straight sessions. that's the longest winning streak this year futures this morning are being affected by some of this global stuff. who better than boockvar to be here and tell us that the world might -- will we make it through the weekend? maybe we'll make it through the weekend but not much longer. it's friday, august 10, 2018, "squawk box" begins now. >> live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" right here on cnbc live at the nasdaq market site in times square. i'm andrew ross sorkin along with joe kernen and morgan brennan who is hanging out with us today the dow is off about 127 points. we'll explain why in a moment. the nasdaq looking to open down as well. 46 points. s&p 500 off by 15 1/2 points want to show you what's going on

overnight in asia. we have a nice little chyron of eamon javers he will be coming to us in a bit. nikkei off over 1% look at european equities as well we will show you what's going on there. red arrows across the board with the dax and the cac off over 1%. you'll see it there. you'll see it. it's come down to 2.893 for the ten-year i'll leave it to morgan to explain this >> will you? we had record-sized auctions this week in the treasury market rick santelli would tell you that demand has been stronger. >> the story you're about to talk about is putting pressure on all of this

>> yes >> angina. >> bear are me it's friday. one thing to watch now, turkey its currency plunging to lows. the lira losing a third of its value this year alone. the stock market is also in absolute free fall right now the turkey etf is down 42% this year. that drop is starting to worry one of the world's central banks. "the financial times" reporting that the european central bank is getting worried about ecb exposure to turkey unicredit and bnp paribas among the biggest banks with operations in turkey both of those bank shares are down the euro falling against the dollar after that ft report. the fear is that you could see contagion. at least that's the worry this morning as we look at turkey >> not necessarily contagion with these other currencies?

they're not related? iran, the ruble? kind of weird. we have three, four different currency situations happening. can makes you think maybe it is related or at least not totally separate a lot of times the end of the world, when we start worrying about it, it starts with weird currencies >> is that your explanation for the futures? >> yeah. not down much. we had an unbelievable run back to 25,600, 25,700 we would be high weroer withoute tariffs. s&p near an all-time high. we had a good run. we wouldn't think the lira would cause the united states nasdaq to go down >> big corporate story of the

morning that we're following, the story of tesla the company planning to meet with financial advisers next week to explore the possibility of taking the company private. the board expected to ask elon musk to recuse himself from the process that's according to a news story by alex sherman alex will join us in the next hour to explain what he knows. he's trying to make some sense of what is a complicated situation at tesla wework raised another $1 billion in funding from softbank the company says the investment raises the cash pile to 4 billion, which it plans to use to acquire new property and leases this is the second investment by softbank wework provides shared office space and services and corporate customers account for about a quarter of memberships wework is valued at $20 billion. they made the disclosure yesterday as part of its

first-ever release of its financial results. revenue doubled to $421 million. its net loss in the first half of the year more than tripled to 723 million as it opened new office space and spent more to market them. silicon valley or softbank or saudi is now subsidizing everybody's office space at least for now. a true model shift, everybody takes these short-term leases. wework takes the long-term risk. >> wework. >> wework. hard to say. >> two thoughts on this. there's a long lead time in terms of the properties turning a profit wework said they generate more revenue and profit from properties they had a year or longer the fact that they are squcaling dramatically speaks to the fact that they have those losses tripling the other thing is do not call

this an office space leasing company. you know, they very much fashion themselves more of a tech start up, silicon valley type company with some sort of more funky jargon around being a physical, social platform, things like that >> you get a better multiple for being a platform >> absolutely. >> we'll broaden this out. i have a lot of things bouncing around in my head. >> boy >> i know. >> here we go. >> that's a bad start. russia's prime minister warning that new sanctions would amount to a declaration of economic war. eamon javers has more. i will start with my thoughts, a flig frightening thing for everybody. >> i'll buckle up. >> we were talking about canada, saudi arabia, andrew posed a question whashould saudi arabiae the moxie do this if trump did

not pick a fight with canada and then in turkey, the guy we want released, and they want that guy here that they think orchestrated a coups we have the poisoning and the ruble getting crushed. like it or not, the leader of the free world can do some -- you need to be on his side, i think. it's bad to be on the wrong side of the united states on any of these issues some of these currency moves, you can't tie it directly to that we are the biggest elephant in the room i don't know whether we need to throw our waiteight around all e time, but we can if you google leader of the free world, you know what comes up now? >> no. >> angela merkel >> is that one of those google bombs? >> i think that's the way it

works now. to the globalists, you know, trump can't be leader of the free world because he's so america first. it's so weird. even china, we have a problem. look at the yuan, their markets there. i would get drunk with power i already am wouldn't you >> i won't touch that one. >> let me give you the story you're reacting to we can react further to it on the other side this is a sharp reaction from the russian side to these sanctions put in by the united states side this week. here's what the prime minister had to said yesterday or overnight. dmitry medvedev said this is a stark warning to the united states side not to go further. he said if some ban on banks operations and use of one or

another currency follows it would be possible to clearly call it a declaration of economic war it would be needed to react to this war economically, politically. remember, all this goes into into effect because the united states agreed with great britain that the poisons of sergei skripal and his daughter was done by russian intelligence it was a russian nerve agent at the center of that there was a formal determination by the united states side that the russians were behind it. u.s. intelligence concluded that that triggers under the law this round of sanctions they'll go into effect on august 22nd

we'll wait and see what further response we have from the united states we have not seen an official statement from the president at all on this. the president has been relaxing in bedminster, new jersey, taking a light schedule, playing golf we'll see if he comes back from washington with more of this on his mind next week >> i like how you play everything straight, eamon that's why i'm here. >> go ahead. >> when you're with your friends, colleagues, just pose the question why doesn't putin push the buttons and tell trump that he has on trump and tell him to back off or would they tell you that doing it this way is trump's diversion to make them think that -- >> make it look as if they're being tough but they're not actually being tough >> exactly >> so they squawk and complain and make it seem like trump is effective when he's not. >> you know who might have the answer that guy on late-night tv. the guy who not the story.

he was on jimmy something or other. >> i am following the dots >> is this a diversion putin could tell him to back off or -- >> i think we got it look at the ruble. >> i know. we have a chart here >> they're making it look good >> there's a reason here look at the dollar strength against the ruble going up the last 24 hours. >> really making it look good. >> this is why russians have a reason to squawk this is having real impact investors are concluding that the united states is serious here and willing to go further and they thought maybe the united states after helsinki would hold back. so i think the market is trying to adjust here to what you got in terms of trump's rhetoric about russia, which is friendly, and trump administration actions on russia, which are not necessarily friendly, which seem to be decoupled from trump himself. that could be a deliberate

strategy by the president to talk nice face-to-face and then carry a big stick behind the scenes that could be what's happening here we need a bit more clarity from the white house. >> i like it andrew won't even look over at me he knows i'll try to get him involved >> i'm trying -- >> you're involved, andrew >> i'm hiding, eamon >> he is so deeply in that global warming piece in the "new york times" on the front page. >> "time" magazine >> no. this is on the front page. the wreck qupiece on, wow, it's. >> the "new york times" magazine last week devoted to climate change it's worth reading even for your side of things that believe all of this is not true >> just when we thought we couldn't turn down another alley. >> we were on russia >> it's free-wheeling friday >> okay.

>> we have to move back to the markets. thank you, eamon let's talk about the markets and what the heck is going on this morning. peter boockvar is here joe lavorgne is also here. >> joe is ready to jump in on the russia stuff >> you want to say something >> i give eamon credit he didn't take the bait. >> he's good >> amidst what has been a good -- we've been on a nice run this morning there's more anxiety now this morning. >> turkey has been a political problem for years. they've been fighting back

against the central bank for years. now all of a sudden it's begun to matter. does it matter >> i guess up until this morning i thought it was relatively contained. turkey had its issues. liquidity flows recede from the fed. the ecb, bank of japan, rates going up accidents start to happen, turkey is an example of that with the ecb warning what it will mean for european banks and their exposure, now it's a real-world problem for everybody else up until yesterday it was a mess in turkey. >> to add to what peter says, if you look at the dollar trading at the higher end of the recent range. if you break out the dollar versus em, it's taken off because you have weakness against the dollar for much of em, not just turkey. >> argentina, brazil >> it's broad based. you have a lot of em debt priced in dollars

you have the fed, my favorite thing to talk about, plodding along raising rates. that's a recipe for a currency crisis >> so we have here in the u.s. equities sort of slowly drifting higher the word that's come back in is complacent a vix under 11 volatility is in currencies now. has the dollar become a safe haven trade? >> by default again. no question. plus the ecb -- the fed is obviously further along in the tightening cycle, where the boj and ecb are just really getting into -- extracting themselves from it. just as we saw -- i'm not saying it's a repeat of '07 or '08, but everyone ran to the dollar it's happening again the dollar index is really just in the middle of this multi-year range. it's against em that the strength is more pronounced. >> china is a big issue.

incrementally they're the most important driver of growth if china had a hard landing, that would have a profound effect on the u.s. economy, which is doing well. even 3%, low 3s is great >> is anybody hearing the view that the pull back in the em world is a worthy buying opportunity? >> people will argue that. i don't believe that to be the case >> i think yes in some countries. china on this pull back is attractive india. >> why >> the shanghai composite is down 50% from its 2007 peak. that market has done absolutely nothing. i grant the problems they're facing in terms of debt, transitioning to a more service based economy. tariffs. over the next couple of years, it's trending. >> are we happy about king dollar all this stuff about trade is about more exports, maybe we have some more heft now because our dollar is so strong. the stronger the dollar, it's

self-defeating in terms of trade. >> part of it is the fact that if you look at the u.s. performing economically better than most other regions in the world, and the dollar becomes a safe haven in the sense that's where the most attractive investment opportunities are >> it narrows the relative outperformance we have >> it does, if you look at u.s. interest rates, among the g20 the u.s. is the highest yielding country. >> before we let you both go, on the fact that we have the strong dollar, we have this inflation data this morning everybody is looking forward to the cpi number stronger dollar, weaker commodities, does this put a cap on inflation >> peter and i agree on a lot of things i'm of the view there's no inflation. i was advising the fed let it run. peter i'm sure has a different view >> higher inflation -- we may print a 3% cpi wages are only growing 3%. so real wage growth is zero. higher inflation is a growth

inhibitor. it crimps the standard of living of consumers i want to see lower inflation. the pressures are building in many different ways, is that could get reflected today or next month whether it's trucking costs leading users of trucks to start passing it on, it's labor costs rising, but crimps profit margins. i don't want to see higher inflation, especially with interest rates so low. >> thank you thank you for coming in on this -- >> free-wheeling friday. >> free-wheeling friday. >> that may be the last dog day, too. one of the last dog days you know santoli's story today >> what's the story? >> how the dogs of the dow perform during the dog daysof august i think i may have come up with

that is it interesting? >> we'll see when he reports it. >> we will >> thank you, guys >> what is boockvar? is that dutch? >> russian >> he might be a spy >> really? >> can you speak to this story >> putin texted me before and wished me luck >> you've been in dead minubedmr this week? >> i have some friends there >> that's what you call them >> sully is a golfer, he called thomas peters a belgium. now belgium is mad >> nasa's mission to touch the sun. we have the details of a record setting space flight scheduled to launch this weekend. and we'll show you possible logos for president trump's f e space force. as we head to break, the biggest winners and losers in the dow. alerts -- wouldn't you like one from the market

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>> the mission to touch the sun starts this weekend. the probe would be the first spacecraft to fly through the sun's corona, the part of the atmosphere visible during the clip eclip eclipse. the rocket will launch the fastest object in the history of mankind at 3:33 a.m. eastern tomorrow morning it will travel 430,000 miles per hour that's fast enough to go from

new york to tokyo in under a minute a heat shield will reach 2,000 degrees but will keep delicate instruments behind it at a comfortable 85 degrees fahrenheit >> this is morgan's thing, space. >> it is >> it's cool how does nasa compare in terms of their technology, engineers, compared to the private race to space? who is ahead of the game >> in terms of the labor pool or in terms of technology >> well, yeah. are the private guys going to catch up to these guys this stuff seems out there >> at the end of the day, it is nasa and government that sort of -- they create a lot of the funding, even in this case, if it's seed funding to be able to spur the next waves of technology. >> they don't need to make money. you need basic science at the beginning. >> you do. >> my thought was i'm surprised they can make something that

actually holds back the heat enough to keep the instruments working when you get that close. i can't imagine you can fly anything that close to the sun and have it work but they can they have something that keeps it at 85 degrees >> it's a 1$1.5 billion spacecraft this is meant to target what has become a bipartisan issue, which is space weather the fact you could have solar flares, basically electromagnetic pulses that shoot out from the sun and have over history and really take down earth or parts of earth trillions of dollars could be affected potentially >> what about the space force, is that silly? in the future, it would be called the space force people make fun of that on twitter. >> a space force >> trump is calling it the space

force. i don't think that's crazy 50 years from now you may call it the u.s. space force. >> i think we'll have one. they're calling for $8 billion over the next five years >> can i ask one question, in space, can anyone hear you scream do you know? >> i don't know. when i go up, when i finally get to go up as a tourist, i'll let you know >> you know what that is from? "alien." >> i have not seen that. i can't do the horror movies >> in space, no one can hear you scream if you were on that ship -- >> no. >> the nostromo. something do somethi game over, man that poor guy passed away, bill paxton -- >> bill pullman. >> no bill paxton.

game over, man that's "aliens." >> we were going to do a story about the space force logos. >> can we see it >> i don't know. we have gone too far on this conversation >> no, we haven't. can never go too far >> which one do you like >> i like -- >> pick one. >> i can't decide yet. >> i think i'm going with the bottom left. maybe. that looks more nasa than military bottom left or top middle. >> what's available is the great hillary weird looking thing with the arrow and stuff. >> oh, my goodness >> luckily that's available. thank god. coming up -- >> freewheeling friday >> i'm surprise we don't have pictures >> international energy agency

out with a new report overnight. details are next as we head to break a look at yesterday's s&p 500 winners and losers

♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square.

>> good morning. welcome back to "squawk box" on this friday morning. among the stories front and center, the lira is plunging to record lows. it's now lost a third of its value this year. that big drop is now starting to worry the world's major central banks. t "the financial times" reporting that the ecb is getting worried about europe's exposure to turkey you're seeing not just what's happening to the euro there but it's impacting markets across the world. investors becoming anxious about contagion. the other big corporate story. tesla planning to meet with financial advisers next week to explore the possibility of going private, but the board expected to ask elon musk to recuse himself from the process that would be a natural thing to do given that so far this process has not been natural we'll see what happens there

ryanair is bracing for its biggest one-day strike ever. pilots in five countries have walked out canceling aboutout f of -- 1 out of 6 flights markets have looked down after what has been a nice couple of weeks here let's show you what's going now. dow off by 101 points. the s&p off by 12. the iea out with its monthly report tracking demand trends. jackie deangelis has the details. >> good morning. the iea saying demand was flat in the second and third quart rts and probably for the year and maybe slightly higherfor 2019 this report centered on how wcam

the oil market has been for now. the iea saying that could change with the second round of iran sanctions. right now a wait and see approach when it comes to oil. they mention opec. output was steady last month probably because the saudis also want to see what happens with iran before they put more of their oil out on the market. remember, this market is tight now. if the saudi barrels come on, the iranian barrels don't come off, you could see a price drop that would purt phurt producers globally what happens now oil has established a new range. 65 to 72 u.s. production is up per day. >> a lot of stuff you said our next guest will confirm.

gary ross, ceo of blackgold investors llc. ross is a family name of andrew. have you done an ann social securi ancestry -- have you booked your relatives >> i doubt it. >> i doubt it. >> i don't think the original name was ross. >> it wasn't >> was yours >> i'm not sure if ours was original i don't know >> i heard earlier from jackie that before the sanctions take a bite out of the production in iran that opec will already be producing more, so that prices could be weak? >> that's what they were thinking about we had the opec meeting. they said we'll put barrels back on line to make up for the short fall that we're expecting, but that shortfall has not hit the market yet

>> the customers wanted more oil in anticipation of the sanctions, but the sanctions won't really hit until the fourth quarter november 4th you will see october loaders come down dramatically in iran the trump administration has been pushing hard. we'll see a dramatic drop in iranian exports come october >> there are still going to be buyers for some of that oil, right? >> china is unclear. talking to the chinese companies, there will be substantial cuts far more cuts than people originally thought primarily because they're nervous about trump. he's unpredictable there's other issues involved with the administration. on oil sanctions we'll see a substantial drop in iranian exports. but it hasn't happened yet that's why we have an oversupply of 30 million, 40 million barrels. not a huge amount. the interesting thing is wti is

still backwardated it's really brent feeling the impact at the end of the day the saudis want $70 to $80 oil, brent that's what they want. they are supplying the market to achieve that >> trump doesn't want $70 to $80 oil. last time he sold the saudis that, the oil came right back down >> he doesn't want it above 80 >> he needs it, though did you see this story in financial financial h"the financial times," how the saudi vision, trying to give money to softbank and other people, they're going to run out of money. the current setup is a problem for them >> that's weird. so you need higher oil prices so softbank can have money? >> no. basically they made all these commitments to investors around the world as part of this strategy they never had the saudi aramco ipo which was supposed to be a

cash infusion. now they can't send checks to everybody and they have a problem. >> it's an oil-based economy, it's going to be hard for them to divert. >> they need over 70 to balance their budget they will make sure it's at least $70 brent. >> jackie, you don't do 10-point ranges anymore she does 7-point she said 65 to 72. >> that's wti. >> yeah. >> for brent add $5. >> so 70 to 77 >> pretty much >> the sanctions will depend on the fact of whether the allies decide, look, we won't take the iranian oil anymore. you have people saying we'll ask for waivers. the government here saying maybe we have to grant some of these waivers. is the drop off going to be as significant as everybody thinks this time around will it be like last time? >> i think it will be bigger

i talked to all the companies. i talked to the indian companies, cli these compacomp s companies, chinese companies, they're going to cut the government is stringent on giving out the waivers they wanted to put this economic pressure on iran we could lose 1.5 million barrels a day from iran beginning with october loaders october loaders is sort of november runs in asia, refinery runs that would mean they have to come in and buy atlantic basin crude, u.s. crude, north sea crude, west african crude in september, which is another two, three weeks away i think we have a period of vulnerability in price the next two, three weeks, then asia should come in we'll see that buying in the atlantic basin that should be supported i think we stay in the 70, 80 range. the saudis are the marginal supplier to the world. they're exporting 7 million barrels a day.

if their customers wanted less oil, the saudis have allowed production to go down. that's how they keep trying to manage the market. if the customers want more oil, they supply them more oil. >> they're playing us out. that's what that music is. thank you. appreciate it. jackie, do i not listen to what you say? >> you listened today. >> be careful. >> we have a good story coming up later, not to do with oil i'll be listening. coming up, jobs in america we'll get the latest read on hiring trends from the linkedin work force report editor-in-chief dan roth. and then the latest tesla drama. the soap opera continues we'll tell you what the company's board is likely to do next as they consider elon musk's proposal to take the company private. we're back in a moment you always pay your insurance on time.

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time for the executive edge. the july jobs report missed expectations but the overall american hiring picture continues to look healthy this summer joining us now for some deeper insight into u.s. employment, dan roth, inkedin's

editor-in-chief. great to see you >> good to be here >> you sift through the data of your 120 plus users on linked in. >> we have more than 120 users >> 120 million >> that's in the u.s >> what's the data showing us? >> 4.6% increase year over year in hiring. this is another big month in hiring coming off double digit increases for the last 18 months relatively flat month over month but still just continuing to be a job seeker's market. the labor market is so tight now. the industries that are showing the big gains, agriculture, manufacturing, and transportation and logistics so all of these areas that you would think are trying to slow down because of the tariffs are worried about what might come, they are all still hiring in big numbers. >> so no impact from trade on the hiring in those. >> yeah. so far it looks like the

trade -- the tariffs and trade -- what's going on in washington is making headlines, but it is not yet impacting how employers are thinking about filling these openings >> we talked about this before linkedin is very good at capturing the services market, the professional market. do you think you're capturing the blue collar workers who might be impacted as well? >> that's a great question absolutely we looked at the last two years how this measures up against bls numbers to make sure does this pass the smell test, does this look right the numbers are all matching up. when we come out before bls, we look at numbers afterwards, they are moving in lock step. we think the numbers we get on linkedin are representative of the u.s. economy >> how does the data break down between demographics millennials and now gen-z. >> millennials and gen-z change

jobs more. this is not a cohort that is not afraid to leave their jobs they're totally confident in their able to gnlt ability to gs they're changing jobs three times of the rate of baby boomers. they're just quitting to travel, to start new companies, putting money aside , then they don't feel the ties to their employers and they don't feel they're in any place to life. >> you think it's across all industries i had a view that tech and maybe parts of wall street, tight labor force issue in terms of engineers, and the reason why the employees have been able to take over these companies, the reason why these companies are trying to placate these people in a way they never did, people would think unions were powerful millennials are powerful really i thought it was just these sort of two industries. is it across the board >> across the board.

you can't -- first, it's a tight labor market employers are desperate for these job openings they can't fill them there are more job openings than people to fill the jobs. so employers are going out of their way to increase perks, make people happy. think about work life balance. for gen-z who is leaving colleg and doesn't know anything different, he says this is amazing. thank you for these perks. i'm a mission-driven purpose, i'll find my mission somewhere else >> and you don't have as many pensions incentivizing people >> that's right. >> we'll leave it there. >> you did nothing in terms of telling me how to join -- >> completely failed on that point. >> you said last time you would get me on there. >> we'll get you on. >> i don't want to shame you on the air for not following up on anything you said. >> i thought you were maybe -- it was summer, you were at the

beach. you go to the hamptons >> i do not go to the hamptons you can't get there from here. there's one road, unless you're -- you know, unless you're andrew. what is it called? blade? if you didn't have a helicopter you would be using blade >> before i come on next time, we'll get you on >> people keep asking me >> he's zooming around summit in his porsche. let's keep it all in perspective. >> i'll in millburn. >> sorry sports owners are making the most of the real estate around their stadiums we've been seeing this trend go on for a while they're turning it into a sprawling entertainment complex. eric chemi has that story next as we head to break, a quick check of the european markets.

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more and more sports teams are venturing into the entertainment world as a fresh source of the revenue off the field. eric chemi joins us now with the story. and it's not a new trend, obviously. >> the trend is the teams are taking the ownership stakes in it it's not just an entertainment space next to the stadium that someone else owns. now the team owns it goes into their books. they don't necessarily have to share that money so what's happening right now is we're looking at these pro sports teams, they're looking off the field for their next wave of money. the texas rangers are the latest ones this weekend they're opening up an entertainment complex outside of their stadium it's called texas live it's owned by the team it features dining, bars, music, entertainment, a hotel they're just the latest team to use that land next to their stadium for bigger entertainment goals. we spoke to the chairman of the rangers and the chairman of the

cordish companies. they worked together on this venture. >> there's only so many dollars you can generate from ticket sales and tv revenue so this is just an added revenue source. >> these tv rights, these ticket sales, they're hard pressed to grow much more from here as we all know, those are struggling areas in terms of growth so the teams are trying anything they can to leverage their brand value. they're hoping people will want to spend their time and money there. >> what you see today opening is mammoth. it's a couple billion dollars of investment, but it's just the tip of the iceberg and it will become where people will come for the weekend. so maybe now you used to drive to a ranger game, go back home now you come for the weekend because of all the things you can do the hotel connected to the ballpark you stay in it's going to be a win/win/win >> they have about 80 home games a year football teams have eight.

the majority of the calendar is open it's an opportunity to make money on the same land these ownership groups are seeing the original teams and stadiums as one part of an entertainment portfolio. obviously we know on golf courses, they've turned golf course land into residential space. this is the more modern version of that. >> it almost reminds me of msg and what they do here in the city, for example. we've got the sports teams then they use the venues for entertainment as well. is it that type of business model? or is it different >> it's tricky in the city it'd be like if you had msg on one site and the next five blocks dedicated for other stuff. they do all the things in the arena and own properties around the city this is just, hey, we're in the middle of possibly nowhere let's buy tons more acreage next door and you don't have to revenue share this money that's interesting it's right in the ownowners'

pocketbooks. >> there were games last night the season has started, right? >> the season has started. there are bets to be made. there are kneelings to happen for the anthem there's all this going on. >> i didn't want to necessarily get to the kneelings, but that's not over, is it? >> multiple teams, multiple players. the nfl put out the statement saying we want them to be in the locker room if they're going to not stand and we don't know what to do. >> it's the nfl, man i don't -- >> the ratings this year is going to be tricky my buddy last year gave up on the giants because they were kneeling but he was back watching last night. >> you remember the way they handled that and j&j became how you handle things. did the nfl handle this from the beginning? ri it'll be a different case sty.>> ec chemi, thank you "squawk box" will be back after this break target your goa? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term?

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the dog days of summer coming to an end >> no offense, but is your dog pregnant or super fat? >> i called you for pizza, not opinions >> so how did the dogs of the dow perform? a developing story the turkish lira collapsing and global investors are getting nervous. the risk of contagion straight ahead. >> plus is the american consumer shopping or dropping the nation's retailers about to ring up results and we will bring you the names to watch and the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning. welcome back to "squawk box" here on cnbc we're live at the nasdaq market

site in times square i'm andrew ross sorkin along with joe kernen and morgan brennan. our guest is from douglas t. lane and is a cnbc contributor let's look at the markets at this hour. dow looks it would open up a 96 points nasdaq off 35 points s&p 500 off about 12 points. another record low this morning for the turkish lira against the u.s. dollar. putting a bit of pressure on equities across the board. this comes as the political and diplomatic dispute widens. at the center -- increasingly off authoritarian regime in turkey sources tell cnbc that tesla's board, this is a new topic, by the way. that the directors are going to be meeting with advisers to begin exploring the idea of

taking the company private elon musk tweeted earlier he'd like to take it private. the board said to be ready to tell musk to recuse himself from the process. cnbc.com technology reporting alex sherman is going to join us in a little bit. he's got some details, a little bit of breaking news on this topic as well. we'll also be getting another read on inflation this morning with the release of the price index. both the headline number and the ex-food and energy rate expected to rise by 0.2%. a few stocks to watch this morning, drop box shares are lower. the company's earnings and revenue beat wall street forecasts. but that news was overshadowed by the departure of dennis woodside take a look at those shares right now premarket. down 7.5%. lionsgate reporting a narrower loss than expected revenues topped forecast

it's also expanding the play channels in europe those shares premarket are up 2.5% they've got an intro written for me here. i apologize in advance to mike santoli. i've been talking about the dog days of summer and how that begs -- >> he's been teasing you all morning. >> not him now someone told you to look -- but i'll tell you why it's okay and i'm not apologizing. the dogs of the dow is a bona fide strategy that had great returns far long time. and the logic of it is pretty obvious. it's undervalued, underloved high yield stocks. we haven't looked at it recently because the market's been so hot. >> they've underperformed pretty badly this year. >> so the strategy has been

working. >> not lately. the detail is typically you take the 10 out of the 30 at the end of the year with the highest dividend yields. there's a value strategy and they've not been great >> when the dow itself wuas a little more homogenus, it was they're just neglected so you can look at the ten dogs of the dow this year in other words, coming into this year, this is what you would have bought in equal amount. verizon, you have both the big pharma stocks in there, big oil stocks cisco, merck, and pfizer have kept you afloat. these are total returns. obviously ge the biggest drag. procter & gamble as well the portfolio is slight down

with dividends, the overall dow is up close to 5% with dividends. >> absolutely. >> total returns kind of half the point so it's part of the value stock under performance. right? in general, these are going to be the cheap ones. you only have cisco in there as a tech stock so it's not so much staying that this strategy doesn't work anymore. it's the market that's tuned into it. >> you know what this is one of -- i'm glad i suggested this this has been one of your best, i think -- >> and imagine the coincidence the one you suggested is that. >> it's weird. it's scary but we haven't talked about that we used to talk about them all the time sam stovall has talked about the -- yeah, he's right here >> back in the day, it was a little bit of a -- >> you didn't talk about who the dog was in this picture? >> we get to play who let the dogs out we did it used to be a thing. mike, will you stay with us? i'm going to intro sam stovall

is your dad still -- >> yeah. pop is 92 1/2. i think once you hit 90, you count by halves. he's enjoying himself as a cnbc watcher, as a snow board back and forth from new york to florida. >> did you ever have a strategy based on dogs of the dow >> no. more value based >> that would be value >> yeah. you know, then being more stoc selective opposed to just saying let's just take the bottom but what you're saying is value's been so out of favor and the conversations have been about faang and tech and the greatest revenue growth. but some of those stocks on the dow that have been beaten up could have potential like the chevrons down the road but it's got to be stock specific at this point >> there was a unit investment trust. >> yeah. that essentially simulate it there's a lot of twists on it. i was saying earlier there's a

subset of the dow. not only the highest yielding, but the lowest priced ones like the dogs of the dogs. that would have gotten you ge. not a lot of help this year. >> will you be 100% invested from today, you think? >> i wouldn't recommend you be 100% at any time >> would we still be talking about a bull market a year from today? >> i think we will one step further, what sarat was just talking about maybe you look at seasonal rotation cfra has a seasonal rotation custom index that takes that dogs of the dow strategy -- or the sell strategy but stays invested and focuses on the challenging may through october period and whether yo domestically at small caps, mid-caps, or global, the strategy is performing >> will we have a secular bear

again in the next five years, sarat? >> i mean, if you talk -- if you read everything, right there's so much pessimism now. >> it's an underloved bull, i guess. >> more and more >> did that count in '08 it was a quick one >> talk about starting 2000 and lasting 13 years because that's where you were capped >> underperformance. >> you had '01 and '08 was more of the financial secular bear market you know, today i think what could cause the bear market is an overshoot on inflation. somewhere where interest rates move too high. it seems like everybody is already in that camp so i don't see that. i think this is an extended kind of bull market but the rotation's going to be really important we haven't seen the opportunities that people like us have been investing in in financials, health care kind of slowly coming back energy's slowly coming back. there's still a lot of -- people still want to be in the growth stocks

i think that's kind of the rotation you might get out of. >> technology has quickened the pace of everything almost. it's almost like the developments happen more quickly. i think it's going to get quicker when computers get so smart they're doing a lot of the things we used to have a churn out ourselves. they're going to be designing things for us. >> it's like moore's law in terms of price it's now moore's law in terms of improvement of the speed and technology, et cetera. >> so will that -- is it possible that that makes bear markets less likely to be sustained for 10, 12 years >> well, as long as you have human intervention, that's the one that goes back in time the madness of the crowds. because actually, you know, take a rules based investment strategy if it's still run by a human, it's a natural intention to try to overrule the rules. it's not going to work this time when, in fact, it usually does >> look at the retail sector right? that was a bear market for about

12 months. look at energy bear market in energy as well. >> video rental, really bad. photo mats, tough. tough. record stores. >> even the companies that work -- in 1999, there was no company more dominant than microsoft. everybody could have said this is all in the favor. it didn't fail it was just priced too high and went ten years >> the multiple contradicted by 50%. >> right now the market is saying yes we have this faster moving world and technology is going to hasten the pace of everything it's decided it's kind of a winner take all type business. right? so you have five stocks worth a few trillion dollars people saying they're just going to capture a lot of that we'll see. >> it's always different >> i want to get your thoughts on industrials for a minute. it seems like last year a lot of the blue chip industrials, we saw huge moves to the upside in the stocks i'm just looking here at the dow. year to date now and i think a lot of this is on the trade and tariff worries and maybe earnings that weren't even better than the beats we've

seen 3m and caterpillar down 12% and 13% year to date >> yes you had a multiple contraction really at the end of january and i think you had a couple of things happen there. input prices started going up. energy prices starting going up as well. then it was the whole talk of tariffs. and that's really had a lot of people take money out of the industrials, a rotation that came out of the fear that you're not going to be able to pass the pricing on and all your input possibly is going to be increased. by the way, the largest markets might not be accessed. so there is some potential there. they've come back a little bit in the last couple of months but there's another place that money can rotate into pretty quickly. i think the overhang is still there based on what's going on in china and potentially higher input costs. >> you said not 100%, but asset allocation, i don't want any asset allocation do i need to have bonds? what do you do to lessen the exposure of -- >> well, i think you should have

bonds. i do first off, let's -- i mean, bull markets don't last forever we will end up having a bear market at some point in time if you look at a 60/40 portfolio, diversification did not fail us in 2008. our memory and expectations failed us. we actually had a return on that 60/40 portfolio into '08 that was better than in the bear market of '73, '74 and all bear markets in the great depression. so actually the only asset class that has a negative correlation to equities is bonds you need that flight to safety and you're going to want the ba ballast for your portfolio typically in bonds >> well, not bitcoin i'm so soured on bitcoin now when it goes down, you ignore it you only like it when -- it's $6,000 again >> why don't you pick some up? >> is $6,000 cheap >> i always said if it drops below, it's interesting. >> below what? >> six >> $6,300 today.

>> i know. >> all my bitcoin is going to be simulated because i can't get the stupid coinbase to work. so i'm going to be -- which is good for me. it's good that my initial trade was a simulated -- all right sam, bitcoin, dude >> i haven't bit a coin since they took silver. >> okay. sarat? >> not on a bitcoin. no bitcoin >> you want to the have someone rubbed out, andrew >> how close are you guys watching what's going on with the lira right now showed that chart earlier. it's a huge move this morning. >> everybody in the lira was trading bitcoin. >> i think it's going to be emerging markets people are going to see what's going on over there. those are the things the people -- the unexpected, right? we know things are happening there. something could happen where you get a pull out of the market which would affect the global markets at least in the short-term >> okay. it's debt and the dollar with 50% of their gdp in u.s.

denominated debt, that's the big problem. and then the real question is what kind of a steam rolling effect could that have on spain, france, italy, other countries around the globe but when you're dealing with an economy that's less than $1 trillion, i don't think it ends up -- it's more of a headline than it is a bottom line >> okay. >> do you have any brothers? do you have brothers >> i do. >> okay. i was just wondering whether you get the whole stovall legacy i mean -- >> i thought you were implying i came from a test tube marked failure. >> no. it would be nice to step into bob stovall's job. but you had to share it with your brothers. >> absolutely. but we like to share it with him. pop is a big watcher of cnbc as i mentioned -- >> we appreciate that. does he have a nielsen box doesn't matter because we don't follow that. they don't measure up, effectively. coming up when we return, this week's big corporate story. it doesn't stop. elon musk looking to take tesla private. we've got new reporting on the

board's reaction take some camera of morgan right now. she stopped. you're watching "squawk box" right here on cnbc

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the s&p down 12. nasdaq indicated down 37 or so and the 10-year is under 2.9%. it has been most of the morning. i think it still is. russia's out with a big warning towards the u.s. russia's prime minister de mede medvedev making comments after the trump administration threatened new sanctions against russia following this year's nerve attack on a former spy living in the uk and somebody like, like, ctouche the container or something that stuff is frightening. but we've talked about it already this morning the rhetoric and the actions taken against russia have diverged you have to acknowledge that, right? >> i will acknowledge that if i acknowledge that, will you acknowledge some other things? >> which things? i have to take it on a

case-by-case basis >> we have to do some tesla news >> so you don't have anything specific here? see, you have this general malaise that you're in with this whole presidency i mean -- >> no, no. i have very specific things. but we don't have time for it. >> does it involve tweeting? >> it could take hours in corporate news, tesla's board planned to meet with advisers next week to review plans to go private. and that's just part of this ongoing -- what's now i'm calling a soap opera joining us now alex sherman, technology reporting for cnbc.com the board is expected to ask elon musk to recuse himself from the process. alex, what do you know >> so what we know, joe swb it seems like a way of standardizing a non-standard process in terms of this deal was announced. you can't have a less standard process than announcing you are considering taking a company private on twitter and then

throwing out a price and in a succession of tweets leaking little bits of information here and there. so the board is going to meet with investment bankers, at least one investment bank. >> what bank is that, alex >> what was that >> what bank is that >> i know, but for reporting reasons i'm not going to reveal that yet but there's -- you can keep in mind that these companies do have relationships with certain people individuals have relationships with certain people. and the board has told elon musk or plan os the tell him he should get his own set of advisers >> alex -- >> a similar thing happenedwit michael dell when he wanted to take dell private. >> the basic question is does the board believe or know

whether, in fact, elon musk has financing secured as he said in his original tweet >> so what i'm told on this is that the board believes that elon can round up the financing. but it is still unclear if he has actual committed financing you know, that obviously is a concern with the s.e.c if he does not, in fact, have committed financing -- >> is that a concern of the board? is it a concern with the board that the ceo of the company is publicly saying things that may, may not in -- at least if you -- >> have an impact and may potentially break law. >> is that a problem have you sensed any angst among board members or people around the board? >> look, tesla hasn't commented where the money is coming from and it's now more than 48 hours. there was actually a countdown clock. someone made a countdown clock

on twitter about the time since he said funding is secured and tesla has not commented on pit that can't be a good situation for any company. if the money was readily available and there and it was all signed up, you would have to tell me why the company hasn't come out already and said, here it is. it's either not here or it's so bizarre/terrible investor and public relations about why you wouldn't say that at this point. so the board is -- >> did the company have any obligation to disclose these conversations given about going private before they came out via twitter even though the board said in its own statement they began having this conversation with elon musk a week prior? or is that somehow papering over something else >> look. you'd have to delve into what the seriousness of the conversations were at that point which goes back to the initial

point of is this funding committed/secured. the whole idea musk would go out on twitter and say i'm considering taking the company private and then saying funding's secured and not having the money, at that -- or having the money. i think that's what the board is trying to figure out and that's why they're going to do this next week to say, okay exactly what are you thinking? what do you have here? >> on the funding thing you'd either know it or you wouldn't am i crazy on the funding piece of this -- on the funding piece, you'd either know within five minutes whether there's funding or there's not funding. not, i can round up the funding, funding might be available if i call my ten best friends, call a lifeline i mean, that's not funding >> well, it is funding it's not committed funding >> i'm just trying to understand what the board is thinking about this >> well, i'm sure that is what the board is thinking about this i'm sure the board has been handed a situation now that they are going to again try to clean up if they can and again, the s.e.c. will be

looking at this to say, all right. what is the acceptable amount of time here if you do, in fact, round up committed financing i mean, this is the question right now around this company. if they are able to turn secured financing into committed financing, is there a certain amount of time if that's acceptable these are the questions that regulators are looking at right now. i'm sure these are the main questions that the board is asking and wanting to solve as quickly as possible. >> alex, thank you good reporting appreciate it. >> thank you coming up, japan's softbank making another big bet on the u.s. office space and job market details when "squawk box" comes back

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coming up, shop or drop. the nation's retailers about to ring up results. we'll bring you the names to watch. one store has christmas season starting already you know that? >> costco has halloween costumes

snoelt ♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square among the stories front and center, the u.s. dollar is at its strongest level for more than a year. 13-month high touched this morning. this comes amid concerns about escalating trade tensions and the uncertainty over terms of britain's departure from the european union qualcomm is settling an antitrust a case in taiwan for about $93 million. they've also agreed to invest $700 million in taiwan over the next three years all that is in lieu of a $778 million fine originally imposed

by regulators in that country in a dispute over qualcomm's patented licensing process and former tesla engineering president doug field has returned to apple. he's going to work on apple's self-driving car program he left tesla last month after five years he previously worked for apple's mac computer division. >> okay. by the way, i've always thought that, you know, everyone thinks apple is not really doing a self-driving car or no one really know what is they're doing. i think they might be doing something crazy and we don't even know it >> they could probably -- what they're working on is probably the guts, i mean, the software in there they don't need to be the manufacturer >> by the way, that's a real question if you talk to the folks at waymo or the folks at general motors who are doing this, this idea that somehow everyone is going to buy the brains of these machines and sort of just install them in these, the

integration -- >> is very complicated >> it may actually be much more important than we give it credit for. >> it's a question of who can they partner with. i do think apple understands they're not a real manufacturing company at the end of the day. >> we will see meantime, wildfires in california have claimed another life the latest is a crew member assigned to the carr fire in northern california. that fire has now been linked to eight fatalities now another major wildfire is on the march in southern california nbc's dan schennmen reports. >> reporter: large and fast, the holy fire is ravaging southern california firefighters have struggled to contain the flames evacuations have been ordered and the fire is now closing in on more homes. at least 14 have been destroyed. investigators say arson ignited this place and say it was the work of forest gordon clark arrested at his mountain home. just before he was taken into custody, he spoke with a photographer

>> do you know how this fire started? >> i have no idea. i was asleep i had two ear plugs in >> clark now faces several arson-related counts if convicted, he could face life in prison. >> a fire of this magnitude has the potential to impact a lot of lives, a lot of people, a lot of property >> reporter: fire is a fact of life in california more than a cousdozen of large s are burning in the state 90% of them caused by man. fires on pace to burn more land than ever before in what could be the toughest wildfire season in california's history. dan schennmen, nbc news. >> some of the largest fires in california have now been burning for three weeks. well, wework has raised another $1 billion funding from softbank the company says the investment raises its cash pile to $4 billion which it plans to use to acquire new property and leases.

wework provides shared office spaces in 23 countries now it is one of the most valuable start-ups. it is currently valued at $20 billion. l'oreal is teaming up with facebook to launch virtual demos for shoppers the company l'oreal bought an augmented reality and ai start-up earlier this year the new technology will be rolled out on instagram where users will be able to see how they might look with different shades of lipstick or eye shadow >> i love that you're doing the read on the story. >> i know. i wondered about that. but we all know, we all know, andrew and i are no stranger to different shades of -- >> we'll have to test drive these together >> we can -- you know what if you're going to do this job, you got to -- you can't be queasy about sitting in that chair. right, andrew? >> always. >> talking things over >> talking it over. >> if it's a different person and they use a different -- you know, we come out here and it's like what's wrong with me.

you need to feel good about yourself, right? on tv. and you were pale earlier this week >> i try to. then you take me down a peg and i feel less good it's complicated >> when i help you when your makeup is not right -- >> i apparently looked ghostly >> i thought he was referring to not enough sun >> we got it fixed up because of him. yeah >> all right >> what's your mac number, joseph that's not a computer thing, for those who don't know that's a makeup number we'll be front and center next week with home depot and m macy's and more. mark, great to see you today >> good morning. >> we've got the xrt i think it's up 2.6%, 2.7% so far this week. its best week in two months. we're getting more earnings next

week how do you feel about the state of retail right now? >> i think second quarter is going to look fine for those who have been doing well it will look okay, maybe a little better for those who are struggling i think prosperity certainly with regard to retail really requires tranquility prosperity, by the way, is a little bit tissue thin even though the unemployment rates are extraordinarily low. underemployment remains an issue. and the tax cut did not hit most americans. and if it did, it's been dissipated long ago. so going into the second half of the year which is obviously the critical portion of the calendar for retailers, there is not as much free disposable income. there's tremendous potential for

a drop is consumer confidence. largely driven by the events of the day every day. yes, many consumers paid little attention to what's going on by the time we hit the midterms, i think that's going to change >> i think that's kind of the key point. maybe we do see a drop in consumer confidence. we haven't really seen it yet. we're still near these multi-year highs you don't think we'll have a strong holiday season? you think people will pull back and not spend coming back to christmas? >> there'll always be a holiday season the question is what's the tail tale the tape going to tell when the year is over many retailers are struggling to get themselves in reasonable shape for the second half. if that burst of activity happens at the last minute at very, very challenged margins which is what we've seen in the last few years, there's going to be some breakage in retail as there has been >> you really think all of these -- and they've been well

listed on cnbc and other places. but all of these consumer confidence numbers, business confidence numbers, right track numbers, these are all outliers that are going to come home to roost because of the -- i don't know what did you call it we need tranquility. do you think a tweet is going to cause all these people to finally think these things are horribl horrible.. >> if it's being bandied about like a schoolyard fight and it really explodes into a series of zrungss -- >> you're talking about a policy with trade. >> what i'm talking about is the effect of what's going on politically with regard to prices i don't think prices are going to be hit this year, per se. but they could be hit explosively next year. >> the prices of goods that consumers buy. >> so the publicity that receives is going to create a

tremendous issue in the hearts and minds of consumers and we've seen in the past bursts of disruption caused by -- i mean, i'm an old guy the oil embargo in 1973, the business stopped right in its tracks >> when the republicans in the midterms run on the positive effects that they say we've had from the tax cuts on corporate america. and on the unemployment rate being 3.9%, you don't think any of these positive tail winds are a result of that >> the retail business is driven by the man and woman in the streets. >> they have more jobs but they're underemployed. so they'll wage expenses rising. and unemployment is suggesting there's a shortage of available labor.

folks' actual income is not rising it's under pressure now from inflation which is beginning to creep. and inflation could become a tremendous disruptive factor if these trade disputes explode because the consumer is going to pay the price for this >> go ahead. >> go ahead. >> i understand you're saying you assume it's going to happen. assume it doesn't happen given the state of retail for the last two years where now let's look at the supply side. you talk about demand of the consumer a lot of the big department stores have really rejiggered and restructured where do you see the opportunity there? if there at all? >> i don't buy they have restructured and recovered i think the winners in retail are the amazons and the costcos who bracket the marketplace. one obviously all in e-commerce. the other largely brick and mortar the legacy players like macy's, although they've put up a whole host of very attractive

headlines really haven't changed their operating strategy whatsoever not as viewed from 700 or 800 stores so i look at herald square and some of the things they're doing is very exciting but they're not translating yet. >> but macy's would argue their focus has been on online share and cutting back old stores. >> well, they haven't cut back enough old stores. and their online share which has been rising are not particularly profitable for them. because they're not organized and set up to be efficient as obviously amazon has become. so the shift into e-commerce will continue in a big way i think it'll grow again by double digits. the legacy players that have managed to get in on that party will get better. but i don't think they've

unloaded enough of the brick and mortar space to rationalize the changes that have taken place. >> thank you >> i'm worried about retail. i'm worried about everything now. >> can't help but worry about everything look at the headlines every morning. >> so much to be happy about though anyway great golf tournament going on all right. andrew coming up, shares of facebook getting clocked last month following that bad quarterly report now off only about 15% since earnings were released up next, a facebook bear who warning this is just a head fake and the situation is only going to get worse from here we will talk about that when "squawk box" returns z

. welcome back to "squawk box. after facebook -- but our next guest has a very different opinion. in a new note, he says facebook may have hit its highest point for years to come. joining us now is paul schatz,

chief investment officer you made the fact that the stock has moved up has been a head fake why? >> good morning and a number of reasons. so first of all, facebook is so overly loved and so overly owned, it's almost reached a cultlike status. i really think the news that came out with the earnings report was so bad long-term, they didn't just miss for a quarter. they didn't just say, hey, the next couple of quarters are going to be a challenge. they said we see decelerating growth as far as the eye can see with no qualifier. for a stock that's gone up at a meteoric pace and almost parabolic. and it's overloved and over-owned and it's got so much hot air and it's really expensive, that's almost a seminal event. that's a catalyst.

if they had said that in 2013, i'd have a different viewpoint the bull market itself is 9 1/3 years old. the bull market's been living on faang stocks think of how the environment for tech has been. it couldn't have got any better through january. i mean, everything in tech has been just perfect. >> what's a fair price for facebook fair price for facebook right now? >> i'm not a fundamental analyst. i can just tell you that if my thesis plays out, the next stop is probably below 1650 a i've been a bull so many years, this is not some perma-bear coming out i think ultimately by 2020, '21, i think it's a $90 stock the head winds have actually increased.

you're late in a bull market cycle. there's so much -- you got tech regulations. no one's talking about that anymore. you're going to regulate tech. it's coming. so you've got head wind after head wind coming let's not forget look i don't want to say social media is saturated, that's an exaggeration my 15-year-old, 13-year-old, 10-year-old laugh at me because i live on facebook the next generation is certainly not going to be like it is right now. there's so many things i think if you said to me, hey, how am i going to be wrong i would say to you, well, free cash flow growth has to be at least 5% and if it doesn't, which i don't think it's going to be, they will continue to revalue that stock. a bear market's coming at some point. i think we have recessions somewhere between mid-19,

mid-20 i think the stock goes down -- >> those are all fascinating macro calls. but if you're going to come on the show and talk down facebook, give me the rationale for what the price should be of facebook. >> right so ultimately we don't know what free cash flow growth goes to. i don't think it stays 5%. i think it goes 4, 3, 2.5. if that's the case, certainly the stock goes below 150 as we go on in years, i think that translates like after we saw the dotcom bubble bursting, that translates into $100. is the company done? no it couldn't get any better >> sarat, one question >> i understand your rationale but as a long-term equity investor, you have to understand there's risk in any investment say guess what we're reinvesting in our business and kind of

rebasing where we're going and it's not just facebook there's other thing there is by the way, this is a cash flow positive company and i agree with you margins go down but over a period of time, they have an install base that actually moves across different demographics it is a company that is a global company over the next two, three years will come back maybe not in the next six months, but on a stock-specific, i disagree >> earlier in the show you had santoli on talking about microsoft in '99 it was a global great company. ten years, the company was still great, but the stock price was down and really struggled. i think facebook is similar. listen, it's a great company, but it was priced for perfection that -- >> paul -- >> listen. that decelerating growth as far

as the eye can see, this is not an earnings miss this is a long-term problem they have >> paul, thanks for the perspective. great part about the market is everybody's opinion is what makes the market we shall see >> thank you >> anybody on myspace anymore? do i need to switch? coming up, this morning's stocks to watch. but first as we head to break, here are the biggest premarket dow winners and losers stay tuned you're watching "squawk box" on cnbc when my hot water heater failed, she was pregnant, in-laws were coming, a little bit of water, it really- it rocked our world. i had no idea the amount of damage that water could do. we called usaa. and they greeted me as they always do. sergeant baker, how are you? they were on it. it was unbelievable. having insurance is something everyone needs, but having usaa-

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i'm a small business, but i have... big dreams... and big plans. so how do i make the efforts of 8 employees... feel like 50? how can i share new plans virtually? how can i download an e-file? virtual tours? zip-file? really big files? in seconds, not minutes... just like that. like everything... the answer is simple. i'll do what i've always done... dream more, dream faster, and above all... now, i'll dream gig.

now more businesses, in more places, can afford to dream gig. comcast, building america's largest gig-speed network. our guest host this hour, sarat sethi managing partner at douglas c. lane associates and a cnbc contributor now i'm worried about -- you saw. i was worried. i'm worried about that we're underemployed and i thought there were glimmers of hope in terms of wage gains in some of these reports. am i wrong about that? is the tighter we get, aren't we expecting some wage gains eventually >> i agree with you. i'm not in the camp of i don't think the consumer has the money. you know, everything we've seen so far has said balance sheets are getting better, rates are still low, employment's getting better and wages are slowly rising as well i think there's that bear case we've talked about

if you're going to say what could go wrong, tariffs could go wrong. oil prices could go to $90 >> that could block the strait of hormuz which would be bad >> every year we go through for this goldilocks scenario, this bull market we've had, we can say what could go wrong. china tomorrow could come out and revalue their currency again. so i think in the face of all those unknowns, what do we know? we know, you know, that things are getting better >> do you think it's peak earnings >> i think it's peak earnings for certain sectors. no question about it but i think this rotation we talked about getting into health care, financials, and industrials i think will help the market >> sarat, thank you. and most importantly, do you know the real news of the day? it's his birthday. happy birthday >> happy birthday. >> it is >> and being a "squawk" guest host >> i mean, what a birthday present that is. >> thank you for having me >> you're welcome. >> good to see you

coming up when we return, red flags everywhere two new reports suggesting housing will be in for a world of hurt in the second half of the year hope that's not true but we're going to tell you the details about it straight ahead. plus, speaking of a world of worry, a roundup of the biggest geopolitical risks in the market, they're feeling it "squawk" comes right back. so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today.

world of worry the turkish lira collapsing and the effects are rippling through global markets breaking economic news a key read on inflation minutes away the numbers and market reaction coming up. plus, smooth sailing the ceo of nor wewegian cruise e joins us as the last hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box. welcome back to "squawk box" on cnbc. i'm joe kernen along with andrew ross sorkin and morgan brennan the futures as we speak, it's an

old term we used to use. we're down 118 on the dow know s&p indicated down 14. nasdaq indicated down 43 as all this is happening in the equity markets, there's another problem for the turkish lira against the u.s. dollar. after disputes worsen between the two countries. at the center is the detention of a u.s. par tstor in turkey o terrorism charges. the financial times is reporting that the ecb is now getting worried about european bank exposure to turkey paribas one of the main banks. the euro falling against the

dollar $1.14 exactly now after that ft report turkey's president, in fact, is speaking now and he just said that turkey faces an economic war and that converting dollars and gold to lira would be the nation's best response he's calling on those who have gold under their pillow to convert the gold to lira i don't know if i would do that if i were in turkey, but that's what he's suggesting we'll continue to monitor the speech and bring you the headlines. >> it's worth noting they have been an ally for us. they're one of the strategic partners for the f-35 program. that has come under fire with all of this tension between the countries. all those sales and how it can affect defense contractors, et cetera check out the russian ruble. that is also dropping to a two-year low medvedev saying any new

sanctions against russia will amount to a declaration of economic war those comments after the trump administration threatened new sanctions after the nerve attack on a former spy living in the uk joining us now, head of security at wells fargo securities. we just shows two dramatic charts in term of currency this morning. the lira and the ruble which is more important broadly to the markets >> i'd say the russian ruble is more important systemically more important in a larger economy but i think the other question is, is this -- what's the issue here is this a symptom or a cause i think there's clearly growing differences between the u.s. and russia and turkey and china. and i think that's causing, you know, this convolution in the foreign exchange markets >> we've been also talking about

this morning and specifically where the lira is concerned in this situation in turkey, the potential for contagion. at least from a currency standpoint, is that a possibility? >> it is it certainly is. i would be more concerned if it were russia and things were to get worse there. we've had other emerging currencies that have fallen sharply. and they haven't been such an issue. the difference with turkey is the geopolitical importance. so in that sense, i think it has great chance >> the yuan. we've obviously seen a valuation there and stepping no to prop it up right now, how does that play out? >> we're not quite as worried. mainly because if you look at a

country like turkey and it ability to perhaps take on the international investors, it's relatively limited but of course china has a much larger war chest and they've been doing this for some time. capital controls can come on capital controls go off. i think at this point, they'll probably see some modest weakness further in their currency, but they're already showing some concern about excessive depreciation i'm not concerned about a collapse in the currency >> has the dollar if by default become a safe haven trade? >> yes, i would say that over the last three to five years, it hasn't been the most safe haven but this extreme excitement for the foreign exchange markets we're seeing today, for example, dollars outdoing everything. so this is the place to be for right now. >> you know, it's interesting because we talk a lot about u.s. equities and the fact that at least more recently they've kind

of -- traders here have kind of shrugged off the trade headlines. but it seems to be playing out are you seeing higher volumes and volatility and is this not just traders but also companies coming in to hedge in different parts of the world right now? >> i think it's part of it i do believe there's some increase in volume certainly volatility in particular, i would say your turkish liras, mexican pesos, clearly when you look at the data that's available, the volatility majors have sparked much higher. if you're looking at the major currencies, it's relatively low at this point. but high volumes and some increase in volatility but i think still more volatility to come if you think about the uk and brexit, for example, there's a lot to happen between now and march of next year i think we're going to probably continue to see some increase in volatility and the bonds will continue to go up. >> yeah. just saw the lira is now down 10% against the dollar right now.

so for a trader or investor who's looking to dip their toe into fx right now, what would you suggest that them? how would you guide them >> i'd be looking for something to sell against the u.s. dollar. just in the current environment. and it kind of depends if you're looking for a particularly exciting ride, maybe you'd want to be short currencies like the mexican peso because you're looking for currencies that perhaps it's not too painful to short by either interest rates being too high. if you want to stay a little bit closer, among the major currency where is maybe you're going to have a slightly smoother ride, i think you're looking at currencies it's on the sideline and also that are sensitive to global equity markets. there you'd be shorting the australian dollar, new zealand dollar, and the british pound. i think you'll get the same result it's just a smoother ride to the downside >> thank you for joining us today. >> thank you shifting gears a little bit,

staying with gee geopolitics. we're joined by steven cook. unbelievable in the past -- i don't know, do we need to go back ten years five years, now. is the biggest recent development the accession of mbs and the implications for this new saudi arabia is that where you are with this? >> well, certainly the emergence of crown prince bin salman is trying to make saudi arabia the most important country in the arab world and he's doing it in a way -- let's say he's breaking dishes rather than seeking consensus. and we see this in first his dramatic ascent to becoming the crown prince moving all of his competitors out of the way very, very quickly. his dramatic reform program

which is something that's really going to change the way politics and business is done in saudi arabia and this rather aggressive foreign policy which we're seeing in the very nasty spat with canada of all countries >> it's hard to -- i don't want to view everything as an american, obviously, steve and i don't know who to root for here but i mean, two or three years ago i would have said a stronger saudi arabia would be something we would want in this country versus iran. and it looks like that has come to pass. if you look what's happening in iran right now compared to saudi arabia, it's staggering. then the minute i think saudi arabia is a great friend, you know, i wonder about the hijackers, opec, oil you know, i don't know it's tough to figure out i think we need to be detached and let the chips fall where they may and not get too involved in all this stuff >> well, i think in a way, you

have to look at saudi arabia in a somewhat different frame is it strong certainly bin salman can bring significant kind of brute political force to bear on his opponents within saudi arabia. but, of course, his efforts in yemen, his effort to impose a blockade on qatar, other foreign policies, have been essentially a failure. so it's hard to say that saudi arabia is strong i think in ways, it's quite weak and then, of course, in the conflict with canada, we're talking about canada, a model neighbor of the united states which was merely expressing its concern about the arrest of peaceful dissenters. and the saudis have overreacted in a way that actually makes them look weaker and honestly quite foolish >> my question is why the west, if you will, and why the

business community which has been very happy to take saudi money and effectively placate all of this, at some point is there a line in the sand where people say, you know, we're not doing this anymore >> well, as i said, mohammed bin salman is trying to switch the way business and politics are done in saudi arabia that is fwhb a way, somewhat destabilizing. over the course of many years, there's been an elaborate consensus process within saudi arabia much of which is done behind closed doors bin salman has essentially thrown out that model and is now seeking to accumulate as much power as possible. this has created dissent and fissures within the royal family some of which you see creeping out. >> steven -- >> some of which you don't it's a country that we often think of as stable, but i think we should think of more in terms of relative instability. >> the question i have is you

have a man in power who has talked about transforming the country, who goes on "60 minutes" says women are going to drive. has talked with all business leaders in the country blackstone's taking money from them softbank's taking money from them then at the drop of a hat, they're unhappy about a tweet from canada and it seems to set the whole thing back on its heels, you know, as if none of these reform efforts have happened how are you supposed to square that circle? >> i think bin salman got terrific press when he was here last spring. i don't think that anybody should give the saudis credit for being the last country on earth to granting women the right to drive when saudis talk about reform, we should be very skeptical about it >> what's it all mean for -- and then it comes back to the syria conflict and iran and russia and enemy of my enemy type

relationships. >> i don't think that anybody is suggesting that the united states should somehow walk away from its relationship with saudi arabia saudi arabia is the most important country in the arab world. our interest and security in the region are bound up with the saudis i think we should be more clear about what is happening in skrab. and the weakness of crown prince salman there is every reason to want to see saudi arabia to be successful there's every reason to believe that we can try to help influence reform in saudi arabia of course the saudis have to be serious about this as you point out, this overreaction of a tweet from the canadian foreign ministry suggests all the talk of reform and the great pressthat the saudis were very happy for the crown prince when he was here seemed hollow. >> if i did a word search of

your book -- when did the book come out >> about a year ago. >> how many times would i see the word "isis" mentioned? we didn't even mention, that's not a word we even just used in talking about the middle east. that's different, isn't it >> it's somewhat different a function of our own attention span isis is still out there. and i think if we look at the span of the last two decades, every time we believe we turned a corner and struck some serious blow against terrorists, some other groups, some new metamorphosis of the same group has emerged as violent if not more so than before. although as an exteistential threat to iraq, isis has been greatly diminished it's still out there and it's likely to transform into something else. this is not a time where the

united states and its allies and the anti-isis coalition should relax by any stretch of the imagination. >> all right, thanks "false dawn. i wish it wasn't false there it is. right there. steven cook. thank you. >> thanks so much. meantime, let's get you caught up on the headlines at this hour. another twist in the tesla saga soap opera planning to explore the possibility of taking the company private. but the board expected to ask elon musk to recuse himself from that process campbell soup brodowngraded to underweight. if they see a sale as an unlikely outcome the analyst says even if a sale does happen, it's unclear how much of a premium a suitor is willing to pay and dropbox revenue beat wall street forecast. but that news was overshadowed

by the departure of the company's coo. he helped oversea the expansion of its enterprise business we've got a lot more coming up on "squawk box." a troubling sign for the housing market we're going to tell you why consumers feel like it is no longer a good time to buy or sell a home. we'll do that right after the break and in the next half hour, nike may be out of the golf equipment business but the brand has a rare chance of sweeping the majors we'll explain. before break, a look at the turkish lira which is taking a pounding we'll talk about that as well. ay tedbout 8%. stun you're watching "squawk" on cnbc hey allergy muddlers: are you one sneeze away from being voted out of the carpool? try zyrtec® zyrtec® starts working hard at hour one and works twice as hard when you take it again the next day. ♪ stick with zyrtec®. muddle no more®.

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starting sunday save up to $14 on zyrtec® products. i'm a small business, but i have... big dreams... and big plans. so how do i make the efforts of 8 employees... feel like 50? how can i share new plans virtually? how can i download an e-file?

virtual tours? zip-file? really big files? in seconds, not minutes... just like that. like everything... the answer is simple. i'll do what i've always done... dream more, dream faster, and above all... now, i'll dream gig. now more businesses, in more places, can afford to dream gig. comcast, building america's largest gig-speed network. welcome back to "squawk box. wework's investment raises the cash pile now to $4 billion. plans to use that money to acquire new property and leases. this is now the second investment from softbank wework, of course, provides shared office space in 300 locations in 23 different countries. wework is now one of the most valuable start-ups currently valued at $20 billion. wework made the disclosure yesterday as part of its

first-ever release of financial results. revenue doubled in the second quarter to roughly $421 million, but net loss in the first half of the year more than tripled to $723 million as it opened new office spaces and spent more to market them. so still a big question about the business model itself. more troubling housing sign in the market. i didn't know there were some. but apparently there were more than we were thinking about? diana olick, you should have called me about the first ones >> i've been talking about it. >> i was out for two weeks >> okay i'll give you that first and foremost, affordability fell to the weakest level in a decade of q2 of this year that according to the national association of home builders

that's thanks to higher home prices and higher mortgage rates. just 57% of the homes sold in that quarter were affordable to americans making the median income that's down from nearly 62% in the first quarter. and that's nationwide. but in some markets, the situation is much worse. most of the least affordable markets, of course, they're in california but in boston, seattle, miami, portland, and reno, less than 40% of the residents making the median income can afford the median priced home affordability likely behind a drop in housing sentiment among consumers. app new report from fannie mae shows fewer americans believe now is the time to buy or sell a home fewer also said they felt sure about keeping their jobs in the coming year. none of this bodes well for housing in the second half of the year especially if mortgage rates move any higher which they could very well do and that would weaken affordability even further back to you, guys. >> all right thank you. the president is weighing in now.

i've got half of his -- fizz tweet on the n apple i don't know if we made a board. here we have it. the nfl players are at it again taking a knee when they should be standing proud by for the anthem numerous players from different teams wanted to show their outrage at something most of them are unable to define. they make a fortune doing what they love. and we have the rest of the tweet. dot dot dot usually means another one is coming? >> stay tuned for more. what he's effectively saying >> you know nfl is starting again. >> i'm aware of that i've heard >> i think the giants lost -- did they lose to cleveland but saquon's first run was what? 39 yards that's pretty good you know who that guy is, right? >> how many baskets? >> yeah, yeah, yeah.

>> what inning >> it's confusing for him because there are three pointers there's a field goal and -- no. this is -- yeah. >> football? >> you have two teams here, you know that, right >> but i thought you can't use your hands >> that's the other football >> okay. thank you. by the way, it's a joke. i do know that >> you shouldn't even try. coming up when -- i shouldn't try. that part is true. norwegian cruise lines, will it be smooth sailing? that's a bit of a cliche anyway, the company looks to dethrone rivals like carnival and royal caribbean. ceo is going to join us on the set at:4eaerti 80 stn me you can come sail away with us right here on "squawk box.

restaurant chain buffalo wild wings could be adding sports betting to the menu a spokesperson says it is in the early staging of adding sports betting to its locations this comes after legalized sports wagers back in may. you think about it their business model in large part -- look at the way they advertise. look at the way they advertise, you know, all the funny things that people are waiting there to see overtime and -- so that makes total sense. it's nice to be engaged. money does get you -- even the pool the march madness pool, we get

engaged. any skin in the game -- >> gambling is going to be, you know, the whole -- >> it'll be interesting. coming up, breaking economic news we're minutes away from the july consumer price index everybody's talking about inflation. numbers are getting more important each month we'll take you live to the cme after the break. take a look at u.s. equity futures at this hour down over a hundred on the dow we'll be back.

welcome back to "squawk box. rick santelli here with important news our july read on cpi the survey says up 0.2% on headline up 0.2% on core. which of course is without food and energy both those match expectations. let's dig a little deeper. year over year headline, up 2.9% why is that important? hey, we've had many up 2.9s, but to find a bigger one with a three handle, you have to go to december of 2011 2.4% year over year core, that's a tenth hotter than we were expecting. if we look at real average earnings, they were up 0.1% year

over year. those were weekly. hourly, we're up -- excuse me. that's a minus sign. so if we look at average weekly earnings year over year, up 0.1%. but a revision looking at 0.5% but minus 0.5% year over year. that's pretty good news if you're looking for a bit hotter inflation. however, since we didn't really take out levels that seem a bit hot, it certainly looks as though we're giving up some ground a little bit. keep in mind, we lost the handle we haven't got it back in tens it was on the 23rd of july now we're going back down into it we'll have to wait and see big story today, the dollar index now above 96 it's extending its gains back into the summer of 2017. and it really does underscore a couple of different dynamics one of them we have to pay attention to is what goes on with the rest of the world that needs to procure dollars to

satisfy debt denominated in dollars and serve as various payments that's something to pay close attention to joe, back to you >> thanks, rick. if you were over in turkey and the guy told you to turn in your gold for lira, would you do that like, immediately? >> repeat the question, joe. i'm not quite sure i heard what you said >> he actually said we want all of our citizens to get the gold out from under your mattress and turn it in and we're going to give you some lira i think i might keep my gold >> i don't know. so somebody's been reading about richard milhouse nixon, i guess, huh? >> yeah. so i'm going to put steve on the spot here. steve, says here i'm going to come to you for your reaction to the data now, i don't want it to be words. can you give us some type of reaction -- like, what would you reaction be on camera? >> no, no. i want a facial -- is it shocking is it boring is it -- >> no. it's interesting

>> it is all right. give me an interesting -- see, you're not ready you didn't have acting lessons >> i never had any acting lessons. this thing with me and joe or with rick, people ask is it real i'm like, i'm not an actor it's the way i feel. >> is it the same with me as it is with rick i thought it was a love thing. >> a love thing. can i talk about the details of this -- >> give us your reaction >> what's your reaction? >> i want to know about wages. >> we're going to get there in a second let me say a couple things in here my point about when i said this is there are a lot of ups and downs, things that equate -- >> sell it >> give me the swings. the used vehicle prices going up up 0.7% after a 0.6% in the prior month. so that is getting higher or hotter if you want to call it. a 1% decline in prescription drug prices. not exactly clear if that's the

declines we've seen. airline fares have been down, down, down, down four downs up 2.7% in this month. something to watch one of the things that's happening is the per srecipitous decline in telecommunications cost which kept down the inflation rate it's falling out of comparisons. that's another reason we're up there's a lot of talk in thinking about we hit that psychologically insignificant 3% number on the cpi. we didn't get there. but still 2.9% these numbers are in line. and we're not seeing too much effect yet of any tariffs. the question becomes how would the federal reserve act if tariffs started pushing up inflation. i want to give you one quos from jim o'sullivan nicely done, guys. the fed likely would respond aggressively to a tariff-induced surge in inflation fearing the people would be able to extract much bigger wage gains in

compensati compensation i think that's true, but i think to a point because i want to show you one other thing. and this is the ten-year inflation expectations it's one of the things the federal reserve uses to say are expectations getting out of control. this is from the ten-year tips market it's kind of flattish around 2%. the fed would get concerned if that number spikes so right now the answer to the wage question and inflation question is the fed is watching stuff like that to see are people's expectations of inflation getting out of control? if it did, that would increase the pace but not the number itself i'm done >> thank you >> you're welcome. >> it's lovely. >> was that all right, joe >> that was a good real reaction substantive. >> but was it interesting? >> substantive >> i think it's interesting. >> substantive >> it's leveled off at 2%. that's what the fed is going to watch. they'll watch that, they'll watch the michigan inflation expectations they'll watch a series of things that will say, okay.

this is getting out of hand now. by the way, you got a lot of push me/pull you going on here the dollar going up is disinflationary. right? you're going to are have some ps going up from tariffs and some down as a result the fed's going to watch that. >> a lot of great acting coaches in new york city >> you think i should go for acting classes >> i don't know. you said you've never -- you said you don't know how to do that with me and rick. i don't know if you want to. >> i don't joining us now, chief u.s. economist at s&p global equity research you looked -- of course, you're in the business. you looked transfixed on what steve was saying >> i never thought that economics would be interesting, but it is. i've always found it interesting. >> it's dismal. >> sometimes i'm not surprised. that would be my take. the economy is doing a lot better than what expected in the past job gains are around $200,000 a

month on average we're expecting about 3% this year as well you'd expect to see inflation pick up. i think it's been rather modest the readings we saw so far, probably because of a lot of factors at play here and if that's correct, then the fed -- >> i want to ask a question that joe wants to ask channelling joe here so the argument about the speed limit of the economy has been if you run too hot, it's only a 2% speed limit. you get inflation. and that shows you that you're running too hot. we're running 3% year over year. we did a 4% quarter, but that's a single quarter if we keep doing these sorts of numbers and can run 3% without causing inflation, does that mean that economics or the economists had the speed or the run rate of the economy wrong? >> the -- so what you're talking about is the potential growth rate we have it at 1.8% at s&p global i would say that -- yeah,

economists get things wrong all the time so we could certainly be wrong, but i would say what's going against that argument would be demographics that's what's going to hold down growth we right now have a labor participation rate at a 40-year low. we still have a lot of baby boomers leaving the market we have a lot of people prying that out as well and that puts downward pressure. >> i think conventional wisdom on the potential growth rate of the economy and i think slack in the labor market are two things that are very much up in the air right now. that maybe economists have been overly pessimistic about those two things >> i would also then add, if you're going to look at business formation, that also is incredibly low based on where we were pre-crisis. we're probably 50% to 60% where we were pre-crisis >> says something in the journal over the weekend about who's still around in terms of the participation rate >> i read that piece, yeah >> they factored out -- you know, the people sitting at home doing opioids and everything

else what they came up for 2 million to come back already >> easy. you wouldn't run right to the bone in other words, always going to be some other structural employment in there. some number of people who aren't going to work. >> but did it play into freddy krueger's -- the guy at princeton. or did it play -- >> alan has to come back on. my guess is he's on vacation up in the cape. >> what should it play into in there's more slack or not? >> i'm trying to think of which economist had the more slack idea i was always a little optimistic by the way, it plays more into the fed's idea i know you criticize them, but nobody has been more willing to let the economy run than the bernanke, yellen, and powell the sense i get from them is they want people to go back to work and they see huge downside for people being out of work and putting them back to work is a good thing that echoes into future generations and future

years for potential growth of the economy. >> i just wanted to jump in on that so in terms of the slack, you know, i know economists are dismal, but one thing we're seeing is those people of prime age are starting to come back. and that's a positive. >> and that's part of the 2 million. and look at -- never mind. >> there but for the grace of god is you if you're not already there. >> there are people who are 65 who could retire or they could stay in the workforce. that is another potential source -- >> they're staying in longer >> they are staying longer >> another thing i would say, if you want to go in terms of the skills gap question which i think there's a big factor there, if you look at the so-called beverage curve, that shifted out pretty sharply and that, i think, is a real question of basically the question of are they -- you know, can businesses find the workers they need. >> seriously >> under your breath joe has been insulting me.

>> i'm not insulting -- what i'm insulting myself then. no, i was just -- i'm surprised. i'm not insulting you. anyways, thanks. we just got the second part of president trump's tweet. oh, we're going to -- he tweeted earlier the nfl players are at it again -- but he added something. they make a fortune doing what they love. and then let's go to what -- we did the dot dot dot. he just tweeted, be happy, be cool a football game. the fans are paying so much money to watch and enjoy, it's no place to protest. most of that money goes to the players anyway find another way to protest. stand proudly for your national anthem or be suspended without pay. reason we just mentioned this again is that football season is starting the nfl came out and tried to address it in kind of a way that didn't satisfy anyone. then they actually -- the players union didn't like that >> right. >> and pulled that that's not the way it's going to

progress and i think we're in limbo we're not sure what they're going to do. then jerry jones and -- >> some owners are going to pay for it, some aren't. >> dak prescott said i'm not kneeling then he gets hammered as a -- i don't know a traitor or something on social media. it's still very, very tribal and bifurcated >> we've seen it play out in corporate america as well. the same time we had results from papa john's, their founder basically ousted a process that started last y er with all of this controversy around the nfl they of course lost their sponsorship. on deck, will it be calm ore rough seas ahead for norwegian cruise line? that's coming up next. e with re. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory.

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welcome back to "squawk box. norwegian cruise lines holdings reporting quarterly results this week norwegian upped its outlook for the year joining us right now is frank del rio. he is the president and ceo. welcome. we were talking about cruising have you guys cruised? by the way, how often are you on a cruise line? >> you know, i make it a point to visit every one of our ships once a year. i need to talk to the crew, make sure they know i'm supporting them

is it's good to be on board alongside customers, what is the current climate, the customer? or do you think that's distinct to what's going on at norwegian? >> i was listening to steve and your prior guests i've always believed the government agencies and those who follow economic trends should look at the cruise industry as a leading economic indicator. customers buy today a discretionary service they're going to consume seven, eight, or more months down the road >> talk about the pricing power that you now have. >> well, it's -- we have pricing power. we increased our forward guidance for the year on the back of higher pricing, higher yields this is a fixed cost business. >> right

>> so you win and lose based on your ability to raise prices over time. to generate more on board revenue. >> is it higher prices across the board? is it higher prices at the high end? i know you've developed a number of services at the higher end. is that where the margin is coming >> they're coming across you know, we operate three brands norwegian, oceania, and regent as i mentioned yesterday in the earnings call, those two brands are now 50% sold for 2019. the fastest they've reached that milestone during the course of the booking curve. so people are booking further out which to me is showing confidence in the consumer who is putting money down today for a discretionary vacation at higher prices. so you've heard about the millennials and they don't want stuff, they want experiences

and experience is what we sell whether it's excursion, spa, specialty dining people are buying it at higher prices >> the vantage point is strong right now. is there anything you could see potentially sidelining that. are you worried about everything going on in trade tensions around the world for example, the impact it's having on steel prices >> ceos worry about everything we have to worry steel is not something i worry about. our ships are built in europe primarily in italy or germany. they're on fixed costs contracts. so the tariff riffraff is going back and forth no it's not affecting us. >> all right we got to leave it there thanks for coming in this morning. appreciate it. thank you. coming up -- i thought it was you, joe it was me. the turkish lira this morning, it is down but the full story behind the drop right after the bak

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currency flies rapidly downward against our very strong dollar aluminium will be 20%, steel 50%. our relations with turkey are not good at this time. let's go to michelle caruso cabrera for more. >> that's an example of the president using maximum pressure when he wants to try to achieve what he wants. he's trying to get the release of an american out of turkey here is the lira one thing you should understand is there is a currency crisis full stock going on in turkey. and you can't blame the united states for it at all it's turkey's own making turkey lives on foreign borrowing. they need foreigners dollars and euros to come into their economy because they have a current account deficit. if you don't know that means, don't worry about it they have done nothing to try to attract the dollars and euros into turkey.

interest rates are rising in more stable places in the world. you're less likely to put your money in turkey which is instable money has been leaving many emerging markets turkey and erdogan, in particular, doesn't like higher interest rates turkey needs higher interest rates yesterday. two months ago a year ago he won't let them do it. and that is why you see the currency getting weaker and weaker we're showing you a one week if he can bring up a two day or one day, i want to see what the moves are here because what's been happening this morning. around wan, the leader of the country, made some statements that brought no calm to the market whatsoever. and the lira continued to plunge however, his new finance minister, who is his son-in-law, by the way, took over about a month ago. has been speaking for the last few months maybe the last 20 minutes. he's been saying the right things he's been saying we believe in the independence of the central

bank that's a full lie. turkey hasn't allowed independence in central bank he's saying it, at least, for the first time they're going to have a stronger monetary policy. he's suggesting it seems to bring the lira off the lows. however, with president trump's tweet, i can see why the lira would be moving lower. we're showing this is the lira if we can show the dollar, the reverse charts to see what the dollar is doing. that's going to give the price how many turkish lira to the dollar that is going on nobody should be surprised i think the next question, guys, what you've been hinting at, to what disagree is there systemic risk in there are banks in europe that have exposure there. but at the same time, this has been a train wreck in slow motion right. you would hope that the leaders of those banks, with exposure, have done things to hedge their positions, to reduce their exposure, and to maybe wall off whatever problems they have there.

you can be sure the ecb has been thinking about those things. >> you would hope, i would point out, if you take a look at shares of deutsche bank they're down 5% premarket. the fact that the worry is about potential systemic risks seem to be playing out in that stock, for example. >> right if you're worried about systemic risk in europe, the first bank you're look at is duetch bank. we've share the share price and the way the securities are cocoa performs as well you can see we see at the bottom, that's the dollar chart. so the dollar is getting stronger against the turkish lira what we show you at the top is 6.21 lira for every dollar. >> michelle, you know, we're dancing around this, but there's a run on our country's currency. the president wants to get some guy out. one individual guy and not cooperating with him onthat.

he's willing, while i'm not saying it's fire in a crowded theater, there's a run on the currency you see a currency on the run and you pile on it. >> absolutely. maximum pressure. >> this guy is ready to -- and this is about getting an individual out of turkey and yet we're going to -- that shows you he's willing to do a lot of -- >> he smells weakness. he's going to use it. >> unbelievable. >> maximum pressure at the point where they are really, really struggling i don't know if erdogan gets it. i don't know if he gets it that he needs a policy shock of dramatic proportions now. >> i mean, you know, just looking at the other side, i would get worried about being too impulsive with causing a run on some of the world's currencies i mean, maybe the turkish lira won't do it. but adding to it and piling on and the ruble right now.

but then, again, maybe you get the desired outcome down the road but i would --i don't know should we tread lightly? that's the way previous administrations would have done. >> i'm glad you bring up the ruble for the following reason they're letting the rubble weaken right. so when we think about systemic risk, a lot of people have been around for a long time think back to the russian ruble crisis from the '90s. remember back then currencies were pegged. and the russian central bank blew billions and billions and billions of dollars trying to keep a ruble to a certain level against the dollar they finally had to give up. it happened overnight and caused dramatic consequences in their banking system and, by the way, all over the world. including hedge funds in the united states. not happening again. they're not going to blow all that money trying to defend the currency when we see these dramatic currency moves, yes, they're dramatic but they're better than the way it used to be. they allow a slow motion process rather than a, you know, dramatic move. >> we talked about it earlier,

michelle one lesson being learned it's better to have the united states on your side in terms of a lot of these things than not on your side and in the middle of this trade dispute, that's being driven home, again. it's like it's scary no one can give you power. you have to take it. you're seeing it played out. it's fascinating. >> for sure. >> thank you jackie deandrews is here with some important news. finally. the pga championship, which happened -- they will tee off again today but it started yesterday. and nike has a chance to sweep the majors who has to win if ricky wins, that won't work. >> you're right. nike sponsored athletes, if one wins this weekend in st. louis, nike will sweep the majors the masterers patrick reed, brooks koepka, francesco

molinari they're sporting the swoosh. nike ditched the golf business but it stayed with the apparel and food wear businesses sponsored athletes are winning and maybe losing the underperforming equipment business was a smart move for nike tiger winning anything, the company could make history and garner more attention on the business front if the swoosh-wearing player can drive it home. one last note, as a relatively new golfer i would tell you i don't think the equipment matters much the apparel matters more certainly to me. >> yeah. on any given day, my clubs work. >> days they work.

>> your outfit says it all. >> do you think it matters if you look like the part >> no. no. >> oh, my god. we're done. >> thank you. >> have a good weekend >> yeah. thank you. >> thank you for the opportunity to sit here with today. >> i have to get home by 2:00 to watch this i hope rickie wins make sure you join us on monday. squawk on the vei"squawk on thet good friday morning. welcome to "squawk on the street." jim and david are off this morning. stocks are set to lose their gains for the week possibly the month on the dow as contagion fears bubble up around the turkish lira germany is down nearly 2% as the ecb is reportedly concerned about loan exposure.