the new apple watch. our resident technology expert todd hazelton will tell you whether it's worth the money people pay 20,000, 30,000 for watches. certain people it's wednesday, september 19, 2018 "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box." good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew is off today charles campbell is our local guest today. charles, thanks for being here >> thank you for having me >> let's look at futures yesterday very strong day for the markets. the averages saw their best day in about three weeks you saw the s&p 500 close

higher and the dow is at the highest level since january 29th this morning dow futures are indicated up by 21 points. the s&p and nasdaq are slightly weaker let's look at overnight in asia. the nikkei ended up by%. m 1%. then this morning in the early trading that we're watching in europe, you will see that right now things are mixed slight advances for both the cac and the dax. ftse is flat stocks in italy are weaker look at the treasury market in the united states. the ten-year is 3.05%. north korea says it will abolish its key missile facilities in the presence of foreign experts.

the news comes as the leaders of north korea and south korea were holding talks in pyongyang separately kim jong-un promised to visit seoul that would make him the visit north korean leader to visit the capital since that peninsula was divided back in 1945 the two leaders also say they're working on a joint bid for the 2032 olympic games president trump applauding the news in a late-night tweet saying in part very exciting he likes -- i like when he summarizes the previous tweet. when he says nice. >> very exciting >> very exciting i find it hard, after the president met with north korea, it was either we could have done that if we wanted. we heard from prior administrations, but we weren't going to give him the satisfaction of being on the

same level of the u.s. president. we heard that. and we heard our concession was doing that we got nothing in return all along we got back the remains of some servicemen we got back some hostages. no more missile tests. all these good things happening, none of that was mentioned by critics. if this actually moves forward from here -- it's interesting. though there was -- the president has been very conciliatory towards kim jong-un, their state media is saying the united states is acting like a gangster, and saying we had to demilitarize our side, or pulling out of -- aren't we worlds better than we were when missiles were going across japan >> there's a potential promising path for this. that's not to say we achieved our goal >> it wasn't going to happen

overnight any way. no one was willing to wait and see. they were already drawing conclusions that we had not achieved anything when we were in the middle of the process is it possible -- we saw his father, his grandfather, we know their m.o. in the past, but is it possible a regime can realize i want to enter the 21st century with the global community and act like a country should act. >> i sure hope so, but i'm not willing to put enormous faith in him yet. maybe the calculus is changing for him as this is happening you can be hopeful that he follows through on some of those things >> it plays into the next story, and that is that the president thought some of our trade friction with china was causing china to -- with body language with north korea to make it tough on us there because of what we're doing with china. this is the hatest vlatest salvo

the chinese state media saying they will outlast america in a trade war. and it will emerge stronger. this comes after the u.s. announced tariffs on an additional 2$200 billion of chinese goods. china retaliated with tariffs on $60 billion of u.s. goods. there's a big piece in the "journal" today that we're not exactly sure what victory looks like in terms of what we want china to do. president trump is ready to do almost a scorched earth -- that's a bad word to use, but in terms of economic terms. he's ready to go to the mat. 550 billion, 25% tariffs what do we want? i think it's clear what we want. we want them to stop stealing. >> we want a lot of things we want american companies to own their own companies there. even when we spoke with wilburious yesterda

wilburious -- wilbur ross yesterday, he said we would like to get to that point in some of the early talks they were thrown back on their heels when it looked like there was more >> i was watching commentary yesterday from different networks, they were sort of saying that president trump was naive because he did not understand that they're asking china to change their economic model. which is stealing, making partners give over technology. >> that's a huge advantage of breaking away from what was the status quo and having someone who came in as an outsider looking at this saying it doesn't make sense >> they were basically saying china will never do that we have to let them continue to steal. you don't want to cut off your nose to spite your face.

but i think we know in the big picture that's not sustainable >> china may be more open to the idea of intellectual property protections at this point because it's getting system of its own intellectual property. >> exactly but they may be more open to discussions. >> i'm sure they'll develop a lot of stuff independently of us what do you think, charles you're here. you want to weigh in on any of this >> most people wouldn't argue with the president's goals regarding reforming china and having them change their social, cultural, economic policies. it's the tactics that people sometimes object to. my feeling is that what's unclear for markets is how long the duration, the intensity, the scope of this trade conflict will be. a lot of people think it will be after the midterm elections china will think the president will re-evaluate if he loses the house. not this president he will stick in the heels

some think it would be after the g-20 which could be the first time the two of them meet and potentially deflate the situation. >> but they're so far apart on intellectual property, on allowing companies to be owned by -- >> i think the g20 is the place where you might see a personal relationship >> markets are implying that but if it doesn't go that way and it ends up being like jack ma suggested -- >> 20 years. >> or even 5 years that's not discounted in financial markets now. >> no. though we saw what is the -- the numbers at this point are miniscule. at this point the tariffs effect 10% of chinese products. that's fedex >> a couple tenths of a percentage point, but the implicit headwind is what it does to business and consumer

confidence you will see that in the regions of asia pacific. you will see it in the pmi numbers. when those numbers taper and see declines, that's your warning that corporate earnings are possibly at risk >> fedex was down 6% of 7 yesterday. >> dollars dollars, not percent >> dollars 241. china is claiming even with tariffs on everything, you're talking about 0.7% of gdp for them on how it would affect them >> i don't know if you believe those numbers. >> right but 0.7% to them is not as important to us. the justice department is launching a criminal probe into tesla. investigators want more information on elon musk's tweets about taking the company private. the new york times is reported

that goldman sachs and silver lake have been subpoenaed as part of the investigation. cnbc reached out to both companies for comment. we have not heard back former gm executive bob lutz weighing in on tesla's latest troubles >> they will never make money on the model 3 because the cost is way too high he's got 9,000 people in that assembly plant producing less than 150,000 cars a year the whole thing doesn't commute. it's an automobile company headed for the graveyard i predicted this for some time i continue to predict it >> tesla shares closed lower by more than 3% yesterday tesla bulls love it when old detroit executives tell them how to run a car company i guess if anyone knows how to take a car company into the

graveyard, these guys know how to do that as well as anyone they've done it a couple of times. that's what they say let's bring in bob lutz to run it my rap is on the brother's hat the people who love the tesla story, they're down from earlier this year. but it gets nasty when you start looking at your account. i think tesla closed yesterday at 240 >> 280 >> 240 is the low. so it's still well above its 52-week low, but down from much higher levels, up in the 3s. >> i think it was at 318 or above 318 -- >> it went up higher than that

when he first put out the take private thing. 385. it's not about the brother's hat. >> his brother is on the board of tesla kimbal >> my brother is doing great >> this thing never comes off. i tonight know you're at the new york stock exchange >> they have quirky personalities. >> let me ask you this retsler comes in here in the morning sporting that hot to talk issues what do you think of him if he comes in with that hat? would you ever come in with that hat? >> i better have my next rodeo lined up >> how about you. >> i would probably walk home. >> i don't understand why you're wearing chaps today. >> they're eccentric

personalities. that's what happens of you create companies, make lots of money. >> you would hope it was an additive to your looks instead of making you look ridiculous, right? we're talking about them >> beauty is in the eye of the beholder >> all right maybe andrew is shopping for a hat has th hat. >> are you allowed to do that? >> not on a holiday. you go to temple let's get back to the markets and talk to our guest. chris restler and let's get back to this idea that the markets yesterday closed at strong levels the dow at the highest level since january. what happened when we look at this headline risk particularly around china and the trade issue. why do we continue to see the market set new highs chris. >> growth in the businesses

continues to do well confidence is there, that's what we should be looking at going forward. but earnings are still good. repatriation is occurring. tax reform is coming through what we're looking at is how much economic activity was pulled forward >> by the threat of tariffs? >> exactly when we get into earnings season in october and november we will be listening closely to management about has there been impact yet what are they seeing when we talk to companies, activity is good the summer is over that's typically a slower period europe is back to work world cup is over. there's a lot of catch-up business going on. >> you don't think there is a meaningful impact? >> we don't know yet when we ask betweencompanies, t don't know dominic chu did a report on the port of l.a., it's stacking up

what is in those boxes >> for the holidays. >> some of it and maybe some other activity which was pulled on to the shores sooner. we're asking companies how much is in those boxes? >> charles >> i think the market expected a discount and that the u.s. would implement this new level of tariffs and that china would retaliate. >> this is already baked in. >> right we would see higher s&p and earnings are great you will have an eps number for 2018of probably 170 or north so there's a bit of a relief that's why asia is up again today and the yuan is well contained. it's not deprecating dramatically >> what's the mentality for trading? is this a market you don't want to short

>> it's a market which is getting increasingly complex and difficult to navigate because of the china trade issue. it's unclear how it will get resolved investors are betting there's gamesmanship going on between key policymakers or that either the midterms of the united states or the g20 will see a turning pivot point for the negotiations i'm skeptical that that will happen >> chris what do you advise clients to do now based on that uncertainty? >> we have taken more of a trading strategy in the last six months or so we deployed capital over the summer when volumes were light we have seen the small caps do well since the summer, which has been great we've had to employ more of a trading strategy going into the midterms >> every time you see a dip you buy that what is a trading strategy >> we saw a lot of value when they sold off on low volume.

now we've come back up to moving averages so we're re-evaluating some of the investments we've been in historically one area we keep an eye on is semicap equipment, that's where china wants to grow. but semis have been weaker, and that can be a leading indicator to overall economic growth we don't think the cycle is over, but it's a commodity you have to be careful >> chris, mank you fthank you fg in today >> thank you trade again is taking center stage. we talked about it quite a bit, eamon javers who is in washington for the latest. very strange, the market cranking this week even in asia the markets are okay, i think. i don't know do the markets know what's going on they know something? are they oblivious

>> they never tell you that's part of the problem what we have is a situation where markets are responding to what the president is doing. the president explained yesterday what his take was. he was at a joint appearance with the president of poland yesterday at the white house in the east room. the president laid out his thinking on the tariffs and chinese. here's what he said. >> to have the benefit of china having do with north korea, they have been helpful. i hope they're still helpful there's a question about that. but it got to a point where the numbers were too big this should have been done for the last 20 years. >> the president also said that the united states has been the piggie bank of the world and that the united states has been taken advantage of for years and years. he blamed previous occupants of the oval office nor nfor not de with the trade imbalance between the united states and china and said now is the time to do this. when you talk to people at the white house behind the scenes

and why this is happening now, it's because the president feels strongly about it and because the white house team feels the any economy is humming to such a degree, if you're going to take the hit, now is the time to do it the united states can afford this now it can't when there's a recession on they feel now is the time to tackle this problem. that encapsulates the president's thinking we don't know whether the president will move forward with that 267 billion he said he would if the chinese retaliated yesterday we saw the announcement of the retaliation. so the question is when will we see the rest of the chinese tariffs put into place, if at all. >> you saw the president reference some red state strong supporters he has that are being targeted by china. >> china's words, too. >> it's clear. >> it is you just said he thinks now is the time i wonder if some of those house of representatives, some of

those congressmen in those areas think now is the time. >> some republican senators from farm states don't like this at all. their constituent are feeling the pain the question is whether that will play out in november. >> i don't know what a mix minus problem means, but we get it in our ifb. i'm hoping that's what happened to you it looked like you got sick of what i was saying. >> no. no. >> like you just pulled the ear plug out >> that was a technical audio problem. so i pulled the ear piece out. that lets the guys knows there a technical problem. >> i do that all the time with guests >> you're putting ideas in my head i never considered that. i could just do this >> jack lew was on set the other day, i tried it he just kept talking. what is a mix minus?

what is an ifb you know what? we can't go there. >> right >> eamon javers, thank you i hope we fixed your audio problems >> all my problems have been fixed. >> all right good thanks >> we fixed you, we're letting you go. when we come back, cnbc.com's todd hazelton was here yesterday to review the new iphones. today he's back with a look at new series 4 apple watch he will tell us whether it's worth buying after the break right now a quick check on what's happening in the premarket. some of the biggest winners and losers in the dow. right now home depot is leading the way, up about 40 cents

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internals but is it worth the upgrade? joining us is todd hazelton from cnbc.com it's good to see you you got one. where did you swipe it from? >> from apple. the loaner unit. i ordered one for myself i like it a lot. >> do you have a watch now >> i do. i have the series 3. i would upgrade, i don't they everybody has to upgrade from last year's model to this year this is too two times faster than loast year's model two times faster a lot of new health features one is an ekg coming later this year you put your finger on the digital crown. it will read you out, give you a pdf that you can give to your doctor it has louder speakers the biggest thing is the bigger screen that is good to read texts on.

>> that's luring me in with this i used to wear a fitbit, and this has the fitbit stuff built into it. it tells you how many times you stand, how much you stand -- >> i don't have a fitbit either. >> it also starts tracking your workouts automatically at first i was like this doesn't work it takes longer, then you get the back credit. >> you have to be active enough. >> yeah. i was on the treadmill at office, i finally ran far enough, it says you have been running for a half mile and it gave me all that credit. >> and it will tell you if you've been sitting still too long >> you have to stand, burn enough calories, you can set your own calories goal and work out 30 minutes a day. so you close all the rings now with the software you can compete against people if you had one, we could have a

seven day competition, whoever wins at the end gets a badge >> some other things, in terms of being able to leave your phone behind i hear you, it's not a gorgeous watch. >> yesterday i charged my phone for a while. i was sitting there. i had this feeling of i need to get my phone i don't like it. it was only over there for ten minutes. nothing -- i'm getting spam. i don't need to see what's going on there's no e-mails there that i need to know about >> right this is a cellular model >> i don't want to be that person has rolex or pbreitling, are the going to go out of business in. >> some people still love the luxurywatches, but at high

e end -- >> i like the steel one. you get the hermes band. >> look, is it a problem for the high-end or more of a problem for timex, swatch -- >> first the low end, but eventually the high end. some higher brands are adopting this technology. >> when did you join cnbc? >> a year and a half ago >> you go with the sweater a lot. did you know andrew has a sweater of the month club. is that the same one -- >> no, i got several >> he's already done this, by the way. i don't know if you weren't around you can join it's the gift that keeps on giving every month. you get some zweaters, it has a zipper >> a zipper model.

>> andrew already has this turf covered. if you're thinking about making this a permanent thing -- >> i can't do the sweater? >> you can do it, but know that andrew was here first. >> one feature i wanted to talk about -- >> more about the watch? >> it has fall detection if someone falls, it will detect you. if you fall over, it alerts you. and if you don't answer and say you're okay, it will call emergency services >> this is off the list right now for tariffs. how important is that? >> i think it's really important. if you look at price already, it's expensive >> add another 10%, to 25% >> i buy one every year, most people wouldn't. $ $400 is a lot. >> the target group for people

who have fallen and can't get back up, i don't know if they're the same people who would buy a watch. >> i agree >> you need dexterity for your fingers. >> they have to remember to charge it every night. >> my resis teps tance to changl i wear one of these? >> you might >> you wear one? you're in with this? not the sweater, but in with the watch? >> in with the watch >> get a new sweater every month. the gift that keeps on giving. >> this show is also the gift that keeps on giving >> exactly the new tax law was supposed to pave the way for trillions of dollars in overseas profits to return to the u.s., but companies have been hesitant we'll find out what's behind the holdup first the cleanup in the carr

carolinas is just beginning. i think the president is heed ther headed there what's going on? >> recovery effort the are under way but they are slowed down by the floods and high waters, that's why the national guard has come in. that stufull story coming up on "squawk box. really want to be there, but you can't.

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among the stories -- that song china firing back at the u.s. this morning the chinese state media saying they'll outlast america in a trade war and emerge stronger. this is after the u.s. announced tariffs on an additional 2$200 billion of chinese goods north korea pledges to dismantle key missile facilities in the presence of foreign inspectors the two leaders also say they're working on a joint bid for the 2032 olympic games.

the dow jones up 32. the nasdaq up about 2. the s&p is flat. what is left of hurricane florence is moving out to sea but floodwaters are continuing to rise, and the cleanup is just beginning. seema mody joins us from new bern, north carolina what is the situation on the ground >> well, dramatic rescues have become a common sight after hurricane florence ripped through the carolinas leaving many citizens and businesses in a dire state this hurricane could cost between 17 billion to $22 billion. we're here in new bern, population of 30,000 this served as the home base for emergency personnel assisting in the repair and recovery efforts. the national guard has brought in a lot of heavy equipment from charlotte. we have trucks, portable water, a gas tanker to my right

this truck is getting ready to make a big water tler delivery. this truck has about 100 cases of water but this is a coordinated effort you have fema, red cross, even the new york police. the nypd has come down to assist in the recovery and relief efforts. two big concerns now delaying efforts, high waters and flooding you had the river, cape fear, which crested overnight, 61 feet that has delayed the recovery efforts. transportation has become a big challenge. the other thing is power outages. we started at 1.9 million, that's come down to 267,000 that are still facing power outages duke energy says full restoration not expected until next wednesday back to you. >> on top of that, sounds like infrastructure is overloaded i heard like 1,000 roads or more may still be under water

>> that's right. in and around the region you're seeing high waters, floods, massive piles of debris stacked across different roads that has made transportation much more complicated. it has delayed the overall recovery efforts that's why you have emergency personnel that have come from beyond north carolina including the national guard to help out with transportation. use some of their heavy duty quipibility equipment to assist efforts. >> seema mody, thank you very much. a big selling point behind the tax reform plan is that the companies would flood the u.s. with repatriated cash that they were hoarding overseas last month the president talked up the prospects talking to business leaders >> the number started out at 2.5 trillion, we think it will be over $5 trillion will be brough back >> joining us is tao francis

from "wall street journal" who finds in his latest articles that companies are taking their time bringing the money back to the u.s. i thought that's weird, because it is something that is a big selling point for tax reform you bring up a lot of good points like it's not all cash. half of the profits over there you couldn't bring back if you wanted to. is that the main reason? it's early still, too. >> that's a big reason the estimates are 2.7 to $3 trilli trillion, half of that was reinvested into equipment, vehicles, stuff that won't come back to the u.s. any time soon >> there are securities that are easier to bring back is it long-term liquid securities

>> cash, stuff companies could sell and maybe turn into cash or reinvest elsewhere >> so like i said, it is still somewhat early is there uncertainty in ceo's minds about either how to do it or whether it's going to be -- it's not going to be grandfathered? what's in their thinking that is causing them to hesitate >> one thing is that the regulations are not done yet so companies know what they'll have to pay on this one-time transition tax that's a tax on all their profits, whether or not they're repatriated. they don't know what ins and outs of those rules will be. so depending on what those rules are, they may not want to move money out of one country to another. >> that's a huge issue if they have not written the rules on it yet -- >> there are some rules. they're getting some guidance, but the gist of it is for the most part companies won't move money until they need it unite the technologies, they are, in

fact, moving some billions of dollars back because it's cheaper than borrowing even at today's low rates. >> it's hard to -- even if it's a dollar, it's hard to look at it and say -- we want it to be more, but anything is better than previous. >>repatriations are up >> was it a record or just above 2017 >> it's certainly -- the amount repatriated in the first quarter, it was more than -- the first quarter was more than what you saw in 2016 and 2017 combined >> oh, combined. >> combined. there's a lot of money coming back about 300 billion according to commerce department estimates. some of that came back before the tax law change some of that is new profits. new profits are not being taxed by the u.s those can be repatriated freely. so we were looking at what happened to the old profits, the

2.73 trillion. >> who knows we'll see what happens with the house. who knows whether this outlasts four years you have comments? >> how much do you think ceos are holding back because of trade uncertainty? either in the eu or china? >> the real issue is that companies move money when they need it. if they don't move the money now, or if they need it overseas because they will need some money to reinvest in operations in fast-growing markets. the real fundamental issue is business, not taxes. >> thanks. you dodged a bullet. we do not have daylight comes and i want to go home to play for you. next time. >> my theme song >> that was going to be. we tried do that not in the system. >> thank you when we come back, the

"squawk" ceo call. we'll talk to the chief executive of hair cut chain great clips. and then the ceo of autonation, michael jackson. and later kevin brady will join us on the "squawk" set to talk about the prospects for another round of tax reform, trying to make the tax cuts permanent. stay tuned, you're watching "squawk box" on cnbc

autonation's ceo mike jackson is stepping down from the ceo role in 2019 he will become executive chairman of the company. we have mike joining us at 7:00 a.m. he's our guest host this morning. we'll talk to him about this and more again, mike jackson stepping down at the end of 2019 from autonation as executive chairman time for the executive edge. united airlines is overhauling its boarding process customers complained that areas around the gate is congested the area is reducing boarding lines from five until two. it will send passengers

notifications on mobile devices when the boarding process is starting the airline has been testing different boarding methods over the last year, but still i go back to the whole idea charge people to bring stuff on the plane instead of -- instead of checking it. so many more people are dragging bags trying to avoid that fee. but then they get the gate check, it slows everything down. if you want to improve that line, find some way where it's not an economic incentive to bring more stuff on board with you. >> because it is amazing what i see people bringing on >> dragging four things. >> not me, but andrew has complained since he's in the front of the plane, every single piece of luggage has to go by him. they hit him in the head boom boom boom so it's -- he should get a window seat. >> protection. >> that's what i suggested coming up, great clips is an

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♪ okay warning. dad joke coming up some businesses only manage to make the tough transition to a digital world by a hair. that's true for our next guest but not in the way you may think. joining us to talk about technology in the salon is steve hockett. he is the ceo of great clips great to have you here >> great to be here. >> how many franchisees are there with great clips >> roughly 1,200 in the u.s. and canada >> as a result you are doing about 110 million hair cuts a year >> yes >> what do you know about what's happening with the american consumer we'll talk technology in a moment how much is the average cut, first of all >> the average great clips -- depends on the market you're in.

the franchisees set the price. but probably $14 is the average invoice around the system in the past year. >> what have you seen with your customers over the past -- >> our customers continue to get their hair cuts, a good cycle of how they come in we do 60/40 men to women we've got a good balance in our business they continue to come back you know, everybody wants to look good, be presentable. the economy's booming. there's opportunities for jobs and so we are in a great space >> so if your numbers are good, is that a sign the economies are booming or does it also pick up when the economy is down when people are looking for -- >> when the economy was in recession and it was up and down, now that it's back again, we're doing well so our space where we are, how our focus on hair cuts, regardless of where the economy

is >> i was not thinking this would be a great place for technology to take over what are you using technology for? >> our business is delivering hair cuts to customers around. what we want to do is innovate in that orbit around the hair cut. and we do that with a great clips app, online check in where customers can check in, get on the wait list outside of the slan then when they gom come to the salon, they're at the top of the list because we don't take appointments they do that through the technology. >> how many of your customers actually use that app? >> right now about 40% of the customers this year. it goes up four to six points a year we're thrilled with it it's changed our business on that part of the technology. >> it's not just that though you're also using it in terms of tracking customers in the notes

s section. >> we do it's called clip notes the hair cut will put into the system how the customer had their hair cut, what they wanted then if they go to another salon in the u.s. or north america twhab data is transferred out of the cloud. that new stylist will know how they wanted their hair cut it's a huge benefit for the customer and helps build our brand in their eyes. >> what do you think is realistic is how many salons you can open up? >> we've got 4,300 i don't know, double we'll continue to grow and expand >> what's your largest challenge in managing franchisees? >> franchisees are managing. they want to build a business. they want to use the brand but yet they're independent business owners. so we need that franchisees that will follow the brand, embrace

that, use every bit of the brand to grow. and we're down well so franchisees like that. but they're independent. sometimes they want to think independently but that's not a franchise system >> we want to thank you for your time today appreciate you coming in >> thank you >> steve hockett and charles campbell for being here for the hour. >> thank you company announcing he's going to step back from his role mike will be our guest top of the hour and later, we'll talk with kevin brady. "squawk box" coming back so, the whole world is talking about ai. big, bold promises like... it'll transform the human race! it's gonna solv unsolvab! it'll find life on mars! but here's the thing. you don't live on mars. you build wind turbines. supply car parts to thousands of cities. answer millions of customer calls a year. like this one:

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china promising to outlast the u.s. as a trade war heats

up markets shrugging it off wall street pointing to another higher open as investors brush off trade tensions the latest on what to expect from today's session straight ahead. hitting the brakes tesla shares tumbling after the justice department launches a criminal probe into the company. autonation ceo mike jackson is here to react and talk about his changing role at the company his comments are straight ahead. it's september 19th, 2018. international talk like a pirate day again. and the seconds hour of "squawk box" begins right now. live from the beating heart of business, new york, this is "squawk box. good morning, everybody. we are live from the nasdaq market site in times square.

i'm becky quick along with joe kern andrew is off today. the dow has been higher this morning once again after closing up by over 180 points yesterday. dow futures right now indicated up about 35 points yesterday the dow closed at its highest level. this morning the s&p is up just -- actually, it's relatively flat. nasdaq is too. in our headlines at this hour, the justice department has launched a criminal probe into tesla. investigators want more on musk's tweets about taking the company private. goldman sachs silver lake has been subpoenaed about this investigation. we have not yet heard back we will ask our guest host autonation ceo mike jackson about this and much more bank of japan holding steady overnight. and it stuck with its july pledge to keep rates extremely

low for an extended period china's tencent music cutting in half the hamt of money it's looking to raise if the united states the company is now seeking to raise $2 billion that'd be down from $4 billion tencent music is china's biggest music streaming company. its ipo is expected to be one of the biggest listings by a chinese company this year. a big breakthrough, hopefully, maybe on the korean peninsula. the north korea promising to permanently dismantle its key missile facilities it will also allow outside inspectors to monitor and visit the missile testing site this news comes as the leaders are holding talks in pyongyang kim jong-un says he plans to visit south korea in the future. it would be the first time a north korean leader has visited the south since -- >> since they were split, ever

>> president trump applauding the news in a late night tweet ending in part with, very exciting >> i've been watching what's happening in the two koreas. i don't know if you saw a month ago there was a meeting they would allow some family members from the south to come meet with the north. it's something they do every once in awhile i got to read some stories on it there was a mother who was in her 90s who was able to visit with her son for the first time since '45. the real human reality of families being separated, thinking they'd be able to see each other again soon and then going that long. you have to win a lottery to be able to get the visit. >> if you recall, the all the angst of the olympics evapora evaporated that was one of the first signs of the thaw when north korea sent a contingent to the olympics now they're working on 2032 which is interesting

we have -- what was -- how did the president end that tweet? >> very exciting >> we have mike jackson from autonation very exciting. i was going to use the same -- i'm going to tweet out the same thing. autonation out with big news this morning joining us now is our guest host for the next hour and a half, mike jackson ceo of autonation soon to be executive chairman of the company. what's the date? >> well, when the new ceo is selected by the board some time in 2019. he'll be the new ceo and i started thinking about this a few years ago and looking ahead said in 2019, i'm going to be 70 years old and have been ceo 20 years that's sort of like a rule of 90 i'm breaking through that would be a good time to hand the baton to a new ceo. company's in great shape we've built a brand that's trusted and admired by customers. our consumer satisfaction is through the roof we set 20 straight years as

number one automotive retailer in america brand extension is coming to life so rule of 90, next year is a good time. now, the board i'm very happy to say has extended my contract through 2021 i'll become executive chairman some time next year. handle the transition. >> so this is really looking forward thinking about how you want to do this. taking your time to find the right succession >> have you groomed anyone inside the company >> this discussion with the board has been going on with more intensity since 2016. we all agreed on an approximate timeline now we're making it official of course there will be internal and external candidates that will be candidate. another thing i feel strongly, ceo succession is the number one responsibility of the board.

and our lead director will lead the effort it will be a very intense succession process i would say as far as the qualification, we're looking for an outstanding business leader i'm sure they'll have one. whether he'll have my charm, i can't say that for sure. >> looks >> it'll be an -- >> golf skills >> golf skills that, i can't predict. but i am sure it'll be an outstanding business executive that i will hand the baton to. >> has anyone done a look back at the metrics of where the stock was, what return we're talking about. be the -- i would think in 2008 anyone thought it would be doing

pretty well by now >> i remember $3 to $4 a share twice in my career shortly after i joined >> as auto sales collapsed in 2008 >> the great auto depression, not recession. >> and no one had ever done this a roll up with auto dealerships. wayne had done it with other -- >> our founder who you and i both loved >> and we didn't know that it really was going to be -- he thought it would but there was some question at times about whether this model was applicable to car dealerships. >> i like a challenge. and what we've done, we've built a brand from coast to coast. >> you know mike was a mechanic. >> i didn't realize that. >> i started as an apprentice mechanic >> with the big fancy german cars >> i like german cars.

so do you. >> that's true >> so building a brand from coast to coast and taking over $20 billion of revenue and combining them to create new profit opportunities and new business fields for the company is one of the most exciting things we've done over the last years. and what i'm also very proud of is the company has a purpose that drives it every day looking for a cure for cancer particularly a focus on breast cancer and how this has been embraced by all the associates across the company. and with our flag drive pink and putting a pink plate on 2 million vehicles out there and having people come in and say i didn't buy the car from you, but i can a have a pink plate.

gives a singular purpose to the company. started something that was by acquisition and building a culture that's not opposed that drives everybody every day is special. it's quite something and the numbers are good too >> for me you have always been a straight shooter and talked to us honestlyabout what you've seen in the pipeline, your concerns along the way, when you think things are strong. it's given a great economic indicator to hear what's happening in your business especially when you see sales of trucks going up. that's because of the contractor business i just remember how clearly you've kept us on track k with that what do you see happening right now? >> well, it's nice of you to say that, becky. if i look at our time together, you've got a point of view i feel good about next year, 201 twooi 2019 i think it will back off a

percentage point or two. because of substitution into nearly new for the industry, the shift to trucks approaching 70% in august actually broke through 70% really underpins the profitability. and for ourselves. so the outlook is pretty good for the industry through 2019. >> pretty good sounds like you have a few concerns. we heard people talk about peak auto for years at this point >> i declared peak auto on i think january 2016 i said, okay, we're at the peak but it's a nice enjoyable peak i think it will continue to run until inflation rears its ugly head and the federal reserve raises rates significantly above neutral. >> because of what it would mean for auto loans >> yes once inflation braex out, the

federal reserve will raise rates to tamp down inflation. but there's no sign of inflation at the moment. and joe, to your point -- >> what is neutral now >> neutral is much lower than it was. >> 3.5%? >> yeah. >> if gdp goes up more than it was for that period more than people said it can't go above 2% anymore because of, i don't know, product pivot and population, whatever reasons they use what if it goes back to a consistent 3%. then the new normal wouldn't be as low as we are right now, would it >> no. i think inflation has really been stabilized. we have a goldilocks situation where you have people who left the ray d-- labor force

there are more people coming back into the labor force every month. >> but you think -- >> so that could run for a few years. >> if people in the past were willing with a lease or a purchase to be up in the high single digits, you think that if it went -- if it doubled where it went, they won't like it there. >> the difference is that auto loans -- cars cost a lot more than they used to. if you're talking about a six-year $70,000 loan -- >> let me be clear once inflation rears its ugly head and the federal reserve decides to raise rates above neutral, and we're not there yet. >> what happened to the ten-year age of the average car that hasn't been replaced that's all been taken care of? >> all i'm saying is the day will come -- we're not there yet. it's still over the horizon. but i think the idea that the consumer is willing to pay any rate that has no impact on

consumer -- >> i'm just asking whether it's from a low level, if it doubles but it's still at a historically low level, is that what we're talking about? or is there an actual number where people feel the pinch? another thing i'm asking is whether you're willing the tradeoff of having a strong economy is higher inflation and higher rates when do you decide, wow, i'd rather not have as strong of an economy because the head winds are self-fulfilling. you would normally like a really strong consumer. but if it causes inflation and higher rates, you wish you didn't have it is there a perfect sweet spot? >> we're in that perfect sweet spot and we may be in that sweet spot for a few more years in that you have very low unemployment but with workers returning to the workforce. so the wage inflation is very much balanced and under control. so this could go on for quite some time. >> by the time it's over, will

we be, like, walking around and not hearing any cars because everyone's driving around those electric vehicles? just don't even know you're outside because you don't hear cars anymore you certainly don't hear muscle cars is a transition happening or not yet? >> we're past the inflection point on electrification it's probably 10 to 20 years away 30% of the cars on the road. >> going to be all teslas or are there going to be some audis and bmws >> i think if tesla is still there, that would be impressive. >> that's a statement right there. maybe none of them will be teslas >> we'll have to see. >> because of the hat his brother wears? >> yeah. i almost wore that big cowboy hat today. i was going to bring a joint and the jack daniels and the hat

>> i don't mind the joint. >> and declare i'm running for president. i was going to do that always. anyway >> do we have time for lutz's comments here's what bob lutz said which was -- >> show me >> not very nice i think we're going to show it. >> they will never make money on the model 3 because the cost is way too high he's got 9,000 people in that assembly plant producing less than 150,000 cars a year the whole thing just doesn't compute. it's an automobile company that is headed for the graveyard and i've predicted this for some time i continue to predict it >> so -- >> graveyard that's sort of what i just said, isn't it so i agree with bob. >> you do? >> yeah, i do. in other words, to go to electrification, you need a sustainable model. they're taking the profits from trucks and subsidizing electric vehicles to get through the

difficulties the shalds ha-- shareholders ham this far if you're skimming the top like he is now, he's only building above $50,000 you may be okay. build it for you in two months if you want one at the $35,000, he may never build it for you. >> mike, the criticism is going to come from people who say, of course you and bob are going to criticize this because you're the old line industry that's threatened by his new approach >> i am totally excited about selling electric vehicles. we are all in. >> but tesla doesn't use auto dealers. >> that's fine i never faurgt againought againt that's his call. autonation, we're big in california we didn't challenge him in

florida. autonation has never challenged tesla's business model they're free to sell however they want. if you're saying like lutz's point is this a sustainable business model i think when you're skimming the model 3 with a bait and switch strategy, maybe it works but there's going to be a day of reckoning. >> we have much more from mike jackson to come. he's our guest host for the next hour and a half. when we come back, china's second in command says the country is facing what they call greater difficulties because of tariffs. we will talk about the escalating tension between the united states and china and the ongoing trade waafr is brk. ea r teth

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all i need access, tools, connections. high-speed connections. is the world ready for me? through internet essentials, comcast has connected more than six-million low-income people to low-cost, high-speed internet at home. i'm trying to do some homework here. so they're ready for anything. china firing back at the united states this morning saying it will outlast america in a trade war and emerge even stronger speaking at a world economic conference this morning, china's second in command insisted the company is comfortable with its economic situation joining us now to talk about the trade war is former australian prime minister kevin rudd. he is now the president of the asia society policy institute. mr. prime minister, thank you for being here today >> thanks for having me on the program. what happens here? you know china incredibly well

who's got the upper hand >> the chinese aren't hurting domestically >> they are? >> yeah. not just for these reasons the tariffs and the threat of tariffs but a general slowing in the pace of economic reforms so you speak to the chinese private sector, they are concerned about how this will effect business confidence, investment decisions, and growth by year's end. having said that, i don't see any real chance of a breakthrough this side of the midterms because the chinese judgment is they want to know what sort of president they're dealing with the stronger one, a weaker one, or just the same whap congress will be like and will there be new mrss my judgment bottom line is if there's any breakthrough on this, i don't think we're likely to see it until quite towards the end of the year. >> would the g20 meeting that's coming up be a potential time for that >> yeah. i think in the margins of the

g20 is face safing mechanisms. you have a regular meeting where people were having a spat can actually sit down on the sides and have a chat. soic that ii iic -- i think tha. that's coming up in november so that provides a way through keep in the back of your mind, as i've said on this program once or twice before, the chinese have politics too. face matters, backing down matters. and the diplomatic craft is how do you work on the trade deficit to fix market access questions for investment and intellectual property without the chinese having a face problem domestically >> do you have a solution for that >> well, i think if the united states tries to roll everything into one which is we're going to fix the trade deficit and we're going to fix the regime in china, all in one neatly tied up deal, it ain't going to fly. i think you can come up with a

deal my judgment could be proven wrong which actually reduces the deficit over a series of time on the part of the chinese vis-a-vis american access. on the -- let's call it the investment environment questions, intellectual property as well as the chinese industry polls he's supporting what they call china manufacturing 2025, state subsidized rapid development of high-technology that's going to take a process with fixed timelines to resolve. >> that come after 2025? >> i think that will come, that should be a process which comes at the conclusion of the trade deal let's call it the tariff war but if the u.s. side -- this is partly the divisions at the moment between those who want everything wrapped together. who actually want to see this

thing handled in stages. >> chinese also have this ambitious belt in the road economic initiatives throughout asia and into europe how is that -- how are countries reacting to that how is it going? it's unprecedented in economic history. >> if you do the metrics on it which is we talk about in the united states about the marshall plan straight after the war it was a terrific plan by the united states. it boosted confidence in europe and had significant dollars attached one of the calculations i've seen, the financial numbers around the initiative. in current dollar terms, it's ten times the size of the marshall plan. here is one trick though the chinese still have to provide the finance for it and chinese banks can't just print money on a continuing basis. therefore, some of the constraints within the chinese system is how do we actually

continue to afford this given the projects will not generate a rate of return there are constraints in the system internationally what's the reaction it's mixed in sri lanka if you look at the port developments there. there's been a huge debate about the level of indebtedness which has been incurred by the sri lankan government. other countries are welcoming it there are mixed factors at play. >> you said the chinese are worried about saving face politically. but they must be worried about the economy politically. >> the eternal dilemma of chinese politics or politics generally. i think the bottom line is china has a deep pragmatism about how to handle what it sees to be the driver of its learn power. that's the strength of its economy. they would like a deal they'd like to bed this thing

down they'd like to get through it. so therefore, wisdom in the white house i think lies in knowing when to cut this deal. i'd like to know -- i think what the chinese would appreciate and the rest of the international economy would like to appreciate is when consensus is reached within the various contending parties in the white house as to what the final deal should be. >> that's the president's decision alone, i think. >> that's true but up until now, we've had two or three false starts. which have fallen foul of a final agreement in the white house as to what the ultimate acceptable outcome would be. so my urge of those in d.c. handling what is a megarelationship for the u.s. but also for the world is work out what you want. convey the message and let's get this thing done. >> kevin, thank you very jomuch for joining us

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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 front and center this morning, mortgage applications rising by 1.6%. the average rate hit a

seven-year high. the ceo of danske bank stepping down over a money laundering scandal the euros flowed through its estonia branch between 2007 and 2015 and most of that was suspicious sony is betting on a blast from the past. the company announcing a retro style gaming console called playstation classic. it's modeled after the original playstation and will be debuting in december at a hundred dollars. it will also come loaded with 20 games. with record unemployment and building sale momentum, there could be a record holiday shopping season. retail sales are expected to grow between 5% and 5.6% from a year ago topping $1.1 trillion. e-commerce sales expected to rise as much as 22% through the

holidays that would be slightly higher than the 16.9% growth last year. deloitte predicting e-commerce sales themselves could reach $134 billion this holiday season compared to about 110 which was a year ago when we return, we're going to talk markets, trade, and your money. as we head to break, take a look at the u.s. equity futures futures have been higher once again after closing at their highest levels since late january. dow right now up 15 points but the s&p and nasdaq slightly negativ gave

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let's talk markets now joining us for that is victoria fernandez from crossmark global investments. here on set is gabriela santos have either of you ladies been able to figure out whether the market will key on trade issues eventually or were you confounded by the action yesterday with the announcement of another 200

million? >> we think it's trade action. we've been talking about this for months at this point, right? so there's largely been the baking in of a lot of these expectations for a lot of asset classes. especially when it comes to emerging markets so any sort of incremental positive on the trade front is already enough to cause a little bit of a relief rally. so yesterday specifically i think it was a response to the fact that the actual tariff number wasn't -- the percentage wasn't as large as expected. i also think it was keying off some of the measure that softens the blow to their economy. >> the financial presses, i watch them every day it went from the market sold off based on increasing trade tensions with china and then when there's be an overture from the allegation yesterday it was the markets were looking past trade tensions with china so, you know, they don't know

how to characterize it >> i don't know if it's looking past it. but everyone had expected it expected it. >> you think it was better news it being 10% than 25%? >> correct an incremental positive, correct. >> so it hasn't affected it yet, victoria is this the calm before the storm? if it gets really bad should you be lightening up or does market strength show it's going to continue higher and shrug this off >> for now, the markets did shrug it off yesterday and a bit of a positive surprise with that 10%. but we have to look longer term. right now we're about 0.2% effect on our gdp. if it goes up to 25% the beginning of the year if we don't get a solution from these trade talks possibly coming up, then that goes up to about 3.5% of gdp but if you look at the whole $267 billion that's coming that has the tariffs on it for china, that's about 1.3% of china's

total gdp. they're saying their hit is going to be about 0.7% it's going to be a larger hit to china. so there can be some growing uncertainty as it relates to this however, we have a lot of tail winds in the works we've got low inflation. we've got strong earnings. we're looking at possibly another 20% growth and enings this quarter there's tail winds in this economy that are keeping us fully invested and using, maybe, like, the fixed income allocation to have a bit more of a conservative approach. to buffer any volatility we see coming >> do we need to be an expert in trying to read -- hesitate i can't see the tea leaves but do we need to understand everything to know how potential

sides eventually save face they have an economic model we think is unfair but they probably think -- they're going to be hesitant to abandon that >> business as usual for them. >> as a market strategist, do you have to study up on thousands of things to understand it? >> i think we need to understand where they're coming from. there was a perception this would be an easy negotiation in the sense we have a bit more leverage with them than they have with us we have a team that's based in asia which is very helpful and they tell us -- >> what do we say? how do both sides save face in this >> we say china views this as an existential battle now they see it's their moment in the sun and they're reluctant to abandon their model and place in the global stage. so it is difficult for them to be seen as succumbing to any sort of demands to the u.s that's why i think investors have largely accepted that this is not going to be easily

resolved that this is going to stay with us. >> market keeps going up do you -- you have china experts at your firm now, victoria, to tell you exactly how this would work i guess you got to have a trump expert too >> yeah. you'd have to have experts all the way around, wouldn't you sk but when it relates to china, we have to remember they're having domestic issues as well. a lot of the issues they put in place, some of the programs with trying to get the leverage down, the shadow banking issues, that's really affected some of their private companies. their credit growth is actually slower on the private side and that's causing some concerns for them they're really doing okay on the state supported side but as a whole, china is having some domestic issues so that plays into how much they're willing to give in order to save face and make themselves look as strong as they can because the u.s., the administration really feels like they're coming from a source of

strength with this and they're not going to back down >> that's why it's concerning. >> but also -- i know we're trying to save chinese face here and everything, but the administration when it comes to china on trade does have a point. >> yeah. >> administration after administration has been saving face with the chinese and it's led to this massive trade imbalance and all this intellectual property. but the idea after doing this for decades it can be resolving amicably is naive. >> when kwhyou hear from jack m who is an expert on how the chinese perceive this. when you hear from him it's going to be 5 to 20 years of disruption, you start to think, okay we need to recalibrate >> that's where i think it's important to think about what's actually been priced in which we would say is quite a lot >> mike, how many teslas will we be selling in china in five years? >> he's building a plant there with chinese money >> then maybe a few. >> there might be a few.

>> gabriela, thank you victoria fernandez of crossmark global markets in the great state of texas when we come back, presidential historian doris kearns goode wiwin will join us talk about her new book. it visits four presidents she's profiled in the past find out who they are right after this break

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welcome back, everybody. our next guest takes a page from history for a new book on leadership let's welcome in doris kearns goodwin. she's the author of another new book it's called "leadership in turbulent times. thank you for being here >> i'm glad to be here >> you went back and profiled four presidents you already dug

deeply into. why did you pick them and why the timing on this >> they seemed to be the ones leading in really difficult times when you think about theodo theodore roosevelt and there was a fear of would capitalism survive. lincoln coming in at the civil war where he said he wouldn't have thought he lived through it and a war that would kill 600,000 people about to start. and fdr coming in at the rock bottom of the depression people taking bank deposits out. and lyndon johnson on the assassination of jfk so each one of them, though, proved to be the right leader for the challenge at the time. they worked for who they were. >> that leads you to the question of do you think the times build the leader or the leader is there helping build the times? >> it's one of those great questions when i was in college -- believe it or not, we must have been pretty nerdy.

but that's what we were excited about. i think clearly what the times does is offers up an opportunity for greater leadership because in a crisis situation, you mold together somehow you can bring people from different groups together. but you may not be ready for that hoover was in the same depression situation as fdr. but he didn't have the temperament to deal with it. >> it's a combination. >> the republic will survive anything, i think. which harkens me back to the greatest document ever written 1787 it almost to me seems like there was some kind of divine intervention >> i think what happened -- and i read recently called "the fame and the founding fathers." it said each started out as a

selfish reason they wanted to be successful at a certain point they become interested in the collective identity and fame is much bigger than scelebrity. it's to be remembered over time for something great. when that transference takes place, that's when you get the mark of a real leader and those founding fathers had it in spades >> so would you say we're in turbulent times today compared to these turbulent times >> people always ask me, they come to me because i'm a historian. tell me, is this the worst of times? i don't think it's the worst of times, but it is turbulent there's peace in the world and streets. but people feel i think an anxiety. they feel a lack of -- and the way our political dialogue goes and anger on both sides of the parties. fury and people feel a sense that something's going on that's not normal >> i think it was probably

easier to control some of that in the days before twitter but you bring up an interesting point from president lincoln he used to write hot letters when he was mad? tell us about that >> lincoln when he would get angry with someone, he would write a letter to them then he would set it aside hoping he would cool down. finally looking at his papers, you see hundreds of these letters never signed or sent but he got them outof his system fdr would write speeches for fireside chats he would say some horrible things about congressmen he's a traitor, a bad man. by the time the speech came along, wait until the third, it's all gone. but by reading allowed these horrible things, he got it out of his system. >> the de facto turbulence, it's -- even with north korea it

seems like tensions are even easing there i mean, there are trade tensions, but a lot of the turbulence appears to be generated on social media and the triablism. and i'm not sure it compares to real actual turbulence like the cuban missile crisis or the civil war. it doesn't seem to rise to that level. >> it's in our heads >> i think so too. >> there's a sense of anxiety. there's a sense of feeling like the country doesn't have a common cause, a common mission that people -- in fact, teddy roosevelt felt it would fwlounder if people in one section or religion felt the people were the other. didn't have common lines >> some people have a common zboel. it's just there's 35% have one

common goal 50% have another >> it was terrible in the 18 501850s. it was much worse. one could say he was so incredibly brilliant, that he was carried out on the shoulers of his supports. in the democratic paper that would say he was so embarrassed. he fell on the floor and fainted and they had to carry him out that way sound familiar >> going back to washington after he was elected from illinois, he had to sneak into washington and came in at night in a disguise. although maybe it's not that different. >> what they all exhibited is there's no single pattern to leadership the trajectory is different for each one of them they had different skills. but there's a certain family resemblance. they all learned humility at some point or another. fdr learned it through his polio. if he could move his toe after

two years, he learned humility he had to work so hard just to get to walk a little bit teddy roosevelt learned it because he got a swelled head and everybody knew it. he took himself too seriously in the legislature. >> this might be a problem that might be a problem then >> so are you excited to do a book on trump? is that turning? the wheels are turning in their head >> haven't been turni ining yet. i like my guys to write letters and diaries. that's the treasure for me >> you got tweets. >> yeah, but these are little things u like long letters where you're telling your romance at the same time you're telling what's going on >> that's your secret. >> i think it is people years from now have so much stuff about us. they'll know how he walked and talked but they won't have that intimacy that comes at the end of every day, the only way to communicate with your family

and they really spent time on letters. >> that's interesting to think we lost that part of our history. nobody does that anymore >> nobody keeps diaries in the same way they used to either every night, all of lincoln's cabinet would keep a diary about all the things lincoln made them mad. now there's a leak i hope they set a standard for leadership because they are among our great presidents building a strong team of people who could argue with each other but would come together in the end and having the capacity to control their emotions, learning how to communicate with the technology of their time whether it was the newspaper or the radio. >> lbj is one of your guys >> i'll tell you why one is domestically. vietnam. and i got to know him.

i worked for him when i was 24 >> if you worry about being mean and foul mouthed and everything else, he -- he was -- >> he's not your typical good boss, right? we'll say that there's a moment he looks at somebody who says, can't you write a letter to your mom and take a crap on your own time >> exactly and you go back to all of them, you got ulysses s. grant who knows what was going on with him. >> i know. we've had tough times before no question. it's not like we're all of a sudden going over a cliff which we haven't gone over before. >> i don't know. the tough times are represented in mean tweets they're not represented in unemployment and wages not going up >> but people care about the company. i think that's it. >> you don't know whether that resulted in trump's election or from trump's election? >>ot bh. i think it's both. >> thank you so much doris kearns goodwin the book is "leadership" check it out cal: we saved our money and now, we get to spend it - our way.

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"squawk box" is in session our special guest, house ways and means chairman kevin brady behind the wheel autonation ceo mike jackson announcing he is stepping aside after nearly two decades he is here as our guest host today. plus, breaking economic news housing starts and building permits just 30 minutes away as the final hour of "squawk box" begin right now. ♪ live from the most powerful city in the world, new york, this is "squawk box.

>> morning is it really snas national talk like a pirate day again. live from the nasdaq -- boy -- i didn't know -- live from the market site in times square. you know what this show is rated, right rrrr i'm joe kernen along with becky quick. andrew ross sorkin is off this morning. and our guest this morning is chairman and ceo df actually, brady could use a little -- no >> don't do it >> don't even go there >> that'll end up in enemy hands, won't it? ceo mike jackson is here we'll talk to chairman in a minute the futures right now are up 16. they're actually red on the s&p and the nasdaq a although it was a solid session

yesterday in the midst of new tariffs against china. treasury yields were up above 3% not solidly, but they're no longer looking like they're going to break under 3% at least in this session. and our headlines this morning. north korea says that it will permanently abolish its key missile facilities in the presence of foreign experts. that's a gesture aimed at reviving the faltering talks with washington. the leaders from north and south korea have been holding in pyongyang. kim jong-un is promising to visit seoul. that would be the furst time that's happened since the two koreas were split. china saying it will outlast america and emerge stronger. those statements come after the announcement of more tariffs on chinese goods. and mortgage applications rising by 1.6% the fixed rate hit a seven-year

high all right. now to our news maker of the hour after passing the house ways and means committee, several republican bills known as tax reform 2.0 are set to hit the floor for a vote some time before the end of the month. joining us now on set, ways and means chairman kevin brady we've talked a little bit about the structure and the content of these two so-called 2.0 bills. basically what you've already told us about on the show. with some modification >> yeah. it's really three bills. permanen permanency and to pro growth. and 2% growth on top of what we're seeing important there. we also go farther look, we didn't do enough, i think, to help businesses offer savings plans and workers to take them up a lot of our medium and small size businesses don't have those

types -- >> you mean 401(k) >> yeah. exactly. plus we think workers ought to continue to save past 70 1/2 we're starting a small change so that if you have a savings plan, you don't have to take it out at 70 1/2 you can save throughout your lifetime and then there's great changes for education savings. whether it is to be able to use your savings for apprenticeships. mike, you start out as a technician. >> that's correct. >> and as well as paying off student debt and the innovation side of it i think is a really smart targeted means to encourage more entrepreneurship here. >> we had the general reporter, the sluggishness of the repatriation is it a surprise to you it hasn't come back more quickly? >> i think it's more of a timing issue. i think there's much more of those dollars to be repatriated.

my discussion around the country are the businesses are already planning to bring those dollars. and i think the advantage here, you know, we use tod to have tht one-year holiday no real game plan for how you use it businesses are doing this differently because it's permanent. now they're thinking through when do we bring it back, the maximum economic growth for us so yeah, i think it's good they're being deliberate about it >> is there anything you can do in 2.0 that would give them more confidence i don't know the journal reporter says there's still problems >> so i think it's more a kcase of where best we employ it i think these early indicators are just so positive but i think the best is yet to come. because a lot of what we did was designed to influence where they locate facilities, research

patents, headquarters. those decisions are being made to move these things back. i think it'll take awhile. but i think that's why what we're doing actually will prolong the economic growth for the u.s. >> well, you keep your head down westbound i know always try to get you fato talk about the water cooler issues. but i've heard maybe we're doing okay now, but it's front end loaded what do you expect when you blow out the deficit with a big -- you got a mature economic cycle and then you throw gasoline on the fire of course you're going to get 3% for awhile, but it's not going to last long and you're going toend up paying for it with higher deficits and higher interest rates >> i disagree on almost all of that this wasn't really designed to be a jump -- a huge jump start at the beginning this is -- this has been really encouraging to the see impact right off the bat. it's really designed to leapfrog

america back to the lead pack as the best place on the planet for these new investments and jobs so you got investor confidence up, manufacturing confidence which is usually the most pessimistic. the most skeptical of the future there at a 20-year high. and i see the revenues coming from the federal government. higher this year than last >> up 1% for the first 11 months >> individual revenue is up. payroll tax revenue is up. and the corporate to revenues while they're down are better than expected. because we're seeing this growth >> you thought it would be down more than 30% for corporate? >> yeah, i did corporate is such a small part of our entire -- yeah. so i think, look we won't know if this pays for itself for a number of years but early on it's really encouraging. >> can i just ask what happens to tax cut 2.0 what are the odds of it getting done before the election and what are the odds after?

>> so the time is short before the election i think the kavanaugh nomination confirmation and we've got about a week or so -- >> you brought that up i wasn't going to bring that up. >> from a timing standpoint, we're going to put the ball on the field and move it stwlu through the house to the senate. it's in three bills. so leader mcconnell has been clear. when i see support 60 votes, we'll move those three bills as we see it. >> do you see that support right now? >> i think after the the election and look we're going fight to hold this house and senate so we have a chance to move it >> you know in a trial, if the defense opens up a -- >> are you really -- >> if the defense opens a door you weren't able to open beforehand let's talk about that. do you have any insight? >> blow up the asteroids at this point? >> hold on, mike please so on monday let's say she doesn't show up on monday.

does it go forward with just kavanaugh? and then do you think that flake and some of the others that were waffling, do you think they go ahead and move it out of committee for the full senate? or will it get bogged down >> i think fairness is the word here so she's asked to be heard i think out of fairness, they should do that >> but she's not going to come now unless there's an fbi -- >> flake tweeted last night. >> but what would democrats do that are now giving cover like manchin and others this is not in the fbi's purview. it's in the state -- >> zbagain, this should be hear. >> if she's not coming do you just havekavanaugh sit there again. >> i think so. i think this is just a hail mary

pass to delay it but treat her and the physician -- >> if wekds talk about something inspiring, a year ago i was walking the streets of houston and i was struck at how determined they were to help each other recover after this devastating, devastating flooding of this hurricane and you must be very proud of the city, what it is today it is a remarkable story >> we really are everybody came together in the toughest natural disaster. my then-18-year-old son, he and their buddies grabbed their boats and went to help our responsibility now is to help those in florence it's the personal impact for that home, that business you lose a lot of small

businesses as well as people we still have a lot of folks living on the second floor of their home they haven't gotten repaired yet. we've got a lot of folks not back in it we know just like with harvey, florence, maria, irma, they all have long-term impacts >> chairman, can i ask you about trade too. it's a topic we spent a lot of time on this morning kevin hassett said today the administration is ready to move forward with the bilateral agreement just with mexico and the united states. we can't get canada on board, larry kudlow said the same thing to me earlier this week. would congress give approval, is it legal from your perspective to do a bilateral agreement instead of the three parties with nafta everyone here wants canada to be part of this three-country agreement. no doubt about it. they're an important trading partner. but they're not an easy trading partner. some of our long standing and most serious trade disputes we have with our neighbors to the north -- >> that sounds the hard to

imagine when we're talking about intellectual property theft from china. >> well, canada has its moments swem what a perfect time to resolve those. i'm pretty optimistic that they can reach an agreement soon on this they're in the end zone. >> i really hope so. because i fully understand china. i get that trade war with china. got to do it canada is our biggest export market, we sell more stuff to canada than any other country in the world. we have a peaceful border. it's just hard to get your head around that there's some dispute here with canada that can't -- >> they think of them as a new sort of enemy. >> it's hard to get your head around of all the fights you can pick in the world, why the canadians? >> it's not unusual. canada pulled back at that point. look mexico's come to the table and an agreement's been reached.

i really think it's important for them to come to the table. >> who would have thought that mexico got to the finish line before them. >> the timing is difficult from them too i believe an election in montreal or the day after the deadline for these talks being reached. >> look, canada needs to step up here this week we're not going to change the deadlines in the new trade rules. we opened up the process to the public we made it more deliberate we're going to stay with that timetable. so i really think will there be discussions of canada into the next year? will it be conversations about how we move forward with mexico, yes. we're not going to leave them hanging in this process. you don't want to miss what happened with this guy >> joe, let's go -- >> now that you got that, can

you reduce my new jersey state income -- the reason queuetook any state income tax away is because you couldn't get your borders. now you've gotten that can you reverse my -- >> i don't know how to do all that except say your governor holds a key. >> so actually someone was tweeting that -- someone was tweeting that brady finally got his border adjustment tax. >> it was so much different than this with frankly. >> but are you -- would you have ever -- a year ago, would you think we've been talking about $500 billion with china. >> not necessarily one of our arguments for considering the border adjustments, in the end became too divisive but we could live in that type of environment with the rest of our competitors or liver in more of a tariff world. we're in that right now.

i think now how we help guide the president toward targeting the practices of china and bifting off the traded gots -- except canada. >> yeah. so, look i think canada will be there i think it's in their interests. it's in our interest so don't delay would be my message. >> so would you give me two different answers if you had to bet on what happens in the house? if rp actually putting your money down, what would the outcome be and what would you say as kevin brady, republican from texas what would the end result be from the house >> we lose some seats and maintain majority. >> really? >> yeah. it's going to be a tough fight when you look at the individual races rather than just generic polls, our candidates reflect their districts as soon as they

debt republicans can show up to vote and our strengths prevail. >> thank you very coming in. you okay >> you just giving me grief today. >> you liked the border adjustment thing >> don't ask mike about that >> i saw your makeup, but i didn't bring that up >> no one does anymore but you, joe. >> i'm still living with stuff from 20 years ago. >> welcome to the crowd. thank you, mr. chairman. when we come back, we have more stocks to watch first, here's a quick check on what's been happening with the biggest premarket winners and losers in the dow. stick around, everybody. you are watching "squawk box" right here on cnbc your muscles look good, but we should be seeing

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welcome back to "squawk box," everyone we've been watching the futures this morning yesterday was a big day for the markets. the dow closing at its highest levels since the end of january. you see right now dow is down by about three points s&p is down by just over three points the nasdaq is indicated to open

down about 13 points jd power out with its overall satisfaction study satisfaction with north america's airports climbed to an all-time high driven with better marks in the security check and food/beverage/retail categories. the best overall rating went to california's john wayne airport. it serves orange county. it edged out the buffalo niagara international airport. if anyone ever actually goes there to see how they do i guess people still fly to buffalo. >> of course in fact, we just mentioned it as one of the top travel locations when -- who did we have on >> i saw that. i love buffalo but it's cold and get a lot of snow off the lake. >> not in the summer >> niagara falls. >> plus you have buffalo wings >> buffalo wings is that really from buffalo? >> yeah. >> they're not made out of -- >> buffalo legs? no among the biggest airports, las vegas and orlando tied for

the top spot the worst airport in north america, need i say, even mention it, la guardia new york's and then the second lowest -- >> our home. >> this is redundant newark liberty in new jersey >> yeah. those who fly it know it >> land of the frozen escalators know what i mean >> yeah. >> what? >> i could think so of somethings i love about the airport. >> always great to -- i like when they match up the length of the flight with the length of how long it takes to get your baggage. because after a long flight, you're always ready to wait another two and a half hours or so if it comes at all. >> but we digress. big news from autonation this morning joining us right now with more on the leadership announcement is mike jackson. he is the outgoing autonation ceo and guest host this morning. also paul engrassia.

paul, great to see you this morning. thanks for being here. >> hi, becky >> we've been speaking with mike jackson who's going to be stepping aside as ceo, staying on as executive chairman through 2021 but big change at is a company he has personified so foy eied . what do you think? >> you can till skill from luck by its duration. >> i like that i'm going to write that down >> it's true and look, mike has had a long, successful run at autonation incredibly successful. which begs a couple questions. mike, what do you say to investors this morning and shareholders to reassure them about the future now that you're moving on? >> one of the reasons i feel confident to take this step is the company's in such a great position and has such an exciting future.

we've built an incredible brand combined it with our scale to create new opportunities for autonation that no one else in the industry seven thinking about. so it's a -- it's a good moment to hand the baton to an exciting new ceo. i have every confidence in the world that there'll be tremendous interest in the position the board will have no lack of people who said they will be thrilled to be the ceo of autonation i'm sure they'll pick an exceptional leader no company is ever about -- should ever be about one person completely so, you know, i'm proud of what's been accomplished in my two decades there. and i'm looking forward to a new chapter as executive chairman. as our founder taught me, wayne, life is a series of chapters and i feel it's a good time to take the next step forward

>> is there any change of direction on the company that you foresee? you know, under the new leadership which will perhaps be an outsider? >> so i would say clearly we have a tremendous opportunity in brand extension. that anyone would pursue certainly have a tremendous opportunity in digital capability that any new ceo would seize. but i'm also completely open if the new ceo has other ideas and initiatives that could be also pursued. i would be completely open to it and the board's completely open to it. >> and tell me about -- when you took over 20 years ago, the conventional wisdom was really the only proper ownership and successful ownership model for auto dealerships was the private ownership, not the public capital markets and really a

small number of stores under a single owner or family and you sort of burst that myth. what was the biggest challenge, you know, in doing that? >> i like a challenge. when everybody says it can't be done, mikey says let's see i certainly had the support of our founder and our board and long-term investors like eddie lampert and michael larson through bill gates but the journey was first let's diversify the business that's a statement of humility i'm not picking which one is winning. i'm going to be into all and then we diversify geographically from california, central texas, into florida but then we had a very strong operating model and did something nobody else in the industry has ever did. we centralized everything for control and finance out of

texas. that everybody's on the same accounts combine that with a investment grade balance sheet. it put us in a position that we're in a cyclical business where there's volatility around the stock and you're out of favor, we can buy it aggressively so joe, we've repurchased 85% of the outstanding shares of autonation in my time here for less than 20% a share for something like $9 billion. so we took a disadvantage and made it an advantage finally to your point, can you run this as one entity the fact we built a brand from coast to coast that stands for something, our treatment of customers, our value products that we offer to them, and unify 28,000 associates around a purpose greater than selling cars and fixing cars namely finding a cure for cancer that we made meaningful and tangible in their life, that if they have a family member has cancer, we

will make sure they get a second opinion at a major research hospital somewhere and we also -- when they had that family situation, we immediately sent them a check for $5,000 no questions asked so this drive pink has a unifying purpose imagine how far we've come >> thank you so much for joining us and mike, thank you for being with us especially on this morning. we look forward to lots more conversations with you. >> did you wait for your luggage at nartoy?ewk da >> yes, i did. i almost missed the show oh, and there's the closing bell. (sighs) i hate missing out missing out after hours. not anymore, td ameritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim.

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welcome back to "squawk box. rick santelli here yes, we have some breaking news. current account balance, second quarter. expecting a minus $103 billion comes in 101.5 billion that's a nice drop from 121.7 billion which was lowered to 124 -- from 124 billion. now to the meet of the matter. august housing starts up over 9% 1.282 million seasonally adjusted analyzed units. subtle revision last month now, if we look at what's going on with permits, completely the opposite picture down almost 6% at 1.229 million

seasonally adjusted annualized units. we were looking for a number over 1.31 million. so lower sequentially, less than expectations down between 5.5%, 6%. so real split decision what's coming down the road in the form of permits. it would be nice to see that firmer we're still solidly above 3%, joe. dollar index highly unchanged. so much going on back to you. >> yes and we had chairman brady on for awhile rick, i don't know what the prospects are for 2.0 between now and november and then i don't know what the prospects after november are for anything so life is interesting and then we got china and everything else, rick. so, you know, don't take off a week >> but guess what. after november we're still going to have all the same issues. we're just going to have

different people or potentially different people tackling them we'll have to wait and see tackle them in different ways. sometimes tackling them in opposite ways. >> yeah. sometimes flag football. where there's no tackling at all. >> exactly all right. thanks, rick coming up, many farms in the southeast were hit hard by hurricane florence the south carolina agriculture commissioner will join us with a look at the damage stay tuned hopefully you know you're watching "squawk box" on cnbc. ♪

. all right. welcome back, everybody. let's look at some video from high above south carolina following hurricane florence our next guest took to the skies recently to survey damage from that storm and joining us right now is south carolina agriculture commissioner hugh weteathers he has been watching closely to figure out what this meant thank you for your time today. >> thank you, becky. good to be with you. >> what did you find in the flyover? was it worse than anticipated or not quite as bad >> it really was worse than anticipated and when you fly

over, you get to see it a little better than, perhaps, we do on the news so we did that seeing the river flooding but then when we were able to land and engage with farmers at three or four counties, we learned just what we were expecting that some of our crops were severely impacted realizing this is the third year out of four that we've had to make this trip so that weighs on us all but nevertheless, the resiliency of our farmers always comes through. but yesterday was a time to assess how their investments that they've made for the last several months and their crops, how they're going to fair. and depending on the crop, the damage ranges from pretty severe to we have to wait and see >> what are the biggest problem crops? would it be cotton soybeans >> well, with a crop that's ready to be harvested like cotton, as you ride by a cotton field you see that the bowls open up and the white lint of

cotton is exposed. it was, in fact, exposed to sustained winds that literally can blow that cotton from the plant to the ground. so we saw that we then looked at some peanut fields that suffered from the excess rainfall they will not be able to access with the equipment when it's time to harvest. we were shown that the peanut will literally be separated from the vine so while he has a great crop potential, he won't be able to harvest it so again, it depends on that stage of crop. soybeans, a great fall crop. some of our crops from 30 to 40 days from his or her vest, they still have some potential.

>> you mention this is the third out of four years you've had to make this journey and take a look at some of the damaged crops. it's also coming at a time when the trade war with china and tariffs are posing some risk for farmers as well. what do you hear back? what's the situation just in terms of overall health and how long some of these farmers feel like they can hold out. >> well, our farmers understand what is at play. no better example than one farm in marion county there were three generations there. the parents, the two brothers who operate the farm, but also their children so it reminded me we're not just thinking of 2018 and '19, but the american farmer. the trade war has had a temporary impact on our markets. but there are bigger forces that impact agricultural markets.

supply and demand chief among them with a temporary impact of the trade war, i'm pleased that president trump proposed and a executing a temporary program to provide relief for those farmers who already had those investments made in those crops in 2018. so that will be addressed going forward, though, it is marked access that the american farmer needs. so he or she can compete with farmers around the world on a fairer trading scale >> you know, right now is the time when farmers have to be thinking about what to plant for next year. obviously there's a lot of uncertainty. what do you hear back from the farmers about what they're doing as they're making plans? >> well, for the most part right now they are thinking about this year's crop. as i said earlier, what can they salvage from their investments they made over the last?

we vote with our acreage we watch markets for example, this year soybeans had greater ak rajs planted because the markets were more promising in the spring. next year and the markets for the most part will react to what we call carryover projections. it gets around supply and demand as we move forward next -- this winter when the farmers are deciding, they will look at the markets available to them and see where their best opportunities are. and that's the job we have at the department of agriculture, the u.s. department of agriculture is to create opportunities not only for this generation of farmers but for the next one to come >> commissioner weathers, thank you for your time. we wish you the best of luck with what you all are dealing with right now >> thank you, becky, for your concern for south carolina farmers. coming up, the new ceo of

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so earlier s&p futures down by three. nasdaq off by 11 sharines of netflix rising this morning and server colocation company equinix following the resignation of steve smith joining us now for first tv appearance since becoming ceo of the company, charles meyers. president and ceo of equinix mr. meyers, it's good to see you. do you have kids >> i do, indeed, joe >> can you explain the company it's really -- do you have any in high school or they're younger pretend they're in high school >> mine are actually older than that >> that's good then. can you help me out with the company and exactly how it works

and what it does it's actually for our viewers. i understand it. >> absolutely, joe yeah equinix is really a global data center provider. what we'd like to say is equinix powers and connects the companies that connect your world. so while we may not be a brand that sort of rolls off people's tongue in terms of a powerhouse digital brand, you know, we actually -- our data centers around the world play a critical part of enabling the companies you rely on every day. i just heard you guys talking about netflix and the price target raise on netflix. that's, for example, all of the faang companies are targets of ours netflix is a great one around the world to place their structure and enable them to allow them to deliver the high quality experience so folks can binge watch their programs >> so what actually went on? how long have you been -- this is your first interview. what actually went -- were the

ramifications or the circumstances of mr. smith's departure? >> you know, we don't -- the company actually has not provided internally or publicly details on the matter. but what i would say is there's a period of some anxiety there as you might expect with a transition like that but i think we're very fortunate the company was in terms of being able to have peter van camp, our chairman and former ceo step into the role, very stabilizing force. you know, he asked the team to really get focused on the plan that we already had in place and think the business has continued to perform well over that period. and then the board really undertook nine months or so peter was in the chair, a couple of key things really to, you know, one, look at our culture and particularly our leadership culture in terms of, you know, the values and behaviors and operating norms of the leadership and then also undertake a ceo

search to find the right person with the right experience and capabilities and leadership composition to lead the company going forward. i'm delighted to have come out of that process and be leading the company in this next chapter. >> so the -- i mean, obviously he was a charismatic and popular leader you're continuing along the same path, i guess, as mr. smith. but just not in the poor judgment in employee matters or something? have i got that right? >> that was the phrase that was used, indeed i would say that, you know, again, steve led the company through a very successful period of time. highly admired inside and outside of the company in many respects i think in terms of continuing the execution and strategy of the company and moving it forward, absolutely want to build on that success. but we -- you know, i think we're very excited i addressed the team last week

and talked about the alltucultun our commitment to that culture and my commitment to make sure every employee in our company can say i'm safe, i belong, i matter we have an amazing culture that is critical to our success and has been central to our ability to attract and retain talent we're going to continue to focus on that. >> when you're looking for a location for a server, what -- how do you choose? what -- is it as simple as the physical -- like do you think about the weather? do you think about the terrain how does it work >> yeah. i would say the primary factor that drives our site selection in terms of the markets we serve is really requirements for connectivity and where the digital sort of economy connects so we have -- we're in 52 markets around the world the focus for us is being approximate to the fiber routes

and to the network proirviders that are going to allow our customers to deliver what they need in terms of physical site selection, though, there are other factors around weather and seismic activity and various other things that influence how we site a data center. >> i can imagine any of this -- what's happening with the trade dispute, anything with china that is pertinent to talk about with you today? >> well, not so much in terms of, you know, since we're more of a services company, you know, the tariffed items would have relatively limited impact in terms of our cost to goods i think the impact is more around the overall sentiment of customers in terms of how they're thinking about, you know, sort of the overall global economy and their expansion plans and those kinds of things. earthqua equinix tends to be somebody who looks to help them play that

out. if people need to shift their expansion plans based on their assessment of the implications of tariffs or trade tensions, you know, we can help them whether that's into western europe or pan-asian strategy, on strategies or whatever their global expansion may be, we are there to help. >> thank you, with appreciate your time this morning great to be here this morning. >> thanks a lot. >> it is a new term. >> well, i pretended that'll bring everybody in all on the same level. do you believe that? >> no. >> all right when we come back, shares are up another 50%, we'll hear from the

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ahoy matey today is september 19th, it is national pirate day. if you want to take part, head online, there is plenty of pirate names if you live by a participating long john silver and talk like a pirate and you will get a deep fried twinkie and you will get free fish and chips. play with your settings on facebook and change your page to pirate language. i have a good joke i am getting to why don't pirates shower because they know they're going to wash up on shore later. what do you think, matt?

>> have not heard that one there is a reason i have not heard that one have you heard any good pirates joke because neither have aye. >> okay, the most wonderful time of the year for retailers is around the corner. the holiday retail sales are expected to grow from 5% to 6% from a year ago. holiday retail sales could top $1.1 trillion this year. they are planning to hire a lot of people this year. >> yes, they are i saw from fedex of 10% more or something. google launches some new tools to help company track whether or not employees are using its app. how employees are using

productivity app the product is currently in the testing phase. >> amazon is the third largest digital platform in the united states the company closing in on lea e leaders of facebook and google amazon will bring in $4.6 billion that's more than 4% of the mark. facebook and google combined making up the digital ads of the reven revenue. still got some ways to go before they close that ground tilray, investing in cannabis is what he calls great. >> all the alcohol companies need to enter this industry. it is a great hedge for them

whether you are an alcohol company. it is a global company our intent is to build a company that dominates part of this $150 billion industry. we don't want to partner with them we want to build avi >> shares of tilray is up 50%. >> we don't have time. i ha ave few more. maybe this is good, coming up this morning's top movers, "squawk box" will be right back. >> stick around for the joke >> maybe for your heart...

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well, we have no time but did not matter i went through the 21 top, that's the only one that's worth it make sure you join us tomorrow, "squawk on the street" is next ♪ goodwednesday morning, welcome to "squawk on the street," i am carl quintanilla with melissa lee, cramer and david are off today. futures are remaining the same u.s. candidates stock resumes. the president will visit some areas hit by