2018 "squawk box" begins right now. ♪ >> live from new york where business never sleeps, this is "squawk box. >> good morning. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. our guest host -- >> we're all back together again. >> we're all here. >> and our guest host for this hour is stephanie link head of global equities research and a cnbc contributor >> great to be here. >> lots of stuff to run through. let's start with the u.s. equity futures. at this point it looks like there are red arrows across the board. dow futures indicated to open down by 96 points. s&p futures are off by 9 1/2

the dow had a decline yesterday of 12 points the nasdaq, the russell 2000 seeing their worst day since the middle of august the nasdaq was off by 0.2% that tells you about how strong the markets have been to this point. red arrows across the board this morning. we'll talk more about what to expect in a bit. overnight in asia, the shanghai was down by 1.6% the hang seng composite off by 2.6% that's the biggest decline since june nikkei was also lower. down by a half percentage point. look at what is happening in europe most of the markets are in the red. the cac is down by 1.25% the dax is off by almost 1%. italy is the lone holdout now. it's up by a quarter percentage point. if you look at treasury yields, they did pick up yesterday this morning it looks like the

ten-year is yielding 2.888%. 30-year at 3.054%. wti crude, wti hitting its highest level in seven weeks yesterday. the highest level since may. this morning crude oil back down by $1.14 >> we're continuing to track tropical storm gordon. it's losing steam as it moves ashore the mississippi and alabama coastline. parts of alabama could see up to a half foot of rain. the storm is expected to weaken further. we'll have a live report in a couple minutes. toyota plans to recall more than 1 million hybrid vehicles due to a wiring issue. an engine wire harness poses a fire risk. it affects vehicles produced in japan from may of 2015 to may of 2018 it includes 100,000 prius models in the united states. we're learning more about the arrest of richard liu in

minneapolis last week. according to a public information report released by police, liu was arrested following an allegation of rape. but he was released from custody without being charged and then he returned to china police say they won't file charges until their criminal investigation is complete. that won't happen before friday. attorneys representing mr. liu say they don't expect charges to be filed against him shares of jd.com falling sharply again this morning that's a bizarre story >> following it from the beginning. we'll hear more. >> if he's all the way back in china -- >> yeah. >> that's just -- pre-reading the story, i was like there's some strange facts >> strange facts >> being released from custody for such a serious charge is strange. become able to have your

passport and completely go around the world i don't know do you have any comments >> no comments no thoughts. >> are you -- you seem relaxed >> i feel very relaxed >> i can see now that this show is stressful, getting up is stressful. i can see that even your hair is blossoming while you're on vacation >> the hair drier. >> you use a hair drier? >> for the first time. >> they were invented a long time ago >> we are discussing hair dryers in the makeup room >> you look like you're blossoming how much time did you have off things are growing things are sprouting everything is coming back. it's just from -- >> he had a beard until two days ago. >> my wife made me take the beard aoff. >> was it spotty >> very spotty

little round patches the senate intelligence committee holding a hearing about russian meddling in the 2016 election. executives from facebook, twitter and google were invited to testify, only two companies will be represented today. julia boorstin is in washington with more. >> good morning. this morning sheryl sandberg and jack dorsey will testify before the senate intelligence committee. that will focus on their work preventing election interference sandberg in her prepared remarks taking responsibility and saying the company is i investing for the long-term because security is never a finished job. one question we know will be top of mind is what regulation could look like. the topic mark zuckerberg was grilled on when he testified in april. >> senator, my position is that there should not be no regulation >> you going to embrace regulation >> i think the real question, as the internet becomes more important in peoples lives, what's the right regulation.

>> but you as a company, will you welcome regulation >> if it's the right regulation, yes. >> this will be jack dorsey's first time on this stage to weigh in on these issues he will get a double dose of questions, testifying before the house this afternoon on the question of bias in twitter's content monitoring in prepared remarks dorsey saying twitter does not use political ideology to make decisions. we do not expect to see google at the witness table larry page, the ceo, was invited but they rejected saying they would send a policy executive, kent walker. we'll see how that shakes out. >> is there any expig ectation a the questions will be more pointed or technologically literal than some questions asked of mark zuckerberg >> i think there were some

memorable instances where the senators showed that they were not so familiar with facebook's business model mark zuckerberg had to explain to them how facebook worked, the fact it was an ad-supported business so i think enough time has passed since that april testimony that i would think there would be a certain amount of education on how these businesses work. i think having read dorsey's testimony, a lot of what he'll be talking about is explaining the systems and the business model of twitter >> you remember, since it's the ten-year anniversary of your finlt c financial crisis -- >> my financial crisis >> you remember when lloyd was in front of the senate, they're saying you shorted all these things, he said we make a market if someone wants to do that, we'll be the person. they had no idea

why would they know anything i just said senate intelligence committee, i thought that's an oxymoron did you watch any of that yesterday? >> i watched a bit of the testimony. yes. >> can you comment on how you felt about it? let me ask you this. we were interviewing presidential candidates from your party for 2020. >> from my party >> whose party >> from that side. >> i'm throwing a party. >> i'm throwing a party because you're back. >> which one impressed you >> as a presidential candidate >> yeah. that's not what you were watching yesterday in your view, you didn't see that as -- >> i was watching to hear what that gentleman had to say. >> which one >> i wanted to hear his answers. i was more interested in the answers than the questions that was the problem >> that was the problem.

>> we don't want to do this. thank you, julia did anyone impress you six of them were in the running yesterday. how about bloomienthabloomentha? he's in a neighboring state. >> i'm not sure -- i'm not sure about any of them. >> it will happen again today. >> i know. >> it's competing with this other tech thing, right? >> i know what we'll be watching >> i have to dvr both, i think >> serena is advancing >> did you see her she was getting emotional. then she got timing down >> look out. what did you think of when the father of the student from parkland came over to try to shake the hand did you see this you know, he had earlier said i'm going to confront kavanaugh.

i'm going to go over and confront him he's a member of -- >> yeah. >> a lot of sympathy but he's -- that was a pre-determined move. i don't think kavanaugh knew who he was did you see the controversy with the person sitting behind kavanaugh, the white power sign? she was just relaxing like this. it looked like an okay thing but i don't think it was intentional. the internet went okay that she was flashing a white power sign i think her mother or father was a holocaust survivor, she was born in mexico i don't know it's crazy it's like a circus >> let's give you some other political news >> i know you saw that >> i didn't. an upset in massachusetts. mike capuano was defeated in his first democratic primary challenge since he was elected back in 1998

ayanna presley is almost set to be the first black american candidate to be representing massachusetts. she wasted no time in blasting trump saying our president is a racist, misogynistic, empathy-bankrupt man. bayer is one of the bigger losers on the dax in germany today. second quarter core earnings did rise however profit from bayer's consumer products business fell 18% largely due to the weaker dollar also the revenue from claritin and coppertone fell further. sglsh . rh, formerly known as restoration hardware, shares are falling. retailer's second quarter earnings beat forecasts but revenue fell shy it is trimming its revenue

guidance. and workday is down 2% in the premarket. the cloud softwaremaker missing second quarter earnings targets. subscription revenue did beat forecasts. they are raising the sales outlook for the year let's get to the markets joining us is steven whiting from citi private bank ed campbell is portfolio manager at qma ed, i'll start with you. yesterday 25% earnings growth is good revenue growth of 10%. we wanted that for years and years. 4.2% estimated gdp for the quarter. is the s&p up 9.9% through august >> yes >> did you realize that? while you were gone it was hitting a series of new returns? >> that's total return including dividend >> i believe the country good things happen i get it >> no. no you were able to comment -- you finally on a different show said things are going well in this country. you admitted it when i wasn't

around >> economically things are going well >> it's those tweets how is it looking in the future? >> things havegone great as yo have mentioned certainly the near-term situation looks like it will continue to be good. when we look at the recession dashboard, all the indicators are blinking green there are a number of risks out there from troubles in emerging markets that look to be spilling over into other countries. there is a -- we were concerned about inflation as the unemployment rate continues to move lower that's not an issue for now th . trade tensions have not deescalated much i think we'll see an escalation between us and china i would not be surprised to see corrective action in september september is typically a tough

month seasonally you have had historical black days in september. i think any corrective action we see we would recover we'll probably end the year higher than today. >> all those positive elements that we just heard, people know this, right? >> right i don't know when it turns from that consensus to where it becomes kind of a -- i don't know, a bull market that has not been embraced with both hands. it hasn't been the most loved bull market. these facts are out now. >> it finally matters. since early in the year we said this would be a 20% plus earnings year. we did get the boost from tax cuts it will continue very fortunate at this stage when unemployment is so low inflation is also so low i agree it's convincing i will showing signs of gaining

but not in a disruptive, negative way that gives us a good outlook for 2019 what's shocking is how international markets have traded turkey and taiwan are not the same place you look around the world, backward looking earnings over the last 12 months ex u.s. are up 19% look at this gap in performance. we're seeing implied volatility, correlation, looks like crisis levels around the world. just saw yesterday's data on the ism. very strong manufacturing data the ism export data index was at 55 the world is not collapsing when the export index is at 55. two years ago it was in the 46 territory. oil below 30 all these sorts of things. you can find places around the world that are trading like early 2016 again >> my point at the beginning was that -- is this in the market

already? is the sentiment turned to where it's too bullish >> short-term indicators look overbought short-term sentiment indicators. folks looking for the next leg up from the other guy, they sell into this a bit. is a recovery coming to an end no >> who knows what that means for the stock market >> our market sentiment indicators are indicating euphoria here. you are at risk of a short-term pullback when you think about valuations, s&p 500 pe ratios started the year at 18.5 right now they're below 17 na they're elevated historically but not at dangerous levels. >> stephanie what has "half time" indicated? is it bullish yesterday? >> it's mixed. i look at two pieces of the economy.

the consumer, 75% and manufacturing. consumer, listen to what target, walmart, estee lauder, costco, any retailer all said pretty good things about the consumer as long as that continues, and i think it will because it's supported by good jobs, okay wages, but confidence. so the confidence is leading to spending retail sales, auto sales, even home prices are up the consumer is good that's underappreciated. i think that the momentum in the economy can continue is it going to continue to grow at what we just saw in terms of the second quarter gdp no but you probably will do 3% the second half of this year low inflation. double digits earnings growth. the one thing i'm looking for is capital spending

business investment. we saw an 8% number in the first quarter. does that have legs? if it does, does that lead to productivity which can extend the cycle? that's the question in my mind i think it will extend >> if you had to pick one thing, what's better than a strong consumer you think we like capital spending those guys don't do anything we're always at the chicken and egg thing. it seems like if you were to start with one thing, you would want consumers strong. that would be a first pick that you would want >> that's why i look at these two pieces of the economy. 75%. there's a multiplier effect on the industrial side of the economy. it's only 12% of gdp but has a much bigger impact to the overall economy. if you have manufacturing and industrial also participating that's broad based

i do worry that everybody likes the u.s. and no one likes international. i'm tempted on em and europe more so. i think people have thrown them out. i think you're seeing bottoming out in the economic indicators, particularly in europe i still think you have to have exposure on the u.s. side. >> andrew, you are globetrotting. hair dryer you bought a hair dryer. >> just to put numbers on what you mentioned. u.s. stocks up 10% year to date. emerging markets down 2% and 6%. so there's been an enormous spread in the performance. >> the economic performance gach gap is not as large. >> but with the s&p 500, you have gone from 19.1 times in january to 16.5 times. so i get that we're worried about a whole lot of things, because we all always worry about a lot of things. that multiple is reflective of

that. >> we started to build more risk premium in there >> thank you >> i think so. >> are you on "half time" today? >> i'm here for the full hour. >> we'll make the most of it >> i have a lot. i'll bring it. >> do it all before 7:00 when we come back, a live report from gulfport, mississippi. we'll talk about the impact of tropical storm gordon. right now, as we head to break, a look at premarket winners and losers in the dow.

let's get the latest on crop tall storm gou tropical storm gordon. jackie deangelis is live from gulfport, mississippi. good morning >> the worst of the storm hit

overnight. it hit harder about 50 miles east of here in alabama. we're in gulfport. conditions are dry but in mississippi last night the governor declared a state of emergency and imposed a kcurfew of 7:00 p.m. that was observed by residents and businesses here pretty much everything was shut down by 6:00 the lesson here, we learned something from the hurricanes we saw last year, harvey, irma, maria. it's better to be safe than sorry. when it comes to oil production in the gulf coast, the producers were safe, too oil prices did move in preparation for this almost 50% of the refineries in the united states are down here in the gulf coast. they were impacted last year about 9% of oil production was closed down because of preparation, evacuations overall people are saying we dodged a bullet with this one. >> that's good news. good to hear

thank you very much. american ryder cup captain jim furyk selected tiger woods, phil mickelson and bryson dechambeau for the ryder cup they are already joining a squad which includes dustin johnson, brooks koepka, justin thomas, jordan spieth, ricky fowler, patrick reid, bubba watson and webb simpson furyk is expected to announce the 12th and final roster spot for the u.s. ryder team after the bmw championship on september 9th. they pick whoever is hot dechambeau won the last two tournaments here serena williams and rafael nadal defeated their points last

night to move on serena moved on in straight sets, nadal survived a 4:49 marathon against thiem to advance. nadal had a really tough match a couple days ago. it was phenomenal to watch last night it was on too late. he lost the first set 6-0. sometimes you can like a fox there. i'm down 3-0 >> save my energy for later. >> when it's 90 degrees and humid. not quite as bad last night. coming up, more stuff today. the guy who beat federer is going to have to face joker as brad gilbert calls him my family didn't like the guy who beat federer they love federer. looking for some revenge

nafta negotiations resume between canada and washington today. a live report from d.c. next we'll talk to the ceo of the canadian american business council about some of the sticking points. as we head to break, here's yesterday's winners and losers on the s&p 500 really want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready, because we're helping leading companies lead with digital.

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♪ welcome back you're watching "squawk box"

live from the nasdaq market site in times square. good morning welcome back to "squawk box" on cnbc look at u.s. equity futures. let's show you what's going on dow looks like it would open down, off about 96 points. nasdaq off about 16 points s&p 500 looking to open down 9 points a couple things going on in the "squawk" planner weekly mortgage apply kications data at 7:00 a.m at 8:30, international trade data for july. at 9:30, jack dorsey and sheryl sandberg will appear before the senate intelligence committee to answer questions about foreign influence on social media platforms. at 1:30 p.m., dorsey will appear before the house energy and commerce committee almost like competing things going on today the battle over supreme court nominee brett kavanaugh will

pick up in a few hours on the first day of hearings, democrats showed up ready for a fight by immediately calling for a vote to adjourn. interrep shuptio interruptions from demonstrators interrupted the hearing. crihrystia freeland is backi washington to resume trade talks. >> let's get to washington for an update on the high stakes going on in washington eamon javers is here >> the fabulous heat and humidity in washington, d.c. you guys are welcome down here any time >> becky is starting a movement for the norm >> it's an article about how

three-day weekends make us all more productive. >> we're willing to suspend disbelief. no doubt we would be all more production >> makes sense to me send the memo to the boss, let him know >> weekend >> so are you excited today or -- it's -- you know -- >> we have a lot going on. >> when is it not a circus, but not always three rings or two rings. >> feels like it sometimes let's start with the united states and canada. both sides back at the negotiating table. you remember that the talks broke down over bringing canada into the revised nafta agreement last week. they agreed to keep talking. that will happen today we expect that they might make progress the new deadline that they're looking forward to is october 1st. that's because of the 90-day clock starting on capitol hill they have some time now.

justin trudeau has given comments over the past 24 hours that make it look like he's not willing to make amany concessions. he said there are a number of things we absolutely must see it. no nafta is better than a bad nafta deal for canadians. here's couple of sticking points a mechanism for dispute resolution also this cultural exemption among the things it would do is protect canadian media companies from being acquired by american media companies. the example they give is fox acquiring the cbc. dairy supply chain management, that's the canadian farm-based subsidy system the canadians want to keep in place.

we're learning more about dysfunction inside the trump white house. this coming from bob woodward in his new book called "fear. some excerpts have already come out. two incidents relate to trade and nafta. look at these two bullet points from the book. gary cohn reportedly stealing a letter off trump's december that would have withdrawn the u.s. from an trade agreement with sk. and later on saying i can stop this, i'll just take the letter off his desk so woodward painting a picture of a trump administration where aides felt like they had to literally steal papers off his desk to stop him from taking action the white house has pushed back on this book saying it's fabrication. the president yesterday said bob woodward has had credibility issues that will dominate the

conversation in washington today. >> we'll check in with you later. for more let's bring in marry scott greenwood. good morning >> thanks for having me. >> i know when we spoke to you last week you were optimistic thinking we would get a deal by the end of the week. what happened? >> i was if somebody is going to take papers off the desk, could they also take away his twitter machine. if he could stop tweeting about canada that would help things. the goal line has been moved yet again, and the question i have is will justin trudeau save us from ourselves what happened when the last time i was with you and today, the president gave an interview with bloomberg in which he said apparently off the record but later reported by another outlet that he doesn't plan to give any concessions whatsoever to canada so that is obviously not a great

place to be. there are a couple of places you mentioned in the show where canada needs to see flexibility with the united states i think canada and mexico have been flexible and constructive, i time for the u.s. to finish this it's important for our own economy right here at home we'll see if they can get there this week. they don't really have 30 days to finish it they have to agree in principle, write it up and then talk to congress about it. i'm not sure where the goal line is it's somewhere between now and the end of the month >> your point is that this didn't happen because justin trudeau needs to go back and save face politically and say he has a win on this, too >> the prime minister has to get something. maybe the thing he gets is he saves the entire economy of north america by averting these

tariffs. one thing that would have to happen is the steel and aluminum tariffs would have to come off another thing that would have to happen is whether you call it chapter 19 or something else, there has to be a mechanism that all three countries agree to where we agree how we'll resolve disputes it won't go perfectly. it never does what are the rules of the road? canada has the right to ask for that how much flexibility does canada need to show versus the united states and mexico? that remains to be seen. it's clear that everybody has to be willing to bend a bit it can't just be the president of the united states making demands and everybody else caving to his interests. that's not how the economy works and that's not how any political leader would want to have it. >> >> i understand your point on dispute resolution it makes sense, but mexico already caved on that front. that deal already had that as an issue. they worked a lot of things into

the agreement that sounded like it was an opening for canada, trying to make it easier for them to come back in >> mexico put life back into these talks. and the united states showed flexibility on the sunset clause, which they weren't showing flexibility on before. mexico's argument on dispute resolution is even in the u.s. international courts which is the other way to do disputes, foreign countries win 50% of the time mexico's argument is as much as they would like chapter 19, they don't have to have it. will canada go along with that possibly there's another issue where canada is not seen as caving at all. the notion of a cultural exemption. canada wants to tell their own stories and voices, i understand that let's see if ustr does >> i know you thought we would get this wrapped up last week. you're optimistic that it will

be completed in the new time frame. what happens if it does not? >> i don't know how to feel. i think maybe it's 50/50 we're drinking out of the same cup of tea with canada why the president would want to poison did, you know, by not getting to a deal, i don't understand it. if we don't get there, i think the economic consequences are serious. we do a huge amount of business with each other in north america. almost 7$700 billion a year. canada is our third largest investor they're our largest export market mexico is up there it's in our economic self-interest in the united states to modernize this trade agreement. if we do so, i think everything will be okay and the u.s. will start refighting with kleichina. if we don't t could be devastating to our own economy >> thank you for joining us. >> thanks for having me.

>> we have more coming up on "squawk. we'll tell you how cyber criminals are penetrating fortune 500 companies. the ceo of proofpoint will join us. and then at 7:00, what congressmen expect to hear from jack dorsey later today. and later spicy chicken sandwich anyone? we'll talk to the ceo of wendy's, talking growth and mcdonald's stay tuned - i love my grandma. - anncr: as you grow older, your brain naturally begins to change which may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain gary cohn, according to the

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welcome back blood testing firm theranos is dissolving, but that's not the final chapter in the story the founder, elizabeth hopes and another former executive await a criminal trial they're accused of defrauding invets i investors out of hundreds of millions of dollars. if found guilty they face up to 20 years in prison a handful of staff remain.

taylor said they reached out to more than 80 potential buyers. big-name investors lost about $1 billion. finger stick blood tests began as holmes became a celebrity and then it was said that the drug tests were unreliable. most of the tests were performed with commercial analyzers that were purchased from other companies. the liquidation process is expected to take 6 to 12 months. so many questions around this. the great book about this "bad blood" reporting on this and digging through the details. without john kerry, who wrote the book, i'm not sure they

would have been caught before the real reporting, this was an instance where the reporting not the government or somebody else -- >> where were they headed, theranos >> where were they headed? they were taking e ining people, providing false results -- >> they knew full well they didn't have technology that did that >> you're saying it would have come out eventually. >> think about how many people would have been injured. >> i'm not saying that to what end were they trying to think this was -- >> it was like a ponzi scheme. they believed they could get to the other side of the cliff. >> when you send out stuff and you are -- it's obvious you're getting results from existing technology, bringing it back and claiming that your one drop

black box mechanism did this, are you hoping that in the next two years that there will be something actually working >> very interesting today in silicon valley and elsewhere a number of countries are pursuing the theranos strategy of doing a small amount of blood and apparently they're much closer to where theranos was ultimately >> that would be the way to do it to actually have the technology before you do that >> the concept of the technology may not have been the wrong idea >> we all want to do this. but you need to have -- you can't just pretend >> especially before you roll it out to the commercial public >> they're saying the players that are already entrenched are trying to undercut us. knowing full well you're sending it out did she not know -- >> of course she knew. >> that's just a huge investment

scheme you might as well be jordan delfort or whatever his name is. >> all right when we come back, why hackers are not attacking corporate vips they're attacking weak links further down the food chain. the ceo of proofpoint is here to explain. he's making his way to the "squawk" set as we head to break, a quick check of the european markets. at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates.

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welcome back to "squawk box. one of the biggest prizes for a cyber criminal could be hacking a company's ceo. that's what's called a vip in the corporate world. the next guest is warning against vap, very attacked persons and those are lucrative products tell us about a vap. who is a vap >> they are individuals in the organization that have access to all kinds of information and

they're people that if compromised could be a great treasure for a bad actor. >> and so what's happening is hackers instead of going after what might be the highest profile person or trying to find the people around the highest profile -- >> it's finding the person in the organization that has access to really interesting information or data. >> like the i.t. person? >> or someone who has access to all the systems. but it can be someone you can easily influence we recently looked at a bank the people that were being attacked were the loan officers because they have access to all of the consumer information. >> now, when you say that they're attacked and can be compromised, does that mean that you're getting in through this and inadvertently getting access to this other information? >> no, an attacker looks at their poe firofile, gets them to click on something, go to a particular website and through that you get access to other

information. >> gary, you had a great quarter recently. >> we did. >> emerging products are 20% of total revenues you said it increases your tam by $5 billion. where do you see emerging products -- this piece going as a percentage of total revenues over the long term, and do you have the right portfolio to have that growing or do you need to do more m & a? >> so we feel really good about the emerging products that we have they basically supplemented the core growth of our business. and we think that has a great growth opportunity for the coming years as you look at our historical growth, we've been very consistent about delivering on our numbers, one, and, two, continuing to deliver this balance of growth and cash flow. >> how much do you worry, though, about the big tech giants who continue to build some of the kind of functionality that you have into the, quote unquote, stack, their own services. >> it's a great question but this is what we do for a living. this is all we do so we are 100%

focused on the threat landscape, how that changes and einvolvolvs >> but despite how much it's changed it seems like it still stayed the same. >> in some ways, yeah. >> the biggest opening in the fence for most hackers is still your e-mail. >> it's sort of fascinating. we see the attacks to infrastructure like exploiting vulnerabilities really declining and the attacks on people increasing. >> and the attacks on people -- it's a phishing scam for the most part. >> yes, absolutely. >> these are e-mails that look like from friends with a document attached to click on. >> that's right. the amount of e-mail fraud doubled to 12.5 billion from 6 a year ago so the amount of impact it's having today even though it's the new old thing, it continues to be the issue.

>> do you think the i.t. spending environment is going to stay as strong as it is right now or has it peaked >> i think the i.t. spending environment is healthy and will stay healthy in security, we still have a long ways to go to increase security postures with companies but we feel very positive about where that is going. >> gary steele, thanks. >> and thanks to stephanie link for joining us for the hour. >> thanks for having me. congressmen from both sides of the aisle will tell us what to expect from twitter ceo jack dorsey that's next. next we'll talk to the chief executive from fast food chain wendy's. unfortunately, the one nearby is not open yet, so we'll have to fend for ourselves we don't have any food anyway, he can come anyway i guess. he'll join us for an exclusive interview at 7:30 a.m. eastern i think that she's a very nice girl...

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tech under fire. will today's hearing on capitol hill set the tone for regulation down the road? we'll hear from congressmen on both sides of the aisle on what they expect from twitter's jack dorsey and facebook's sheryl sandberg. september off to a shaky start for the markets. trade tensions ratcheting up between the u.s., canada and china. your market playbook is coming up. plus, pops and drops making a comeback, melissa has a segment on her show called pops and drops. >> no, that's been gone for years, like a decade thanks for watching, joe. >> if it's available, we're taking it. a look at some of the greatest

calls and all the greatest pop music from the '80s. the second hour of "squawk box" begins right now ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's take a look at the u.s. equity futures an hour ago the dow was down by almost 100 points. right now the dow futures look like they are down by about 65 points s&p futures are in the red too, down by almost 6 points and the nasdaq down by about 9 points. this comes after a down day for the markets, but one where the markets managed to pare some of those losses at the end of the day the dow was only down by 12 points the nasdaq had its worst session since august 15th but it was

only down by 0.2%. let's take a look at some of our headlines for this hour. the u.s. and canada are set to resume trade talks today canadian foreign minister chrystia freeland will be meeting with u.s. trade representative robert lighthizer in washington to work out a handful of contentious issues. canadian prime minister justin trudeau says he seeks a deal that benefits all parties. economists think that the trade deficit rose to $49.2 billion from $46.4 billion in june also toyota says that it will recall a little over 1 million hybrid vehicles worldwide. that recall is because of an engine wiring issue. the issue affects vehicles produced in japan between june 2015 and may of this year. 192,000 of those vehicles were sold in the united states. >> you guys were not paying attention to the cold open this is what happened yesterday. >> plus pops and drops

making a comeback. melissa has a segment on her show called pops and drops. >> no, that's gone that's been gone for years like a decade, joe thanks for watching, joe >> anyway, it's available. >> are we taking it? >> we're doing pops and drops. >> the last time pops and drops is when that song was out. >> everything is ready to go you've got something that works like that, rhymes. some stocks pop, some stocks drop. >> let's do joe's row. see, "fast money" is going to be doggone it anyway, here are some of our pops and drops we've got that animation again it's pretty good tops for pops and drops. killing her, i know. i'm going to get a message from her. anyway, deutsche bank, it's been ten years? i don't think -- anyway. >> time flies when you're having fun. >> deutsche bank resuming

coverage of caterpillar with a buy rating and a $177 price target, implying 30% upside. the analyst covering the stock says cat is a preferred play for the early stage equipment replacement cycle. with that said, the stock is under pressure this morning. as you can hear. and deutsche bank initiating coverage of caesars. the price target is 14 citing the stock is undervalued this stock is up about 1%. when you can have an actual sound indicating the change in direction -- exactly let's see this one i'm interested in every one of these now. it gives me -- we have to constantly sort of reinvent and refresh. so this stock is going to be down temporary employment agency downgrading the stock. the price target lowered to $67.

goldman says it sees limited earnings growth coupled with temporary staffing recovery in the later stages so andrew, i'm going to let you do a pops and drops sometime. >> thanks. thanks for the -- >> i'm going to let you -- >> it's a real compliment. i appreciate the honor, the privilege. >> do you want to? >> let's see who can do it better. >> let's do. >> a challenge. >> the other big news in the business world today is actually taking place in washington, d.c. facebook's sheryl sandberg and twitter's jack dorsey, they're headed to the hill this morning where they're going to be grilled by the senate intelligence committee julia boorstin joins us now from washington with more >> thanks, andrew. the senate hearing on election interference kicks off in about two hours. it's the first time sheryl sandberg and jack dorsey have testified on capitol hill. the big question they're facing is whether they're ready for the midterm election

sandberg's testimony takes responsibility for facebook's role saying that the company is investing for the long term because security is never a finished job ceo mark zuckerberg echoing sandberg, publishing an op-ed in "the washington post" saying the, quote, combined forces of the u.s. private and public sectors will be necessary to protect american democracy from interference in what he calls an arms race. jack dorsey will be there on the topic of bias in twitter's content monitoring dorsey is saying twitter does not use political ideology to make any decisions now, google will be noticeably act. they invited alphabet ceo larry page and rejected google's offer to send its top legal and policy exec, kent walker. back to you. >> thank you, julia. stick around, joining us congressm maman peter welch and

congressman bill johnson both serve on the energy and commerce committees good morning to both of you. >> good morning. >> senator welch, do you think when you look at twitter right now that there is a political bias to the way they have approached things? >> well, it's a fair question. the bottom line here is that whether that's raised by democrats or president trump, you do need an answer to it. are the algorithms favoring one side versus the other. the bottom line here is that twitter and these huge operations like facebook have to do a lot more, be transparent, be protective of what does go on and keep hate speech off it. congress hasn't stepped up we essentially have a regulatory system that was designed for when we had dial-up phones so i think there's a lot of work that we have to do in congress to make certain that the rights of citizens in the integrity of our political process is protected and we have to also put a lot of demands on twitter and facebook and these other big

operations. >> congressman johnson, i understand that you are concerned about what may seem like a bias. the question, of course, is if that is true, first of all, which you have to decide on or stipulate, what do you do about it and do you regulate these companies? >> well, you know, i've never been a big fan of more government regulations i believe in a smaller, limited government i think the fact that we have twitter and facebook and google and other such applications is because the federal government has not been able to regulate them or has not been able to figure out how to regulate them. however, in the absence of regulation, the responsibility, the bar for responsibility by these tech companies is very, very important the bar is higher. and to fall back on the assertion that these are algorithmic decisions that are being made, that's a tech term

that goes right over the heads of many people algorithms are written by people they are conditionally based logic statements that say if this, then do this and we tell the computer system what to do and so someone is making the decisions about content, and that's what we want to find out today from mr. dorsey, how are those decisions made. >> what happens if we just decide rather than call them a platform, call them a media company and to the extent that there's commentary and analysis that's done on all sorts of media that has all sorts of biases, we've had this conversation before, i imagine you wouldn't -- you wouldn't necessarily regulate a media company. >> well, and i think that's a very, very good question because 93% of the american people say that they get their news online. two-thirds of the american people say that they get it through some type of social media platform like twitter or facebook or others and so i think that's a very good question. i think for a tech company to

assert that they're just a tech company, i don't think that that's accurate. i think they are to a degree a media company and the american people deserve credibility and integrity in making sure that what they think they are seeing is accurate and true. >> julia boorstin has a question for you. >> in jack dorsey's prepared remarks he says repeatedly there's no bias in the way the algorithm works and the decisions they make. with that in mind and having taken a look at his prepared remarks, congressman welch what do you think is the most important thing that you want to hear from dorsey today. >> well, how do you verify that? what you've seen on some of these platforms, and the media company makes much more sense to talk about, is really totally false and defamatory information. the biggest example, of course, is the attacks on parents who lost their children at newtown you know, the first amendment

protects free speech, but it doesn't protect yelling fire in a crowded theater. so there's got to be some way where when there's a legitimate question raised, whether it's by bill johnson or president trump or the democrats that you can get to the bottom of it and do it quickly in a transparent way. so we are moving, i think, towards an area where congress has to ask the question whether we need some regulatory body that is empowered. >> what does that body look like >> well, that's the question because it would have to have that flexibility that mr. johnson is talking about, but you'd have to be able to have an action that would protect, say, the newtown parents from these attacks that are just flat-out we all agree totally false, defamatory and very destructive. and congress hasn't even asked that question itself on the energy and commerce committee. but i do think this question of whether you need some regulatory body that is going to be able to protect the integrity of some of

this information, certainly keep off hate speech and keep off clearly false speech like what has happened to the newtown parents, it's time for congress, i think, to step up and answer that question. what's the regulatory body that will answer these questions. >> congressman johnson, i know you say you're concerned about regulation but you've heard what president trump has said and a number of your colleagues on the right have said things about the need for regulation. what do you make of that idea? >> i'm not saying there's not a need for regulation, i'm saying we have to be very careful about pouring water on our campfire. that's what has happened to america's economy since the early '70s the growth of big government has put such regulation on the backs of businesses that it has stifled innovation and ingenuity in many sectors. information technology and the internet is one area regulations have been absent and so it has

thrived and we've got the digitally connected world that we do today. i'm not saying no regulation, i'm saying we have to be very, very careful about how we do this so we don't put the brakes on innovation. we're the technology leader in the world and we want to maintain that position at the head of the table in the global economy. >> congressmen, both of you, thank you for joining us this morning. >> thank you. >> thank you. >> it's still interesting that in this whole conversation almost the roles have been reversed republicans who historically didn't like regulation now all of a sudden are talking about regulation democrats who historically wanted regulation, now saying they don't like regulation because the president trump liked regulation you know, the bedfellows are fascinating. >> this may be an issuewhere you do see some agreement between the right and the left on some counts of it maybe they get to an agreement where they think there should be something come around. if there is a bipartisan issue in washington, this might be it.

>> we have radio listeners this is going to be in every one of your tags. >> i want to thank peter welch from vermont and bill johnson from ohio. >> this is when you were gone. when you were gone we're running a tight ship here. we fixed a lot of things >> we're still here. >> exactly markets falling on the first day of the month amid increasing trade tensions will it be a september to remember we'll discuss after the break. later, burger business heating up the ceo of wendy's will join us sans food, unfortunately stay tuned, you're watching quk x"n bc 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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credit swiss and joining us for the hour is richard bernstein, the ceo of richard bernstein advisers welcome to all of you. i think i'd like to start out with this, mandy, just talking about some of the issues you brought up in your notes just this idea of fomo, fear of missing out. it's something that's hitting investors. >> it's definitely a theme we're seeing so with markets making new all-time highs, the dominant thing in options is people piling on via the buying of call an call spreads, taking the view that markets will continue to rally and grind higher from here the fear barometer recently fell to the bottom of a five-year trading range telling you that investors really not seeing too much downside risk in the market and are more concerned about the upside. >> and they're not protecting themself with hedges as a result. >> not as much as before. >> richard, does that sound like a smart play to you?

>> look, i'm the worst short-term trader in the world so i really can't address that i will say what mandy is saying about the trading aspect and the options market is definitely not true about overall asset allocations. if you look at pensions, end endowmen endowments, foundations, you still see the scarring of 2008 people are still very scared about going in full bore and i think that market tops are not -- don't occur when you have this hesitancy. >> i was going to say i would take that as a bullish sign. >> i think it is. >> that not everybody is fully invested. >> i can't address the short-term stuff, but you're definitely not seeing it in asset allocations. >> phil, how do you think about all of this? >> i actually like mandy's statement in a way about fomo because i think there is still a lot of upside risks.

look, the u.s. economy is cooking, we're probably going to go 3.5% this year. chinese easing up on monetary policy and europe is finally showing some signs of life after a very disappointing first half. so if some of these geopolitical and trade issues work out, this is a very stim la tore environment and that's going to be very good for equity prices. >> so if people are coming back after being away from the summer trying to think about how to reassess things, you would tell them to go ahead and invest more money in the united states or other places >> yeah, we're still overweight in the u.s and i think really our message to ourselves is really to take it easy. what do i mean by that just take it easy, try and ignore some of the noise out there. but the global economy is either cooking or it's being stimulated aside from em, the three major zones in the world aren't doing so bad if things work out, that's good

for equity prices. >> mandy, when did you first start seeing these positions ramp up? has it happened gradually over the summer or more recent than that >> it's more recent. there's been a lot of parallels between the market action today versus what happened at the start of the yore in january if you recall, markets started off in a gang buster way and the option market back then we saw similar upside chasing so i get a lot of questions about are investors too complacent. >> that led to bad news. >> we all know what happened in february but there are some key differences this time around so yes in the u.s. equity volatility if you look at the vix index is back to the lows but volatility is high elsewhere so in europe and emerging markets, they're pricing in a much bigger risk premium there currently versus back in january, volatility was low everywhere so yes, there was probably too much complacency to start the year but right now i do think markets are appropriately priced. >> rich, i know you're not a short-term guy but there was an

interesting theory getting kicked around the table here last week and that's just as you come back, you're looking at the last quarter and you have the hedge fund guys and other people who are going to be chasing benchmarks at this point the markets are doing pretty well and that puts pressure to chase the momentum and that leads to upside potential. >> absolutely. there's pressure to meet or beat benchmarks if you think about the story that active managers can't outperform here we are heading towards another december where you might have another yore where active managers underperform. if the market continues to go up i think you'll see more where people are actually chasing because it's a business risk it's not an investment risk anymore, it becomes a business risk and that could -- that has shown in history to be a very substantial driver of the market. >> rich is going to be staying with us the rest of the hour but our thanks to mandy xu and phil guarco. when we come back, a lot more on "squawk. the ceo of wendy's is in town to

speak with investors before he does that, he's going to be right here later, big tech on the hill. what's at stake for companies like twitter, facebook and others a live report from washington straight ahead in the meantime, here's facebook's ceo mark zuckerberg who testified in front of a house panel committee in the spring talking about regulation. we're right back in a moment >> i think that it is inevitable that there will need to be some regulation so my position is not that there should be no regulation, but i also think that you have to be careful about what regulation you put in place for a lot of the reasons that you're saying i think a lot of times regulation by definition puts in place rules that a company that is larger, that has resources like ours can easily comply with but that might be more difficult for a smaller startup to comply with so i think these are all things that need to be thought through very carefully i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform,

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coastline. forecasters say parts of alabama -- we're not going with 6 inches anymore we're saying they could see up to half a foot of rain we're glad that it weakened, but that's still a lot of rain, obviously, 6 inches, but remember the hawaii hurricane. were you guys paying attention to that for hawaii what they were expecting they were expecting 30 inches. now we're talking 6. for news, it's just not -- we're trying half a foot now that's still a lot we hope that mississippi is able to deal with that. anyway, coming up we'll have the ceo of wendy's join us to discuss the burger business, the growth plans and the state of consumer as we head to break, take a look at u.s. equity futures equity futs are doures are down2 or so on the dow, nasdaq down 12, s&p pulling back 7 if it were to open at 9:30 making my dreams a reality

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good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center, mortgage applications falling very slightly last week by 0.1 of a percent. the mortgage bankers association says that was entirely because of a drop in refinancing activity with new purchase applications actually rising during the week. the average 30-year mortgage rate was higher by two basis points to 4.8%. the centers for disease control reports 30 more cases of illness linked to consumption of kellogg's honey smacks cereal. kellogg recalled 1.3 million cases in june because of potential salmonella contamination. however, the cereal is still being sold in some locations so beware. boeing says its kc-46 midair refueling tanker has completed the faa certification process. last month boeing said it had

increased its projected spending on the program by $426 million because of testing delays and production changes hurricane gordon churning in the gulf coast jackie deangelis joins us right now. she's in gulfport, mississippi, this morning good morning. >> reporter: good morning to you, andrew. tropical storm gordon certainly did pack a punch in parts of alabama as it hit 50 miles east of here last night there was wind, rain, some storm surge to be concerned about and some rain to watch throughout the day today. here in gulfport, mississippi, relatively quiet this was the city that was hit by hurricane katrina in 2005 pretty badly, so the town here really was bracing for this. the governor of mississippi actually declaring a state of emergency yesterday as a precautionary measure and last night here there was a curfew imposed at 7:00 p.m. and it was strictly imposed by police patrolling the area. the ports have been an issue as

well gulfport has been closed since yesterday, also pascagoula and others when it comes to business, a little bit broader we're watching the energy industry you could see oil prices spike yesterday over $70 a barrel as traders were anticipating the potential impact of this storm 50% of the refineries in the country are down here on the gulf coast, so flooding potential and shutdowns there are a concern of the some of the production was shut down as a precautionary measure as well, about 9% but it doesn't seem that the impact of this has been as pervasive as was expected so right now we'll be watching throughout the day for some of that potential flooding to see what happens but some of these refineries that were shut down can be brought back up fairly quickly today oil prices trading lower as we're assessing the damage here not as severe as expected. >> which is good news, jackie, thank you. that's a beautiful shot.

but we know what's coming. time for a squawk ceo call todd penegor, ceo of wendy's >> didngood to be here, joe. >> i think about wendy's, it's the third largest. the market cap is $4 billion mcdonald's is $120, $130 billion or so. is it an apples-to-apples comparison >> we don't have a big international presence so we're primarily domiciled in north america. we only have 500 restaurants outside of the u.s. and canada a great opportunity for us to continuo grow our business and we're not yet in breakfast. >> starting, though, eventually? >> we've got 350 restaurants today on breakfast we'll have to see. we've tried breakfast several times in the past. >> is that your excuse for not bringing us food today >> there will be food coming after. we'll make sure you're well fed.

we'll get a dave's double in you. >> 6,000 approximate locations >> we've got 6650 restaurants. >> only a few owned by the company at this point? >> we've got 335 restaurants so we own 5% of the restaurants we think that's a good footprint to have. we can be a great brand steward. we're also in high wage and low wage so we can represent the system well and be the lead for the franchise system. >> are you seeing any wage pressures at this point? >> the wage pressure is out there and is consistent. it's not just mandated minimum wage, it's really supply and demand so to get good talent, you're going to have to pay a little bit more we continue -- >> how many minimum wage people do you have at this point? >> we really never talk about minimum wage it's all about starting wage >> what is your starting wage? >> varies by state, varies by locale on average we would be well

above the minimum wage. >> well above the minimum wage the initiatives in recent years have involved, i guess, ease of ordering in terms of online and technology, et cetera? >> technology will play a big role going forward, joe. it's really how do you get more orders back into the kitchen and create a better customer experience when you think about kiosk, make to order, full customization, you can swipe things on, swipe things on. working on mobile ordering and mobile payments so you can get folks through the drive-through line a little faster people are looking for speed, convenience and affordability. >> do you think you're as fast as mcdonald's? they're finally coming around to fresh burger. >> we've been fresh in every hamburger in every restaurant since 1969. >> so you're laughing. >> validated that fresh does taste better but, you know, that is a big push on who we are >> but does this slow you down i would think it almost makes

you faster. >> you can actually make to order. when you're thinking about make to order, you can cook that faster so it's hotter and juicier. if you look at all of the drive-through speed ratings, we're consistently at the top. >> how much investment on the tech side have you had to make internally and how much have you had to outsource to others >> we've had what we call the 90-degree lab. we do a lot of our work in-house we have a balance between what's outsourced and insourced we're proving the business case, making sure that they follow once they follow, i'm sure they'll participate. >> how big a delivery business given the conversation around delivery for everything will wendy's participate in >> we're starting to see a nice tailwind today still small in the spirit of our same-restaurant sales but convenience is getting redefined. folks want rather than just the speed of the drive-through, they want the food at home. what we're seeing on delivery is

our highest rated overall satisfaction so convenience trumps everything. >> and people pay for that >> our average check is 1.5 to 2 times more than those in the restaurant the consumer is very happy to get them at home. >> tom, what would you say about the health of the consumer we've heard a lot of the commentary from the retailers that were just reporting. >> it's still a bit challenging. it's really because if you look at the qsr space, about 40% of our consumers are $45,000 and under from an income bracket and they're not participating in the real wage growth to the extent of the rest of the consumer base and that's why you're seeing a consistent dealing schedule out there from a lot of the competition as well as wendy's we've had a four for $4 offering you get a hamburger, chicken nuggets, fries and a drink our biggest competitor is still

food at home you need a compelling offer. fast, convenient and affordable. people are looking for quality too and we are deliver that with all of our fresh-cut vegetables and fresh beef. >> wendy's started in canada i'm from the upper peninsula so pretty darn close to canada. >> that counts yeah, the kiosk, you know, you swipe your credit card, and i immediately look up and it says j.k. up there. >> it's really cool. what happens is -- we've separated -- >> you jump the line. >> if you go to the kiosk, automatically your order gets to the kitchen faster and we have more capacity in the kitchen the slowest in the whole restaurant is the ordering for folks. we are trying to make it less stressful for the consumer. >> it is because there are people like one person that goes in and orders like, i don't know, they're bringing it to like a family of 60 or something.

>> we love those customers. >> yeah, you do, but all i want is a large fries and a drink and so i'm waiting for this other order to be filled. >> that's where you'll see mobile ordering, so you'll have your kiosk in the palm of your hand so you can make the order on the phone and jump the line. >> you're from ohio. have you ever been to wendy's number 1 in columbus >> dave was from columbus. wendy's number 1 ways on broad street it closed a new years ago. >> i was there once. >> i'm from cincinnati we don't fraternize with the -- too far east anyway, thank you. >> really appreciate it. thanks for having me on. >> wendy's ceo. the president is just tweeting and here it is. isn't it a shame that someone can write an article or book, totally make up stories and form a picture of a person that is literally the exact opposite of the fact and get away with it without retribution or cost. don't know why washington politicians don't change the

libel laws, question mark. what is that, that was seven minutes ago and i haven't seen any additional tweets since then >> two points of fact. one is apparently all of the conversations were recorded. two, he apparently was offered the opportunity to talk and then said that he wasn't and you can listen to that whole phone call online and three, for a man who always talks about the rule of law, the idea that he wants to change the law every time it doesn't work for him i think is worthy of at least mention. >> couldn't he sue them if it's -- >> he could sue them for libel. >> all the recordings, they're all anonymous, though. >> no, technically they're not. >> but at this point they're anonymous and it's more he said/she said. >> i think the point is that this is a little more factually based than maybe the last book. >> andrew, good to have you back, but should i mention mattis and kelly, there are five

or six people that have said this is absolutely untrue. so -- i just was going to do the tweet and move on, but it's good to have you. >> someone's got to give you both sides of the story, otherwise you only hear one. >> that's our problem. okay because in the media, you only -- we always hear both sides of the story lately in the media. coming up, it's been an ongoing debate should you rent or buy diana olick will join us for the preview of what's coming up. >> easily the most-asked question and the answer is changing stay tuned, we'll have it next ♪ a hotel can make or break a trip. and at expedia, we don't think you should be rushed into booking one. that's why we created expedia's add-on advantage. now after booking your flight, you unlock discounts on select hotels right until the day you leave. ♪

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welcome back to "squawk box" this morning take a look at futures right now. we are in the red. the dow looks like it would open off about 61.5 points, nasdaq off 12 points and the s&p 500 looking to open down about 6 points. it's been a debate for years, should you rent or buy? well, it seems like the tides are turning.

diana olick joins it right now with more on this. what did you find, diana >> becky, i swear it's the question i get asked most and answer has suddenly changed. rent or buy, since the housing crash it's been buy. lower home prices and lower mortgage rates made the calculation pretty simple, but now both of those are sizably higher the monthly costs of buying a home an owning a home are up 14% over the past year this is more than three times the 4% increase in monthly rental costs and all this is according to realtor.com so the number of local markets where it's cheaper to rent than buy is significantly higher. as of now just 41% of the nation's population lives in a county where the median income family can afford to buy a home. looking for the numbers for july, buying a home was cheaper than renting in just 35% of the nation's counties, compared to 44% a year ago it is much local to buy than rent still in detroit, baltimore, fayetteville, north carolina, and in madison county, illinois, which is just next to

st. louis. on the flip side, cheaper to rent in most of northern california and of course the new york city area, particularly manhattan and brooklyn and renting is now a better investment than buying for the first time since 2010. that according to research from florida atlantic university. that is you make more money taking the savings from renting and reinvesting it than you do through owning and seeing your home equity increase so rent, guys. sell and rent. maybe. >> yeah. i don't know how long we can count on that, diana i mean your savings has got to go somewhere where it grows, but the stock market can't go up forever, right who knows. >> that's a problem we're overlooking. >> invest it back in something else, maybe real estate income properties >> it's normal, right? except for 2008, housing is an early cycle sector interest rates are low, incomes start to grow, so in an early cycle environment you can buy.

later cycle interest rates go up, home prices go up, it's harder to buy. the exception is 2008 when we have artificially low interest rates which made things affordable what we're seeing is quite normal. >> guess what's coming up -- thanks, diana -- more pops and drops. i haven't decided, i think i'm going to let becky do it >> i'm heartbroken. >> i think she'll sell it a little bit more. do you want to do it andrew can -- >> i accept your challenge dance-off. >> it's not a challenge, it's a gift it's a gift. couple of names you need to watch. >> keeps on giving >> at the top of the hour we're welcome gillian tett with thoughts on the upcoming anniversary of the financial crisis. plus tech under fire what you can expect from today's big hearing in washington. james stewart of "the new york times" will be our guest his thoughts on regulation, wall street culture and more.

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not the music i'm waiting for. higher in premarket trading. the industrial distributor came in 3 cents above estimates with quarterly profit of 99 cents a share. hd supply also raised its full year outlook and that stock is up by 2.1% general electric is under pressure ubs cutting its price target to $13 a share from $16, primarily because of difficulties faced by ge's power unit. ubs says ge appears to be losing share in a rapidly declining power market that stock is off by 1.5%. and caesar's entertainment is rated by deutsche bank the stock is at an attractive entry point and that it is well positioned to outperform its peers in the industry. the stock is up by 3.5%. >> people on the radio know exactly whether the stock is up or down. >> based on the noise? >> based on the noise.

>> where's your clown nose >> over at nielsen they're going we've got to check these numbers. >> which way is the whistle going on that? >> this can't be right anyway, our guest -- actually it started right at 7:00 when bernstein came on is when the -- anyway, he's been the guest host for the last hour, richard bernstein, ceo of richard bernstein advisers and a cnbc contributor. we talked about sentiment quite a bit since the beginning of the show because i think everybody knows the backdrop of the economy would be very positive for stocks right now, which makes me worry that that's so well known i don't know whether people immediately think that you can link the two on a real-time basis, that a good economy means good stocks. is it too bullish right now? is the story out already >> no, i don't think so. i don't think so. >> really?

>> look, the economy is cooking. the economy is hitting on all eight cylinders. i think most people know that. i still think, though, the big question in most people's minds is when is the next 2008 coming. that's creating an immense amount of hesitancy. some among investors on the positive side, that's still happening among ceos and cfos too. >> all this focus on the repeat of a 2008-like crisis, people talk about that in a once in 100-year or 75-year phenomenon. >> right. >> should that be the thing people are worried about >> i think you're right. i think it is like a once in a generation type event. >> we can only hope. >> i think that's probably true. but i think if you think back to the depression even, it took like 70 years to work off the fear factor of the depression, right? we didn't get people accepting equities until the late '90s so i think we're going in a

period here, the very early stages of the scarring of the investor community but i think the positive thing is that people forget the stock market is related to the real economy, and ceos and cfos to imprudent things at the peak of a cycle. that's just not happening right now. >> so we shouldn't be worried about a repeat of that -- >> of 2008 >> yeah. >> no. >> sounds like a good time for a ten-year anniversary special on the whole thing to bring it back andrew, can we do that >> sure. >> use that slide whistle. >> did you hear what i said? time for a ten-year anniversary special. >> and we have one coming up next week but we don't want to -- we're not ready to unveil things. >> you can build anticipation. it probably won't hurt in terms of sentiment to remind people. we don't need people saying, oh, that will never happen again. >> look, it's not march of '09 let's not get drunk on all this. but to say that we're at the precipice of falling into some

massive abyss. >> but you think that's fresh in people's minds in terms of keeping sentiment under control. >> i think so. look at the hedge fund community and how they have gone from really being levered long to now they're all absolute return. pensions and endowment foundations, it's a massive change in psychology in that world. >> all right, thanks for joining us. >> you almost made it through a whole segment with him. >> almost, almost. >> 59 minutes and 45 seconds. >> you have embraced it. >> i have embraced it. >> otherwise you're just another richard bernstein. coming up when we return, our guest host for the hour, gillian tett will join us. she's joining us along with jim stewart hanging out upstairs in

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a three-ring circus in washington today tech execs on the hill, supreme court confirmation hearings and trade talks with canada. we'll bring you an update on all three. plus, we'll debate potential social media regulation and privacy concerns with financial times managing editor gilli gillian tett and jim stewart. a bill in california would require companies headquartered there to add women to their boards or pay a penalty. we're going to talk to one of the authors of the bill as the final hour of "squawk box" begins right now >> announcer: live from the most powerful city in the world, new york, this is "squawk box. >> who, me i'm always here. it's good to see i like -- i like it. everything looks good. jim stewart is here, gillian

gillian tett is here andrew is here, becky is here. our guest host is gillian tett it's salmon-colored? >> it is indeed salmon-colored i brought it along and it matches becky's dress. >> i did it for you. >> put little fts on it and you'll be perfect. >> and green is always good. >> money. >> it's the color of money there's red, there's blou, but money is green futures right now are down 70 or so last we looked, 69 on the dow. the s&p is down 6.66 and the nasdaq down about 13 treasury yields have been creeping up a little, but they act like they got all day to get to 3.25% they're 2.88 this morning. 2.88. an update from the gulf coast this morning gordon has been downgraded now from a tropical storm to a

tropical depression. the center of the storm is in central mississippi with maximum sustained winds of 35 miles per hour so that's good news for the folks down there. here are some of the stories investors will be talking about today. nafta is on the docket canadian foreign minister chrystia freeland returns to washington today to resume trade talks with u.s. trade representative robert lighthizer separately, the confirmation battle over supreme court nominee brett kavanaugh will pick up again in just a few hours. in the first day of hearings, democrats showed up ready for a fight, trying to throw a wrench into the proceedings by immediately calling for a vote to adjourn. and an upset last night in massachusetts. long-time incumbent u.s. representative mike capuano was defeated in his first democratic primary challenge since he was elected back in 1998 ayanna pressley is almost certain to become the first black woman elected to congress from massachusetts in november because there are no republican candidates in the race her district includes much of

boston and some suburbs north and south of the city. at the main event in washington, i guess that -- to us anyway is twitter ceo jack dorsey and facebook coo sheryl sandberg set to be grilled by lawmakers this morning carl quintanilla joins us now from capitol hill. so regal it's just -- i don't know, are those corinthian, carl i got those confused what are they? >> pentameter. >> i was talking about that yesterday, sonnet 73 about fall and -- anyway, are you excited you look excited. >> it's going to be an interesting day here at the capitol, joe sort of a three-ring circus between the trade talks, kavanaugh and big tech executives here on the hill. take a look at who's testifying. sheryl sandberg, jack dorsey and the sort of unknown kwoernt in

google sheryl sandberg might have the easiest time because mark zuckerberg was here in april twitter, may be a tougher day for dorsey they have discussed election interference in the past but this criticism of throttling conservative content is something new and something he will address not just in the morning but in the afternoon on the house side and google, brace yourself for a shot of an empty chair the company wanted to send their general counsel, jack warner they said that was not going to do so will they be shamed for sitting this out mark warner gave an interview to "wired" and it speaks volumes they do not want to be in the discussion in a media post yesterday raises

the specter of whether or not utility-style regulation is necessary with these companies in his words he says i don't believe that is the right answer because they're private entities and they're not violating the first amendment. but all of these questions are very big huge implications for the business model we'll see if we get any actual answers today. i will say dorsey's prepared remarks are pretty granular. he goes into the degree to which democrats and republicans have on average different numbers of followers and perhaps you might argue later different levels of engagement he also goes into the numbers of accounts they have removed, what percentage of those were actually located in this country versus, say, from an iranian service provider so this could get very, very interesting. the hearing begins in just about an hour and a half. >> carl, i've been kind of saying it in gest, but there is a little bit of a grain of truth to this too. this could be the one area where you actually see a little bit of boy partisan support, voices on

the right and voices on the left who would like to see regulation granted maybe not the same regulation, but this is one of those few areas where you could see a little bit of agreement. have you heard much of that being there? >> people look at it that way and also from the inverse which is they're in a political vice they're getting pressure from the left and the right so it depends on which side of the microphone you're on i will say, becky, in this interview with "wired" today, mark warner was asked how are these hearings going to be any different than april when mark zuckerberg was here. he said this is not going to be internet 101 the senators have sort of learned from, i don't know if you'd call it a mistake but appearances during that hearing where no one seemed to even understand how these things work that's going to be different, he says he wants this to be much more about how we're going to address midterm elections 2018, 2020, and not so much a retrospective of what went wrong in 2016. >> does warner say anything about how he would get to some sort of an agreement because again, a memo lays all

this out but the idea that you can get voices on both sides or at least a quorum to say we think this is a way forward. do they look to europe as a way to do that >> gdpr, we'll see if lawmakers think that is amodel warner has proposed a 20-point proposal of how to address the advertising question, which has made big circles in silicon valley it's a key question whether or not people actually table initiatives or ideas or whether this is more about pinging the executives sort of as we saw with zuckerberg months ago. >> carl, thank you we'll all be watching incredibly closely. carl will be there all day to talk more about that for more on this topic, let's bring in jim stewart, "new york times" columnist jim, this is a potential quagmire for any of these companies, just the idea of regulation will it come, what will it look like what do you think? >> well, i think we need to step

back a little bit from sort of the political haze over all of this to say, first of all, what is the problem and then, two, what is the solution, if any. >> if you had an answer to that, that would be impressive. >> when i hear people talk about let's regulate them like a utility, i think, whoa, why? i don't get that at all. there are two major kinds of problems there's the fake news, the fake -- you know, the nonexistent person, the interference issue, and then there's the privacy issue where people are concerned about using the data the data thing -- >> and then there's the first amendment issue or the bias issue about how in fact these algorithms are working that's going to be taken up today. >> how is it a first amendment it's a private -- >> but you're hearing the president, president trump, say specifically it is that issue more than any other -- more than the privacy issue, more than political rigging, anything else, that has the president now talking about regulation

it's actually very interesting in terms of we were talking earlier, the idea of democrats on one side historically have liked to regulate things republicans on the other who have historically not. now they decide they want to regulate on one issue and democrats on the other. >> maybe you're talking about trump, but most republicans are not talking about regulation they're all talking about a light hand the ones i saw recently. who have you seen -- >> when it comes to terrorist posts because there's also a national security issue as well. >> which republicans, just watching the hearings -- just listening, i haven't seen anyone but trump. most of them want a really light hand the guy we had on earlier, you heard him, you had the republican on and he wasn't calling for regulation which one are you talking about. >> andrew, let's put content into the fake news issue that's all substance and content and then there's privacy content, regulating content is an incredible quagmire whether you say it's a first amendment model or not, the business model for them has been

to deliver the results that the users want. >> hands off. >> and their algorithms are completely aimed at making it a better user experience if we start -- if regulators start going in and try to change that, then, a, i don't understand how that serves anybody's interests other than theirs and b, it doesn't really have that much effect on their business model depending on what they do, i don't think people are going to stop using google because the government is saying, oh, you have to get a certain number of these kinds of results i think it's a terrible idea the government clearly doesn't know how to do this. they barely, as we heard last time, they barely know how the internet works so i kind of shudder at the idea of them stepping into that but i don't see that having a huge impact on the business model. the privacy issue is i think a bigger concern for them because data is the heart of their business the use of data, the matching of the data to advertisers, using

the data to serve advertiser needs, that is key. >> if they can't sell you, how are they going to make money although those big companies when you ask them about that say it's fine. we're already dealing with the eu regulations that went into place this year and we can work that way their argument is it will hurt the smaller guys what do you say to that? >> well, i think there's some truth to that. i think the eu model is probably about as far as anyone would want to push in that direction what i think is interesting is a lot of people don't care they're not opting -- they're not saying, oh, you can't use my data for anything. they actually like getting the targeted ads. >> although we did see facebook have to bring down its growth expectations as a result and that came as a surprise to wall street. >> that may be i think there's no question it's not good for them. i mean they'd be much better off if they could use everybody's data, but i don't think it's the end of the world but that is the biggest threat, i feel. >> one thing that i find is fascinating and ironic is

because of what's happening in europe, regulators and companies in california are having to rethink what her doing it's almost a mirror image of what happened in the auto sector earlier when essentially you had california and regulators setting the standards for german car makers it's tremendous irony. an unexpected consequence of the globalized world it's going to be interesting to see the extent to which the companies can keep it separate from what's happening in europe. >> do you think advertisers will step up? if the head of p & g said, look, we're not going to advertise on twitter anymore or facebook unless they do x, y and z. >> absolutely. i think they are going to respond to that. and that -- maybe we'll see some of that. i think what we still need t see is can they really respond to it? part of what they have been saying is we're trying you know, we're doing research on this. i don't know -- i don't think we know yet just how hard they have

been trying as opposed to fine tuning their algorithms. how hard they have been working to ferret out some of this but technologically this is really challenging, especially if you're trying to weed out all the hate speech maybe from real people, the hate speech from fake people. once you start going down that path, that's an enormous challenge. >> yeah, a very difficult task depending on where you're sitting, what you believe, where things go with that. do you think google is making the right decision or the wrong decision by not sending someone, not sending the ceo. >> my advice to them dealing with congress, always send somebody, you know get your message out there go answer the questions, be polite of course they should go i don't understand why they're being -- why they're pushing back on that what harm would it go for them to go and share some information with congress. >> google is actually desperate right now to get some distance

between itself and phobia afaced twitter, but the irony is look at how much data google holds about them compared to, say, facebook and google is up here compared to facebook and so it's astonishing. they're not selling it but they're using it in terms of their internal processes, so the question is whether that matters or not. >> i also notice google saying we're different from facebook an twitter, we're not really content creators, we're just a search thing but i don't think they are that different. some of the same people when they're searching on google, they're being directed to potentially fake sites, hate sites. a lot of bad people are searching for things on google and trying to find the very things they claim they're not involved in. >> why have users and advertisers decide not to -- given all the boycotts and everything you hear about constantly, they're now going to talk about in d.c., but when it comes to actually users and how users use the products, they haven't seemed to take a step

back the way you would think they would if they felt the way these conversations would suggest. >> what i would argue,a anthropologiey there is a massie bartter going on at the heart of the tech economy where consumers are getting free services in exchange for giving up their free data. >> there's never anything that comes free. >> we don't understand the terms of that bartter deal most people recognize they are getting something back you can argue that's bad, but it's a reality. >> i think also the simple answer is the advertisers are getting what they want this stuff is really working for them also it's different from say -- let's say you have a national tv ad and there's some offensive content on the show and millions see it and are outraged by it. as opposed to the internet where some neo-nazi has sought out a

neo-nazi site and then gets an ad for something on it that person isn't offended by it that doesn't care. it's like the person who's not looking for neo-nazis never sees it, so there's not going to be some customer backlash against p & g saying, oh, it's horrible, one of your ads was on a neo-nazi site. they won't even know meanwhile it's working so i don't -- i don't think we're going to see a huge ground swell from advertisers any time soon. >> jim, it's always great to see you. >> good to see you too. coming up when we return, european automakers caught in the middle of president trump's trade war. we'll talk and take you live to a brand new mercedes plant right in the middle of trump country usa. later, a california bill would require companies to add women to their boards or pay a penalty. we'll talk to one of the state senators behind that bill at the bottom of the hour stay tuned, you're watching "squawk" right here on cnbc. really want to be there,

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welcome back to "squawk box. daimler is opening a new plant

in south carolina despite trade disputes with the white house and the european union phil lebeau joins us from lansing, south carolina. good morning. >> reporter: good morning, andrew this is an interesting plan. it was initially a finisher plan for sprinter vans but they have decided to make it a final assembly plant so they are building the sprinter vans here in south carolina, expanding this plant's employment from 900 to 1,300 employees. look at the growth in sprinter van sales in the united states if you go back over the last eight to nine years, the growth has been steady, especially as the commercial van market and the demand there has increased that has been part of what mercedes has been able to capitalize on. in the past, they would build these vehicles in dusseldorf, germany, make them complete, then strip them down, take them apart, ship all the parts over here to south carolina where they would reassemble it

that's how they were getting around the chicken tax, a tax on any vans built overseas and sent to the united states they made the decision that it would make more sense and cost less to build the vehicle from start to finish here in the united states for sale in the united states and that's what they are doing here. with regard to the trade issue, they are well aware of the negotiations and how contentious it is. their feeling is if they can get to zero, the entire industry would benefit. >> our position is as a company, and i can speak for my business as you already mentioned, we believe in free tariffs in a global world and we believe in free tariffs what currently is going on, we do not know exactly all the details which are currently under way. we will observe that in detail and then come to a conclusion. >> reporter: as you take a look at shares of daimler, keep in mind that the vehicles built here, guys, are going to be sold in the united states

overwhelmingly almost all of them will be so there's no trade component here in terms of these vehicles potentially being taxed if they're sent to another market overseas the whole idea, helping meet the demand in the united states by expanding production here. and, oh, by the way, because there's so many more auto manufacturers down here in south carolina, the big issue is finding the skilled labor as they expand production here. >> phil, can you just explain the phenomenon of the sprinter van, because you do see it all the time you talked about it at the top of the segment i'm just so curious about it because i used to think that chevrolet had a lock on that or even ford with its ford transit. >> reporter: right. >> what happened >> reporter: right and you still see the transit. they made a commitment, i want to say about 10 to 15 years ago, that the sprinter van could do well in the united states, particularly when it comes to package delivery or short haul delivery services or with smaller companies that need that type of a van.

they were exploited that demand. the u.s. is now the second largest market in the world for mercedes and daimler when it comes to sprinter van sales an that's simple low because you have those smaller delivery packages and there's a market for that. >> as a premium brand, is there a premium price relative to ford, for example? >> reporter: well, they start at $33,000 which is going to be a little bit more than some of the other comparable vans that are out there. it's really what is the company looking to use the van for given the economy right now, there's plenty of demand for this type of van. >> phil lebeau, thank you, sir great to see you. coming up, please, don't ignore warnings from the cdc about things like cereal people keep buying a recalled cereal that's dig 'em frog you're looking at right there

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coming up, international trade data just moments away we've got the numbers and the market reaction next. then we will talk to a california state senator behind a controversial gender quota bill for corporate boards. right now, though, as we head to a break, take a look at the u.s. equity futures. been in the red all morning long dow futures now indicated down 78 points, nasdaq off by5, 1 the s&p down by 7. "squawk box" will be right back. ? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty mutual insurance. ♪ liberty. liberty. liberty. liberty. ♪

we are just seconds away from international trade data for july actually we're seconds behind. jim, the numbers, please we're all waiting. >> okay. the number came in as negative 50.1 billion, so a little bit less of a trade deficit than last time and the revision was negative 45.7 billion so a little bit less of a trade deficit from last time as well the stocks came in under a little bit of pressure and they stay that way. the 10-year yield was 2.88 it stays that way as well. this is like the elephant in the room number. equal parts political as market

moving if it came in disastrous, you'd get people to say we expect things to get worse before they get better with this trade tussel going on so it will be interesting how people spin it but right now it had very little market moving effect back to you, joe. >> nothing so far, jim, thanks but we're still going to try we're going to get something out of this data it's steve liesman's job to make some lemonade here have you got anything for us, steve? >> i got lemonade. i got an arnold palmer for you is that what it is the lemonade and -- i know you like that. this is a pretty important number i just want to kind of correct the way jim talked about it. it's less of a trade -- it's actually more of a trade deficit. in other words, it's $51 billion, that's the biggest trade deficit since february there have been a lot of things that have been playing with this number going back to the hurricanes of last year, you had huge imports to replace stuff that had been ruined in the storms move along to recently you had

huge exports and imports, a lot of back and forth to get ahead of tariffs the other thing you have is you have stronger u.s. growth. guess what happens when you have stronger u.s. growth the trade deficit goes up. in fact i want to show you some numbers or a long-term track people talked about the trade deficit getting worse. if you look at the history -- that's not the one i wanted to talk about first, i'm sorry if that was unclear in the back that looks at the trade deficit by country you can see that canada, we have a spliet surplus with, mexico and the european union are all within a half a percentage point of u.s. gdp. if there's a problem, it's in china, which as you can see a magnitude what would you call that, three standard deviations higher than the other folks. if you were going to focus on a trade problem if you see deficit as a problem, you can see the other ones don't even matter relative to what's happening with china right there i want to show you the other

chart. thank you very much. there's the trade deficit as a percentage of gdp. >> it's moderating since 2015. >> right, right. it's pretty flat is the idea it hasn't gotten worse the other thing you can see, you see those little bands there, those vertical bands those are recession bands. they tell you that the best possible way to improve our trade deficit is to have a recession. when the u.s. grows more strongly as it did, say, in the precrisis period of 2008. >> because we stop buying imported stuff >> there's two reasons why we buy imported stuff we buy them at a lower value and sell them at a higher value. >> it's not worth calling for a recession. >> no. we import sneakers for $3 and sell them for $80. that's one way we make money the other thing is we feel more wealthy so we import more stuff, which is the reason why a lot of

people think the trade deficit, other than, and i don't mean to make light of that, other than the local pain that happens when certain industries are hit badly by import competition, in the aggregate why the trade deaf si is not a problem in fact, every time we grow more strongly, we end up increasing the trade deficit. president trump cannot have it both ways. he has stronger growth and that's a fact and that's an important fact and it's -- >> he's trying to squeeze the trade deficit while getting stronger growth is tougher to do. >> i guess you can try to close off the economy and try to do it all domestically, but that would not be the most efficient way to do it. if somebody makes something cheaper, you ought to buy it >> i could not agree more and i think you should go and give an economics lesson 101 to the white house. >> there are people inside the white house who are trying to give the president that economic lesson >> i was being tactful.

>> cohn is apparently stealing letters off of his desk to teach him a lesson without teach him a lesson. >> none of this is to say that, first of all, our trade arrangements with china cannot be an really must be and should be improved. that's a big part of it. and we could probably tweak canada, mexico and europe, but as that chart shows, the magnitude is so different they shouldn't be treated the same way. >> the other thing that's amazing is there's a surplus with canada and yet canada right now is in the crosshairs that again looks very odd. >> let me ask you this you knew chrystia freeland you worked together at the "financial times." >> we started our careers together 25 years ago. >> so there are some close to the president that would say this is a self-inflicted wound, meaning that she and trudeau have effectively created this problem. others would suggest that the president has created this problem. how do you think she's reacting

to all of this she's going to be in d.c. today. >> well, she is a very steely, tough character who is very brave, having as steve knows having worked in the former soviet union in those chaotic years. nothing scares her she will carry on as she always does with a very enclosure, steady plan. and i suspect that she is not going to blink first. >> if you had to guess, andrew, would you say we have a surplus or a deficit with canada when it comes to dairy products? >> i would imagine we have a surplus. >> we have a massive surplus 2-1. we sell -- i forget the numbers, it's like $150 million to $75 million that they send us. they do have a 270% import tariff on dairy products after a 10% quota on imports. >> who is winning the messaging war on this, though? >> it depends on who you're talking to. >> exactly.

>> where your audience is. >> i don't know the extent to which americans have begun -- >> what's the population of canada versus the population of the united states. >> 10%. >> something like that >> so we should be selling -- no, what they're doing, joe, it's a political thing. >> and the whole trade deficit today -- okay, so forget about imports. let's forget about it then we should be trying to maximize exports to places, whether -- you can let the trade deficit go up, import more, that's fine but we should still be trying to maximize exports. >> what adam smith told us like 300 years ago and it's pretty much stood, although there have been some -- you should buy from the people that sell it to you the cheapest the people that sell it the cheapest -- you get all that by the way, the trade deficit is somewhat the result of policy, but mostly the result of individual decisions made by individual peoples and companies. >> except that right now one of the bizarre thing that's happening under the current

administration is that they're getting almost socialist in the way they're starting to introduce this idea of quotas of exports or targets of what people should be exporting to different countries. that is not free market under any way, shape or form. >> this is the reason why i don't understand joe doesn't oppose the administration's trade policies it is incredible command control over the economy massive command control. >> it is bad to try to have managed trade but then again -- >> you go back and forth on it. >> cramer is a free marketer too and so is larry kudlow and so there's -- the knee-jerk reactions that i see so frequently around this table and other places don't take into account any nuance and i've seen the way we've sort of dealt with this for the past 25 years so i just think that maybe there's a time when you say i'm going to try to disrupt this. >> the interview you did with president trump is important and i think his take is right. if there's a time to do this, it's probably now.

>> we have to do something -- >> but this is what the problem is. >> i don't know about canada and security and things like that. but in terms of intellectual property and china, enough is enough. >> but that's completely different from saying that we're going to mandate that the u.s. has to sell a certain amount of soybeans or steel to china that is back to old-fashioned command and control. >> worse than that, it's like there's a line out the white house door for these exemptions, right? and then you wonder are they sort of comparing this to campaign or political donations? i don't know if there's any evidence of that, but it certainly creates the possibility. >> we've been told no flat out we've been telling some of the stories. >> some of them have and some have gotten exemptions. >> there have been 16 applications we did a big number crunching at the ft and back then there were 16,000 applications by american companies for exemptions just stop and think about the paperwork and bureaucracy. this administration said it wanted to cut down on government and bureaucracy, it's creating it with these exemptions.

>> the obama administration's policy, which i thought was smart, was tpp it was encircle china with a trade agreement and the democrats bailed on that, hillary clinton bailed on it, and trump said it's the worst deal of all the worst deals that were out there so he aband onned that, even though they're using some of the concepts in nafta right now. but that was one of the ways to do it. the trouble with it, joe, if you acknowledge that china is the biggest issue, i don't think you go to that fight without your allies >> we were talking about that yesterday. that's the typical criticism for how we do it we've been dealing -- working with our allies for 20 years andrew earlier mentioned how strange it is that up is down, left is right, democrats don't want regulation, conservatives do this is another example. and i'm gratified that both you and gillian now don't like command and control economies. >> never have, joe never have. >> and you like small government, leave business alone and it's taken this --

>> never have. joe, as i've told you -- as i've told you for 20 years, joe, the best thing to do -- >> this is wonderful. >> -- if you want to become a capitalist -- >> you want less regulation and less government. >> all right so it's just that it's a start it's a good start for you, steve. >> you're on the opposite end now. >> now you're a command and control guy. >> not completely. >> high def sits. >> i think we're all still where we've always been, we just may have a little bit of nuance here and there. and i'm comfortable. >> gillian will hang out with us for the rest of the hour. when we come back, a bill in california would require companies to add women to their boards or pay a penalty. we will talk to one of the state senators behind that bill right after this break your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally discovered in jellyfish,

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welcome back to "squawk box," everybody. we've been watching the futures this morning and they have been under some pressure. the dow futures are down by about 87 points below fair value. the s&p would open down by 8.5 points and the nasdaq off by close to 20 points emerging markets are becoming an increasing concern for u.s. investors. it's among the issues along with trade that have been cited as pressuring sentiment that concern is reflected in the ishares emerging markets etf which is down in the premarket trading after losing more than 5% over the last week. this morning down another 1.33%. business insider reporting that goldman sachs is ditching plans to open a desk to trade

cryptocurrencies the framework for crypto remains unclear and that's what led to that decision. there was a lot of hope pinned on goldman's ambition to trade crypto and what it would mean to the price of bitcoin and normalizing cryptocurrency, if you will the decision if in fact they don't press ahead with it could have implications for the price. there you're looking at bitcoin at about $7,000 a coin joe. all right. there is a bill sitting on california governor jerry brown's desk that if signed could remake the lordsheadershif some of the biggest companies in california it mandates that companies add more women to their boards and penalizes them if they don't joining us now, democratic california state senator hannah-beth jackson, one of the bill's co-authors. we've in fact been talking, senator, off camera about all the -- all the different sort of angles to the discussion

there is -- there is ends that we all want to accomplish and there's means to an end and i think we finally decided, which normally it's not a good idea to say the ends justify the means, but maybe there are certain circumstances where that makes sense. you would never want to have a law that says you need to do this to a company, but otherwise how do you get -- how do you actually have it done, so maybe at least in gillian's view the ends certify the means here. you can explain it when she finishes >> i think it's well put we did try a sort of softer touch on this. the data is quite clear that when you add women to your boards of directors, particularly at three or more women, the companies are more profitable they're more productive. they're better innovators, they have better governance policies. so in 2013 i authored a

resolution urging california's companies, publicly traded companies, to add more women to their boards we really got no positive response so this year i introduced a bill that does require that these publicly traded california-based companies will be required to add a woman to their board if they have none now, a board of five or more will have to add a position or have at least one of the five members of the board be a woman by the end of 2019 to add more women going forward. of course as you say urging is a better approach than requiring but we had no success when we tried to do it politely. so now we're just basically saying to be more competitive, to be more successful, you're going to have to add women to your boards. >> right as devil's advocate, you'd say we want true gender blindness,

and a company should be able to just find the best person looking around and think of just a situation where, wow, i really have found someone that i want unfortunately, it's the wrong sex here and i've got to all of a sudden in my calculus, that has to be mandated by the state that i do that and that's where you start thinking -- i mean eventually do we want 50% women? true gender equality should be 50% should be board members should be women on a board, is that eventually where we go? >> well, i think at this point in time what we're looking for is the critical mass of women on corporate boards so we reflect that diversity women are -- 52% of women are in the workforce today, and women represent 70% of the consumers so clearly for businesses to be more profitable and more successful, adding the voice of 70% of the consumers of your

products or services would make sense. but what we've found is that companies really don't want to go far from what they're comfortable with boards of directors want to find people who think like them, who act like them, who they're familiar with, who they like, and what we found is unfortunately that has been men limiting access to what is out there a very qualified group of people who would love to serve on these boards. >> senator, how do you do it outside of the board and at the level of management, which i think ultimately you want to go, and i imagine where you probably need to go there is no direct connection thus far between the number of women on boards and the leadership from a management perspective. how do you either create that connection or do you actually have to try to incentivize this at the management level? >> well, what we do find is that when you have women on corporate boards, they tend to find and be

interested in bringing women into management positions. again, when it's an all-male board, there's a real reluctance to look outside, if you will, their comfort zone, the traditional box, for a nonmale e leadership they tend to be the ones willing to look to women for leadership. we know there are registries with women who are not only competent to serve on boards and in leadership positions and upper management positions they're there. it's just that currently without requiring them, we look for them, the male-dominated boards or the male-only boards are just unwilling to take that step to find them. >> senator, i would like to ask you a question we focussed on the other day

it's a fascinating data. it shows that essentially 50% are female around 35% in sweden and finland and france and even the uk is over taken the u.s. recently the numbers in the u.s. have been stuck at around 50% for a long time. in your view, what is the key reason for the lack of women on boards in america? >> that's an interesting question the fact is that in europe and every country you've mentioned has mandated, has required a certain percentage of women be on the boards of directors so iceland back in 2003, mandated 40% of their boards had to be comprised of women even germany requires 30% of the boards be comprised of women these are mandates that were set forth by these countries and as a result we have seen more and more women on these boards you look to the united states where there are no such

requirements, and that's the reason we don't see more women serving on the boards. that's one of the reasons for the bill to say, look, folks, we've looked at what happened in europe we looked at companies where we do see that critical mass of women, and they are more profitable the numbers are there. the studies are there. msci has done such a study they all show more women on these boards, more profitability. that's why we have said in california we want these companies to be more competitive. put more women on the boards and they will be. >> senator, thank you. thank you. >> you bet. >> we appreciate it. thanks when we return, we'll talk to jim cmerar down at the new york stock exchange. ] [ engine revving ] what's that, girl? [ engine revving ] flo needs help?! [ engine revving ] take me to her! ♪ coming, flo! why aren't we taking roads?! flo. [ horn honking ]

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extreme wildfire conditions may occur, so we can respond faster and better. we're installing cutting edge technology to provide real-time mapping and tracking of weather patterns. and we use this information in partnership with first responders and california's emergency response systems. to learn more about the community wildfire safety program and how you can help keep your home and community safe, visit pge.com/wildfiresafety you're looking at live images ahead of a hearing on big tech today jack dorsey of twitter making his way to the hearing room as we speak along with cheryl sandburg it's going to be a big day hearing from them. across the way on the hill today, of course, is the

continued kavanaugh hearing. a lot going on in d.c. >> let's get down to the new york stock exchange. jim cramer joining us now. there will be a lot of focus on that carl is down there your co-anchor i was looking at some of -- i don't know if it was you, jim. you were tweeting some of the stuff that the street was thinking about the nike situation. was the bottom line you had a pretty good run and maybe it's time to lighten up a little? >> yeah. i think in the end the end markets really define this company and they can have a lot of controversy and get a lot of people talking, but when you go over what the most recent comments were, which were from foot locker. i know the u.s. is only part of the puzzle and nike is doing okay it was doing fabulously. it's doing okay. i think the rest of the world is good i don't think anyone's ad campaign is going to change the idea perhaps this one had a great run. it's terrific.

it had a great run. >> not connected to colin kaepernick >> no. no sometimes fundamentals. >> yeah. okay all right. thank you, jim coming up, just wanted to make -- >> i know. i know i got you. i know ♪ ♪ fight security threats 60 times faster with ai that sees threats coming. the ibm cloud. the cloud for smarter business.

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index, consumer discretionary, tech, and materials. all right. welcome back we want to thank our guest host today. she's the financial times u.s. managing editor and cnbc contributor. >> it's great to be here. >> come back soon. >> all right, folks. that does it for us today make sure you join us tomorrow right now it's time for "squawk on the street. good morning welcome to squawk on the street. i'm carl quintanilla live at the nation's capitol jim cramer and david faber at the new york to be exchange. it's a big morning in washington the senate intelligence committee hosting tech executives on the hill they're conducting a hearing on foreign influence operations use on social media platforms. set to testify jack dorsey, facebook coo cheryl sandburg and noticeably absent is google's ceo or alpha