones that can translate between 40 different languages in realtime. this is one of the only products i would like to try out of the new things out there shares of google's parent alphabet, you're going to see up 99 cents yesterday butthe $967.77. when we come back, congressman luke messer will be talking about equifax, the data breach there, tax reform and much more. then alibaba and the pac 12 bringing american sports to china. we'll speak to pac 12 commissioner larry scott about the initiative and the appetite for u.s. college sports in china. right now, though, as we head to a break, look at the u.s. equity futures, we've been higher today. slightly higher but this is coming after another day of record levels. dow futures up by 10 points, nasdaq up by 10 potsthin, e s&p futures up fair value by two points

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market site in times square. among the stories front and center, we are an hour's time from the labor department's weekly report on initial jobless claims economists are expecting 270,000 new claims for the week that ended last saturday, that's slightly lower than the prior week that comes ahead of tomorrow's september employment report. apple has rolled out an update for its apple watch the series three version of the apple watch is first to feature its own chip for cellular service but a lot of users had been experiencing connection problems viz media chief is leaving the company in february. the company says her responsibilities will be split among existing executives. she had been considered a possible successor to ceo lowell mcadam but the "wall street journal" reports it had become clear to walden she was unlikely to get that top job. >> russian president vladimir putin and saudi arabia's king salman are meeting at the

kremlin today. the two are expected to discuss the global oil market among oh things this is the first official visit of a saudi monarch to russia and i'm not qualifying that since. >> first ever. >> apparently. amazing. >> opec and russia getting closer together. there were comments saying that, yeah, this gives additional heft to everybody who's not the united states and the global oil market. >> nice room. >> it is if you like gold. >> equifax's former chairman and ceo richard smith heads back to the hill for a third day of testimony. smith is set to appear before the house financial services committee in just under two hours. for a preview of that discussion let's bring in congressman luke messer, a republican from indiana, and a member of the financial services committee messer is the gop policy chair and congressman, thank you for joining us today. >> glad to be here.

>> what have we not heard from mr. smith lately that you would like to hear >> equifax has a lot to answer for. of course 140 million americans have had their personal information compromised in my own state of indiana it's almost $4 million and i don't know if either of you have gone on this web site to check out whether or not you've been compromised. >> we have both joe and i are in the position that we have. i think just about every adult american is. >> i've done it. it's a problem you have to give your social security number or at least parts of your social security five times, your birth date multiple times, attach it to your personal e-mail i just think for the average american they want to know is this really the way to best protect my information to give you the people that lost my information more information and who will be liable for all this? after all, most american consumers didn't pick equifax, they just were involved in some other loan transaction and the company they were dealing be

picked it. we need to get to the bottom of what will happen most importantly we need to get to the bottom of how we prevent this happening in the future. >> i think this is much more concerning than any other data breach we've seen because you don't get to pick the company you're doing business with or collecting so much information on you it's basically every adult in the united states who has any credit rating who's ever tried to make any major purchase and it seems to me that the company has fallen short not only in the response on how they handle this but as you mentioned making sure they're going to be liable for the damages that come from this. they've continued to say they've put out this package, smith continued to say this over the last couple days we have a package that's out there but they won't say they will be responsible for anything that goes wrong with this. the question is what is the government in a position to do if anything? >> it's going to be a challenge. look, 140 million americans, almost any company would struggle to meet that liability.

i also have questions about now if over half the people that have social security numbers are now compromised what does that do with our broader system and the way it's been used in commerce moving forward. so i mean again this is one of those dilemmas that doesn't have a whole lot of answers but the american people want to know what is equifax going to do? i went through the whole web page and i'm still not clear even what i signed up for. >> me neither. >> so it's a mess. >> i guess the biggest problem is that the stuff is changing and evolving so quickly that it's going to be hard for regulation and laws to catch up with it. what's the answer to that? there's a broader issue, congressman, i think. >> i know what we have to avoid. what we have to avoid is writing legislation to specific technologies because the pace of technology moves so quickly. i think we have to look at whether social security numbers should be allowed to be used in greater commerce the way they've

been allowed to be used in the past you could industrial that social security number used for government purposes but now again with over half these numbers compromised, i'm not -- i think we have to think very big about what we do moving forward. >> the other thing that drives me crazy is not just equifax, equifax did this in the beginning, i think they've changed. that i basically said if you wanted to find out if you'd been compromised you had to right away -- any legal resource you'd have to go after them. stuff like that is crazy and i can't believe the number of contracts that come up any time you try to sign on to any web site or any app that say a very similar thing, that you won't hold us liable for this. that shouldn't stand up in a court of law, should it? >> again, i'm a limited government conservative that wants to see government get out of the way but when you have these standard contracts that people are essentially forced to be signed into we need to look at making sure consumers are protected. >> right congressman, while you're here, let's talk about tax reform and

this budget. first of all, do you think the budget gets passed and will it be in a form that can pass the senate >> we're going to get a budget passed today it's important we get one passed because that's the gateway to tax reform as president trump said, the american people need a pay raise and it's long past time we give it to them through reducing the burden of our taxes on the economy and putting more money in every working american's pocketbook but, yeah, i believe the -- we'll get a budget passed in the senate as well and we'll get it reconciled. we don't have any other choice what happened in health care is not okay from my perspective the united states senate is broken, it's not okay to make promises on health care for seven years and then shrug and walk away when it got a little hard and on taxes now, this is one of the biggest things we can help grow wages and get this economy going again and we need to get it done. >> but is it true to think that in order to make this happen, you're a pretty conservative guy, are you going to have to give away more in this budget than you'd like to to make sure

it passes the senate >> well, my focus is on pro-growth tax reform and what i know is if we want to grow the economy we need to reduce the tax burden on the economy and a great way to reduce the tax burden on every american is to simplify the tax code and double the standard deduction so that they can opt into a flat tax one way or another we'll figure this out the senate is broken almost every vote comes down to a tie breaking vote. president trump was in indiana putting pressure on joe donnelly, one of the indiana senators that could be that tie-breaking vote. >> a democrat, by the way, we should point out. >> that's right. we have been hearing that there could be a fourth tax bracket put in place to maintain the current tax rate on the highest earners. would you beco okay with that if there's a tax cut for people coming in in the lower brackets? >> our number one priority needs

to be middle-class tax relief so i'm open to proposals that increase the middle tax cut, middle-class tax cut because working hoosiers are who need the benefit the most but i want to make sure we have a tax plan that grows the economy and to do that, job creators, the folks that are investing in the economy, creating jobs that will bring potentially -- the potential for better wages so i think we need to be careful there. we don't want to have a tax cut that doesn't get the economy growing. because if we want to pay down the debt and deficit, how we've done that in the past, the only time we've done that in modern history is when we've had 4% growth our number one target in these tax cuts should be what's the path to 4% growth and if our tax cuts lead us to that path, look, you'll have better wages, you'll have more jobs, you'll have more money coming into the federal government coffers and the opportunity to pay down the debt. >> very quickly, we're out of time, very quickly, on this idea

of salt on the state and local taxes, i would guess you're not in favor of getting rid of -- i would guess you're in favor of getting rid of the deduction that you can take in states with high tax burdens so you're not paying into the federal government if something happens that you need to compromise to either put a limit on some of those things or to give those back in a big way would you be okay if you got a tax bill passed if it has to be done for politics to get republicans in the blue states to sign off? >> the current process subsidizes high tax states so i think it's a good idea to look at it. again, my number-one goal is growth so what we need is a tax cut that reduces the tax burden on the american economy so we have better paying jobs in a growing economy. if we do that, the rest of it is negotiable. >> congressman messer, thanks for being with us this morning. >> thanks. >> pretty amazing because, you know, living in -- >> state and local taxes living in new jersey working in

new york i know it's going to be just horrific for us so other people in the rest of the country, crappy politicians in new jersey and new york -- >> keep raising taxes because they know they can get away with it. >> spending, illinois, usually democrats. >> i can't understand how it got in in the first place. >> and they subsidize. >> it if they don't grandfather it or make a slow way of doing it it's going to collapse the economies. >> they should stick to their guns coming up, pac 12 conference teaming up with alibaba to bring u.s. college sports to china pac 12 conference president larry scott joins us after the break to discuss "squawk box." we'll be right back.

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news out this morning concerning tech giant alibaba, the company expanding its partnership with the pac 12 athletic conference in the u.s. to bring more collegiate sports programming to mainland china. joining us now, the commissioner of the pac 12 from buffalo, right? my entire career we were big eight back then. >> that's right, 2011 the buffs joininged the pac 12 conference. >> oklahoma and nebraska used to beat up on the buffalos back then is there a market? there's a market, really, in mainland china for college

football >> growing college sports in general. >> college sports in general. >> well, there's a huge interest in u.s. higher education, particularly pac 12 schools in china. >> on the west. >> we've had 27,000 chinese students currently at our schools and china is the fastest-growing market for applicants to our school so globalization is a huge priority for our universities and sports can be the front porch for the universities, it provides exposure, interest, passion and at the same time incredible experiences for our student athletes when they can play over there. >> you have a good thing going in the pac 12 but you need to because of the s.e.c i mean, those two together make for a pretty competitive game because not everyone, i don't know about the big 10 anymore. >> well, the great thing about the pac 12 is the all around excellence we've won more ncaa championships than any other conference we hit 500 last year

the next highest conference is over 300 the rio olympics in 2016, we had 246 student athletes participating in the olympics. and back to gloeblization, that was from 47 different countries so it's the all around excellence of the conference obviously we're strong in football, strong in basketball, those are the sports that get the most notoriety but it's an all around commitment. >> as somebody who has kids who are going to be applying for schools, what's the percentage of international students in schools today? what was it ten years ago? what will it be ten years from now? >> it's about 15% of all the undergraduates and it's higher for graduates. 15% of all the undergraduates at pac 12 schools are outside the u.s. >> what was it ten years ago >> less, i don't know the exact number. >> seems like it's tougher to get into the schools we're competing with students from around the world to get into our schools.

>> our universities see themselves as competing on a global stage, faculty, research partnerships, undergraduate students the primary mission is to provide access for students. >> especially for state-funded schools. >> yes, and global centers of excellence our public universities have quotas and caps in terms of how many out-of-state students, how many international students but there's a growing interest in these global higher ed brands. >> so the -- i sound like someone who starts every sentence with "so. you've got ohio state worth $1.5 billion. you look at revenues and expenses and put a normal multiple on it what's the pac 12? what you oversee, those football teams, it's multibillions of dollars you're overseaing right now. that's a lot of money and you can see what happens when there's a lot of money involved. things happening in basketball in the ncaa right now.

do you have the answer do you sleep at night? >> what we've read recently is a big concern, our highest priority is protecting the integrity of the competition when you see people cheating and the influence of money and of course it's a big concern we've had 7,000 student athletes in the pac 12 only 2% are going on professionally in sports. so the system is providing incredible opportunity our universities and this is true in sports, they're about students becoming successful in life afterward if you look at the fortune 500 ranks you will find so many leaders there say they learned leadership skills from college. >> i agree i talked to our alumni and ceos, they love to hire former athletes, especially women

the correlation between how many of them were athletes, the grit, the perseverance, the playing as part of a team, leadership, these are things you get from sport -- >> one more thing. i'm sorry to cut that off. i wanted to hear about that but, i don't know, we've got to run i read somewhere if the informal doesn't ha if the informal doesn't handle this from here on out, i don't know how they handle it, that college football will be number one and surpass the nfl because the nfl had -- that's the -- they had the goose that laid the golden egg they're screwing this up i think the owners are, i think goodell is did you look at this and say this is an unfortunate situation? >> i always felt athletes had a tremendous opportunity to be

leaders, to affect social cha e change you hate the see a situation handled -- >> but the nfl wraps themselves in the flag. they have a flag that covers the entire field with flyovers of military jets and they have guys sitting during the -- you can't do both. >> and at all college events honoring the flag and our country and national anthem is an important part of the tradition and so it's something we value but i certainly don't cheer for any other sport to stumble. >> i don't either. but i'm -- you know. guys make a lot -- the guys that are over there in afghanistan are making -- in iraq are making $20,000 a year and these guys are making $5 million a year. >> i was at arizona state the other day for a football game, pat tillman's statue is in the end zone before those players come out for every single game they touch the pat tillman statue so honoring the tradition and service of americans is an important part of tradition in college football. >> i'm only watching nbc

televised nfl games from here on out. anyway, larry, thank you. >> thanks for having me. >> appreciate it. when we come back, move over electric cars, here comes electric planes. a startup that is attracting support from boeing and jetblue is ready to unilve its next model. phil lebeau will bring us that next

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 what they want out of life. or they could get even more. it's a warm blanket. it's a bottle of clean water. it's a roof and a bed. it's knowing someone cares. it's feeling safe.

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chicago with the details the tesla and acceleration changed everyone's idea that planes with torque, but i can't believe it can lift a 747. >> we're years from seeing it happen with huge jumbo jets. let's look at the zunum aero details are being released about this 12-seat hybrid electric plane. this is animation from the company. the first won't be delivered until 2022 the big selling point here is that the cost of lithium ion batteries as they come down, as the weight comes down, the people at zunum believe this will be more cost effective for operators on a cost per seat mile basis when the first ones come out next decade but will people be comfortable flying an electric plane they think they will be. >> by the time this aircraft is in the air in early 2020,

everyone will have ridden in an electric car or ridden in an electric bus this will be a non-issue. >> here are the details behind the suh numb aero. seats up to 12 with a range extender gas turbine engine. could go up to 700 miles they say it will be 80% lower emissions, less noise and the funding, of course, as we mentioned earlier, some of it from boeing as well as jetblue and i checked just for you, joe, there are two configurations where you could get a lavatory in the plane so i know that's a concern of yours wherever i do these stories. >> if you s.a.t. here on set for three hours everyday you'd see it's a real concern, phil. don't b.s. me, how old are you >> are we going to talk depends on "squawk box"? is this what this came down to >> catheters, depends, i don't know. >> i'm a little younger than you

but i know you're always interested in finding out -- >> planes need bathrooms i'm not flying to just boston, i might be flying to l.a. >> planes need long charges. >> huh >> planes need long charges, too. >> right they need long charges, too. but, yeah, phil, is that too much to ask? you're sitting there i'm afraid of the panic that might set in. >> two configurations have it on this plane so you're okay. >> thanks, phil.

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the first hurdle for tax reform, a key vote in the house. on the agenda, a ranking member of the budget committee philadelphia fed head talks about job hikes. plus, the executive producer behind this popular show. >> you always left me satisfied and smiling, so -- >> that's what she said! >> now betting on new content platforms, we'll be hear to explain as the final hour of "squawk box" begins right now. >> announcer: live from the most powerful city in the world, new

york, this is "squawk box. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market side in times square, i'm joe kernan along with becky quick. the futures are indicated higher again this morning, up 16 or so, the s&p up two and a half, the nasdaq indicated up 16 and i've lost count of new records and -- what do we call them fresh new highs as opposed to the smelly rotten high. >> there were 41 or something the other day for the s&p. >> just for this year. >> as we pointed out, 24% on the dow since the election that's a quarter almost. >> that's why you've seen a lot of new highs. >> a lot of trillions. >> pretty steady march, too. >> russian president vladimir putin and saudi arabia's king salman are meeting at the kremlin. saudi arabia and opec are lobbying russia to stay on board with their efforts to raise oil

prices after signals that moscow wants to end participation in production cuts. this is the first official visit of a saudi monarch to russia r russia among the headlines so far, saudi arabia says the territorial integrity of iraq must be preserved. he's calling on the united nations to set up an international center to fight terrorism. russia says putin has accepted an invitation to visit saudi arabia as well in business news today, shares of fedex and u.p.s. both falling after reports that amazon is experimenting with a new delivery service the online retail giant's new service would reportedly be aimed at making more items available for free two-day shipping you can see fedex is down by 2.8%, u.p.s. is down by 2.9% we've known for some time amazon has been playing around the edges when it comes to fulfillment and delivering that last mile but if you look at shares of amazon, they're up by just over $2 today. >> if i knew how to watch amazon

prime tv at home, if i knew how to log in, could i log into amazon prime and buy this -- i'm going to buy this book by the guy who just won -- he's got a new book. >> you've never bought anything on amazon? >> um, i should -- yeah, i have. i've had people do that for me. >> the royal "we" have bought -- this is a -- penelope's bought stuff on amazon. the kids have? >> oh, my god, there's packages everyday. >> my life -- >> i asked someone to do it for me does that count if i ask -- >> no, we'll get you -- you know what there's an app, we'll get you on and you can buy the book on the end of the phone a-m-zar a- a-m-a-z-o-n -- let me google that i've never been on facebook and i'm getting off twitter, it's a cesspool let's go toy latoy lann mui.

>> the senate will be voting to get its budget out of committee. the deal in the senate for a tax cut is worth $1.5 trillion senator bob corker said yesterday he will vote for this budget but eventually he wants to see a tax plan that reduces the deficit or he won't support it >> it does feel like to me up here it's party time that serious issues, serious discussions about fiscal issues are not going to take place. there's been a lot of sugar talked about over the last couple weeks, there hasn't been a lot of spinach. >> it's democrats, though, who have been sounding the alarm about the impact of the tax plan on the national debt.

>> republicans spent years pretending to care about the deficit when it came to making cuts to middle-class priorities but the minute came to handing tax breaks to the rich, that all went out the window. >> are we adding to the burden of debt for our children and our grandchildren? >> all the rhetoric aside, the budget resolutions in both the house and in that senate committee are expected to pass today. it will still be a couple weeks before the two chambers reach an agreement on a final version and, guys, we are not going to see a tax bill until all of that is wrapped up. back over to you. >> ylan, thank you very much for more on this, let's bring in budget committee ranking member john yarmuth. thank you for being with us today. >> good to be with you, becky. >> we know there's still a lot that needs to be worked out. what can you tell us it's hard to assess this stuff until we know the details. >> this is an "alice in wonderland" process right now. we have republicans who are

opposed that will vote for it today, we have people like senator corker who raise alarms about the senate budget but they will vote for it this is about moving forward with what we call reconciliation that allows the senate to pass tax reform with 51 votes as opposed to 60. so we're fighting about the budget because we believe that the republican budget represents a drastically wrong set of priorities for the american public and the government. but really this is about tax cuts for the very wealthiest and the corporations and that's where the debate is going -- what the debate will end up being about. >> i mean, it's maybe that on the headlines, it may be the rhetoric but what i pointed out earlier to another democrat is you guys aren't even in the game we won't know if you're going to be until we figure out if the republicans can decide amongst themselves if they can pass the budget, if they get 51 votes, it doesn't matter what you or anybody else says. >> well, that's exactly right.

and what we're trying to do is, again, raise alarms about what this means for the country the tax cut which is will disproportionately go to the wealthiest americans one estimate is that in 202780% of the benefits -- the tax cuts as outlined last week would go to the top 1%. 45% of middle-income americans would see their taxes increase according to that analysis so there is a lot to be concerned about and the fact that the senate is moving so inevitably toward doing this without any democratic participation, as you mentioned, indicates what they want to do they don't want to have our input because they know where they want to go and it's to eliminate the estate tax, eliminate the amt, cut the corporate rate, allow pass through income to be taxed at 25%. and to lower the top rate from 39.6% to 35% so we know what they want to do and they don't care what we would like to do.

>> so, congressman, when you say the republicans want to cut the rate on corporations, when you say that it's like a pejorative and you say it with a straight face and you understand that we have 35% rates here and you understand that a lot of stuff gets moved to other countries. i mean, you really want to -- does the entire democratic party want to stick with that? that corporate rates should be going up, not coming down? it really wouldn't help if our corporations were more competitive globally that wouldn't accrue to any middle americans that might get wage increases or bring manufacturing jobs back here is that really your stand that lower corporate rates are something we shouldn't try to do >> well, let me say this i think there are a lot of democrats and myself included who wouldn't be averse to lowering the corporate rate to a certain extent the question of pass through is what concerns me most. >> okay, but you use that as a pejorative

you said they want to lower -- and that's just -- i mean, it works with a lot of people, the public still thinks that maybe corporations are these terrible greedy entities that just want to steal your -- >> well, some are, some aren't. >> if you know better i don't know if you should still use that as a demagoguing point. >> well i agree. here's what i would also say, there was a study recently of 90 major corporations who pay 20% or less in federal tax and it indicated that over the last five years, they collectively actually cut 300,000 jobs. so there really is not a lot of evidence that when you cut the corporate rate it accrues to the benefit of workers, it accrues to the benefit of the economy in general. yes it helps taxpayers and ceos and they can buy their stock back and do all those things so i'm much more interested in cutting taxes for corporations if i understand that -- and am convinced it can help the american people not just because

it can help ceos. >> you know there's trillions of dollars that are not on these shores that are left over there where tax rates are lower and companies go and make things over there where tax rates are lower. you wouldn't rather have that money back here? >> absolutely. absolutely and i've been a co-spore son of john delaney's bill here which would allow repatriation of earnings if a certain portion of it is dedicated to rebuilding infrastructure i think that's a great idea. but the last time we gave a tax holiday on overseas income, all of that money, virtually, was used to buy back stock and pay additional dividends. >> don't a lot of your constituents have pension plans and 401(k)s? you'd rather -- if it goes back to -- if it comes back here for dividends and stock buybacks and stocks go up, those are bad things does it go to the ceos or some of your constituents that have retirement plans or that might own stock? >> it does there's no question a portion of

it does. but, again, i'd like to see some concrete benefits for every american from some of these proposals rather than just some americans. >> i don't know, we did a lot of redistribution for eight years and never got above 2%, maybe we should try something that unshackles private industry and corporate america and see what happens. we've got the stock market up 24% for some reason since the election you like that, right >> i like that. >> you're a kentucky guy people in kentucky have stocks. >> i do, too i'm very happy about that. >> okay, good. thank you. thanks, congressman. we've talked before, i've from cincinnati so i know you i know what you're all about i love entucky we're closer to kentucky in cincinnati than ohio really. doesn't really make sense. >> and the cincinnati airport is in kentucky. >> exactly our airport is in kentucky i love the bluegrass state thanks for putting up with those questions, appreciate it just making a point. >> absolutely. >> thanks congressman,

appreciate it. new details i merging about the mass shooting in las vegas nbc's jay gray is there and, jay, we appreciated your reporting out there, thanks for joining us today >> thank you, joe. and, look, as we move forward, investigators trying to piece together a timeline for the gunman's life before the attack, police for the first time suggesting that at some point maybe he had some help. >> keep your head down go >> reporter: four days after the massacre in las vegas, the investigation is growing. >> more than 100 investigators have spent the last 72 hours combing through the life of 64-year-old stephen paddock to produce a profile of someone i will call disturbed and dangerous. >> reporter: there is new information this morning, including this stunning revelation from sheriff joe lombardo >> reporter: do you think this was accomplished on his own?

>> face value, you have to make the assumption that he had to have some help at some point >> reporter: while police don't know where the help may have come from, the investigation has revealed a significant amount of explosives in paddock's car, thousands of rounds of unused ammunition in his hotel room we also now know some of his guns apparently jammed during the attack and while they won't say what it is investigators do say there is evidence paddock expected to survive and escape after the attack federal agents have spend hours talking with his girlfriend marilou danley and say she's cooperating fully with the investigation. she also shared a statement through her attorney. >> i am devastated by the deaths and injuries that have occurred and my prayers go out to the victims and their families >> reporter: victims and families that, like investigators, continue to

search for answers here. in the days leading up to the attack, paddock was seen with another woman, police don't know who she is, they'd like to identify her and speak with her. we also now know he spent hours gambling before locking his hotel room door and turning his weapons on the crowd below joe, a lot of questions still linger here. >> it's getting -- it's -- really, it's bizarre at this point, jay, and none of us know what to make of it but we appreciate you trying to make some sense of it thank you, jay gray. coming up, our what's working series continues this time we're looking at the winners and losers in the industrial sector. we'll talk to an analyst next. plus a cnbc exclusive interview with patrick harker, a voting member of the fomc this year we'll bring you that conversation live at 8:30 a.m. eastern time then betting on content. we'll talk to ben silverman, executive producer of shows like "the office. he joins us on set to tell us

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welcome back to "squawk box," everyone take a look at shares at inovio pharmaceutical the company's experimental zika vaccine showed promise in an early human trial that prompted antizika immune responses in human patients we didn't talk much about zika this year. >> that's the first time we've said it, i think. u.s. manufacturing expanding at the fastest pace in 13 years. joining us with what's working in the industrial sector, the global infrastructure group co-head at william blair and this is another one of those -- welcome, good to see you this is another one of those subjects where there are decidedly two opposing sides about what we're capable of here now in this country, about whether it can come back or whether it's going to continue to exit because of labor or whatever makes it -- maybe you're selling it over there so maybe you're going to manufacture it over there. do you think there's policy that

can bring it back here in a tangible way or not? >> i think it's started. last year we saw 25,000 net jobs added from in sources or reshoring. we lost 220,000 between 2003 and 2013 on average. so that's -- >> what do you mean on average >> a year? >> on average in manufacturing >> per year? >> per year. so this is a big shift. >> million ises of jobs. >> we've already started to see on on shoring back you've seen in the the petrochemical refining sector because we have low cost in much greater conti coming out from the non-conventional sources so -- >> well, a lot has happened. >> a lot of manufacturers are figuring if you want to sell in the u.s., you better make it for the u.s. we don't have a law like the eu does for domestic content but for a transportation logistics standpoint, it makes a big difference. >> does an uncompetitive -- number one, is it uncompetitive? people that don't want to lower

it say no corporations pay it anyway. >> they've worked around it a lot. look at what's going now -- >> would it help if it comes down to -- for people to be back here >> i think so but, you know, i think right now there's much more structural change that is going on in many of the key industrial end markets rather than legislative or health care or tax reform or anything like that. >> so it almost doesn't matter, you're saying? >> companies figure out ways to reduce their tax base. look at the ip companies that have moved their intellectual property anywhere to take advantage of ireland and luxembourg. >> we lost a lot of farming jobs at one time. >> yes. >> decades ago. >> we didn't want them anyway because they weren't going to be -- we want to be the most productive country in the world in terms of agriculture but you don't need people out manually plowing fields do we want people manufacturing here we can't all be service people can we >> no, but we're about on the

cusp probably to see more and more pervasive use of robotics people think robotics is a net loss of jobs but every robot actually creates 2.7 jobs for the one that's replaced? >> what? >> you can't believe that? there's servicing, programming, coding. >> but they're different types of jobs. they're not the type of jobs that you can come out of high school and get a job for the rest of your life. >> the countries with the most robots in the world -- china and germany -- have the lowest manufacturing unemployment. >> so that's not necessarily -- >> just like everything else -- >> there's a lot of misperceptions but we're seeing our smallest best engineering manufacturing companies design their own clap arty robots and deploy them in low cost wage regions like mexico and czech republic. >> is there also things we can do with regulation or deregulation to help this trend continue in terms of manufacturing? >> i think innovation is here

whether we're shifting away from the fossil economy to the electrified economy, we're right on the cusp of that almost like a light switch when you come to $100 a kilowatt for temporary storage of electricity you already can generate less renewable on fossil than a cost basis. so it's going to change how we run our cars, our trucks, our trains, it's changing today how we run our ships we have autonomous operation. >> you mentioned autonomous planes i have issues trying to think about an electric plane, not interested in getting on one of those at the moment. >> think of it as a big drone. just happens to carry you and me. >> no way. >> well, you know, we have it digitized, global gps system for air traffic control that is on the cusp these are the things that need to change as opposed to tax

reform we're still running in the analog in the u.s. >> mexico and canada has a digital system already. >> there's been a push for that for years and years. >> i wrote a column for "fortune" probably five years ago about that why hasn't it happened particularly at a time when you're dealing with 30% interest rates? >> they've tried several times to upgad it and spend $20 billion in the first try and $14 billion on the second try so there's a factor that we're going to spend more money that we don't get returns on. >> who's your favorite manufacturer right now >> right now i would tell you there's -- the opportunities because the industrial side has swong around so much and it's back globally, you're trying to find companies so dominant in their niche that they can still take advantage of this much stronger free cash flow that they're generating to redeploy acquisitions so to think of them as the funnel for privatizing all of their smaller independent

privately held companies that maybe run out of the third or fourth generation and they can pick them for eight or nine times and that in turn allows them to supercharge, they're already strengthing and accelerating core end market growth so that would be a kay dent, that would be an rbc bearings, that would be crane. these are companies that, you know, you can't do this if -- >> how about ge, nick? >> ge is all about fixing the cash flow and he's doing a radical trunkication of the cost structure. it wasn't broken, it was bloated, it will be a lot less bloated vrm you'll see ability to sustain dividend and increase it later this decade and you'll see a much more leaner. >> great having you on today. >> thanks. when we come back. philly fed president patrick harker will join us at 8:30 a.m.

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good morning and welcome back to "squawk box" on cnbc live from the knack dak market site in times square among the stories front in center, shares of constellation brands are jumping in pre-market trading. this is one of the reports we were watching today. spirit's maker reported a profit of $2.47 a share, well above the $2.16 estimate revenue beat forecast. constellation amgs raised its full-year guidance that's a nice chart to be sure seaworld is another stock on the rise uk theme park operator merlin entertainment has reportedly approached seaworld about buying a steak. yup, i know this company because they're the operator of legoland and also madam tussaud which some day, becky, someday, someday -- >> you'll have a wax figure? >> both of us. just us. seaworld is said to prefer a

sale of the entire company heal health insurer cigna will end health coverage for oxycontin on january 1. it will offer instead a differe different oxyco-ddoneoxycodone-g the drug can't be made more powerful through cutting it or crushing it. that's interesting maybe they should have thought of that five years -- ten years ago. >> for anybody who will be listening to cyber hacking stories out there, including what happened with equifax, with yahoo! listen up, here's a great story. amazon's alexa has a new skill the technology struck a partnership with nissan and users can unlock vehicles by asking voice assistant to do it for them certain models made between the years 2016 and 2018 will be equipped with technology that

allows alexa to flash headlights, honk the horn. "alexa, honk my horn." yeah, that will be fun this is not the first time amazon teamed up with an automaker. bmw said it will be in its 2008 models, too we are a few seconds away from weekly jobless claims rick santelli is standing by rick, take it away. >> good morning. we have data we're looking at our august read on the trade balance which is a trade deficit which is dash close to expectations, it's red ink, $42.4 billion following the minus 43.6 billion jobless claims, 260,000, down a dozen, down 12,000 from an unrevised 272 and it seems to be getting in line more post those horrible storms, getting to an area where it's more trustworthy. continues claimings in arrears move from 1.936 million to

1.938, let's call that a lateral move here we sit at 232 this is the interesting thing, bucky, this could be the seventh trading day where ten-year notes close between 231 and 234. they've had a lot of flat plateau areas all year, very similar to equities. low volatility, tight closes, this isn't the symptom of a market at a major turning point. usually you get your most volatility at tops and bottoms, becky, back to you. >> 24% on the dow since election day, rick. >> yeah. that's it. i'm sure it's a coincidence, has nothing to do with who did or didn't get elected, right, joe >> i guess it's -- it was all in motion, rick, right? >> yeah, it was all in motion. >> the consider had been driven into the ditch, pulled out of the ditch but then the keys did get given -- they did give the keys back to the people that drove it in the ditch. that doesn't make sense. >> i'll tell you what.

we always look to somebody to take care of our issues, our problems, what's wrong the american people are good at dealing with this on our own it's horrible that the government wants the keys to all cars, they want to drive everything they want us all to be passengers but the problem is they're not great chauffeurs. >> all right, i didn't want to get to -- actually, leishman's coming up, we can leave you here but he has something different to do. but maybe let's -- you know, we'll reserve a place -- >> we should talk about why you have to have a ph.d. to be fed chairman that's what i want to know seems like the ph.d.s of the past have done such excellent work in telling us about these road hazards ahead of time. >> go back down, who is supposed to read this i forgot you. >> rick, thank you very much in the meantime. let's get to see the leishman from austin, texas, with a cnbc exclusive and an exclusive

guest. steve, good morning. >> good morning, bucky, always a pleasure, thanks very much i'm here with patrick harker, the philadelphia fed president and maybe we can put those questions to the philly fed president, thanks for joining us. >> good to be with you. >> so let's talk about the first thing that happened there and i'm amazed, 260 on the jobless claims they never seem to spike in a post-harvey post-irma environment here. >> this is an incredibly resilient economy. you just think about the resiliency that this economy as shown quarter after quarter, year after year. >> you don't have a ph.d. in economics but you do have a ph.d. answer rick's question do you need a ph.d. to run the fed? >> you need a deep understanding of the economy and markets for sure that's critical. you also have to have other kinds of skills outside of academic training. good business experience, pragmatism, i think pragmatism is important and the ability to build consensus because the fed is a consensus organization

ultimately. >> so what is the limitation, then, on the ability of the president to appoint somebody who would be a disruptor at the fed? >> well, the first question you have to ask yours, i have to ask myself and i can only speak for myself is disrupt what the economy is doing very well there are issues there's always issues but one needs to work with not just the other members of the fed but other entities throughout the government to make those changes so i think that skill of being a consensus builder and team player is important. >> the main point of critics when it comes to criticizing the fed is the lackluster groit rai -- gret rates, this idea we're only growing 2% and that that's the result of the quantitative easing of the low interest rates. >> monetary policy is there to support the economy, it doesn't drive growth growth is fundamentally businesses making investments, workers getting the skills they need. >> but what about this idea that

it's business -- that quantitative easing drove down business investment. you've seen that idea from kevin warsh, even nobel prize economics winner mike pence put that out there. >> sure. but at the time you have to put yourself back -- monday morning quarter backing is always easy consider the crisis at the time. i wasn't at the fed at the time but plarp the at tewhat were ths >> the argument would be doing nothing and letting the market take care of itself. >> well, at that time the decision makers thought that that was not a wise -- >> do you think it was wrong looking back >> we look at where the economy is today relative to how we bounced back from the recession relative to other global economies, it seems to have played out pretty well. >> here's another big criticism. this iscoming increasingly fro the federal reserve. yesterday dan you are the rouleau said there is no inflation theory that works for making monetary policy a week ago fed chair janet yellen said, you know what, maybe we don't really -- i'm not sure about how the inflation

dynamic works. to what extent is the federal reserve flying blind in that it doesn't seem to have a good working rule to predict inflation? >> there are issues and a group of our economists put a paper out that showed that the phillips curve has not been a good predictor for the last several decades. so this is not just a new phenomenon, it's happening for a while. that doesn't mean we can't make policy in these sort of situations where you don't know what's under the hood you can still drive the car, you just have to be pragmatic you can't push the car too far in either direction. you can't step on the accelerator or brakes too hard you just need to be pragmatic. >> let's be pragmatic and talk about the nuts and bolts in terms of your outlook. we had a bumpup in growth in the second quarter it looked like that was going to continue in the third quarter then the hurricanes came off and we shaved off anywhere from a half point to a point. what's your sense of the underlying growth rate of the economy? where do you expect to end up?

>> lightly above two until we see other changes on the fiscal side of the house we're not going to move that growth rate too much. >> if the current tax cut came through as proposed in the outline, would you change your growth forecast? >> maybe, but i would have to see exactly what the details of that tax plan are. >> there's not enough details now? >> not in my mind. >> let's talk about your outlook for rates. we talked i guess back if march, you were kind of on board this third rate hike. do you remain on board >> i pencilled in a third rate hike in december. >> you're still using pencil >> we have to see how the inflation dynamics play out. if we step back from being a central banker or a commentator on cnbc or a banker, the rest of the world, the rest of the economy thinks it's a good economy. low inflation, low unemployment so we have to realize that while there are issues here with respect to low inflation because it doesn't give us the leg room we need in case there's a

negative shock in the economy, it's not a horrible situation. >> we looked at the smart chavez up earlier, 24% increase in the dow jones since the election of the president. to what extent do you see that as a positive force to the economy? to what extent does it give you concern the market is overvalued >> i think there are concerns on either side. on the positive side it gives companies more money to invest for the future and if they do that, that's good for the economy to add to productive capacity of the economy. >> i have two more questions i have to ask you. pencilling in the third rate hike for december, what about 2018 >> i still have three rate hikes in for next year but we'll have to see how the dynamics play out. >> let's talk about the conference we're at which is work force development, one of the titles of one of the agenda

items is the future of work and i had to look at that. is there any we talk all the time on "squawk box" about the robots are going to come in and take over the work and there's no way to train the workers for the future jobs. >> no, we're always going to create new jobs go back 10, 20 years ago. did we have web designers? no we're always creating new jobs but we have to continue to focus on work force develop. i think one of the limiting factors, probably the limiting factor in growth is not access to capital although for small businesses that's an issue it's the inability to get the skilled workers, this mismatch between what companies need and what workers know is real and growing and that's why this conference is so important, finding ways to help bring people productively into the work colors >> thank you for joining us today. >> thanks. >> back to you guys. that's a ph.d. guy but not a ph.d. in economics. >> and you're glossing over that president harker, urban and civil engineering and then he

was professor and chair of the systems engineering department at penn at the school of engineering, this is a guy who should be running things, actually, at the fed, you glossed over that leishman. >> joe, he can hear you if you'd like to talk to him. >> president harker, off bs, ms and ph.d. from penn? do you know people there still do you have any pull there >> a little bit. >> he has a daughter and he's basically outranking any guest with any connection with any university to help get his daughter -- who, by the way, his daughter is very accomplished and lwill have no problem gettig into school but dad won't let go. >> i thought i'd ask. >> let it go, she's great, joe, she's very accomplished, very smart. >> i think honestly, you know -- is economics really a science, really if it is, it's a dismal science. anyway, thank you gentlemen, thanks, steve and thank you president harker coming up, the new world of

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you've got -- you're like -- how many things can you juggle people can get to six balls, can't they you have almost six. >> big week for us to propagate. >> what's the first thing? what's in the front of your mind right now? >> next friday night we've got the premier of "lure" on amazon which is an incredible show based on a podcast, like the ultimate creation of the modern media age, finding ip through a podcast, aaron minke's "lure" which is one of the biggest podcasts in the audio universe and turning it into a television show and partnering with amazon to deliver. >> it it sounds spooky you're putting it out on friday 13. >> of course. >> vampires, werewolves, all kinds of spooky stuff happening. >> exactly "lore" as in are they real stories? are they not real and diving into really scary stuff and an incredible new high braid way of story telling. >> and you have people from "the walking dead" who have involved

with this. people that we would be -- joe and i are big "walking dead" fans >> yeah, the producer of the walking dead, our co-producer and we put together a scary team on the other side of the dial for our other fans who don't want to be scared as much we have "jane the virgin" premiering on broadcast based on a format from venezuela so projects from all over the world, ip generated in so many different places and so many different outlets for content. >> lucky they -- you have a really good feel for where the media is converging now with ip, i guess, right >> i do feel like very connected to it. i think ip is more and more important but only when it's then married to the brilliant talent that can execute and deliver on it so if it's not for gina rodriguez and jennier man, "jane the virgin" could be a good idea that never manifests into a great show.

and with "lore" the same thing we just got a great review and we're pumped and think it could be not only scary but a game changer. >> i'm excited is it going or the serial or separate is it going to be a stand alone episode? the episodes are stand alone but through amazon you can watch them all as you want a la carte and the premier will be next friday so hopefully everyone will stay home and get scared. >> is there ever a shakeout in terms of so much stuff getting thrown up against the wall >> i hope my speg tspaghetti sto the wall but there is no question we are producing in general more and more content. >> i need it i need more content. >> and more and more players are getting involved but i only know the litmus test of what's the dinner party conversation and what was what movie did you go see three years ago is now what are you watching and that's everywhere i go so i think there is an appetite but you can't

watch all this stuff and i know you had larry scott on earlier tonight and he's talking about maybe we do the lacrosse channel, maybe we do the swimming channel, maybe we do, you know, these microniches as well and i think around content it'swell i think around content it's the same thing the "jane the virgin" fan may not be the same fan as the "lore" fan and maybe you can find your own bespock content. >> we're seeing so many different providers paying for so much content, but the reason it always made sense under the broadcast version is you could allocate those eyeballs all in one place. if you can't do that anymore it's harder and harder to get paid for a hit. >> it absolutely does, so you're forced to juggle six balls to make up for what would have been

juggling two, where the downmarket revenue is isn't as clear. it was when they came in to buy library content, and used to make up the money on "the office" or "seinfeld" or "friends," but now you're seen -- >> and everybody is ready, too the movie actors, great writers, great directors. if it's am op, it's amazon there's no longer any stigma, i'm only do -- >> we saw reese witherspoon, nicole kidman, the biggest names are here, and i think they like telling stories. what we like about tv is the intimacy of being in your living room you feel so connected to these characters, and watch somebody develop episode by episode, season by season that character portrayal for an

actor is phenomenonally fun. >> we do that here on "squawk box." >> i feel that you've become incredible characters. >> exactly, and thank you. >> thank you both. i thought you were going to guest host for an hour. >> soon. this is what the new producer does and why everyone says content -- we have a show premiering saturday night on "animal e.r. >> we gotta go i write them a poem instead. and one for each of you too. woman: cool. that actually yours... that one. yeah. regardless, we're stuck with the bill. to many, words are the most valuable currency. last i checked, stores don't take words. man: some do. oh. (alert beeps) not everyone can be the poetic voice of a generation. i know, right? such a burden. settle up with your friends on october 17th with the bank of america mobile banking app.

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the fine quarter of the year has kicked off consumer

let's get down to the new york stock exchange. jim, we've been running some bits from bill ackman on your show last night. what did you think on his take on adp do you buy in? is he right? >> i think they are so so i think he made an impression. the problem is the total shareholders return, depending on how you measure it isn't that bad. the way that ackman wants to measure it, he thinking a lot of the spike is him, but becky, in order to beat these guys, you'll

have to have more on them than just how much you're making per employ employee they got fat and happy they should have been more tech and more service now, and they missed those big opportunities. i hope we hear more about it "squawk on the street. tomorrow don't miss the interview with nelson pellets. that's at 7:30 eastern time. we'll be right back. hey, i've got the trend analysis. hey. hi. hi. you guys going to the company picnic this weekend? picnics are delightful. oh, wish we could. but we're stuck here catching up on claims. but we just compared historical claims to coverages.

but we have those new audits. my natural language api can help us score those by noon. great. see you guys there. we would not miss it. watson, you gotta learn how to take a hint. i love to learn. ( ♪ ) whoo! ( ♪ ) woman: class, let's turn to page 136, recessive traits skip generations. ( ♪ ) molly: i reprogrammed the robots to do the inspection. it's running much faster now. see? it's amazing, molly. thank you. ( ♪ )

sky news is reporting that the uk prime minister theresa may has no plans to resign her bid to reassert her authorities was ruined by a disastrous speech to a conference a speech to her party was interrupted by coughing fits -- why does that sound familiar at one point? and a protester walked up and handed her a notice that she had been fired then watch this. >> >> that was -- >> the sign behind her literally

falls apart. reto "or everyone. "remember the sign fell on someone? >> this is right before she got handed the pink slip essentially. >> well, thanks for being with us today >> you're welcome. join us tomorrow "squawk on the street" is coming up right now good morning welcome to "squawk on the street." i'm scott wapner with jim cramer david faber is on assignment see how we are setting up for this day on wall street. s&p with an implied open, and so woul