september logs the worst average for stocks the dow, nasdaq, and s&p each dropping more than half a percent. all right. oh, my god make sure you join us tomorrow everybody is back tomorrow "squawk on the street" is next ♪ good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer who is back and david faber. welcome to september seasonally the worst month of the year for stocks. futures are red ahead of a busy few days in washington europe down about a percent. oil above 70 as tropical storm gordon nears the gulf coast tonight. stocks near historic sighs but said to start september with a slump. facebook is falling this

after a key analyst downgrade warning of toxic brew of slowing sales growth and regulatory risk and nike sinking after rolling out a new campaign with colin kaepernick a big branding opportunity or a big misstep? futures are falling this morning on the first trading day of the month stocks hovering around record highs. trade tensions between the u.s. and key partners continue as we kick off what is known as one of the toughest parts of the year for investors. september historically the worst month for stocks the dow, nasdaq, and s&p posted gains last year for the first time in about four years man, it's good to have you back. as we open up the playbook for the fall. >> thank you and thank you for the welcome. i hope everybody had some time off. i think that, you know, fresh perspective here you come back and say what a juggernaut you read all the headlines it's kind of interesting because when you're away for awhile, away for a week you look at the headlines and it indicates that the market should be down every day.

trade tensions, it's relentless. and then look at the actual stocks which are reflecting the real economy and other than if we have europe down today, you know, we were flat at 4:00 a.m and now you've got this european spillover. i got up at 3:30 enough with the vacation stuff hey, man you can do that after -- >> get back to it, man. >> i think things are good i think that individual situations we have to talk about. do i fear september? i fear people who fear september because of october. >> that's generally been the problem. weak september but once october comes. nowhere was that seen more than in '08 the dow was down six for the month of september s&p down 9 nasdaq down 12 and october came in with even bigger. >> yeah. i think that the big difference, obviously, we have a robust economy but we have stocks that are up a lot i mean, i'm working on some

stocks tonight particularly a group that is averaging 50 percent that involves the cloud. and when you have that kind of tremendous growth. look, we had sales force last week sales force quarter i went over it there was an example i went caught up. what a great quarter maybe they used a new metric which is recent performance. but what happened, i believe, is the stock was up double digit going in that's a reminder of what it happen double digit going in and boom gets hit that matters. >> it tuesday. we spent a lot of time talking about the strength in retail while you were here and carl was out and while you were out, of course, it continued one of your big names last week, we didn't hit dollar tree got crushed. >> yeah. they made a mistake. i mean, anyone who has been to the family dollars is kind of shocked. is that all you can do dollar tree was really a terrific company and they bought something i think more than they can chew. this is kind of one of the -- it was interesting to see all the

retailers and how few of them were really bad. >> so few. >> jc penney was back. >> foot locker was bad but, you know, the mall is very good these guys have figured out how to get be more on the cloud. >> yeah. i went to restoration hardware. >> usually a little later on their business stories. >> i told the story myself i gave an unbelievable halftime show at my place when notre dame was playing michigan there was no reason to watch anymore. i gave a fantastic exposition about the mall and gaming. >> did you have a rapt audience? >> i did it for myself. >> just practice >> yeah. everybody was like will you stop it already what is it with you and the mall >> down tree downgrade today jim mentions nike. a big story this morning

colin kaepernick may not have a current job in the nfl but he has a new deal with nike former san francisco 49ers qb now the face of the company's 30th anniversary just do it ad campaign he tweeted an image with the tag line "believe in something even if it means sacrificing everything." colin kaepernick knelt during the national anthem to protest racial injustice nike will produce colin kaepernick apparel including a shoe, t-shirts, nike will also donate money to colin kaepernick's know your rights campaign last week his lawsuit accusing the nfl of colluding to keep him off the field was allowed to proceed. that will cloud the season, to some degree. a few billion in market cap shaved off today. >> yeah. it's interesting our old friend -- >> yeah. >> the guy has been under contract for a year and they were waiting to do this. you have to go over the foot locker conference call that's only 24 and you have johnson who is a

good ceo it -- if you can be cool, that will sell. if there are people that believe colin kaepernick is cool, believe me, they'll do well. when you go over foot locker there were head winds in the jordan shoe which was surprising it was not a good quarter for all. nike air max is doing very well. nike air max $150 on the nike side $150 on the foot locker side no real edge nike is football cleat it's a dominant if you feel this is bad, go buy under armour i think that's a perilous thing to do. i think we're talking about nike the brand that is a problem is some of the jordans i don't know it may not be that good anyway lebron is considered cool. >> he is when you think about the political statements he's made you certainly see this as an affirmation by nike of the

athletes who are an important part of its brand already. >> yes. >> but frankly, many of them are african-americans. many of them are in support of colin kaepernick. >> yeah. remember i'm going to philadelphia this week for the home opener that we represent nbc has. it's interesting i finished coach peterson's book this weekend. obviously, the eagle super bowl champ coach. he talks about how he told all his guys you got to stand. you can raise fists but you have to make a difference they all had to stand. and i love to know, you know, the coach is so candid about his life i mean, who else said listen you got to stand but i agree with david if it's cool, and i think a lot of people think it's cool it's a win for nike. >> do they know their customer >> they know their customer. >> they're wading into this potentially highly charged area if they didn't know their customer well and think it was going to resonate with their customer. >> they've never known their

customer better because of the unbelievable direct to consumer business they do i think they have a fabulous artificial intelligence read it's 71% in the u.s. it's big international i think that remember tom brady, by the way, is for under armour. i don't think tom brady will do that i think tom brady is going to keep silent. but, you know, i think if nike goes down too much, you have to buy it they have a lot of momentum. and i think this is a calculated company. it really had more information about its consumer particularly in footwear than itself ever had. >> nike boycott is the number one hashtag on twitter whatever that means. >> what happens if trump tweets something? do you think it impacts the stock? >> i think we're a divided country. i think there's a huge percentage of people who think,

as coach peterson said, insulting the men and women in uniform. there's another percentage who said he wasn't going to play anyway i think there's people who say come on. let's be honest. this guy is toxic. he's not good enough to be able to select. nike is so smart i mean, i think you look at the nike was the first to know about who buys their footwear. and how good they are at this kind of thing. it's the personalization all of their outsourcing have been great they know. they don't do anything -- this is a company ahead of everybody other than amazon. >> jimmy calls it plitzation as a branding opportunity isn't that worrisome >> well, you go back to what foot locker. they said they lost the pizazz

maybe it's something that can get people in the stores. >> you mentioned the jordans it's been conspicuous because of his unwillingness to participate in these debates. >> isn't it interesting. >> incredibly smart businessman and by far the most successful endorser of all time. >> i know. they've been pulling back nike jason tatum, the guy from the celtics, i'm going to boycott him. he's great and they think that jason tatum is cool and that's why they're pushing him and not pushing the jordan the new jordans are coming but i just think that anyone who is selling nike, you've got to be betting under armour. you're betting football cleat. remember nike doing well in running shoe do we relate running shoe to colin kaepernick >> certainly coming from a position of strength take a look at the stock itself over the last year

i mean, quite aloof. >> deserved. >> yeah. i think when you look at what they line up him i'm sure people thought colin kaepernick was going to get picked up. boom dez bryant was the only guy in my fantasy. >> my son had a bunch of them. i did not. i'm aware of what is going on. >> it's fantasy draft. >> yeah. i'm aware. >> i know. i know i know can you see the number of ads on your fantasy page? i urged iegger to do that in 200 said, bob, you have to put ads on the page. i was early. he's a green bay fan and i got, just so you know, i

got jimmy graham i think he's going to be better. >> graham? he had to be like third round. >> fifth round >> where did you place last year >> i had the most points a enthen i won the super bowl twice. i an interesting partner named adam schefter. >> that's like insider trading. >> there's no fcc other than the fcc on cbs. >> i don't care. i'm saying right now that shouldn't be allowed. >> i don't want to be lumped in that when we come back, we'll stick with the nfl the ceo of pizza hut is with us after announcing the official pizza sponsor of the nfl take another look at the premarket. plenty of watch this week along

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monthly auto sales we'll get to the phil le bow. >> hey, krairl we'll start off with ford it was better than that ford boosting sales by 4.1%. we'll talk about trucks in a little bit after i tell you, also, about toyota

toyota also reporting numbers down 2% last month that's a little weaker than expectations for a slight increase it remains the same story we've had for some time. pickup trucks sell now for toyota pickup truck sales up 24%. 24%. i know that toyota is not nearly the size as ford when it comes to pickup trucks you look at ford, the f-series sales up 6%. for some perspective, right now if f-series continues selling at the current pace with it will be an all-time record for annual sales of more than 930,000 sold this year, if the sales rate continues at this pace not surprising since auto sales track with consumer confidence and we see consumer confidence very strong now. back to you. >> interesting, phil couple of other bits of news goldman reinstates the sell on tesla. yeah six month target is 210 implies

about 30% downside mercedes will unveil the electric suv the eqc what some are saying is tesla's first test with competition. >> the goldman piece, you know, remember they were thought to be involved with some sort of mythical i don't know -- >> go private. hybrid go private. >> but before that, they had a sell a lot of goldman. there was not that much new. i would point out the electric vehicle competition, as you mentioned, is now front and center people feel finally there is an edge and, you know, an edge plus the possibility of getting rid of the subsidizes people are going to think they can't compete. they can't compete in the end. i think they have kache. many of people don't regard it as a car they regard it as a great technical achievement. i've been in a bmw electric and it's pretty cool but pretty cool doesn't cut it versus tesla i think they're making a lot of

cars and the more it's crowded they buy high end. the more nobody does as well by the way, ford, i think they're getting out of everything that is not selling well they're going to focus on what is selling well. that makes the dividend good but doesn't necessarily make the earnings big. >> yeah. we had some cautious calls on the ford dividend last week. >> yeah. >> morgan stanley, for sure. >> i still believe in the dividend but it's not enough look, ford and gm what is the most challenged universe that i deal with? it's autos at what stocks go down in this market anything related to autos except for a couple of used car dealers. that's not enough to make it exciting. >> tariffs any concern there and/or nafta or the negotiations continuing with the u.s. and canada. >> as soon as we see it involved

with canada it goes down i think we're in a trade war with canada. i think the president says once again they've been incredible in terms of how much they take from us i would say mexico has been incredible it is europe i'm worried about again. europe hasn't given in on anything there's a lot of talk. we need larry kudlow. >> there was a lot to talk about. they're offering to eliminate all tariffs. >> where is it >> we weren't interested. >> i think the president we're going to wake up to some bad tweets by the end of the week. there will be bad tweets one thing i would say is are you going to keep selling the car or steel companies? just go buy nordstrom, which is a favorite goldman said it's the best go buy something that is not in the president's cross hairs. that and cannabis. >> cannabis. yeah. >> usually you mention canopy by about 9:10 you're kind of late. >> my bad.

>> there's a deal with the stock that short sellers has been pressuring and, yes, i think that canopy is ready for the end of pro big and $50 billion medical market no more opioids. >> that would be great. >> we'll see what happens. take one more look at the futures as we kick off the first trading day of september in a minute this is a tomato you can track from farm, to pot, to jar, to table.

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seven minutes before we get started for trading day here it's a tuesday, of course, hope everybody enjoyed labor day weekend. glad to see you back after more than just a labor day off. >> i went to see a friend in sonoma it's fantastic any time you want to go there, i welcome it. >> let me give you a new one a new idea. >> yeah. >> amd. >> oh, my lord again? >> by the way, it doesn't have to be -- i know a lot of people -- >> i was singing your praises while you were gone while the stock went para bollic. >> it's about beating intel.

gaming hasn't been intel strength. >> don't you think it's a little overdone >> if you use a number, people are talking about $175 then no can you wait for it, at this point? i think she's turned the company around financially david, if you want to go there you want to go there. >> i'll go there. >> nvidia and gaming it's allocation. david, it makes every game look like a movie and everyone wants to use it it's going to be hard to get nvidia has the best single story out there. >> okay. >> look at this.

>> it's amazing. >> she's brilliant >> i know. i sing her praises because he's the most humble person i know. as we've been doing, david, when we had her on here. >> you did. >> she sat right there. >>yeah we'll talk more stocks including the key downgrade after this every fire department every police department is part of a bigger picture. that bigger picture is statewide mutual aid. california years ago realized the need to work together.

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acan echo throughout ane entire community.nge that's why we proudly support, invest and volunteer in communities like yours. because the changes we make today... can you hear me? ...shape the possibilities of tomorrow. u.s. bank the power of possible. you're watching cnbc "squawk on the street" live from the financial capital in the world the opening bell in just over 90 seconds after everybody gets back to work over the labor day weekend. we'll be seeing brett kavanaugh on the hill in a few moments tomorrow jeff dorsey testifies on the hill for the first time. >> dorsey controversial for twitter. not controversial for square one of the great performers.

facebook downgrade, i found it chilling you're talking about a piece where no loeninger frictionless. super vision costs more. talking about how you used advertising against news feed. now against the stories. get this, deceleration in growth equalstwa? [ applause ]

>> moffit argues a lot is driven from within. and they decided they're -- [ opening bell ] speaking of social media, i don't know if you saw malone over the weekend in my opinion, google will be broken up and not allowed to go vertical on services anything in which they control the search algorithm and figure out presenting it to the consumer. >> yeah. delrahim never said. >> yeah.

trying to talk to john but it's almost the fall we'll have our annual interview coming up in november. >> it's going to be important. cloud service is not as strong as amazon and assure. >> yeah. >> when you have search and when you have, you know, chrome you have a lot youtube. there will be someone out there one of the analysts will say, you know, it's the greatest thing if they break it up. there's so much value. i come out and say what a fabulous combination you mentioned pizza hut. i think it's a big deal. you know. >> yeah. >> he made an important point. he felt that the national anthem hurt papa johns and then

immediately discredited by the successor. they said they want to go local. you can do stand up. when you do national, you have to watch the players moving. i think it's a big deal. pizza hut needs to be recharged. it's been the part of young ever since taco bell has been revitalized. my wife had the bacon burger yesterday at wendys and she said it was killer. she ate all the fries. can you imagine? >> no. >> doesn't like ketchup. this is the second bacon burger in two months. how many are you allowed to have >> you shouldn't have any. you know that. >> you tell her. i'm not. >> nike is the worst dow component down about 2%. verizon is the other one as they get downgraded on evaluation they argue they keep their overweight on tmo if the sprint

deal doesn't work out, it could be a good deal for a cable provider. >> wow talking to brian roberts later this week. >> i don't know if comcast is focussed on that. >> they have to be. >> yeah. i'm convinced they need to buy a wireless company sky is still in progress i think it's right around there the 21st you get it. the potential for the auction, so to speak. you go up if disney or fox decides to come back that's the future. verizon you talk maoffit. >> yeah. t-mobile had a fabulous quarter. it was totally wrapped up. and the stock moved up eight straight i find it annoying but when you're on front of capitol hill

you have to report yourself. they spend a lot of time getting the approvals they need. >> yeah. a lot of business cases end up in front of the supreme court. it will be an important component. >> oh, my. >> yeah. there's chuck grassley caf new d.c. circuit court judge since '06 has been through the process before was first nomineed ated in '03. >> yeah. remember there are people in the senate who are going to say his credentials are pristine when you voted for this president, you voted for this. and judge brett kavanaugh is a

distinguished whether you like his views or hate them it's hard to craft a narrative that said he's a hack and this is not a nixon appointee where we need a little mediocrity on the court. >> i want to know why how he spent that money on the washington nationals tickets i hope somebody asks $200,000 when you're making that a year how is that possible he took out a loan and paid it back what it doesn't make any sense. >> i mean, because the team is bad? or what? >> because he spent his entire salary before taxes. on nationals tickets. >> it was probably ill advised probably an ill advised decision. >> do you think it's odd even you wouldn't do that on eagles tickets. >> i'm not sure about that. >> maybe. >> jim, on the banks

the average u.s. mutual fund cuts the bank exposure by 1. 1 percentage points. that's the biggest quarterly drop since '13 as they try to trim exposure to financials. >> a tough group. >> yeah. the amount of money that keeps going toward the payments business and, you know, you get mastercard you see visa how well they're doing. >> amazingly well. >> people don't want interest rate risks i think that jpmorgan is doing well i don't understand why there's such an aversion i will say this, i think that this is the cheapest group in the market other than the autos i mean, i look at ford you were talking and you tweeted about the f series but banks and autos and banks need to be able to buy back even more stock that's typical

these banks need to buy companies. anything other than banks. go buy something other than a bank. >> maybe you're right. i'm not telling them to buy a cannery, for heaven's sake. >> i think jpmorgan and netflix. >> somebody is going with that now. >> digital misses line up perfectly. >> we're going to read that and it's like david got it first thank you, david. >> yes we haven't talked about jd.com interesting story over the weekend. the company's ceo he's now back in china denies wrong doing in the sexual misconduct arrest in minnesota. but stock is down about 6% curious story. he denies wrong doing but was arrested

unlikely to face charges and is back in china. stock, though, is getting hit. >> yeah. how much is it worth to the company? the company is can i just say for the record the chinese company, i think, have to be appointed. it doesn't matter what he's doing where he's going. >> they have to be avoided. >> yeah. you see how the president is not that crazy aboutchina. oil is the highest since july. tropical storm gordon may

approach hurricane strength tonight as it gets close to new orleans. >> i came back and i did a fishing trip i was in the 90th anniversary. i don't know if you thought of going on a fishing derby the reason why the stocks aren't moving, this is not going to impact this is not the perm i can't if you go to the gulf there's a number of inactive rigs. it's past tense. there's transocean doubling down doubling down and china going deep water are you kidding me deep water i mean, the days when chevron had great deep water but that's pretty much it. so please stop buying the oil stocks on the basis that the gulf that they may have to evacuate the platforms by the way, the platforms extraordinary fishing off them red snapper. it's gorgeous. >> during commercial breaks when you were on the rig. >> we won the white trout

competition. >> i know you did. by the way, they have -- >> you cook them up on the rig once you catch them? >> cook them up. >> or wait until you get to land >> we cook them up when we get to land. >> you can't do it on the rig. >> we put, obviously, the white trout up asher caught it but i took the credit. >> today the times does a piece on how they're starting to challenge google and facebook on advertising. clients like geico shifting money over there because chances are when you're on amazon searching, you're in the mood to buy something. >> yeah. it's the right place to put. remember you have an advertising business that is growing retail business that everybody says is fabulous even though other retailers are doing well it's amazon web services

amazon web services it did have a good quarter it was talking about amazon web social securitys unless you're a direct competitor to amazon going with walmart and azure. you go to amazon web services and they're fantastic. and, look, worldwide i got i'm incredibly in awe of what bezos is doing i was out west visiting a friend and you hear about, okay, who is stanford where are the stanford guys going? >> they wear you out. >> yeah. i'm sorry you go to dream force. we're going to mad money and you get get on trail head. it's their coding business

free coding. >> other than amazon, largely a lot of stocks in the red with the s&p down about a half percent now. the nasdaq, as you might expect, down 3/4 of a percent given facebook getting hit as we mentioned earlier. >> that was brutal. >> generally a negative tone in the marketplace, at least as we get september rolling along here. >> we have data point this evening. >> yeah. >> you know workday has been one of the fabulous stock. there's been a bunch of stocks creeping up in tech that are service now. amazing quarter. >> yeah. sales force, as i mentioned, i thought it was a terrific quarter. facebook does create an overall

gloom, you know, look, was the toxic piece powerful obviously i think that no one ever seems to want to say it's time to buy facebook. >> i haven't seen that. >> yeah. you mentioned it on friday. >> yeah. a lot of people, you know, they can't buy it. >> a decent move since the nxp deal fell apart. >> it's back to where it was when broad come started the deal and steve said you're up.

when l you stop selling it already? it has google down. >> you're inching to get back to work i can tell. >> i've been practicing forever. you don't need to have a florida state game to know it's time congratulations, brian sullivan. >> just take a deep breath. >> sneak in a trip to the floor. >> how depressed that the restoration hardware thing got to the paper edition. >> that was amazing. >> we'll go to the opening. >> yeah. and my wife in restoration hardware it's a match made in heaven we'll get to bob this morning. >> defensive tone in the market. utilities and real estate moving oil over $70 here. you heard the guys talking about that elsewhere we have dollar strength the last couple of days it's trade related whenever that happens, the usual stuff moves down

metals and mining stocks down 2% emerging markets down 2% that's china internet the third one there down 2%. this happens every time you get dollar strength trade issues floating around here elsewhere, the market direction, well, you know, the usual stories over the weekend about selling september. yes, it's the worst month on average. it's down 0.5% since 1950. none of this impresses me in the least. it's been up 29 times and down 37 since 1950 that's about 40% up and 60% down that's not enough topan panic about. sell in may go away, we've been up almost 10% since then it's a good indicator. down almost 10%. we'll see if that changes in september. but i would be surprised overall. don't get too concerned over

whether september is an up or down month there's issues for the month u.s. markets have clearly been moving with trade. some resolution on nafta and china would be helpful there's once again the peak earnings and margins debate. now it's peak earnings for the third quarter. it was peak earnings forthe first quarter six months ago and there was some concern about slow down in the u.s. growth here but the big debate, and this has been going on for a long time, is about the weird disparity with the united states versus the world overall. there's been good reasons why the u.s. has been outperforming. we have superior growth. we have corporate tax cuts we have this astonishing run in the super cap tech growth areas in apple and amazon and microsoft and nvidia and some of these amazing semiconductor stocks there's a good reason we've been outperforming. it's a little weird the numbers s&p up 8.5%. we're talking about a 13% difference between the u.s. and

the rest of the world. agr germany has been terrible. europe has been underperforming throughout the year. japan is essentially flat. we know what a basket china is many of the markets are retail driven and many are concerned about the trade war overall. a lot of weird disparities this year and a lot of people have noticed this morgan stanley, quits over there out with a note this morning they were overweight the united states now they're neutral. and they specifically talked about this weird outperformance. japan and emerging markets still not sure they should do anything there. essentially still underweight. the point is, a lot of people talking about maybe europe worth looking at with the declines this year. back to you guys. >> thank you, bob. now time to head to the bond pits and check in with rick santelli in chicago. good morning, rick

>> reporter: yes winds of september are blowing strong in chicago yesterday. we have popped a bit but yet look closely we're still in the 280 288 up two twos are up one. we're steepening a little bit. 30s up four. maybe the most important aspect it looks to be the 17th session we'll close in the 280 last time we closed in the 290, as you can see on the chart is in august. the yields have dropped. that's one of the reasons higher quality paper is moving up reversing the trends of last week you can see bunds moving up in yield. maybe not as as aggressively as treasuries then again they're in the 30s. as a percentage move, i think they win look at two day of dollar index. having another pretty good day many people are asking after we made it through the emerging markets, how much bullishness is still left in the dollar index it vacillated for awhile

if you open the chart up from early july, we sort of held around the top of the range. many thought we were going back into there was merits watching. especially the way we went through the 95 even, remember, the high that we had about three weeks ago was close to 97. carl, jim, david, all accounted for. back to you. >> yes thank you, rick. we'll see you in awhile. dow down 148 back in a minute

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i think they should be more worry that she's doing a fabulous job we are talking about zale's and jared. >> the big thing is kay is changing the model not to be the so-called of loan sharks or whatever as a bank but as a jewelry chain, don't go against her. it is a big mistake >> we are talking about tiffany having a good week last week >> they're management. it turns out to be fashion not only like lululemon. >> it is not just the signature tennis gift, it is actually a lot of new stuff and beautiful flowers and the stores are great looking. david and i will go to tiffany's together and i will break the bank together. >> getting on one knee >> thank you for mentioning the eagle box. that was important to talk about my loan and extravagant other

than the italian house >> and a few other extravagan ve as well. >> jim, what's on "madden" tonight? >> once again, the gulf, you want to trade oil for that, it is a big mistake and we hope everybody does well and swap those rigs mawhich are tenuous. >> that was a good first -- >> yes, did i mention canopy and how much it is affecting it? >> canopy growth >> jacksonvilim, we'll see you . quick programming notice, we'll be live in washington tomorrow as big tech executives from twitter and facebook is ready to the on capitol hill for the

first time in some kacases. dow is down 137, we'll be back in a moment.

♪ good tuesday morning, i am carl quintanilla with david

faber. dow is down 106 and s&p is down about 8. as we pay attention to the kavanaugh hearing and execs on the hill tomorrow. let's get to rick santelli in chicago. >> it is a little bit light. it is up 1/10 and the revision takes away three tenths of negative of activities for minus 1.1 to now only down to 8/10 on ism, in my hand, i am holding a 25 year record of ism manufacturing. there is not anything here that's higher than 61.3 for the month of august. 61.3

61.5 is the high on 2004, i believe it was may i have 25 years of data showing that particular number at 61.5 is the highest so this is only a couple of tents away and it is quite incredible let's look at through the internals employment, 68.5 up to 66.5, prices paid. it is back from 72.2 to 72.1 >> finally giving us a glimpse of what the future may hold. ism is a powerful number just like confidence of last week just hovering that much below 290. carl and the gang, back to you >> wow, we'll call it near record high manufacturing activity rick, thank you. >> rick santelli our road map for the hour, we'll start with stocks, slumping on the first trading day of september. trade tensions with canada and

china remaining in focus new season and new sponsor, we'll talk about the new nfl play >> nike makes a statement unveiling wiunvei unveiling new ads with colin kaepernick what impact will this have for nike and the future of football. >> the dow is down triple digits on the first trading day of the month. september is the worst month of the year for stocks. the dow and s&p and nasdaq did pose games in about four years our chief strategist at fmra, i hope you guys have a great summer welcome. >> sam, you talk about the markets needing to under go some near term digestion. >> really, we have been advancing without any kind of a break what so ever we need to take a bit of a

breather right now so i just think that it is time for us to reset the dials a little bit before we experience what i call the pep-pose election pop >> how about the blow out manufacturing number that we got. people reading into that what does it tell us where we are in the cycle and the sustainability of 4% plus economic growth? >> well, i think you are asking the right question in terms of the one word, sustainability how does it get much better than this when you look through the 22% earnings growth expected this year and 10% earnings growth next year, that's been around for a couple of months we are looking at valuations that are still the second highest of the bull market what's going to allow that to work its way higher. it is lack of competition. while i do think we could end up to see 6 or 6.5% over coming 12

months period, i think we have to readjust the trajectory of expectations >> berry, what do you make of sam's numbers? >> to me the ism, i would not read too much into it in front of the trade conflict, there has been some channel stuffing for a lack of a better word, front loading and production schedule and some of that going on. the thing you have to worry about is the fed if they're going to do their job, they have to raise it to a positive real rate which will lead to positive earning numbers. i guess you would call it a transfer from wall street to main street in terms of prosperity which is in line with some of the politics today >> are you referring to 19 or december or are you getting the grandular here >> well, this year you don't have much more than the 2% interest rate and it is zero real rate. next year is the question mark will the fed conform and go to about a 3% rate while most of

the developed world central banks are still at a negative short rate if that happens, with growth differentials and rate differentials, we would not be surprised to see a stronger dollar a lower p.e. multiples of the s&p even though earnings are up. >> a higher rate may be a concern for some >> i think that's 2019, we have not had a bare market start over the past 60 something years when inflation rates have been above interest rates we'll need two rate hikes this year just toget two inflation ray rates. we'll have to move well into 2019 before we see high rate of stock market growth. >> barry, i am going to ask about trade. friday afternoon, in the 3:00 p.m. to 5:00 p.m. hours it was so dramatic.

talks had finished early between canada and the united states and they stalled and they're going to continue into wednesday and there were questions whether the trump administration is foll following through the deadline over nafta and over the weekend president trump tweeted some harsh words. does the market cares about all this or just assumes it is going to be a deal and it is all noise? >> well, when you hold trade strategies and leaked to toronto newspapers was not helpful that was the disruption on the latter part of the deal on friday a deal with canada will come, we are talking about dairy and dispute resolution mechanisms. this is just tweaking on what used to be nafta what i am concerned about is relations with china where some major changes are needed and there is going to be a long drawn out and more contentious -- in 2019

in 2018, other than the typical summer and autumn weakness, it is hard to see a lot of disruption >> have not touched on e.m. a whole lot today. lagard is going to meet with argentina. >> it has not derailed it yet. i remember back in the summer, we had the tide bottom closed in july we went through a pull back of 6.3% and got back to break even and correction of 11%. it was only until 98 that we went through a near bare market because of the asian contagion -- i think what happens here is there is more of a ripa effect from the lira dropping >> you are saying don't read into the fact that u.s. markets don't seem to be caring about

that >> be cautious and careful and there could be more to this. the market is saying there is not a concern and i would go along with that. i would be vigilant to the possibility that it does spread beyond that. >> all right, guys, david. >> listening to both of you, i mean it sounds as though you're advising people to a certain extent, don't buy anything and potentially consider selling is that fair >> well, the question for me what we have been advocating since early may is a more of a staple healthcare utility telecom defensive trade on polici policy diversions. it is some what deflationary we are seeing a little bit of a flat curve so i am going to run that trade a little longer but we are trading in and out of this market, yes.

>> barry and sam, thank you guys, good discussions to start on the week and the month. colin kaepernick does not have a job in the nfl right now but he does have a new deal with nike he's one of the face's of the company's campaign he tweeted yesterday, "believe in something even if it means to sacrifice everything." >> he protested racial in justice by dealing nike will produce kaepernick apparel and t-shirts last week his lawsuit accusing the nfl of colluding to keep him off the field was allowed to proceed. obviously, this has caused a lot of backlash and raised some real questions of how corporations should deal and what nike was thinking there is a #boycottnike.

i have been talking to folks at nike figuring out why and what's the calculation here they're not naive and they knew this was a risk of alienating a big section of their fans and potential fans colin is not the face of this 30th anniversary just do it campaign he's one of the number of athletes, athletes that have a lot of common in terms of over coming difficult life circumstance circumstances. serenavil williams is one of th faces of this showing her as a young girl and growing up in compton and dominating the sports and a linebacker who's an am toe aam am -- amputee.

>> there his face is not going on the billboard of new york city, it is going to be in san francisco or l.a the relaunch just do it is a new generation of millennials. millennials appreciate being real and that's what i am told inside of nike that you don't have to dance over anything and you don't have to be politically correct as you do before this is a different generation and that's part of the messaging here when it comes to the campaign as far as the company is concerned, i think they would down play the fact that there is a whole new product line up around colin kaepernick that may or may not come. this is sort of the campaign or the message and we are showing members in this that's involved in a number of la vetaathletes >> there is going to be fallout. there is dpoigoing to be fallout

the bottom line. the stock was trading near record highs it is in a position of strength. >> they would not truly alienate to use the word. they're customer based by doing something. i have to believe they know their customer base well enough to believe the threat of a alienating a large percentage. >> or that it is worth the risk. >> or they tested this and sort of predict what the reaction will be. they're ready for what happened this morning that's cramer's thesis this morning. >> they're not going to do something without going back and forth internally >> what i can tell you is that two-thirds of nike wearers are under the age of 34-year-old and 45% are under the age of 25 years old. i wonder how much of those boycotters are over the age of 25 probably a lot >> way more than under i would imagine. >> your kids are not going to

boycott nike >> probably. >> no, i don't think they will >> that's a back-to-school factor that's going on and kanye west and trump's supporter and adidas >> we were talking earlier if the president often does takes on a corporation very well where he stands on this. he certainly can come after nike >> it could make a little bit awkward with the nfl relationship they have a partnership through 2028 to make uniforms and all the teams and game day clothing and outfits, no word though from the nfl reaching out to them they're not commenting >> coming up, one brand teaming up with the nfl for the new season the new sponsor, pizza hut is kicking off its ten years as the professional pizza football of the team we'll speak to the ceo of the

company after the break. "squawk on the street" will be right back this wi-fi is fast.

i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. 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. pizza hut is making its debut replacing papa john's as the sponsor of the professional football joining us is artie starrs welcome artie. >> great to be here. >> what have you got planned >> we have a lot of plans. our team members could not be excited of activating nfl

partnership. this is a huge deal for us we are kicking off a few things. we got antonio brown and juju smith and coming out and creating awesome ads for us. we got nfl game day and game plan where you can go to pizzahut.com and we'll remind you when they're playing every week of the year to make sure you have a hot and fresh pizza >> yum brands and taco bell and kfc and pizza hut is the weakest link in terms of sales do you expect enough of a boost from the nfl to change that? >> yes, our ceo have talked about rebuilding the foundation of pizza hut on a digital strategy we have expectations on our partnership. we want to elevate our fan experience and get customers excited of bringing nfl and

pizzas together. >> we are talking about nike's position today plain and open of controversy, right? how do you handle some of the drama that'll sort of cloud the season >> yeah, we are an inclusive brand and we think of the nfl partnership, it is about bringing football and pizza together and making sure that nfl fans, 70% of americans identify themselves as nfl fans and half of them are women when you see our advertisements and how we activate, you will see the celebration of the fan experience >> papa john's had an interesting thing and under gone a good deal of controversies have you been taking share of them >> i can't comment on recent business trends. the first half of the year, our sales were up 2% and flat in the second quarter we are pleased with the progress against the transformation agreement and $130 million investment that we made at yum we expect a lot of things out of the nfl partnership as well. >> what about ratings?

they plunged last year and down the year before, or some of the controversy that's been stoked by the president are you coming in at the right time in. >> if you look at the top 50, 37 of them were nfl games people are just watching the game in different ways our partnership allows us whether it is on a mobile device or at home for fans to celebrate pizzas with the nfl. >> are you ready to take on with the president if you have to >> 70% of americans are nfl fans and i think everyone wants to focus on football. >> do pizza sales go up for games? >> this is a big time of the year for us. we can watch when we put ads out, restaurant calls and internet orders will elevate after advertising. >> how much does consumer demand to know where their pie is at any given moment how much money have you had to put into technology? >> we put a lot of money into

technology we have a terrific app and mobile website consumers do want to know and transparent relationship with the brand thas that they interat with we track our pizzas and tell customers where they are after they order it. >> they give them sneakers, too, do you still do that >> i was going to wear them today, they're beautiful red sneakers but they don't allow it on the floor it is great, it smells like pizza right now at the new york stock exchange >> artie starrs, thank you >> when we come back, we'll continue to watch these markets and facebook is unveiling their new campus and we'll bring you inside the look a little later on and economic boost of new york city. it is fashion week, we'll be joined by fame designer za zac posen. "squawk on the street " is back in a moment. you always pay your insurance on time.

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our julia boorstin got an inside look and she joins us now. >> thank you, david, the newest gary design building aims to turn heads and attract and retain employees the building is 525,000 square feet this is connected to the 3-year-old sister building where mark zuckerberg and cheryl sandberg sits. building the cost of facebook west campus to an estimated of $1 billion plus. now, we have some drone footage that shows the 3.5 acres green roof take a look at those, solar panels and an outdoor amphitheat amphitheater they have town square which includes a redwood forest. >> when you walk out of our town square, it is pretty cool. who would not want to work there? i go out there and sit on the

log and have a meal and conversation with a colleague. people can envision themselves there so it is a real big part on proposition and selling candidates on what it is like to work here. >> the openness of the building aims to reflect the company's culture. >> the mission of the company is focusing on community and giving people the tools to build their own community and really the internal aspect of our building is very focused on community as well >> now, the bar is certainly high for tech headquarters last april. amazon in january opened up those glass spears, all these companies are competing for talent linked in, last year's tech had the highest turnover in any industry >> wow, that's interesting a fascinating look at corporate campus which is increasingly a big story out west

julia julia boorstin we are talking about this huge spread in general of u.s. stocks the rest of the world pronounced with the financial stocks. it is getting a lot more attention maybe an indicator of the bigger macro risks or other things here you see the spread between the excel f. the european financial sector and etf, there is a tremendous 25 or 26% points spread in the last 12 months the green line is the u.s. etf of course, we have our fed increasing rates and there are still caught elsewhere and two ways to look at this it is a source of potential risk and weighing down the rest of the global markets in the u.s. this has been going on for so

long you had a weakness in european banks and it is something that we have been able to i guess kind of escape from or insulated from one final point, foreign stocksg >> that trade picked up some steam with all the trade hostility back and forth, europe, two of our biggest trading partners are chooina an the u.s. if they go at it, our economy gets hurt. >> right >> struggle european banks continue >> let's get to sue herrera for us right now >> thank you, david. good morning everyone. here is what's happening at this

hour we begin with senator feinstein announcing they're going into this morning's come fnfirmation hearing for brett kavanaugh confirmation >> we'll attend the meetings and we want to express our concerns. >> t the taliban announcing the founder of afghanistan have died after years of ill health, haqqani died monday morning. his network was declared a terrorist organization by the u.s. in 2012 monica lewinski walking off stage this after being asked after she expects a personal apology from former president bill clinton she says the question violated

agreed upon parameters regarding to her interview questions >> you are up to date. >> when we come back, trade tensions are spilling over into the markets as talks in canada picks up again tomorrow. we'll take a look at what it means for the economy when "squawk on the street" comes back dow is down 22 points.

welcome back to "squawk on the street," i am sara eisen and back with carl quintanilla and david fiber. things have started soft here, post holiday of labor day. nasdaq is down most of the bunch. keep in mind it is coming off the best month of the bunch, up another 2% overall it is down 4/10 this morning >> we are offering our lows, certainly for all the major

averages there fears of escalating tensions are weighing on stocks tomorrow, canada resumes discussions with u.s. trade representatives after failing an agreement last week. president trump added to the pressure by tweeting over the weekend. >> quote, "there is no necessity of keeping canada in the deal, congress should not interfere with these negotiations or i will terminate nafta entirely and we'll be better off, far better off." joining us now is the president of the national foreign trade counsel and former fed vice chair allen >> how important is this trade agreement that we have already negotiated at least for the most part of mexico >> well, i think it is extremely important. the u.s. canada trade relationships have been robust and strong but also you know

nafta has now been around for over 25 years. look, our main competitors are in europe and asia and we can't compete effectively with europe and asia unless we have a strong north american economy canada and mexico are not our competitors. they are part of our north american industrial and agriculture base and we'll compete effectively with the rest of the world in a strong north american economy and to rip canada out of nafta right now would be a mistake >> we actually had a trade surplus with canada and not a deficit. do they have more to lose than we do? >> i don't think so.

both economies will lose if there is a major disruption in the relationship we do have an overall surplus, we have a slight deficit in goods but a strong surplus and services more importantly in mayor sectors like autos and high-technology and products and other things there is a tremendous independence between the u.s. and canada we sell them a lot of agriculture products and we trade parts across the border. they're apart of integrated supply change. that's what enables us to compete effectively with china and with europe. our real competitors are the big asian companies or big european companies and if we want to remain competitive instead of starting to raise tariffs in the united states, isolate our markets, we need to strengthen the trading arrangement particularly nafta and we should have done ttp and the trans

atlantic trade agreement all of our trading partners are busy integrating their economies with each other and free trade deals while the u.s. are raising tariff barriers and closing a lot of their markets this is a major problem for the ability to compete with europe and asia >> allan, how do you assess whether a revamp deal if canada can get there and even between the u.s. and mexico. has any economic implications or major changes for the supply chain and how should investors view that? >> i think it may have familiar implications for the mexican border because of the high wage provision that's in there. that's irrelevant to canada where wages are higher and higher than the united states. but, you know the whole thing is borderline crazy we have this very workable free trade arrangement with canada

and mexico with some exceptions but mostly free trade, there is robust dispute resolution mechanism which are pretworked well for the united states fundamentally, the whole thing reflects growth and fgrotesque miss understanding on the part of the president of the united states and his part seems to be rolling over it is a shame really >> winvestors are not treating this as a major disaster >> it is a good question at first they were, they were dancing up the down as the trade restrictions are looking more or less serious >> i think now with the markets are some what complacent they don't believe i don't think

either that the u.s. canadian trade relationship is going to blow up in our faces or even if the u.s. chinese won the latter is more dubious u. u.s./radian relationsh u.s u.s./canadian relationship will get solve one way or another >> final question, ambassador, you know exports are only 10% of our overall economic economy is that important while they represent a significant percentage revenue for corporate america. a percentage of the economy is fairly small exports of goods and services combined are closer to 15% of our economy and trade is well over a quarter pushing a third of our economy, exports are becoming increasingly important

to our major industry. we got a huge revival of automobiles, one of reasons we are exporting 2 million automobiles in a year including countries like china there is no doubt in the future that exports are extremely important as our economy becomes more productive and we produce more goods with fewer workers. the only way we can keep employing more and more people in these industries is to have access to global markets we need trade desperately. to make the assertions that trade is not important to the united states would be a major mistake. we are in an independent global economy and u.s. has to be able to compete with the rest of the world. we are only going to do that if we have good, strong and global supply chains and growing industries with growing export markets. >> gentlemen, thank you to you both ambassador yerxa and allan

blinder. >> thank you >> dorsey and sandberg are both testifying in congress sessions low are about 158 we are about half of that now, the dow is down at 71.

a top technician is sounding the alarm on tech stock. find out what it is on trading nation.nbc.c nation.nbc.com more "squawk on the street" right after this

♪ that's confident. but it's not kayak confident. kayak searches hundreds of travel and airline sites to find the best flights for us. so i'm more than confident. kayak. search one and done. let's get our rick santelli exchange for september of course, we go to rick santelli >> thanks, david grover from norquist, thank you for joining me >> good to be with you

>> i can remember after the reagan year and after the credit crisis, when we tank after capital gains, many times it is windfalls for treasury something is starting to happen with capital gains, tell us about it and it has to do with inflation. >> right now when you buy a house and stock and land or an individual company, you hold it for 10 or 20 or 30 or 40 years much of your gain that you pay capital gain taxes on is inflation. for individuals, 45% on average of your gain is really inflation. the secretary of treasury can by definition change the cost of the cost faces for capital gain taxation to historic cost plus inflation. the courts have ruled you can do this when the fcc did the same thing. the secretary knows he has

authority. the question is how much avenue would it bring in? it would cut the capital gains tax in half and for older americans who held property orland or stock more than half every time we cut the capital gains tax, revenues flown in more than expected >> grover, what i found fascinating here is we don't need to wait for congress. not that i have a problem with congress but lately nothing seems to get done. why is it that in this case treasury can by pass the legislative process in this regard >> all the secretary has to do is change the definition it is a change of the law, they do this all the time in government and the irs makes these changes. it is simply saying cost can have many meetings if you look at economic textbooks or business textbooks

historic cost pays for it. replacement costs and all of these things are used by the government at different times. the secretary just says, i say when you sell your assets and pay your capital gains tax, the cause that you take the price to sell it for, subtract the cost take inflation out of paying capital gains. nobody should pay taxes on inflation. >> there are instances of course, grover, where you may have bought a stock that has not changed in price in ten years and that'll address issues lingering such as that as well >> it has not appreciated as fast as inflation. people are paying taxes on land they lost money on that's why land is not being sold and put to better use >> my final question, many time

in your writings, you say the tr trump tax reform changed and gave a chart to the economy. many economists disagreed with you. we have about half a minute left can you tell me quantitatively how we have a success for the economy? >> sure, we were paying 35% business tax, corporate income tax, that's the highest in the world. we are competing with china which pays 25% and germany at 25%. we just dropped back to 21%. i talked to german politicians, we know decisions around the world are being made to invest in the united states rather than germany where as before we could say the americans tax you more and come invest in germany and the chinese can do the same thing. we have seen capital investments grown dramatically over the last seven or eight months as tax

cuts kick in >> thank you very much sometimes you take a step back and you hear of the deficits somehow we have to link spending reform in to some type of budgetary process. >> thank you for your time, david faber, back to you >> thank you, mr. rick santelli. >> now, let's take a look at what's coming up on "squawk alley. we'll talk to tom wheeler on what to pe texcthe changes that could affect stocks, that's coming up on "squawk alley."

welcome back this week marks the start of fashion week here in new york. twice a year fashion extravaganza brings with it an extra 200,000 attendees and delivers a huge economic impact for the city joining us here, famed fashion designer zach posen. >> thank you happy tuesday. back to school. >> back to school, back to fashion weeks. but the top story is really nike i wanted to ask you about nike's decision to go forward with this very controversial ad campaign around colin kaepernick. is it worth it >> yeah, it is worth it. >> why >> because it's important for

corporations to take risk. to me it's actually upholding american value system of freedom, of speech and of an opinion, and i mean i think the entire issue got way blown out of -- out of whack literally it's working watch social media. >> although there's a #boycott. >> the market is reacting differently but i say with anything like this, time tells. >> it's interesting to hear you say that because i don't know, i don't hear you speak out too politically as someone who has to appeal to all sides. >> it's a fine balance. >> how do you walk that line >> anybody can buy my product. you know, i think that is -- i think fashion surpasses politics. >> do you have to be careful about what you say >> very. you know, i have very strong beliefs. i believe in equality, i believe in women's rights, and i believe in the values of this country.

so when they're questioned, there are times to speak up and it is important, but it is a fine line when you're running a business it's getting more and more questioned >> it does feel like we are in such a polarized world where consumers do have the power of a boycott and social media to amplify their messages and their biases i'm just wondering how you see that as a designer who's trying to sell to everybody >> lately in the right moments, but it's important to have a voice right now, for everybody to have a voice. you know, we're in a changing time the market is changing, the playing field is changing. so it's just you have to navigate it very carefully >> i'm curious to get your thoughts on distribution because you've got some you teunique ta fashion week a big piece in "the times" about how amazon through tough love has forced retailers to get smarter. >> yes i presented my collection today. i'm done

my fashion show happened on collection it is online. >> no traditional runway. >> no traditional. i did a photo shoot with an emerging actress and a young girl i know, maya hawk it's up online on vogue.com and women's wear capturing the mood of a brand, not necessarily a runway show. distribution you know, direct to consumer it's about partnering with your retailers and being really in touch with your customer and this is a business and you have to follow it. you have to build on what works. you have to add and try new things, you know, make your margin it's a tough business. nobody said this is going to be easy it's changed enormously since i started and, you know, we watch it carefully but if you're shrewd, you're frugal, you're smart and you take calculated risks, you can build a successful business. >> i think you also have to pick

the right person we've been talking a lot about this as an investor theme, zac, ulta beauty surged because they're going to sell kylie jenner's beauty line it feels like there's a handful of taste makers right now. a lot of them are kardashians and jenners that are driving the business around fashion. >> they are the new advertisers. >> why is that happening >> i think people wanting to be connected to humans. i can't speak as all, but i think authenticity, experience, creating your own content is really important i think people -- the internet has made celebrities even more into gods and also relatable people in some way i think it's aspirational. >> so is that partially why you chose -- i mean i know you've had a long relationship with

maya hawke but is that why you have chosen her? >> i just adore her. she's magic. that's something that you can't create if you see somebody who has the sparkle, who has the magic, you can't pay for that that's hers. and i'm lucky that i've known her and was able to capture this rare moment with her also capture something a young female photographer shooting another woman, takes another outlook on my clothing >> should fashion week be concerned? are there going to be fewer and fewer designers willing to attend >> i think fashion week needs to relook at how it presents itself we're in continuous market all the time, continuous creation, continuous sale. so you have to continually create new ways of, you know, of advertising or promoting or introducing new products into your line. it's like fashion brands are going to become content providers as fashion magazines

and publications become brands it's almost swapping so in the future, we'll be providing content, and i think we're just at the beginning of this new frontier and evolution. but what we know traditionally as fashion week, and i love a runway show, you know, is changing but it's a very saturated field so you have to find interesting, creative ways of cutting through the market as any business does, as nike needs to do. stir it up. >> i know you've been talking about that theme for a while. >> it's happening. we're here. >> zac, thank you for coming by. >> thank you. >> zac posen. facebook and twitter go to washington tomorrow as calls for tech regulation continue we'll be joined by former fcc chairman under president obama tom wheeler in a few moments the dow working back to the flat line amazon 2046. "squawk alley" is up next.

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