thank you. >> what a morning. >> go sixers >> love it >> proof was in the pudding during the playoffs. >> we'll have you come to every game as long as you're winning >> i'm there for you "squawk on the street" is next good morning welcome to "squawk on the street." i'm david faber along with sara eisen. we're live from the new york stock exchange jim cramer is still at one market in san francisco. caa carl has the day off you can see we are looking forward to what would be a slightly down open european markets have been open for some time. sara following the bond market in italy

we'll talk about that and look at the impact it's having on the stock market the dax down almost 2% >> italy down 4% >> saw that. >> you always act like i'm not able to see the ten-year note yield. >> just making sure. >> she thinks i'm old. just watching out for me ten-year note yield. crude has been a big story brent well above $80 let's get to other road map, it does start with that big story from late yesterday, the s.e.c. taking on tesla. shares plummeting in the premarket. sources say elon musk pulled the plug on a settlement offer we'll give you some of those details. >> s.e.c. says it is fraud, seeks to remove him from the job. musk responds saying the action is unjustified and that the board is backing him. and the white house pushing for 5g they'll have a meeting today with all the major wireless carriers we will talk with ajit pai in

just a few minutes the securities and exchange commission suing elon musk and seeking to bar him from running a public company the s.e.c. accusing musk of fraud and making false and misleading statements about taking tesla private >> we allege that musk had arrived at the price of $420 by assuming a 20% premium over tesla's then existing share price, and then rounding up to $420 because of the significance of that number in marijuana culture and his belief that his girlfriend would be amused by it. >> musk issued a statement saying this unjustified action by the s.e.c. leaves me deeply saddened and disappointed. i have always taken action in the best interest of truth,

transparency and investors integrity is the most important value in my life jim, the s.e.c. thought they had a settlement, but it was an unwillingness on the part of musk that he neither confirmed nor deny those charges that led him -- left him unwilling to take that offer. he would have had to step down as chair-minute for tman for tw would have a fine, it would require two new directors, but that's it. that's it. that's all he had to do. he said his integrity was too important for him not being abl.

the company not being sued by the s.e.c., just mr. musk. >> yeah. when i read that and listened to you earlier in morning and realized he turned this deal down, i think he must be going for some sort of insanity defense. this is amazing. what a deal. the s.e.c. did it very fast, but that kind of deal -- that's the sweetest deal ever usually -- i don't understand how anyone could turn this down. david, they got a piece of paper. they have the 5.3 -- 5% bonds that have been the bellwether. they have a november refinancing. do you sticker it with some sort of like, listen, the ceo may be in jail but we need 200 million? honest to god what is he thinking this is a deal people would

fight for. they would kill for it >> i know. you keep saying jail, jim, you know it's simple, he's not going to jail. you have to stop saying that >> you know what i mean. i mean that if you turn down that kind of deal, i think the s.e.c. will refer to justice because this is the kind of arrogance that the s.e.c. was just not counting on i think the s.e.c. liked the fact they did this, and then you refer to justice if you don't refer to justice there's still some civil resolution but neither admit nor deny is the home run for someone who made up -- come on, you read the complaint. he read it all up. he just made it up >> they say he didn't make it up, he had a series of meetings with the public investment fund of saudi arabia, was led to believe by decisionmakers there

that they were willing to back a go private effort. they had a 5% stake in the company, and he thought the money was there. this is what you will hear as a defense from the company as one reason why he also wanted to correct the record he felt when the ft reported the $2 billion investment, it was getting out there, and he thought he was adding information necessary for people to know because it was being leaked to a certain extent that's part of a long-ranging defense. >> let's say that's right if this man is removed, you read the facts about how no one seemed to know at all that he had this talk. the government saying there was never really a 420 -- there was no financing david, you said from the beginning that it's the -- we got the finance iing that this turns on that was just fraudulent they did not have the financing. >> on the other hand there are

big investors who said -- who have fought the s.e.c. a lot of people talking about mark cuban totally different case, but he famously said if you have the resources, fight them. they're not that smart you think of leon cooperman. there's a number of issues >> that's an interesting point >> this is a a publicly traded company with a board of directors. cuban is a personal investor i understand why he wanted to fight that this is a publicly traded company. they didn't go after the company, they only went after him. he's rolling the dice. >> you know what i find interesting, if you look at the settlement and what would actually have occurred, you would have had a new chairman, you would have had two new independent directors. i cannot tell you how many investors i've spoken to who either are neutral on tesla or like it who believe that would be perfect that would be something they would embrace because it would keep musk there, but it

potentially would add governance, some gating ability on his behavior and from their perspective be a much better structure from which he can operate. it's interesting that the settlement he turned down potentially would have been one embraced by investors because of the additional two new directors and the new chairman >> people would have bought the stock on that you wouldn't get these downgrades, you wouldn't worry about this november refinancing. put two people on, suddenly you have a very good board that is responsible. this would have been the home run. the s.e.c. offered him a way to finance, a way to go forward he spurned it >> one analyst downgrade was citi group going to 225.

two options they have is mr. musk just getting out, and the other is hevails and stays on but there's reputational harm to the company how do you value the stock that's always the question, the musk premium now investors really have to think about that question and ponder it as we try to figure out his fate and whether or not he can prevail >> what's interesting is the shorts think it's worth nothing. zero the longs think it was outrageous that he tried to cap the upside at 420. it's going to 1,000. i think this 1,000 versus zero fight will continue because there will be people who say he would not do this unless he's totally predominaninnocent i mentioned, yes, if justice goes after him, and he has a

martha stewart outcome, what you will end up with is something that the bulls -- maybe the bulls think he will operate the thing from another place, typically we don't have ceos do it but what a deal. it was sweetheart deal what lawyer in his right mind -- this is where the lawyer must have been cut off at the knees the board, how about the statement that they had put out, the board backs him. two independent directors would have made a good difference. >> they would have on this criminal thing, you know the bar is far higher for that yes, i believe there's been reports of the u.s. attorney in san francisco looking into this. i don't know that gets anywhere. really, criminal >> no, they would get him on the -- they could get him on a technicality of disclosure i'm just saying you know when the s.e.c. feels spurned, they

don't know where to go one way they could do it is go southern district. we don't know what's going on. you're right, jail is a long -- a stretch. i'm just saying you go against the s.e.c., they don't play the way they did as if you played with them. going to justice is a way to do it to get something done >> right we should also point out it's certainly possible that they -- they settle all the time, also there are settlements. that happens frequently. it's not inconceivable here. >> they gave him a gift. he looked it in the mouth. >> apparently he didn't want to be in a position where he could not deny these charges >> the stock is set to open almost 12% lower >> 420 because the girlfriend would like it. that's sound judgment. >> maybe not best way to come up with a price >> suboptimal! >> whatever you call it.

shares down sharply premarket. when we return, s.e.c. commissioner ajit pai will be live from the white house to discuss the future of 5g looking at futures, that italian bond move, it's getting slammed, weighing on markets globally more "squawk on the street" when we ruretn.

the trump administration hosting the major u.s. wireless carriers and regulators later this hour to discuss 5g technology verizon is set to launch the first wireless 5g service in four cities next week. at&t and it mobit. mobile also follow ajit pai joining us from the white house right now. nice to have you, chairman >> great to be here. >> why are you doing this? >> we want america to lead the world in 5g as we led the world in 44g it requires government to set the stage to get the tools out

there to use in the marketplace. >> what will you learn in the meeting today, when verizon and t-mobile and at&t are in the room what is the interchange going to be about and potentially what will you find out that will enable you to do what you just said you set out to do? >> first we want to outline across government strategy, not just the fcc, but the entire administration will be on the page in asserting u.s. leadership in 5g we hope to learn the necessary building blocks for 5g we want america to be the home for investment and wireless connectivity we need to know what policies are needed in order to promote u.s. leadership. i'm hopeful it will be a productive exchange. >> i spent some time talking about it, reporting on it. it is going to be significant change you obviously know that. one key question is when when is it really going to be something in terms of powering the internet of things n terms of what it means for the home and consumers.

when do you think it will be actually something we're talking about on a daily basis and something we're embracing on a daily basis. >> there's a strong case for optimism about it being sooner we've already seen some of the companies doing 5g trials. we've seen a lot of investments and innovation in the tech sector there is also reason to be concerned. there's a lot of barriers in terms of the infrastructure needed to get out to the marketplace. these regulations are holding back the case for a 5g deployment so the fcc is focusing on the 5g f.a.s.t. plan >> much of what you're discussing here is interesting part of the argument made by

t-mobile and sprint as to why they should be allowed to get together namely they together will be able to spend the money on the resources, to bring them and bring us as a country up to where we should be in terms of 5g do you agree with that argument? >> that's one argument we're evaluating and the context of that transaction i can't comment on the particular transaction, but again we want america to lead in 5g we want to set the table so every country big and small, regardless of where they are trying to deploy the 5g services will be able to do so at scale in order to serve american consumers. >> let me bring jim cramer in from the west coast for a question >> great to see you. >> you, too. >> i want to follow up on what david said john ledger said if we don't allow this accommodation, we will be left behind in 5g. if we do allow it, we will burst

ahead. do you think antitrust should consider 5g when they make their decision about allowing this deal to go forward >> i can't comment on the fcc's consideration of that particular transaction, whether justice decides to evaluate that is up to the justice department. i hope going forward we can take a holistic view of the marketplace, allow a company across the united states to invest in 5g technology and build a strong business case for 5g going forward >> does the trade war slow down your efforts, mr. chairman, to bring 5g here? how much of that network equipment has to be imported and now a 25% higher rate into this country. >> i don'tbelieve so by far the biggest barrier are the domestic regulatory barriers it takes one to two hours to install a small cell on a

utility pole for 5g. but it could take a year to two years to getting regulatory approval for that small cell the spectrum necessary to get out into the marketplace, we've been working aggressively to do that we already teed up over the next year or so, more spectrum for the commercial sector to use than all the broadband currently today hold so those are important for 5g to be deployed at scale >> why are we so concerned about china and 5g it came up in cfius' turning down of broadcom's purchase of qualcomm it came up in your op-ed in the "washington post." what do we have to fear from china on moving ahead with 5g? >> china saw the success america had in 4g, and they want to claim that victory for 5g

we think the market-based approach is a superior one we don't want to cede the mantle of wireless leadership to any country. and if china is the first mover in 5g, they will be able to draw some of that talent, innovation to their chauffeurshores >> having seen a 5g camera, it will add to surveillance of that society. >> i think about some applications here, telemedicine, the internet of things, all kinds of applications that we can't conceive today all of that could be on tap if we make the right decisions here that will be a boom for american consumers and our internet economy at large >> we'll follow that closely look forward to hearing about the meeting today.

thank you. >> thank you up next, it is cramer's mad dash as we count down to the opening bell oat lo another look at futures here dow futures down 72. more "squawk on the street" straight ahead alerts -- wouldn't you like one from the market

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>> you remember amelda marcos, remember what she was famous more >> shoes >> exactly 1,000 pair of shoes this rbc note about general electric. this man says there is a number of shoes to drop this is the marcos piece that a lot of the bears have been waiting for. there is steve tusa. gips cut, th guidance cut, they expect. power turbin, and they don't like the radio silence since the quarter, implying no deals have been done. this is another piece that says this is not done going down. >> really, jim >> yeah. i'm just reading it. >> i know we put his picture up, but why -- >> this is tusa jr >> why the deafening silence

from the company you think they should be communicating more forcefully in terms of pushing back on impact from this turbine problem? >> i wish they would say this issage isolated turbine problem, it had to do with the way things were stalled i wish we saw a bid for healthcare now that oil has breached levels, should make baker hughes better but it's saying it can't bottom until we hear more news flow and more shoes drop. the shoe thing, it's like a fetish with these analysts >> yeah. that tends to happen sometimes, i guess. >> you have to make calls on this, david. you have to make calls this is a negative piece >> we'll keep an eye on ge, as we have all week that significant fall in the stock as you well detailed since we first got the tusa note warning about conceivably

broader ramifications from that one problem that they have with that turbine the applause building here at the nyse we'll have the bell in one second [ bell rings ] it's friday, you can see the realtime exchange back at hq we expect a bit of a lower open. at the big board celebrating its ipo, ctk and over at the nasdaq, cowen. 100th anniversary of cowen i remember when it was owned by societe generale simon hobbs used to get on my pronoununciatio pronunciation. >> societe generale. >> it's all italian today, though >> wow remember those days? >> just wanted to mention italy

because -- jim, you have to be watching the italian banks again. sort of the basket case of the market now after a big bond move lower, yields up the new government which just formed in june, populist government says it wants to spend more, announced the new budget deficit, 2.4% of gdp, way higher than what the market was hoping for and what the expectation was. they thought it would be below 2% a lot of it going to subsidies this is how they've been popular, but of course not so popular when it comes to the market for the banks, they hold a lot of this sovereign debt which is getting pummelled. ten-year yield about 3.26 on the italian ten-year. >> we want to get to ylan mui. >> senator jeff flake said that he will vote to confirm brett

kavanaugh to the supreme court jeff flake sits on the senate judiciary committee. they're slated to begin their vote any minute now. flake was a critical swing vote, now coming out in favor of brett kavanaugh, saying there's a presumption of guilt innocence proven guilty. so this is setting up for a floor vote in the senate next week back to you. >> flake a key vote there. jim, we were talking about the italian bond market. yields on the ten-year have not been this high since may, i believe. >> yeah. what's interesting to me is when i spoke to jamie dimon earlier in the week which seems like a month ago, he said these things are not really impactful on

jpmorgan but the u.s. banks always get slammed on this stuff. it has ban buying opportunity except the fact that the banks acted so terribly after the fomc i can't just say buy, buy, buy given what happened with the fed. but let's not -- let's remember european banks are not american banks. we know the european banks are short of capital when i do business in italy, the banks are not like what it is like to do business here they don't do mortgages basically. they're not in that business there. >> no. >> financials worst performing group in the s&p, to your point, jim. they had a tough week. down a little more than 3.5% >> they've been horrendous it's almost as if people say, look, lending is slowing down. we'll pay you more for the cds that you get, but they won't be able to make more on the loans that they issue. i got to tell you, that will

cause margin compression i thought there was a chance that they could do -- get more spread, but people will sell these stocks until they see the earnings >> then what you think they'll be encouraged by earnings? >> i think that they can be -- i think the earnings won't be nearly as bad as people expect but the group will be under pressure they like fintech. they like square they like mastercard they like visa some of these banks like citigroup continue to buy back stock endlessly because they're making fortunes being banks. they're not airlines which are doing better, but i think they'll make a lot of money and we're wrong to believe that these companies should have an apreeappreciatably price turn. i just can't pound the table >> tesla shares as we suspected and as was indicated from virtually the moment we reported

the s.e.c. charges against mr. musk are down 11.6% right now. jim, some are focused on a convert that they'll have to pay back because the price is far, far higher that comes in november that's not a large amount. the much larger amount -- >> couple hundred mill >> yeah. >> david, the bonds are not trading down nearly as much as i thought. 85 down to 84. the believers are believers. they'll be believers as long as tesla is on the road i swear. that's where you have to come down 1,000 versus zero, that's my price target both ways >> will they be believers if elon musk is out and what's the next move from from board will they come out and assert their independence at some point? i keep thinking of the interview we had with kimbal muszik, it's all up to elon >> they have already shown they

don't have independence. >> wow, david just went there. >> come on i spent some time on this. the go private effort was real as strange as it may have seemed it was not, of course, the way we typically think of a go private. that threw many of us initially when we first saw those tweets we thought it was impossible you can't put more debt on a company that's not really generating free cash flow and it has 10 billion in debt the plan they were trying to work through, 30 billion in new equity, 20 billion rolled by existing investors, 20 billion rolled by mr. musk in terms of ownership, they think they might have gotten there and then they would have had a quasilistin lig it was odd 17 days later that was abandoned. but this board, come on, the best thing that could have happened was an vek ss.e.c.

settlement, two new directors and a chairman >> david, chill. >> did you just tell me to chill? >> all this turns on that notion that he had the funding. the very specific language you have said over and over again, the specific language he used in the tweet is not what they had -- they may have had intent you saw some things in the complaint. people there say texting and saying what is going on? do you have anything even if there was some sort of funding, it was not the kind of funding that you would have reported on as being in the bank >> no way. >> would you ever have said that money was in the bank? >> no way. >> that's what he asserted >> that may be a reflection of his naivety in certain ways. he was told verbally, we'll be there for you. but you're right, those of us who follow deals, unless you have a signed commitment letter from a financial institution

that has already shown it can syndicate whatever it is saying it will commit to, no, you're not done you're not done. there's not a chance you're done this was far from that >> naivety is a great defense in the higher standard that the justice department would have to bring. that's a tougher case if he was just naive it's not a tougher case if they filed a paper which said i have to get the shorts, i will even say we have the funding. throughout that complaint they talk about how the shorts got to him. they got to him. that's something that a lot of ceos would hate to admit, but these guys got to him. >> that was obvious following musk the analysts got to him, the journalists got to him, most of all the short sellers got to him. the question is where is this going? he's denying wrongdoing, so it goes to court presumably then what? he could be banned >> if the s.e.c. wins, he could

be banned. >> with no clear number two right now and no apparent succession plan. >> no. that's back to the point we've been making about the board and their lack of any real power here it will be a while until they go to court and there's always a possibility they'll settle on the way. one has to imagine six months at least on the outside before they see the inside of a courtroom, i would think. though i don't have input as yet from the s.e.c. about their view on that. we'll have to wait and see he will be ceo they will be trying to meet production targets there will continue to be questions about potential competition and so many other things on the fundamental level that we talked about for so long >> david, we have not heard from him lately about the number of cars that he produces. don't you think that he has to change the story line from this to start talking about how he's probably ahead of plan for 2019. wouldn't that be what he would

do typically maybe well ahead of plan talk about 500,000 cars in 2502. he has to start tweeting something that is not related to this otherwise the narrative is so cloudy >> some analysts are saying they were on a better trajectory as far as that was concerned. model 3 deliveries and production are accelerating now, and some believe tesla was on the precipice of having profitabilities. >> i'm waiting for someone to say he made a good deal turning this deal down people may say because he says he's innocent, we can do the financing. this stock is down 38 points that's far less than the bears thought they would get >> you think so? >> yes, i do

i think the bears really felt the bonds would go down. the key bond would go to 78. they would start telling -- talking to people they can't refinance. they didn't get the bond drop you said over and over again, david, the bonds are always right. the bonds are trading well it's incredible. these people love this guy >> some of the analysts do, too. >> it was important that the s.e.c. chose not to charge the company. it would have been a difficult charge it would have been a failure to appropriately oversee an employee in some fashion if they had charged them with fraud or in some fashion, that conceivably could be at least a material adverse event in some of their laclauses. at least they can breathe a sigh of relief on that, that tesla was not included in the complaints even though the settlement talks

did involve the company as ell the company was the one that would have to appoint the two independent directors. the company would have paid a fine as would mr. musk have paid a fine but only mr. musk faces the charges. before we go -- >> that's why the stock is not down that much >> okay. >> i wonder if the brand -- you think the brand equity suffers and that this will affect consumer choices or is this just a wall street thing? >> i think some people will say do you want to buy a car from a company that may not be able to service it i think the people who own the cars will come up. i think people will still buy the car because it's loved if i would that board i would try to find a solution rite now that would make it known their independence, and he won't be thrown out but more of an adviser. if they do that, you know what life goes on >> life goes on for the markets

as well with the s&p down by a tenth of a percent nasdaq around the same technology, not too much apple had been up. it turned. ge to the mad dash point that jim was making, it's down another 1.5% let's get to seema mody on the floor with more on what's moving this morning >> david faber, good morning stocks are lower on this final trading day of september, but we're higher for the quarter markets have been able to shrug off a lot, trade fears, higher rates. if you look at the s&p futures, you did see a dip lower on the headlines out of italy but we are off the lows of the morning. for europe, overseas, notable weakness italian government agreed to a 2.4% budget deficit for 2019, that possibly sets the stage for a showdown with brussels that's why you see weakness in italian lenders. unicredit, tesla, sao paolo down 8% to 9% across the board.

check out the global market performance in 2018. germany down 6%. china down 15% russia and ja ban hipan higher the chinese minister of foreign affairs speaking right now and talking about how the u.s. misperceives china and its ambitions. he says china is only seeking peaceful expansion and is not trying to displace u.s. leadership he touted the international export expo where china will try to boost trade with other countries besides the united states big tech, defensive, utilities lagging. overall the s&p 500 up 9% this year, led by a handful of stocks a lot of traders here say narrow leadership of a rising market can be a worrying sign chicago pmi just moments

away let's head to the bond pits and rick santelli. >> good morning. yes. we're about 14 seconds away from a very important number, chicago purchasing manager we have university of michigan at top of the hour it's important to know a lot of these feel-good numbers have been strong. we're expecting 62 we end up with 60.04 that's the weakest number going back to april, but do understand anything above 60 is still super duper high consider this. the 20-year high for chicago is 68.8 from march 11th, and this year we had a number close to that actually it's the very end of last year. 67.8 for december. so lofty levels. let's get to the marketplace if we look at what ten-year note yields are doing, one week chart summarizes it.

they have given up some ground looking at the curve today, down two on twos, one on tens, one on 30s. look at the week, up one on twos, down two on twos, down three on 30s we continue to see the curve flattening as we cross over the fed meeting. a lot of the action year-to-d e year-to-date, it looks like a double top 3% for a friday. bund yields are dropping you can see a may 1st chart there. the reason it is, think about spread relationships the italian yields are going up, if you're a european investor or any sovereign investor, you're most likely selling italy but buying the higher quality paper. so a lot of curve moving down with respect to the euro curve looking at italy specifically.

five-year hovering around 2.30 right now. just compelling. look at the ten-year, taking it back to the summer of '14 since we saw levels like this. unbelievable all the work that the ecb, all the policy distortions caused by keeping these rates low, look how quickly the market trades against them the dollar index has been on fire since the fed meeting it's up over a penny on the week, david, jim, sara, back to you. >> rick, thank you. coming up, we'll keep an eye on the slump in tesla shares and reaction to the s.e.c. suing elon musk. the stock is down 12% right now. worst day since november 2013. "squawk on the street" will be right back

this school has had an incredible culture for a long time we've had a great brand and the

last three years we've had a great economic tail wind all that being said, our teams, i think, really put together the right portfolio in true alignment with what's happening in the marketplace and we're seeing our customers adopt that i'm proud of what they've done. >> cisco ceo chuck robbins on "mad money" talking about the company's growth prospects jim, the dow was the big winner and cisco had a decent three months as well. >> cisco is becoming much more of a software company than a hardware company much more a cyber security story than just the old switching and routers. that means it will get 16 multiple, maybe goes to 20 and therefore the stock could easily go to 55/60 on the things chuck was talking about yesterday. >> jim, you've had such an interesting week out there it's where so much of the news and many of the important things going on in business are so i'm

glad at least one of us could be without there regularly is i thought one of your most interesting comments is just how hated facebook is. >> yeah, actually you know what? i talked to a number of people since i made those comments and more people came forward and said thank you, thank you for revealing that they have broken the trust and made it so the rest of us will have to pay. i have yet to meet someone who says to me can i explain to you why zuckerberg is great and why it's okay they left? i have not got than at all this company is a rogue company in the eyes of other tech companies because they all say how does this company have any trust at all i think the answer is they've got a lot of advertisers and that's still the case. >> google see you on the hill today. >> oh, yeah. jim you'll be right back with

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>> let's get to it stop trading with jim. >> david, a lot of positive

notes about constellation. that's modelo and corona some of them, the notes indicating there could be a reacceleration of top line but there's also a lot of chatter about cannabis beverages and how they're going to take the market by storm by 2022 if they are approved in this country so that people will be drinking beer or they'll be drinking cannabis and constellation with a big position in canopy soon if they want to they can control it they've got the first mover advantage. rob sands took the bull by the horns and i think you have to be more circumspect but people are starting to give them credit for cannabis beverages i wish the police found a way to brea use a breathalyzer on cannabis that's one of the big holdups. >> you've been talking about that for some time jim, what do you have on "mad" tonight? >> john donahoe the your friend but i've decided to put him on my show. >> as usual, as usual.

>> of course williams-sonoma and then sanjay poonen who is the coo of vmware. they have the closest relationship with amazon and i'll see you back at the ranch monday. >> thank god. >> safe travels, jim. >> thank, guys. >> i don't like you being -- makes me uncomfortable having you away so long incredible work as always, jim thank you. >> tesla coming back david, they can't stop coming up here, more reaction to the s.e.c. suing onusla t furholds for tesla. ♪

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(john foley) i was there in chicago when bob barnett made the first commercial wireless phone call in 1983. yes, this is bob barnett in chicago. (john) we were both working on that first network that would eventually become verizon's. back then, the idea of a nationwide wireless network was completely unreasonable. but think about how important that first call was to our lives. it opened the door to the billions of mobile calls that we've all made in the last 34 years. sometimes being first means being unreasonable. i'm proud i was part of that first call, and i'm proud that i'm here now as we build america's first and only 5g ultra wideband network with unprecedented wireless capacity that will not only allow for phones to be connected, but almost everything-- transforming how we all live, once again. (bob barnett) as you know, this call today is the first call that we've made on the cellular system.

welcome back to "squawk on the street." our last of the big breaking news and it is big, university of michigan september finally take the mid-read and toss it. the mid-read was 100 .38 the new read is 100.1. so we lost seven tenths but trust me, anything over 100 is very, very, very solid think about it this way. the highest number in the last 20 years in my database is 103.8, that's from '04 this year we had 101.4 in march. that was the highest level going to that january of '04 so 100.1

is the second best number of the year lofty number let's go through the internals if you look at the one-year inflation outlook, it moved down a tenth from 2.8 to 2.7. jay powell, pay attention to this, right? and 2.5 is one-tenth higher on the five to ten-year outlook so one year goes down, the five to ten-year goes up and we'll have to ponder that a bit. back to you. >> generally good confidence rick, thank you. good morning and welcome back to "squawk on the street. i'm sara eisen and david faber live in post nine at the new york stock exchange. dow turned positive, s&p trading around the flatline, nasdaq lags it's the final month of september and this has been the story of the month dow has been the big story, s&p is positive and the nasdaq still lower. our road map will start with

tesla tumbling the s.e.c. announcing it's sue elon musk. we'll bring you up to speed in this major story. >> plus, trade tensions and the italian bond market weighing on global stocks of this last trading day of the month and the third quarter. we'll look at how to prepare your portfolio for the rest of the year straight ahead. >> migraine suffers, listen up a new drug from eli lilly gets approval from the fda. we'll speak with the head of lily's biomedicine division this hour. >> the s.e.c. is suing tesla's founder, its ceo, its main engi engine, elon musk. phil lebeau who knows a thing or two about the company and mr. musk joins with us more. good morning, phil. >> if you look at shares of tesla, they are currently on pace for their worst day, right now down more than 12%, the worst day for tesla shares since 2013 david, your reporting earlier today lays it out clearly in terms of a settlement offer that elon musk himself rejected that's why this stock is under pressure today

the key point in that settlement offer would have require ed lon musk to neither admit nor deny culpability. he would have denied being chairman but he could have remained as ceo. he would have paid a fine as would have tesla and tesla would have been required to add two new independent directors. elon musk rejected that offer and once that happened, well, it wasn't long before, as somebody said in your --in a meeting that i was listening two into, this is like ants at the picnic analysts are saying stay away from this stock right now. out with a number of notes today, citi downgrading the stocks to sell, barclay's says what's the musk premium? could be as much as $130 and ubs says it expects shares of tesla to trade down substantially e. lon musk did issue a statement after being charged by the s.e.c. yesterday afternoon in it he said this unjustified action by the s.e.c. leaves me deeply saddened and disappointed i have always taken action in

the best interest of truth, transparency and investors integrity is the most important value in my life and the facts will show i never compromised this in any way. with tesla's board issued a statement saying tesla and the board of directors are fully confident in elon, his integrity and leadership of the company which has resulted in the most successful u.s. auto company in over a century our focus remains on the continued ramp of model 3 production and delivering for our customers, shareholders and employees. remember, with regards to the model 3 and quarterly deliveries, we should get those numbers on monday or tuesday of next week and the expectation is that tesla will be very close to hitting what many expect it to need in order to either break even or maybe turn a slight profit for the third quarter but right now that's overshadowed because of the news of the s.e.c. filing these charges against elon musk. >> phil, we made this point earlier but it bears repeating so much of what the s.e.c. would

have required in this settlement is actually many things that i have at least heard from shareholders that they would embrace. namely two independent directors to shore up the independence of the board itself a new chairman conceivably who, if they were strong enough, might be able to rein in some of mr. musk's more self-defeating tendencies and yet we're here right now it doesn't mean we can't get -- there won't potentially be a settlement, that happens sometimes. all of this, phil, because on his focus it would steameem to a certain extent on the short. that's what the s.e.c. is alleging that he was trying because of his just being tormented by these short sellers to get back at them by manipulating the stock higher through that tweet. >> and the short sellers are not going away you know, that david though it's interesting, i think they're in a quandary here in terms of wondering how does this play out if you are a short seller on tesla, how do you gain this stock over the next month three months unclear whether or not there

might be a settlement that allows elon musk to stay or do they go to court and elon musk is driven out of the country one thing with regard to elon musk's leadership and whether or not somebody could come in in a c.o.o. role or as a ceo and elon musk as a chairman allows them to have some control over the country, almost everybody that i've talked with, david, in the auto industry either who is an executive right now or was an executive at an auto maker and i've said would you work for elon musk everyone of them says the same thing, only if i have the ability to make calls and not be second guessed publicly and i don't think that would happen we lon musk that's the big conundrum if you are long on tesla. you want that second person maybe to be there, that adult in the room, so to speak, yet at the same time you love the fact that elon musk is a visionary, that he's a maverick, that he does things and says we're going to do this can those two co-exist people are wondering if that's possible. >> by the way, on that point with tesla slide, it has a

market cap lower than general motors which may be of some consolation, $47 billion is the gm valuation phil, on that lawsuit secured note from barclays, clever title, obviously, they ponder this whole notion of what the valuation is without the musk premium. how do you think about that? what is this company without musk since he's such a driver of the brand and the innovation and the entrepreneurial spirit what's left? >> i agree 100% with that note because i think there is a huge premium. whether it's $130, $150, i have no way of coming out with a number there but i do agree with the premise of the note which is if you believe in tesla, you believe in it because of elon musk. if he's not running that company, if he's not calling the shots, are you confident that these guys will be able to grow as they have i think a lot of people would sit there and say maybe not. for all of the faults that elon

musk may have and people will outline them and say that he's a popoff and he doesn't think things through, for all of those faults, he also deserves credit for getting tesla where it is right now. he has driven them to that point and that's the secret sauce, if you will, behind tesla and that's why many believe you take him out, you take down the stock. >> he is a unique person for sure phil, thank you. phil lebeau. joining us at post nine, pulitzer prize winning "new york times" columnist jim stewart who co-wrote that now infamous interview with mr. musk. let's start from the top what do you think about all this >> i'm flabbergasting on several levels, first of all that it wasn't just the funding secure that turns out not to be correct but virtually every single thing he tweeted according to the s.e.c. was false and materially false. number two if the settlement deal really was that we're going slap you on the wrist and you step down as chairman for two years, that's a great deal

i cannot fathom why they would have walked away from that. >> it was real i'm pretty confident in my reporting. >> i totally trust you. >> and jim everybody agrees with you except mr. musk, i guess i'm utterly astonished they would have turned down a deal like that. and finally when he gives his e reply that i'm full of integrity and the board says he's full of integrity, what is their defense? the s.e.c. complaint essentially quotes musk admitting virtually all the material facts he is the major source for the complaint. they obviously interviewed him, i assume they interviewed the saudis the facts don't seem to be in dispute. this is false, this is false, this is false. what are nay going to say? how do they think they'll get a better deal by fighting this and finally let's don't forget that the specter of criminal charge is hanging out there. typically what would happen if there's a criminal investigation, which there's some suggestion there is, and if that goes forward and they bring charges they'll typically freeze

the s.e.c. case while the criminal charges go forward. >> and the criminal charges would be focused on what market manipulation? don't you have to prove he was a beneficia beneficiary? >> you had to prove he had an unlawful intent which was to -- again, i was struck by the s.e.c. complaint it's a road map to criminal charges because it says over and over again it talks about the shorts and the implied motive that he wanted to punish the sho shorts which would be a minute nip lag -- manipulation and you don't have to prove that in an s.e.c. case. it seems they put that warning in saying you think this is bad? well, look where this could go >> so you think -- because there have been times where we see both come at the same time and to your point the doj typically takes the lead but you don't discount the possibility at all that criminal charges could follow >> no, absolutely not.

this reminds me of -- remember martha stewart is she had the s.e.c. charges, they froze the s.e.c. case then when the criminal case came in which wasn't related to her function as ceo at martha stewart, it was her alleged insider training then you see elizabeth holmes at theranos where she did settle the s.e.c. complaint but there were still criminal charges that came in afterwards so it can go in any number of directions i would by no means rule that possibility out. >> though it could still be a settlement that's certainly a possibility isn't it >> there could certainly still be a settlement but i wouldn't expect one in the imminent future if they turn down what looks like a very reasonable deal it looks like s.e.c. is really trying to not destroy the company. to their credit. >> as we reported, there was an expectation they would also charge the company and they did not. it would not have been a violation but they were expected to come and they didn't. that was a surprise. >> yes, i was a little surprised by that, too they typically do do both. i think part of that may be that the directors themselves

according to the complaint were totefully the dark here. i mean, he did all of this just freelancing which, by the way, again, i've heard from some directors, it would not be such a bad thing if he had to relinquish some control here and get an adult or adults surrounding them to curb his dangerous impulses while letting him be the visionary creative force he is and everyone gives him credit for. >> if the civil case gets into a courtroom, do you think there's a way to spin the offer of a settlement in favor of musk and say, look, the s.e.c. was willing to take two years out of the chairman role, hes say the as ceo and we get some new board members. that was the deal on the table and now they're saying he should be barred perhaps as ceo so in other words, can he basically say if the s.e.c. was willing to go that half measure, why should he be forced to have worse remedies at this point >> well, that's what everybody

says, he rejects a reasonably good deal and gets a worse thing and that's the way the system works. if you spare the government the cost, the time, the expense and the effort of going to trial, then you get a benefit from that and typically if you do not and you push them to the wall, you -- they extract an extra pound of flesh out of that now, i'm not saying that will happen here. it may be the s.e.c. is committed to keeping the company healthy and so they won't demand a higher penalty but i have no idea we'll have to wait and see. >> jim, you have insight into his emotional state perhaps more than some of us given the interview that you did this would seem to me to only add to the burden on him, a man who's doing so many different things any sense as to what it's like to be party to a litigation with the s.e.c. and try to do these things given what you know about them >> well, he's going to be -- for any lawyer i would think extremely difficult client someone who is not going do what

they tell him to do and who could potentially make things worse in this context. the fact that he rejected that settlement i think is more evidence that he's not thinking in a strictly rational way and even the s.e.c., it's not a mistake but they approached this whole tweeting outburst as if it's some kind of rational thinking process whereas i did a whole column on this i think you have to look at the psychology of it to understand it makes no sense in any rational world and maybe his defense is that, look, in a very vague and subjective way i believed this when i tweeted it but the s.e.c. hasn't still explained the precise circumstances in which those tweets happened. what had he been doing that weekend? what had he been doing the night before why is he alone in his car apparently tweeting all this stuff while he's driving himself to the airport and by the way, how is he doing that while driving does he have autopilot on? all of this is torelevant to hi

mental state and i have heard from directors they would love to find a face-saving way to get him off the place, to take a vacation, to rest, to have somebody else come in there and maybe somehow out of all this they'll succeed in doing this. as a shareholder i think that would be quite positive. >> jim, i have a feeling we'll be talking about this more in the future thank you so much for being here jim stewart. where the stock down 11.5% when we come back, preparing for fourth quart we are. it's the last trading day of the week, month and quart we are stocks are falling a bit on global trade fears and concerns about italy and its debt oblems "squawk on the street" will be right back and we will discuss it ur retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. at&t provides edge to edge intelligence.

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i'm trying to do some homework here. so they're ready for anything. the dow is up as we head into the last trading day wrapping up q-3. no sign of a nafta deal. what's ahead for q 4 weighing in now, pimco's head of public policy lindy cantrell and the chief investment officer of allianz global let's tart with trade, libby, the president accused china on the global stage of interfering in the midterm elections does that escalate the trade war? >> absolutely. this is going get worse before better is our long standing

view this is broader than trade this is about who is going to be superior about the global economic stage and president trump is saying via various mechanisms that he wants the us to maintain global superiority. >> yet markets go up and the headline is they're slugging off trade fears. >> and i still think there is this view that this is part of the art of the deal for president trump that he doesn't mean this, this is a means to an end. again, i think we would just underscore how sincere president trump has been on trade for his really entire public life and especially with china. bob lighthizer has been a china hawk for 30 years and, again, i don't think this is going to get better we thought that -- i think some folks were optimistic that we might see something by the g20 summit by the end of november. i think that's very optimistic i think this is going to slip into 2019 if not longer.

>> burns, for the global markets, where are the trigger points for where this might matter we were showing a chart of the u.s. dollar index. it's back on the upswing right now. that's been a stress point so where would you look to say that all of a sudden maybe a perception of the trade issue wors worsening? >> well, it's something that really i think you almost have to watch it on a day by day basis. there's been this on going tug-of-war between on one side we've had very good economic fundamentals, good earnings growth, good gdp growth and on the other side you've had geopolitical concerns, namely the china trade tensions so on the days that the president doesn't tweet himself in the foot with talk about increased tariffs, we've seen stocks continue to rally and the third quarter earnings growth is expected to come in a little bit less than what we had in the first and second quarters but around 19% so to some degree if you let the

markets do what they want to do and focus on the fundamentals, stocks should move slowly upward valuations are getting stretched. at the same time if we grow with earnings that should drive markets over the next 12 months. >> do you continue to see this dynamics playing out shenzhen is down, the dow is up, almost a mirror image of each other. >> it's a case where as there's no absolute winners in trade war, there can be relative winners and it seems to be what the market is saying is that whereas the u.s. may suffer, i think gdp growth could be hit by as much as 1% next year if we continue this tit for tat, but at the same time, china's been suffering more and as my counterpart noted, this could be very well part of the art of the deal and the president just using negotiating tactics. >> libby, for the first time this week we saw a couple of

articles about the interest cost on the u.s. debt obviously we had the fed raising rates, we are in a bit of a higher-rate environment. do you think that will become a conversation at all given our trillion dollar deficit? watching the italian bond market respond to a budget over there that people are concerned about. >> yeah. it's a great question. i always joke the minority party in congress are the deficit hawks and then they get back the majority and those fears of the deficit fade away. it will be a narrative and there is optimism if democrats take back control of the house we'll see a push for infrastructure but if republicans control the senate these deficit fears may be an obstacle to seeing something come to fruition so yes it will play back to the narrative, especially in republicans lose the house

you'll hear them talking about deficits. >> libby can tritrill, burns mckinney, thank you for joining us >> we have breaking news out of walgreens, let's get to dom which you. the s.e.c. charged two former executives of walgreens prior to walgreens/boots merger of making some at least forecast with regard to future financial results that didn't disclose some of the risks that were involved in achieving those forecasts. those charges have been settled by walgreens/boots alliance with two former employees who are no long we are the company however they say there's no admission of wrong doing in this particular settlement however it pertained to some of the 2000/2014 disclosures they made during their earnings calls with regard to future financial targets and what it would tyke get to those targets back to you. >> walgreens a dow component down about 0.6% as we speak. when we come back, a new drug from eli lilly gets

approval from the fda. we'll hear from the head of lilly's bio medicine division. and the battle between elon musk and the s.e.c. hits up. what it means for tesla investors straight ahead "squawk on the street" will be right back 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.

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welcome back to "squawk on the street." time for our etf spotlight let's get to dom chu with a look at yield plays >> is those longer term interest rates on the rise and trending higher for over a month. some of the worst performing parts of the stock market have been the bigger dividend paying sectors. some investors have been looking for ways to gain dividend income in a market environment not generally favorable for dividend paying stocks. one of the biggest ones is the vig, $38 billion in asset, the fund tracks the nasdaq's u.s. dividend achiever's index. it's a list of stocks with a record of growing their dividends year over year it's up 8% yield to date a little more than the s&p 500 there's the i shares dividend, dgro, similar in objective to

track and index of dividend growers. north of 6% performance in 2018. a 2% in yield. and for those looking far twist on the traditional index side of investing, there's the smaller oppenheimer s&p ultra dividend revenue etf. it's a mouthful, the ticker is rdiv this fund uses overall revenues to determine which one of the stocks have the biggest hold there is the fund is up around 5% year to date it's got around a 4% yield how investors react in putting money into or taking money out of these dividend funds will be interesting given where interest rates were r heare headed. >> ten year firmly above that 3% thank you. the latest target of european union's antitrust cop amazon, margarethe vestager spoke about what she's looking

at. >> amazon has this dual role they host a lot of little guys enabling them do e-commerce which is a great thing at the same time they're a big guy in the same market so how do they treat the data that they get from the little guy? does that give them an advantage that cannot be matched or how to understand this? we have concerns from the marketplace and we have seen-the-in a sector wide inquiry so we are very interested to learn in deep detail how this works. >> vestager giving us a peek into her investigation and one of the central questions is amazon lets a lot of small businesses sell their products are they using the data to make copy cat products and cannibalize those third party offerings.

i asked her if she'd received complaints and she said no so it's a different example of how european entrust in the u.s. it's about protecting the consumer which seems to really like amazon. >> i did a documentary on amazon a few years ago but we focused on this particular issue it's not news to any merchants who sell on the amazon platform that if they succeed there in particular that they may face amazon competing with them they all went into it knowingly aware of the risks of exactly that. >> is it still in that benefit for them that amazon gives them such a big platform to sell all over the world, these somewhat no name brands >> that's why they do it you would never have access to the audience you can when you're on the platform but many go into it knowing if we're too successful we'll get amazon's attention and they may go into business and compete against

them we previewed that at least four years ago since we did that doc so i wonder what they'll unearth that isn't known. >> zusupermarkets create privat label versions of branded goods when they're successful. i don't know if that would be a defense but it's analog. >> i asked her about meetings with megan drael heelrahim. you'll hear that were mar ggareh vestager ahead of the closing bell it was pushed back a day because of the headlines. >> the closing bell? >> no, the vestager interview. >> let's head over the sue herera for a cnbc news update. >> good morning, everyone. here's what's happening at this hour the senate judiciary committee agreeing along party lines to hold a vote this afternoon on supreme court nominee brett kavanaugh. republican senator jeff flake says he will vote to confirm kavanaugh, making it likely committee will vote to recommend his nomination to the full

senate the american bar association, though, is urging the senate to delay the vote until the fbi can do a full background check on assault claims against kavanaugh. the white house dismissed that ideas saying kavanaugh has already been through six separate background check investigations by the fbi. overseas, serve men were arrested on thursday in the netherlands on suspicion of plotting a large scale extremist attack that dutch prosecutors think was foil bid a month's long investigation heavily armed police arresting the men in towns close to the borders of germany and belgium here at home, the "wall street journal" reporting the irs is expected to allow business meal deductions to continue when lawmakers dropped rates for business income as part of the tax overhaul they slashed some food and entertainment deductions for businesses to help pay the tab you are up to date that's the news update david, i'll send it back downtown to you. >> thank you, sue. when we come back, remember

that contentious tesla call back in may >> of the reservations that actually opened and made available, can you let us know, like, what -- what percentage have actually taken a step to configure? >> we're going to go to youtube. sorry. these questions are so dry they're killing me >> the analyst that asked that question that musk avoided joins us next on the.e.'s s.clawsuit. "squawk on the street" will be right back don't go anywhere. my name is chris hughes

and i am a certified arborist for pg&e. i oversee the patrolling of trees near power lines and roots near pipes and underground infrastructure. at pg&e wherever we work, we work hard to protect the environment. getting the job done safely, so we can keep the lights on for everybody. because i live here i have a deeper connection to the community. and i want to see the community grow and thrive. every year we work with cities and schools to plant trees in our communities. so the environment is there for my kids and future generations. together, we're building a better california. michael avenatti ♪ trouble maker, i know you're no good but you're ♪ ♪ stuck in my brain, why does i feel so good ♪ it was the tweet that shook tesla. the funding secured tweet

leading to a lawsuit the s.e.c. now filing a civil complaint against ceo elon musk saying, quote, when he made these statements musk knew he had never discussed a going private transaction at $420 per share with any potential funding source tesla seeing its worst day in the market since november, 2013. joining us at post nine, needham senior analyst rank vindragil. cramer suggested he was surprised it wasn't down more. stock down 11%, 12% given the magnitude of the risk this company now faces. what about you >> look, it's a clear head wind on sentiment it's clearly turned negative you have to wonder about elon's future at the company. these serious allegations and we think this puts a lot of pressure on the board. the board's responsibility is to delegate to management, not to

enable management. and we think the latter has been done here which raises corporate governance concerns. >> is the biggest question for investors the musk valuation and what the stock would be worth if he exits right now. >> i think having elon in place and his vision of what tesla has become has really brought investors along for the ride it's enable add lot of quite frankly cheap capital. capital is critical in order for tesla to execute on their future vision and plans and we wonder about their ability to raise that cheap capital in the future to execute on that vision. >> raj, what are you telling clients? >> i think it's a disaster of epic proportions on multiple fronts not only does it affect the consumer brand, it harms the brand equity and that could affect customer purchases but it also basically eliminates any

credibility. are stock has been going up because of elon musk the fundamentals don't justify a $250 stock the stock is trading at $135 times earnings on next year's numbers. that's twice the multiple of amazon four times the multiple of nvidia and these are companies considered technology or artificial intelligence machine plays. you f you apply it to the automotive sector, either way you cut it the valuation is absurd and the stock has been going up primarily because of mr. musk's brand vision. >> joseph, what is your estimate right now of the company's

capital needs and how will that be inform bid the numbers we'll get in the next few weeks? >> the capital situation is perilous with the $920 million it converts to in february given where the current stock price is cash flow will improve it's still going to be a little bit on edge. if you look at what elon and tesla's future plans are, multiple rounds of capital, billions of dollars will be needed and we think that could be a bit more difficult to raise. >> i think the issue going to be -- they're going to have a difficult time raising capital if the s.e.c. investigation continues. based on our calculations, they'll have to raise anywhere from $1.5 billion to $2 billion in the fourth quarter alone and they're burning through about

$600 million per cash. so we think they here in a serious situation in terms of cash burn. >> what are your price targets joseph, you have 315 on the stock? >> we are. we're taking a bit of a wait-and-see approach i guess to readjust our price target. there is somewhat of an elon premium here and that is what's come down the stock will be range bound in the absence of information. it's certainly been a volatile stock. i think until there's more clarity investors will have a difficult time stepping in. >> and you >> we have a sell and we don't have price targets on our stock but we could see the stock getting to 150 even if you give it at 50 times multiple on $3 of earnings next year you'll get $1506789

so the multiple we think is going to start to compress once people realize there's credibility issues. >> we've got to go, guys, thank you. >> thank you when we come back, fda approval, eli lilly's new drug for migraines gets the green light. we'll have the president of bill by's bio micedine business with us "squawk on the street" will be right back hi, kids! i'm carl and i'm a broker. do you offer $4.95 online equity trades?

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let's get out to the cme group in chicago rick san telly is there with the santelli exchange. good morning, rick. >> good morning. and thank you. this is going to be a very interesting guest, folks i'd like to welcome professor aaron friedburg. thank you for joining me. >> thank you for having me. >> all right, you have written something lately that dove tails with what many and i discuss regarding the globe. in 1945, the fall of '45 there

was a yalta conference where stalin, fdr and churchill reorganized and carved up the world after world war ii something similar may be going on with regard to china and the u.s. tell our viewers your perceptions. >> yalta came at the end of a destruct i have world war. i think we're coming from the end of a period of cooperation and optimism in the united states and the future direction of our relations with china and the question is what will come next. >> in terms of what will come next do you see the possibility of two giant tectonic movements? one china-centered economic domain in the world and the other with the u.s.? to me that was almost inevitable no matter what or how people or countries or institutions or businesses felt about china, the fact of the matter is they have

a goal down the road they want to achieve. >> i think that's right and the question was whether it was possible for the united states and china to continue to cooperate in the ways we thought we could back at the end of the cold war and the beginning of the 1990s. our vision, the american vision, was of global integration and one in which we would continue to prosper and probably where the united states would continue to be number one i think china's leaders have always had the idea that they would eventually emerge as a global power severe with the united states. >> don't you think china also very much wants to be number one? >> i think that's become increasingly clear they don't want to be number o two. >> i know that all this is messy and i don't mean to interrupt you but i want to probe your mind on this if you have two countries that want to be number one and it's important for the financial

culture of the u.s. to be that leader, that this shift would have occurred no matter what and it could never be pleasant you don't carve things up in this regard in a pleasant way. >> well, i think, again, if you go back to the early period after the end of the cold war, the assumption of u.s. policy was we'll cooperate with china, we'll encourage them grow. >> to give them a head start, though, wasn't it? it's better to work with them than against them? >> yeah, that's right and the assumption was by doing that we would set forces that would lead to their democratization that hasn't happened >> professor, we're out of time. i want to have you back because i don't think we're anywhere near the end of discussing this big issue. thank you for your time, professor, i enjoyed it. sara, back to you. >> rick, thank you. let's send it to john with a look at what's coming up next on "squawk alley.

happy friday, john. >> happy friday, sara. we have the founder of siebolt systems. we'll talk regulation, the pressure on silicon valley and maybe i don't know something about volaleti visionaries that's coming up on "squawk alley. fu obvious.

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welcome back stocks managed to get in the green. those stocks have been the focus since the fed interest rate decision and underperformers in early trading. leaders are citigroup, ameriprise, charles schwab as the quarter comes to an end, health care is the standout. certainly a big deal there back to you guys >> thank you we're going to talk about health care in a moment first, the google ceo getting a private audience with gop lawmakers on capitol hill. kevin mccarthy, majority leader who has come out with statements that are critical of google. clearly republicans are focused, david, let's listen. >> we had a discussion last week he made a commitment to have that discussion is long overdue. the concerns for transparency in

the power of social media today, there's a lot of concerns in the house and senate you made a commitment one, because we couldn't have a hearing to talk to members and also committed as we come back to have a hearing in judiciary. i thank you for that if you want to say a few words >> thank you for arguing this, and thank you to all of you for taking time. i appreciate getting a chance to be here. look forward to explaining what we can do better and have a productive discussion. thank you. >> as we look at social media, the two-thirds of all adults that use it, 90% of every search goes through google. important to continue the discussions. thank you guys >> thank you

>> that was the google ceo next to kevin mccarthy. quite different optics than the empty google chair in the hearing last time they faced lawmakers on capitol hill. >> that's right. perhaps the google ceo trying to make amends. kevin mccarthy represents a district in the state of california he is someone that's been critical of google for months, accusing google of purposely putting comments under the ideology for california republican party, said when you pull up a search for california republican party, underneath the ideologies, included naziism that was one of calls for mccarthy as he went on this mission to, quote, stop the bias that's become one of the rally cries for conservatives, and one of the reasons they have been eager to have social media ceos

here on the hill >> thank you. the fda approving a new migraine drug. rivals also received approvals for similar drugs. joining us, kristy shawman. >> great day to be here for migraine patients. >> how large is the addressable market for this drug >> there's over 30 million adult migraine patients in the united states if you look at that, only 10% are on migraine agents there hasn't been a new medicine in over two decades. we are happy to bring this forward. >> those that get them a couple times a week and those that

suffer with them but not as frequently >> studies show patients had 4 up to 14 headaches, episodic patients. >> headaches in what period. >> in a month. yes. those patients which we call episodic, emgality was able to cut migraines in half for those patients with it, one out of seven have the potential to be migraine free think about that in the course of a year, if you have up to 14 headaches a month, cut it in half, you get a week of your life back every month. that's three months out of the year and it is not just a headache, it is a neurological disorder. these patients are suffering they can't show up for work, can't show up for their kids' birth days, missing precious moments. >> i know from a family member, these drugs are game changers

and technology behind them what differentiates yours? >> thank you, sara i think there are two things one is clinical data we are the only unique medicine to show 100% reduction in any given month for patients, that's a big deal to them to have that hope as you look at lilly, we have been in neuro science for decades, not just for migraine we are looking at, we are looking at it for cluster headache, suicide headache these patients are really suffering. we are submitting that data to the fda hoping to get approval next year and studying it in pediatric migrainers, people orchids 6 to 18 years old. lastly, we have a whole other medicine for acute >> that was going to be the question how often are you taking it

prevpr preventive >> they're shots millions of patients have been on this device through the diabetes portfolio, insulin. it is an auto injector, easy to use. >> we have to leave it there sorry for the short time thank you for being with us. >> thank you very much >> christi shaw from eli lilly "squawk alley" is up next. [ upbeat music playing ]

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it is 8:00 a.m. at tesla headquarters in california, 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪ ♪ ♪ good friday morning. welcome to