the pets and the houses. guys >> all right. diana. thank you for that and thank to you for spending the hour with us and make sure, becky, i will see you. have a good weekend. everybody else >> good friday morning welcome to sidewalk on the street i'm here with david faber. final day of august, it's been a good month for the bulls futures had the losses today u.s. canada trade talks come down to the wire france down a full 10% get to chicago in an hour. begins this morning with stocks strapping amid trade tensions.

near historic highs as canada and nafta go down to wire. talks resume this hour plus coca-cola, it's taking on coffee soda and snack giant in a deal to buy uk coffee change for $5.1 billion. >> unstoppable amazon. tech giant closing in on apple now less than 2% from joining the trillion dollar club. last trading day of the month. been a bullish one dow and s&p remain on track. nasdaq could chop up biggest august percentage gain in 18 years. futures set for a weak open. ramping up and today marks deadline for a new trade deal to be secured we expect to see foreign minister any minute with an update on the negotiations interestingly the mail says the talks have sowered in the last 12-18 hours. top of the website is why canada could tell the u.s. to shove it

on nafta who know ifs that means anything regarding these talks. >> who knows exactly not clear if this sort of deadline passes that excludes the possibility of canada coming along. when it comes to market reaction, definitely the headline on $200 billion going through the bloomberg interview did weigh. i also think there's a dynamic whenever the market gets stretched and tired, there's always a trade deadline to reach for. always ready excuse, well, that could be the big offset to a lot of the good stuff we know about. that's kind of the way i'm reading it right now with the nafta thing, the actual stakes in stock market terms are not tremendous, but directionally it doesn't help. net negative no matter what. >> nafta tension regarding canada president in the interview says the offer to strap tariffs was not good enough. suggested getting out of wto if they don't shape up.

200 billion perhaps on the way all of it adds up. >> 200 billion for china of course the public comment for which expires today. the 30th you conceivably could see it as early as next week bloomberg reported trump told aides he may move forward with probably the most significant. not unexpected, but at the same time amid continued fears of a bad path with the chinese with the way the market might react to your point, we see these brief reactions and everybody moves on. >> the general posture of the president saying i would rather be more aggressive i would rather follow aggression with further aggression as opposed to give and take process. the market doesn't love that you start to hear for businesses

or big businesses it becomes an element of the capex question. are we going to have to think about outsourcing very soon. we don't know if that's really here now question for earnings and cappings >> coming to the microphone. let's listen. >> short, sweet and not in english. we have a 50/50 chance >> we kind of miss it. >> by the way, some reporting this morning that the holdup here really centers around dairy

and ag reports the negotiations between are ongoing. no concessions by canada on agricultural that's a spokesperson from ustr. see if they're getting any narrower in scope. >> of course the key is what would the impact be for the canadian economy if they were not part of major all trade deal with mexico and united states. same way i think our negotiators when it comes to china believe there's a great deal of pressure on that country right now that the economic momentum perhaps the country has turned to a certain extent credit creation has slowed and growth in china has slowed that's part of the construct negotiators are thinking about when it goes into affect next week and we continue to move with what most people will not be any sort of resolution with china prior to midterm election >> if the canada thing gets hung up on dairy and things like that, it would be ironic in a

sense. those are not the big economic swing factors to say the least you're going to slap tariffs effectivelily on the big three auto makers stuff coming from canada they make there because of milk. right. >> speaking of things that you drink, deal news this morning. coca-cola buying costa has nearly 4,000 locations across a variety of international markets. she talked to james quincy of kwo coke a few moments ago. >> pretty interesting deal. >> and the big question is why coffee, why now. >> one of the few bright spots within beverages growing growing 6% globally. coke feels that was a whole in total beverage portfolio and wanted to be in coffee the bigger question and the investor calls going on right now and all the analysts are asking this question which quincy and i talked about

extensively. retail coca-cola doesn't do retail operations you really want to be in retail? quincy says no this is not a retail strategy. not a food strategy. they have pastries at costa. clearly part of the coffee strategy is having stores because they build business in the brand. we're buying a great management team, which by the way totally keeping in place here, that knows what it's doing in retail. not our core competence. we are bringing the global scale. we can introduce different formats as a total beverage provider in some places you might see stores, beams and machines quincy is not thinking of this as a retail strategy sees it as one pillar of growth maybe in asia, but not trying to open you up stores in the u.s. to compete with leaders, the starbucks out there. asked if he saw a weakness in starbucks right now. he said no, it's not what it's about.

>> so what is sit about. >> building a coffee grounds. >> they do compete with starbucks in the uk. >> they're the leader in the uk. they have about 4,000 physical outlets across 30 different country >> do they currently have the same way starbucks does, a lot of their product in supermarkets and available in other place >> that's where the potential is they also have vending machines and quincy framed this as using their global scale and their relationships especially in the u.s. with the biggest food service customers. remember, coca-cola has mcdonald's contract. burger king contract they want the get coffee, which is a growth market into those stores that's where he sees it going. you don't do capital allocation for retail how do you make sure the stores are clean. this is not your business. that's why they're keeping the management in place. if we need more resources. we will give them that he says actually not a capital

intensive business, but the real value here is that they have a proven well liked coffee brand mr. quincy is from the uk. he grew up with the costa coffee brand. we have he frames the unique capability to bring that to a much bigger global scale in a way he says coca-cola can only do also responded that way to questions about the valuation they're paying i think the parent company said around 16 times even that. a little high. >> i don't know what the growth rate is. >> we don't know exactly they don't break it out. he says it's a premium >> what else is available for them if they want to go down this road? was there a play where they don't have retail where they don't have that expertise. >> we did see necessastle starbs deal he has been hungry for all sorts

of starbucks brands. wasn't a lot of options left if you wanted to find a leader in the marketplace. that's what costa is. >> there's a look at the properties you forget they are sort of consolidated so significantly in coffee that i guess they're a key competitor to everybody. >> that doesn't take into account the way dunkin has rebranded stores in recent weeks. the money mcdonald's is pouring into north american restaurants heavily foccused on beverage. >> shelf space issue, it's expanded tremendously. i'm sure there are niche brands there that coca-cola could add it's a different approach to say we have this established coffee brand in particular. >> exactly you could buy a more indy brands that are growing very fast nestle and jab have been doing that stumptown for instance, a local brand growing very fast. they wanted something as i said

the proven leader in a certain market with some runway to grow. second biggest chain in china next to starbucks and not a ton of penetration there places like that sees real growth opportunity. >> starbucks down a little more than a percent viewers want to know if there's a single costa location in america or the u.s. >> not in the u.s. not sure about canada. he does have plans for the u.s not physical store, again just getting it in restaurants and getting vending machines outs there. he's taking a lot of questions about the growth potential of this brand what coca-cola would say is it was missing in the portfolio clearly a growth brand pepsico less than two weeks ago acquired soda stream a lot of similarities in these deals. both of them show the giants going where the consumers are going. faster growing beverages than

the colace, the carbonated soft drinks all have a global component. overnight calls from both companies when deals were announced. both a bit of a strategy beyond the bottle and cans. moving over into different drinks quincy did say one trend we're seeing across the world is that consumers are willing to spend more on commercial beverages, but they want choice they want diversity and they're picky. likes to have a brand very popular. >> not like mcdonald's is going to put costa coffee in the mcdonald's. >> they could. they have their own coffee. >> they're a heavy coke customer. >> yes so i think those negotiations will happen with some of the largest food service customers especially if they've got some cool new vending machine to try out. >> you're going to do more work on this i imagine. >> see you at the 10 hour. chasing that big $5 million deal today in beverages. when we come back, amazon

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expanding ad business. could amazon get bigger than apple. along with colin senior research analyst at bayer. happy friday happy labor day weekend. good to see you both. >> happy friday. >> what do you make of recent price action in amazon how much of this is deserved we still have another percent. stocks move today. we think there's a lot of room this is based on some parts analysis we're software guys, look at the reoccurring elements of amazon business and looks like $16 billion business in 2022

highly reoccurring companying relying on them to run their businesses we think the add business is another emerging business higher margin. there's no doubt advertising is a tremendous tail wind for the business given amazon the nature of the retailer, i think they'll put guardrails along the business. limit long-term growth to some extent i would agree the cloud service businesses could be aws. probably has greater growth and potential over the longer term

it's always been tricky to force amazon to structured framework on a price to sales basis. doesn't look to howhard they'r harvesting profits amazon is up to where it last was in 2003. in 2003 it was about to grow earnings is there anything remotely ahead of it that can kind of replicate something like that kind of top line growth or just going to be about the margins getting better and harvesting what they have. >> look at the total market. we look at and say there's $40 trillion of addressable market we talk about march to a trillion the markets today are huge if you look at just health care. and, again, they're basically just getting involved in that market so we don't believe they need to

do anything else to continue this i think the markets they're in, they're still really, really early. and then you look at international buildout you look at countries like australia. i was down there a few months back and it's really, really early for amazon in australia. i think the biggest concern for amazon that we have is are they doing too many things? are they going to get spread too thin they have the markets. need to fill the markets out and get greater wallet share. >> the president has kept up a drum beat criticism of amazon throughout the year. hadn't hurt it whatsoever. whether it's been the post office or attack directly on bay s b b >> i think amazon and jeff baned

to be aware. less 5% market share in each business anti-trust does not seem like a legitimate concern or criticism. can't really speak directly to the conditions in the warehouses except that amazon has made an effort to try to improve conditions there something we'll keep an eye on >> interesting to see public response to sanders yesterday. invited to fulfillment center. has not taken them up on the offer. you know, not spending a lot of time on it i think we're looking at kind of the core fundamental markets looking at the opportunity set and as colin said, they're still so early in each of these markets. you know

aws has 70% market share, but we still look at that number of 20 billion this year relative to a $300 billion software market so far away from being adominant percent of the overall share of that market. regulatory and getting spread too thin are the things we're watching it really hasn't been an issue so far we're not as concerned about it right now. >> we'll watch it. thank you. brett colin on amazon today. get another check here in the futures on this friday as we go to quick break watching for developments in u.s. canada trade talks in washington we'll continue from nyc in just a minute

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♪ each day, brings new possibilities. that's why you need a partner dedicated to helping your company reach its goals. u.s. bank -- the power of possible. you're watching cnbc squawk on the street. live from capital financial of the world. another busy day for a final week in august today retail earnings parade continues, and, again, sort of out sized moves in both directions depending on the name. >> yes, very strong general backdrop huge separation between the winners and losers and companies making the most of it or not

retail as a whole in s&p is up more than 2% week to date. and so now probably defines upper end of who is really crushing it in every respect very strong stock. going to add to it then you had dollar tree and big lots today. >> the winners for the week are relatively speaking have to include lulu and tiffany to a lesser degree. lulu's case 71 cents beating 49. guiding up for current quarter. >> include online 20%. it's kind of crazy numbers laren eustace laren eustaulu toe and category stands in favor hard to stay away lulu's ses co success coming at the cost of l

brands now one of the worst performers getting recent lows, down 26% over the last and one of the names that surprised on the downside, weren't many of them when they came to retail. >> l brands, anybody circling and saying look, break these two chains apart bath and body works now as well as victoria secret i don't know just seems like it's become an undermanaged legacy of retail with just too many stores. >> activism has been not that great. not that great a road to go down >> you got a big founding shareholder. >> think of jcpenney loews has been successful. macy's and jeff smith did not work out at all. >> toys r us is now affecting the inventory change for

walmart. going to carry more toys this holiday and soak up lost competition. >> everyone said it was not necessarily a totally broken business it was an awful balancing attached to bad business and bad ownership. >> opening bell here final run of the week. s&p at the exchange here mid island little league team marking third place finish among u.s. teams in the little league world series love when kids ring the opening bell i point pharmaceuticals doing the honor >> one of the five boroughs, we should point out some people don't know. >> you were on squawk today talking about what happens when you have a certain level of gains by labor day. >> yes. >> for the final fourmonths of the year the last few years, final four months gains nine. let's see, almost uniformly

positive. >> and so yes, september and yes history says september is the weakest month of the year. down more than it's up if you look at midterm election years, it's also down more than it's up last 17 or something so you know, the probabilities say maybe there's a reason for caution in september, but the context matters a lot. and if earnings forecast are not being revised down a lot in september often happens in bad times. the market isn't as if you hato. not necessarily in september through the remainder of the year. >> i do think there's a muscle memory arguably people early this week started to get in front of that and say wow, i don't want this to run away from me. i can from maturely see another meltdown this market is not as inclusive. doesn't have a lot of momentum behind it. pockets of momentum and covering for weakness elsewhere. >> you think there is sort of a

weakness in breadth? >> consumer is great except housing and auto health care is good because well that's working industrial is well off highs i think you could argue that's a healthy environment. not all votes being lifted by it just doesn't seem like we've yet had that momentum push since january frankly. one of the defining things about january was the market got overextended overbought people got too bullish and kept going up on top of that. that's what we haven't seen right yet. >> you mentioned autos morgan stanley, adam jonas comes out with the downgrade says we forecast ford's free cash flow to fall significantly in 2019. believe investors should fall substantially short of dividend payment next year.

i said on twitter this morning tesla wont be the only fashion flow story of the auto sector. it's true. >> what the stocks have been telling you as well. ford is down from 13 early in the year to nine and change. you know, that has been an issue for a while in terms of the dividend. >> yes. >> you know, the family ownership. >> they are the only one of the big three that did not declare bankruptcy did not get the chance to wipe that debt and restructure as gm and chrysler were able to do kudos to them. >> quite the opposite. allen, when he ran ford was given credit for getting it ahead of the crisis. saying we have to load up on a lot of longer term debt. we have what it takes to get through. now they still have it. >> they still have rihave it. relatively new ceo in there taking them down different paths. sort of new approaches and moving out they're really about trucks. >> all trucks. >> like trucks

tesla once again below .300. black rock voted to strip musk of the chairman title. then musk last night on twitter despite all the criticism of his twitter practices hadn't really slowed down. responded to a troll more or less last night regarding steve bannon's comments. bannon called him immature man child and musk said can steve bannon please insult me some more best pr i've had in a while. >> i would say doubling down he certainly is being kind of digging in on some level and i think we're back to where we were. can you execute. is there demand for this many cars we're not talking about any kind of recapitalization at the moment i don't think anymore it's sort of interesting i guess the big institutional shareholders, minor vote of no confidence down the road

going to continue to be an issue with tesla no doubt about that. how it's actually attacked is sort of the key question 20% owner and even more than that. >> well many. >> it's just so much around him. the aura around him is significant as in i you can think of the kpcomparisons to steve jobs. >> yesterday after buffet spoke on air made note of the fact apple shares rose. overall market sagged. same story today apple up a%. almost 228 as we got the invite yesterday from apple for september 12 even some leaked photos out about what the iphone x or 10 s might look like. we don't know whether it was a rendering or actual photo.

>> as the stock has scaled to these highs, it hasn't really been about this launch season this year. so you wonder if expectations were low enough, that's just one more excuse to buy one of the strongest stocks in the market the biggest stock in the market that has all these endor endorsementin endorsementinendorsements things i would mention to look out for, basically people feeling like it's a no lose. you're losing a little bit of valuation support as it's gone up here. people keep in mind, it's not really that fast a sales and earnings growth story anymore. just a massive earnings power. huge cash generation huge cash holdings and buyback you have a lot going for you not a megagrowth story anymore. >> almost two seasons of apple reporting. capital return season in the spring and the fall back to school christmas is about shipments. really two environments you go back very bipolar every year.

>> sure. i guess you could play them either way say, well, the fundamental story kind of ran out in the spring and it's about dividends or buybacks there's no moment of truth coming necessarily, but inevitably, it gets a little too popular as a stock. >> when it does come to great growth story, continues to be one of them if not the key one may soon join apple as the second trillion dollar company right around 983 moving up again this morning yesterday i was trying to use my memory still try to do even though things are available at the touch of the button. came up with a number wrong on bez bezos. he has sold some stock along the way. doesn't amount too much in terms ofov overall you can do the math. 16.1% when they get to a trillion, it's a stunning,

stunning number. >> and he mostly sells to fund the space stock. >> to a certain extent wanted to buy the post that didn't take a lot he can peel off enough to keep wealth from running away. >> let's call it approaching $160 billion of net worth. hey, he started it in a little office i love the pictures we still see circulating the internet of him at that computer late at night amazing. >> has anybody told him what a terrible business books were. >> yes, why are you doing books. >> he expanded from there. >> he would definitelywant to talk ulta. the guide was a little weak on skpern earnings and comps take you back to july of last

year that's when it started to roll over from low 3s. >> fought its way back. >> it has. specialty retail, as long as the cops are firing and keep leading the numbers, doesn't matter what the pd is. stumbled on that front. seems to be regaining. the department stores fought back seems like it's resuming the growth path that we've in terms of again in a good consumer skrierenviro. >> dollar stores interesting play this week big lots was a miss. revenue was a miss 1.6 on comps was a beat. guide was week as well the dollar stores, some of the warehouse, something crazy dynamics in both sectors within retail. >> yes >> it's one of those deals that

doesn't do well with people making excuses in the same general business stocks look totally different. clearly better. >> talking about geographic portion. >> geographic i think some there's some differences in terms of how much business is consumer versus other stuff and all the rest there is geographic. >> taking a look at campbells soup the key for campbell will be whether and if third point chooses to challenge for the board. probably more likely than not. perhaps even a full slate. i pointed out many times already, the nominating window for directors is open right now. so we may see news as soon as next week in terms of what third point chooses to do there with roughly 8.4% stake despite the math that would seem to argue against trying to take that on, given the presence of two family members together controlled the 35%.

just the two of them on the board and perhaps opposed to the road the third point would want them to go down. much more focused on overall sale did want to come back to campbell day two after the announcement yesterday of planned sell offresh business and international operations. >> the presumption that there is a sale to be made, i mean, that has to be examined, right? there would be real buyers for it. >> yes that is -- right and campbells board determined that the optionality that they are able to take advantage of in the future will be better served by focusing now, becoming two segment company, and potentially exiting 2019 with a much stronger profile

jtsds trz it's hard to make the case american jute door brands. owner of smith and weston back in june. today took guidance up 42% and revenue. shares almost 30%. sort of yeah this is really driven down people felt like demand had been pulled forward by years. so obviously this is -- heavily shorted stock. as we await more mike pence on trade. dow is down 44 let's get to bob on the floor. good morning, bob. >> happy friday. sort of a mixed market fractionally down overseas in china. fractionallydown over in europe. car makers a little bit weaker once again you have skepticism on nafta deal. some question about whether

china tariffs coming into affect next couple of weeks let's take a look at sectors today. predictably sectors impacted by trade such as materials and industrials are a little bit weaker financials have been weaker most of the week. actually because we're not going anywhere on rates. the important thing is tech continues to hold up and consumer discretionary continues to hold up this is the key story. we might get a little bit of flat skpns weakness over in asia on tariff concerns our rally continues to roll on you can see here just the open for the week tech has been strong semi conductors have been strong consumer discretionary strong. the key to market is really the amazing strength in health care right across the board talking biotech. pharma medical devices. doesn't matter health care is a real staller. not a trade story. not impacted by trade. that's really helping the market you can see banks not really

doing anything financials aren't the key. key is tech discretionary. we've been discussing how everybody's retirement is doing. up because the market is better. that's good news president is trying to move things along in whole retirement debate phase going to issue an executive order today asking for consideration on easing the rules for small business to offer 401(k) that's a good idea more importantly wants to include the rules. after 70.5 modernize the liefe expectancy tables 30 years ago people didn't live as long as they do now they wanted earlier withdraws. people are living longer today need to be modernized. very good idea effect of this might be hopefully be able to keep more money in your 401(k) or ira for

a longer period of time and not be required to withdraw that be signing that offer later today. finally want to note that today some changes in the rules on china. going to be increasing the waiting of the china mainland china shares at the close today, bottom line is if you own any kind of international fund over the next several years, you're going to own more and more china stocks inevidentability and perhaps a good thing right now, dow is down 38 points karl, back to you. >> i'll take it, bob let's head to the pits now rick at the group in chicago happy friday >> happy friday, dave. stop the press august release chicago purchasing manager survey. expecting 63 a little bit extra 63.5 sequentially. two points lower than july look at 65.5. don't despair. only sets us back to may

do keep in mind, if we look at the 20 year high, that was established in march of 2011 at 68.8 well, we had 67.8 at the owned of last year so all of these numbers with 60 handles is the point are pretty lofty. let's get to the charts. one week of tens you can see we've lost some ground we tried to get up into the 290s we failed. this the 15th session in a row not days, sessions that we've closed in the 280s if you open the chart up to the most significant violation of .280. it was at 278 from the end of may. since that it has been a defining boundary. there's a lot of wood. meaning, a lot of the price action down there to hold up the market that's the way traders look at it if you look at booms, august wasn't a kind month. lost a lot of ground some of that for reasons that italy's economy seems to be losing ground and the long-term

prospects of them getting along may be losing ground so that seems to be the dynamic after yesterday's tenure option. i like this chart. we failed at test of 95. firmed up a little bit dollar versus canada with all talk about are they coming into the fold or not. it's virtually almost changed with respect to where it entered august and just to show you what an interesting week it's been, on the day we're down, down 2. on the week. all maturities right now are up to basis points. karl, back to you. >> as we go to break, take a look at top performing stocks on the s&p. widespread disparity in the retail names ulta is going to lead higher on the s&p today. yum brands

dow is down 20 squawk on the street back in a minute

gas prices in focus today hitting a four-day high. >> so not great news for drivers but they have been high most of the summer. at least they are not higher really than where we started things off. the biggest component is crude oil. oil prices are relatively steady. we have several factors that are tugging on the price. you have those trade war worries. supply constraints is supporting prices and so is the strengthening dollar. some are starting to price in the possibility of lower global oil demand as a ripple effect from the trade wars. the price of copper also continuing to fall for similar reasons. china is the biggest consumer of that metal. thursday crude oil prices did gain about a percent in the session. right now we are sitting just under $70 for wti. market participants are focussing on disruption from

crude supplies. u.s. sanctions restrict the country's oil experts in november. he thinks we could see up to $95 a barrel by year end. venezuelan exports have dropped to about half of past year's exports. crude inventory in the u.s. fell more than expected all just adding support to the price of wti. >> we'll watch that. a lot of people are driving this weekend. we'll talk a bit more about coca-cola's play on coffee taking on starbucks as it snaps opu.k. coffee chain costa. oh good, you're awake! finally. you're still here? come on, denise. we're voya! we stay with you to and through retirement... with solutions to help provide income throughout.

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makes since given what markets have done. that is consistent with how we have operated. no correction in global tech implies you have to have the stocks perform. historically you have had follow through with these names. it's not in this rotation. that poll is a very different sentiment than coming into this year when it was popular to think you were going to see a big rotation into value, perhaps. >> 63% say it is time to buy e.m. time to go long emerging markets. if you are globally allocated that is what the map is going to tell you. i don't know. we had a lot of false starts in that direction. that is why i think the dollar has been so important. >> active management looked like it was going to start off the year to your point in value. >> manager stocks have been very weak. people feel like it is just

disruptive, cost pressure. asset values are up and are doing okay. we are watching the hand rail ustr. today is the deadline for trade negotiations with canada. we did get a rare comment. the negotiations between the u.s. and canada are ongoing. there have been noonssns cceio by canada on agriculture. watch that when squawk on the street comes back. fight security threats 60 times faster with ai that sees threats coming. the ibm cloud. the cloud for smarter business.

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good friday morning. welcome back to "squawk on the street." dow is down 14. s&p roughly flat at 2,900 on this friday as we are looking for any headlines. let's get to rick santelli in chicago. >> this is an august final read on university of michigan sentiment. you take the mid month read and toss it. that was 65.5. we have now gone below that. it's 63 -- i'm sorry.

wrong number. i was reading chicago. 95.3 was the mid month. we improved to 96.2 but 96.2 is the weakest number since the first month of the year. we improved. it is an improvement but it is somewhat of a mixed bag. let's look at the inflation indicator. three percent on the one year. that is interesting. 2.9 was the mid read and 2.6 also hotter than our 2.5 last look. just like yesterday personal consumption expenditures, these are things to pay attention to because jay powell and company are probably paying attention to them. >> our road map for the hour starts with coca-cola looking to take a piece of the coffee pie with a $5 billion acquisition of

costa. what it means for the company and starbucks, mcdonald's, do duncdon done -- dunkin. >> the tech giant could become the second company to hit the trillion dollar market cap mark. let's show you what stocks are doing. dow down about ten points. s&p 500 is trading right around the flat line. nasdaq up 0.2%. better tone today as we await news on trade. to come out again and say they have a deal if they can get one done by this self-imposed deadline of being today, not a lot has leaked out in terms of the details or sticking points, talk that president trump wants canada to open its dairy

industry. we'll wait to see what they can achieve. from the president's point of view he did an interview saying they have to make this deal. >> he also said that a deal would come if not today, in a period of time. was it a throw away line was he trying to hint that perhaps friday is a soft deadline we don't know. >> we have a lot of optimistic talk from the u.s. side. we did get the headline that president trump appears to be moving forward with the next round of tariffs with china. the comment period is up next week and it doesn't look like we have made progress. >> i thought it was today. >> september 6 for the 200 billion. >> i thought it was august 30. either way could be coming fairly soon. >> so a little bit of uncertainty on trade. overall things have been better. as far as emerging markets maybe

relief for theturkish lira. turkey and argentina still absolutely a mess. so far u.s. stocks have been insulated. >> dow erased its losses. the marathon talks are down to the wire as the u.s. and canada rush to strike a deal today. bob lighthizer's office saying negotiations are ongoing. >> we'll see what happens. and if it doesn't happen we'll put tariffs on the cars coming in from canada and that will be even better. i think it is going to happen. we have really developed a really good relationship. we love canada but they have to treat us fairly. they haven't treated us fairly.

>> joining us this morning, the former u.s. ambassador to canada. thank you for the time. headline in the globe, nafta talks sour. negotiations hung up over u.s. demands to kill key chapter 19. how much credibility does the global mail have >> i think it is quite a bit. for me the definition of insanity just listening to the president is how the president has been treating canada all this time. this is our best trading partner in the world. we have a surplus. $670 billion total trading relationship. 35 states, our number one export to canada for all of those 35 states. you look at this and it is not just trade. they were with us in 9/11 like no other country. they were on our side in afghanistan. they helped diplomats when out

of iran. they made movies and plays about how good our relationship is with canada. there are negotiations going on with mexico and then get a phone call and say we are going to announce a deal with mexico. come on in, you have four days to do a deal on one of the largest trading relationships in the world. canada is there. i don't think he has been treating them too well. >> hasn't he been around long enough to know that his style is contentious? this is how he generally works. he said some rough things about mexico and suddenly they have two thirds of a deal. >> he has used 232 on steel and aluminum. now he is talking about tariffs on auto and auto parts. that's like throwing a hand grenade into the canadian economy and it will also be a huge problem for midwestern states and manufacturing states. i think we are playing with fire

here. i hope and i'm really hopeful that we can get this negotiation to a conclusion today, at least this part of it. >> can you talk a bit about the canadian dairy industry. i went to the dairy farmers of canada page this porning. clear -- this morning. provides employment to more than 200,000 canadians. why is this so sensitive do you think president trump will get his way and get tariff free canadian dairy exports? >> there is a long history here. much of the dairy for canada exists in quebec and ontario. there are different ways of supporting agriculture. you can use subsidies like we do a lot in the united states or you can do supply management which is what canada had chosen to do. everybody should know here a couple of things. the u.s. has a trade surplus with dairy with canada right

now. you wouldn't think that. second, we have quotas that we go up to. we don't pay the 270 and 300% tariffs. three, we have tpp. we actually negotiated increased allocations of dairy for the united states. there is a lot of leeway. i think the president is talking about a dandelion in a beautiful field. i think this is something we need to work on. i think this is unfortunately blown way out of proportion by the president. >> all of that said, ambassador, isn't it the u.s. that has the leverage in these negotiations right now? >> absolutely. we basically have ten times the size of the economy. canada 75% of all of its exports go to the united states. so much of their gdp is reliant on this relationship. the u.s. has all the leverage in

the world. just because you can doesn't mean you should. when you take your best friend, your greatest ally in the world and start squeezing them you can win but i will tell you the relationship will be damaged much longer than it will take for the ink to dry on a new nafta deal. >> we may have the economic leverage, ambassador, but canada has plenty of friends in congress. it's the top state for a lot of exports across the midwest. you really think the members of congress will let a u.s./mexico trade deal go through without canada in. >> i don't think they will at all. oren hatch yesterday through the senate finance twitter followers you'll see that he came out very aggressively in support of canada. you have the u.s. chamber in support of canada. today's wall street journal came out in support of canada. this cannot happen without canada. i think it's a folly to think

you will go mexico alone here. it won't happen. it won't pass congress and it will be harmful to the united states. >> i think we are joined by a fellow ambassador to mexico. i apologize for the late audio issues. we keep looking at canada's reaction. do we know how mexico is viewing any of this back and forth >> well, i think it is largely encouraging if it means we are taking a step towards a trilateral agreement. the announcement on monday was only a step. canada clearly is our number one trading partner. while mexico is our number three and number two for exports it is only a better agreement if it is a trilateral agreement. >> ambassador garza, did mexico throw canada under the bus by doing the deal with the u.s. first with the exclusion of

canada >> i wouldn't say they threw canada under the bus. i think there was a narrowing of issues, consensus reached on issues that were particularly difficult in the context of the united states and mexico, issues as related to the sunset clause. i think having narrowed the issues created urgency going into today. i think really it created an environment where we are hopeful that we can get to something similar, a preliminary agreement in principle with canada today, get that clock ticking. hopefully they will have some final text in 30 days and then go down the road. i think the road is still fraught with obstacles in terms of congressional approval. the politics here are not easily navigated. if they can get to something that looks like a genuine handshake by the end of the day they will have a little wiggle room to get the final text.

i think it created urgency and narrowed the issues. >> certainly a handshake would be something we would note if we get that in the next several hours. thank you so much talking about these u.s./canada trade talks. when we come back, coca-cola's latest acquisition of costa coffee. we'll take a dive into what it means for coke, the competition and the industry. large earnings beat for our new ceo. what is going right there. stocks up another 15%. it was up 140% over the last year going into the earnings yesterday. squawk on the street will be right back. now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com

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he's only going to be here for like a week. like a month, tops. oh boy. wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. lulu lemon shares soaring. the earnings the first under the new ceo calvin mcdonald. lulu lemon attributing strong earnings to push past athletic wear. the numbers here were fantastic if you look across retail.

20% comps which they actually did a similar number last quarter. ten percent in store. 47% e-commerce. 30% for women's and men's pants. athleisure is still in. lulu lemon has managed to sell a lifestyle. mcdonald talked about similarities between his job at sephora and now at lulu lemon. so that is working. they also have huge traction when it comes to international growth. how many times have i been telling you about men's abc pants, women's $100 bras. >> you and wilf had a back and forth about this with price elasticity. >> that is why you are seeing growth like this for a retailer.

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>> . time for a friday etf spotlight. we are looking at one of the most popular funds, the hack etf which is up more than ten percent in august on pace for the best month in three years. among names cisco up more than 12%. makes you wonder if people are starting to pay attention to the

election cycle and whether or not people will be on guard for any activity online. how satisfied are u.s. workers with their jobs? that is the question business research group posted in its most recent study. 51% of those surveyed said they were satisfied with their jobs in 2017. for more we are joined by the conference board president and ceo. steve, what goes into sort of satisfaction for a typical employee when they answer a survey like this >> this is an annual survey done by the conference board. there are 27 different factors to it. we know the economy is rocking. you have unemployment below four percent, wages are growing, consumer confidence is at 18-year highs. it is not surprising that worker satisfaction is correlating. people are very happy with their jobs and happy with the environment, the supervisors and

so forth. one of the biggest changes has happened with low income workers where they have lagged because they have been in jobs that have been less satisfying. now you are seeing churn. this conference board survey is really an interesting survey that ties with all of the consumer confidence data, as well. >> you say wages are growing. there are those who focus on them being stubbornly hard to grow as quickly as they should given the rate of growth in the overall economy. anything in the survey on the wage front >> wages are growing around four percent. we are at the target of two percent inflation growth. if you get wages going too fast you will hit inflation and that will be the wrong balance. this is sort of a goldilocks environment. i think on one hand you have the pressure of labor participation

rates and the fact that there are labor shortages especially in certain geographies and skill sets. i think this is a great balance given the level of growth that we are seeing. in the survey they do make some recommendations on what they like to see improve. the obvious thing is about chances for growth, chances for more feedback and that sort of thing which is great constructive feedback for supervisors around the country. >> wondering if you are seeing signs that this is as good as it gets. we just got a university of michigan consumer sentiment number. these numbers have been elevated. the august number is the lowest level since january. there was a big decline in the current economic conditions index. less favorable assessments of buying conditions, less favorable assessments of market prices and rising interest rates. are you seeing any of that start to filter in

>> if you look at the conference board's data this sort of environment looks like it will continue for the next year or so. it's not reliable beyond that. this is 2005, 2006 all over again. it doesn't get much better than this. so our data shows that the consumers don't expect us to take a step function up from here. they do expect it to continue. that is all good news. if there were expectations that there would be a big leaf that would be out of whack with what we are seeing. i think we are in a goldilocks environment. if we can maintain this we shouldn't overheat from here. >> anything in there at all that gives you pause since you seem very enthusiastic about what you have seen? >> the only thing goes back to wage pressure starting to push too much does it drive inflation?

some of these labor shortages are in certain areas. you start to see imbalances. some of that is natural in certain areas of the country. you are running out of i.t. skill sets, technical, engineering shortages and that sort of thing. you don't want that to overheat. it's a skill set issue more than anything else. >> we appreciate your bringing it to us. thank you. >> great to be here. coca-cola striking a deal to buy the world's second largest coffee chain for $5.18 billion. costa has nearly 4,000 locations and another 8,000 express locations. coca-cola ceo james quincy on the call with analysts saying this isn't a retail strategy but a coffee strategy. >> we believe these have a very

compelling strategic rationale. coffee is a significant on trend profitable category as i'm sure most of you if not all of you are well aware of. costa is a strong consumer proposition. it has a scalable coffee platform to engage with consumers across multiple formats and channels. in the end it is a coffee strategy and not a retail strategy. >> joining us now is senior vice president and number one rated consumer analyst on the street. >> thank you for having me. >> i heard your question on the call t. was a thoughtful one. you asked i guess what they were buying if it is a market leader and has so much potential to grow. did the answer satisfy you as far as how you see this fitting into the overall coke portfolio and the growth opportunity this brand has? >> it makes since in terms of

having to get into coffee. i get why they are trying to diversity. i don't understand why they had to buy something. i don't understand why they had to spend $5 billion to do it. from the clip that you played, i think the coffee strategy actually requires a retail strategy and requires retail positions. so i think they are figuring that out. that is not an ideal answer for coke. it is difficult for them to get into coffee because they haven't been successful without buying the retail outlets. >> their answer to that is that they will just keep the current management team in place which is doing a great job. if they need more people they will add more people. it is only one pillar of growth. in the u.s. market it didn't sound like quincy wants to take costa stores here to compete with starbucks.

>> if you are buying something that is good in a region and you expect them to grow outside of the region but you leave them alone, what are you adding as coke i get why they felt like they needed to, but go forward remains to be seen. given curing buying dr. pepper and snappal. it is a fast growing market. you are setting up a battle of titans here on a global basis. >> are you including j.a.b. in that >> absolutely. they were the first movers here. i think coke looks a little bit reactionary, frankly, in this deal. i believe it is a real ization that they need a retail strategy to make coffee work. despite difficulties i have in leaving this company alone but then being able to extend it

geographically on a global basis. >> it's not like they don't have the wherewithal to do that or to compete in a very heated market. they have the expertise. >> why didn't they do it themselves what does a u.k. number one coffee brand bring them that they couldn't get themselves i think that is a struggle, spending $5 billion to buy what? a bunch of really good retail stores. do you really need all of that. i think it comes down to they don't know retail and they have to roll out detail to be successful on coffee on a global basis. i think that is the reality that they are coming to. >> for coke, what is the closest thing they have done that would inform a retail strategy in the future >> not really. this is somewhat of a departure. i think the closest you can imagine is what they have done

with their fountains in retail. that's what they are thinking about from a costa in the u.s. on a vending perspective. nothing really close to retail is anything they have done. >> what deal would you like better everyone looked at james quincy as a deal maker and he was going to come in and got everybody excited. there has been monster speculation forever. coffee is growing six percent globally. at least it is a growth area versus soda and diets. >> i don't struggle with the idea of getting into coffee. i don't struggle with that at all. paying $5 billion for a regiona brand for me is difficult to understand. that is 16 times e.b.i.t.d.a. i

don't think it is a question. frankly, there was buzz about them getting into japan with alcohol. maybe getting to the alcoholic ready to drink market. monster is growing, as well. i think further into the dairy category, as well. not milk but value added dairy like fair life in the u.s. there are many places in beverages. beverage is a very dynamic growing category. for right now coffee is where titans are setting up to battle each other. >> this is the second multibillion-dollar deal from the beverage giants. it has been sleepy. i think these are the biggest deals for coke and pepsi of the last seven or eight years. which do you like better pepsi acquiring soda stream?

>> i order coffee makes more sense to me than soda at home. i get they are trying to expand it to other beverages at home. the soda category in general is a difficult category to grow in. coffee makes a lot more sense despite the price tag on this deal. >> both sort of have global appeal in terms of growth. thanks for joining us. >> thanks, guys. let's get to sue herera for a cnbc news update. >> good morning everyone. here is what is happening at this hour. a former associate of paul manafort has been charged with a lobbying violation. he is accused of failing to register in the u.s. as a foreign agent. he worked lobbying on behalf of a ukrainian political party. the queen of soul will be laid to rest today. today's funeral will be a six-hour star studded

invitation-only service. an investigation is underway in new mexico after a greyhound bus collided with a semi truck trailer on an interstate. police say the semi trailer blew out a tire and crashed into the bus. at least seven people were killed, 37 were injured. and new developments in the colin kaepernick collusion case against the nfl and team owners. in a big win for kaepernick, an arbitrator denied the nfl's attempt to dismiss that case. kaepernick sparked controversy when he started the protest of players kneeling during the national anthem. the nfl has declined to comment. you are up to date. that is the news update this hour. i will send it back to you. >> that will be a big story this fall. take a look at amazon as the company's market cap inches closer to the $1 trillion market. watch the stock at 2050. dow is up 19.

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welcome back to "squawk on the street". one hour into the trading session, let's take a look at where the major averages stand. dow turned positive. s&p 500 really trading around the flat line. we are trading at record levels on the s&p, nasdaq and russell 2000. s&p back over the 2,900 level. for a closer look at the markets on the final trading day of the month let's bring in allen ruskin. we were talking about your expertise, currencies. the dollar seems to be a focus

for stocks lately. whether the inverse correlation is tight or not, how much do you see the dollar dictating overall direction and tone >> i think it is helpful for stocks in so much as when the dollar is weak the dollar has typically helped in terms of key components. things like investment are pretty strongly correlated with the dollar. the dollar leads by about three quarters. some of the strength we are seeing in the economy not only in the exports but in investment actually relates to the dollar. at the same time the dollar is now recovering quite strongly. that portends some slowing in the economy. >> is it going to continue to go higher or is this sort of the consolidation period we have seen >> i think we haven't hit an inflection point. i think the dollar has still has a lot of solidity. interest rates is absolutely key. the china story is important.

the treveils are problematic. all of the different elements are dollar constructive. we shouldn't forget what is going on. that is a big element of it. >> this is where i guess the international concerns do collide if you are a u.s. equity investor. how much of a head wind do you think there is for u.s. stocks amid a global back drop? >> the strength in the dollar has been an absolute body blow. right now, however, with valuations completely flushed out we think there is opportunity. the valuations today imply a return over the next five years well into double digits. double digit returns in a broadly single digit world get me interested for investors. >> areas we are interested in, it is a lot like trying to pick

a team to support during the college -- >> the bad news bears. >> you are looking for a good coaching staff and athletes that can deliver. within emerging markets that means you are looking for policy makers that can steer things and an economy that can perform. right now areas like turkey have a lousy coaching staff and a lousy economy. areas where we are starting to see opportunity in southeast asia regions, thailand, korea, decent coaching staff, decent team on the field. >> i just go back to the contention that we could see double digit growth. what is that based on? investors need to focus on the long term picture and look at the returns not just one year out but five or ten years out.

how do we know when the e.m. pain is over >> it is not obvious that it is over yet. at this point in time i think we have dollars knocking on all of the weakest doors and it is having a cascading effect. right now india is letting its currency weaken. that door seems to be open. on the dollar bulls charge as it were. we need greater sense that u.s. interest rates are really if not peaking, at least they are slowing down. china's rejuvenation in terms of growth is maturing up to the easing we are seeing is taking hold. all of those bing macro features are in play. >> you think rates are the story more than trade is even as we wait for the comments out of

canada, for example? >> i think trade is something that is important. how investors are thinking about trade at the moment is sort of like the nice teacher that you had at school that would give you credit for just making progress. that is how i think markets see trade at the moment. as long as it is moving forward and in broadly in the right direction markets will rise to reflect that. what i think the challenge will be going into 2019 is focussing on the rates picture. that is where as we see the u.s. ten year getting up that is the level where we think investors need to go a little more balanced on the equity versus bond discussion that has been so pivotal. >> this is going to come down to china. people say that e.m. contagion isn't really a huge thing. it is trying to control its currency. does china have the capacity to do that? do you worry about broader

devalueuation that could disrupt. >> when things get really tough they have instruments under their control that other mark market -- it is what they can ultimate hae do. they are cutting interest rates. i don't think that will be successful. you will see the exchange rule weaken. if they allow local authorities to lend more that's the kind of action which i think will get the chinese economy going. they will get the economy going again. >> that is the kind of thing we believe will provide support for some emargierging market is the second of the year. >> what if we see more tariffs >> i think it makes a lot of headline noise but is not really leading to impact on the economic back drop. when you have that dynamic where it damages the investment

sentiment but isn't damaging the economy, that is an exciting opportunity rather than a broader risk for long time investors. >> thank you. have a nice long weekend. when we come back, speaking of rates. could pets be driving the housing market we'll look at how pet amenities could be at the top of the wish list for sommienal he llniome buyers. squa"squawk on the street" is bk in a minute. ted, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

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judy shelton. we have the leverage to potentially get better deals. maybe we have done that. many say should we be treating our trade partners in such a fashion? is there a good will category as an economist when we do these deals? trump is a businessman. >> i think there is good will on all sides and that's the point. that doesn't mean we have to think in terms of being charitable. all of these countries are trying to bring about the best possible trading relationship possible. we are all going for our best deal. i think what we have seen especially with mexico is a tremendous new trust, a willingness to work together. i'm sure that comes as a surprise to many people. it is not just with the existing

government. his people are working very well with our people. so there is good will there. that doesn't mean that a country owes another something. we are all trying to make it work for all of us. >> let's take the same thread of logic to the dollar. when it comes to the dollar it is a reserve currency. when it strengthens it causes problems and issues in emerging markets, much of which they really built the foundation through bad politics and bad financial economic decisions. how much good will should there be there specifically from the likes of jay powell and the fed? >> the fed has long made it clear that its policy will be determined by how the fed assesses what is in the best interest of the united states. so that goes without saying. the problem is for other countries when the dollar is weak they complain because that

tends to distort their economy. when the dollar is strong that can hurt them, as well. if they are on the receiving end and they are getting lots of money they are able to borrow because money is seeking higher interest returns from emerging markets then they turn around when the capital starts flowing out because the dollar becomes more attractive and interest rates are going up in the united states. i don't think they should be complaining. they should be insuring that their own domestic policies are in the best long term interests of their own nations. >> excellent answers. always a pleasure to talk to you y. can't wait when you join us again to maybe have more details on the new trade arrangements. >> thank you. and to you, as well. as we head to break, take a look at the markets. dow is up three points. s&p is unone.

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millennials love their pets so much so, they often put dog and cat needs above their own when it comes to a home. what amenities they're looking for. happy friday, diana. >> reporter: we thought urban rental buildings, now millennials are making decisions based on pets. jessica evans sold her condo, bought a house for her dog lucy. >> i loved living in a condo, it was great, convenient, i didn't have housework but one thing missing was my dog's happiness. >> reporter: 73% of millennials own a pet. that's more than any other demographic. a whopping 89% of millennials that bought homes this year own a pet according to realtor.com that has millennials putting pet

needs front and center in real estate decisions 79% of home buyers that close this year said they would pass up an otherwise perfect home if it didn't meet needs of their pet according to realtor.com survey jessica knows this, she's also a real estate agent. >> lot of times they want a yard, some outdoor space that does mean people moving out of the city, even though they would love to stay in the city the challenge of a lot of stairs can be difficult for people with older pets having a place to wash your pet is a big deal. dog friendly places, being able to walk to petco, or petsmart, that's a big deal. >> reporter: actually spent $12,000 on renovations for her dog and cat. back to you. >> we joke about it. remember how much money people spend on their pets. thank you very much. getting breaking news

regarding papa john's. let's go to kate rogers. >> john schnatter filed suit against members of the company board of directors who are running the company and the currently ceo, seeking assistance to stop irrepairable harm those individuals are causing due to repeated, on-going breaches of duties of loyalty and care they owe to the company. he anticipates the chancellor currently presiding over earlier demand for documents from the company will also preside over the lawsuit. the suit is sealed we don't have more details at the time he previously filed a complaint seeking documents related to his ouster as chairman last month. before this suit was filed, a source familiar with mr. schnatter's thinking told me he is concerned the company is engaged in active, on-going effort to cover up true facts, including by retaliating against those that reported serious misconduct by the board in senior leadership and

investigating themselves he has concerns about hiring of endeavor global marketing, affiliate with a board member mark shapiro as they also head up the advertising campaign. papa john's said he recused himself from the process we reached out to papa john's and endeavor the stock is a fraction lower right now. back to you. >> getting messy. >> one nasty fight for sure. >> he is not going without a fight. clearly. >> thank you for the latest on that. coming up on "the closing bell" chances of a federal reserve rate hike and impact on banks. florida bankers association ceo alex sanchez will join us on that show. meantime, "squawk alley" is next dow is up six points

good morning, it is 8:00 a.m. at apple headquarters in cupertino, 11:00 a.m. on wall street "squawk alley" is live

♪ what you want ♪ baby i got ♪ what you need ♪ do you know i got it ♪ all i'm asking is for a littl respect, come on, hey baby ♪ when you get home, mister. good friday morning. welcome to "squawk alley." post 9 of the new york stock exchange markets are reflecting a couple of things. one is a friday before a long labor day weekend, also uncertainty behind the u.s. canada trade talks which continue even as we speak. >> tech is a winner today, has been all month we are watching specifically amazon shares, one day after crossing the $2,000 mark for the first time ever, ticking closer to becoming the second company to reach the trillion dollar valuation. magic