>> live from new york where business never sleeps, this is "squawk box. good morning welcome "squawk box" on cnbc we're live from the nasdaq market site in times square. let's look at the u.s. equity futures. yesterday the dow was up sharply. s&p was up nasdaq closed down this morning red arrows across the board. after gaining almost 200 points yesterday, the dow looks like it will open down about 80 points s&p down by 8.5, and the nasdaq down 31 points in asia, the shanghai remains closed for a week-long public holiday. the hang seng reopened after a holiday yesterday. down 2.4%. japan's nikkei was flat. then check out european equities you will see red arrows across the board there. a lot of concern about what's

happening in italy italy the biggest decliner, down by 1.1%. it looks like it's still standing firm against the eu transis down by 1% the dax is down 0.8% the ftse down more than a half percent. treasury yields in the united states -- interesting, ten-year treasury in europe, yields took off. skyrocketed today. only 3.4%, compare that to the ten-year note here at 3.058% so there's still a whacked out view of the disparity between here and there >> whacked out view? >> what was the percent in italy? >> 3.4%. it's 3.4%, just a bit more than you will get for a ten-year note here, which is why there's so much pressure on our yields. pepsico reporting quarterly earnings earnings came in at $1.59 a

share, two cents better than expected revenue exceeding wall street's forecast pepsi sees a slight negative impact from the strengthening of the u.s. dollar. pepsi is down about 79 cents 109.92 today is the ceo's last day there, and the cfo, hugh johnston will be on "squawk on the street." and stitch fix shares are tumbling after mixed results last night the style service that went public last november, fourth quarter earnings beating forecast, but the number of active users falling short of estimates. active clients climbing 2.7 million, street was looking for

2.8 million. stitch fix announced they're expanding into the uk which should happen by the end of the year earlier this year they announced a version of the style service for kids the stock is up 130% from the ipo. katrina lake willi be on "squawk alley. >> was it one of our disruptors? >> it just went public less than a year ago it's gotten headlines and attention. the stock was up 70% since first going public >> speaking of ipos, this is deep it's october you know it's october. anybody that comes public, even if you are losing money, you do well and u.s. stocks are trading at the highest premium on international shares in years.

it's october we hit new highs i don't know. >> you think there's a problem >> int makeimation. >> october gives me the creeps, not only because of the new "halloween" movie. >> which has gotten good review reviews. >> going back to the well. that crazy zombie guy has done one, which was totally scary and violent. halloween is coming. >> they think a recision is not likely in the next three years in the face of that. i was trying to figure this out, too. october can be a scary time, but usually when you have a run like we've seen, the fourth quarter is okay. >> halloween is big for andrew, but different than out where we

are. you just pick a building you go -- >> no there's school streets in new york city. >> don't you pick a building you wait in the lobby, let your kids just -- >> that's one way to do it >> that's so sick. >> good way to hit a lot of people fast. >> efficient candy method. >> in my neighborhood, by the time you walk up the driveway, it's two houses basically. if you can get through the gate to get into the gated community. >> past the dogs >> release the hounds. >> breaking news >> we do someone is here. >> amazon just out with that breaking news. >> courtney reagan is here she has more on this >> got here fast amazon is raising its minimum wage to $15 an hour. they announced this. this will be for 250,000 employees as well as 100,000 seasonal employees they do not tell us currently how much minimum wage is but there were a number of news

reports talking about the wage disparity between an amazon worker in a warehouse and jeff bezos, which we know is the richest man. >> this is not bernie shame? >> i think it's more from what the "new york times" and others have written about problems these workers have had that's the cherry on top >> what were the reported wages prior? >> the reported median wage for an amazon employee was 28,446 that was reported. amazon had not confirmed that us with the case. they are now moving to $15 an hour that 15 number is the key number there's a lot of these working groups that are calling for $15 minimum wage in fast food companies, retailers target has a path to $15 by the year 2020. they're offering $12 to start. they say they believe moving to $12 that helped them to attract

workers for the holiday season >> walmart moved to $11. >> and gap did it first. >> if you're amazon doing this, you're hopping over so you're not near the back of the pack. >> so that gets you over to a little over 31,000 >> i don't know. >> it's a 40 -- i don't know if you pay on 35-hour week or 40-hour. this is for full time, part-time, temporary and season m. y seasonal. we know labor is so fight right now in the u.s not just for the holiday season, but beyond >> if you start looking at seasonal workers and numbers that have come out with the massive numbers that target, macy's and others to hire, there's not enough workers to go around you may be forced to pay up. >> i did some reporting on this. talked to a bunch of economists

that work for zip recruiter, indeed.com and those folks they said they think the retailers will get there, but they'll have to may more, give them incentives, they have to be more flexible and dip into areas of labor they didn't before. we'll see how that plays out when it comes to service in the store and the experience of workers. it's a tight labor market, this will open some eyes. >> thank you >> thank you global trade and the turmoil has dominated headlines from washington to wall street for the last few months. what's on the agenda now that we struck a deal with canada and mexico ylan mui has more. they said that we want to get this done they want to get nafta done and then go to china >> pulling this agreement together was a major milestone for the trump administration now we may have a sense of how the trump doctrine works yesterday the president said this whole experience will shape

the way his administration approaches future deals. >> that's what it is, it's a privilege. we don't take it as a privilege. we don't take it as a privilege lenl it but it's a privilege for them to do business with us. everybody. everybody. it's a privilege for china to do business with us it's a privilege for the european union who treated us very badly, but that's coming along, to do business with us. >> so it sort of feels like this white house has opened trade talks with countries in every corner of the globe. so let's look at where they all stand. the deal with south korea that trump signed at the u.n. last week was the first completed agreement. the new usmca is next. the three countries will sign it in 60 days, then it has to be ratified by congress and then the governments of mexico and

canada negotiations can india are going well and then talks with japan have just kicked off. according to trump's version of events, he said they called three weeks ago saying we want to keep your president happy president trump said that was a wise decision. back over to you >> some interesting things lately in those pressers i like the fell in love with kim jong-un. did you hear that? do you remember that >> he wrote him a beautiful letter >> better than the alternatives, i guess. >> so weird. >> you know -- >> you're right, it beats the alternative. >> it was also funny when the president said can you imagine if i drank in that's my only good quality can you imagine if i drank i would be a mess. >> can you imagine the tweets? >> can you imagine the twis.

he doesn't do that thank you to ylan mui. sorkin, lead story here -- >> which one >> g ernge. i read this. ge replaces ceo after missing financial target wait, when did that rule change? since when we had 16 years, every quarter revenue would miss or something would miss you had a board that was in immelt's pocket. when did -- if i were flannery, since when >> i heard speculation early yesterday that part of the reason, at least the speculation on this, is that you were going to have the credit rating agencies potentially downgrade this will stave that off >> this already happened once. >> could happen again. >> you saw welch's comment, this is not flannery. >> i feel bad for him. i think he is the one left holding the bag. >> how much would you pay him on

the way out? in fairness to him, you have given him 13 months to actually even try to do this. >> he's in a huge mess >> did he move too slowly? when he first got the job, he was there for 30 years to begin with >> do you remember when jack welch was on, he said if immelt who just guaranteed that quarter, he said if he misses that, someone has to put -- it was not a great way to say it. but so many times it happened. you don't see how ridiculously hypocritical this is, that you get rid of the ceo after missing the target there must have been more than a dozen times that targets were missed with the prior regime >> yes you're right >> i guess it's different now. different board. different situation. >> it's a totally different

company. it used to be the bastion of american manufacturing >> so we've gone from 98 billion, to 9 billi7 billion. we have to get rid of this guy this guy is out. he started at 98 >> i feel bad for him. i do >> how much do you want to give him on the way out >> does he have deferred comp? >> that, you would get any way >> do you always get that? >> i think so. >> i'm not taking that away from him. >> i would suspect you get it. what do you want to give him >> i don't know. i don't think that way with you your compensation for these ceos what's good for you? >> wall street still can't figure it out. >> at one point he was getting 2 million as a base, then 3 million as a bonus with other things that would ratchet you to 15 million so how much you want to give him on the way out >> i think this is not fair, maybe to shut him up, give him

more >> more than $15 million? >> how long has he been at the company? >> 30 years. >> at ge, yeah >> he's been there 30 years. he's not being treated well, i don't think. >> he's treated well during the 30 years >> the bigger question is what to do with this now. rbc coming out and upgrading the stock to outperform today. jpmorgan says look out, don't assume this is a bottom this could be a sign of bigger issues at play. that's why the board will to take such drastic steps. >> he wasn't treated as well as a media executive. how much was les making? >> he may not take that with him depending on what happens. >> flannery wasn't making 80 million a year >> he doesn't get anything depending on the outcome of that investigation. let's get you caught up on the markets. joining us is chris brights

didmdid brigtm brightman and ed keon. you're headed into october you have warning signs out there including the idea that ipos are not making money 83% of them. markets at new highs yet then there are some signs that things are going well goldman sachs says it is very low probability that we'll run into recession in the next three years. that makes people start to figure out what side chris, you're nervous because you say october is a scary time. >> i have some rather negative memories of various octobers, so it does make me nervous what also makes me nervous is the slowing economic momentum. we have a strong economy for sure, but i think it's decelerating on the back of -- >> why do you think that >> fading fiscal stimulus probably more than anything else i think the trade talks are a

bit of a distraction, if you were a small trading nation i would be worried it makes great drama to talk about the trade, i think the u.s. domestic economy for u.s. equity investors is probably more the issue that said, you have to understand that the markets lead the economy, not the other way around so trying to forecast where the stock markets are going by studying economies is like lookinging in t ining in the ree a 10-year-old bull market, an economy at full employment, fed tightening, we have some scary changes in the credit markets, it is not outside of the realm of possibility that we get a nasty surprise >> ed, you say you're nervous about things but you're still bullish you think by the end of the year we continue to higher levels >> we are describing ourselves

as bearly bullish. so yourself weight u.s. stocks not by a lot but we are neutral to underweight international stocks there is some evidence outside the united states that some of the pmis are rolling over in the efa countries. emerging markets have a variety of problems, some related to fed raising rates and some idiosyncratic to each country. it's an environment where risky assets will give you a positive return, especially u.s. stocks because of the tailwind from the tax cut and other changes in the economy. >> is that an argument for telling people don't sell, don't necessarily put new money to work or not? >> we position the portfolios so we can still gain some gains, but also be prepared for an eventual downturn. that means a bit of a barbell approach i've been adding a bit to

treasury bonds within the portfolios which serve as a hedge. you can do some things to try to prepare yourself for a downturn without necessarily giving up the upside if we continue to see that stock price move higher. >> chris what are you telling people if you're nervous in october. do you tell people to get out? >> we're very differently positioned we are very bullish on emerging markets from these levels. it's hard to make a call on stock price movements for a months or a year, but the em is trading at half -- less than whatever of the u.s. equity market shiller pe. from those starting conditions, history suggests you do much better with the cheaper markets. >> the reason they're trading at those levels is because the dollar has ridden as the fed raises rates if the fed continues to raise

rates, how will that ease up on markets? >> there's problems and discussions about emerging markets, but a lot of those markets are inconsequential for em positions argentina just got put back in there's nothing there. we're talking about places like south korea, taiwan, china, india. yes, there are idiosyncratic issues in all of these markets that makes them em markets when you can buy at a shiller pe that is at historical bargain basement prices, relative to the u.s., which is trading at a shiller pe about 30, which is the only time we've seen prices that high or higher was the tech bubble in 1929 those are not great entry prices for equity investors so buying half price or less than half price emerging markets is what we're advising investors. >> chris, thank you for coming

in thank you, ed keon. when we come back. we'll talk crisis management with eric desenhall. we'll get his take on the elon musk s.e.c. settlement. and then later we'll talk tesla more with invest ror ron baron. did you see this article in the "new york times" the pictures of the parking lots with tesla cars everywhere >> why makes no sense >> we will talk about that let's look at the biggest premarket winners and losers

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new book just out today "best of enemies. we want to get to the book, but first the news of the day. let's talk musk first. how much did this s.e.c. settlement hurt or in some cases there's a view that it might have helped the firm >> my see is thview is he got ag ticket s.e.c. cases can be serious. i think he got off with a parking ticket now he has to be more careful about what he fwetweets and smo. i think it's a good outcome. >> he has continued to tweet on his own. it looks like he's not necessarily been tweeting material non-public information or anything material on twitter just yet there's been a couple of tweets, now int makimations about what s

been saying. do you think they need to take away the password and account and he needs to send everything else to somebody else first? >> i think what happens is people in these situations always blame the handlers. why can't you control him. what i find when you're dealing with these gigantic personalities is that it's hard to control them. it's not like people behind the scenes are not trying. sure, in a perfect world you would take away the iphone or whatever he's tweeting with. but it doesn't work that way these people are kings in their own little environment you try to control the king at your own peril >> what do you do? can you pass that over for a second in the "new york times" today there's an article about a group of people who have been taking aerial shots of parking lots where they say they are seeing large numbers, dozens in some cases hundreds of tesla vehicles and it's raising questions about whether there's demand for

vehicles, where these cars are going. the response from tesla, i don't know if you were the pr person what you would be saying, in zoom ca some cases they're not commenting in some cases they're saying they're being collected to be delivered or to be fixed it's all sort of shrouded in mystery. what do you do >> look, i mean, i don't know much about this incident, but tesla has to come to grips with the fact they have grown-up problems it's no longer the project of a cool science kid it has to become a grown up, viable company otherwise it won't last it has to be an operation to look serious. >> what do you do when operations are not there yet they're calling on volunteers to deliver the cars over the weekend to try to make the

quarter. clearly the operations are not there, what can you do on the pr end so they can get operations in order >> i don't knows there always a pr chick in something like this. i think one of the things you have do in a lot of situations like this is play your assets. one asset is spiritual the idea that this is what the future looks like, and that people who buy these products feel really good about doing so. and you hammer that. that's the best of your limited options. >> what's your take on john flannery getting the boot after 13 months now. >> we have a running joke at our firm, you never want to be the first crisis management firm you want to be the second or third because the first gets fired now we're seeing a relatively new concept in the last few years in management controversies that when you absolute i will have to change the orbit of a story, you just

bounce the ceo, whether it's fair or not. i tend to think it's not this is where we are when you have a lot of calls coming in to the media operations of a company, why aren't things better, the fastest way from "a" to "b" is bounce the guy i have my own reservations about whether that is a good strategy. this is where we are it's a head rolling contest. >> you also have a side hustle we understand besides just managing crises, you are writing about spies. apparently de niro is in the middle of the story? >> first, "best of enemies" is the true story of a cia legend named jack platt and a kgb officer. they were assigned to flip each other in the late ba'70s they became best friends this would be a nice bromance story if it didn't turn deadly it turned deadly because until

now nobody knows the real story, the full story of how the worst spy in american history, robert hanson, was taken down and it's our guy, jack platt who brought the file back from the kgb proving hanson was the traitor. this landed his friend in a russian prison for more than five years because the russians falsely concluded that it was ganadi who gave up hanson, which was not true the way robert de niro plays a role in the story, this falls under the category of you can't make this stuff up, he was friends with the two spies because they consulted with him on "the good shepherd. when genadi was in prison, robert de niro sent him a christmas card with the foet two of the two of them together. the russian mob boss saw they were friends and genadi fell under his protection thank you for helping us with

crises and with spies wish you a lot of luck with the new book "tbest of enemies. coming up, we'll talk nafta -- >> it's not nafta. what do we call it >> will be no morning nafta. you can look at this we see him look at this they'll be no morning nafta. ♪ they'll be no morning nafta i don't know who comes up with that >> that took a minute. >> clever? that's a stretch right now a look at yesterday's s&p 500 winners and losers ♪

can i get some help. watch his head. ♪ i'm so happy. ♪ whatever they went through, they went through together. welcome guys. life well planned. see what a raymond james financial advisor can do for you. so, they say that ai is the building block of the future. super. but today you're building wind turbines. morning sir. chief, the blade isn't passing quality gate. that's why you work with watson. i detect frictional loss on the midspan. it can detect the tiniest defects from just a few images to help production stay on time and on budget. i optimized the fiberglass finish to reduce frictional loss and maximize airflow. i was also part of the maximizing. for ai that can do more with your data, choose watson. hello. the best ai for the job.

welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box" on cnbc ♪ usmca ♪ usmca >> which way >> we're on the air, this is not for the blooper real >> we are? >> we are. among the stories front and

center at this hour, there is a big shakeup at google today. the company's ad chief is leaving to join graylock partners his departure coming 15 years after starting with the company. the companying tapping the head of google docs for the job facebook is naming a new head of instagram after the departure of the co-founders >> how do you do an "s?" >> i don't know if we'll get a shot of you guys still going adam liseri will be leaving the photo sharing unit his promotion comes the departure of instagram's two founders another stock to watch, papa john's shares rising on news that legion partners has taken a 5.5% stake in that country they say papa john's that

multiple potential paths to higher valuations. separately, papa john's founder john sha nattsha nat schnatter day in court looking at the dow, down about 83 points. >> that's a big enough story, papa john's for that to be on "closing bell. >> the interesting thing about this, he was not just the former ceo who was ousted, he owns like 30% of the company it's not so easy to make a 30% owner go away. >> you know why i'm excited about it being on "closing bell"? >> why >> because wrilf will say pepa. you heard him say that, right? >> i think he may have altered his pronunciations >>ly be watchini will be watchig

it's jobs week in america we're counting down to the friday jobs report. joining us is lan hi chen. he has watched one day you're looking at horror what's happening. the next day you're like this is not so bad how are you feeling -- the trump presidency, initially i think a lot of guys at the hoover institute were like who is this guy. >> that's a fair assessment. >> is he a conservative? a populist is he a republican he used to be a democrat i'm not sure what -- how you feel it you tell me how you feel >> i don't know if we have an answer to that question yet. a lot of people say tax reform, regulatory reform, what's happening with the courts, all positive tweeting, not so much.

>> things result from tweets, there may be a method to the madness. >> one could make the same argument about tariffs >> yeah. >> how about nafta >> usmca >> the "s" is problematic. >> you have to invent something for that otherwise you contort yourself >> looks weird on tv that's never stopped us. so that turned out you looked at the details there. how is it? >> there's good things there concessions on dairy which are important. on the autos, initially i think a good thing the long run question is can you continue to build cheaper small autos in the u.s. given the higher requirements that the law puts -- or the agreement puts in place. >> rules of origin requirements? >> yeah. place of origin requirements the other thing is politically what happens with this agreement in all the different legislatures can it get through canada,

mexico, the u.s. congress. there's stuff for democrats to like higher labor standards higher environmental standards so there are reasons to think the democrats may think this is a good thing >> we heard if there wasn't going to be an agreement it would be disastrous for the supply chain labor unions and businesses were lining up saying this couldn't happen we thought that's a reason why the bilateral deal would not make it through. doesn't this say here's a little something where everybody can save face and try to keep everybody appeased >> that was the goal here. the expectations were low coming into this, the fact they were able to roaeach a measure of agreement is a positive. this was always going to be the easier negotiation compared to europe and certainly china china is lingering out there, the question of what will happen out there. >> the lead story on drudge. 1 trillion in debt in fiscal year 2018, just

announced by the treasury, the federal debt increased $1 trillion do they know it to the decimal point? they do. hoover institution, that should get your attention >> we care >> is it given that we make 3% growth, is it at least a little more palatable >> i don't know if it's pat latibla palatable, but if the economy continues to grow, we could see numbers not go over a trillion dollars. there's no appetite for entit entitlement reform, social security, medicare, no appetite for any of that. until you address those

fundamental drivers, you will continue to see big numbers. >> to be even-handed, huffington post lead story, kavanaugh threw some ice on someone back in 1982 >> i heard >> did you hear about that >> i heard about that. >> thank you when we come back, it turns out breaking up really is not that hard to do. deal blocking is becoming a popular strategy for activist investors, and it could be more lucrative than matchmaking. at the top of the hour we will talk tesla with ron baron he's been a huge bull on the stock. he's defended a lot of the things that elon has done along the way. we'll ask how he feels right now. a lot of issues coming up in this extended interview. and later agriculture secretary sonny perdue will join us to talk about the renegotiated nafta deal, usmca

welcome back to "squawk box. time for the executive edge. let's play let's make a deal.in

break a deal for some hedge fund activists. leslie picker has that story. >> reporter: an activist hedge fund will go long a buyer and short a seller and push for a break up of a signed deal before it closes. think of this as a mirror image to arbitrage which bets on deals closing. but scuttling deals can be profitable for investors returns from arbitrage is about 5.5 percentage points higher than what shareholders would have good afternoarnered withoud intervention in 36% of the deals the activists were able to block them from closing, that compares to the norm where 9% of deals fail to close in 17% of the cases studied activists were able to get better terms for

acquirers in the deal. of the 70 unique investors that have employed this strategy, researchers say jana partners is the most frequent user carl icahn and keith meister also used the strategy >> if you're playing all the sides, i don't know how i'm supposed to feel about that as an investor. if you're an investor in the acquirer it benefits you because it reverses what happens when a deal is announced and an acquirer stock price goes down they say traditional deals benefit overwhelming the targets. shareholders in the target stock, which tend to see a huge pop in the stock price so they argue this takes the reverse -- >> i wonder if it gets to the point where you see companies that are about to be acquired not nearly have as much of a

jump in the stock price because of the arbitrage factor. >> exactly that's the question, too as this becomes more popular, does this disincentivize companies for signing deals in the first place. >> not if a get a big breakup fee. >> if you go long a company over 5% t has to get disclosed. if you short a company -- >> it doesn't have to be disclosed. >> ever, right >> no. so carl icahn, when he was seeking to break up the deal between express scripts and cigna, he did disclose he was short express scripts and long cigna, but he didn't have to do that >> he did it voluntarily >> leslie picker, always bringing us interesting stuff. thank you. >> green mailer was on "jeopardy" the other night coming up, pepsico out with

earnings and it's indra nooyi's last day >> last day. she deserves credit. >> sara covers soda and food >> a horse walks into a bar, bartender says why the long face that is not what happened here it's like why are you here okay thanks we'll tell you what's going on in this video after the brea k. at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside... ...& security algorithms on the inside... ...& that way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy.

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we mentioned this before the break. a bucking horse crashed into a bar in france after escaping its stable it almost looks like pamplona or something. the horse broke some tables and chairs luckily nobody was injured but you can imagine you don't want to get stepped on by a horse. obviously, you could -- that'll -- you'd definitely hurt >> know why he was mad and started bucking? >> is it about that joke >> somebody used that stupid joke on him and he was sick of hearing it >> i wish we did the physics

nobel crises it goes to the oldest person ever 96 years old previously it had been somebody 89 years old they point it out it wasn't -- won for literature but let me tell you one more thing. this is physics. a woman was named winning from canada this year donna strickland and it's rare. only the third woman to have won a nobel prize for physics. the first? madam curie in 1903. this a big deal. it's for lasers. and the other, american arthur ashcan, he's the oldest to ever win -- >> let's talk pepsi. >> you don't have to cut me off. i'm finished pepsi is out with quarterly results. sara eisen joins us with more on

this >> i'll give you some of the highlights from the quarter. she is leaving on a strong note. more than 4% organic growth is a turning point. speaks to much better trends going on in the business it's not just snacks which has been the case over the past few quarters remember pepsi owns frito-lay. north american beverages returned to growth other highlights, international very strong especially in developing emerging markets. as far as the weak spot and this may be weighing on the stock this morning strong dollar, starting to hurt. places like latin-america, russia the currencies have gone against them we saw that recently in nike's quarter where foreign exchange goes from being a helpful tail wind to an actual head wind. they raised their outlook for organic revenue growth which is a sign they're seeing better trends in beverages and in

snacks a mention this is indra's last time on par with staples. i picked out a few highlights of her tenure including the good for you fund for you strategy where she added healthier snacks to the profile and also diversification away from the cola, the brand pepsi, into bubbling sparkling water. >> i give her the credit there you say why do i give her as much credit as i do. "a," she staved off the nelson peltz. and she was able to do it and transform the company. i would argue long-term is now set up as far as the trends that are taking place in food these days in a better way at the same time and she didn't kill the company

in the meantime. it's a hard thing to do. >> absolutely. it's a big deal she saw some of these trends with healthier eating and snacking. because largely the food industry completely missed it. it's why you're seeing so much pain at companies like campbell soup, for instance, and other food companies frito and their snacks business have continued to out-perform. biggest question for the next ceo, he's been at pepsi 22 years. does he think the power of snacks and beverages together the right way? and will he look at spinning off the bottlers like coke is doing. >> interesting sara eisen, thank you. appreciate it. >> thanks. >> thank you, joe. when we come back, our special guest at the top of the hour investor ron baron we're going to get his take on tesla. he's excited he's ready to go elon musk in the settlement with the s.e.c.

we've got that extended interview right after the break. your company is constantly evolving. and the decisions you make have far reaching implications. the right relationship with a corporate bank who understands your industry and your world can help you make well informed choices and stay ahead of opportunities. pnc brings you the resources of one of the nation's largest banks, and a local approach with a focus on customized insights. so you and your company are ready for today.

in this hour of "squawk box," billionaire ron baron. his thoughts on elon musk, the state of the company, and whether or not the electric car maker will continue to be one of his largest holdings that interview is just minutes away plus we hit the ice with former nhl star jeremy roenick the puck stops here as the second hour of "squawk box" begins right now ♪ live from the beating heart of business, new york, this is "squawk box.

>> good morning. welcome to "squawk box" right here on cnbc we have the man coming from the ring, ron baron, in just a minute but live at the nasdaq market site, here we are. i'm andrew ross sorkin along with becky quick and joe kernen. take a look at equities at this hour dow looks it would open off about 62 points. s&p 500 looking to open off about five points and the nasdaq looking down 22 points a couple headlines to bring you this morning pepsico reporting third quarter earning results this morning earning $1.59 per share. 2 cents above estimates with revenue also exceeding forecasts. the company did cut its full year forecast due to the impact of the strong dollar hugh johnston is going to be on "squawk on the street" to discuss the quarter's results at 9:00 eastern time. and of course this is indra

nooyi's last day on the job. we wish her well and congratulations on a remarkable tenure that we were just talking about. >> three minutes we talked about that, actually separately, amazon raises their minimum wage to $15 an hour it covers all u.s. employees both full and part-time. target previously announced it was raising its minimum wage to $12. walmart raised its minimum from $11 earlier this year. this should help with wage inflation as things go, this is very positive news the nation's automakers will release their october sales today. expecting an 8.3% decline compared to the same month last year ron baron is here. he's the ceo and cio of baron

funds. tesla is the firm's eighth largest investment representing 1.72% of baron funds total assets ron has been a big bull on tesla shares and huge defender of elon musk thanks for coming in today >> thanks for inviting me. >> there's been a lot that's happened since we last saw you. >> so you want to talk about tesla today? >> let's talk about tesla. we now have this s.e.c. settlement as an investor, someone who's been supporting him all this time, what did you think when you woke up and heard there was an s.e.c. deal he walked away from >> well, i didn't think that was a great idea and when he had not received support from his shareholders for going private transaction, he flipped around and changed and canceled the transaction and when i didn't think he was going to receive support for this, walking away from that settlement, i presumed he was going to go out and renegotiate

and do it again. >> let me back up on this. the going private transaction, i mean with that's why this s.e.c. suit is here the s.e.c. doesn't think there was any ongoing transaction. this was him sending out a tweet based on a loosely based idea. that was not a transaction he made >> it was a proposed transaction. and i assume that he thought he had financing. but didn't meet reregulations to make such a statement. >> what did you think about the idea and i read in a letter to the s.e.c. from elon musk, he talks specifically about you and having discussions with baron funds about rolling into his transaction. so what was your view at that time >> well, i said i didn't want to sell it for $220 a share and i had a special proposal

this committee was going to consider about being able to invest in the privacy company through an entity that i was intending to form. but i thought that this was -- i would prefer that the company remain public. i'm not an expert on the law, but i would think rather than this exact controversy going on right now, the most important thing about tesla in the long-term is their stock price is going to determine on how many cars they sell, how many cars they make can the battery business be as big as the car business. >> and if they have enough funding to get to this they're very close to self-funding if they're not already. let's talk about the

fundamentals they were supposed to when they were making these cars, these model 3 cars, it was supposed to cost when they got to 10,000 cars a week, they were supposed to cost about $28,000 per car that they made and they were planning to sell them for $42,000 per car. so a nice profit built into every car. instead of selling them for $42,000 a car, right now they happen to be selling for more. which is $5,000 or $6,000 extra. now if they're running at 10,000 cars a week, they would make an enormous amount of money they would be making an enormous amount of money even at $42,000 a car when they get there. so how many cars are they going to sell? how big is the battery business

going to be? in the context of this settlement that was just announced where tesla is going to improve the governance, elon musk is going to remain the ceo and he is the driving force for this company, that they will -- so you're going to eliminate distractions the communications with investors are now going to be overseen >> meaning he's not going to be tweeting anything about the company. >> well, i -- >> except that he is, by the way. even overnight he had a handful of tweets related to the company. >> he's supposed to be -- i think he's communicating -- what did he say >> just -- i mean -- i don't think these would necessarily constitute material tweets he had a handful of things about spacex but in reference to, for example, tesla's stock he said something especially going weird with yahoo news feed on iphone. always saying tesla, may be

getting gamed. >> so i believe that investors would benefit if there were less communications and the stock was up 12% in the week i think the more communication about things that are extraneous to tesla, the less conventional it's going to be and people like convention if they're going to contribute to a business. i think the s.e.c. would get a benefit from this settlement also it's not just for tesla shareholders, but for the s.e.c. the s.e.c. wants to have some kind of control over what ceos or businesses are able to communicate through social media to their investors >> the stock was down on friday because people didn't -- for a multiple of reasons. people didn't want to see him taken out as the ceo they also didn't want this ongoing investigation that would

prevent them from being able to tap the markets for additional capital if needed. there's now going to be a chairman brought in. do you think that person, that chairman should be an outsider or would it be okay with you if it's somebody on the board right now, the same board that's been here for everything we've seen >> i'd like to see who it is i don't want to judge. >> would you take a board seat if asked >> no. >> you would not >> no. >> because of your position in the company? >> i'm not an activist investor. i communicate regularly with companies but i've been asked a number of times to be on a board. i don't want to be on anyone's board. >> what do you make of the current board though because the critique is that there is no, dare i say, adults in the room or people who are willing to control elon musk >> when you look at a business from the outside -- as i said, this company's valuation is going to depend on how many cars they sell and how much they make on the cars and how many they

can make, how much profit they're going to make on the cars it's not going to depend on whether we like or don't like a tweet comes out of the ceo the president tweets all the time 40% of the people love it and 60% don't. >> you could argue that elon musk pulled a rabbit out of the hat in this last 24-hour period with the s.e.c the s.e.c. could have said go pound sand or we're going to make this more complicated for you. >> i was reading an interview with jay powell. he said that elon musk is material to the prospects of having the ability of this company to execute and he doesn't want to damage the company, doesn't want to damage the shareholders, doesn't want to damage the community how upsetting must it be to an individual like elon musk who's working his butt off to try to change the world and get rid of carbon emissions and help the

environment. and every day to be criticized because he has -- he's different than most people i mean, so i'm not -- >> you said yourself you don't want the tweets. >> i prefer not. i prefer him to be more in the box. >> what kind of person would you want to be the chairman of the company? >> i think that someone who had a regulatory experience, someone who's done well, someone from a business who has great manufacturing expertise. >> on the operations -- >> they don't need me to tell them what they should choose i think they should have someone substantial. >> on the operation side, you talk about meeting or at least making the numbers from an operations perspective, how do you feel about the fact they have in this past week enlisted volunteers to deliver cars that there are questions about

cars in parking lots that they have offered extra promotions for free supercharging. what does that say about where they are in terms of the development of the production line >> you know, there are -- >> these are the issues -- >> these are all short seller arguments. you know, when you look at this company, when we started to invest in it -- you know, i did a friend a favor about ten years ago, and he was formerly the head of evokmark we went to law school together he was telling me he was now going to mentor an individual in a private equity investment and if i invested in that private equity, then it would be helpful to him as far as raising money for other investors. i said i only invest in our mutual funds, but i know you since 1966, and i'll do whatever you want so i invested some money. >> your money. >> just my money and the first stock i got back

was tesla stock. $3 a share that was my cost $3 a share then they're getting ready to go public and he comes to visit me -- >> elon does >> and we talk for a couple hours and i say i don't understand how this can be successful in fact, i just gave you a table here there's 50 car companies that have failed in the past -- since 1950s. 50 of them just one after another look at all these companies. american motors, brickland, checker, delorean, desoto. 50 companies i said there's no way these can be successful. then they take a car out to my house in long island and i test drive it i can hardly get into it i said this is a crazy car so fast and how do i know i'm not going to get crushed on the highway? i get back to the office, and this $3 stock i had, i sell. and it's now $25 or $30.

sell it. but i keep following the company. in case there's something i'm missing. and we keep watching it. and then in 2014 or '13, i realize i made a mistake and the stock is now $80 we go out and visit him. spent a couple of hours with him. but mike at least owned the stock. after that meeting i said, mike, you know, at least you're smart enough to own it congratulations. he said ron, i sold it you sold it after you listened to what he had to say? are you kidding me he says, yeah i did. now the stock is $70 or $80 a share. then they're starting the delivery of model s. and then i have to buy and the stock goes in 2014, $160 i sold stock at $25 or $30 and i say, okay. i have to own stock. so we start buying stock at $160 and we buy stock between $160 and $230 average cost is $219

and i think we can make 20 times our money. >> ron, one question, one issue that's been brought up this was from bob lutz on friday and i know bob lutz hasn't liked this from the beginning. >> he says they're going to go bankrupt. >> but he brought up a point on friday i hadn't really considered before. and that's the not having dealers is a huge disadvantage over the long run from a financial perspective. when you have a dealership network, they take the ownership of the vehicle from the minute it moves out of the factory. if you don't have that dealer network system, this is inventory that has to sit on your balance sheet how do you handle that if you don't have a network dealer? i did more research on it. henry ford was the one that invented the dealership model. he did it because ford was short on cash at that point. local dealerships would take out

their own loans. and then that way the organization would have a much bigger float and it wouldn't be riding necessarily on the company. that's an argument that kind of makes sense to me. why is tesla not using it? >> when he formed the dealer network, you're right, it was because he didn't have capital he couldn't build them and own them he had to have some way to get them out in the field. the dealers several years later invested millions of dollars in each of their businesses and what happened to them was they became incredibly successful and powerful. and a lobbying powerful. they have perpetual licenses they'll get out of the profitability achieved by companies. tesla and several months of inventories are holding. that's a big risk. that means the car dealer, the car owner, the car company, he's at risk if they don't sell the

inventories. tesla only manufactures to orders when they get an order, they make their car they don't have an order, they don't make the car and from the time they take an order, in 28 days they're able to deliver that car to the purchaser. direct to consumer nobody in between. the credit of tesla is so good with the suppliers that the suppliers give them terms and oftentimes it's two or three months basically they're getting paid in 28 days and they're not having to pay the people who build the car, the people who have the metal, for 60 days or 90 days. >> that's counter to what we've heard. >> they're having float. >> the suppliers say that tesla has tried to push for tougher deals than they have with other companies. >> everybody pushes for tough deals. every single car company pushes for tough deals. this company does a billion dollars a month of revenues, they're getting a billion dollars of float

they're creating float every time they're creating cars right? this is a float business these are positive floats. getting a billion dollars in floats every time they sell a billion dollars in cars. in addition to that, that's above the levels if they do a billion dollars a month now, they have a billion in float $2 billion means $2 billion in float. in addition to that they get credits $5,000 a car and they were planning on making $10,000 or $12,000 in profits. i think they're going to make twice that for awhile. they're not going to sell below $50,000 a car for another year. >> do the credits matter, if the credits go away? >> i think there's nine states or ten states where every time you're selling a car that's a gas guzzler or a big truck, you have to buy a correct to allow you to sell that car >> i wonder if regulation

changes achange s at the state model and that goes away >> it starts at 2% of the cars you sell then goes to 4%. the median should be going up. the only reason the car companies, the big oems are making these electric cars, they're not making money on them because they get this credits. >> can you speak to the issue that the shorts raise. in particular we were talking about this article today "the new york times" published with images from short sellers who've been flying around with airplanes taking pictures of parking lots where there are dozens if not hundreds of vehicles and the explanation from tesla is not always clear about why those cars are there, what's going on there are issues whether they need to be fix ed off the line. >> jamie stone in my office had a porsche. he bought a model 3. he said it's not comparable to a porsche. he said it's unbelievably

different. he said it's the best car he's ever had my kids have -- one of my sons has a model x. he says he will never own another car other than a tesla if you talk to anyone who owns these model 3s, it's unbelievable the quality, and it keeps getting better and better and better >> they're buying the $60,000 and $70,000 versions >> general motors with their plans to get 97% without defects. when tesla has them, that's making them fast and they're early on the rampup. when they're making them like that, what happens is you don't have -- you have to make sure everything runs right. the percentage they're making is higher and higher and higher i was out with a couple guys, i guess three people in my office. and we were out at the general motors plant in orion, ohio, last wednesday and we were with the president

of general motors. four and a half hours. his whole team walking around the plant, we're talking. they're making the robotaxis he was telling me just to cut to the chase here, he said what tesla has accomplished is extraordinary. extraordinary. my first question to him was that, you know, you got all these billions of dollars invested in plants that make motors you're not going to need motors anymore. how is it to convince the board of general motors to make these huge investments that are required in batteries and electric cars, and the dealers don't want to sell them because there's nothing to fix dealers make all their money on fixing stuff opposed to selling stuff. how do you get your board to do that he said there's a canary in the coal mine. what's that? he said, well, we noticed that the general motors consumers are

using uber and lyft. in the next ten years, the automobile industry is not going to be recognizable dan, who i think is an incredible guy >> dan adams >> yeah. he said what is going to happen is that -- i've lost my train of thought on that one. >> that what he thinks is going to happen in terms of changing the car industry >> electrification he thinks when you get the cost of a battery to be less than the cost of the motor, it'll take off. when i started investing in tesla, the cost of the battery was $35,000 a car. it's now maybe $12,000 or $13,000. the cost of a motor is $5,000 or $6,000 the cotts st of a battery is gog to be there in five years. you have to have ten-minute charging right now it's 20-minute

charging for tesla i said how insurmountable is that he said it's technically doable. he thinks autonomous driving is where he can establish competitive advantage opposed to electric vehicles. he says the automobile companies can control how fast that comes on but i disagree with that because there's all these countries like china. city by city, they're rolling out. they say you can't sell internal combustion engines anymore i think it's going to be exciting -- i'm sorry. >> no. go ahead you're a big convert on this >> you have to use natural gas for the grid >> how about solar >> i don't know. but at this point there's not much difference in terms of the, you know, the carbon footprint, whatever you're talking about. >> there's a huge difference between natural gas and --

>> natural gas, no, i'm talking about between charging your tesla. you still got to get your power from the grid. and so at this point it's -- >> battery storage business. i happen to think that tesla can be a $500 billion -- >> that's with the -- you know, your 50 cars you can't put oldsmobile as a defunct car company. you can't put pontiac. they're models of cars you're using these numbers -- and you know who you don't have on here? tucker remember jeff bridges. he only made 50 cars the dude is not going to work hard enough to make a car -- what's wrong, andrew you got something important? go ahead go ahead go ahead you look really pained go ahead >> what i wanted to -- >> rambler rambler became amc >> amc's done. >> but it was swallowed up >> studebaker, gone. >> you can't go oldsmobile and pontiac? those are models >> they're not all models. >> they're mostly models

you don't have tucker. >> let's do it this way. a lot of cars didn't make it >> we'll take that. >> what have your conversations with elon been like over the past couple of weeks >> been real interesting i think he is really a guy who wants to do the right thing. and he's not an easy person to work for he's demanding, likes perfection i think the reason he had some people leave is not because something's wrong with the cars. it's because he's a tough guy to work with. what i think is he thinks about how to make his shareholders happy, how to make his customers happy, how to make his shareholders happy, how to make his employees happy.

he's always trying it's just he's not like other people i've met. when i was in 1969 -- 1999, we had an investment in sotheby's and this historically had been the biggest lost that i had ever experienced. we invested $500 million $20 a share. i thought the idea was that they were going to take it and put it onto the internet. and the stock went from $20 to $40. so we're making $500 million then the chairman gets indicted for price fixing and the stock goes to $10. so we lost $250 million. devastating loss for me at the time and i always thought that was the worst loss i've ever had but the worst loss was in 1999 for an entire year -- so after the stock doubles to $40, i spent the entire year talking to jeff bezos and meg wittman and i

visited him three times, spoke with him on the phone maybe every month, talked to meg a few times. i wanted to get them to buy sotheby's. here i am trying to get them to buy this company that i have an investment in and i'm trapped. and instead of focusing on, oh, my god this guy is changing the world. my biggest mistake is not investing in amazon. he's laughing that funny laugh and i didn't invest in him how could i miss it? if i ever meet someone like that again, i will invest in them that's where elon comes in >> speak to the pressure you think he's under because people do have questions about just his ability to persevere through all of this, what it feels like i know you've talked to him. >> as i said, he's an uncompromising person. he's innovative -- >> you think he takes your advice >> some of it. at least far bit, he told me he

thanked me so i think he understands, but he's different and bezos is different so i think -- >> bezos is different, but he hasn't made the missteps that elon has made. >> you never know. >> elon's have been public >> and they didn't have social media then but this is good for this settlement they have, to go back to that, it's good for tesla shareholders >> you think this is a corner has been turned and we won't see that type of behavior. >> i'm hopie ining there's less it. >> let's talk broadly about the markets. we've talked about this a lot. we are at new market highs we've seen where things have come when you watch this, do you worry about these high levels? or do you think there's more room to run?

>> so i think that the market is not at high levels 16 times earnings that growth is accelerating multiples of companies should be different, should be higher now than they had been before because you have capital models instead of having to build car plants you're getting fees from the assets that other people are investing in businesses. and that's deserving of higher multiples. $7 billion of hotels other people are paying revenues to put people in the rooms. so there's different ways like that, and i think that -- so my big premise -- our big premise is that the stock market is tied

very closely to the economy. the stock market should double every 10 or 12 years over the long-term and i can't see any reason why that's going to be -- that's going to change. you go back to 1960, my typical example. the dow jones was 600. it's now 2,600 and you look at the gdp of the company, it's now $21 trillion they grow 6% or 7% a year. and stocks give dividends. last night i asked my wife, i said, when we started dating in 1975, i said you were a systems analyst. how much was your salary and she said $20,000 i said well, i just looked up and a systems analyst now is $80,000. you should have kept your job. but that was 3.5% increase per

year that's the rate of inflation the value of your money is going down by 3% or 4% a year. that's what it costs you to hire someone with the same qualifications look up anything you want, go back it's 3% or 4% a year basically 3% or 4% a year, that's the number. so we're doing something, we're taking money that's falling in value, 100% certainty it's going to fall in value every democracy that existed has done the same thing. we're taking that asset that's falling and creating businesses. the way you protect yourself is by investing gold in 1975 was $130 an ounce it's now $1,300. and the dow jones in 1975 was 1,000. it's now 26,000. that's 8% a year stocks are in the best play. and that's 8% a year compounded.

plus dividends, even more. >> if you think the market is so closely tied to the economy, if you think economic growth is picking up, then that might be reason for thinking stocks are going to pick up too you think that's the case? >> yes and growth will be faster, technology is going to be better so when -- i sent you before a listing of stocks that we had invested in and i said that in 1992, we had $100 million under management and now have $28.58 billion. we've made our clients $27 billion in realized and unrealized gains from the gains we've achieved. so i happen to think if we don't have flows, then -- and we are getting flows. but if we don't have flows, we

can double our money again and if you look at that list of companies, we've made in -- i didn't start off to be a long-term investor that wasn't the idea the idea was selling research for commissions. my idea was -- am i going too far in this? >> no, no. >> and so we're getting 1% commissions. fixed rates in the 1970s and so i would invest in disney and mcdonald's and federal express and nike so i invest in these companies and my idea was if i got someone to invest $800,000, i would make an $8,000 commission didn't take long to figure out if i got them to give me an $8,000 commission for buying a thousand shares of something, then if i got them to sell that, i would make another $8,000 commission so i was buying and selling. and then i look back in ten

years, i say, my god what a disaster all these companies i was recommending initially, look what they became and i could have been rich >> buying the stocks >> and holding that's where the buying and holding comes from it comes from looking back and seeing to try to find these businesses that can double in size and investing them and keeping them >> maybe to bring the interview -- i know we're coming to an end in a moment -- back to tesla. you did say you thought this would be a trillion-dollar company by 2030. that would be much more than doubling. >> yes 20 times 30 times >> how does that happen? >> it's really hard. >> it's hard >> it's really hard. i think it could be a $500 billion car business i think it could be a $500 be g billion battery business

i think in three years we can triple our money and i think in -- if you take my scenario and i'm right and i think there's better than 50/50 chance in 12 years it's going to get to a trillion dollars of revenues $150 billion a year, the company is selling for that now. want to give it a 15 multiple? basically that's a big number compared to where it is right now. it could be 30 times but it's -- you know, there's a lot of things. you can't just go out there and just advertise getting people to buy your service >> a lot of things have to break your way >> yes >> and every other car company in the business has to go out of business >> no. i'msaying sell -- i think this is going to be the biggest car company. you have 10 million cars a year. i think the battery business where there's all this technology in the batteries, i think the battery business is going to be big as a car

business i'm not even thinking of being an airbnb. and instead of you making the pams, then that car is just going to drive away as part of the tesla fleet. someone's going to use it during the day. and that money that is obtained from it, half will go to you and half will be going to tesla. that's the reason why tesla has no money tied up those cars they sell for $40,000, buy it back for $20,000. there's a hundred thousand miles you can do a year. and you get 50,000 revenue miles. a dollar a mile. that's a big deal too. i think the car companies overall are way behind and they're hoping that they can delay the onset of electrification. they know it's coming. but they hope they could delay it because they have hundreds of billions invested.

that's going oi way because you don't need motors anymore. >> ron, i want to thank you for being with us today. >> thank you for the conversation coming up, ge was upgraded that's been rare but it follows big news yesterday. details after the break. and then later, the puck drops tomorrow night for the start of the nhl season which as you know you can watch on nbc sports. jeremy roenick joins us and talks to us about his new book the futures at this hour are down lower, but better than before now down 52 on the dow you're watching "squawk box" on cnbc

welcome back to "squawk box" this morning following the announcement of a new north american trade deal, the u.s. agriculture department came out in support of that. joining us is sonny perdue good morning to you. >> good morning to you guys. >> thank you for joining us. a lot of commentary about this new agreement and what it does specifically for farmers in america. your take on where it is and i have a host of questions >> sure. we think it's a great deal obviously u.s./mexico/canadian

deal is good for the u.s. economy. i think president trump achieved most if not all the objectives we had to begin with >> what do you think it's going to mean for farmers in the united states specifically on this -- those with cows and those making milk? >> we've got great dairy provisions eliminating canadians' unfair practice we're in the best neighborhood on the planet. logistics work both north and south. it's going to be good for u.s. agriculture who's benefitted over the years from access to these markets. >> what do you make of canadian dairy farmers. and their headlines in canada. get slapped in the face from new nafta. what should they be thinking this morning >> canada has a supply management system. their dairy farmers do very, very well. i know our farmers here in the u.s. wish they had done as well.

they talk about a supply management system, but what they have done is allow them to over-produce which depressed prices on the world market which hurt our dairy farmers and we're just right sizing that let them manage a supply in canada >> is there any element of this that you wish could have been adjusted even more so in our favor? >> always there's some things that you could tweet and we would love more access. we got more dairy access we got more poultry/egg access than before. we got the wine issue restrictions lifted. so there are always some things -- we always want more. but i think ambassador lighthizer, president trump did a wonderful job on holding the line on these agreements >> when you look at this bill, is there any element of it that you think represents a challenge to the american farmer >> again, the challenge is productivity and i think american farmer does

that very well as i said, we could always use more we would love to have free unfettered access to the dairy market in canada but they had their system they defended there they designed to have almost a guaranteed income for their dairy farmers. >> the farm billics pir rati ie coming up. what are you going to do >> we want to execute as long as we can for farmers, there are going to be no changes out there. we are going to continue to implement that they're going to get their plc and arc payments here in october just as they always have frankly, there's not going to be any changes. we would have preferred it had been done prior to expiration date so farmers can plan for the next year. but i believe the conference committee will get it done before the end of the year >> we're going to leave the conversation there we're very grateful for your time and work.

>> thank you coming up, hockey season is here who better to talk the coolest game on ice. jeremy roenick has a new book about his life in the league he joins us after the break to erlk about why hockey plays are so good at golf too. and the state of the game. we'll be right back. and then is goes like this few stocks on the move this morning.

rbc upgrading ge from sector prefer to out prefer on news of larry culp being named as ceo. saying his vision and operating excellence should put a floor in the stock. rbc also raising the price target from $13 to $15 jpmorgan adding weight watchers to its focus list. they believe the pullback from its peak in june represents a compelling entry point for investors. price target of $120 and papa john's. shares rising on news that legion partners is taking a 5.5% stake in the company saying papa john's has multiple potential path to higher valuations and separately, john schnatter had his day in court yesterday testified against the board which booted him from the company in july. he's seeking documents relating to his ouster. want to take a quick check

of the markets right now take a look at u.s. equity futures. we are in the red. "squawk" returns after a short break. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order? ooh, that's hot. ♪ you know, we could sell these. nah. ♪ we don't bake. ♪ opportunity. what we deliver by delivering.

the puck drops on the nhl season tomorrow night. seeing the newest team nearly claim the stanley cup. joining us now jeremy roenick. he's also a celebrity judge of golf channel's driver versus driver which premieres tonight i grew up with the cincinnati stingers and swords. i didn't watch a lot of hockey until recently >> roenick it's all good. >> i should have known and if people came back -- we have a 30-second break now i was doing justin leonard his pre-shot routine because we were talking about that he always gets down low which is similar to the slap shot. >> it's very similar people say why are hockey players good at golf -- >> you are good. >> i'm pretty good i'm a single digit, one handicap i call myself a golf snob. play as much as i can.

seems to be football players, baseball players, hockey players. after that, there's not much hollywood celebrities haven't won in awhile. >> broadcasters. >> i consider myself a broadcaster now too. >> you are it's an interesting mix between hockey and golf with you you're on the -- the golf show is a big deal for you. >> it is coming out of my element i'm a hockey guy but i love golf so to be on "driver versus driver" tonight, it was so exciting for me. i love different equipment i love seeing new drivers. i'm one of those guys that go into the golf shop just to look at what's new out there. when i got this chance to do "driver versus driver" which is a reality competition series where we find -- we have designers that put in their design -- >> it's going to be a wilson -- what do you use now? are you using a taylormade now

>> i have the last winner of "driver versus driver. i also use a lot of wilson equipment. which i have to because wilson is the sponsor and host of "driver versus driver. but we try to find the world's next best driver but do it through a competition style. where everybody ages 22 to 81 on this show have submissions wait until you see some of these drivers that these people designed some really pushed the box of being very futuristic. >> did you guys read the 18 story lines to follow in the nhl this year? i got to three and i got totally lost i don't know enough about the stuff. but there are 18 compelling story lines. you got the capitals we'll see what happens there new coach. >> can you imagine that? win a stanley cup, lose their coach. first stanley cup in the history of washington. so we'll see if they can come

back and repeat. >> and the only way vegas can beat last year is by winning the stanley cup. >> which is crazy, right >> brand new >> it's unprecedented. first-year team goes to the stanley cup or goes to a championship and has the chance to win the hardest trophy in sports to win. which i believe. i was there 20 years, never won it but we'll see how they react to having such a successful season. remember last year, a year ago with the shooting, that's right when the season started. so this team rallied around the city they rallied around an idea they embraced themselves in the community. everybody ran with it. that adrenaline of being thrown out of their old cities. now a bunch of misfits, they ran with it. it'll be neat to see if they can keep up with that momentum >> also about streaming but another expansion. seattle? will that happen >> i think it's one of the bigger markets in the united states seattle is near the canadian

border have the competition between vancouver and san jose plus there's only 15 teams in the west so we can have one more. 16 in the east make it even sounds right, right? >> is streaming ready for hockey now? >> i believe so. i think hockey is at an all-time high in the popularity salary cap went up this year because of the revenue it's created. they're getting their players out there to market it it's been blowing up people love the game i don't see why not. >> i remember when nbc -- i'm not saying they stepped up to the plate, but there was a time when people -- it was after the lockout? >> yeah. ten years ago. >> people thought hockey was dead >> 75 inch screens >> nbc revolutionized that people can watch the game on television because a lot of the knock against hockey is you can't follow it. >> can't follow the puck >> can't feel the energy, right?

but i think nbc is really with their camera positions, their microphone positions, the way they've gone out there and made sure they brought people closer to the players and the game, they can get a good feel of it. >> by the way, that's similar with golf too. >> no question just watching this ryder cup and the sound. >> remember when they used to put the highlighter on the puck? >> yeah. when they had the blue light camera that didn't work either. >> unfortunately for the rangers, i became a fan. >> rangers have an interesting season this season rebuild. driver versus driver tonight golf channel >> be sure to catch wednesday night hockey the double header tomorrow season gets under way on nbcsn tomorrow night when we come back at the top of the hour, senator path toomey is going to join us. we'll talk the economy, trade, and a lot more when "squawk" returns. here.

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still to come this morning, senator pat toomey joins us. plus our guest host for the rest of the show is former dallas fed president richard fisher he'ljo uonetexl ins s nt. es? great question. see, for a full service brokerage like ours, that's tough to do. schwab does it. next question.

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new this morning, asset management giant blackrock releasing its investment outlook for the rest of the year and you'll see it here first earnings central pepsico beating the street in the quarter, but cutting the full year outlook. this as indra nooyi leaves this week plus we'll introduce you a woman who ran patagonia for

decades and is now dedicating her life to conserving the earth. the final hour of "squawk box" begins right now ♪ live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live -- we're doing it live -- from the nasdaq market site in times square i'm joe kernen with becky quick and andrew ross sorkin joining us future -- >> blake harrington. i never put that together. >> yeah. he has nothing on you. >> i will invite you to my 70th birthday party in march. >> is that true?

>> yeah. shatner comes in and i feel good about life he's 87. right? nobody can live more than one day at a time. >> the goal is to keep going that way >> the alternatives are not good let's look at the futures right now. we got to talk about -- what sit? g5 >> 5g. >> that's what i talk about. that's a golf thing. >> that's your aspiration. >> there's the futures down about 50 points on the dow. and the s&p down about four. let's get you caught up on some headlines this morning. pepsico organic revenue growth up 4%. but the company did cut its full year forecast because of the impact of the stronger dollar. at first that put pressure on the stock, but about two hours later, stock now up by almost 1% pepsico cfo hugh johnston will be on "squawk on the street" to talk about the quarter's

results. that's at 9:00 a.m. eastern time amazon is raising its minimum wage to $15 an hour effective november 1st that raise covers all u.s. employees both full and part-time as well as seasonal workers too. target previously announced that it was raising its minimum wage to $12 now on a scale to work its way up to $15 an hour by the year 2020. and walmart raised to $11 an hour earlier this year tesla shareholder ron baron says the electric automaker could be a $1 trillion company by the year 2030 baron joined us in the last hour >> i think this is going to be the biggest car company. you got 10 million cars, 15 million cars a year. i think the battery business where there's all this technology in the batteries, i think the battery business is going to be as big as the car business >> he's been a big investor. about 1.7% of baron funds overall wealth you can catch more of ron baron's comments on cnbc.com

now to washington news senate banking committee is going to hold a hearing today to discuss the implementation of the economic growth, regulatory relief and protection act which was signed into law in may joining us now is senator pat toomey he sits on the banking committee. anything else going on with the senate >> nothing that i've seen. >> you know what i can't -- i don't think i can take it if we don't just focus on this issue. i don't think i can talk about the other thing. it's not my problem. and it's just so troubling watching the whole spectacle can we just talk about this? let's keep it within the lanes here andrew, i'm sure will get back to that other ice throwing or whatever we're going to talk about. >> we also have trade. but yeah let's focus on trade and banking. >> okay. so tell me about -- so what happens -- what is the news peg on the law signed into effect in may? >> i think the short version is the law automatically provide

regulatory relief for small and tiny banks and that's good. but it also contemplated regulatory relief for medium size and larger regional banks, for instance and we have yet to see that implemented. so one of the topics that i'm certainly going to want to discuss at the hearing today is what kind of progress are regulators making with those sort of medium size banks? those above $250 billion in assets because under current policy and under dodd/frank, any bank over $50 billion was treated exactly the same whether you're $51 billion and you are, you know, a regional bank in rural pennsylvania or a citigroup. and those are two different animals. we're looking to see some differentiation in how they're regulated. >> senator, my name is richard fisher i was head of the federal reserve back at dallas for ten

years until 2015 this was something we really pressed hard for, getting that lifted up at least to $250 billion or so. these regional banks particularly the little community banks you mentioned really have struggled with over-burdened regulatory excess. >> right >> you're going to have randy quarles testify today. the vice chairman of regulation. are you meeting any resistance at all from the fed? >> i wouldn't describe it as resistance but i'm eagerly awaiting some of the results. i would argue that there are some things the fed could have done already for some of these banks that are -- they're not tiny banks, but they're not extremely complex international banks either so this bill that we passed earlier this year, 2155 requires them to have the regulation reflect the activities i'm going to push them to see where we are i think it's overdue >> good. i'm all behind you, but i'm not

there anymore. >> give them a call. >> i think we can just broaden it to talk about the new usmca i don't know there's no short -- can we just keep calling it new nafta? there's good things and bad things in your view? >> well, that's exactly right. i think there are good and there are bad things look, the good thing is relief that we're not going to descend into a full-blown trade war with our nearest neighbors and biggest trading partners that's certainly good. and there are some specific titles that are encouraging to me you know, new titles on digital technology, financial services, intellectual property. these are all constructive but i think the biggest changes are actually changes that diminish the free trade that nafta has permitted. i don't like the sunset provision that is in this. i don't like the dramatic reduction in the access to a

state dispute mechanism. i don't like the government mandating wage rates and putting quotas on imported vehicles. so it seems to me it's a modest step backwards from the point of view of a free trader. but there's a possibility that we could address some of these, what i consider flaws in implementing legislation that congress has to pass and there are some good things so we've got to study the details. >> just looking at the newspaper, senator there's just no way around it. so it will -- mcconnell says there's going to be a vote this week on kavanaugh. do you talk to people? do you -- i mean, you're in the senate you must where do things stand right now? you know anything that we don't know about the fbi investigation, the scope, the time as anything changed? what's jeff flake's latest -- how's he feeling about things? what's his temperature today >> we all got back in last night

and had votes last night have not had a chance to really have a lot of discussions with my colleagues. we'll have a lunch today the republican conference where i am sure this will come up. but honestly at this point, i don't have any granular information. if senator mcconnell says there is going to be a vote this week, you should bet that there will be a vote this week. >> two quick questions because we speak to a business audience. we're trying to understand what the midterms are going to mean and ultimately what that's going to mean to policy. how do you think the kavanaugh hearings are going to impact the midterms >> i think it's very hard to say. i don't know what the net effect will be. i think most americans have to look at this process and be disgusted by it. disgusted by the process that got us to the pointof this really eventually necessary but terrible hearings that we had last week. the woman had a terrible

experience, but it's completely uncorroborated there's an attempt to really destroy a man who's had a fantastic reputation for decades. i don't know what the net effect is going to be on the elections. >> and what do you think the effect is ultimately on the credibility of the court the reason i ask because i know you've thrown your support behind kavanaugh on this but there are clearly lots of americans that watch those hearings irrespective of who you believe were anxious about, perhaps, the disposition in which he responded to the questions >> i think most people will understand that when you are personally accused of a heinous crime you had nothing to do with, people are going to react pretty aggressively. we did see that. i think if you want to know what brett kavanaugh's temperament in he courtroom is, we have 12 years of his service on the d.c. circuit court of appeals there's plenty and no one has ever said that he has an unsuitable temperament.

>> i remember justice thomas and the most famous line and you could see the rage underneath his -- and he's had a -- you know, you look at the last 25 years he's been on the bench. and to say that -- to extrapolate from his temperament when he was being accused. remember he said it was a high-tech lynching has anyone been more calm and measured over the last -- so i don't -- i mean, that's a great idea once you -- we made the guy mad. now let's say by the act of the guy being mad, that disqualifies him. it's beautiful it's perfect it's amazing to watch. thank you, senator >> thanks for having me, guys. >> senator pat toomey. >> okay. we should tell you that blackrock is out with its global investment outlook joining us with this exclusive is richard turnell good morning to you. why don't we start with you and the headlines from this report

>> well, first of all, great to be here. thank you for having me on we see three important themes for the remainder of the year. the first is continued economic uncertainty in part due to trade. that keeps investors focused on growth where they've got the greatest confidence in returns. our second theme is gradually tightening financial conditions. one of the big changes this year is for the first time really since the global financial crisis, cash, short rates are providing a viable -- we're looking to move money into safer haven assets we've seen cig kants flsignific into the curve very attractive and see the curves steepening. then the portfolio resilience. given uncertainty, you think investors will continue to look to build resilience.

that still means taking risk, but taking risk where you're most confident of getting paid for return that's in places like investment, great credit, equity one area where we think you're being paid to step into volatility is the emerging markets. >> richard, the thing that i'm most curious about know is if you do have these clouds on the horizon, you do have the issue with interest rates creeping up, whether buybacks are going to continue at the pace they have they represent such a big chunk of the market, the equities market right now in terms of propping things up and if you think companies potentially take a step back, even a minor stepback, what that does >> well, one of the reasons we continue to be positive is the huge amounts of cash companies both have on their balance sheets today but also are generating. we've seen extraordinary consistency in that cash being returned to shareholders

both through buybacks as you say but also dividend and dividend growth over time the companies we're speaking to continue to buy back shares. they hope we're going to see a significant recovery in capex. our expectations are that companies continue to be significant buyers again, that lends up towards u.s. equities where we're seeing that cash being returned most consistently i think that really provides an underpinning if tr the market. >> richard, can i ask your focus on emerging markets. at the same time you're talking about gradual monetary tightening, becoming attractive. there's a lot of dollar borrowing that took place in ems. rates are coming up. it's kind of hard to be a strong advocate unless you feel it's completely washed out for argentina, south africa, indonesia, turkey, et cetera et

cetera et cetera it seems a little difficult to make that argument but you are seeing it a different way. >> so we're seeing a combination of local country factors turkey and argentina and also global factors as you mentioned. and i'd say the stronger dollar being very important in creating some of the volatility that we've seen in emerging markets going forward. it's worth remembering that the countries you just listed, they're a small part of what emerging market universe offers. and actually particularly when you look at equities, they're much more focused to asia where debt levels are much lower the reasons for being optimistic going forward on emerging markets are that many of those local country lists are close to a peak we're seeing china by far the big e driver of em growth remain firm holding out better than consensus expectations this

year we believe that most of the fed rate hikes are now priced in the market has really caught up with what the fed has been telling it for some time you've had this big adjustment in expectations. and along with that, you're starting to get some stability in the dollar. the dollar has been in a stable range against developed market currencies since may we take that all together. we look at the valuations now on offer. and we think investors are really being paid very attractively for stepping in and some great potential earnings growth at attractive valuations. >> we're going to leave the conversation there thank you, though, for bringing the conversation to us appreciate it. all right. coming up, go take a hike. the former ceo of patagonia joins us to talk philanthropy and value of national parkland just two firms dominate the proxy on shareholder proposals a critic says it is threatening y dendt seche key of all this

keinpeenrear stay tuned

welcome back to "squawk box. kroger and walgreens have announced an agreement for exploratory joint format stores. 13 walgreens stores have been selected to combine products and services from both companies and those stores are located in northern kentucky near kroger's cincinnati headquarters. the companies say they will closely monitor customer feedback our guest host this hour is richard fisher he's the former president and ceo of the dallas fed. richard, it's great to see you great to have you with us. >> thank you >> you're not just the former dallas fed president you've got a lot of other hats you wear you're a current at&t board member, former u.s. trade rep. >> deputy trade rep. >> but that gives us so much ground to cover with you today do you want to start talking about rates? would you rather talk 5g? would you talk china what do you think? >> i'd like to touch on 5g

but as far as rates are concerned, it's pretty clear they're in a risk management mode at the fed. powell is a different kind of chairman he comes from a credit market background the last non-ph.d. fed head was paul volcker so they're preparing for a turndown in the cycle. you want to have as many nuts as you can have in the tree as long as it's not totally disruptive to the economy. >> he thinks the market has finally figured out what the fed has been saying for a long time. do you think that's the case or where they keep raising rates and ratcheting away at this, has the market really figured that out yet? >> i think they're coming around to it. markets can -- i remember the talk about qe-infinity when i was there. you're overshooting your expectations and then correct. i think things are pretty much

discounted here. and we didn't think there'd be a fourth this year two or three more next year. that's consensus view right now. it is being discounted we'll see how far they go. they have these debates about what is the, quote, neutral rate the bank president goes out and talks about it's higher than we think it is. >> did you just call the members of the fed a bunch of nuts >> they're putting nuts in a tree >> i thought that was a pretty good -- the point you made was that it's not in president trump's best interest to keep interest rates low because eventually winter will come and he needs some room you need some flack. can't cut from zero. it's hard to cut from 3% probably >> i personally expect them to be up in the 3.5% range. >> when? >> then you have dry powder for the next downturn.

>> yeah. and you can resort to the balance sheet which they're reducing, but you don't want to do that. >> nuts up in a tree >> to me they're not nuts. >> i thought i heard that. >> jay powell is a giant squirrel >> he is saving for the winter. got those big cheeks >> well, he's got great cheeks and then on trade, i implemented nafta. it was out of date there's a lot that needed to be corrected. electronic banking and so on as i was just saying to andrew on the break, because i like the music of faulkner, it's not as bad as it sounds it could have been worse i spent a couple of intensive days with wilbur ross this summer he was very articulate about this i expect this to be done

it's tough for trudeau to give up a little on the milk stuff. that's going hurt him on the eve today. but i think he waited until the last minute. so i'm encouraged by that. on china, i don't think they're going to relent. i think they're going to continue to see this clash by the way, this bridges into 5g which i hope you let me talk about. >> we will talk 5g in just a little bit >> try to ram it all in. >> g5? >> planes and cell service at the same time. bepre ming up, the announced nol izin physics the historic details after the break. ...you never got the brakes looked at? oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think and do automatically. imagine that, a world of new digital products and services all working together for you. can i borrow the car when it's back?

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still to come this morning, the former patagonia ceo who is fighting biodiversity. she is going to join us on "squawk" when we come back more than half of employees across the country bring financial stress to work. if you're stressed out financially at home, you're going to be too worried to be able to do a good job. i want to be able to offer all of the benefits that keep them satisfied. it is the people that is really the only asset that you have. put your employees on a path to financial wellness with prudential. bring your challenges.

♪ good morning and welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square bain capital and kkr are starting a $20 million fund to make payments to former employees of toys r us the two firms own the now liquidated retailer, but they are not required to pay workers under bankruptcy law they're currently working on formulating eligibility requirements for payouts

also the senate expected to pass a new faa authorization bill part of the proposed bill regulates minimum seat size for passenger jet ifs for the first time i know becky has strong feeling about the size of seats on these planes especially the middle seat united technologies has one conditional approval for the deal to acquire rockwell collins. one that makes airplane deicing systems and another that sells aircraft stabilizing equipment i just care about the leg room >> you don't care about the deicing systems? >> oh. i need the deicing systems and then it's a priority situation. >> got some odd priorities infants in first class is a real -- >> that's a separate issue >> they can't go down with the pets it's cold. >> no, no, no. i want a market-based solution for this

>> overhead bin? >> no, no, no. >> okay. all right. >> i want them to have their own special section. >> aren't you glad you came on the how? >> i am. i'm great with deicing coming out of southern chile, we had to deice it. >> they say let's take it 15 minutes. let's have a vote in the plane who wants to deice >> just the leg room >> always deice. . >> tesla news is just hitting. tell you quickly tesla says they produced 80,142 vehicles they say that's 50% more than their all-time high in the second quarter >> okay. i talked about this one earlier. there's no nobel prize with literature out of a different type of prize for literature but the physics prize came out today. we had physiology and medicine yesterday. there were three scientists. they came from the united

states, france, and canada awarded the nobel prize in physics. half of the $1 million prize will go to arthur ashkin who's 90 years old older person to receive a nobel prize. he developed optical tweezers that can grab tiny particles such as viruses without damaging them when we say tiny, you think like bacteria are tiny. anyway the other half will be shared by gerard mourou and donna strickland strickland the first woman to win a nobel prize in physics in 55 years and i think only the third the first as we noted was marie curie in 1905. awesome. >> it is manhattan real estate sales dropped 11% in q3. this marks the fourth straight

quarter of double digit declines the average price of a manhattan apartment fell 4% during the latest period to $1.9 million. we've heard from a number of experts now who suggested things are going to continue to go south. i wonder -- i do wonder long-term not just in new york city, but you're seeing this play out in major cities across the country, whether this actually ultimately will weigh on gdp, consumer spending in ways we haven't adjusted for >> well, i come from the land of gerald hines these real estate developers, as long as you have cheap money, build until the buildings fall over that's the nature of the entrepreneur >> you think it's an over-supply story. >> it has to correct so we'll see how much it weighs on the overall economy >> okay. our next guest has devoted her career to conserving biodiversity after 20 years as patagonia ceo, christine tompkins along with

her husband doug continue initiatives. today the tompkins foundation has continued to preserve and protect 13 national parks in chile and argentina. she's joining us now thanks for being here today. >> thank you nice to be here. >> you have brought a spotlight that a lot of americans may not focus on may not recognize what was happening with the land there, with patagonia, and doug by the way who was there with north face the founder of north face. what did you all see and why do this with your philanthropy? >> well, i think that -- i think what we saw in chile and argentina is happening everywhere in the world. this is not an exclusive series of events or evolution of what's happening to wild nature sitting here as the nasdaq goes up, as the dow and the s&p 500 goes up, so goes down usually

the percentage of nature being transferred to production. that's essentially what the calculation looks like and so really at the end of the day, we feel that the non-human world has an intrinsic value all its own. it doesn't need us to place value on it. and that social systems need a healthy ecosystem to remain healthy. so i think everybody decides what they can do to protect those things they love in our case it was to create national parks and to bring back species that had gone extinct and from jaguars all the way through giant ant eaters to pumas and so on. that's the nut of it >> we're looking at a map of where some of these parks are.

here in the united states we have the national parks system which has been heralded as the nation's greatest idea what did you see happening in these areas that concerned you >> if you look at the southern cone of chile and argentina which this map represents, it has every type of landscape sfr t -- from the driest desert no the world to wetland there were great opportunities to acquire large landscapes and two willing governments chile and argentina to take them on as new national parks think about theodore roosevelt jr. and the people who started the rockefeller family kick starting the national parks system here. it's really a very similar

effect but a hundred years later. 120 years later. >> when you did this, i mean, it looks very obvious looking back in hindsight what you were doing. but when you first started, there was a lot of concern from some of the local populations thinking that's not really what you were up to >> yeah. i think when you look back -- you're sitting here today and you look back to 1993, two foreigners come in and start buying up hundreds of thousands of rain forest and not cutting it and saying that they were going to make a park out of it and everyone would be welcome. this was heretical in a certain -- just because no one had done it before i think in any culture, anything new is gazed with suspicion. so people said we were creating a nuclear waste site for the united states, creating a new jewish state even though we were

bo not, creating a new site to finish the chileans off for good it was tough in the beginning, but certainly thereafter it calmed down and we went on to create these 13 new national parks. and whatever else happened >> what's your goal now? you have the 13 national parks set up now what >> oh, i think that i plan to do these kinds of things until i physically can't or mentally can't. and the re-wilding part of our work has really transformed what we're doing -- >> you mean with the jaguar? >> bringing back all the species that are missing in any place we work

as they say, landscape without wild life is just scenery. and that came along i would say midway in our work re-wilding has -- which is complicated and long-term and expensive is really one of the strategies for the future. because the goal in creating national parks isn't just to create the national park itself. it's to create the space and the possibility that natural ecosystems can come back and be whole again. and obviously that people can come from wherever they are and visit the parks and have a sense of ownership about them. >> kris, want to thank you for joining us today >> thanks. coming up, tesla reporting better than expected third quarter deliveries reaction from wall street coming up next.

welcome back to "squawk box. a battle between companies and investors working its way through congress the weapon that advises shareholders now these firms going on the offensive. leslie picker has more on the story. >> that's right. this is all about a bill targeting firms like iss that advise shareholders how to

proxy -- the gompbs reform and transparency act would require proxy advisory firms to register with s.e.c iss and the council of institutional investors say this bill would be harmful for investors. they're launching a website to urge american voters not to -- by giving companies the right to review research. investors may not their reports in time to make decisions and it could slant in favor of the companies in contested situations the u.s. chamber of commerce and business round table, those two groups representing corporate america may have been big proponents of this bill. representative sean duffy who introduced the bill told cnbc in june that proxy advisory firms need additional oversight to

prevent abusive power and monitor interest >> continuing this conversation is ken birch good morning to you. >> good morning. >> so i have to admit, i'm conflicted on this issue there's one element of me that thinks these firms do have too much power but at the same time, i almost look at them in some kind of journalistic fashion and the idea of sharing the reports prior to their dissemination to the companies seems very complicated a e complicated. >> so the proxy for investors and others, my group the core membership representing funds of millions of people around the country. and it's the investors who are responsible. they hire the firms. they get advice. increasingly, they have their own teams to go well beyond anything from the proxy advisory

firms. i think the core issue is executive pay. that's what's got various groups such as the main street investors coalition upset. they -- companies want the opportunity to vet reports on executive pay and particularly recommendations of analysis before they go to investors. and most of the times it's actually not that much agreement. but sometimes there is disagreement over executive pay. i don't think it makes sense for companies to have -- >> do you believe the proxy firms are too powerful does this become a check the box outsource research to others almost as an insurance policy on the votes that these pension funds are taking >> yeah, if you asked me that 15 years ago i'd say yes. i think that's long since changed. the investors have stepped up. there is some of that, still, but the largest investors that hold the most shares, their

voting policies, they're doing the work on this so the proxy advisers do sometimes crystallize opinion. i think that's where companies see the impact but the advisers follow their clients. >> now, one of the big sticking points at least as made evident by the website you all published today, is the idea there's greater regulation for proxy advisory firms it could increase the cost for the average investor and be harmful for them in terms of information. how exactly does this additional scrutiny from the bill really impact your average investor sitting at home in their decision making and their 401(k)s? i just don't understand how this would trickle down to them >> the bill is intended to raise costs and be more difficult. there already is regulation. but this particular bill would raise costs for the investment managers for those who hold

shares in mutual funds and so forth. it would do so in part by limiting competition which i think is a major concern for this bill. it creates large barriers to entry. and imposes substantial new costs in how the proxy advisers must do their job. i think it's intended to attack the proxy advisory firms a good chance it will take one or more out of business. >> ken, you said this is really about pay. this is about compensation, disclosure why do you say that? that's the hot button issue. there are other issues the main street coalition is upset in some cases shareholders have looked at requesting better disclosure you know, this bill would have nothing to do with the outcome whatsoever

i think it's the executive pay that really gets people riled up just as when in the 1990s the accounting regulators sought to have proper accounting for stock options. there was a huge rebellion against that statements this is the end of capitalism as they know it did not collapse and i think we're seeing the same thing again >> ken is at the council of institutional investors. i've written about them. they are actually not about main street investors at all. this is an organization that is basically funded and supported by the association of manufacturers. when he calls an astroturf organization, that is what he was referring to. >> very good when we come back this morning, the bottom line and tesla's new numbers. plus jim cramer will join us live from the new york stock exchange stay tuned this is "squawk box. we'll be right back. i think we should do that meeting tomorrow.

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welcome back, new numbers from tesla this morning. phil lebeau is joining us.

>> these numbers basically came in now it is slightly higher basically came in lined with expectations the streets were looking for 52,500 model three delivering slightly more than 53,000. total production of 80,000 vehicles you see model x. i get the question from people time to time, how come we don't talk about the s or the x? model 3 whether they can hit the production of level they have been targeting that's the driver of whether or not this company can turn a profit in the third quarter. there is no indication from the release from tesla that the company has in fact been able to hit that profit line where they can turn a slight profit i would not be surprised if when the analysts crunch these

numbers and we get indication from the company that we may see a profit in the third quarter. >> let's get more to that and get to the new york stock exchange where jim cramer is joining us what do you make of that >> gee, i got to tell you, when i listen to ron baron, okay, it is tesla's day the tail wind of what happened to the sec and those numbers are too great to ignore. i don't care for the stocks because of the pebalance sheet. you got guys who think it is going to go to a trillion dollars. somebody like ron baron is great money manager. there are too many shorts so it goes higher. >> okay. we are going to keep it tight and speak to richard fisher a little bit more. >> thanks. >> pepsico's ceo hugh johnson,

stay tuned we'll be right back.

our guest richard fisher and also on the at&t board and futurist and sort of thinking,

5-g is a big deal and it makes me think -- it is going to be important in the future that we play here and we don't want people to steal our technology are you okay of what trump is doing with china >> 5-g is important to our country. i will take it out of at&t and other consultants and firms. the way it helps everybody from the consumer to the analysts to the first responders, it accelerate the speed there is an international standard and it has been agreed to the u.s. carriers and also china. i know the administration worries about this and who'll dominate the protocols of the internet and so on we have much more spectrum here

in the united states than you have in china. companies like at&t and others are deploying all these stuff. 12 cities this year and 7 more cities next year i hope our government does not get caught up too much of u.s. verses china i am glad the sec has over ruled on the small cell and that's critical also provided continued added spectrum for us to live on 5-g it took a while. we have deployed more spectrum than china has china is a big country it reached a million or whatever it is. that's a drop in the bucket. carriers are working hard to get it done. it is important to our country that way content will be able to be delivered more rapidly and very importantly it is much more secure if they continue down

this path or anything else in the delivery system. >> on china again i don't see this administration relenting. they'll keep ratcheting us up and that's the wrap. >> how is that >> we are out right on time. >> make sure you join us tomorrow, "squawk on the street" begins right now good tuesday morning, welcome to "squawk on the street," i am carl quintanilla with david faber and jim cramer. >> amazon raising its minimum wage and tesla hitting production target and pepsi. a budget show down in italy and oil hi