but you would have to call that a pretty -- that like almost reminds me of when your buddy, howard schultz came back to starbucks. that also rejuvenated starbucks. >> steve jobs, too >> jobs, yeah. >> all right, everybody. have a great day today make sure you join us tomorrow right now it's time for "squawk on the street. gad thursday morning welcome to "squawk on the street." queeintanilla with jim cramer europe is mixed. september, wholesale inflation, a five-year high on an annual basis. we'll see what that means for cpi tomorrow our road map begins with earnings jpmorgan and citi. we'll dig through the quarters the trump white house on tax reform what the treasury secretary is not negotiable and facebook's cheryl sendberg

right now on the russia controversy. we'll go there live in a few moments. major banks out with earnings. jpmorgan with a quarterly beat stronger loan demand offset a decline in trading revenues. citi's results also above consensus, helped in part by lower costs and better than expected trading revenue they both mentioned brexit a year ago, jim. really helped trading and year-on-year comp is tough >> joe asked me earlier which is better and i went with citi no slight to jpmorgan, their quarter was excellent, too there's fantastic growth how about this statistic you know that jamie dimon bought back $4.5 billion worth of stock, even though the stock is up at 97, scitigroup had every line item better than expected citi gave what was considered an analyst day. and i sat down with mike korbat, the ceo on analyst day, skpeman everyone told me, pie in the sky, he exceeded everything that

he said. it is a best in show situation they're buying back $60 billion worth of stock walmart buys back $20 million, everyone gets excited. citi is the one to beat. the tangiblebook is at 68, so they're buying above tangible book credit card really, really strong don't forget, they do have this great international business and we are in an international expansion. so citi's got a lot of things going. the naysayers will have to eat a lot of crow at citi, of which they're essential. and i may mail them some the dead crows you put franks on crow, because you can put that on anything >> you mentioned international naysayers. the imf is having their meeting today, the world bank, and they have a report that says sitciti one of nine banks that has thin buffers, paths that aren't sufficient to build those buffers. >> it's really interesting, because they're so wrong >> that's it yeah, i'm going to complete dismiss that out of hand they have a huge amount of

capital. they were the ones that passed it, stress test, when we did the faitoo big to fail test, they w number one corbat has just -- that's rather surprising from an organization they really trust. i always hate to think as a generalist i've done more work than they have but there's a lot of components of citi that are very safe if you're going to pick on mexico, maybe, maybe you can make a case there, 4% growth but when i hear that kind of thing, i say, this is exactly why citi has a low multiple. i would rather go to sheryl sandberg than handle what they have -- >> speaking of d.c., imf meeting there and sheryl sandberg with mike allen of axios. let's take a listen. >> what i reiterated in those meetings is we think it's important that they get the whole picture and they explain that transparently to the american public, so that when they were ready, when they wanted to make a decision to release those ads, we stand ready to help them, and make sure they don't harm anyone's, you know, give out any personal information. so we said that if they wanted

to release them, we were ready to help them and then they announced that they were going to and we're going to help them but we also talked about other things that really matter. because we're also cooperating with other companies so when these badactors are trying to cause harm, they don't just go into our platform, they go into others so one of the other things we're doing along with cooperating with government is working with other companies, so that when anyone identifies a threat, we can get them off of all of our -- >> misery loves company? >> it's imported efforts need to be coordinated that's really important. and the other thing we talked about, and i think this is important to mention, too, are the things facebook is taking on these problems so we're investing very heavily in machine learning, because we really have to go after fake accounts we're higher 4,000 more people to increase our jeef oversight u ads and our content. >> compare that to 2 billion users. >> we'll get there we'll get there.

well, this is also really important is, we're working on transparency that we hope to set a new standard for transparency and advertising, because we believe everyone should be able to see and you're right, you're right that this is a new threat. but it's not really a new challenge. and unfortunately, there have always been bad actors out there, who are trying to undermine our society and our values and what's important about these meetings and all the work we're doing together is that if we all work together, we'll never solve everything completely, but we can make it a lot harder to harm us and preserve the right of people to express themselves freely and openly >> so sheryl, most of the coverage has been about the ads, but even more non-ad material from russian accounts came into play in the election should that be released? >> we talked to them yesterday we gave them now, so far, the ads plus the pages they linked to, so they have some of the

content. they're asking follow-up questions, which we expected we'll continue to provide information. >> so, maybe >> no, we're going to continue to provide information for them. we think it's really important that the american people get the whole picture. and so, as we share information with the investigators and they are willing to make it public, we stand ready to help them. we think it's important. >> so will you commit to providing them any of the non-ad organic material that they want? >> yes, we're going to give them the material they want and we said that yesterday and we want to give them the material we want the full picture to be understood we don't want this kind of foreign interference and none of us should want this kind of foreign interference and in order to prevent it, we're all going to have to fully cooperate with government, with each other, across the board >> these ads were taken down because they were from fake accounts if they were from real accounts, would you have let them run? >> that's a really important question, because these ads are divisive and they are down, and the pages are down because they were from

fake accounts. some of them are hate and some of them are violence, and those come down on our platform. but a lot of them, if they were run by legitimate people, we would let them run and we spend a lot of time on what content can run on our platform it's a really important question and it's a difficult question. so -- >> so most of them would have been allowed to run? >> most of them would have been allowed to run now, we don't allow hate we don't allow violence. and we don't allow bullying. and we work hard to get that stuff down and we know enforcement is always hard and we need better at more -- >> that's sheryl sandberg, as the first public interview of a senior facebook executive since those revelations about russian-backed groups buying ads on the platform were made public she met with some lawmakers yesterday, jim it looks like we're going to get to see some of those ads, eventually >> if they were sophisticated about their questioning, what they would ask is, would it hurt your gross margins to put actual people in. do you really think that the machine is ready to be able to

detect hate? i have tremendous respect for the machines, for machine learning, for what's been done alg rorithm algorithmically. i think they're fantastic at looking what i regard as key words. but it would cost them money to have humans to review and spot check. and yet humans are the only ones right now that can detect this we are not in a position yet to have the machines learn and understand and block, but none of these senators and congresspeople seem to understand, this is about the gross margins of these companies. if they have to start hiring people who are english lit majors rather than this computer scientists out of standford, you would see their gross margins go down i do not trust the machines to do what people can do, at this stage of the game. but they seem to not understand the way wall street works and what's really going on here. >> do you think that would be material that incremental amount of labor? >> i think that they should say, listen, do you want -- i mean, maybe -- everyone's taking as a

matter of fact -- and i think they're being buffaloed -- that the machine learning -- you know, listen to what she says. and she's a genius, i love facebook my charitable trust owns it for a hundred points but the essence of what they're saying is, the machines are going to take care of it i think when it comes to fake news, i think when it comes to lies, you actually need a human component. if i were these congresspeople, i would say, do you mind putting some humans in charge of the meer machines is it because it costs too much? is that why you won't do it? is it because you think humans aren't as good as machines i think it's overconfidence in machines, because they are not from the real world. >> whether it's machine or human, do you believe there needs to be more >> absolutely. you can't have crypto-nazi stuff next to procter & gamble nelson says they cut back at proctor procter to make the quarter. david campbell said, no, it's

because we done want to be against contest. i use the term crypto-nazi because i don't want to say russian, russian, russian, it's more about hate content, it's about charlottesville. but when you get off the desk with people like clorox, who are still willing to commit -- they're going to have more than 50% of their ads online. but i think that these companies have a level of responsibility not unlike what we have on our network, where there are people who basically say, you cannot say that and you cannot do that and they need humans maybe they need to outsource it. maybe they have to get a truth squad. but to come to congress and say that the machines can do it, do these congresspeople not know the way the silicon valley works? is there anyone from silicon valley in congress because the machines are being equated with these supernatural ability to be able to detect hate hate is something that is deeply emotional. it is something -- >> and hard to define. >> yes so that's why you need humans. and if you can came down there and said, you know what, we're

going to commit humans because we don't think the machines could do it, i think this whole debate would be very different but to come in there and say, listen, i know computer science and computer science can detect wh wh what geshls has to say the whole point is you can't understand what it says. >> so is this the gross margin make you sour on the stock >> no, it just makes me -- i want them to come and say, look, we'll commit money, even if it hurts our bottom line. that's what i want to hear and give me a nickel a share but you know what, they get away with it. they get away with it because people have a belief that because of alexa, because of amazon, because of the ability for spotify to tell you what song, because of netflix's ability, if you like this, then you might like this. these people are being buffaloed by these very smart people in silicon valley who are really overestimating the ability of machines right now to detect it. so our machines can do it

incredibly, they can do autonomous driving and nvidia can do 325 trillion different calculations, so they'll know if it's a human walking in front of your car and make a judgment -- but that does not allow them to be able to detect what they're doing, go back to russian propaganda it's not the daily worker. it's not that easy to spot >> we'll hear more from sandberg as that interview with mike allen goes on. if she makes some more headlines, we'll get back to it. as far as the banks go, jim, we were talking about citi, j.p. mpmorga jpmorgan, loan growth up 7 yesterday you said you did expect them to accelerate, was that enough? >> i do. these stocks, we expect them to run. i don't think it's enough that the fed is going to hike citi's net interest margin is roughly the same but what i find to be encouraging is that these banks are going to begin to have a different regime

you know, you have to rule out -- you know, he ruled the banks with an iron fist and a mercurial and away you never knw whether you were loaning too much now we have j pals, very sophisticated regular later. and mike corbat or his group can say, you know, i'm willing to give that loan now, there will be more loan losses but in order to be able to have more growth, of which the growth is really starting to accelerate, you have to make some mistakes as a banker. not everyone loan is going to be perfect. but i liked everything i heard i loved the international business of citi, what they kept corbat, you turn the lights on every day to make money. jamie dimon, he is taking advantage of the better economy and lending. and you know, there are statements -- i know everyone thinks it's all platitudes jamie dimon spends a lot of time talking about what he's saying and it is good, good, good when you go over and he's talking about the global economy continues to do so well -- to do well, u.s. consumer remains

healthy, solid wage growth and then, these numbers were done with terrible natural disasters in our country these numbers are done with houston and florida, the two greatest growth states in our country. s so i really like these numbers very much. these are companies that deserve a price to earnings multiple equal to at least the average industrial >> so it's early days, but to these two results help to put to rest worries into the quarter about credit quality, delinquencies, consumers falling behind on credit >> i think they do i think that's a great point, carl and i've got to tell you, citi has such a good credit card business they can tell you whether there was deterioration. if anything, there is -- i mean, i know it sounds like a poly pollyan pollyanna, but these banks have been through hell and back and i just genuinely believe that when you sit down with these numbers, you'll say, wait a second, why am i paying 23

times earnings for colgate and 12 times earnings for citi why isn't citi buying back so much stock, huge numbers, $7 number why isn't citi at 98 i can craft the story where citi can be at 98, but why colgate can be at 98 i think we're going to have a big change in the way we look at banks. normalized earnings, not going to be wrecked by tony westen at the justice department who's a tough guy. >> and all hinging on tax reform or not >> none. because they're realist, and they know even though the harrisburg speech -- i love that, like the harrisburg speech you know, the big truck behind them >> the harrisburg address. >> you know, gettysburg is over here, harrisburg is over here. they should fix the train station at hasrrisburg, it's terrible looking but it was not four square and -- you know, this was about blue state, red state, this and that >> we'll talk more about the president -- >> it's not the ultimate measure in this thing. >> -- about stock market cap and the debt and a lot more. when we come back, the treasury

secretary's message on tax reform what he says is not negotiable we'll get to domino's. we'll get calls on square, disney, bitcoin, record high when we come back in a minute. what started as a passion... ...has grown into an enterprise. that's why i switched to the spark cash card from capital one. now, i'm earning unlimited 2% cash back on every purchase i make. everything. what's in your wallet?

the treasury secretary continuing to make the case for tax reform this morning on squawk he was asked if the white house would accept a corporate rate slightly above 20. here's how he responded. >> the president's made it clear that he wants 20%. that's the one part of this bill that not negotiable. we want 20% on corporate taxes that's what we need to make america competitive. >> didn't get into too many specifics again, jim, although ongoing reports that the president may reconsider state and local deduction. as our friend, jimmy pethokoukis said, there goes another pay-for. >> look, i think this is so far away and i appreciate secretary mnuchin's comments about something being inviolate. i think you're going to your people in congress and say that something's inviolate on their side and i think you almost -- inviolate means, okay, it's up for grabs. i don't mean any disrespect, whatsoever, but the 20%, well,

then, okay, then you've got to come up with something else. and i don't -- there's got to be a realistic approach by the media. we're all so beaten -- you know, we can be charged with being fake media pinpoint the tax cut, okay i think it should be 15. that should be -- so i'm president trump times two in this is stuff. i'm just saying we've got to be realistic. the people in congress are not friends of his what happens if senator corker comes out and says, you know what, 28% is inviolate then what do we do when you call them little people and attack them on twitter, they have the ability to exact revenge and they will exact revenge. >> i can't imagine what you're referring to >> yeah. >> interesting, marion lakes making some comments -- >> boy, i like her >> she mentions tax reform quote, it's not front and center in the dialogue we're having with our clients about whether they should or shouldn't do a strategic deal it's neither holding up business nor spurring business. >> yeah, look, she's a serious

businessperson and she understands that to add something into the mix that cannot really impact numbers is a big mistake. now, they won't -- they also won't talk about federate hike, because we just know how much a federate hike works, but they don't want to inject themselves. they feel like if they inject themselves in this debate, they will be blasted as for being -- >> but we had heard anecdotally that tax -- accounting for taxes was a roadblock. >> right look, i think what matters with these guys is that the consumer is so strong i think people are misjudging the consumer let's say the consumer gets the $4,000 number that mnuchin is talking about. no, that's not it. it's about getting increase in wages and having easier time being flexible, being able to move to another job. and those are the things that jpmorgan, which is deeply rooted in trying to hire people, hiring veterans, they're talking about job growth from the private

sector and that's good. we don't need the government i want the government to be as good as its people and get off the backs of the people. no, not lincoln, reagan. >> on a day where continuing claims are down to 1993 levels -- >> you know, just get out of the way, guys! if you can't help, get out of the way! right? you're either part of the solution or part of the problem. that was senator eldris cleaver. he never actually run. i think he was more of a scoffl scofflaw but there is a notion here that we can do without you. you keep squabbling, we'll do fine once you stop squabbling, then we'll pay attention. and thank you for not suing us like the previous guy. >> a lot more "squawk on the etcoins tethr e break. feel that? that's the beat of global markets, the rhythm of the world. for most, the cadence of today.

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bank driving the story today, as we get earnings from jpm and citi but we'll watch sheryl sandberg in washington, the imf meeting also in washington, futures are in the red opening be ifi mutlln veines

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talk with your advisor about shield annuities from brighthouse financial established by metlife. just about two minutes to the opening bell on this thursday let's get cramer's mad dash. >> sometimes he asks me what's the key to market, it's symbol mu, micron they published a huge slew of stock at 41. in this deal can hold at these prices, you're going to see a very big move once again in a series of stocks, whether it be land research, amap, a big number bump, or some of its fellow travelers in stocks like a skyworks solution or a kcorvo

barclays raises its price target from 40 to 60. pricing has held up well for d ram and for flash. the price-to-earnings multiple for micron is 5. it's now lower than gm and ford. so $1.2 billion of stock that's overscriubscribed. keep that in front of your screen it will determine what happens today in tech. >> we did get a week guide out of lattist juniper, the guide, a little soft >> yeah, i wish juniper had given us a little more information. the release is really suspect. and i do feel that there's more to -- it's june per relajuniper. there's been a pal casted over these because of worries about the iphone 8 and the 10. but what i would point out is that these are internet of things stories and analog devices and texas instruments. these are autonomous driving these are a lot of what -- factory floor. it's much more than just the pc and the cell phone soy like what's going on at micron >> let's get to this opening bell and get you a look at the s&p at the bottom of your screen

this morning at the big board, it is jump start providing literacy programs for preschoolers a eren underresourced communities at the nasdaq an ipo today, cargurus.com we'll talk to the ceo of the online automotive marketplace later on this morning on "squawk alley" at 11:00 a.m. eastern let's do domino's, jim >> domino's, i think is a bit of a raid, frankly. domino's stock is up a lot, i get that there were people who wanted domino's stock down. they've come in with guns blazing. i like both the comp store sales domestically and internationally. when the stock was down 12, i detect what had i called painting the tape. people who come in and say, you know, that wasn't a good quarter, and i'm not calling it manipulation, but i'm saying, give me a barrack. we'll have patty doyle on tonight. he promised that it was going to

improve. i do not believe the real sellers. i think people that want to make you feel like you should panic i like domino's' quarter i think he did a great job the existential threats and the threats from the other forms of food are not panning out i like domino's and stick by my recommendation >> same-store sales up 8.4 the estimate was 6.6 a year ago, 13.8 so that doesn't concern -- >> well, you're comping numbers that are just so fabulous that it's very, very difficult to maintain you can't just keep -- i mean, there's only so many people in the world. now, i want to hear about technology and i don't -- i'll totally understand people who want to take profits but down 12 didn't feel lake profit taking. it felt like bang down i think patty will come on tonight, and i think he'll tell a very positive story about growth there's a lot of quick takes going on right here, right now here's morgan stanley, first look, results, but stock is a picky customer all right, all right

they have a lot of firepower they have a great business model. international was the weakness last time. he solved the international problem, as he said, it was largely britain. there was a note in the evening standard two days ago about how britain has turned around. if you seldol domino's short, remember when he came in, the stock was at ten bucks the man's delivered and delivered, not just like domino's delivers. and may i just say, may i just say that the no cheese tomato pie pizza with banana peppers which comes on time, just like it says on your pc, is so darned good that it has brought my family together. >> that's good -- you can always track where it is. where it is in the chain >> i love that and now they've got gps to be able to find your house. you don't have to stand out there and say, hey, hey, hey remember, millennials can't speak. they only text millennials hate tipping, they don't understand it, so they put the tip on the card. >> they don't drink alcohol and

they don't garden. >> no, millennials literally just watch netflix, they eat pizza, and they do like mexican beer and that's really all they do other than re-brand themselves constantly on instagram. not unlike my daughter and the winner is, it was a picture of mt. rainier >> a couple of downgrades today. one is disney, which is the laggard on the dow guggenheim goes to neutral target goes 122 to 105 there have been a couple of downgrades today the others is williams sonoma, where the analysts are citing investments in ecommerce or direct-to-consumer >> both of these have coengigeny it's a catalog company they've always been most in touch, stocks up 18% from the bottom in august my problem with williams sonoma is the same as nordstrom in order to keep up with amazon, you have to spend money. which is -- hence the reason why i like walmart goldman goes conviction to buy i don't blame hum one pit.

>> although he's raised his target >> these companies have to do so much in order to stay in the running. i'm sure some will say wayfair is the problem for williams sonoma but williams sonoma, that makes sense. now, the disney and viacom, to conflate those two and put them in the same sentence is to make bob iger e-mail you and say, what do you know what you're talking about? i still think bam tech is the solution they talk about the possibility that the programming and the movies are not going to provide upside i still maintain my long-term buy disney, not short-term >> we'll watch it. right now, the laggard on the dow, 30. as travelers and j p.m. and the financials are close to the top. >> i absolutely what happened with the stock at travelers. jerry fishman, the late, great jerry fishman, an unbelievable man with a heart the size of the empire state building came in to tell me, we don't write florida,

we don't write florida, after 1992, andrew, we don't write florida. the stock was down ten points on florida damage, because people are so ill-informed of the company that fishman created, travelers is a good stock. >> ulta, the biggest loser today. some wires say a cleveland research cuts to neutral can that be it >> down from 300 to 200 and now they say no good i pose that perhaps that amazon is doing competitive work. sephora, which is a higher price point, is doing quite well, as jcpenney rolls it out. but let's not forget, ulta, it was an extremely highly valued stock. and when they didn't blow away the numbers last time, all the momentum guys left the stock and they have not come back yet. and i don't know when they will. even though i think that the ceo is fabulous and the numbers are good they're just not good enough to justify a higher multiple. >> so you're not going to draw a line between some of these big gainers, domino's, ulta, micron?

are those -- >> boy, that's good. micron at five, six -- five times earnings here, inexpensive unless the cycle will roll over. >> but they're not atms for those who are nervous about october for whatever reason? >> domino's is a $200 stock. i've been after a lot of companies to split the stocks. and what -- because i want more retail and they always come back and say, listen, the big funds don't want us to do that, because then they have more trading fees, but they ought to. and i'll talk to patty about that tonight on the show because what happens is that these individual hedge funds have enough firepower to knock a stock down and individual retail nervous i don't have 200 bucks if they were to split this thing 4-1, you would see the stock but today. that's just the truth. >> i can say the same thing to nvidia, by the way it's time for nvidia to split its stock. but i don't like why nvidia is going up it's going up in correlation to cryptocurren cryptocurrencies

and why that is somewhat of a very small piece, it is driving me crazy every time when bitcoin goes over 5,000, they buy nvidia. jamie dimon did not reiterate, bitcoin is a fraud, because that's all we've talked about. will you stop that >> i would say, i'm not going to talk about bitcoin anymore >> i urged him not to. i said, all we did was talk about bitcoin because you mentioned bitcoin, so he's gotten religion about not talking about bitcoin. but it's going through 5,000, because people by nvidia and secondarily amd. it is true that he runs nvidia has talked about cryptocurrency. but it's really autonomous driving and machine learning i don't want to say, hey, sheryl sandberg clocked nvidia, but nvidia is voice and the nintendo switch what bothers me here is the last points of nvidia have been the run from 4,000 to #5,000 in cryptocurrency and that worries me someone's going to regulate that stuff. we look at some of these stocks, if this micron holds up, this

land research applied materials complex has been so strong and that's where a lot of the technology stock buyers are. analog devices, they are applied materials. applied materials was on the show recently. that's a story that you can go to 65 without a problem. >> i couldn't believe what michael dell said about what they're now calling edge computing. these censors that are on your devices that no human interaction. could beat 100 times bigger than the internet as we know it >> michael's givenyperbole ther important to circle back to sheryl sandberg who is a jeans a genius and i feel like i slighted her and i didn't mean to i'm just saying the bad guys are really clever. putin's really clever. he's got artificial intelligence on his side. the only way to defeat him is a combination of artificial intelligence and actual humans because, you know, russia is very good at ai. and they can confound us so we can't just meet them with

our own ai, we need someone who says, now, wait a second, that's russian. i see where it's coming from i often talk about this with twitter, which is like, guys, how much would it cost to have humans do things, but they always come back and say machines are better? you know, machines can only do so much. >> yeah. >> and we ascribe this level -- look, terminator ii is not real. it was a movie >> well, at least for now. sky net. >> i'm worried about sky net as much as everyone else. some of these bank companies, they think that, when i ask them questions, that the world revolves around me and that's something my wife often charges, just to give some of these guys -- >> jim, on the inflation data, 26 year on year, the ppi, we'll get cpi tomorrow does that -- does that settle december we're getting into the 80% probability. >> yes, we have to and we need that if this net interest margin -- we also need -- instantaneously, the bears and ist very conservative

hedge funds say, we'll have an inverted yield curve every time we've had inverted yield curve, that means we'll have a recession so we're headed to recession i want to prep people, that's what you want to hear. i find it's somewhat rig rigoro, but we've never been this low, so we don't know >> the 210 spread was 100 basis points on election day it give up to 135. this morning, 82 and 75 would be a nine-year low. >> well, i would like to start worrying about something like everybody else, because i'm going to let them worry about it i'm more concerned about comcast. people are looking at that viacom disney and they are saying that comcast is weak. now, i do, i regret that our partner, david faber, is not here because, boy, does he know more than we do but there is now this 1-1 correlation ever since the last comcast call, who says if it's bad for viacom and bad for disney, it must be bad for disney i question that, but i do work for comcast, so people could say, it's very easy for them to

say, jim, you know, you are just talking your book. but it is -- every time one of these goes down now, it just correlates >> comcast down 7% over three months now and one of the worst losers today. right now to at&t, which filed that ak yesterday. >> that was also at&t, issues about storms but you know what, comcast talked about the storms will ever and gave you the heads up i am -- my charitable trust owns comcast and i'm sticking by it 100% and i'm glad nvidia is giving up -- >> you say that almost every day on twitter >> i have to >> if you're buying nvidia for bitcoin, stop. >> yes, because you are going to be let down. because one day, some of these governments are beginning to say -- other than china -- we know that this is being used by bad guys and ransomware. we know it's used to evade taxes. this thing is just -- like the machines with the russians and artificial intelligence, the machines have -- the humans have let the machines overrun us. there will be a backlash there will be a backlash and

governments are going to get together and say, listen, we like block chain we don't mind you, but we cannot let you evade taxes any longer i would think that secretary mnuchin, if he made one comment about how bitcoin is something that we could tax and make a lot of money, bitcoin goes to 4,000 and then nvidia goes to 175. i don't what that. >> let's get to rick santelli who mentioned some of the data this morning over at the cme good morning, carl >> good morning. the data is higher than expected granted, it's pbi and many investors like to look further down the pipeline. they'll put much more credence, much more prioritized tomorrow's cpi in a stronger way. even the markets almost looked past the data. look at a two-day of two-year. you can't even hardly find the impulse at 8:30 eastern. if you go to the far end of the curve, it spiked at 8:30 eastern, but it didn't break out

to anything on the upside. if you open the chart up, you're just kind of sliding down like many markets that reached an apex on the non-foreign. last week, after all the central banks, i said it many times. as a matter of fact, if you were to look at the difference between our ten-year and bunds, you'll find it's around 190. what does that mean? we are pricing in what our central bank is embarking on and it's slowly impacting markets. it's not changing correlations, just changing calibrations look at one week of bunds. really, since last friday, it's pretty much steady eddy, tight range, doesn't look like anything too exciting is going on if you want excitement, keep an eye on the dollar index. there's a one-week chart once again, it looks like a slide. it's just sliding back down. how important is this, considering we closed at 102.20 and we're now around 93? we failed at 94? well, open a chart up to about a three-year chart what you'll see is, in mid-15

and '16, you will definitely see all the work we did slightly above that 95 area we are failing down here in a slow fashion and many traders continue to try to pick bottoms in the dollar index, and it just futility, ca jim, back to you >> i am so pro-euro right here people understand, they have to raise rates. the european economy is stronger than us. many in places the european economy is stronger than us. and i love their central banker, but they've got to start they've got to start raising rates. and they've got to do it now >> you've been saying that for a wile they keep dragging their feet. >> their economies are great paying homage to catalonia, but the fact is, the spain economy is skipping a beat their banking system is whole. they have to do something. their head's in the sand mexico wants to take our business with 18-1 pay sow europe wants to take our business enough already i wish the president would get a

little more on that -- you know, who am i but the notion of european countries taking business from us, i don't like it. >> yeah, on that point, we want to get to the imf world bank meeting in washington, d.c our sarah eisner is there this morning with a very special guest. morning, sarah >> reporter: good morning, carl and jim. i want to welcome -- or maybe he should welcome me as the host of this event, the world bank president, dr. jim yon-kim this is odd. because usually we come here and there's some problem child in europe, the u.s. with a fiscal cliff. for the first time in a long time, we're all growing together in 2017, how sustainable is that >> reporter: along, we think it's great news. there are still some problem spots. africa is only going to grow at 2.4% this year, and that's really getting close to population growth. so we are very concerned about growth in africa but what we hope is that the growth in japan and the united states and europe are going to

drive higher growth rates in developing countries going forward. but now is the time. so we've been saying, you've got to make these reforms, and people have been saying, well, it's a time of crisis, so it's difficult to make reforms. so now we're saying, okay, now that things are getting better, let's move >> emerging market stocks, though, which i know you have a keen focus on, are at a six-year high where do you see the brighting spo spots in the emerging world right now? >> there's been a slowdown in india, but part of it because prime minister modi is putting in place this goods and services tax, which is going to streamline the ability to do business in india tremendously and he's really been working on the kinds of bids sector, you know, the doing business ranking has been very important to him he's been making changes we think they'll get back to growth soon. you know, china is still stable. and staying at above 6.5% is going to also grow everybody who is in that chinese value chain we're doing an event on one belt, one road, which they're

trying to sintegrate even furthr the entire belt and road area, so that trade can happen much more quickly we think if those things go forward, that growth from the emerging markets can continue. >> trade is picking up and that is a key theme that's helped growth. just yesterday, though, president trump sitting alongside prime minister trudeau said that a nafta deal might not happen and there is this america first policy does that worry you, with respect to trade >> we're following the nafta negotiations very carefully and the people who are actually in the negotiations were saying just yesterday that it's been progress made on small and medium enterprises our position has been very clear. and moreover, our position has been extremely evidence-based. trade is good. trade is actually essential for our work in developing countries. the more trade we have -- >> do you think the administration gets that quality. >> my understanding is that they're trying to look specifically at what these trade deals have made for them when i've spoken with them, they say, we're not against trade

we're looking at the trade deals to make sure it works for us what that means, eventually, i'm not sure but i can tell you, we work very closely with the trump administration and we're on saturday announcing a major women's entrepreneurship, and we were -- >> you're targeting $1 billion >> it's going to be over $1 billion, eventually. but specifically targeting women entrepreneurs in developing countries. >> i wanted to ask you about that because the trump administration has put out some mixed messages on that front with respect to female health care, for instance and ivanka trump supported rolling back obama administration policies on equal pay. so is she really a champion of women in the workplace >> well, in my work with her, she's had tremendous insight into what it takes to start a company. so that's what we're doing with her. specifically, we're going to provide women with start-up funds, but also with mentorship. and what she's told me is that

she's going to be personally involved in providing mentoring, because she herself has started a business to women entrepreneurs all over the world. as you know, sarah, we don't get involved in domestic policy issues >> but are you still advising the administration on infrastructure reform? >> we've continued to talk with them about various approaches -- >> is that going to be the plan? >> i'm not sure. i think there are other priorities right now but we've had some very goods conversations. and what we do is pretty straight forward we come in and say, here are ten different ways that countries have stimulated infrastructure investment by using their relatively lower borrowing costs to bring others into the business of infrastructure investment now, whether that happens or not, we don't know, but we stand ready to help. >> the president did talk about it with the truckers last night. president kim, thank you always a pleasure catching up. >> thank you, sarah. >> on some of the front and center issues here for the global economy and for the u.s. as well. back to you, carl. >> sarah's got a lot more this morning from the imf meeting

sarah, talk to ewe soon. when we come back, company car gurus will make its debut today. disney, the dow laggard, down 28 points on the index. back in a minute

i'll have the langoustine lobster ravioli. for you, sir? the original call was for langoustine ravioli. a langoustine is a tiny kind of lobster. a slight shellfish allergy rules that out, plus my wife ordered the langoustine. i will have chicken tenders and tater tots. if you're a ref, you way over-explain things. it's what you do. if you want to save fifteen percent or more on car insurance you switch to geico. sir, we don't have tater tots. it's what you do. i will have nachos!

dow is down 36 points. s&p down 5.5 the imf meeting in dc and sheryl ndrg cmesabe'somnts with mike allen. we'll get stock trading with jim in a minute.

time for cramer stock trading. > someone should throw a blue apron on jill. jack and jill went up the hill jack hanging in there. jill is tumbling down. >> this is nothing to laugh at i apologize. >> it's gaffing people it's below where i can talk about in terms of market cap they missed on everything. the labor day sale was bad dramatic deceleration in sales all i can say is one well timed ipo in terms of trying to get out a lot of private equity money. this is a disaster like blue apron. it shows you the mall continues to be no place to be

>> there's nothing for your view on retail into no, i can't recommend, william sonoma spent all the money. guys trying to do well empty mall and they can do it. this is an area where you have to be very careful there were good things to say about jill when it went public it just went away and disappeared. have i nothing i have nothing to say about jill the only one that did well was canada goose and it's not even cold yet it's the warmest fall we've had on record. >> dpz tonight. >> yes, listen to pat doyle, the bears, it's in the grip of the bears right now. he'll talk about new gps technology that makes it so the stuff comes faster be careful today is a day where retail will get spanked. keep track of micron it's holding in very, very well. but if you sell citi, you got to try to figure out, buy it back at 73. is that how you treat mike >> we'll see you tonight

fly eagles fly >> don't worry, aguilar's going. brian westbrook tes me don't be too concerned. brian was the best ever. >> a lot more on the wteouhi hse push for tax reform with the dow down 27 when we come back. isis, and saw his portfolio drop by double digits. it really scared him out of the markets. his advisor ran the numbers and showed that he wouldn't be able to retire until he was 68. the client realized, "i need to get back into the markets- i need to get back on track with my plan." the financial advisor was able to work with this client. he's now on track to retire when he's 65. having someone coach you through it is really the value of a financial advisor.

♪ >> good thursday morning welcome back to squawk in the street sara eisen is with us from the imf meeting in washington meantime, look at the markets. banks trying to hang in there. jpmorgan and citi earnings today. pain in retail have the downtown down 34. >> our road map starts with wall street reports jpmorgan beating the street. we'll dig through the calls coming up next. >> plus, the big pitch for tax reform the president warning congress they'd better get it passed and damage control, facebook's coo is speaking out on the russia ad

controversy. >> the big banks in focus. jpmorgan and citi kick off earnings season. more specifically, wolf about, that balance between what trading revenue did and what loan growth did. >> right, carl both jpmorgan and citi beat expectations there were some common themes between them, better expense control than expected and solid loan growth. encouraging was an improvement in net interest margin which had been lacking in recent quarts. more pronounced for jpmorgan there was one shared negative. higher provisions within consumer ray trend to keep an eye on but citi's cfo said credit trends are still within normal ranges of business. on markets, the two companies differed jpmorgan worse than already low expectations policy the cfo said trading was very competitive revenues down 21% year on edge

driven by a 27% fall in fixed income currencies and commodities. equities down 4% the sluggishness would continue into the fourth quarter. citi market revenue down 11% year on year fixed income down 16%, equities up 16% a smaller part of their business investment banking fees slightly ahead of forecast for morgan, slightly behind for citi away from the numbers, jamie dimon said if tax reform passes then in time, all else equal, jp margen will be boosting jobs and wages. though mary and lake cautioned that benefits wouldn't materialize immediately. on regulatory reform, she was saying that now having people in leadership positions helps and that she would expect to see some new things in the next months and quarters. share prices of the two banks near the flat line down about a third of a percent

just slipping a little bit citi in the last 20 minutes or so jp's been around there all morning. >> we'll watch the price action later on today thank you very much. for more, let's bring in managing director at rbc capital markets. gerard, good morning. >> good morning. >> when you think about the sentiment regarding loan growth and trading revenue, why is there not more of a sense of relief today >> i think early on there was and the trading shifted against the banks all of a sudden as you can see from the screens there was om concern going into the quarter particularly in the capital markets numbers and we saw that in trading specifically trading was down meaningfully for both companies more so for p morgan as people dive through the naunz reassess the situation, they'll come back to the banks. >> reassess? what needs to be reassessed? >> i think what we have to look at carefully is that the

valuations of the stocks still are attractive and i think as we look out toward the interest rate environment, that is going to be driving these mid interest margins. granted the capital marks certainly get the full color today but we did see growth in loan growth particularly at jpmorgan on the commercial banking side, record numbers that bodes well for the regional banks, of course >> gerard, it jeems like the equation for investing in the big banks is how long the cycle will be. the trends are favorable even if markets are too quiet for them to do well. on the trading side. but you've probably seen the best levels in terms of consumer credit and perhaps business loan credit where do you think the multiples should go if we're closer to the back end of this psychle >> i think you summed it up well i would agree with you that we're well into the cycle for the banks and if this repeats to similar cycles, we probably have

another two to three years of besign credit. it will be determined by the quality of the economic growth of the country the big swing factor is can we get tax reform if we do, these stocks will go higher and that's going to drive both credit as well as loan demand. >> mary and lake on the call today. gerard said tax reform is so vague it's almost like talking about hypotheticals at this point. it's not really swaying people to do a strategic deal or not do a deal do we believe that with so much uncertainty? >> i think there is quite a bit of uncertainty, carl i would say that should this tax reform come through, i don't believe people are pricing it in yet to the bank stock prices certainly we did at the beginning of the year when everybody saw the new president come into office that's really been backed down if there is true tax reform, it will help not just the banks themselves but their customers and there will be more activity and there's should help the loan demand in 2018 and '19.

>> i got to ask you about this imf report which names citi as one of nine international banks that deserve heightened attention from regulators because in their view, the capital buffers are thin when you look at future requirements. cramer this morning suggested that was too harsh corvette's done a good job where does the imf get this and do you agree >> i would say we don't agree. we believe citi and all the large banks in the united states are very well capitalized. if you look at our capital levels today, you have to go back to the 1930s to find a period we had such high capital in the system. where the imf comes from is they are looking globally and worrying about the global risks which citi certainly has with a cet1 ratio of over 13% for citi and supplementary leverage ratio of over 7%, they are very well capitalized to handle anything thrown at them in a downturn should that happen in the next three years or so.

>> just to drill into the trading business a little bit right now, maybe jamie dimon has a point that invests are in the short term fixate too much on the quarter to quarter numbers this is a market very sensitive to big older companies being disrupted. is there anything to worry about structurally about the wholesale trading business that perhaps it's not going to come back when markets get more volatile and you get volumes up >> you're on to something. we do have now electronic trading platforms that are nonbank. where they took their efforts are highly liquid markets with very low margins so when volatility comes back, the banks will certainly get their fair share i think we're going to see these electronic platforms take their fair share it tends to be in the thinner margin trading areas for example, derivatives which is a very, are, very profitable, this is an area that banks will

excel at g10 rates which is government securities, that's the area where the nonbank platforms are focusing their attentionings >> finally, at least on the two names, the first out of the gate, you expect any changes to your targets or your ratings >> no, we don't. we think the bank call is still to own the banks you've been kind, carl, to have me on in the past. we've been bullish on banks and still are. i think what will be the game-changer will be if there's an economic downturn coming and we don't see that happening. >> gerard, thank you so much as always gerard cassidy rbc talking early banks out of the gate. when we come back, a busy day in washington president's getting ready to sign an executive order on health care. the big push for tax reform is under way. what the treasury secretary told us this morning what's not negotiable had the imf meeting in washington stocks in a holding pattern but pretty steady.

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>> a lot of news out of washington today in about an hour the president will sign an executive order on health care. eamon jabbers has details on that morning. >> that's right. we're expecting that executive order at about 11:15 the white house is framing this about expanding choice and access to health care in the country which they say has been getting more and more restricted under obamacare pointing out as

many as half the counties in the united states will have only one insurer on the exchanges in 201. they say that con trikz of the market is mirrored in the private sector markets, as well. they'd like do something about that here's what the executive order will do. three main points to bring you here one is it directs the labor secretary to consider expanding access to what's called association health plans that could allow employers to form groups across state lines there. think about things like trade associations and the like which could form their own health plans under this they would direct the department of treasury, labor and hhs to consider expanding coverage through short-term limited duration insurance and it would direct treasury labor and hhs to consider changes to what are called health reimbursement arrangements with your employer would reimburse you for your deductibles or copays and things like that. all of these will take time. this not go into effect immediately because in each case, each particular agency of

government has a particular time clock that will have to start after this executive order kicks in they'll have to go through a comment and notification period on all that. they don't expect these rules to be written before the next six months or so and once each individual administration determines where they're going to go with these rules, all of this could look different at the end but the intent here the administration says, is to make sure that they're pushing as hard as they can for access and for competition in health care insurance. carl in. >> thank you very much along with health care today, taxes taking center stage. house speaker paul ryan saying in a speech this morning conservatives need to unite to push tax reform legislation across the finish line we're in washington with the latest on the tax debate. >> the speaker ryan laid out an aggressive time line for getting reform done this year. first, they need to finish up the budget and the senate is expected to pass their version next week. ryan said the house and senate will then work together on a

compromise and the goal is to get a real honest to goodness tax bill over to the senate in november so they can score a big win this year. >> we're going to keep you here till christmas if we have to we have to get this done it's just that important. >> he was speaking at the heritage foundation, and that discussion was less about policy than it was a call to action for grassroots conservatives >> one thing that we know is that ideas alone, they're not enough that doesn't quite just cut it if they were, we would have already fixed our broken tax code by now. i wouldn't be here taking up your morning bold reform means taking on not just the status quo itself, but the people who defend it who stop at nothing to keep the system rigged. >> and that includes the business community freedom partners which is a group affiliated with the koch brothers, this week they launched new tv ads here in d.c.

that go after home builders, energy companies accusing industry companies trying to protect their own carveouts saying they're jeopardizing the whole push the stakes for republicans are very clear he framed tax reform as critical to strengthening the economy and a stronger economy will help republicans keep the majority on capitol hill in 2018 back over to you. >> that's why it's center stage. for more on what's going on in d.c. and with the tax debate, we're joined by lonnie chen. and jared bernstein, center on budget and policies. lonnie, if we have these ingrediented to what perhaps is out there with the tax debate which is the treasury secretary saying 20% corporate tax rate is a hard line. senator corker says i won't vote for something that adds to the deficit. you have many doubts among the president's staff about state

and local taxes whether they're going to continue to be exempt how does all the math work to get anything forward here? >> this is remarkably challenging. tax reform, this is why it's so hard the minute you start digging into it and thinking about how you might start to offset some of the rate cuts, it gets remarkably complex what i continue to return to is the fundamental dynamic here which is that republicans politically recognize they need to get something done before the midterm elections and they are much more comfortable talking about tax reform and in the vernacular of tax we form and economic policy than the health care debate. for those twos reasons they'll push really hard that 20% hard and fast ceiling on the corporate rate is going to pose problems because it's very, very difficult to get the rate that low. if the president believes that that is a key point for them, that's thing they have to try and stick to it's going to be tough.

>> lanhee if the congress is heavily motivated to get something done, does that lead us to a point where something is limited in scope and therefore, they can do it, say on the campaign trail they did it and by the way, the economy is pretty good as it is. >> it could be we end up with a more limited package what we're talking about now is significant. we're talking about corporate rate refor, reform of the code, individual reform, harmonizing the corporate code with the individual code. this is a very, very complex exercise it could end up being the case they say let's figure out how to deal with the corporate side or let's figure out a more limited tax cut focused entirely on the middle class those are all possibilities because at the end of the day, the calendar is compressed we're already in mid-october all this has to get done before we get to campaign season early next year. >> jared, the president goes to harrisburg last night and says america first means putting american truckers first and

talks about wage gains because of tax package that would be $4,000. but the thing that's not negotiable from the treasury secretary is the corporate rate. why zero in on that? >> i think this is not at all about tax reform contrary -- i felt he made a lot of great points on the politics i would never characterize what we're seeing as tax reform, just tax cuts the biggest tax cuts they've proposed has been taking down the corporate rate to the 20%, opening up what i think and many others think is a big new loophole for high end pass through businesses, lowering the individual rate, getting rid of the estate tax believe me, getting rid of the estate tax does not help truckers so i think you asked a really good question which is what is the end game going to look like in terms of the magnitude of the cut. your intuition may be right. they could go with something that's deminimus

the economy is not asking for a big stupid tax cut here's the decision point. it's all a matter of how much they're willing to raise the deficit and the debt if they continue to ignore voices like bob corker's and throw those concerns out the window, then the sky is the limit. and they can pile as much debt as they want on this as long as they sunset it within ten years that's what george w. bush did man, it was bad news for the debt. >> lanhee they could do that on a ten-year window if they so choose but if there are folks in congress willal stick to the deaf revenue neutrality and not necessarily endorse the president's comment last night with the stock market going up so much in value, somehow it mitigates the accumulation of the national debt, where does that leave us? there are still people hop genuinely seem not to want to add add to the deficit. >> absolutely. that the key question we're going to have to figure out amongst the republicans in the house in particular which is how

many of those old school deficit hawks are still around how many will say look, enough is enough in terms of taking a tax cut and blowing out the deficit, particularly if you look beyond these ten years and what the implications might be the question now is going to be how much of this is going to end up being politics and how much ending up being an effort to drive good policy. good policy would suggest if you do tax reform, you truly broaden the base in a way that allows you to raise the same amount of revenue or roughly similar to it that will be the question, how many of those traditional owed school deficit hawks still remain versus people just interested in getting a political win. >> there's fiscal deficit hawk and fiscal chicken hawks we've seen a lot of the latter lately and you know, another decision point here is just how willing republicans in congress are to believe phony growth scores. i'm not going to tell you even i think a poorly designed tax plan

like this one won't have any growth effects but most analysts believe that he would be deminim deminimus. any analyst who is not being paid to believe otherwise, there's nothing close to paying for itself in this cut if you try to get to deficit or revenue neutrality with phony scores, i like bob corker says, that's not the way forward these decision points are yet to be seen. >> a lot still remains to be jeanne jared and lanhee maybe congress will stay till christmas to try to figure it out. thank you. >> as we go to break, shares of j jill plunging almost 50% as the retailer gives current quarter earrings guidance well below estimates. now looking for 8 to 10. third quarter comps down 3 to 5. we'll get sarah's interview from the imf fall meetings. the dow is down 1937 "squawk" continues in a moment.

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♪ it feels so good ♪ >> welcome back to squawk on the street i'm sara eisen at the world bank meeting where something unusual is in the air. optimism for the first time since prefinancial crisis, the world economy is set to expand in a coordinated way. the imf just this week upped its forecast for growth to 3.6% and 3.7% next year as the head of the fund christine lagarde told us she would last week economies from europe to the u.s. to china are boosting each other. world trade expected to grow 4.2% this year, the most we've seen in about six years. it's the sort of progress that is cheered here at these kind of events where finance ministers, central bankers and economists get together in meetings, talk

about coordination, globalization, and as you can imagine, there is one elephant in the room. that is the u.s. and the administration a headline today running in the financial times, trump administration hits out at imf over tax reforms last time i was here, commerce secretary wilbur ross called protectionism warnings by lagarde "rubbish." there is a tension here and president trump saying he might not be able to make nafta work in terms of a deal there's a lot of behind the scenes discussioning whether this white house's bite will be as bad as its bark specifically on trade policy, coordination on economics, and whether it's a risk to this newfound global expansion. we just talked to president kim, the head of the world bank he said specifically on those nafta talks and some of those threats, he advises the administration on infrastructure he's working with ivanka trump on a women's entrepreneur fund

which is raising money and he said as far as he understands it, the administration is pro trade. they just want to work out the specs on how it benefits the united states more he's actually played this pretty savvy in terms of these global institutions working with members of the trump administration in a way that the imf hasn't done as much, guys. >> yeah, sarah, maybe it's reassuring that the imf is finding something to worry about when it comes to the potential for trade interruptions because if i look back to past years when they weren't so optimistic about the global growth outlook, those where is better times for markets for taking on more risk. you wonder right now when all is calm and the imf says it's unusually balanced, have the markets already figured that out. >> that is the question. christine lagarde told us when i asked kim and lagarde about the sustainability of this she says this is not a psychically cal moment in time she sees real roots for a

coordinated recovery in fact, she was just giving a press conference and did say ta europe is a growth leader. cramer was talking about that last hour. that is something new to discuss and could have legs. kim also said he sees this longer lasting and not as a moment in time the question is though, are they going to get too optimistic where it's a turning point and signal overenthusiasm. i will tell you they're still worried about debt levels both imf and the world bank kim is still worried about sluggish growth in africa, worried about climate issues and still telling policymakers look, now is the time to act this is not going to be smooth sailing. optimism with a dose of some worry and some policy advice i would say. >> we'll see how the tenor of the meeting changes as you make your way through the interviews. we'll talk to you in a bit sara eisen in washington just about half past the hour. sue has a news update.

>> good morning, everyone. here's what's happening at this hour a california man fleeing the wildfires ca toured a harrowing scene, the car surrounded by smoke, falling ash and burning trees. in a post, he said he and his family made it to safety but their house was likely destroyed. 23 people have died in one of california's worst fire seasons ever. ten young men now face hazing charges in the death of lsu student max quell groofrer he died while pledging the phi delta theta fraternity last month. toxicology results found his blood alcohol level was six times the legal limit. the government's cancer moon shot initiative is getting fresh cash the national institutes of health announcing today 11 drugmakers will give $55 million for inmum know therapy research. amazon is gearing up for the holidays the e retailer will hire 120,000 workers to headline packages at

fulfillment centers, that is 20% more than last year. holidays are right around the corner that's the news update over to jackie deangelis for the inventory report. >> good morning. the department of energy reporting that natural gas inventories rose 87 billion cubic feet right in line with expectations we saw these prices were a little supported this morning to the upside more than a 2% gain and we're holding onto the gains. i can tell you this. last year, we were a little bit lower. the five-year average slightly a little bit higher. what's important about gas right now is price action. it's just sitting under $3 where it was a coup weeks ago. year to date it's down 20% so a lot of people think this sub $3 level is probably where it's going to spend most of its time the rest of the year unless we have a particularly cold winter right now is the time you don't see too much demand for heat or air condition. we sit in the middle for a month

or two before we see what mother nature hands us. back over to you at squawk in the street." >> thank you very much when we return, damage control facebook's coo sheryl sandberg is in washington speaking out on the russia ad controversy. we will tell what you she had to sain men y aomt. throughout my career, i've been fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others.

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>> we're getting headlines from the fed. steve liesman joins us with the details, hey, steve. >> good morning. two fed governors speaking at this hour fed governor j. powell mentioned as a potential pick for the next fed chair saying is fed policy has been and should continue to be gradually in terms of hiking rates the balance sheet plan to shrink the balance sheet will be gradual. the u.s. economic recovery he calls on solid footing and a gradual policy should reduce the risk of an interest rate spike he does cite low volatility in markets and elevated asset prices in global markets

the main thrust of his speeches talk about how emerging markets will react to federal reserve policy and he says they should have time to adjust. he says fundamentals have improved emerging markets are likely to manage the normalization, the rise of interest rates from advanced economies well. he says significant risks of for adverse scenarios remain as well as saying market tantrums can carry significant risks of snowballing into something bigger finally he says emerging market vulnerabilities have been rising he particularly cites corporate debt in the emerging market world. one more thing, another fed governor speaking at this hour says low interest rates heighten the risk of asset price bubbles. so sarah, it looks like jay powell has taken on the role stan fisher played for a while sort of warning and thinking about emerging market vulnerabilities to rising policies around the world.

>> before i let you go, your reflections on ppi today especially that year on year number does it set us up for cpi tomorrow >> i'm not too worried about it. i don't see those brewing inflationary concerns. you had a pop from energy. plus, we've got this interesting dynamic out there where ppi has been a little bit higher but simply not passing through at least for the moment to the consumer price level that could change at any time. so far, the pass-through from higher wholesale prices hasn't happened that should mean shrinking mar jinz, hasn't happened. >> steve liesman on his beat this morning facebook's in damage control mode following its role in the presidential election as the political pressure continues to build for big tech coo sheryl sandberg met with the leaders of the house intelligence committee yesterday and back on the hill today this morning she answered questions about the platform's role in the russian ad

controversy. >> does facebook owe the american people an apology >> certainly anytime there's abuse on our system, foreign interference on our system, we are upset. it's not just that we apologize. we're angry and upset. what we really owe the american people is determination. we're determined these are threats. these are challenges but we will do everything we can to defeat them because our values are worth defending > facebook, google and twitter set to testify to congress next month. joining us this morning is former office depot ceo steve audlynn president and ceo of the committee for economic development. good to see you again. >> morning, carl. >> how much do you expect facebook to actually change and how? >> well, you know, this has been a big change for them. they started out small as all these small companies do idealistic we're not going to get engaged in public policy

why do all these big businesses have washington offices. we don't understand this as they grow, they do understand it and find out the need to engage in this so facebook, google, twitter, they all now are finding themselves thrust into the debate as they become social platforms as they become pr platforms as they become political platforms. what should their role be in society. that's what we're talking about today. >> have you determined whether or not the fix so to speak can be done by a human being or a machine? >> well, you know, look, i think that the question is free speech and you know, what is one group's point of view is another group's hate speech. and these platforms are enabling this then you have the global nature of these platforms and so what is a domestic issue in one country is a foreign involvement issue in another you've got rules and regulations that are different around the

world. you have societal standards that are different. they're trying tobalance all o this stuff you've got five companies today, apple, microsoft, goog, amazon, facebook, five companies that are worth over $3 trillion in market cap these are the companies with over half a trillion dollars in cash offshore. they weren't around 40 years ago. today they control commerce, ecommerce, all the social networking and very important and they need to engage and catch up in public policy. they need to do that around the world and understand and write policy for themselves and engage with public officials to make sure they don't devolve into censorship but engage productivelily in our society. >> steve, this engagement you talk about, there's a defensive nature to it they don't want to be regulated in various ways. what do you think specifically they're at risk of in terms of being recast as a regulated business

alonging what lines might they see some kind of government constraints? >> good question, mike i think you've got an issue here where they're open platforms they weren't created to be pr platforms or political plat fors they were social plat fors but they are today today political platforms. they're platforms for free speech so the regulatory nature is going to come around in this country the first amendment rights and what is free speech and you know, how do you control hate speech? and what is censorship who's going to do that censorship are the politicians going to do it is it going to come from washington or will the platforms self-censor? are they infringing on the rights of some groups. are they left or right or involve themselves noose political campaigns. niece are all open issues today that are relevant in washington. they're relevant in capitals around the world, by the way, and they're seeing different levels of regulation creep up in

europe and in asia obviously, they're cutting deals with china in that form of sense censorship what is censorship and what is the right place for them to be from an open communication platform. >> all right so a lot of questions this morning, steve did sandberg say anything today that leads to you any answers to those questions? >> you know, i didn't hear anything startling i think she played it right down the middle where you would expect her to be you know, they have to stay open they have to though understand and participate in the process she said they were going to give or have given all of the ads to congress and to the government they're going to share in that but she then stepped back and said they don't want to censor, that they want to be an open platform for debate. so i think they're concerned about the right issues the question is, whether they are going to come up with the policy to govern themselves and whether that's going to be enough for these governments or whether the governments will do

it do them and then what does facebook and the other social platforms become. >> do you suspect, not that you're a social media stock analyst, but do you suspect it leads to pressures either on margins if they have to invest heavily in these fixes or on user growth if people decide these platforms are not where they want to get their information anymore? >> well, look, the value of these companies come from their advertising. so the investment in r&d and technology in order to control all this is ongoing. it's sort of baked into the business model the question is, what are the advertisers going to do in this and if they get attacked politically, are they going to pull out that in fact be the determinant in affecting their market value and their growth platform. if the governments start to limit their ability to grow in certain areas or if they start to censor them, then the users are going to go elsewhere because they don't want to become part of a censored

network. obviously the advertisers will follow this is a critical issue to their business model and to all of their revenue to fix this in a way that is right for them, is right for their customers and is right for the regulators >> we're going to find out if that becomes material over time. we'll see if they give guidance on that in the coming quarter. steve, thanks for the help steve-o dland in washington today. >> southwesterly airs announcing plans to begin service to hawaii phil lebeau joins us with more on what that means for other airs, most notably hawaiian air. >> this has been expected for some time. gary kelly has said it's probably the most asked question he gets. yes, southwest has decided it is going to start service to hawaii they haven't set a date when the flights will begin, but ticket sales begin in 2018. if you take a look at hawaii and the importance here, remember, they have about 10 million tourists a year going into hawaii that's globally.

that's not all from the united states a big chunk of those coming from the pacific coast or the west coast of the united states to hawaii what does it mean for hawaiian airlines keep in mind hawaiian has been expanding internationally because they've been facing more competition from u.s. carriers flying to the islands. nonetheless, that puts a little bit of pressure on hawaiian airlines that's why you see the stock today under a little bit of pressure as southwest says yeah, aloha, we are going to hawaii at some point perhaps in the next year or so >> and phil, where will southwest be leaving from to go to hawaii? what airports? >> it's obvious you'll probably see flights out of los angeles, probably see some up in the bay area up near san francisco. so that's likely where you'll see the flights initially to hawaii >> all right we'll keep an eye on it. thank you very much, phil. when we come back, we'll take you inside the most expensive home in switzerland, seven stories underground. walls lined with mink fur.

you won't want to ssmi the private tour "squawk on the street" will be right back

let's get to the cme group in chicago morning, rick. >> good morning, carl. you know, if it's earnings season, it's time for rebecca corbin corbin advisers i love when we start out the quarter and talk the big picture. something changed in the past. everybody use the to talk about recession percentages, a bit depressed. we've changed. what happened? >> yeah, i have to take you back to 2015 to china blowup that went into the third quarter of 2015 to the highest level of bearishness in the fourth quarter of 2015 to reset of expectations in the first quarter. that has been the start of the reset when we saw the election

clearly was. >> turbochargers whether it's who didn't get collected it doesn't matter from this standpoint it, found ground to continue to grow. >> absolutely. >> right now your respondents institutional all around the globe are not looking at undervalued. but they're not looking at overvalued what this they see >> last quarter i talked about how there were fewer investors talking about the marks being overvalued that's decelerated this quarter. so fewer investors thinking the markets are overval pupd almost half of the survey participants think we'll have expansion through 2017 the markets strong quarter coming up. strong 2018. i think we'll continue to see the valuations going up. >> it's amazing. the last time you were here maybe two quarters ago, we were talking about long in the tooth on this expansion. that's dropped off >> it has, absolutely. we really reached a point in

time, march, where the overvalued was the highest we saw. last quarter it started decelerating and this quarter it's less. >> what about things like gdp. >> all the important aspects of what can create and keep this extension goinging >> what are they going what do they see from that standpoint >> first of all, expecting a strong quarter organic growth is supposed to be sustained or improved, margins, talk in terms of input costs and 59% of investors are expecting sequential improvement, so quarter over quarter growth. we are in a growth mode and investors are expecting that >> you know, i found it interesting, cnbc has been all over you look at jpmorgan and citi that are out trading could have been worse, but it wasn't a bright spot. the bright spot was supposedly loan growth. lack of volatility doesn't help the big, big, big traders, but certainly seems to be the sweet spot with regard to your respondents. >> i'm pretty sure the investors we survey, long-term high

quality institutions are taking advantage of any market dislocations based on short termism. these folks are looking out longer term, so, you know, anecdotally that would be a two to three-year time frame >> real quickly, out of time geographically, part of the globe they like best >> euro zone >> wow, so all you trying to pick the bottoms of the dollar index, keep that in mind rebecca corbin, thank you. mike santelli, back to you >> all right, rick, duly noted thank you very much. now over to john fortt in san francisco with a look at what's coming up on "squawk alley. hi, john >> hi. busy morning on capitol hill facebook's sheryl sandberg continues to take meetings and questions over the russia probe. also the president expected to sign some executive orders regarding health care ri t hr.oudunghe all that's coming up on "squawk alley"

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watching ipo today, cargurus price 9.4 million shares at $16. >> that was above the range, as well >> yep >> pretty hot one there.

meanwhil meanwhile, robert frank takes us inside the most expensive home in switzerland, and that's saying something, the most expensive in switzerland >> we've been doing this home over five years, shot over 100 homes, but this is far and away the most amazing home we have ever shot. we are the only cameras that have ever and will ever be allowed inside the broker gave us a tour. it's a $185 million home it's got red velvet in the library, a lot of walls covered in gold, walk-in closet covered wall to ceiling in gold. walls covered in mink fur, down below the car cave, a $260,000 spinner, so you don't have to turn around and back out subterranean lake.

this total house is 60,000 square feet, and every wall, every room, every bathroom is covered in the most amazing materials, whether it's fur, gold, brass, and, of course, those views. plus, yes, it is a ski resort, so it's got a private ski den with boot warmers, where you have a private chair lift waiting for you right outside. and this house, you know, switzerland has sort of become not a tax haven anymore, but very popular for the security, the safety, both economic and private security, so, this house is going to appeal a lot to maybe a russian buyer, middle east buyer, asian buyer, that wants mink-covered walls and probably the best security you'll find anywhere in the world. guys, back to you. you'll see a lot more tonight. >> robert, when you go to these and shoot, do you get to stay overnight? >> i do, but not in the house, unfortunately. a much cheaper hotel nearby, but being in that house is worth it,

even though i didn't get to sleep there. >> robert frank, we can't wait to see more. what an amazing piece of tape. thanks a lot when we return, sara at the imf etmeing with larry summers dow's down 14. back in a moment

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welcome back to "squawk on the street." i'm kate rogers. telecom standing out as the worst performing s&p 500 sector, down by nearly 2%. at&t is a large part of that story. that stock is off by more than 3% after the company said its third quarter results took a hit from the string of hurricanes and it will lose about 90,000 directv video subscribers due to growing competition. now back downtown for the start of "squawk alley". >> kate, thank you very much good morning, it is 11:00 a.m. on capitol hill, 11:00 a.m. on wall street, as well, and "squawk alley" is live