j>>oe >> like jenny's call on verizon. so am i. private equity doing well up again today like it to go higher. >> land lines and rotary dial. thank you for making it easy as always, that does it. "power lunch" begins right now >> thanks, brian i'm melissa lee. lest moonves out following allegations of sexual allegations. who could buy it and the liability facing cbs apple suppliers getting whacked after president trump tells the tech giant to make its products in the united states how trump's tariffs could impact apple and back from the brink, approaching the ten-year anniversary of the financial crisis are we any safer the signs to look for in the nt crisis football jobs and the oil business, jerome bennett in the house. "power lunch" starts right now

and welcome to "power lunch. i'm dominic chu. stocks steady this hour. the dow under a little bit of pressure trade tensions still a big concern. china's u.s. trade surplus hitting a fresh record and president trump warning of more tariffs ahead. so we're going to call it the hurricane prep trade we have home depot and lowe's hitting all-time highs jennerac insurance stocks taking a hit. tesla, on comments from analysts and foot locker and rh jumping on analyst upgrades. >> i'm courtney reagan to the trading action this hour. bob pisani is at the new york stock exchange hi, bob. >> hello we're up on the s&p but i don't like what i'm seeing here. i see big cap tech names starting to roll over, i see health care starting to roll over a little bit and the banks looking wobbly you can see this in the dow. the dow is negative and you can see why here first off you have a big call out of citigroup downgrading

united health from neutral to buy. a big market leader recently dragging things down boeing is down apple is down as well. put these three together here that's almost 120 points in the dow. cisco and intel they're negative now we are starting to see the banks roll over a little bit goldman sachs and jpmorgan, merck a new high every day, that's not doing anything. so when a big leader like health care starts flattening out, you got issues remember what's moving the markets and keeps moving things here there you see the new highs. every day talking about merck and lily, that's rolling over a little bit talked about costco, hurricane related things, norfolk southern, home depot, a hurricane relate the story these have been on the high list what i think is happening we're stalling out a little bit here remember what moves the markets here number one, of course, the fed and rate hikes that's the big issue china and the tariffs and the dollar tech leadership. faltering a little bit the global growth, which is very, very uneven right now. the united states is the key story here

what we do not want to see is what we saw last week, s&p, lower lows, lower highs, every single day it's like six days in a row. you don't want that to happen right now. very important for the s&p to stay in positive territory guys, back to you. >> all right bob, thank you very much for that we'll key on that. the technology trade has lost a little steam, so are we still in an environment where you just need to pick up stocks on dips when you can and is this rally fully intact for the remainder of 2018? let's bring in omar, the chief investment officer with charles schwab investment management and chad morgan, portfolio manager with washington crossing advisors omar, we will begin with you as we talk about the trading action that bob just spoke of, is it concerning in any way that we are seeing the kind of maybe a little bit of a rollover that we're seeing in today's trade, the technology trade was strong earlier, it is not so much now >> yeah. this is very normal volatility for this time of the year. we have started this every time

in a market, especially being so strong in the summer don't think this changes the story for the long run and remaining of the year. if you think about what we have in our favor, we have a very strong u.s. economy that continues to grow at a very good pace unemployment numbers, productivity, manufacturing, so very good and solid. that should keep the fed on track to keep at least two rate hikes through the end of the year secondly, you know, the cycle continues to be strong we're 17% increasing capital expenditures year over year, which is led by technology that overall is a very good risk for the potential for future earnings companies and investors are actually worried about trade companies and investors are worried about what the future might be of inflation. we're going to see a little more later in this week about cpi and ppi and what does that mean for the potential expectations on the fed. >> chad, is the path of least

resistance still to the upside despite today's tepid market action this i a market a few percentage points away from record highs is the thesis intact for a continued bull run >> i think for the short run that is the case, okay, that you have u.s. economic data points and earnings and revenues that are moving up quite a bit. the unsettling thing, though, is that you have growth stocks that we believe are somewhat more stretched on their valuation perspective, so we would actually recommend that investors look towards large cap value companies. the valuations there do make sense. but also that the u.s. economy as well as the u.s. equity markets don't live in a silo the global growth backdrop looks for disjointed when you look at china and the eem, a deceleration of growth, also when you look at the eurozone, they are also having issues on gdp and earnings growth and inflation expectations we do believe that also that as

the fed continues to raise rates, look at the two-year bond, you're starting to see yields becoming quite competitive. we think that will also sap from equity returns in the long run our long-term expectations for growth for the s&p 500 is between 5 and 6%. >> what we have not mentioned yet, tariffs the next round of tariffs, omar, back to you in terms of this question about technology and where we stand, you know, the next round of tariffs will hit technology as well as probably consumer discretionary stocks and i'm wondering how you view that given these are the two sectors probably that have seen the least amount of correction off their highs? these are the sectors that have been leading the market higher this year. no impact yet from tariffs and yet the next round could really hit them >> absolutely. i think we have to watch the tariffs discussion, particularly the discussion between the u.s. and china trade disputes, it is really more an

investor issue more than an economic one a lot of the calculations are around what could do that to the gdp is probably in the range of 20 to 30 basis points of gdp however, when you think about what this could do for semiconductors, for example, it could take up to 25% of the earnings if these tariffs go into effect. when you think about what the potential impact from the investor perspective, certain parts of the manufacturing of certain of this technology, you know, devices will be impacted as well as autos and some of the consumer discretionary i think it's still early to tell, but, you know, what we got to wait for the next 60 days as we start thinking about the deal between u.s. and china, it is also what unfolds with the nafta and the trades with the eu all that together will increase volatility into the market and particularly in those, you know, high-flying sectors that have pretty high multiples. >> we haven't talked about the midterm elections either we have to leave it there. thank you very much. omar at charles schwab and chad at washington crossing advisors.

les moonves out at cbs following more allegations of sexual harassment and assault. what now for the media giant and its battles? jane wells is in los angeles with the latest. hi, jane >> hi, courtney. moonves loses, redstone wins half the board has been replaced shari redstone will put off any merger between cbs and viacom for two years and cbs has pulled a proposal to issue shares to minimize her power everything is good between cbs and shari redstone shares have come back since they said last hour on fast half you should buy cbs on the dip. there's also the question over who will be the ceo, the coo is filling in, now also president there are questions about whether moonves will get any severance. now "forbes" has his net worth around $700 million but he may have to live on that if outside investigations find he violated cbs's sexual harassment policies and if "the new yorker" stories are true, the answer is probably

yes. hard to believe, guys, we are a month away from the first anniversary of the metoo hash tag which began in october after "the new york times" and new yorker published accusations against harvey weinstein n november charlie rose lost his job after a story in "the washington post," nbc fired matt lauer after its investigation. cbs took a slower path with moonves considering the first new york new yorker story came out six weeks ago. >> jane wells in los angeles what does moonves' departure mean for the future of cbs joining us is kay, the founder and former chair of usa network and erica james, the harland dean of the school of business at emory university. thank you so much for being with us erica, i will start off with you, is the worst over for cbs in terms of the crisis that it is managing? >> well, no. the worst is not over. you'll see additional commentary

and see people coming out of the woodwork wanting to talk about this issue lumping it with other crises of this nature. >> do you expect the old board will face liabilities? you know, often in the future, you may get rid of what was perceived as the problem but the liabilities the company faces linger >> this will linger and it's going to cost them both in terms of financial remunerations that will taping take place, and viep for some period of time. the impact of this will be ongoing for some time. >> kay, speaking of the impact of this, les moonves is out but he wasn't the only one that's been accused of misconduct at cbs. is there a bigger culture problem here what happens with the cleanup of that can it be done >> it can be done, but it will take some time >> go ahead, kay >> kay >> yes i was going to say that yeah, i

think there's going to be a cleanup for a period of time going on i disagree it will affect the viewership i don't think it will affect the viewership of noor programming at this time it depends on who comes in to take the place for les joe is going to be in the interim ceo of the company and he's been with them a long time. i think that he has to hold the people who work for the company in place and i think that this is a risk for cbs because they've been a top performing network and les has provided that leadership. people could be picked off by other networks i'm talking about the executives in charge of some of these wonderful series that cbs has. i think that's a risk for cbs at this time. i think it will go on for a while, so i said in a previous interview here on cnbc that i thought that les was going to be in trouble because this issue of sexual harassment was going to go on for a period of time and i

think that in order to clean up both the hostility between national news and cbs over the structure of the company, to get that cleaned up, to replace the board members, new voices that will be independent i think in terms of the decisions that are going to be made at cbs, i think these are all very important structural issues that have been -- >> got you. >> decided that are important. but from a management point of view, holding the talent in place at cbs is going to be a challenge. >> erica, let's go back to you for a second, the board of directors is a focus right now this is also a cultural issue for media, a cultural issue for board rooms and suites throughout the country and world. what needs to change at media companies and companies in general about getting this to be a more equitable feel for females, an environment where metoo doesn't have to exist? erica? >> thanks. you know culture is created from the top and so when you see

these kinds of challenges and potential bad behaviors happening at the top of the organization, chances are that has filtered down in some ways that are going to be problematic for not only cbs but other organizations. in order to change this, the challenge will be identifying the next leader who will come in and set expectations, who will have a set of norms and practices and standards of behavior that changes how people operate, how people engage with one another, and until that happens and until that's communicated pretty consistently throughout the organization, it's going to be hard to overcome what we've seen with cbs and other networks >> all right ladies, we will have to leave it there. i think this is a topic we'll revisit in the future. kay from usa network founder and erica james of emory university. coming up we're going to take you behind the scenes of one of the worst economic disassers in american history through the eyes of the people who lived it it's all part of our new cnbc

documentary, "crisis on wall street, the week that shook the world" and we've got a sneak peek straight ahead. a category 4 hurricane on track to slam the east coast this week. we will tell you who is in the path of this big storm and talking business with the bus, legendary halfback jerome bettis talks about jobs, the oil business, and the state of the nfl. you don't want to mi tsshis. keep it here on "power lunch." o we distribute environmentally-friendly packaging for restaurants. and we've grown substantially. so i switched to the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy. and last year, i earned $36,000 in cash back. that's right, $36,000. which i used to offer health insurance to my employees. my unlimited 2% cash back is more than just a perk, it's our healthcare. can i say it? what's in your wallet? that's confident.

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ceo, celebrities, politicians and economists gathering in san diego to discuss the impact of latinos on the u.s. economy michele is at the latitude conference with united airlines ceo oscar munoz in an interview. >> welcome home. >> thank you very much always a pleasure to be here thank you so much. thank you for being here and joining us. >> oscar, please. >> i will call you oscar. >> the latitude conference is a conference about the power of the latino market. why are you here for this? are you here because you're mexican-american or because the latino market is important >> well, that's the traditional sort of input, it's identity politics, but as a reason why myself and several other ceos are here, the latino market is a massive market as we've all heard, $2.13 billion of buying power in the travel and lee sure market it's $56 million. it's a significant business market and i'm here from an economic and evaluation perspective. >> but so what

i'm hispanic, i'm latina and book my airline tickets way everybody else does regardless of their race, nationality, or whatever what does that mean in terms of executing in the business? >> it means different things traditionally people have avoided sort of segment marketing because they didn't see the value of return. at united we're trying to connect people and unite the world and our ethos and what we do is important to us, so not only in this market, we're starting a first of all, the hispanic business traveler is concentrated in three big areas, new york, los angeles, and houston today. the largest markets. those are big hubs for us. it's our community to begin with b, i've seen across the segments it's important for people of a certain culture to be addressed in that way. how do you make the fun, lively, contemporary we're starting a campaign which means more united in english. >> it's a good pun with united. >> it's a wonderful thing and we

can -- mas santos, your san franciscos and san joses and a nice play on that. >> let's talk about operating the business i flew in last night no food on my flight and the flight attendants said there was some issue with the kitchen and couldn't articulate what was going on, none of the flights out of newark had any food on them what's going on? >> the flights internationally have plenty of food on them. we had hiccups in our kitchen and we've been addressing over the last few days. you didn't get your elon musk whi -- e-mail. >> i should have gotten me an e-mail. >> part of making the travel experience is to let you know what's going on ahead of time. we've given vouchers and advanced notice and a snack box. >> we read reports about something related to listeria within the kitchen is that anything to do with that >> i think generally speaking, there are many things that are said, not all of them factual at this point in time, and so as a matter of cause, gosh, we spend so much time on food quality, i

can't even tell you. no it was a little blip we're trying to manage through. >> will i have food on the way back >> you will because it's coming out of this. >> coming out of here. >> i hope you enjoy it. >> to the studio, somebody has a question. >> it's melissa lee at cnbc headquarters recently you raised your check bag fee, your first check bag fee to 30 from 25 to 40 for the second this is raising the ire of lawmakers who say you shouldn't be raising prices like this. is it costing you more to handle the checked bags and at what point does it backfire for the snarls we've all been so on many flights where it takes a long time to load up because everybody has the carry-ones instead of checking the bags which might expedite the process of leaving >> yeah. it's a complicated subject people are attached to their bags and want to hold on to them in many ways our adjustment in prices was a

competitive response, but also allows us to reinvest in our product, lounges, frequency of flying we're doing which is significant, and again as a competitive response, it's something we did with regards to, you know, concerns over time, i think there's a way to avoid those costs, whether you're a frequent flyer at a level with us or you have our credit card, many ways of avoiding that but again, it's a reinvestment in the product you asked whether or not the cost of providing this service has gone up. it goes up like every other cost and it is significant. again, it's well beyond the value that we receive, but that's not the purpose of doing it it's a competitive aspect and it does allow us to reinvest in the product. >> oscar, dominic chu here, speaking of that competitive dynamic, one of your competitors jetblue also raised their checked bag fees, but they did so because they said they wanted to keep fares low. what's the philosophy you have at united? what is that balance between excessive or maybe not excessive, more fees as opposed to just bumping up the actual

fare for a flight? >> well, fees and prices are very competitive and not something we generally talk about in public, but we offer all the airlines, the legacy airlines, offer segmentation there's a product that you can sit, you know, in the front or in the middle or the rear of the airplane and it's around providing customers choice. >> the stock is almost at an all-time high here tremendous year. some folks will look at that and look at a lot of the airlines and say that's because we allowed them to concentrate too much they've got too much power if you live in new jersey you fly united the majority of the time because you dominate that hub. >> with regards to the tri-state area in new york, it's one of the most competitive air markets because you have jfk and laguardia and the surrounding area and the population. with regards to consolidation, it's been great for the product, for consumers, the choice, the safety, and security of the

flying that we do. again, it's allowed us to make enough money to reinvest in the product. flying has become so stressful for people and it's such a difficult thing. how do we make it easier at united one of our premises is to make you feel better about flying us and make it easier >> when will you fight back against the airlines, when you look at the unhappiness that people suffer it's actually the government controlled airports where they control the slots, slowing getting the bags back, et cetera. it's not the flying that they hate, it is the airport process that is miserable? >> we often do say that, that by the time you get and sit on one of our aircraft you're so upset that it's -- >> yes. >> because of the stress also it's traffic so we work very closely with our constituents, airports have different management oversight organizations so we work constantly with them how to make the flow and product with us worked with tsa. trying to get people through understand there's customers involved and safety is paramount

for them, of course, as it is for all of us, but how do you get the flow going as well as possible. >> mr. munoz, mucho gracias. >> we'll see you later this afternoon. ten years ago this week, lehmann brothers became the largest bankruptcy filing in u.s. history sending markets plunging and bringing the global financial system to the brink of disaster we will talk to two former lawmakers, evan bayh and judd gregg who were in the senate as cris unfolded. stay with us on "power lunch." we're putting ai into everything, and everything into the cloud. it's all so... smart. but how do you work with it? ask this farmer. he's using satellite data to help increase crop yields. that's smart for the food we eat. at this port, supply chains are becoming more transparent with blockchain. that's smart for millions of shipments. in this lab, researchers are working with watson

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hi, everybody. i'm sue herera here's your cnbc news update for this hour. attorney general jeff sessions defending the trump administration's so-called zero tolerance immigration enforcement policy asserting the u.s. asylum system is being flooded with illegitimate claims and spoke this morning to a new class of immigration judges. >> let me say this clearly, it is perfectly legitimate, moral, and decent for a nations to have a legal system of immigration and to enforce the system that it lawfully adopts. the battle for the last stronghold of the rebel opposition to the syrian regime

has intensified raising fears of a humanitarian crisis. russian and syrian jets resuming intensive air strikes in idlib and hama provinces the ftc about to implement a measure to further secure consumers' credit. they will be able to contact any of the three agencies to freeze or unfreeze their credit files the freeze can be unlocked at any time within an hour of the request and the best part, there's no charge. that's the news update this hour dom, i'll send it back to you. >> sue, thank you so much for that news update check out these amazing photographs of hurricane florence this is straight from the international space station up above us as florence rapidly grows into a category 4 storm and continues to gather strength in the atlantic ocean. the east coast of the united states is on high alert right now. nbcs news correspondent kerry sanders joins us now with the latest and what can we see these developments do to the east

coast, kerry >> dom, it is going to be devastating, even if it loses some strength as it comes ashore because of the size of this hurricane. right now a category 4, 140, maybe 150-mile-an-hour winds with a storm surge and then inland flooding from all the rain that will drop with the storm that's only moving at about 7 miles per hour but there is a different part of this story which is important. i'm standing at a walmart and that is to show because this really developed on sunday into monday and doesn't look like it's going to really make landfall until thursday it's given people time to prepare you can see people are coming out of this walmart here they've got their water. remarkably this walmart has been able to keep up with the demand because it has been an awfully steady flow. one of those who is shopping is george where are you originally from? >> statin island, new york. >> here we are in north myrtle beach. i'm curious, have you been through this before? >> i've been through five

hurricanes. >> okay. so what do you know from those experiences, especially when you hear a category 4? >> well, i know for a fact that the water is going to get turned off. the power will get turned off. i bought a couple bags of charcoal to grill. bought five cases of water >> really, what you're talking about is preparation and one of the things that people seem to focus on is ice in fact, i've seen in past storms people get really anxious about ice. remember, this storm is likely to come in on thursday which means you have a refrigerator at home you can make ice and store it now. >> you can until the power goes off. >> correct we're talking days now >> i'll buy a 40 pound bag and that will probably be good for two days >> the good news is we have seen here at this walmart they still have ice supplies. they have water supplies they have gas cans some areas they're running short of that. i've been in touch with the

corporate headquarters of walmart on how they're backfilling in their stores in the zone i think the most important thing people need to do and we've heard this from the officials they need a plan if you're in an evacuation zone don't wait until the last minute and if your plan is to stay put make sure that location where you are is a secure location. dom? >> all right kerry sanders, thank you so much for the update it's a storm we will be watching clo closely as it makes its way towards the east coast of the u.s. to the bond market, rick santelli is tracking all the action from the floor of the cme group. >> if you look at a two day chart of 10s you see everything you need after the jobs report, we jumped up a bit into the low to mid 290s and we've had a tight range ever since virtually unchanged on the day in europe a little bit of a different story. especially the short end if you look at the shots, the two-year in europe you will see it's hovering around minus 54.

the year to date chart shows it's the highest yield, smallest negative it's been since the 28th of february we do have the central bank meeting on thursday along with the bank of england and look at year to date of euro versus the dollar, even though short rates are moving up a bit, maybe mario draghi is going to step up and give us more details on the rest of the removal of the accommodation, but the currency certainly isn't moving to the upside finally another meeting this thursday, the bank of england. there's a chart of the pound versus the dollar. now hovering at its best levels against the greenback since the first day of august. courtney, back to you. >> thank you very much, rick santelli appreciate it. this week we mark the ten-year anniversary of the start of the financial crisis. hard to believe. straight ahead we will talk to two former lawmakers senator evan bayh and judd gregg who were in the senate as the crisis unfolded where do they think we stand now and are there any issues lurking. stay with "power lunch." i'm april kennedy and i'm an arborist

with pg&e in the sierras. since the onset of the drought, more than 129 million trees have died in california. pg&e prunes and removes over a million trees every year to ensure that hazardous trees can't impact power lines. and since the onset of the drought we've doubled our efforts. i grew up in the forests out in this area and honestly it's heartbreaking to see all these trees dying. what guides me is ensuring that the public is going to be safer and that these forests can be sustained and enjoyed by the community in the future.

this week marks the ten-year anniversary of the financial crisis all week cnbc takes a look at what's changed and what hasn't since the crisis on wednesday we'll premier the documentary "crisis on wall street." he got a chance to speak with warren buffet about what he thought as the dominos began to fall. >> how much political pressure at that time do you remember was on both hank and the fed and everybody. >> huge. >> and the bailouts. >> there was huge. i think bernanke, tlooing that ha -- i think that hank, paulson, tim geithner, george w. bush did the right thing. they were heroic, but you weren't going to sell that to the american people and i don't blame them all they knew was that they hadn't done anything wrong and their world was falling apart. >> when people talk about the world falling apart, just put it -- because you're so good at this, put it in layman's terms

what do you think the edge of the cliff looked like? what was on the other side >> well, eventually the country, i mean, the farms don't go away, the industrial plants don't go away, they all change hands, but we would ride ourselves, but you had this huge economic machine that is all kinds of productive capacity and people going to work every day and imagine individuals coming up with new products and everything. when the trains go off the tracks and banks get worried about their intraday acceptance from other banks, which they did, and you can't blame them, i mean when you think of, you know, tens or hundreds of billions of dollars flowing there between opening and closing of the bank and all of a sudden your balance with some little bank, may go under that night becomes huge the way the dominos top, what we

learned in that particular panic

was the fact that we're all dominos and we're all very close together >> tune in for andrew ross sorkin's documentary "crisis on wall street" the week that shook the world, wednesday at 10:00 p.m. eastern only here on cnbc ten years after the financial crisis, what have we learned? is the country any safer joining us are two people trying to find a solution in washington at the time. former new hampshire senator judd gregg one of the authors of t.a.r.p., and former senate evan bayh on the banking committee. we appreciate it i want to start off with an op-ed in "the new york times" that appeared co-written by hank paulson, ben bernanke and geithner, that said we're better off but they are concerned about the tools that congress has the fdic, as wel thetreasury the canlonglanket guarantenk d the fed's powers are constrainthe treasurm rket funds ese toosed in the financial crisis senator gregg, if we are witnessing ten years later the pendulum and the pendulum swinging in reaction and maybe swinging back, where are we in that >> right now we're in a pretty strong position because most of the banks have been massively recapitalized at a much higher level than they were in 2008 you've got a diffusion of lending occurring which i happen to think is going to reduce the threat where all the lending over the internet and yes, it's at risk, but it's not a systemic risk i think actually we're pretty solvent right now. we're very solvent right now as a banking system the problem is that ten years from now, all the people who went through this crisis and recall the crisis and understood it was an underwriting problem and that it was a syndication of debt problem, are going to be gone and out of the system and somebody will try to do it again. so you'll end up with a major

economic crisis driven by a bad lending, probably real estate related. i've seen it three times and wouldn't surprise me at all if we got it again in 10, 15 years from now. >> i suppose that's always the fear when you live through a crisis and those people who experience the crisis are no longer in the system, senator bayh n terms of the regulations we're in a period where everybody is looking very hard about regulations and whether or not we have too many regulations in place have we gotten to the point where we have gotten too complacent thinking the system and banking system is much safer than it was ten years ago and therefore we should roll back regulation but perhaps to our detriment in the longer run? >> well, complacency is always a risk, as judd was mentioning memories can be short, new people come into the system who have a great appetite for risk, and if we socialize that risk and have the taxpayers picking up the pieces if things go wrong the risk taking gets bigger. my take is that we acted in the

crisis, regulations and restraptss were put into place to try to prevent a reoccurrence it may have gone a little too far. the capital requirements were raised that's good. living wills were required for banks. that's good. but now we need to revisit it and tweak it, not roll it back, but refine it so that the markets work better with some safeguards, but perhaps not as hersh heavy a hand as put in place a in the beginning. >> it's dominic chu here the idea we can have a financial crisis maybe come again is something lawmakers have to grapple with if you were sitting there back in a position having to craft legislation, is there anything that can be done from the legislative side of things that could prevent something like this from happening again or do we rely on the crisis tools being employed or having been employed by the fed, treasury and what not back during the crisis anything forward looking you can tell us about what laws might need to be made? >> first off it's hard to anticipate a bubble until the bubble is on top of you and by

that time it's usually too late to get it under control. i would say this, i happen to think we didn't need all of dodd/frank i think the things which you just listed by melissa as having been taken away as powers for the fdic were a big mistake under dodd/frank you want to have the ability to correct the situation. if you raise capital requirements significantly, you require that when you do loans especially on real estate, that you don't lend over at 110% of value, you limit it to 80% of value, that you require recourse and that you expect the people you lend the money to to be able to repay it and you require the banks to retain some sort of skin in the game to syndicate all the riskses out to other people and have it subdivided as it occurred in 2008. you do those things you're going to put in place the mechanisms to settle out the marketplace and allow you to have a constructive lending atmosphere and good underwriting. >> it's often hard to see a

crisis until you're in front of it or potentially in it, but when you look back at the crisis that we went through ten years ago, what do you think were the most important changes that were put into place, either in part by the senate banking committee you were a part of or beyond that could help us see some blind spots coming >> there were a great many things put in place to take some of the excessive lending as judd was mentioning out of the system capital requirements for banks were raised, other things on the rivgyest types of behavior were put in place the real problem, melissa, judd was implying, is that we take regulatory and legislative action to prevent reoccurrence of the last crisis, it's very hard to anticipate what the next one is going to be it's almost always something a little bit different than what happened before and that's why a point that was made by bernanke and paulson and judd mentioned in the op-ed is very important, retaining flexibility to respond to the unknown is very

important. we need to do that in a way that doesn't increase the likelihood of moral hazard and increased risk taking, but the flexibility and, you know, counting on our elected officials and regulators to exercise good judgment as was done before in the moment of crisis that's really important. because you can't predict the future with absolute clarity. >> sure. senators, thank you so much for your time. appreciate it. senator gregg and bayh. >> thank you >> thank you straight ahead, pittsburgh steelers legend and hall of famer jerome bettis is in the house. his journey from the end zone to entrepreneur, we will talk business with the bus when "power lunch" comes back after this commercial break. are you taking the tissue test?

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greatest players in pittsburgh steelers history and joining us to talk about football and many ventures off the field, let's bring in legend and hall of famer jerome bettis, the bus as people know him by thank you so much for joining us today. >> thanks for having me. >> let's get the hot take. this weekend's start to the nfl, everything you thought it would be and is it enough to get people to be really interested in football? >> i really believe it is. when you look at the games that everybody expected to be blowouts, that wasn't the case teams that you thought were going to win, didn't win the new orleans saints, you know, was a championship caliber team everybody thought, they came out and got beat up in the first game the steelers everybody thought playoff caliber team, including myself, they went out and laid an egg in cleveland. the browns, who hadn't won a game last season at all, and they played them to a tie and had a chance to win that football game. it's an incredible season. it's going to be a lot of moving parts and a lot of teams that go

up and down. you have to watch and stay tuned. it's the ultimate in reality tv. >> what do you think is going to be the story line that dominates the nfl this year? is it still going to be, you know, the anthem protests or the civil kind of disobedience or is it going to get back to the roots and the game and the drama it creates >> i think it will get back to the game i think the anthem issue, i don't think it's going away, but i don't think it's going to be in the forefront of the conversation so i think it will be there and still be a need for good dialog about the real issues that are at hand and not necessarily the actual kneeling part of it there's a reason why and that's been policed in all of this. hopefully get downs to the real issues and that it doesn't take away from the game itself because it's a great game. >> do you methink the protests hurt the nfl ratings can it be attributed to that

>> you may contribute a little of it, but you have to factor in the major key games were teams that under performed and so who wants to watch, you know, a 7-8 team play against another 6-9 team so it just doesn't work that way. i think coupled this year, good games, coupled with a different narrative, i think allows for the game to be in a better place. >> jerome, your life after football is doing great. you've got so many hats you're wearing. one is the logo on your shirt right now. you have a relationship with striker. what exactly are you doing with them and why is it so important to you to take care of this whole aging dynamic in america >> yeah. so with me, a couple years ago, you know, i was struggling to go to the doctor and didn't want to realize the issues that i was dealing with and that's joint pain so i was encouraged to go to the doctor and found out the options that were available to me in

terms of deal with joint pain and thus the relationship with striker came out of that and then myself and stryker wanted to take that to the next level there was a contest that there was a contest called get on the bus that stryker created last year and culminated to me taking some people to the doctor's office on a bus and we did it up pretty nice and a nice opportunity to show people that you can still get to the doctor's office and then we said, let's double down and take it to the next level next tuesday is national take a love one to the doctor's office day. and, so, with that, we're saying, let's try to create some information to make it available to people so now we're setting up a seminar that is going to be all over the country that people will have an opportunity to get more information about

>> a lot of stuff going on and we haven't talked about your oil and gas business right now thank you so much for coming out here and telling me more about your workings outside of the nfl. jerome bettis, thank you very much >> come back and talk about your other businesses another time. >> thank you i will. ahead, how tariffs on china could have a devastating impact on sllusesma bins. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

so joining us now, thank you for joining us appreciate you being here. i know you ran through the numbers. what is the financial impact of these proposed tariffs up to $267 billion on your business? >> yeah, the impact is monumental you know, the $200 billion round really contains 80% of our goods. the announcement of 267 more covers 100% of what we sell and being a small to mid-size business you talk about disproportionately harming our business shoot, this really does it >> what are the costs if the tariffs go into place and if it

hits 100% of your business, what does that ultimately mean for your cost and for what me, as a consumer, would be paying as a resu result >> great question. this trickles down to the consumer when you're buying a good that is $100 today, you're paying $125 tomorrow. that tariff passes down to the consumer as a tax at the end of the day. >> you are unable to absorb any of this? what happens to your business? what happens to your employees >> we're looking at everything right now. employee layoffs are certainly a possibility. raising prices to retailers is certainly a possibility. our larger fear is that the larger businesses that play in that space could absorb 25% and being a small to mid-size business, we don't have that option we need to look at all sides to see what we and do to assure that this company is viable long term >> you testified and are you continuing to have discussions

with any lawmakers sort of on a one-on-one basis certainly giving them your financial story and what this means to you >> yeah, we've reached out to all of our lawmakers both in texas and california where we have a business presence the response has been weak, at best, quite frankly. we're open and we're looking to have the dialogues with our senators and administration and share our story and how it impacts us to ensure that the jobs that we've created over the past five years, almost 40 jobs stay >> i have to ask, did you end up voting for president trump in the election if so, would you change your mind when you're looking at the gop candidates for the midterm election >> no, i actually voted libertarian. >> okay. fair enough. a lot of this has been done at least from what the trump administration has been saying to even the playing field for what is going on with china. their interference and some level of stealing that, at least according to some folks. what should we be doing to level

the playing field? you manufacture in china but you certainly don't want them stealing your ideas. >> sure. as a business jlab had never had our business stolen and ideas aren't necessarily being stolen. but definitely needs to be a dialogue between the two countries so we can understand where the pain points are. leveraging the business in america to have those conversations in my opinion isn't necessarily the best way to do so >> got it. make sure to keep us updated we'll have to leave it here for now. win cramer, thank you for joining us >> thank you very much fears of global growth remains in tact. will it last find out in the second hour of "power."

what's on the menu for the second hour of "power lunch. global market exodus longest losing streak since 2016 could the downturn spread to our markets or will money come pouring back into the united states we'll speak with the head who was on wall street during the financial crisis ten years ago. why he says we're not any safer today than we were back then

help wanted. lots of it the trucking industry facing a massive working shortage that is delaying deliveries and lead to price hikes. we'll talk to one company hoping to change just that. "power lunch" starts right now welcome to "power lunch. i'm courtney reagan. the dow had been up 123 points and now down by about 24 the nasdaq turned negative before rebounding. higher by just about 17.5 points nike, home depot, american express. nike erased all the losses linked to the colin kaepernick ad and helped online sales for nike footlocker the big winner along with el brand. snap lower and tesla jumping on

the back of positive comments. hi, dom. >> we'll begin with the markets and bob on the floor of the new york stock exchange. bob, like courtney said, we lost a lot of steam and a lot of the gains cut in half. what exactly is the thing that is dragging us down, if it's just one >> no, it's several. tech ruling and we have some tariff worries continuing and we just have a general loss of momentum in some key sectors like health care let me just show you apple not only that, cisco and some big tech rolling over a little bit. then the financials. goldman has been descending and most of the big cap banks have slowly been descending that is continuing again today that is a big number stock $224, $232 affecting the dow

overall. united health care a big monster and downgrade from citigroup today and that is a real concern because that stock has been no where but up recently. fallout from last week's congressional testimony and you heard what was going on there with snap and same thing everywhere else. groupon and yelp and twitter was down but generally been down that is a trend, again, for the last three or four days. finally, we have continuing emerging market fallout and already in bear market tar at y territory. mexico is down not as bad as everywhere else. thr throw in three or four major issues and we just sort of stalled out. not a lot of strong momentum to buy right now for any of the sectors, even including consumer staples. back to you. >> thanks, bob despite the emerging market trouble global growth has remained robust and that could be changing. >> hey, melissa, that's right.

an active discussion around why u.s. markets have remained somewhat insulated from the emerging market pain we have seen this year big drops in the brazilian real down 20% on the dollar last year and take a look at the gross domestic product of these countries. that tells an interesting story. india, while one of the fastest growing economies in the world, it is just a $3 trillion economy. brazil at $2 trillion. turkey is right around $1 trillion and south africa is basically half of that at $350 billion. so, they're much smaller than let's say a china which is currently a $15 trillion or, $13 trillion economy later this week, we do get some important chinese data on retail sales and industrial production towards the end of this week and strategists say any major cracks of china's economy would likely have a larger impact on u.s. markets. still, the emerging market etf

is in bear market territory down about 20% from its recent high in late january. court, back to you. >> thank you very much. should investors keep their money in the u.s. or bet on global markets joining us now is paul hickey, the co-founder there hi, paul, thanks for joining us. you think you heard seema's first report and you've been digging into the numbers for us. do emrerging markets provide an opportunity and possibilities to get in now and make money on the upswing or just going further down from here >> well, it's interesting that you say that because, you know, we just entered official, so to speak, bear market territory with the 20% decline from peak to last week's levels. and, believe it or not, that's already over the last 30 years ranked as the third largest going back to 1988 also the longest in the history

of the index where it hasn't gone with a 10% rally. the dare devil might go in and say catch the falling knight and get there for the turn around. but we're still in the view that it may be too early to get in there. for one, you have two-thirds chance that we'll see two more hikes this year. and with the strong data that we saw last week in the u.s., it only makes the case for a second hike more likely and lead to more emerging markets i think as we see the tighter monetary and come in for emerging markets and not for levels that we had to see real big inflows of capital and rallies in the sector. that's two things. and then the third thing you want people are look at are, hey, they underperform so much at this point in the year, maybe we'll see a reversion but about five other years where we've

seen an underperformance of emerging markets and they're underperforming the s&p 500 by about 20 percentage points year to date. any time it's more than 15 percentage points looking back over the last 30 years the s&p outperformed for the remainder of the year going forward by an average of 11 percentage points. so, if you're looking for that reversi reversion, it tends to take a little bit longer than most people would hope for it to come >> it is very interesting, historical context but then also look at what is happening here in the u.s. this very long bull market run the long bear market run and now this long bull market here in the u.s. i mean, is the u.s. about to crack and turn down? is the u.s. really a safer bet >> so, for instance, the economic backdrop is certainly better you make a good point that we're long in the tooth in the bull market but, you know, we defer to what

the market is tell ittiing us for all the headlines we read this weekend that it was a brutal selloff last week we're in the month of september which is the weakest month of equities and down 1.5% from the high levels held up surprisingly well last week. we're basically about one good day in the s&p 500 from hitting a new high and cumulative d line and high yield credit spreads tightened slightly last week so, we're not seeing these internal indicators suggesting that things are about to get a whole lot worse. the bank stocks haven't done very well, but underneath the surface of the market we've seen pretty strong performance by other sectors picking up the slack. >> all right, we get it, your point is, stick with the u.s. for now. still a little nervous what's going on in emerging markets paul hickey, thanks so much for joining us. from markets to moonves. cbs off their lows of the day.

so, is this the right time to buy? is this good enough to dip your toes in? let's bring in barton crockett over at b. riley fdr the question becomes, is it worth buying because eventually it becomes a buyout target itself >> yes i do think that the tv network sector is definitely a difficult sector to invest in because of the secular concerns one thing that i think is an interesting them to be exposed to is consolidation. i think where the consumer is going and where the industry is going, content is going to increasingly be a feature on larger platforms whether that's wireless, cable, communications or internet platforms. draws you into a eco system that pulls you in and gives you exposure to the consumer cbs is the most watched network on tv and they also have

showtime which is big and direct to consumer. i think that cbs could be an interesting bolt on to a larger platform and i think what was interesting about what came out of the developments on sunday is this statement from national amusement that they would be open to looking at other possibilities, which i think ultimately can make a lot of sense for cbs. >> barton, cbs is without a doubt one of the best broadcast networks in terms of viewership. in the next five to ten years, are we going to care about how many people watch on broadcast is cbs all access? is showtime their over the top offerings. enough to make this an attractive property from a content standpoint >> well, i mean, clearly, these guys have many millions of viewers. they have a skill at developing, you know, it,tv shows at the tof the league and the consumer's interest in good content is growing. just the way they want to consume it is changing i think that, you know, content

is where cbs is strong and i think that distribution is where they could be helped if perhaps they were part of some other eco system, which is what i think was behind at&t's acquisition of time warner and disney's positioning with fox and ultimately we'll see that's what works best from a consumer perspective. >> you lay out the case for cbs being a target pretty well, barton but the stock is not trading like there is any expectation for a deal any time soon i mean, the stock is down here to date and it's almost flat at this point i think it's up just a couple percentage points from thursday's close when we first learned there could be an agreement with nai and in terms of who could buy cbs, who do you see that being and what time frame are we talking about >> well, you know, i think you're still looking at some time, i think that if we see that at&t is accessible which is time warner deal which i think a

lot of people are skeptical about, but i think it's still early and there is a great argument that they'll be successful if they are, they might double down cbs is a great compliment to time warner. >> at&t might buy cbs is what you're saying? >> i think time warner and cbs are seen as compliments. one has a 24-hour news network and the other has broadcast news before at&t moved in and time warner and cbs were seen as compliments and that could come back it doesn't go off the table just because at&t is controlling shareholder. i think that could happen in time if they're successful, maybe they lay deeper into it. that could change if at&t is successful and amazon is moving deeper into sports and cbs is trau strong into sports and tv-style programming and cbs is great with that. you can see people that

strategically could think about this the way i think about the world is, what tends to work with the consumer tends to be what happens. if this does start to work, i think you could see people think about cbs in a different light >> thanks. les moonves one of the highest paid in the u.s. barbara frank joins us with a look at moonves. this is a high interest. >> high interest and very high salaries now a lot of the attention as you mentioned on that and one of the richest ceos in america before the scandal last year he was the highest paid media exec and the second highest and that was twice the salary of disney's bob iger. $340,000 for personal security

and 2$270,000 and earning an average of $55 million a year. now, if you look at his total realized gains, that's stock and the value of options he exercised, that comes to $1 billion since 2006 his big years were 2014, 2015 when he exercised options from previous years earning $400 million from those two years alone. some of his comp is options and deford the question is, how much of his compensation from previous years already given to him will still be his after the exit? i'm sure that is something they're talking about because he's saying, look, this is not a going forward pay. we are talking about stuff that was given to me two or three years ago and i should get that. they don't want the headline risk no matter what happened >> how common is it for a nonfounder to have that kind of wealth tied to his stock

exercise grants? i remember united health and magui maguire. >> i believe was the first nonfounder billionaire but it's a handful only a handful of nonfounder executives had become billionaires and, again, that's just over that period. you know, you can surmise that, you know, investments, et cetera you could easily see him well over a billion dollars in net worth at this point. >> the pay package if they have an investigation, we might not know anything until the end of january at this point. >> what his lawyers are arguing at this point which is legitimate we're not arguing over this year's pay or next year's and contractually no matter what he has done, that is going to be tough to claw back >> robert frank, thank you china tariffs will hurt the company and will raise prices for consumers. the latest on which products could be impacted the most plus, stepping down as chairman

what the future of alibaba will look like without him. trucking companies getting creative to attract and retain drivers. o at u.s. express is doing t set himself apart. "power lunch" is back in two this isn't just any moving day.

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we are awaiting the white house press briefing right now where the chairman of economic advisors is expected to speak. we'll bring that to you as soon as it begins as you can see right now, we're awaiting those remarks, melissa. the tech giant sent a letter to trade representatives telling them that the president's proposed tariffs will hurt the company and consumers. the president responding to that letter in a tweet. john ford is here with more. john >> well, the backkeep drdrop tof this, we have a big iphone anounshme announ announcement in two days apple pencil, hold pod and various adapters and chargers. the iphone doesn't work to be effective so far at least in the united states. but here the biggest risk might not even be thetariffs themselves

the chinese government could make the iphone harder to buy in china. now, if trade tensions worsen with china, there is really money at stake here for apple. in fiscal 2017 apple booked $475 billion in sales in greater china which was 20% global revenue. that is up from 11% of global revenue when tim cook took over seven years ago. apple with 41 retail stores in mainland china and six more in hong kong. when tim cook took over it was a knockoff market. no company better positioned to weather a trade storm than apple. quarter trillion dollar cash forward and huge profit margins and a loyal customer base. on the other, apple is arguably the most high-profile company in the world. they got that way by bridging the u.s. and china like no other company has. it could be a convenient punching bag if either side wants to make a point, that includes president trump

he tweeted that the easy way for apple to avoid tariffs is to move fmanufacturing to the u.s it's not remotely practical. the engineering expertise don't exist here in the u.s. to make those products and the assembly jobs that come with today's manufacturing process don't pay that well. >> multiple times what it currently costs even at the highest end. in terms of the actual profit, john if the tariffs go into effect right now, the products that you outlined would be less than 1% negative hit to fiscal year 2019 profit not really huge qualitative that china could engage in could really impact apple, as you mentioned. the supply chain is all over there. >> affect product getting out of china and affect consumer's product. people like to watch how a new iphone does. china has been one of those

major launch markts for the iphone if for some reason they didn't have the approvals to get these phones in front of consumers at the time that apple wanted, that could affect at least perceptions. >> interesting, so approvals getting them on time that is the key. >> the nontariff barriers that we heard talked about. >> qualitative challenges. thanks, john john fortt. alababa announcing he will step down next year. investors not happy about the news adthstk.w sion plan and hoto tre e oc let's begin.

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go to flexshares.com for a prospectus containing this information. read it carefully. welcome back to "power lunch. shares of alibaba down as jack ma steps away from his role. the latest from beijing. >> jack ma chose a special day to unveil his succession plan. his 54th birthday and it's teacher's day here in china. people on social media have been congratulating teacher ma and h chose this date because he wants to return to life as a teacher a new chairman affosos of one y from today he'll finish his term as an

alibaba board member until 2020 and hand the reins to ceo john and and he was the president of t-mall the site for branded stores and he was coo and also credited with making alibaba single day festival the big bonanza that it is today in his letter to shareholders praised for his analytical mind and said john holds dear his vision the big question for investors is what is alibaba without jack ma ma is the visionary of alibaba the big statesman and not only for the company, but the entire chinese tech scene analysts have been describing him as a solid manager, cautious and a man who doesn't crave the limelight. he does have very big shoes to fill and to ease investors'

concerns ma addressed that in his letter saying the one thing i can promise everyone is this alibaba was never about jack ma but jack ma will forever belong to alibaba >> thank you very much let's go straight to the white house where chairman of the counsel of economic advisors is speaking >> the strong economy that we're seeing is just a continuation of recent trends. and, you know, since we're, we decided this was a testable hypothesis we can go out and estimate recent trends. trend that ran in the economy up to the point of the last election and then compare the latest data to the recent trends in most cases, by the way, the estimates of the trends that we present to you here are very statistical significant as are the deviation from the trend i will show you a few slides can i have the next slide, please

that's the first slide, again. there we go. so, the first slide that we're looking at is small business optimism and this is basically for parallel construction you're going to see that each of the slides we go through looks a lot like this. the blue part to the left of the slide is what happened from the 2012 election through the 2016 election and the dotted blue line is the trend that president trump inherited from the previous president and the red line is what actually happened with the data. and, so, i think that if you look at this chart, you can see that the first thing is small business optimism, the middle chart is the percent recording now is a good time to expand and the last one is expecting higher sales in six months. if you look at any of those, geez, that doesn't really look like the continuation of the recent trend could i have the next slide, please the next chart is something that in my first press way back last fall we talked a lot about

business investment, which is more than $300 billion over the trend. again, if you look at the blue line on the left, the first chart is nonresidential fixed investment and the dotted line is the trend and the growth rate that president trump inherited for the middle of the chart is structures or buildings and that, as you can see, the dotted line that something is headed straight down and equipment investment and that went straight down before president trump was elected. i think that if anyone were to assert that the capital spending boom that we're seeing right now was a continuation of the trend that president trump inherited, then, well, they wouldn't get a high grade in graduate school for that assertion the next chart, please durable goods orders, capital goods orders a key part of the economy and one of the factors that we look at most closely because it characterizes basically the good paying jobs. the jobs that affects normal

americans, blue collar americans. and the first chart is core capital goods orders and the second chart is core capital goods shipments and if you look at it, the blue, again, shows a clear downward trajectory and billions of dollars and that trajectory reversed itself completely when president trump was elected. if you were going to assert that the current good news is just the extension of the recent trend, then you would be factually incorrect. the next slide, please here we're looking at the ism purchasing manager's index which is a survey of people who are purchasing managers for manufacturing firms and there the folks that the title suggests manages the purchases so a really great indicator of the economy because you could survey that and say, hey have you been buying lots of stuff this month or have you not the index shows what their

responses look like. you can see that the trend on the purchasing manager's index was flat when president trump took office and the red line shows you what happened. there is a clear inflection right at the election. let's turn to the next one, please now, one of the things that i could remember at the american enterprise institute talking about before i came in here that entrepreneurship in america was falling off. one of the ways we could measure inentrepreneurship that if you start a new business, you have to apply for an i.d. number, a tax i.d. number for your business so, in this chart, we have plotted the applications for new businesses and if you look at the blue line, they were heading up because we are in a recovery, but there is clear upward trajectory way above the trend at the end and, you know, sarah, like john roberts, is a calculus

geek she looked at that one n stead that looks like a very strong second deriv ative to me. i like calculus better than talking to these guys. the next chart is prime age workers reentering the labor force. again, if you look at the trend, one thing people said when we put out our growth forecast that we have 3% growth. we said that president trump's policies are going to bring factories back to the u.s. and give you the capital spending boom that you saw in the previous chart and that was going to bring people back into the labor force at precisely the right time once again, you can see it if there's a clear break in the trend. and, so, if you see a break in the trend in the capital spending, the new plant formation that gives blue collar workers their jobs, go to the exint slie next slide, please a trend in the blue collar employment, as well. employment for people in goods producing industries the blue part on the left, you

can see there is a clear downward trend going on and the growth rate of that for president obama and then a clear inflection timed almost precisely again at the election. he might defensively attempt to assert this continuation of the trend is almost laughable if you look at this chart and look at the rest of them now, somebody might say if you're showing a bunch of charts, geez, maybe it depends on when you estimate the chart and when you went back and began your estimate and which one do we get then? you get a different answer from what we see. but another way to sort of test whether the data that i just showed you is a fair representation of what a trend looked like when president trump was elected is to compare is to nonpartisan bodies my final chart here. i know i heard this sigh of relief when i said final chart so, so, if you look at the final chart, you'll see that the black

line is in june of 2017 what the cbo congressional budget office, a nonpartisan agency that has the job of looking at recent trends and projecting it what they said would happen to capital spending back in 2017. the blue line is what they said in april 2018 and the red line is what has actually happened. so, i would assert if you look at the collective body of evidence, the notion that what we're seeing right now is a continuation of recent trends. it's not super defensible. and i think that, i know that we're in a political time and passions are high, but as economists one thing we have to do is think ahead to what historians will think when they look back at this time i can promise you economic historians will 100% accept the fact that there was an inflection at the election of donald trump and that a whole bunch of data items started heading north. they will, of course, argue for

a long time about why that happened, but my final thought for you is just this that when they do that and when you watch people do that in the med media going forward that you should watch out for ex-posts theorizers something that happens before and then let's watch the data and see if the degrees is a theory that's how you test a theory you might recall i came back here last fall and i told you that if we had the tax cuts that president trump advised that we have, that he pursued. if we pass them, then there would be a boom in capital spending this year in fact, we provided estimates at the time last fall they said that capital spending this year would go up about 11% because of the tax cuts so far the first half of the year, capital spending is up 10%. so you don't really have to reach far for a theory of what happened president trump deregulated the economy and we talked about the growth and the tax cuts have

exactly the predicted effect on the economy that's brought businesses back to the u.s. and factories back to the u.s. and created jobs for ordinary americans. it's clear that there has been a trend break and with that, i look forward to taking a few questions before i hand it over to sarah to talk about other things and i'll let mr. roberts go first and then maybe try one for each row because i know i'm not allowed to go for the whole time >> based on the information you have given us, where did the revenue drive meet the deficit line caused by the tax cuts? >> it is a great question. one of the things that we could talk about in fact, sarah, let's have a whole other briefing let's do a briefing on the deficit. but one of the was to think about it is that there has been a big change in tax law and a big change in spending policy. and in the tax law side, you could remember that the dynamic score for the corporate tax was

that it would have a very, very low cost and i think that the cost estimate, not dynamically sorted and it was about $400 billion in the final bill over ten years. and, clearly, the growth and the investment boom that was projected by cbo was a significant underestimate for what's happened already. so, i think the notion that the corporate tax side has about paid for itself is clearly in the data on the individual side, there was about a trillion dollar cost and a refundable child credit that got expanded at the last minute to get the votes it needed to pass it. refundable child credit is, you know, very sound policy for people who care about equality of opportunity or families with children that president trump supported wholeheartedly but not at the size it came out. and the child credit, though, is not something to pay for itself. the tax cut has increased the deficit a little bit, but not

the tax cuts that the democrats are attacking but rather the tax cuts that the democrats probably should have supported. i'll go to row two, right there. i'm sorry, i don't know your name >> there's another chart that is not included and that's the chart about the spike in consumer pricing the cost of goods and inflation. americans are paying more for their goods now than they did in recent years can you explain to what extent america should be concerned that the price of goods is increasing at a high rate >> americans should be concerned that prices are going up and if you look at the consumer price index, then over the most recent year it is a little bit short of 3%. and i know that that is something that affects americans, you know, when they go to the grocery store or the gas station and they should be concerned about that but the best defense against increase in inflation is an increase in wages. and the cea put out a report this week that documented that

correctly measured real after tax wages are growing about 1.4% this year. that means the wage growth that president trump has helped create with his policies is overpowering the inflation numbers right now. i'll go to row three and then back >> what credit, if any, does former president obama -- >> i think that attributing blame or credit to individuals requires that i identify policies and talk about what effect did this policy have or that policy have i think that president obama sometimes on the partisan trail gets criticized with numbers that are clearly incorrect because people blame him for the great recession, which was, you know, there when he started and it's not fair. if i look specifically at president obama's policies, a whole bunch of policies that i think were very negative for growth i think the affordable care act lifted, marginal tax rate on individual workers so much so that the cbo even said it would have a negative effect on

growth he increased marginal tax rates on small businesses and that's why small business creation wasn't so high i could look at a lot of policies and talk a lot about them one by one and also advocated policies that he said would help dproegrowth that cle did not and i wonder about what was going on in the heads of the economists that said cash for clunkers that didn't have much effect at all. to say he destroyed the economy or something like that, that is not what the chair should be doing. i'll go back >> two questions for you can i take them separately first one, just playing off of this question here >> yeah, go separately >> thank you you are coming and talking about the economic numbers in our first briefing here in nearly three weeks. it seems like it might be timed to president obama's speeches on friday and saturday in which he talked about the economy and some of those very issues. is that why you're here today? >> thank you for asking that, actually sarah can tell you that i have

been pushing her for quite a while to show these slides i don't know about the three-week lag people take a break in august and some vacation taking at the time but, yeah, we were prepared to do this briefing a few weeks ago and there's not in any way a timing that is related to president obama's friday remarkz and then i promise you -- >> you talked about -- >> the next person is going to ask for three. i shouldn't have done that >> the president also, i'm curious about your views and comments on this, has told private companies apple, amazon, nfl how to run their business. do you believe that is appropriate for the president to do do you believe that stimulates economic growth? >> well, the president has strong opinions about everything i think that we would have had all the policy success that we had if he hadn't been such a strong advocate for the things that we've seen. i think that his strong opinions sometimes stretch into areas

that are outside of the places that cia has any purview and i don't counstsal him on that may that be true for all of my stay here. i'll go to the blue shirt in the back yeah i'll come forward. >> quick question for you on economic stat that the president put out and a comment that the president put out today. the gdp rate is higher than the unemployment rate in 400 years that is just not true, is it >> i can tell you what is true and the history of thought -- no, let me just say that the history of thought of how errors happen is not something that, you know, i can engage in because like from the initial fact to what the president said that i don't know the whole chain of command what is true it is the highest in ten years and at some point

somebody probably conveyed it to him adding a zero to that and they shouldn't have done that. i could say that at least we're grateful when the press finds mistakes that we make, we don't like making mistakes, but we're grateful for when they're pointed out because we want to correct them i gave sarah a bad number a few weeks ago and it was 100% my fault and we re-created it you have to talk to the president about where the number came from and the correct number is ten years >> president obama, former president obama said president trump would need a magic wand 4% gdp. the president suggested that was a direct quote from president obama. did president obama ever say that >> i don't know. again, i am not the chairman of the council of twitter advisors -- >> on wage growth, the white house put out a number that used a different way of calculating wage growth. it seems like that is unfortunate because you have apples and oranges compared to

previous wager calcalculations why is it important to do that and nontax benefits like vacation time and other types of benefits why not just base your analysis on wage growth based on the way you've calculated in the past. >> a whole report that came out last week and new stories that were very well done and thoughtful about the piece i think the question for americans, what they really want to know is how are president trump's policies affecting their lives. it turns out the statistic that got the most attention in the media is not a very reasonable statistic for answering that question now, we talked about how to better measure that. and it was not criticism of the bureau of labor statistics we love those people we're data geeks we use their data to come up with a better measure. people get benefits. a better measure would account for the fact that people have tax cuts and account for the fact that the composition of the labor force is changing because

so many people are coming in and the people who have been out for a while tend to be lower skilled. so they could bring averages down if you don't control for that in our study we controlled for all that and showed just as consistent with our 4.2% gdp growth we're seeing a massive amount of wage growth right now compared to what projections were when president trump took office i don't see sarah telling me i have to stop should we keep going i'll go back there and i am right handed and -- >> to keep these trends going, how important is it for you to have a new north american free trade agreement including canada >> yeah, thank you for the question and the first thing before i turn to the trade part of the question is that some people have also said while sure the economy is strong, but that is a sugar high but it's not a sugar high at all. what has happened is the capital spending boom that we promised that would happen if we passed the tax cuts is under way and the cool thing about capital spending is that people build

factories, that's what capital spending is and they do that in the first half of the year, up 10% since the beginning of the year and then in the second half of the year, the factories start procuducing output the trend might not continue and it's a sugar high just inconsistent with the form the growth is taking as for nafta and the whole team have been in negotiations with canada, we continue to be hopeful they'll sign on to the 21st deal with mexico which is a better deal for american workers and they should sign on to that. i'll come over here and i'll go back to you. yes. >> hi. i have a question about inequality can you talk a little bit about whether you've seen income inequality shrink and are you concerned about people who are just poor, not just people in the economy, but actual poor people living below the poverty line, are they being improved by this economy >> they certainly are. certainly, think about it all the new entrants that get a job

they go from having zero wage to having a wage and they won't show up in the wage statistics those people are better off. and there are a number of other ways that people are better off, too, because of the growth in the economy and also because of policies that had given resources to families that are needy. at the cda we put out a different report over the summer on what is going on with poverty correctly measured and then in the stay tuned department, there is important data coming out this week which will help us look at how income inequality has changed not this year, but in the previous year my expectation is that if that data will start to turn and this year we'll see a decline in income inequality because blue collar wages are starting to grow it's a final point and really important point that you bring up that i want to emphasize because i care so much about it. we're at a historic moment because we're deep in a recovery the unemployment rate is really low and we created a capital spending boom. normally what happens is if you

don't have a capital spending boom that people start to bid up the wages for folks but they're bidding them up because there's a shortage of labor. what's happening now is they're bidding up wages because people had better machines to work with and their productivity is going up and the recovery could last longer and that is really, really good for workers at the low end. precisely at this moment in economic history if you look at past economic boons where income inequality is declined and if we were to blow it and have a recession, then we lose an enormous opportunity in income inequality i guess it's the last question is he allowed -- do you like this guy okay >> before you blame regret, but with the election when he wasn't even president how do you decide when to start

that given for months afterwards >> marcus lucas won the nobel prize at university of chicago got the nobel prize for answering your question back in the early '70s but the basic point is that american businesses especially, their activity is forward looking. if you want to model their investment today, then you have to understand the fact that they're forming expectations, not just about this month, but about the next five, six, seven, eight, ten years equity markets and sentiment surveys is that people started to ratchet up their expectations for what would happen to the economy. everybody except for supporters were starting to do that after the election the fact that those expectations turned out to be rationale because the turnout is something that we see, as you just saw the data let me hand it back to sarah now. and anybody who wants to follow up about the data, feel free to reach out through the press office and connect with me thank you so much.

>> we've been listening kevin hassett at the first white house press briefing in three weeks or so the underlying message here with this began with president trump and not just with president obama. certainly something we'll watch there as well. as the white house suits we are approaching the ten year

anniversary. what are the chances of oolt crisis happening and are we safer than we were back then we are at the enter of the financial collapse she was the chief investment offic officer. thank you for joining us here. you heard about the comments under the trump administration can we feel safe that another financial crisis will not happen because of the strength in the economy in the markets >> it won't happen any time soon because of the strength of the economy and financial markets. the issue is it gets created by excessive concentration. we are see ago healthy distribution of growth no warning signs for any type of financial crisis >> as you look at the current environment that we are in, back then you saw certain risk, signs, warnings out there. you don't see any out there now. are there any looking for that

the concentrations, are there things that you key on as possible risk or warning factors going forward? >> i tend to look at excess ifr growth or one type of loan then you start hearing stories about how people all want to be in that lending area they take on greater and greater risk in that area say it's a low-risk product we saw that with sort of the expanding on the mortgage business so it's when you're start hearing things and you say

growth is good, everyone is making good money. you tend not to question it. >> isn't that when you often don't see the problems until they are starring you right in the face then it's too late. so at least let's look at what we did change. you look at the financial system we made changing regulatory and otherwise. do you think the financial system is safer than we were ten years ago? have we fixed that problem spot? >> i think it's a bit safer. i do think there's not enough within the capital standards there is some penalty but not enough it tends to be the biggest problem a lot of these financial crises i also don't believe the living will plans will be that effective. in the midst of a crisis you will not have disposition assets if they come to you a little early you'll set off a panic

because people think this company is really failing. i worry about the living will and think there should be pressure to be smaller and separating out their deposit bases from pro pry tear risk taking activities. >> is there a chance we would see in the united states the investment banking side of thing separated? that one stop shopping podmodelo away >> i think if anything there's a trend now towards loosening things up and not becoming stricter and separating some of those businesses >> all right thank you. tune in for the deck men tear, prices on wall street, the week that shook the world premiers wednesday on cnbc. the trucking industry facing a capacity crunch.

not enough drivers to handle it. this year alone 50,000 more drivers are needed to increase shippingdemands thanks so much for joining us how many free college tuitions are you providing to your drivers? how is that working out for you? >> we are looking forward to seeing how many of our drivers pick us up on it we are offering it not only to our drivers but to our children as well. it is a great opportunity. we hope we can bring new people in that may not have seen it would now look at trucking and think this is a way for me to

provide for my family and provide an education debt free and look at it as a solution or as an opportunity. >> over half of your revenue came from your top ten customers including walmart, dollar tree, amazon, everybody trying to provide consumers with low prices how are you able to respond to the shortage are you able to pass on increase costs to these customers or do you have to absorb it? >> we are seeing opportunity to raise rates where it is necessary and i think the customer base is concerned enough about capacity and they understand the driver situation as well that being able to pass that cost along in this environment is not a problem >> if we can take a step back why do we have such a big trucker shortage right now we know that we do why do we have it and what can we do to fix it? >> where are potential drivers

>> we are below 4% nationwide. they are all industries that are hiring at record levels. the competition is really tough. we realize that trucking is probably one of the least desirable jobs out there especially in comparison to other industries we are struggling to hire new people where do we find new people? i think stuff like this where we can kind of think outside the box to find people who may not have looked at trucking as a viable solution and try to bring them into the industry >> hoz the opioid crisis taken a toll it >> is an absolute issue. we need -- we need further testing. we are a big advocate because we know it's an issue we are seeing that effect not only the truck industry but really across the entire nation.

>> as we talk about autonomous vehicles is it going to effect the trucking industry and as a ceo of a big trucking company when do you think it will take fulleffect the true tracker with no driver in the truck, i think we are 20 plus years out we got away from technology but public acceptance standpoint before it iswidespread

>> i think it's really changed we are seeing things move to more regionalized smaller distribution centers overall from an overall demand standpoint we are continuing to see a robust environment regardless of whether it is going to go to a retail outlet >> thank you so much keep us updated on that driver shortage >> thank you for your time all right. we have breaking news. the white house press secretary saying president trump receive add letter from north korea's kim about scheduling a new meeting. she says another meeting with north korea is something we want to take place. that's kind of a big development for a lot of folks that believe this situation with north korea is deteriorating >> and we'll watch the market's

reaction >> so a big market day coming up >> thanks for watching >> closing bell starts right now. >> apple on watch has president trump calls on the company to move production to the u.s that could make your next iphone a lot more expensive i'll