pit. we'll explain straight ahead it's monday, october 16th, 2017, and "squawk box" continues right now. ♪ ♪ live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. last week was a strong one for stocks dow was up by 100 points over the course of the week this morning looking at green arrows with the dow futures up by 34% nasdaq indicated to open up by 14 points. the s&p indicated to have new data that is well above forecast. it was spurred by a year long

slide. the hang seng was up by 3/4 of a percentage point shanghai stocks closed down by 1/3 of a percentage point in japan, the nikkei higher once again. another 100 points gain of half a percentage point. trading at 21,255. in europe there is early trading taking place there are modest advances. it looks like the dax is the biggest gainer we'll continue to keep an eye on that. >> we're watching a developing story in the oil market. crude and brent, they are moving higher on news that iraqi troops have seized parts of oil rich kurdistan. they're moving into parts of the city of kirkuk the u.s. has supplied and trained iraqi federal forces and kurdish forces both have been fighting the

islamist state group they are to if he cuss on the war with isis. one is missing, another five missing. they're trying to get to -- they were trying to get to a valve to cut off the flow of oil. right now they are not ruling out the possibility that the oil is leaking into the lake the cause of the blast is unknown. >> huge explosion. >> huge explosion. >> people running out taking a video. they said it felt like a sonic boom when it exploded. >> then we have the parlor games that is the fed. >> fed chair janet yellen making the case for rate hikes. the comments are important we'll show you those in a second and talk about them. the other debate is that perhaps we could get her replacement, including her this week. yellen said the ongoing strength in the u.s. economy will warrant

gradual rate increases she said inflation has been, quote, the biggest rise in the economy. this week in politics, tax reform and nafta negotiations both in focus. kayla tausche has the latest out of washington. good morning. >> good morning, becky those will most likely come up at a meeting that president trump is holding over lunch with senate majority leader mitch mcconnell. he's one of the foremost figures in passing the president's agenda despite there being little to no love lost between them trump's ally steve bannon calling for war against mcconnell's establishment. they say they will discuss hurricane relief and the senate budget deal a key marker in the sand for tax reform. the white house's council of economic advisers releasing a study defending its assertion that cutting the corporate tax rate would raise wages a cut to 20% would add up to

$9,000 onto the higher average income of americans and up to $7,000 onto the median income. so that is certainly going to be a talking point this week. look for that. health care could appear back in the cross hairs because they don't want to fund low income people senator lindsey graham who gofd with the president this weekend said a deal in health care might still be possible. >> the president is not going to continue to throw good money after bad, give $7 million to insurance companies unless something changes in obamacare he talked to senator alexander he's encouraging him to get a bipartisan deal. >> reporter: got to be a good deal this could prove critical on the

trade front. vice president mike pence is meeting with the deputy prime minister to discuss a bilateral deal japan's minister said it will keep a dialogue open so we'll see what happens there. negotiations over nafta have been extended to tuesday one participant telling cnbc the u.s. is taking a political rather than a plaque particular approach experts say if the u.s. were to withdraw from the deal it would likely happen later in the process but then in this environment anything is possible and, becky, in the next couple of days we'll see if he made a compromise we'll keep butting heads to our neighbors to the north and south. >> kayla, a lot of things going on all of these moving pieces at once all of this news that susan

collins would like to vote on a budget because she would like to get to tax reform. if you're trying to figure out where the republican senators may go with tax reform, it sounds like she is in the yes column. >> reporter: she is in the yes column that's important, becky, because on friday she said she would be remaining in the yes column. certainly that is a bolstering of the gop majority. she has been one of the toughest gets for votes on health care specifically, but on tax reform she was a maybe. people didn't know if she was going to remain in the senate. there is going to be some potential new difficulties in tax reform, senator joe corker, he could be a question mark when it comes to tax reform

>> all right kayla, thank you very much journal lead editorial on nafta. >> yes. >> could be the worst economic blender since nixon. one dperd what they were talking about. if inflation is bad, you just say know >> no, it doesn't work neither do -- >> tricky dickey going all the way back to the worst economic blunders -- so the journal is not hard. 6. >> the nafta talks, country of or begin, 35% has to be put together then i saw they want made in america to be a huge portion of that 50% or is it higher?

>> they have switched over from nafta content. >> to making it made in america. >> to a made in america. that is going to be the major sticking point i don't think it's going to fly with canada and mexico. >> we have stuff to talk about on wall street tomorrow look for data on import prices, industrial production and home builder's survey. wednesday housing starts friday, existing home sales and more than 50 companies in the s&p 500, 10% -- >> there are thousands of companies. >> if it's 10% of the s&p 500, that should be somewhere around 50. >> get ready. >> someone said that in my ear nine dow components -- that's almost 1/3. >> you're fast at -- >> mondays, mondays, i don't miss a step.

the list includes johnson & johnson, verizon, procter & gamble and general electric. stocks to watch today. apple has been upgraded to overweight by sector weight. key bank, the firm's target price $187 a share the iphone maker is in what they're calling the early stages of a more aggressive market segmentation tesla has fired hundreds of workers after they conducted an annual performance review. san jose mercury reporting that they fired engineers, factory workers. it comes as the ceo says the company is facing, quote, bottlenecks in the production of the new model 3. the question is will this make it easier or harder.

barrons, positive share and it's a better deal than alibaba barrons suggesting j.d. could be a better buy a lot happening in the stock market and the bond market let's get back to those. ed campbell and sri kumar. dr. doom you have taken the place of a lot of the old dr. doom. >> no, i'm very bullish on bonds. >> bullish on bonds which means, you know, that maybe the overall global economy is i willusery. i'm going to read a comment from ed the reason why the market and other new highs doesn't trade where it's indicated this morning, but the global economy

firing on all cylinders with growth more synchronized and robust due to better growth? japan, europe. why are we below 233. >> we are below 230 today because the growth is really with the amount of liquidity you have the wait of the longitudinal growth >> we do have better growth than we have had in a decade, you're saying that's not true that it's really liquidity is the growth not good is it tepid growth >> the pickup in economic growth is real. in other words, the numbers are higher in 2017 than they were 2016, but it is coming largely from what is happening from

europe to turn it around china's growth has held down the global growth is good, but if you look at the imf world bank meeting late last week, i was there in washington, and the imf has a lot of notes of caution. the global tensions increasing and it wants easy monetary policy to -- >> a lot of this is inconsistent, ed, because the lead story in the journal is that it's a weird inflation fear fear of low inflation when in my entire life all i've ever been afraid of, we were talking about wage price controls, all i've been afraid of is south american style hyper inflation, so it says leaders of the world central bank could prolong it. we have all of this growth things are better than they've

been in a while. you see the stock market in the united states going up and up and up why can't central bankers assume that inflation will take care of itself and realize staying where they are right now is almost looking in the rear-view mirror. >> i think the feds should hike and will hike. >> should they be targeting raising inflation instead of just keeping a currency stable >> i think the 2% inflation target is the right one. if anything, they've under shot the target. >> they haven't -- >> lower than 2. >> if it's 2%, yeah. >> how could they have been any easier how could they have gotten it any higher than that they've pulled out all the stops. >> you worry about japan, right? >> i don't know. >> people are still --

>> the macro -- >> bullard, all of these guys are turning dovish again they may be doing -- >> mark granite, too >> right they might be doing something wrong. >> let's just enjoy what we have here. >> okay. all right. strong growth with zero interest rates. >> you better hope -- >> i don't think they mistreated the legislation. >> it's been cut back substantially since 2009 wages are not increasing people are accepting jobs at lower wages. none of that is inflationary if you want future excuses, i can give uber prices, artificial intelligence, driverless cars. those are possible excuses in the future the reality is monetary policy

is responsible for the lower inflation. the bank of japan's assets hasn't done anything to inflation. >> things are different. >> i think wage pressures are definitely building. we saw the average hourly earnings number in the most recent report pick up to 2.9 there's some reason to think that that number is suspect because of issues related to the hurricane but, i mean, if you look at people who have been continuously employed in the labor market, you know, those wage numbers are growing at something like 3 to 4% so we've got this compositional issue where people are dropping out of the labor market, the older boomer retirees. i think that's masking a

situation where wage pressures are starting. >> is yellen back in is that what you said? why is she back in >> no, no, i think we're back -- i think gary is -- >> there's nothing new about yellen >> john taylor. >> john taylor's there, then there's a conversation about whether janet yellen is back in. but we could be within about a week or two. i will say, by the way, i used to think and we talked about it, that kevin walsh was very hawkish. given the op eds we read, i think he's been hawkish but in a different way. >> that's right. not inflation based. >> not clear he would raise rates. >> i think his commentary was much more around financial crisis and getting ahead of that having said that, how do you get ahead of it? you have to raise the rates. >> in may 2008 he stayed with the policy that ben bernanke had and the reason which is often

given is i'm a member of the board. i have to support the chairman, which is not the way you should be paid to do. you should have an independent view. >> with the exception of yellen being reappointed, the best outcome for it is powell >> more of a friend of dereg gu zblags if at 9:00 this morning powell was announced the markets would what >> they would go up. >> respond positively. >> if it was warsh it would what? >> it would be a bit of an adjustment. >> higher or lower >> lower >> if it's warsh or taylor, you would have a market selloff. the question is do you want a quick market selloff and then a takeoff of the economy or do you want to push it up and then have a much sharper crash later on? >> trump says he's goings to

have four. >> i saw that. >> can you imagine that if that happens? canada looking for supreme court nominations. >> i think given how divided the country is -- >> yeah. >> it would be bad >> it would be very complicated. >> very complicated. my -- >> okay. >> -- polite way of putting it >> do you think he's going to be there to make the appointment? most are still hanging their hat on it. >> i don't know. >> can i ask you one question in i have one more question did you read mark penn did you read what he said? read the editorial mark penn, hillary's guy. >> right. >> if you take 100 million in facebook, you're out of your -- then he makes all of these cases. there were debates, there was this even lost him as support >> he's a tech guy now >> that was not the point i was

making you completely perverted what i was saying. >> i know. >> look at his op ed. >> do you like it tow? >> go ahead. coming up when we return, a new report president trump -- when you started to say that, what op ed did you read? >> that's -- >>rede tmp psintru says the next drug czar responsible for the opioid addiction 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.

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welcome back to "squawk box. the dea's ability to go after drug dealers was weakened. for more i want to bring in lenny bernstein. good morning to you, lenny we watched the "60 minutes" piece last night it's an important piece. how did you get on to this originally >> originally about 18 months or so ago i was asked to try to explain to our readers how so many hundreds of millions of pills could spill out of the supply chain and onto the street i started calling around and ended up finally making contact with joseph renezicci who had recently retired as the head of the dea office that controlled and regulated the control of those pills. >> lenny, it seemed to me that there were a lot of problems to

this crisis and blame to go around where do you raise the largest blame and in terms of where this goes from here >> i don't know where exactly to lay the largest blame. it is -- there's no dispute that congressman tom moreno, president trump's nominee for drug czar carried a bill for two years that weakened and hobbled the drug enforcement agency in its efforts against large drug distributors that senator orrin hatch finalized the negotiations and that the drug industry with its lobbyists was influential in accomplishing that where does it go from here is anyone's guess this law is clearly weakening the dea in that respect, possibly someone might want to bring it up and see if it could be repealed. and then we have moreno's nomination coming up before the end of the year that would give him control over the nation's drug control policy. >> what was the trump

administration's response to all of this, to your report? >> the trump administration didn't speak to us very much because all of this happened under the obama administration's watch. at one point we thought we might speak to attorney general jeff sessions but that didn't happen. so most of our reporting was being done among the obama administration. >> that ruins everything, lenny. >> let me ask you then about the drug industry's response >> the drug industry spoke to us mostly through the lobby for the giant companies that bring drugs from the manufacturers down to the street they weren't really willing to do a sitdown interview or on camera interview with "60 minutes. they did give us a number of points that we reflected in the piece. they pointed out, for example, that doctors are responsible for

starting the opioid crisis and i think there's general agreement that over prescribing is the start of the opioid crisis and they made other points, but they didn't really want to respond directly to some of the allegations we raised in the story. >> watching it, lenny, it was kind of interesting to watch because your main whistle-blower had some personality they talk about his anger and the righteous indignation of the legislators, they seem to be hanging their hat on the getting pain medication to people that really, really need it they were actually able to act like what are you saying that there's something about this law that's based on -- or this -- saying that we're doing it for these untoward reasons like lobbying, money, for the drug distributors i mean, they felt really good about what they were doing it seemed like. so it was strange, wasn't it i didn't -- you know, i didn't -- i started saying how can this be and then i ended up

thinking maybe it's more nuanced than i thought. >> joseph cop and joe treats the large companies as the regulatees and he's the regulator. he warned them over and over and over again that they were allowing these pills to spill onto the street. finally he came in and sanctioned them. now does the law help anyone get drugs who wasn't able to get them i would say read the law there's nothing in there that -- there's nothing in there that brings drugs to people who were unable to get them from their pharmacist there's a study which hasn't even been done that's it. >> lenny, it's an important report if you missed "60 minutes" or haven't made it to the washington post, go out and check out both we appreciate your time and your reporting this morning thanks. >> thank you i was watching the jets -- >> you were watching football. >> and it happened to come on.

it wasn't some anti-republican, anti-trump story. >> maybe i'll just watch it. >> and you learned. >> and i ended up seeing it. >> coming up, p&g.

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box" right here on cnbc take a look at u.s. equity futures on this monday morning dow looks like it would open up 36 points higher s&p 500 looking to open a little over 3 points higher nasdaq open about 16 points higher

got some news for you overnight. california fire authorities saying yesterday had turned a corner in battling several of those wildfires that have devastated wine country. killed 40 people and destroyed more than 5700 homes and other structures authorities are beginning to assess evacuated areas to determine if residents can return home. check out this video it is going viral this morning shots as two roommates were escaping the fast spreading wild fire earlier this month. one had to leave their suv to open a gate. as they drive away from their home, you can see flames all around them. they said that they made it out just as their home and most of their belongings were lost in that fire. procter & gamble declaring victory in the proxy vote against trian. the firm said it was too close to call. both sides are headed to what's known as the snake pit. >> one could argue they've already been down that road.

this is not the proverbial snake pit. this is called the snake pit it's used by the proxy fight participants to describe the tedious, arcane process where they count the ballots one at a time it's the corporate governance of the hanging chad today p&g is expected to file the preliminary results. shareholders voted to elect all 11 of p&g's directors and not for nelson peltz trian said it was too close to count. from there either of the two sides can review and challenge the individual cards now unlike political elections, shareholders and proxy fights can vote more than once. but only their most recent vote counts ibs will look at whether each

card was signed appropriately. they're going to be the ones that mediate that. in theory the recount could switch the results in favor of peltz although that rarely happens, guys. >> i'm trying to think of a case that i can ever remember of that happening. >> i did some research the one that's most similar to this is rjr/nabisco back in 1996 with carl icahn. >> what happened >> it was switched but it was not to goat people on the board, it was more of a non-binding resolution to split tobacco but the switch of the vote -- >> icahn's favor >> yeah. they said they had won the non-binding resolution and then they did a recount and it actually did switch. it was non-binding so they didn't separate the businesses it took two years. >> from a practical perspective, first of all, there's the view that he may hang around the hoop

for the next year. >> what if he wins >> if he wins, he wins, right? >> yeah. >> but, no who knows what happens on the board? hasn't he already won is the point? >> that's the question they say this was a very close vote already they've sent a message to management that they want change that this shareholder has a set amount of plans. they want to improve the margins. they want to see certain changes take place at this company keep in mind, i mean, p&g spent $35 million to keep him off the board. they obviously see some value in not having his voice heard as director on that board so it will be really interesting to see what happens if he does, in fact -- when the certified results come had out in six to eight weeks. >> it will take that long? >> we'll have to be waiting six to eight weeks, more than two months. >> oh, my gosh. >> can't keep my interest level up that much >> it's a famous movie "snake

pit. >> yeah. >> my mother was very scared of that >> my favorite wrestler was jake the snake. remember him >> oh, absolutely. >> who >> jake the snake. >> wrestling this is like a wrestling match jake the snake that was the connection. >> you know it's not real, is that what you wanted to tell me. it's like santa claus. >> i used to walk in i used to love it. >> wrestlemania under the giant slamming hulk hogan. >> yes. >> those were important days in my childhood really >> formative >> all right >> a lot of this is fake. >> this? >> the wrestling that we -- right. we plan it >> i didn't know it. >> coordinate it >> santa's not real, this is not real, who knew >> shhh.

>> i saw you -- >> onay. >> leslie, thank you. >> thank you, guys. the movie happy desk day is destroying the competition at the box office we had the producer here on friday the horror film was number one this weekend took in more than $26 million. that's according to com score. it reportedly cost less than $5 million to make it so already a big winner it borrows the theme from groubtds hogg day as a college student relives the day of her murder until she identifies the killer's identity. >> that killer has that mask on. >> what was the budget on this >> 5 million. >> easily 10. >> maybe 15. >> even if they did, they took in 26 million this weekend already. >> and i watched one of jason's movies, previously.

>> which ones? >> "it follows". >> pretty good pretty scary almost like a "walking dead. he did do a good job of selling it by the way, number -- >> back. i'm not really sure. >> it never left for you. >> not for me. but "it. not everybody likes it you probably don't like those? >> i used to once i started having kids, i just lost my appetite for it i don't know why. >> it's scary when something in real life happens. you get a little bit too close to it. then something in real life happens. >> yeah, can't do that. number two at the box office this weekend was "blade runner 2049" starring harrison ford and ryan gosselin. the critics liked this one it has not performed as well at the box office >> i need to correct myself. we have a fast twitter viewer.

jake the snake roberts but also i said that andre slams hogan, hogan slammed andre. >> that would be -- >> thank you for -- kevin e on twitter. when we come back this morning, tax reform and trade. john england, governor of michigan and we'll get his perspective on things. stick around, "squawk box" will be 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.

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welcome back stocks to watch quickly. the ceo of airbus says he sees no reason to step down over corruption probes in france or the u.k. in an interview with the german paper he says he would do so if necessary. the airbus board has expressed full confidence in the ceo this week t-mobile and sprint plan to report a merger deal without any immediate assets they're going to preserve much of the spectrum holdings

the merger announced late this month or early next month. tax reform and nafta negotiations this week former roundtable president, john engler. let me just guess. more tax reform against getting out of nafta have i got that right? >> you nailed it. >> how do you deal with a president like that? gosh, you're great, president trump, we love this tax reform stuff, but you're just way off on this nafta thing. do you just throw that on him? >> the good thing about washington, everybody is getting along so well. the relationships are so smooth. let's start with tax reform. that's the big agenda item that i think congress is going to get done it's a really good job on the

budget and the senate. they have to finish up that work i think chairman brady in his effort, his theme has really reached out across the country groups large and small, businesses large and small the corporate piece as we've talked over the years, now it's pretty easy. we don't know exactly what those are yet. i think that's not so bad. simply wrong to suggest that there's a tax increase wider, broader base. much more complex. >> there is a lot of conversations and activist groups i think they realize, they being the majority, republicans and senate, they have to get this done >> wonders never cease no, controlling the house and

controlling the senate, they might actually be able to vote in a majority on something these guys are great we don't pay them enough we don't elect them again and again enough i think they might vote with their party, governor? >> i think so. >> you wonder why people shake their heads. it's like, yeah, duh, you have 52 senators and pence. you can't do this? >> well, it's complicated, you know. >> i don't know how -- like even with obamacare repeal, when they lose someone and they have all of these concerns, what is he saying about all of the 49 or 48 that somehow are they all sociopaths they have no conscience? how can you be -- with tax reform, how can they look at -- let's say you get 47 or 48 and

there really is a problem with the last two or three. how do they look at all of your colleagues and i'm more high minded or more virtuous than you. how do they do that? do they like to be on the cover of the washington post or something? >> i think that has not happened with tax reform. >> it's frustrating. i believe the system is broken my own brother talks about his situation where he's trying to buy health insurance for the market and the deductibles are so high and the costs are so high he's gone to an exotic route to get his own insurance i hear that across the country not as a head of the roundtable but just as a guy who goes out and can do a lot of different commissions and boards and people are really frustrated so i think it was a mistake not to do something. the president has certainly kicked the game into a different

direction now with the ending of the subsidies to the insurance companies. it's going to force action there's a debate about who's going to get blamed for all of this the thing they need to keep in mind, people need insurance. another person i talked to a couple of weeks ago had a baby their insurance coverage now next year is over -- it's going from 500 a month to 700 a month. that doesn't even cover the child. >> yeah. >> and the deductible is close to 4 to $5,000 this needs to be fixed. >> on nafta, what do you think the end result's going to be >> well, i certainly think the agreement has been of benefit to the united states. it's been of benefit to canada, mexico there's agreement on all three parts that, yeah, there can be improvements i certainly hope the united states position isn't we ought to throw it out and start over because it was so horrific some of the rhetoric has been

way over the top we've seen the rhetoric on both sides. if you look at the net benefits of nafta, it's hard to say it's been anything but a roaring success. it helps industries like automotive which i'm familiar with >> okay. all right. governor, thanks. >> thank you. >> we are living in interesting times anyway that's all we can ask for? >> paul ryan will not have to keep the house and congress in session over christmas >> don't bring up christmas. we might see -- we were talking about santa earlier who as we know exists and -- >> yes, he does. >> -- and brings presents and has a -- >> wonderful guy. >> green sleigh. doesn't pollute. the reindeer part -- >> he has a red sleigh a red sleigh. >> beautiful real very real. coming up in the next hour,

netflix. i look on regular pay tv they wanted to charge me i found it on netflix for free first time it's ever happened. we'll tell you what to expect from the streaming media company that is now on my good side for once steaks, the final frontier all this week on "squawk box", we're looking at the next generation of explorers as the space race goes private. astronauts, scientists and billionaire richard branson all weigh in on the biggest challenges ahead >> whew! up next, astronaut leroy chow "squawk box" will be right back.

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>> space industry will grow into an economy that will dwroe grow1 trillion he is an astronaut who flew four space missions, logged nearly 230 days in space. is he now the ceo of one orbit, and leroy, thank you for joining us today >> pleasure. great to be with you

>> you know, i would love to get your take on this. you were really a product of the space program when it was entirely government-funded, and lately we've seen all these public-private partnerships and private space missions that are out there. which model do you think works best, just in terms of making accomplishments in space >> well, you're right. i grew up during the very beginning during the 1960s during the beginning in that space race and the cold war, and, you know, up until very recently it's been the space exploration has been the area of governments. now with new companies coming up, it's very exciting i think it opens up the possibility of government and commercial company cooperation and collaboration for exploration, which would be a first. i think the difference that you are seeing now, because.

>> when space-ex and elan musk, it's amaze, he wants to kolonnize mars, find ways of getting there, and we always thought it was a government that would have to fund that because it would be so incredibly expensive. how do you think that, who, just with space ex, a private company, trying to do that >> so the conventional wisdom had always been that to go explore somewhere like mars. i mean, no commercial company is going to do that because it's totally unknown what were the profits going to come from, right? and so in the case of elan musk, he personallies said many times he started space ex because he wants to go to mars. he wants to kolonnize mars there's something in him that wants to do this space ex, he is going to make money -- make it very profitable by launching satellites and doing a few other things and so that he is going to reinvest that plus, he has his plan that he unveiled very recently about,

you know, signing up people who want to be pioneers to go live on mars. basically, you know, kind of liquidate all your assets at some point in your life, put down around $500,000, and he will take you to mars one way. i'm not sure exactly how the business model works, but knowing elan musk or having met him a few times and doing some work for him, i certainly wouldn't count him out >> let's talk about your company. one orbit. what do you guys do? >> right so basically what we do, we provide training solutions for both corporate keynotes and workshops as well as an education site we go out and talk to kids, educators, frankly, and, you know, we want to inspire that next generation just like i was inspired by the apollo program we want to use the space back drop to excite people and use that as a different platform for corporate events going out and talking about topics that are relevant today things like how toce si in the d

how to use education and ek it nolg -- technology to get to that level. >> who is going to win the space race branson, bezos, or musk? >> branson wants to go suborbital bezos wants to build infrastructure in low earth orbit and out to the moon. elan musk wants to go to mars. very different goals very different models. >> who will achieve their goal first? >> who will achieve their goal first? well, i think the easiest thing to do will be sub-orbital space, so i would get virgin galactic will get into space first for that which he shall part elan musk has done it with satellites, and bezos is getting close to launching his sub-orbital. >> we thank you for being here and great to see you >> great to see you. thanks former ambassador served as diplomat for both republicans and democrats dating back to the reagan administration.

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the futures this morning pointing to a higher open as 10% of the s&p prepares to post quarterly results this week. got some stocks to watch this morning. washington watch tax reform, geopolitical concerns all top the agenda, among others the second hour of "squawk box" begins right now ♪ just another manic monday ♪ wish it were a sunday >> live from the beating heart of business, new york city, this is "squawk box."

>> welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site in times square we're not in the background. now we're in the foreground. >> why did you -- >> i didn't understand who i was supposed to be waving at >> because we were in the shot >> wave to our viewers welcome. welcome, everybody >> nice to see you i'm andrew ross sorkin, along with joe concernan becky quick is with us as well let's bring up-to-date on what's going on fed chair janet yellen saying the u.s. economy remains strong and continued gradual increases in inflation are appropriate she told an international bank seminar that she doesn't think that soft inflation ratings will continue and that second half economic growth will be above trend. also, netflix will be reporting its quarterly results after today's closing bell the company expected to report earnings of 32 cents per share revenue just under $3 billion. the street will also keep an especially close watch on the company's subscriber numbers that stock at $201 over the $200

mark ahead of those earnings also, big news over the weekend. tesla firing 400 employees, according to multiple reports. the automaker confirming it did dismiss workers after a company-wide annual review, but did not specify those numbers. this coming, of course, as tesla has struggled to keep up with production it was based on performance, i think. >> based on performance. >> based on performance. a couple of stocks on the move this morning. apple was upgraded to overweight from sector weight by key bank the firm's target price $187 a share. key bank says that the iphone maker is in the early stages of a more aggressive market segmentation strategy. and aeromark, seeing the trucks around. they do a lot of the food service at a lot of sporting events and stuff aramark is buying food service firm avendra as well as hotel linen and towel supplier ameripride

the deal is worth $2.3 billion this is the biggest acquisition since it went public nearly four years ago. >> a little bit of other corporate news this morning. uber's food service. uber each accounted for one-tenth of the gross bookings in the second quarter. the financial times reporting the unit is on track now to exceed $3 billion in gross sales this year. previously unreported numbers. uber eat sales roughly in line with rival grub hub. a lot of people will be watching that we're also following a developing story in the oil market today both crude and brent are moving higher on news that iraqi troops have seized parse of oil-rich kurdistan. reports from the ground say that iraqi kurds have abandoned their positions outside kirkuk airports, and civilians are now fleeing the city the military action comes just a month after iraq's kurdish population voted for independence the united states has supplied and trained iraqi federal forces and kurdish forces they both have been our partners going through this both of them have been fighting the islamic state group. the u.s. army spokesman urged

both sides to avoid escalation and to focus on that war against isis, but obviously, says this threatens not only the oil output, which is why you are seeing these gains of the wti up by 1.4% today, and brent up by 1 .6%, but potentially a civil war that makes a mess of things there once again another story developing overnight. one person is missing and five others are in critical condition after an explosion on an oil rig in louisiana -- on a louisiana lake last night. officials say they are trying to get to a valve to cut off the flow of oil. right now they are not ruling out the possibility that oil is leaking into the lake. the cause of the blast is still unknown, but it was very loud last night people went running to the sides of lake pontchartrain as this explosion blew up. they said it was like a sonic boom this is why you see so much video of that explosion. >> in california fire authorities said yesterday they turned the corner embattling several of those wildfires that

have devastated wine country over the past week the fires have now scorched more than 220,000 acres since they began eight days ago at least 40 people have been killed now, while significant progress has been made on two of the biggest fires, officials warn that major challenges remain we were talking about it last week how quickly it was moving, and we had a miles per hour with the wind, but -- >> the wind was 70 miles an hour faster >> i don't know if it -- i did see that 100 yards, three seconds. 1,001, 1,002,1,003 >> you see video of people you don't even know it's coming. >> you can just see it moving across it's like the scariest thing you can imagine. >> now to the wall street agenda data on import prices. industrial production. the home builders survey then on wednesday we get housing starts in the fed's balk book, and coming up on friday existing home sales should note that more than 50 companies in the s&p 500 and nine dow components report

earnings this week that list includes netflix, which is out after the close today. we also get results from goldman sachs, morgan stanley, johnson & johnson, ibm, verizon, p & g in that big battle with nelson peltz, of course, and general electric in the meantime, the dow and the s&p 500 are on five-week winning streaks. joining us right now is cathy fisher, the head of wealth and investment strategies at ab bernstein private wealth management also, jim paulson, who is chief investment strategist at the leuhold group. welcome to both of you you say the market's march higher is not logical or surprising why is it clear cut to you >> i wouldn't say clear cut. there's a lot to worry about, but when you look at the fundamentals, they're very good. if someone said to you ten years ago, we had low inflation, low interest rates, and earnings growth that's in the double digit range, you would not be surprised to see markets trending upward. >> you would not be surprised, but would you be betting money at this point to expect this trend to continue? >> the length of the recovery

clearly is making people anxious. we're now working towards record territory and how long this recovery has gone on, but, again, we have to remember how different this recovery has been it was a very, very steep credit-related downturn, and most of the non-u.s. world was not recovering when we were in the early stages >> sure. >> we've heard a lot about the fact we think it's very true that europe and some parts of asia are still relatively young in their recovery phase, so we do think it has longer to go we're looking like everyone is for signs of stress, for signs of imbalances, and we simply don't see the kinds of imbalances that could cause a significant pullback at this time >> jim, you think that in order for the bull market to end, there are three things that have to happen. what are they? >> well, i think i kind of look at the foundation of the bull market, becky, and that's in terms of looking for the bear on the foundations. there's been three unique pillars to the bull, i think

one is the chronic wall of worry that i think we're continuing to climb. it's not as great as it was right after the 2008 crisis, but i'll give you one example. the cbo skew index, which sort of is the assessment -- >> what? >> of a chance of a black swan it's the cbo skew index. it's a vix volatility index. right now that's close to a record high. i think there's still a fair amount of -- >> you think there's a counter indicator that just proves that people -- >> i do. i do i think it says that we got to break that wall of worry before the bear can really sustain a collapse i think the other thing is the sweet spot we're in in this cycle. the economy has continued to grow we broke 6% unemployment three years ago. we broke 5% unemployment two years ago. yet, we're still growing without aggravating inflation or interest rates, and until you

aggravate those forces, inflation which challenges valuation levels and higher interest rates as a competitive alternative, it could shut down growth, i just don't see how this market won't continue to trend higher as well >> so, jim -- >> one thing -- >> go ahead. one thing you are concerned about? >> one thing i am concerned about is we are going to lose here at year-end, i think, the economic positive surprises. the economy has been doing so good for so long now that even if it continues to do well, it won't any longer be a surprise economic surprises i think are going to get about as high as they're going to get they can't get much higher without that additional surprise momentum, we may see towards year-end and the first quarter next year a pause in this market, but until the bond yields, i think, go over 3% of the ten-year, i don't think we see an end in the bull market. >> you're also of the opinion that we could see a pullback, but if we do, you think it will be a momentary pullback? >> i do.

i think everything jim said is spot on because when we're looking at what companies are doing, they're not sitting on their hands. they're changing as the world is changing they're trying to figure out how they're going to coudeal with changing consumer preferences they're seeing, and they're starting to do a good job. it's going to be volatile among what type of companies succeed, and that's where active management comes into play, and i think if you think of the fact that there's so much change afoot, it's probably a good reminder as to why this market actually is continuing to trend upwards. if we have a pullback, anything could happen any time, but the fundamentals cash on balance sheet, all the things that we've talked about considering the health of corporations could be a stabilizing factor >> the front page of the "wall street journal" today lays out the case and the concern about inflation rates not hitting some of the targets of 2%, and remaining kind of perpetually low. you don't sound like you're in the camp of people that worry about that you think that that's a good thing, and the stock climbs will continue whethn that happens >> i do, becky

i think inflation is picking up. wage inflation is 3.5% i think it's going to break through 3% soon. i think cpi will head back that way. with dollar weakness, we've seen commodity priced pick up again i wouldn't be surprised if the dollar, which is strengthened again a little bit, if that breaks to new lows again i think it pushes crude oil above $60. if i look at the global transportation rates, that's up quite a bit. industrial commodity prices are up you look at what's performing in the stock market you see material stocks, i believe, that's the second or third best performing sector of the s&p 500 this year. you have emerging markets outperforming. international markets. i think we're going to face the

challenge of overheat before this cycle ends. almost every recovery in post-war history has ended with some sem bleblence of overheat, i don't think think this is any different. >> any thoughts on that? >> overheating is clearly what we're looking for, and as i said, we just don't see it yet we're looking everywhere we can think of we're worried about credit spreads. there's lots of things that are there and visible. skbro thanks for coming in today. jim, it's great to see you too >> you too, becky. >> paulson, do you get -- you're looking at a bunch of weird stuff. did you get to -- did you get to watch the vikings at least are you -- >> i did >> did you do anything fun >> you did all right. >> top of the end of c north we're doing just fine. >> tied with green bay that was -- man. >> no, we're ahead because we beat them. >> okay. but -- >> we got the tie break. >> i worry about black swans i do with you.

that's why the index is so high. because things happen that you never thought could happen to take a touchdown away from a team and then to give the ball to the other team on the 20 and say i'm sorry, but that guy who just ran across the end of the end zone with the touchdown and didn't fumble, that doesn't count. >> i don't think anyone has ever seen it, and that happened, and then rutgers -- >> you're going there. you're going there >> things that you never thought could happen they beat a big -- >> we beat illinois. >> we beat a big ten team. >> the fighting illini >> also i watched that entire game why am i watching? i'm watching rutgers now that's what my life has come to. paulson, give me that cbo flux

capacitor thing. if i'm watching rutgers, i would almost rather start looking at -- >> no, no, no. it was nice of you to bring it up, though >> it was. yeah, i know, for you guys >> thank you >> netflix shares trading higher ahead of quarterly results what analysts are watching straight ahead i mean, the patriots, they need help really? the patriots need help they don't have enough rings then, later, former ambassador dennis ross -- >> no, because putin has got it. >> dennis ross is going to join us he can a key player in the middle east peace talks during multiple white house administrations. this guy gets along with everybody. we're going to get his take on today's top geopolitical stories. plus, the ceo of sotheby's will be here to talk about the big business of art. stay tuned you're watching "squawk box" on cnbc your muscles look good, but we should be seeing more range of motion. i'm fine.

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welcome back to "squawk box. we've been watching the futures this morning, and let's take a look you're going to see that right now at least it looks like the markets are indicated to open higher once again. dow futures indicated up by about 26 points. s&p futures up by just over two. the nasdaq up by about 11.

in our headlines this morning, t mobile and sprint reportedly plan to announce a merger deal without any immediate sale of assets reuters says that the companies are seeking to preserve as much of their spectrum holdings before regulators ask for concessions. the merger announcements is expected late this month or early next month >> we should say that is according to reuters and the other secondary piece of it is one of the reasons that that's so interesting not only that you would get -- not get rid of your spectrum, but also not announce any playoffs >> netflix shares up 23%, we

should say, over the last three months the streaming jiebt is reporting quarterly results after the close today. joining us now to talk about it, a senior research analyst and portfolio manager at frost investment advisors. the stock now trading over $200. what are you looking for this afternoon? >> good morning, guys. thanks for having me typically look through the earnings released. the first two things we're looking for, any data to help us sharpen our estimates about future growth and leverage the growth has been all about international subscriber ads since about a year ago they opened up all of their rest of world, you know, new markets with the netflix service international net subscriber ads and then in terms of leverage, i think it really is becoming must have content the netflix subscription reducing the churn in the u.s. is another thing to look at. >> how much do you care about the spend, right these guys are spending. we just heard -- i interviewed ted out in california just two weeks ago talking about up $6 billion, $7 billion in terms of

spend on content >> as long as they can, you know, get cheap capital from investors, you know, they're just investing very aggressively i do believe deeply that this company is a very data-driven company. they're better than any other media company out there at optimizing the return that they get on each dollar spent in creating media they are concentrating more and more investment in original programming, which longer term is going to have better margins. it's an up front cash cost for longer term. >> how do you think about netflix relative to all of this new competition and that new competition coming from amazon, of course, but the newer competition might be apple might be facebook. >> it's a good question. i mean, facebook and apple are formidable competitors when it comes to digital media competitively. neither one has sloan particular strength in doing original video content. drinking the cool aid too much, but what they say is netflix,

youtube, all of these over the top streaming services just continue to grow the size of the overall internet distribution molgz, taking away share from traditional linear tv. i mean, it's a large enough and fast enough growing pie that the competition at least thus far has been positive just for growing the opportunity. >> talking about taking away from the traditional pie, if you will you saw the digital subscriber numbers or, i'm sorry, the video subscriber numbers from at&t last week. that took down not only at&t, but many of the other big media companies in terms of their stock price. how do you think about that? >> it's very interesting because some of the trends, like the decline of pc's, you started to get a re-up in pc sales last year cord-cutting is one where the hits keep coming, and, you know, you get a stabilization at some point. i'm not trying to really predict that with precision as an investor of netflix and google and amazon you know, from where we sit, the trend is positive for these digital media companies. we saw comcast and at&t negatively preannounce net

subads or sublosses. i wouldn't really try to call the end of that trend, and it looks like in the short-term it may be accelerating, challenging for the traditional media companies, but positive for the digital guys who are driving it. >> thanks for joining us this morning. we will -- >> go, astros. thanks, guys >> you bet thanks >> when we come back, a new report on teen social media site of choice. we have the details when "squawk box" comes right back. retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.

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zbloinchts welcome back we're taking a look at snapchat this morning. it looks like snap is actually more popular with teens than ever investment firm piper jaffray is surveying u.s. teens about their media habits, and firm finds that 47% of teens now say that snapchat is their preferred social media platform. that's up from 39% in the spring in a big story in the world of sports business today colin kaepernick ready to fight with the nfl the former san francisco 49ers quarterback filing a grievance against the league he claims he remains unsigned by teams because of what he is calling collusion by owners following his protest during the national anthem last season.

kaepernick sat down -- sat and knelt during the anthem to raise awareness about social injustice, including police brutality against african-americans and, of course, this is becoming national debate. this will continue that national debate coming up when we return, this morning's top stories plus, we will welcome former ambassador dennis ross he has served as a diplomat for bothrepublicans and democrats. we can get his take auto today's top geopolitical news. stay tuned you're watching "squawk box" right here on cnbc the amazing new iphone 8 is at at&t... and we know you'll love it. because we know you want more. more great camera features and more power. and more than just unlimited data, we give you unlimited plans with hbo included for life. because you deserve more entertainment. and more spokespeople. talking like this, saying the word more. at&t. it's time for more.

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streak in two ears years it closed at its highest level since november of 1996 of course, still about 45% below its record high achieved in december of 1989 general motors has reached a tentative deal with striking canadian autoworkers it would end the strike which began september 18th the details of the agreement won't be released until a ratification vote is held. the head of japan's kobe steel says 500 companies received falsely certified steel products more than double what the company previously said. boeing is among the customers, though, that are said to have received those products. although safety problems have yet to surface there kobe says the data tampering at the company may go back, believe this, as far as ten years. sticking with commodity news, check out copper prices this morning hitting a three-year high. more than three years. not surprising we're also seeing moves higher bhp billiton, and freeport all indicated higher this morning. >> we're following a developing story in the oil market.

both crude oil and brent oil are moving higher on news that iraqi troops have seized parts of oil-rich kurdistan reports from the ground say that the iraqi army has taken positions in and around the city of kirkuk. the military action comes a month after it voted for i wanted penicillin. obviously that's a move that the broader iraqi base opposes the united states has supplied and trained iraqi federal forces and occurrkurdish forces both of which have been fighting the islamic state group. a spokesman urged both sides to avoid escalation and to focus on the war against isis wti up by 1.4% to 5,216. brent is up by 1.5% to 5802. in other geopolitical news president trump has had harsh words for iran calling the country a rogue regime urging allies to join forces in opposition, and without completely scrapping the deal, the nuclear deal, the president asked congress to help review and amend the plan's terms

joining us now ambassador dennis ross he is now a washington institute for near east policy senior fellow. ambassador ross played a key role in the middle east peace process for more than 12 years serving as the point man for different administrations, including h.w. bill clinton. you were in the reagan administration you're a young-looking gentleman, ambassador. must have been the end of the reagan administration. >> it was the end of the administration, yes. i'm definitely a grizzled veteran. >> this is nuanced, this deal. i look forward to hearing your insight into this. if it worked perfectly, says what president trump is trying to do, if you could get some behavior change in terms of ballistic missiles, in terms of funding state-sponsored terrorism, because they weren't in the deal, and obviously maybe that isn't specific to whether they're in kpleens or not, but if you can use that to try to

get something, will it work? he also satisfies some of his promises during the campaign without really getting out of the deal i mean, there's a method to this >> well, there certainly could be i say that it could be because clearly the europeans, the russians and the chinese, want to preserve the deal they're all saying they're not going to renegotiate the deal. obviously, the iranians saying they won't renegotiate the deal. the europeans in it particular do not want us to leave the deal it does create the potential for leverage the key is how we approach it.

>> the issue of having key limitations within the deal expire in 2030 that is part of the deal, but the europeans, certainly the president of france, has already said he would be prepared not to renegotiate the nuclear deal the jcpoa. he would be prepared to negotiate a set of supplemental arrangements to insure those limitations don't expire there is a potential here. there is some leverage here, and the question is how can we best approach it? how can we orchestrate it? if you try to put the europeans in it the corner on this, they may well not respond very favorably simply because the president is not popular in their country. >> right >> but if we demonstrate that we are serious about taking their concerns into account and we're prepared to discuss those with them, and i have even suggested publicly that we might appoint someone from outside the administration as a senior envoy to show our good faith, then there is a potential here, and i don't think we should write that

off. >> should we view it at all, cynically, that if you look at countries where there are companies that have benefitted from the deal in terms of selling into the market in iran or whatever, however you benefit from trade with iran,ing is it that simple with the europeans are they high-minded and they like, you know -- they think the deal was good for the future of the world? i mean, a lot of it is about money, isn't it? >> look, most countries pursue a combination of what is in their more immediate narrow interest, but also in the case of the europeans in particular, what they view as a higher value as well is there an interest in europe to be pursuing deals with iran absolutely bear in mind what basically produced the real leverage on iran that really brought them to the negotiating table when they said they would not negotiate when they were under sanction, but brought them to that was the european decision, the european union decision, no longer to buy iranian oil.

that was a key if the iranians believed that the europeans were going to join us in terms of making it clear that if there weren't behavior changes, they would go back to imposing some of the sanctions, then you might well affect the iranian behavior our challenge is to show that if this deal really is to block iran's pursuit of nuclear weapons, not just for a limited period of time, but for a very long period of time. >> when we try to make sure that a treaty has the, you know -- the overall backing of a country, normally it goes through congress, right? that was -- we decided to do it that way

>> yeah. >> was there a reason that we decided that we would normally do it that way, and if you don't do it that way, if you just go over as the president and sign something that doesn't go through congress, is there any surprise that -- i mean, if it was that easy, there would be no reason to introduce the mandate to go to congress. if you could just go make treaties on your own should anyone be surprised by this is it a positive that congress needs to ratify this thing for it to be real? for it to be real and lasting, that would be a good thing >> look, there is actually before the deal was concluded, i wrote an article with a colleague in which i emphasize it was important to find a way to bring the congress into this because if you wanted to sustain the deal beyond the obama administration, it was very important to have some kind of congressional buy-in in the end the obama administration made a decision to some extent, it was understandable, that given the

unified republican opposition to this, which at the time maybe many were in the end they had to override, and that was impossible what they did by adopting this legislation that the president is now asking them, in effect, to amend, was to put themselves in a position where they could review what was going on with the deal every 90 days now what you are getting is an effort not only to use the non-certification as leverage on the iranians, assuming you can get the europeans to join us, which will not be a simple thing, but assuming you can do that, says you bring the congress back into that and so there could be a way if, in

fact, we see the hill an effort to make this bipartisan. you could see this as something that could ironically make the deal more sustainable with the kind of changes that might be negotiated on the hill, but would also have to be negotiated with the europeans, and i have actually suggested some of the europeans i have been dealing with they should also be talking to the congress right now and some of the key players in the congress who will play a major role in this >> they depend on the administration delivering a considered diplomatic approach i think, you know, if the administration could do that and that is not exactly been its hallmark so far, if it could do that, then there's a potential here, i think, to actually move things in a more favorable direction. it's going to be very hard europeans are going to have to feel this is a genuine good faith effort to try to move things in that direction, and

not simply walk away from the deal if they perceive the latter, the chances are, i think, pretty much nil if they perceive the former, we have a shot at it. >> told you it was nuanced you knew that, though, i think anyway, but thanks, mr. ambassador appreciate your time today >> my pleasure thank you. >> okay. coming up when we return, the big business of high-end art the coo of auction house sotheby's will join us next. first, as we head to a break, check out the european markets up right now this morning. you're looking at some green arrows in germany and in france. the ftse just turning green from red right there in front of. stay tuned you're watching "squawk box" on cnbc

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to grow your business with us in new york state, visit esd.ny.gov. zpleenchts we've been watching the futures this morning, and so far things have been in the green. it looks like the dow is indicated to open up by about 30 points s&p indicated up by just over two points the nasdaq up by 13. this week we get 10% of the s&p 500 that are going to be reporting. we will be watching earnings very carefully in our headlines today, alphabet is training law enforcement on how to handle self-driving car crashes. the company's self-driving car division wamo has been testing its vehicles in washington, california, arizona, and texas now it's working with local officials and first responders

to create accident protocols alphabet has also taught its cars to hear and see sirens and pull over when that happens. i thought self-driving cars didn't crash >> they wioccasionally this can happen we're focussing on a different market art. robert frank joins us with a very special guest robert >> well, the art market showing continued signs of strength after last year's decline. sotheby's just wrapped up its hong kong sales with $400 million in sales total that's up 42% from last year now it's heading into the big november sales with some trophy mon monets and warhols it. tad smith, the ceo, joins us this morning >> great to be here. >> a lot of discussion in washington around tax reform and the markets are waiting for tax reform the estate tax, however, people are saying could be bad for the art market

>> a lot of people delay transacting in the art market until some event happens until the estate tax kicks in. another way to say that is eliminating the estate tax is a reason to eliminate the dlie, and i think it will provide additional liquidity to the market >> it's good >> it's good >> so you just finished an age where there was a lot of discussion, dwikly last year, that the chinese collectors had kind of vanished you just sold a ceramic for how much >> we sold a 900-year-old brush -- a brush bowl that was purely ceramic for $37 million u.s u.s.. >> that was the most expensive ceramic ever sold? >> yes >> the chinese collector, they're strong, they're back, they're going to be here >> they're strong and robust things look good in china. >> let's that you can about the sales next month you have the mao, the warhol

that will probably be the top level. what is that going to sell for >> estimate is $30 million to $40 million u.s. >> what else do you have >> we have a beautiful -- for $9 million to $12 million from yoko ohno we have an incredible estate collection works on paper from here in new york, which has rothco, dega, pollak we have two beautiful monets it's going to be a beautiful set have evenings. >> how would you describe the mood of collector ones right now? >> it's generally optimistic we're seeing a lot of inventory coming to market this year the collectors generally feel pretty good about it >> do you tie that directly to the stock markets decline? >> anything, including the stock market that enhances confidence is a positive thing. >> of all the people we have on, trump's choice of the next fed chief is probably more important to tad than any other person on the planet you would think. because you got a lot of money

you can't -- i mean, where do you put it you can't -- i'm watching the ozark thing. you can't do it unless you put it into art. >> interestingly, art, jewelry, fine cars, fine wines, all of those to be good places to put value. >> you -- am i right or am i right, who do you want give me your pick. someone more dovish than -- >> i'll leave the picks to the experts on this, but i think -- >> you want zero rates forever, don't you? >> no, i don't i actually want a healthy, stable, sustainable economy. i really do. >> you don't like all this liquidity? >> no bubbles. he doesn't want bubbles. >> i don't dislike liquidity, that's for sure. how is that for a statement. i like the liquidity needs to be in line with growth. i would much rather have a good strongly growing economy with liquidity and the right relationship to gdp. >> your old business experience coming back. >> i don't know. it was just my business school reunion for 25 this past weekend. >> what do the mix of buyers

look like? where are they all from? >> the u.s. and china continue to be the two largest groups of buyers >> is china still as active? >> china is very active, yes remember, china buying western art is smaller than, say, the americans buying western art china buying western art is growing, and china buying chinese art is enormous. on balance the americans, north american, also china is roughly in balance europe tends to be a bit smaller. >> are the russians gone >> no. the russians are great buyers. they also, by the way, are occasionally sellers >> and middle east >> middle east continues to buy and some sales >> did you hear about this rodan sculpture that they found in had some new jersey courthouse over the weekend? >> no. they found a rodan >> it's napoleon the bust of napoleon it's been missing for,ic l ilik0 years. >> obviously i -- >> i couldn't believe it they found it in some, i don't know, town hall or courthouse or something in the middle of new jersey been missing for 80 years or

something. >> thank you >> when stuff like that happens, do you have a team of people that then rush to try to figure out how they can get in there before christie's does how does that work >> well, we do -- >> do you offer a guaranteed sale on something like that? >> we do track what's coming down the pike. >> they're putting it in the museum in philadelphia you're not going to have a chance >> i don't like the characterization to rush to get in there before someone essentit >> the big news for this coming up auction season is this da vinci. >> the leonardo da vinci combined with 60 warhol last suppers. >> because they go so well together >> i have to say, i think it was brilliant marketing. i wish we had done it. we didn't. one of our competitors did they did a great job, and i think both are going to do well in the auction, and congratulations to them. >> do you think that's a good pointing, the da vinci >> it's the last leonardo in private hands. there are only 20. it's a masterpiece of unimaginable beauty. what can you say

>> all right tad, thanks for joining us >> it's been great to be here. thank you all. >> good to see you >> coming up, the stocks to watch. first, as we head to break, the dollar this morning. stay tuned you're watching "squawk box" on cnbc

stocks on the move blackberry moving to the nasdaq. getting a new ticker symbol in the process. it will now trade under the ticker bv. separately, reuters reports that the company's patent licensing director has left. the second key patent official to part in the past month. patent patent official. ford was downgraded. with -- did anyone patent -- get a patent on buttons, do you know must have been a long time ago long time ago. >> the 20-year patent rule is over >> the buttons >> manhattan ford was downgraded to sector perform from outperform at rbc the firm says new ceo jim hackett has a solid long-term vision, but that his plans won't have a significant impact until 2019 or 2020 at the earliest

and ulta beauty was removed from the conviction buy list at goldman sachs, although the firm is keeping a buy rating on the cosmetics retailer goldman sites overall industry weakness bristol-myers was cut. bristol-myers squik was cut to hold from buy at jeffrey's its a valuation call the drug maker's stock has risen by 18% over the past three months the energy sector has been one of the biggest laggards for most of the year despite energy stocks, there are some real bright spots she's got that story good morning >> good morning there, good morning. that's right the energy sector has been one of the biggest laggards for much of the year on concerns of global supply gluts and oil prices hovering at lows below $50 a barrel while several u.s. oil producing companies were impacted by hurricanes harvey and nate hitting texas, there were still some bright spots in the industry in q3 popping nearly 21% in q3 devin energy up 15%. marathon up 14%.

also, one of the top performers year-to-date val aeroand conco phillips both up 14% as well a friend of rbc tells me there are two main reasons that these refiners have performed so well. the first being global demand has strengthened substantially in the second half of the year, and the other being hurricane harvey bringing u.s. product inventories to normal levels after being elevated for several years. he also says it's the combination of lower u.s. productivity and inventories it's enhancing the overall outlet for the u.s. refineries andrew, over to you. >> thank you for that. great to see you the movie "happy death day" is like happy birthday, i guess, is destroying the competition at the box office the horror picture was number one this weekend taking in more than $26 million that's according to comscore reportedly cost less than $5 million to make. it borrows the theme from groundhog day as a college student relives the day of her

murder over and over again dying in a different way each time until she can discover her killer's identity. number two at the box office was blade runner 2049 starring harrison ford and ryan gossling it earned more than $15 million. it hasn't performed as well at the box office as they thought it would where it fell 54% in the second week in theaters. >> one of the things about slasher horror movies is you can't really just have the guy just, like, some actor, you know you need to start it out like jason that had that scary mask that hockey -- remember, he wore a hockey mask. that's scary guy in a hockey mask that scared people forever if you see someone walking around in the street in a hockey mask -- >> then there was the scream mask >> that was after the halloween mask michael myers wore that scary weird michael myers. then the scream mask, which is very scary, and did you see -- now, you know, it. you saw it

yeah and that was scary this new one -- i think the $5 million was spent. what do we do? let's get. that's what they came up with right there. let's get a new mask, being but the same knife that way in the sequel you don't need to pay the -- >> $5 million is nothing, though >> i think it's just -- that was just in developing the right -- >> and filming >> you don't have to pay the guy for the sequel because you get a different -- >> it's like the gecco -- geico gecco. >> we have more on the top stories when we come back. we're back right after this. zar: one of our investors was in his late 50s

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zblierngs oil prices jumping after iraqi troops have seized parts of the oil-rich kurdish region >> 30 years since blackmon the dow off more than 500 points paper losses more than $500 billion. >> are we at risk for another computer driven flash crash? we'll have the debate. plus, bitcoin comes home your next piece of real estate could be financed by the crypto currency the details as the final hour of "squawk box" begins right now.

♪ >> live from the most powerful city in the world, new york. this is ""squawk box." ♪ >> good morning. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site. we're doing it live from the nasdaq market site in times square i'm joe kernan along with becky quick and andrew ross sorkin the futures indicated up again, like every other morning basically up 30 or so on the dow for most of the session. the premarket session that we've seen today 35 now up three on the s&p. nasdaq indicated up just under 15 >> k on. a couple of things going on this morning to pay attention to. fed chair janet yellen making the case for more rate hikes speaking at a weekend g-30 banking summit in washington yellen said the ongoing strength in the u.s. economy will warrant gradual rate increases she also said that inflation has been what she's calling the biggest surprise in the economy

this year. take a look at the ten-year yield this morning we're at 2.282 deal news to tell you about. aramark is buying food service firm avendra, and -- that deal worth more than $2.3 billion it's aramark's biggest acquisition since it went public nearly four years ago. that stock now at $42.33 we're also watching oil prices crude and brent moving higher this morning on news that iraqi troops have searsized parts of oil-rich kurdistan founding partner of again capital and a cnbc contributor when we saw each other last week in person on set, this was not in the cards >> this was not in the cards, andrew, and it's an unfortunate turn of events it seems that now that the islamic state has been vanquished, their common enemy, they're now able to -- they're turning their sights back on each other, and it's what is

really a historic sort of battle or stand-off the only positive news for the region is that it appears that the kurdistan elements are not putting up much, if any, of a fight. it appears that iraqi forces are sort of rolling through the region they've already taken over the northern oil company headquarters this may not be the conflagration that it was looking like just last night >> in terms of there's the situation there, but, therefore, then how it's going to affect the oil markets. how does it change your analysis >> well, immediately 600,000 barrels ai day of oil hangs in the balance. that would be a difference maker in terms of global supply demand dynamic. it would tighten up this market. even more than it has already tightened the past year. it's also bringing potentially turkey into the mix and other northern iraq oil could hang in the balance as well, which we pushed the number upwards of 1.1

million barrels a day. we're already up over $1 ra barrel for brent the international market dock off higher on the news what's going to be the fall-out here is to whether or not the fighting actually occurs we're seeing, like, right now, like i said, the iraq forces are just rolling through we could be looking at several more dollars higher. this they shut off the poimline that flows out of kirkuk to turkey >> you might remember i asked you about edge hadding it's the day that southwest -- if you were advising a company whether the hedge at this price and you said perhaps, does this change the equation?

>> if you look in at 42, which was my outlook and still is, that's more than fine because the balance of their portfolio is at the lower cost of market and they'll do great that money will go right to the bottom line. they should never be penalized in my view for losing "money" on their hedges >> john, before we go, end of the year where do you think wti lands >> not too far from where we are right now. right around $52 a barrel. >> okay. we're going to leave it there. john, always great to talk to you. thanks for dialing in last minute >> thank you >> you bet a lot of stuff happening this week in terms of just stuff you can trade on like earnings more than 50 companies in the s&p 500 and nine dow components

will report. the list includes netflix. that's out after the close today. also, this week goldman sachs, morgan stanley johnson & johnson, ibm, procter s& gamble, and general electric we have others up there that you might own. >> the iphone maker is in the early stages of a more aggressive market segmenttation strategy stock is up by $1.30 today tesla has reportedly fired hundreds of workers just in the past week after the company says it conducted an annual performance review the san jose mercury news shows

that it managers, salespeople, and factory workers. it comes as tesla's ceo elan musk says that the company is facing bottlenecks in the production of the new model three. that's probably the only surprising reason with these firings going through. and the ceo of airbus says that he sees no reason to step down over corruption probes in france and the u.k in an interview with the german newspaper, he says that he would do so if necessary the airbus board expressed full confidence in the ceo last week. when we come back, a closet in the cloud retail start-up rent the runway wants to give you access to virtually any piece of clothing you want without having to buy it the ceo joins us on set next and, later, the bitcoin craze hits the housing sector. you can use the crypto currency to finance your next home, believe it or not. we'll explain. stay tuned you are watching ""squawk box"" here on cnbc

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. welcome back to "squawk box. the futures right now have been in positive territory again. this morning up to about 35 points still where we are

up a little over three on the s&p, nasdaq up just over 15 points. the dollar last i saw was somewhere versus euro around 1 18 or so this morning. 118 almost exactly as you can see strengthened for a little while, and then weakened again. 118 has sort of been the midpoint of where we've seen the last three months or so. making headlines t mobile and sprint reportedly plans to announce a merger deal without any immediate sale of assets reuters says the companies are seeking to preserve as much of their spectrum holdings they can before regulators ask for concessions. the merger announce is expected late this month or early next month. rent the runway may be one of the only companies out there trying to convince consumers to buy less the company offers users rotating wardrobe to rent providing the ultimate closet in the cloud. jennifer hyman is the co-founder and ceo of rent the runway, and she joins us right here on set thanks for being here. >> hi.

>> so this is, i think, something that has really seen its time arrive. you guys are renting dresses to people on a pretty constant basis. the company is profitable at this point too, right? >> yeah. i mean, the company has grown tremendously since our launch eight years ago. we have eight million users of the site we also now rent every category of clothing. rent the runway has used more for every day work and weekends that it even is for special events >> i was shocked that you were just telling us off camera that you rent the runway every day, and you did it all through maternity leave. >> i genuinely was pregnant, and i didn't have to buy a single article of clothing because i was able to use my subscription to fashion to just outfit me every day. >> for people who aren't familiar, i mean, you guys have been around for a while, and we've had you on the show before, but this is -- women can -- you have new price point for women who have unlimited amounts of -- >> today we're launching a subscription program for $89 a month where you can pick any four designer items. keep them nor a month. get a new four items the

following month. at $89 each item basically comes up to $22.50 an item, which puts us in square competition with, like, wal-mart, amazon, h & m, target we wanted it to be a mass market price point for people to continuously refresh their wardrobes. >> how many people do you have right now? how many people -- users >> we have eight million users >> how many do you think you have access to with this lower price point? >> we think it opens up tens of millions of additional users because our original unlimited subscription is above $100 a month, which had limited us to household incomes of $100,000 a year plus. we think this brings it down to $75,000 a year household incomes. >> you get four outfits. >> you get four outfits per month. >> per month >> or items. >> or items that you can use over and over. a coat, a handbag, a blazer. >> do you expect to wear it multiple times over the month and then switch out? is that the idea you wear it once and switch out? >> we expect that it will update the programs, and people will

wear those items multiple times throughout the month similar to zara. you buy a trendy piece and wear it a few times rngz and you put it in the back of your closet. >> ties. >> ties. that would be a good business. have you thought about us? >> you know, there's -- >> what about us >> there's so many market opportunities. there's a lot of businesses catering to men. >> ties. >> you have it everywhere else >> i never can get enough. i can't. you know, you look -- >> if you want unlimited clothes, like a new outfit every day, that's our unlimited program. you can swap your four items every single day >> if i can -- >> that actually every newscast -- almost every newscaster in the u.s. has a subscription to unlimited because you have to show up wearing a professional outfit every day and so that gives you kind of your true closet in the cloud. >> what happens if you stain something? >> insurance is included you're totally covered we run the largest dry cleaner in the world at rent the runway. we got you covered >> what pz if you rip something?

>> if you intentionally rip it -- >> not intentionally i'm saying i have got caught on something a couple of weeks ago, and i ripped -- >> you're still covered. >> we will only charge you for the piece if it looks like you intentionally tried to destroy it, which happens almost never >> you guys were the first on the scene. you are by far the biggest, but there are some other competitors who are coming up. i was trying to look through girl meets dress, thread flip, le tote. it seems like they're all smaller, but what do you think about the competition that is out there? >> we're the only company renting designer product we work with over 500 designer brands we're actually giving you the exact same thing that you could buy at saks or neiman marcus, but for, you know, less than -- current season product for less than 5% of the price if you are using the subscription that being said, i think that the more the behavior of renting clothes is normalized, the better for everyone. it is ridiculous that we have closets where 85% of the things in it are used three times or

less in its lifetime, and we're taught to consume an inordinate amount that we don't even use. it's like we have a storage facility in the middle of our bedroom. >> i have to assume that -- i have to assume that designers think of you as a frenemy in many ways. you are adding to their bottom line in the short-term long-term, if this becomes a habit, there's going to be ultimately less buying of clothes and given the problems in the retail space to begin with no >> the real -- you know, the winners in it the retail space are amazon, wal-mart, target, h & m. okay designers don't make any money from those retailers i'm at least giving designers a way to compete with the fast fashion price point. i only buy designer product, and i'm now pricing it at the level where someone who shops at wal-mart could actually consider rent the runway as an alternative. that's really important. otherwise, designers don't have a chance >> a price point that you are getting this stuff at -- >> i'm buying it at normal price point. i'm buying it at regular

wholesale cost from designers. it's a really viable option. we've become a major sales channel of designers, and more importantly, a marketing channel because these eight million women wouldn't have otherwise bought the designer product. >> when do you file for an ipo when do you guys launch? >> well, we're going to try to keep growing as much as possible before any ipo situation, and given that the business model now is primarily related to our subscription businesses, we want to get it in to a place where we have consistency before going to ipo. >> when you see an amazon buy a whole foods, does that all of a sudden open up your mind maybe you thought of this before to say maybe amazon could ultimately own us. it could be part of a prime subscription >> amazon is the most brilliant company in the world, and i do believe that if you have a subscription to fashion, my ultimate goal is that it's delivered to you within half an hour so that you could wake up in the morning, decide what you want to wear, and prime now your outfit >> especially when they're trying to push into fashion in such a big way

>> i'm never going to say no to the possibility -- >> mr. bezos, that's an invitation, if you are listening this morning >> jennifer, thanks for coming in today >> thank you so much >> appreciate it thank you. >> appreciate it that was fun >> if you want to try -- she's leaving. >> well, we did say -- >> bye okay she's out of here. okay coming up, restauranteur danny meyer is here. he is going to start renting food that you can eat three times a month literally. he will explain right after the break. later -- not really. it's been 30 years since blackmon it's the topic of barron's cover story. we'll talk to the author about trading and automation next.

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>> a segue to more food. name behind some of new york's most successful restaurants is trying a new recipe when it comes to growth. announcing a $200 million

strategic growth fund to invest in start-ups and emerging companies. fresh off of the "60 minutes" appearance mark levitt is here, chief investment officer we're both happy to have you here tell us about this new fund. what is this about >> well, this fund is an acknowledgment of two things it's an acknowledgment that, number one, we don't have all the best ideas in the world. a whole lot of other people have them especially when it comes to food, and especially when it comes to people's interests in aligning with companies whose culture is what we call enlightened hospitality. employees first. customers second community third. suppliers fourth, and investors fifth. that may sound a little bit odd to have a fund where you put your investors fifth, but when you understand that it's a virtuous cycle where unless you have really, really happy investors, you can't have happy employees in the first place then you see that those are the companies that seem to be doing the best these days. >> you guys went to college tonight. >> >> we were at trinity college

together >> in temz rms of what this fun will buy, what are you looking for? >> it will be a mix of companies and industries we think there's going to be a concentration of things in the areas that are close to us strategically, like fast casual, fine casual, food concepts, and hospitality facing technologies, although we're not limited to that >> how many different investments you looking to make? >> we think with a $220 million fund, we've got the capital and the team to have somewhere between ten to 15 portfolio companies, and we hope that two or three of those will be things that we develop within union square hospitality group >> how early stage are he we talking? there are lots of restaurants out here even in times square. are you going to pick them off >> we don't think so at all. it's frustrating, though, because we have relationships in the restaurant industry, and a lot of our alumni, and friends of ours after all these years call us all the time saying i've got this idea. what do you think about it they've been doing that for years. that was part of the rationale for doing this i think we're going to wait until a company has really shown

maybe five units in a minimum, but has really shown that it's got legs it can scale, and it's got a following based on the culture that it's developed. >> you planning to buy minority positions, majority positions? what's the -- >> we think we're typically going to be writing $10 million to $20 million checks for typically minority stakes. >> and what is the thread that will run between them? meaning, what makes a danny meyer investment different than if andrew sorkin was making it >> well, i think andrew would probably want to come along for the ride, but what i would say is that it's a company we wish we had come up with the idea ourselves. >> okay. >> we wish if we had only met that leader and those leaders that we would have hired them ourselves, and it's a company that basically has attracted such a following because its employees and its consumers want to align themselves with the culture. >> it strikes me that the company would be getting more than just venture capital

funding. they would be getting almost a shark tank sort of investment where you're going to help them out along the way too. >> well, that's exactly what we -- is our advantage we are not just check writers, but one of the things mark and i like to say is that we don't want to be someone's mom or dad. we want to be the guys who are, you know, unconditionally loved and have a lot of experience and really rooting for their success. >> could be grandfather and grandmother. >> not quite yet not quite ready for that yet >> then the kids go home you mean an uncle. >> as long as they come home for thanksgiving >> all in the restaurant business, or would you ever just -- we've had all sorts of different people come in with different food products. the guys i used to love. by the way, the rx bars that i used to love sold to kellogg last week. >> are there businesses -- >> or like an uber eats. >> they might be outside -- >> one of the things we recognize is that people are not going to stop eating, and they're not going to stop eating at home in different ways. they're not going to stop eating

out in different ways. they're not going to stop eating in their office or on the run. we're looking for any business that has a fresh way of doing something even better than it's ever been done before. >> we've made three investments today. one in joe coffee, one in joe ice cream. they have a consumer package good angle to those businesses as well at some point. >> i'm into donuts there's a couple of good donut companies out there. >> are there companies you wouldn't touch or kinds of things you wouldn't touch? >> we do say that we're not going to do turn-arounds, operational, or cultural turn-arounds >> but there are -- i just wanted to add to what mark said earlier that it may be that a company that we meet has nothing to do with the food business, but they're the best in the world at what they already do, and they want to append a culture to be the favorite amongst their stake holders, and that's a gift we think we can bring here >> what about tech there's reserve. there's caviar, and there are

all of these guys. >> it's funny you say that because one of our very first investments was in a company called rezi, which is in the tech business, and historically even before the fund, we've invested in companies like olo and also open table. we're very interested in tech. >> okay. guys, we wish you lots of luck with the new fund. come on back maybe when you make your next big acquisition. >> thank you very much >> good to see you both. >> when we come back today, 30 years ago the dow shed nearly a quarter of its value and became known as blackmon. we're going to take a look back at that historic day on wall street right after this.

♪ buried just under the surface, the answer to it all. ♪ we want to need each other. ♪

♪ >> good morning. welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square among the stories front and center, bill ackman's pershing square is pushing if -- they highlighted an independent survey by sanford c. bernstein that says 83% of long-term

shareholders support its involvement. 71% support the idea of pershing receiving one or more board seats. board elections will take place on november 7th. more executive changes with general electric the company is named rafael santana. currently president and ceo of ge latin america as president and ceo of ge transportation yikes. 23 he will succeed jamie miller, who is becoming ge's chief financial officer. >> and the lone economic report of the day just out. the empire state manufacturing index, the new york fed's measure of state manufacturing activity, jumped to 30.2 for october compared to a consensus forecast of just 20. quite a bit above. >> cities and states can submit their bids to become amazon's second headquarters today, and john cohen joins us from one city that is bidding for hq2

chicago. scott, good morning. >> my hometown hi, becky. you know, it's a huge project, and a lot at stake here. amazon will be accepting proposals through thursday of this week. at stake $5 billion in investment 50,000 jobs. this is one of the sites that chicago could possibly offer this is the lobby of the main post office. it is -- it is a beautiful old landmark massive building. 2.5 million square feet. it was developed at a time when this was the capital of mail order. the home of sears and montgomery wards. a lot of people like the symbolism of amazon moving in. they're redeveloping the building now, but it has been vacant for 20 years. as amazon goes through these bids from the various cities, so will we using our exclusive america's top states for business data.

let's take a look at how it does amazon has listed a number of criteria here. number one is population it wants a metropolitan area of one million people, and chicago certainly has that we'll give it an a-plus on population things kind of go downhill from there. they want a stable business-friendly environment. this is illinois the worst finances in the nation for a state. ranks poorly in america's top states for business like business friendliness and economy. for stability, illinois gets an f. for tal i want, it is an area that has a lot of higher education, a good pool of workers, but it does poorly overall in work force and quality of life. for talent, we give illinois a d-minus. chicago does pride itself on thinking big make no small plans. it is an expensive state,and so when it comes to location, we give it another d-minus. all in all, if you give it an overall grade, illinois, chicago barely passes here we don't know if certainly how amazon is going to look at the

different criteria how it's going to score. we do know that the governor of illinois is likely to differ with our findings somewhat we will ask him about it governor bruce, the governor of illinois, will be our guest on "squawk alley" coming up later this morning as we continue our trek around the country. guys >> you can't help -- sorry you can't help himself with the states -- he gets in that mode you already did that you are back on the scene again. you know, scott, that's your hometown did you give it -- did you give it a grade for accents because it drives me crazy, and now i understand you and lebeau, that's where this comes from, right? it i give you a d for accents. >> i don't know what you are talking about. we'll have to get santelli over here too to talk to you to do the chicago accent i don't know what's wrong. what accent? >> yeah, exactly what accent? i don't know it kind of moves to minnesota. it's all sort of the same thing. that upper midwest sort of -- i

don't know what it is. it comes down from canada like the weather. >> it's music to everyone's ears >> zot, do you have a favorite, or is that giving it away if we ask you? >> no. and we're really kind of looking at these as we go. it's really interesting how the cities are pulling out the stops for this amazon has gotten no small amount of criticism for this for what is likely to be playing cities against another -- each other for expansion that it's likely to do anyway. they want to get incentives out of this. they want to get tax breaks and so they're going to play this, and we'll see how it goes. look, the idea of being in the old post office in chicago, which they've been trying to figure out what to do with for really decades now, is interesting. it's tantalizing there are other sites in this city that have a lot of interest, but there are other cities as well that feel like they have a lot to offer we'll be looking in a couple of weeks at cleveland, and there's

a lot of interesting things going on in ohio and cities on the east coast boston, new york we'll see how it goes. >> i think you need to combine it with your states routine where you tease us and don't tell us where you are, and we have to figure it out. >> well, in this case amazon has that -- gets to do in a. they get the fun of teasing all of us. me included. i don't know if i like that. >> yeah. turn back on you for once. >> exactly >> scott, thank you. >> okay. up next, jp morgan ceo jamie dimon says there's one good use for bitcoin. >> there is a use case for bitcoin. if you live in venezuela, north kor korea, if you are a criminal, great product. >> i thought -- >> wow >> well, now there's another reason to own bitcoin. it can help you buy your next home that story is next plus, a look back at blackmon. th sokalh atho wl

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. >> restaurants so retail why not real estate? the first thing in texas sold to a buyer using bitcoin closed at ju just. >> the challenge that wasn't that challenging to figure out who would do an exchange that larnl. >> so they turn to bitpay, which did the exchange because seller didn't have a coin he wanted dollars. that will not be the case in lower manhattan where one developer is converting an old rental building into new condos. he has several buyers who want to pay in bitcoin, and he wants to keep the bitcoins

>> i think i will. i think i'll be able to use it both personally and as a developer. i think it will be a long-term means to make payment. i have been buying some artwork of recent, and personally for me i have had a bunch of sellers of artwork ask me to pay them in bitcoin. that's a possibility for me going forward if i elect to convert my. >> he says accepting bitcoin gives him a competitive edge over other sellers in a hot market like manhattan. really whatever it takes, he says, to close the deal. back to you, guys. >> okay. thank you for that we have some news just breaking we want to tell you about from retailer sears. bruce berkowitz of fair holm capital. he joined the board in february of last year fairholme is the second largest shareholder in sears behind coo.

esl investments. that has been one rocky road for the company. >> you know, reporters do legwork a lot of times i did not do it deliberately, but i was in a sears yesterday for a very specific reason >> yeah. kenmore appliances >> no. that was not why i was there it was funny why i was there i was actually looking for a certain kind of tie. just a clip-on believe it or not, they sell clip-ones there still. >> is it >> i was in there for that it was not a good -- it was not -- it wasn't -- >> not a good experience >> not a good spirns not a lot of people in terms of asking you can i help you, not a lot of people picking up stuff that's fallen on the -- in the apparel place that's on the floor that needs to be hung back up again >> it's been a long-running problem with k-mart and with sears. >> really pretty much -- it was pretty shocking. >> as you continue to invest less in the business >> if you can't is a something nice, you don't want to say it it was pretty shocking

>> today is the third monday in october. 30 years since the 1987 stock market plunge that came to be known as blackmon. now trading it's gained even more sophistication in the decades since then, but it's become more and more automated joining us is jack otter, editor at large for otter magazine. he says that the markets could be at risk for another computer driven accident. mike santelli is also here he is cnbc senior market commentator, and it's things rhyme, i think, right, jack? they don't necessarily repeat themselves i remember so well portfolio insurance and the combination of that with arbitrage trading. everyone thought i have portfolio insurance. what would be similar now, i might think, is that people are -- there's a lot of rules based investing, and if everyone decides a rule has been breached, then they could all decide i need to do something, and it could happen again, i think. >> exactly if history repeated, then we would be all set we would be totally prepared for the next one >> we wouldn't -- >> right

>> it's not around anymore >> that's not around anymore, which is good. the problem is when you are chasing these strategies, as you say, it works great in good times. computers are much better at trading momentum than we are, where they're better at vol strategies than we are when the market is going up, but then if the market starts to go down, you p, everything works until it doesn't, right? if everyone is selling, rushing for the same exit at the same time at much faster than human speed, that could greatly exacerbate the problems,ing and we haven't really experienced this i mean, we know that, you know, cbo's weren't so hot in 2007 when the computer said that they couldn't go down what is so hot now that could go down and we don't know it yet. we'll probably find out fairly soon >> i don't remember in 1987 that the fed had taken a balance sheet from, you know, billions to trillions, and central bankers around the world have done the same thing, which just seems like you add that in to what you just described, and it even makes it worse.

>> totally unprecedented experiment that we're doing with all the central bank money you are absolutely right it's taken away a hiding place this insane bond rally that we've had for, what, 32, 33 years now means is that necessarily a safe place i'm not sure it is i mean, at the very best it might be like going to cash, but it's not as if -- >> what about etf's? then you throw those in there? people don't even know what they own. >> they know you own exposure to the market, right? to me it all makes it mindful of how the autopilot strategies in coordination without a lot of governors on them can definitely cause the snowball effect. that to me makes a lot of sense. i do think it makes sense also to keep in mind how singular an event 1987 was literally unprecedented before 22% a day. i do think that we kind of have stress tested this market under the current regime a couple of times. >> are you sure? >> if we look at a meltdown, 2008 equities were not a problem. we executed everything fine. you had a weird etf stuff going.

remember when the financial etf's, the leveraged financial etf's, people are trying to game that and jump it, and it was kind of throwing gasoline on the fire a little bit? remember, the flash crash is in 2010 arguably that was kind of a portfolio insurance kind of move, right? you had, what, ellen reed selling the futures aggressively >> you've done the math on 22% >> 5,000 points. 5,000 points >> two things on mike's point. one is that etf's in 2007 were about, what, half a trillion now it's $2.5 trillion >> the cftc and the sec still literally don't agree on what caused that. that's a little scary. all this time later we're still not sure >> i also think, though, that the actual macro conditions in 1987, there's a massive amount of stress in the markets ten-year yield went from 7% to

9% in no time. the market was already down more than 10% in two months before the crash. the week before was awful. in other words, it was a tremendous amount of stress placed on the market >> it didn't come out of nowhere is the point >> yeah. >> clearly you know the day of the crash that went from nine to seven >> right >> one day >> it was like watching -- >> one final point, i almost think 87 was this unfortunate mix of the high-tech portfolio insurance and the low tech remember the phone is not getting answered that didn't help anybody today -- >> joe >> i was going to do my imitation. i was a stockbroker at ef hutton right then, and i was under my desk we had an earthquake too that just happened out in los angeles, but then my phone was ringing.

one interesting thing, it's always the humans that have the problem. it was the new york stick market makers in 1987, i just learned preparing for this apparently bob minuchin and a guy from solomon got on the phone and said we'll put in a bid at solomon or goldman for any stocks that you'll reopen on the stock exchange >> people would put in a market order or limit order, and then things -- the unsecured trading losses that a lot of individual stock brokers had that day >> i think we've calculated back, and the vix existed, it would be over 100. >> is that right >> i think that's what they've said >> imagine what would happen with a vol strategy now where if the vix goes from nine to 18,

you have to sell half your stocks 100 wouldn't even compute, right? that would be off the screen >> it was, like, $50,000 is what he thought he was going to buy by the time it opened and it wasn't ae limited order, so he put it in, and it was like at a half, and it opened at, like, 30 he bought, what, 50,000 worth. suddenly it was $5 million worth that he was filled on, and then the market immediately started coming up a little he owned the puts at, like, 50 you know, an hour later they were back to ten >> things that were happening. wow. maybe it will come back in the next month there was no coming back on that market back then remember it took two years. i think it took a couple of years. two, three years >> we're so used to everything

bouncing back. people in the last nine years, buying the dips is a brilliant strategy, and it will continue to be until it doesn't >> i don't want it to happen again. is it going to happen again? >> i think mike is right i don't think that we quite will see an 87. >> you're wrong. >> they closed the market first of all. market before it gets to that point >> that always works people get comfortable in that -- those minutes and hours of nothingness. >> you would think the combination of the fed and etfs and computerized trading could make it even worse, you would think, no? we've learned our lesson >> i'm not an alarmist about the fed balance sheet thing. i think it's psychological >> mike santelli -- >> i answer to both. >> when we return, we'll talk to jim cramer down at the new york stock exchange and look at the futures as we head to a break. almost 40 points up on the dow, s&p 500 looking to open higher

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let's get down to the new york stock exchange. jim, we were talking about 1987, can it happen again, maybe it can, maybe it can't. now we've got the fed and central bankers at zero.

we have all of this liquidity too and computerized trading and rules trading -- >> i think the etfs are too powerful and not knowing what people own and double down etfs, all unnecessary. that said there is a kind of a belief that until there's something else to invest in, it's -- the money just doesn't make sense to stay away from here it's got to come in. >> are you -- knowing when you get up like when your alarm goes off at 1:35 a.m., what was the first earnings report this week that you were excited about, the one that you woke up thinking about? >> i tell you the truth, i woke up this morning wanting to go back over to wells fargo and look for a key line how they are still talking to people about what they did wrong. i just think that wells fargo's numbers were dramatically weaker than other guys and it has to

be -- it's not being spelled out correctly by wall street. >> we've got 90 of the s&p 500 or so then we've got -- i think we've got about a third of the dow coming this week it is a big week is it more important to see how they did in last three months or see what they are saying about the next three >> i would point out, a lot of industrials that got really killed the last time they reported have advanced dramatically like the idea of trying to trade out of these things, some of the strongest acting stocks are companies that did poorly last time you may think i've got to get out now but geez, there's a lot of momentum behind every single industrial. >> psyched for you about the eagles were you watching the jets did you see that call? >> i think it was either down on the one or a touchdown like the rest of them -- >> at least give me another down you take the ball away and give it to the other teams.

>> worst call ever. >> in any sport. >> worst call ever. >> poor jets stupid patriot bob kraft doesn't have enough -- we'll see you in a few minutes coming up, don't miss a first on cnbc interview with the uk finance minister phillip hammond. we've got that going for us. "squawk box" will be right back.

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the odds of a december rate hike are well above 20%. the top performing sectors are financials and tech. welcome back, president trump just tweeting this morning, since election day on november 8th, the stock market is up more than 25%. unemployment is at a 17-year low and companies are coming back to the u.s. and the u.s. has gained more than $5.2 trillion in stock market value since election day. also, record business enthusiasm >> forget hiding your facebook profile from your employer the social media platform is trying to help you get a job testing a resume feature which will put it in direct competition with professional network linked in, let users list their professional experience and education as well as their contact details and image and other information just like microsoft it is not clear how many people have access to the feature this test feature -- >> it's weird though

the whole point, you probably don't want your employer having access to your facebook account in any way you want to keep them entirely separate -- >> you would think maybe they'll allow you to eventually keep them separate in some way. i always thought to myself, they would be able to turn this feature on -- >> i guess it's bad enough that employers are looking at that stuff. >> what about my myspace >> they look at that for you. >> i'm thinking about joining -- >> we're out of here good-bye, we'll see you tomorrow it's time for "squawk on the street." ♪ >> good monday morning, i'm carl quintanilla, david faber is back at post nine and futures are study as a busy week takes shape. netflix tonight and yellen sounding hawkish over the weekend and thursday marks the 30th anniversary of the 87