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 hit 75.87 of a four-year

high we begin with an amazon wage hike to $15 an hour. plus, 2020 buzz, former starbucks' ceo schultz get ready to reimagine america and hugh johnston is going to join us in a couple of minutes from pepsico first up, amazon raising their wage it will benefit more than 250,000 amazon employees and including part-time and seasonal workers. jeff bezos have been facing criticism over pay disparity bernie sanders went after the company on the late show with stephen cobett stephen colbert. >> you got jeff bezos, his

wealth is increasing everyday but he pays his workers wages that are so low and many of them are on food stamps or on medicaid >> last month senator sanders introduced the bezos act, to tax corporation every dollar their workers receive. we got this, jim, on top of oil and transportation cost and tariffs maybe going to 25, we'll see. >> we keep on hearing about cost we'll talk to hugh johnston. if cost goes up, you know why the fed are so aggressive it is because of the cost. if you look at the actual new nafta, what you get is wage inflation in other country that historically kept the price of other things down. it is the classic case of why we

do not like tariffs. you raise the price of overseas. our prices are depressed already, there are too many cars and homes. i don't know whether this is going to, we look at what david did on that excellent, excellent special. >> years ago at this point though >> it was like yesterday >> it does feel like it. >> it was like the 13th amendment here >> these people were making much less and suddenly, they're making much more and honeywell has done remarkable stuff making these places more automated. i wonder if the automation does not offset at least to amazon. >> they change dramatically over the last four or five years in terms of this you say the number of robots that are doing things that were not done you still need somebody to pick things they can't do that in terms of covering 13 miles and a shift, that has changed to

some extent. we are still talking about worldwide amazon has 575,000 employees. we are talking about 250,000 employees that'll be affected by the $15 minimum wage and another 100,000 seasonal employees it is important to point out earlier this year, carl, i remember you talked to mcmilan sometimes ago with walmart, they're at 11 bucks right now with 1.5 million associates in the united states. a lot more ofthem are making closer to that number than the 575,000 overall and amazon making closer to the $15 >> the amazon news does include some workers in london we keep on looking at these ten poll moments in retails. it did get them to 10 and 11 this is what mcmillion said at

the time >> wage increases and training programs and this company has always been a people business. it is a people business today and it will be tomorrow. our associates, they're pride in the company and the ownership they take, those things are vital to running a good retail business and today we are investing in them and we want to know how important they are. >> you expect your competitors to match some believe that they have to match. >> they'll do what's best for their business >> interestingly, not at the top of their release because amazon's line that we'll advocate for congress to raise the federal minimum wage wage, #amazon15.

>> the president mentioned this in the rose garden yesterday >> you know how many employees not able to hire somebody because they tested positive for marijuana? >> yeah. >> and it continues to be a problem for other drugs which i hear from large employers and bringing other people on >> i am sure people out there are saying wait a second, how widespread is this we are hiring people who are incarcerated for no reason they are good employees and they all show up and they are royal >> the pizza company that i deal with are only higher we are plotting it and it is only moving up the same rate as inflation. >> you are dead right.

they're passing onall the costs. there is not a lot of positions. that's why their profit margins are awful. that's why it is interesting listen to ron baron. it makes it so the profit margins shrink even more we'll hear from the north on october 3rd. the housing companies are passing on and their costs are going down but nobody cares because they are the fed's raising interest rate. >> fazing out and giving these employees, giving them stocks, they're no longer going to be doing that sproo they would vest in two or three years or more. >> although npr has a stab amazon workers would need to

work three weeks, 132 hours to buy one share. >> if they have smart enough to take the stock a few years ago, they would be very happy >> when you are out west, they watch our show fchand if you sai think square should be at 90 they're paid in stocks the currency out there is stock. here the currency is cash. out there is like hey, did you say something negative about my stock? >> well, no. >> did "squawk on the street" just give me a pay cut i mean that's what they are like out there. here it is like hey, i tried to augment my salary by working at a bar at night >> speaking out west, howard schultz plans to travel the country and promoting his new book

"from the ground up," some chat in d.c. circle this morning whether schultz is trying to beat biden to the punch. >> it is interesting, here is something interesting, that stock was down yesterday for no reason let's put two and two together maybe that stock was down because of the book. howard can sell a huge amount of stock. he certainly got more ammo >> that was like give me a break. i was searching all day yesterday why starbucks stock was down so much >> it will be interesting to see in the national discourse whether or not there is still room for a politician businessman given the businessman we have in the white house right now. >> there is always one right now. >> does anybody want another one? >> i don't know.

>> oh. thank you very much missistter. >> that's not a question >> what david means is that's a democratic ticket and how much groom does someone to the right of sanders have? i can't believe we are talking about this >> okay, okay, i am glad >> biden thought about it for a while and did not do it. >> he's staying. >> my point is, there has be been -- mark cuban talked about it >> i think it is 50/50 >> schultz's running >> what do you think of that >> that's fine with me >> he's pulling all the levers to make it happen. >> it will be interesting. >> why not >> look. you don't have to go through that process, the primary process. it is worth it it is not exactly 40 challenge there is a lot of hamlet joe biden is a hamlet.

to run or not to run, that's the question howard schultz, i mean if the book sells well, come on, he's great on tv. >> don't hit him on the same short sales. he does not like comparable sales. >> we'll get to pepsi later on the beverage business returns to growth hugh johnston will talk about emerging markets and the coming quarter. take a look at futures on this tuesday morning, ron baron, on tesla as jim mentions. back in a moment obvious. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities.

we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪

shares of pepsico is under some pressure this morning up its organic revenue forecast of the snack and beverage giant though did cut the full year of a stronger dollar. today's result marks the final day of the ceo let's bring in hugh johnston and a member of the cnbc, our sara eisen and we'll kick things off. >> hey guys, good morning. >> the turn around in north

american beverages, what drove some of the changes you guys saw this quarter >> absolutely, sara, good morning and great to be with you all here it is a strong quarter for us. you cited the revenue number and aps number was 9%. we feel good about that. in addition to that, the portfolio is working very well and international growth was 9%. developing emerging markets at 10% and frit-o-lay delivered a strong quarter some challenges in north america in terms of commodity and inflation and transport inflation. as we put pricing into the marketplace of the snack and beverage businesses, we expect the profit performance and improvement as we move forward >> in the forecast, seems to be a bit of a surprise, talk a little bit about the u.s.

dollar we know it is stronger and against some of those emerging markets like you do business like turkey and russia how acute of what you are seeing there both in consumer behavior and the impact on the bottom line >> yeah, the good news is consumer behavior in those markets is hoare holding up ver well when we have inflation in places like turkey and russia, obviously we have to increase prices our products are relatively low cost compares to a lot in the marketplace. the consumer side is holding up well the financial of the company, the first half of the year, the dollar was a tail wind through our results, it flipped through a head wind in q-3 so we had to cut the u.s. dollar guidance by a percentage point we did stay in our guidance of 9% >> hugh, it is jim cramer, how

do you get ahead of this we got the drivers and i don't understand how this could be an issue quarter after quarter, is this just a shortage in this country? >> yeah, jim, a lot of ways it is the market for drivers right now is competitive it is a market that's not getting a lot of young people entering the average driver age is 49 years old and it is about 94% male and a lot of the drivers in the marketplace own their own trucks and frankly we are dealing with a combination of two things we want to help the company, people can choose drivers and doing other things are oftentimes doing other things, that's combined with d.o.t. regulations are enforced better among a lot of the trucking

community. it is typical in economics assuages rise and the marketplace evolve, you will see the typical supply response happen but it takes a little time to do it. >> this two things, this regulation is antiregulation, is there any chance the president will say we got to give drivers a chance to make money is the problem to get new drivers that we'll have autonomous vehicles and people feel after they learn these things, they'll have 25 years old and their jobs can be phased out. >> i won't speculate what the white house may do in that regard you have a lot of young people including in a robust job environment as theys are entering right now a lot of them are looking at the option of driving as a career and say you know the long run does not look as good for that

careers if i am a 20 or 25-year-old. so therefore maybe i will choose construction or in another avenue to build a career that choice is affecting itself. with that said, as we mention the laws of economics typically work when wages rise, it will attract challenge. it appears we have to pay a little bit more and it will sort itself out the next six or nine months i view this as a supply demand issue that'll take a year and a half to work its way through >> you know jim brings up the transport cost and inflation and you are feeling it on aluminum and tariffs and i wonder if you can talk about how you are planning to pass that onto consumers. is it through smaller packages or higher prices, what are we going to see from pepsi and how much is it being affected by the tariffs? >> yeah, it has an impact on the beverage business clearly, the snack business uses very little

aluminum as we move forward and obviously as trade deals are reached, we'll evaluate those and see what it means for our ford guidance in terms of what we expect on commodities and what we expect in the income statement. what i would say is this, i think you are going to see higher pricing which we'll deal with it to some degree and some degree you will see package rotation and more pricing increases on cans or something like that and you will see consumers moving over to pt bottles a response to the pricing difference that they may see. >> i want to follow up something i heard on the conference call, you are not plan to get into restaurants which was referenced to coke's new deal to buy coffee what's your strategy around coffee feels like all the big players

a and nestle and coca-cola in a big way. what's your strategy there >> yeah, no question, sara we had a coffee strategy in place for 25 years it is working well we put together a joint venture with starbucks back in 1994. and that venture had been tremendously successful for both of us and all kander when it comes to bottled coffee, we were the only choice for a long time. as you see consumers migrate more of these coffee products because they're looking for healthy energy, you will see some competition play in that space. we are fine with that, we think we have the best brand with starbucks and partner. we have been tremendous innovative in the coffee category we are not surprised the challenge is to continue to innovate and stay ahead further. regarding the restaurant question that you bring up, we

love the restaurant customers. frankly that's where we think we said as somebody to make our customers and restaurants more successful as opposed to comp e competing with them. >> later this week, let's not laugh about this this is a market that could take the country by storm we are seeing wine and beer. this is legal in canada october 17th, can pepsi at least explore this because if it does take the world by a storm and only our country by storm, pepsico could not be left booiehind by it. >> we look at every growth opportunity and we turn over every storm to look for growth that's why you see our growth performance over the last number of years being in the top core tile relative to our consumer

products peers and as far as cannabis, i do know it will be legal shortly in canada. in the united states, it is still federally illegal. i know some states have legalize it i think we'll look at it critically but i am not prepared to share any plans that we may have in the space right now. >> edibles or liquids? >> i have already gone further than i plan there. >> are you asking of his personal preference? >> although we did ask boehner that question once >> what's the leadership transition going to be like for you and everybody else, what can we expect from your new ceo remote that's been with the company for more than 20 years >> leadership transition has gone remarkly smoothly as it has in pepsico i have been through quite a number of these over the course

of my 30 years being associated with pepsico i think you will see two things, number one a continuation of the focus on innovating and reinventing the company and a focus on strongly booked, delivering performance and short term and investing for the long-term. i think you will see a terrific leader in ramon laguardia. we do look forward to the leadership of his company. >> i wish her the best of luck i understand her desire is to spend time with the family and doing the things that she sacrificed to do so well at pepsico. >> thank you >> jim, i completely agree with you. she's obviously has been a remarkable executive and person and for me a remarkable friend over the course of the last two decades. i think in a lot of ways that not to be reduction about but

this quarter exemplifies what it is about, delivering short term results and constantly looking for ways to do things better and more creatively for women in the marketplace and create the most successful company that we can possibly create. everybody is thanking nooyi for all her leadership and what she's given us >> thank you so much, hugh johnston. >> thank you opening bell is in just about five minutes stay with us

every investor should ask questions. is our money in the right place? what am i really being charged? and is it eating into my returns? is my advisor a fiduciary? is he always a fiduciary? a good place to start is with an independent registered investment advisor. as fiduciaries, they live by a simple rule: always act in the best interests of their clients. that's why charles schwab is proud to support more independent financial advisors and their clients than anyone else. visit findyourindependentadvisor.com

♪ acan echo throughout ane entire community.nge that's why we proudly support, invest and volunteer in communities like yours. because the changes we make today... can you hear me? ...shape the possibilities of tomorrow. u.s. bank the power of possible. welcome back to "squawk on the street," breaking news, september's sales was down 4%. we are comparing with september of last year and you had

hurricane harvey and people buying vehicles following that that's the reason you will see also all of the automakers report negative sales. carl, the most interesting statistic from monthly sales, average ford now sells for $36,000 year over year every transaction price of $1,500 we'll get gm momentarily carl, back to you. >> phil lebeau on autosales day. you may see some new products. we are dealing with the florence impact and the comps from harvey last year. >> if you look at automation vers verses carmax. used cars are such a bargain verses new cars. i think it is hurting the industry >> it is not like the old days the old days you got one every four or five years and now you are not getting new ones

the used ones are in such good shape. it is really hurting the market. >> we'll watch that and we'll get gm in a moment as phil says. let's get the opening bell here at the nyc s&p and cnbc at the realtime exchange big board is front door, a home service company spinning off from service master. really quick, jim, i am sewure o see research out of ipos making no money 83% of the first three quarters of the year. a higher percentage. one that's making money is down so badly today that's because they had alessening in the advance of number of people who used it the chinese ipos, well, we let them do anything in our ipo

market there are tech company that grows so quickly that we are interested in. that's really not. biotech never makes money. that market has been nematodes i c anemic. >> it is going to hurt a lot of people for a long time >> did stitch fix belong -- >> you are talking about they have 2.7 millions. that's a lot of customers. but, you know they had 180,000 new customers as the previous quarter and this quarter that's not what you expect a lot of these companies that are amazon, let's say, the growth accelerates we have to watch that one pretty

closely. it is not what i wanted. >> did you see deutsche bank this morning on facebook while they remain positive, they're starting to hear more cautious feedback and the company seems defensive on last week's data breach they go onto say that a large social focus advertising software company they met with, this is deutsche bank indicated that the facebook platform ad re new decelerated and exiting third quarter and see risks given the fourth quarter preparing for the end of third quarter partner data >> they still say the stocks are cheap and a lot of it goes to instagram. they sound a bit of -- >> ecommerce spended at pepsico

was increased dramatically remember hugh johnston was on the board of twitter >> yes, amazon, for advertising is where a lot of people are going for point of sales is it better of point of sales and amazon and with facebook having problems. i know that in gener-- she's wed in this theese things i think facebook is under siege. >> core facebook in particular but the question seems to be how much of that will go to instagram or stories or things of that nature or will it really migrate away from facebook, the company. >> i think amazon is a new entry that's vibrant and a tremendous place to go, alphabet is not losing share and doing well. just introduce new gaming.

that was very smart. twitter still dealing with issues about how many people really use it which is not clear. i think that facebook, instagram and price down rather be at amazon for these consumer products and that's really something to watch we think why did facebook die down as much as it did it can't be the amount of cost i think they're losing shares. >> you think they're losing to amazon even though the pies are getting bigger amazon is incredible >> at home page athe home page s getting pretty clutter >> that's something if you destroy and the look and feel of amazon >> you got to be careful of that kind of stuff. >> you notice tjx are doing

well >> you lose enough sears and k-mart, that action will go to burlington and tjx that we are down to single digit or billions now for them as share owners >> lowe's is upgraded again today. i went to lowe's, the parking lot was not that clean it goes to senior team and talked about it. these companies are really doing everything, they are laser focus and home depot and ross stores and ali's. >> not oliver's army >> so you will mean it, you will join with me >> no, i am kidding. >> oh, you like to spend full price? >> jim i don't buy anything, you know

that >> the amazon home page, that's his biggest concern. >> do you think he uses those automatic things to swipe? you demand at the cashier, don't you? >> i do even here in the morning to buy coffee. >> retail diagnostic, no doubt >> jim, i got to ask you, goldman takes chevron. >> chevron, if you have an international base and you are not trapped, you are feasting off of this. if you are stuck, your stock is going up a little bit but it is still nowhere near where it was last time. oil was in the 60s there is a colorado resolution, our concern is about -- really

we don't know how it is going to go independent oils are not doing that well and internationals are doing fabulous that's who cleaning up guys, one day after a surprise missile of john flannery and ge's stock some of the parts for ge but given their conference and mr. culp, he's taking over as ceo. we are narrowing that discount to 20% they have a $15 price target at rbc because they narrow the discount to some of the parts because they like mr. culp in terms of his ability to execute. >> why would he take the job if

he thought he could not get his arms around power. i know it has been talked about. the plan that john flannery has is not edgy stuff. >> you mentioned you will look out for tusa >> and city confirms a lot of our these this that a lot of the power issues are execution >> i think tusa is waiting and he's worried and you will get dividend cut is it going to be an equity offering, we don't know? stephen tusa, he's been so right. i hesitate to say that he should change his mind. he wants to see what this quarter looks like

flannery lost his jobs because he has not gotten his arms around the size of the various charges. >> right, i was reporting later in the day was when he brought in the $23 billion charge to the board and the elimination of the previous guidance that they said -- again the conversation on the board, is it time to replace him and it moved quickly there. he did tell people there would be no more charges and no more surprise >> this was very much a surprise it should not be if and when the dividend of something happens there. i think people were so confused that dividend is going to change once they complete the exit from healthcare that's different from what they are talking about now. we are talking about the rating agency going in as a result of the impairment charge and potentially ge having to be in a position not paying as much as shareholders

>> i wonder if culp is going to continue the strategy of selling 20% and offering the rest. culp knows exactly how much it is i think it is worth well in access it is n so i think i would be shocked if he continues the same strategy that ge has had about laying off some because they need the money right now either that or he's not going to sell healthcare. the financial were not clean they were using their own method i felt it was a bad term paper >> a lot of footnotes. >> yeah, i am surprised they did not do the asteric and the

double cross >> moving on >> that's you will >> you're done >> hey, your jacket is really nice >> thank you >> i knew i can have something that you will agree with me. >> you didn't buy that at tjx, i know that. >> it is a name that we talk a lot about here once the deal is done, there is an expectation that utx will move and break itself apart. we are waiting on china and they're waiting on china it has not come yet. it is a holiday mainland in china. it may not be this week, they're out all week though. hong kong is still open but china is not they are still expecting it very soon and that'll complet approvals. that's what they have been saying they break that company up stock is going to go up. >> you do, from here >> it is the same as honeywell,

nobody wanted a turbo that was not electric all those elevators. that's where they put elevators. what do we do? we have like a thousand elevators a year >> tesla has comments on cost disadvantages in china ron baron talked on "squawk" of the deal of sec and elon musk tweeting >> i believe that investors would benefit if they were in the best communications. a couple of weeks ago, there were none and the stock were 12%. i think the sec will get a benefit for the settlement and it is not just for tesla the sec wants to have some kind of control over what ceos or businesses are able to communicate through social media and through their investors. >> says he does not want for go on the board and talked about getting in at $3 and selling too

early. he prefers having it public and we got deliveries for the quarter and pretty much in line with their own guidance below consensus. >> thousand dollars or zero. >> you listen to ron and he's a great manager and he has done incredibly well. he's saying the sky is the limit. >> that's exactly what lux is saying >> different in opinion. no surprise on china that i have weakness or we expected of 25% tariffs and makes it difficult to buy a car that's manufacturing elsewhere or should say manufacture in the united states. >> dow is up 7 points. look at who's back, bob pisani is on the floor. >> hello, good day to be back in spain. nobody sleeps in madrid, everybody goes out at 10:00 for dinner and they're still out at

midnight great country. let's take a look at the sector, a lot has been going on since i have been gone a bit flattish today banks have been as major problem. retail is not the leadership group that it was a few weeks ago and energy that has been a real bright spot for the last couple of weeks i want to point out how extraordinary the market has been the seasonal ones and none of them have been working so far this year. that did not work. remember the old idea that the two quarters and the midterm elections were down, this was remarkically indicator going back to world war ii both quarters were up. remember september were down, that did not work either what's rare to see august and september up, only about a third of a time since 1950 a lot of things like fallen by the waste side if you are looking at why this is happening, look at the

earnings situation we have a shot of 25% both in the third quarter and only about a third of that is tax cut we have reserve new growth of 10% almost and the other two quarters of 8% it is not the only thing if you look for other factors and why the heck is the market so strong. we are looking at gdp growth at 3% this year when did that happen unemployment at 1960s level for unemployment right now consumer confidence is near record and there are some risks that are out there that's noticeable but elsewhere, the marginal risks are pretty far down the risk the recession probability is very, very low right now the number of companies have written about that recently. i want to point out a couple of things to be careful about the russell has been dramatically under performing in the last month here is the russell 2,000. i want to point that out we have seen the collapse of the whole go long small cap trade

because the trade wars are starting to work out that system has been working all year keep your eyes on that one second thing is the banks. put the banks up here. it is close to a 52-week low it has been rough for tbanks. it is been under performing and jp morgan and the only outlier why are the banks lagging? there are a number of important factors. the yield curve have been flat raising the short ends which is what the short end is doing. loan growth have been lacking. the positive cost have been higher and paying more in interest rates to their depos depositors and other costs are still high they're investing a lot of money in technology so you can do mobile banking on your phone the rest of the markets are

doing well >> let's get to the bond pit, rick santelli in chicago good morning, rick >> good morning carl, a couple of things we ought to share here we have eu, at 4.2 first quarter at 17, we had a couple of reads over 4% year over year. not to say this is not super meaningful, we do need to start paying attention of this especially mario draghi and company. i am not sure if they know what to do with it. if you look at one week of tens, we have curved out like we have all year, a certain range especially when you look at closing yield specifically in this new range and this is the highest one we had all years and we are getting comfy, look at mid september chart of 10-yr and now in the 3% trading range and

not a lot of volatility everyone of the notion of canada coming on board hardly any movement in the treasuries at all. if we look at the italian ten, you can see the early chart of 2014, that's the last time where it is close to 340 and it continues with the new italian coalition really sticking to their gun s with regards to thei budget numbers if we look at bund yield, that's the other side where you are selling italy and you are buying bund and another problem for draghi there are so many forces that gravitationally pull yields down everyone thou everyo even though we are at a time where jay powell company is

defining what it is. dollar index, one week is just as strong in that chart. time to pay attention to the dollar index above 95.5. should that occur today. carl, jim, and david back to you. >> good eyes, rick santelli. >> as we show you earlier stairs of stitch fix is tanking today down 20% stitch fix's ceo will be with us to discuss as we go to break, take a look at the top performing stocks on the s&p today which is flat. back in a minute

♪ ignition sequence starts. 10... 9... guidance is internal. 6... 5... 4... 3... 2... 1... ♪ don't forget that the past can speak to the future.

♪ ♪ i'm going to be your substitute teacher. don't assume the substitute teacher has nothing to offer... same goes for a neighborhood. don't forget that friendships last longer than any broadway run. mr. president. (laughing) don't settle for your first draft. or your 10th draft. ♪ ♪ you get to create the room where it happens. ♪ ♪ just don't think you have to do it alone. ♪ ♪ the powerful backing of american express. don't live life without it.

think has exposure to energyfund infrastructure mlps? think again. it's time to shake up your lineup. the alerian mlp etf can diversify your equity portfolio and add potential income. bring amlp into the game. before investing, consider the fund's investment objectives, risks, charges, and expenses. read the prospectus carefully at alpsfunds.com/amlp market in a fairly tight range this morning dow up 26. s&p just fractionally higher powell speaks this afternoon in boston as a conference paying close attention to that

and stock trading in a minute. "squawk on the street" back after a break.

the sun comes up. the sun goes down. you did a million things for your family today. but speaking to pnc to help handle all your investments was a very important million and one. pnc. make today the day.

trading, moody's, and intel a

challenged company a lot of people feel it will miss the market in its new chips, which is therefore rippling through hurt micron and hp talk is they've accelerated production and you can see all the hardware move up literally. because of intel i don't know this has been back and forth and back and forth never -- they don't have the a ceo. then again, lululemon went without a ceo and almost doubled. anyway, if intel get its act together, a lot of semis will run and see another leg to that. >> interesting >> yes. >> you trust this? you think inventory is turning >> no. but i think intel is a great company. notice amd is down, supposed to be advantaged by its problems. obviously, the story is getting -- look, they can accelerate things but did screw up. >> yeah. >> just maybe -- didn't screw up as much as we thought. >> execution, a big issue at big

companies like ge. by the way, moody's on watch. >> on watch. >> what we've said. >> downgrade potential, dividend in question. >> intel, as we know, used to be one of the greatest manufacturers in the world, and shows you. they lost a step, and doctor lisa suh ran with the ball now that stock is down because people feel intel will be ass t assertive and able to move, get the supply chain better. got to tell you, if intel -- if this is untrue, everybody gets hurt, because intel is so integral to personal computers >> really quick tonight? >> paychecks, which uglyyou -- actually a good quarter. marty mucci, good job. ge is the focus. put on review for downgrade theoretically means be careful. >> since yesterday a real possibility >> david, going to go. >> "mad money." >> david needs a pair of slacks

that goes with that. >> baaing in a moment. dow's up 13. good monday mor.

welcome back to "squawk on the street." i'm carl quintanilla, live at post nine in the busy tuesday s&p basically flat amazon raising wages powell speaks this afternoon in boston ron baron on tesla and a lot more >> and for the hour, going to start with amazon's wage hike. $15 minimum wage for all u.s. employees. frequent chris it, senator bernie sanders responds this hour. >> wall street giving back some of monday's rally. tech shares slide, although intel is higher. >> could former starbucks ceo have a bid a book tour could provide new hints on his political aspirations. the revamped nafta agreement

lifting uncertainty around trade as q4 gets underway. pimco head of public policy is with us and market strategist also with us welcome. the things i mentioned, what's the most important for q4 >> look, there's a lot of good in terms of the nafta headlines. obviously gives the president a victory in the short term at least. in ways, vindicates his approach, in his mind his approach in terms of using tariffs to get concessions and good for republicans i think the bad, though, is that, of course, this now just focuses, clears the dexa and focuses the administration's efforts on china and keeps auto shares in the mix. good in terms of the nafta agreement, but also negatives. >> discussion of the language in the agreement that basically says if you're going to deal

with a non-market economy, basically china, you've got to let us know. there's ramifications if you do. >> right >> is that an isolated front >> yes not only need to let them know, the u.s. has the a lot to actually withdraw from the trilateral agreement yes. then also the side letter on auto tariffs as well again, there's good here reduces uncertainty regarding nafta, but means that these trade issues, both china and auto tariffs remain probably a headwind in terms of market sentiment and potential for growth. >> where does that lead us to on equities at least? >> equities, to me, face the biggest risk they have in a long time on pace to hike. clarifies a position to do so in my view, somewhat hawkish, in my view the fed stays on pace to do so really as the rest of the world slows. while the news on trade and tariffs is good, as i look at

the soft data in europe, for example, european pmis rolling over, tank inderalingderaling -g over much of latin america frankly i think will be in recession next year the question, what's the lag time between that slowdown and the rest of the world and the u.s. equities market we know from experience these late-stage rallies can be powerful so we've been careful not to get too bearish too early. the risks are there for the fed to overshoot in our view. >> you do spy over russell, large cap over small cap >> i haven't been a big buyer of this idea that the russell is some sort of a safe haven. clearly, many investors have and i've seen allocators talk about it that way in meetings on one-on-ones. that said, i think the russell's, at serious risk whether or not he had an agreement on trade and tariffs with nafta or not, i think their stretched and tend to derisk in advance of the s&p historically. >> now time to go through some of the details, in this usmca

and i'm surprised to hear you so positive wall street journal op-ed page, new nafta worse for trade than the status quo talks about managed trade, setting minimum wage requirements in mexico and other rules and regulations that are not free trade. >> right i mean, just to be clear i think that i'm positive in that it reduces potential source of uncertainty for the market. the other dynamic here, in addition to the things you laid out, sara, that congress has not ratified this. this is just an agreement in principle. the president is expected to sign it obviously, but all three legislatures, canada, u.s. and mexico have to ratify this probably not until 2019 and very much a heavy lift especially if democrats take back the house. remember, democrats aren't the party of free trade. look at cafta, nafta in the 1990s, tpa a vast minority of

democrats. if it's in front of congress in 2019 with a democratic house, you could see democrats trying to go back to the table and actually renegotiate some of these things yeah so temporary, short term uncertainty decreased but not reduced. >> a lot of people say democrats could get onboard because of pro-union, pro-worker provisions on this. the other hand, democrats are they going to give president trump a victory on trade which is one of the major highlights of what he campaigned on in this presidency? >> exactly i what what we expect if democrats take back the house they'll want their imprint on this free trade agreement. >> corporate guidance will be key over the next few weeks. already pepsi today talking about dollar strength, full percentage point eps, anyway. is that going to be common in a month? >> i think it's something with which investors should be concerned. again, we come back to the fed we see the flattening, the

curve, flat rates going up i clearly think dollar strength is in the cards for us no ouber dollar bowl see the two-year yield up and sovereign wealth funds, for example, highly allocated to equities would not want after returns they've had as a sovereign wealth fund, no the wanting to allocate perhaps in a risk-free asset. that likely to happen. starting to see trends in that right now. small, but they're there so i think that's a big risk. >> whispers about pension plans and -- >> yeah. those that disclose their allocations actually show moving from equities and into cash and nominal bonds. >> you sound kind of cautious about the equity market. we're going into another quarter expecting 19% profit growth.

how much longer can that continue >> i was in peak earnings camp a little early last quarter, came on, said the same, but i'm not bearish of equities necessarily. our target for this year is still for s&p up 8% or so. i think we're ready for a pullback here. i don't think earnings are going to overcome cost of capital issues which is really what's going to matter more as the fed continues to raise rates >> certainly that's the focal point around amazon's news today. not just raising wages, oil at 75 if tariffs go to 25, right then you're looking at second-stage pricing effects do we start paying more for things like prime? >> and sanctions coming in early november as well so give a lot of policy things hitting in sort of this, the end of 2018, and 2019, but from a headwind of growth perspective, could be much more a 2019 story than end of 2018. >> and how do you view this from a political perspective?

jay carney. >> smart. >> you think it's smart? >> business, look, buys them capital on capital hill. this -- clearly all the tech giants are really kind of in the purview and remit of legislators eyes right now and so this allows them to say, look, we're trying to do something pro actively we're taking this upon ourselves to sort of preemptively regulate ourselves, if you will i mean -- hey, you know, i think that's an argument they could make politically and it could have legs politically. >> so do you have a december 19 target is that -- we don't have a december 19 target quite yet but likely to be more conservative than our '18 story start to get feedback into development markets from em slowdown including china why tariffs are so important right now. >> guys, thank good to see you both. >> thank you appreciate it. let's get to eamon javers

with news out of washington. eamon? >> yeah. right. larry kudlow national economic counsel director spoke with reporters here on the white house driveway a few moments ago saying that google's ceo, here last week sundaya sundar at the house, kudlow suggesting that includes facebook, twitter as well as people he said who feel that the companies are not doing a good job presumably what larry kudlow is talking about here, conservatives who are frustrated with what they see as anti-conservative bias in silicon valley the goingogle ceo committing to attend that conference the white house hoping to get others as well no date yet for that conference. also had the opportunity to ask larry kudlow about amazon's decision to raise its minimum wage what he said on that front >> good for them

good for -- i'm in favor of higher wages. >> making the right decision >> it's a business decision. a pretty good businessman. higher wages, terrific by the way, more people working and prospering, heard me say this before, is not inflationary a good thing not a bad thing. >> kudlow there saying that amazon's decision, not inflationary, even though it's raising wages across the board kudlow suggesting also this amazon price wage increase is a part in parcel of an overall brightening picture for blue collar workers across the country, guys. back to you. >> but i guess nothing, eamon, on raising the federal minimum wage >> right he didn't speak to that. talked about jeff bezos being a good businessman and making a smart business decision for his own company. >> eamon javers, thank you spending a lot more time in washington, social media heads. elon musk steps down at chairman new production numbers from the

company and tesla, long time bull weighing in on cnbc. >> i didn't think it was a great idea, and when he had not received support from his shareholders, in private transaction, flipped around, changed, canceled a transaction and when i didn't think he would receive support for this, walking away from the settlement netie d iagn.would go out and regoatandot ai ron! soh really? going on at schwab. thank you clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms...again. and online equity trades are only $4.95... i mean you can't have low cost and be full service.

it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management.

tesla shares are down this morning after reaching third quarter scores sounding bearish as also, ron baron when he joined "squawk box" this morning. >> the biggest car company 10 million, 15 million car as year the battery business, all of this technology in batteries, i think the battery business will be as big as the car business. >> joining us now, former gm vice chairman bob lutz bob, you've been critical. called tesla one disastrous mess and last said it's headed for the graveyard, and elon musk retweeted that comment has anything in the last week, better governance, mandated by the s.e.c., better delivery numbers here this morning, changed your opinion >> wait a minute delivery numbers in the case of other automobile companies

generate revenue immediately, because they build the dealers tesla has no dealers so the cars remain in the tesla system they go out to the tesla factory-owned store. until they are actually retail deliveries, no money changes hands. so i think in the press release, which i thought was very maturely worded for once, they spoke of deliveries. deliveries or production well, where does the production go and deliveries to whom? deliveries to factory stores or deliveries to the ultimate consumer that makes a big difference, because production, as i say in the case of tesla, is not like other automobile companies that vehicle is not built to someone when it leaves the production line. having said that, backing up you know, when i made my comment about headed for the graveyard and the thing is a mess, it was when the company was under

s.e.c. investigation, which effectively would have precluded tesla from raising money, and to me no question that they're going to need cash but now with the s.e.c. probe behind them, a mild slap on the wrist. elon musk remains in control, even though he has to give up the chairmanship i mean, when somebody is ceo and chairman, believe me, the chairmanship is an easy thing to give up, because the person who controls the operation is the ceo. so i'd say things are looking better, and who knows. with the massive production push that they put on in the last week, we all saw his letter to the employees saying, you know, get out every last possible unit, because their average production of model 3s is 4,000 a week and in the last week they hit over 5,000 so it was another hail mary.

and you can't run a company consistently by a bunch of hail marys. however, i will say things are looking a lot better he may not lose as much cash in the third quarter. he may even achieve a modicum of profitability, we'll see at the time of the earnings release as for the other commentator, look at the battery technology i don't -- i -- you know, whatever that gentleman is having for breakfast, i'd like to have some of it, too, because -- >> talking about ron baron, i think. >> yeah. because -- tesla's batteries are lithium ion, like everybody else's they contain the same amount of energy per kilowatt hour as everybody else's, and this is the one fallacy of tesla i keep trying to explain to the public. there is no unique technology. there's nothing there in the

drive system, and nothing in the batteries that can't be produced by any other automobile company. >> well, bob, on that front -- two things one is, tesla says it's not counted as a delivery until in the hand of a customer and paperwork complete, but separate from that, what do you make of what audi has put together or mercedes or some of these others evs we're seeing especially out of europe? >> that's my point it's everybody's going to do great evs when the 280, to 300-mile range the pace is available now. a very beautiful crossover with about 250, 260 miles of range, as i recall the price is around $75,000 -- $70,000 to $75,000. audi will have them. mercedes will have them. porsche will be out with a four-door sporty-looking sedan

with a 300-plus-mile range, not to mention volvo, hunt hyundai, general electric ford. it's ubiquitous. as i point out, other companies will sell their electric vehicles as a loss if necessary to get them into the marketplace so that they meet federal and european clean air regulations but the losses on the -- the losses on the electric vehicles are only about, you know, maybe 2% of their sales. they can recoup it on full-size pickup trucks and sports utilities, and tesla can't do that. >> back to broader automobiles give me a read on nafta 2.0 here particularly the automobile rules of origin change and whether it will result either in more manufacturing in this country and/or higher prices for consumers? >> i doubt the higher prices for consumers, because, you know,

the labor cost is a relatively small factor in the actual direct labor -- actual direct labor hours less and less of the total factor in a total cost of an automobile. that's going to get lost in the rounding i know the reaction from my former company is, you know, they're still analyzing it and making sure that he fully understand what they're giving up and what they're gaining. what everybody appreciates is now we have stability. we have a plan we have an agreement the data are out there, and now people can make decisions within that data set. one thing's for sure the nafta free trade agreement or the new agreement is good for the united states and for the american worker, and that's what president trump set out to do and he achieved it >> still supportive of the president's trade policies, and a little more positive on elon musk bob lutz, thank you.

always good to check in with you. >> go blue. when we come back, ecommerce company stitch fix shares tanking after reporting a miss on revenue and user numbers. talking to the ceo and founder katrina lake and inclusive with the stock down almost 30%. dow's up 6 i don't know what's going on. i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis.

is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪

think has exposure to energyfund infrastructure mlps? think again. it's time to shake up your lineup. the alerian mlp etf can diversify your equity portfolio and add potential income. bring amlp into the game. before investing, consider the fund's investment objectives, risks, charges, and expenses. read the prospectus carefully at alpsfunds.com/amlp

get to our atf spotlights. stocks near record highs high are asset managers at multiyear lows mike santelli taking a look arguments bit of a puzzle in past markets group mutual fund managers and companies like blackrock, t. rowe price, making highs along with it but profoundly underperformed the kce. this is an s&p sector etf that tracks all capital markets in addition to the big asset managers it has investment banks, some of the exchanges in there, but 10% below its high. vastly underperformed you see there. s&p this year. look at just the asset managers within it, it's been a much worse story.

invesco down. franklin resources what's going on? move to passive investing is not necessarily benefiting this industry flows weak fees have been compressed. that's obviously what's going on also global markets have been weak i think the market is viewing this group as a disrupted industry it's not necessarily one that has leverage to the overall market picture they look cheap now. all of these stocks look very cheap. kind of multidecade lows for some of them in terms of valuations, relative to asset levels and earnings. a question whether it's a value opportunity or not right now definitely interesting final point, an industry where two of the biggest innovators and market share players, vanguard and fidelity are in private hands. almost as if you're looking at retail and amazon and target are not available to be invested in and you have what's leftover not necessarily the greatest picture. >> what's leftover, not a

winning bet. mike, thanks interesting by virgins. and coming up, amazon hiking minimum wage ceo jeff bezos advocating federal changes. senator bernie sanders calling it a shot heard around the world but will other retailers actually follow suit. plus, pepsi tops estimates beverage business returns to growth mpy' the ceo told us about the coans strategy and his last day. "squawk on the street," we'll be right back

each day our planet awakens with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances. with pg&e in the sierras. and i'm an arborist since the onset of the drought, more than 129 million trees have died in california. pg&e prunes and removes over a million trees every year to ensure that hazardous trees can't impact power lines. and since the onset of the drought we've doubled our efforts. i grew up in the forests out in this area and honestly it's heartbreaking to see all these trees dying. what guides me is ensuring that the public is going to be safer and that these forests can be sustained and enjoyed by the community in the future.

good morning, everybody. i'm sue herera your cnbc news update at this hour. the death toll from the indonesia quake and stsunami on

friday exceeded 500. rescuers saving a man from a collapsed building in a palu where most of the deaths occurred. defense secretary jim mattis meeting with his french counterpart in paris saying the u.s. will not reduce support for french-led military operations against insurgents in mauli. those linked to the islamic state organization are active in mauli. first lady melania trump arriving in ghana for a first big solo international trip. greeted and welcomed to the west african nation with dancing, drumming and school children waving many u.s. and gani flags. and awarded the nobel prize for physics in advances in laser physics and will share the $1 million prize. you're up to date. that's the news update this hour back downtown to you

sara >> sue, thank you. sue herera back at headquarters. welcome back to "squawk on the street." i'm sara eisen with carl quintanilla and others about an hour into the trading session. dow is higher by about 27 points, but the s&p 500 and the nasdaq are lower, trading around the flat line. still digesting the usmca looking ahead to friday's jobs report carl >> auto sales numbers all morning long gm on a quarterly basis, get to phil lebeau. phil >> carl, for the quarter general motors sales dropping 11.1%. a huge surprise, it's not, factoring in comparison with september, late august of last year when you had hurricane harvey and the rebound in sales there. that comparison showing that general motors sales down 11.1%. bip the way, for the third quarter, sales down for every division of general motors whether buick, cadillac, chevy or gmc

another interesting note all auto sales reported today, other three for september. chevy bolt, sales down 41% in the third quarter. gm says, look, we were pushing sales of the bolt to other countries, because we've been ramping up our production and felt we should send canada, south korea, wherever it might be, and that eventually they should start to pick up a little here in the united states, but on day when you also have tesla sales, inevitable you'll see people saying, you got bolt sales down 41%, when tesla is doing slightly better than expected in terms of its deliveries again, not apples to apples, but it is going to get some comparison >> all right phil, thank you. interesting morning. phil lebeau watching auto sales today. meantime you know by now amounts amazon hiking its minimum wage tos 15 $15. benefiting 2,002 employees

bernie sanders praised the move earlier this hour. take a listen. >> what mr. bezos today has done is not only enormously important for amazon's hundreds of thousands of employees, it could well be, and a think it will be, a shot heard around the world. mr. bezos and amazon are now leading the way, but there is absolutely now no reason why other profitable corporations like walmart, like the fast-food industry, like retail in general and other employer -- other employees, no reason now why they also should not be paying their employees at least $15 an hour >> joining us this morning, former walmart u.s. president and ceo bill simon and former

toys "r" us target vice chair jerry stoich with us at post nine gentlemen, good to see you shot heard around the world, jerry. is that going to be it >> amazon is very smart, again accelerated the inevitable and thereby turned something into a positive that had been a negative for them. great for amazon for other retailers, increase the growing chasm between the winners who can afford to match this and losers who can't. the economy as a whole, wages rise, they'll be some inflation, probably not a good thing. >> 1.5 million employees for walmart in the united states now getting at least $11 an hour earlier this year raised by walmart. could they conceivably go higher than that, or are they at a disadvantage in terms of being able to raise wages that much? >> i think they've moved steadily in that direction for a a while now and long said the

best way to get min mun wage up, unemployment under 4%. the strength of the economy is allowing these companies to do that and they have to do stay competitive. he's ride. the gap between the haves and have nots will be exacerbated, but you'll see companies in time and in place as long as the economy stays healthy continue to move forward with wages. >> and to be clear, walmart's one of the winners who will be able to match it it's the companies on the edge, undergoing massive cost reducti reduction, store closings, eking out profits or showing losses now aren't going to be able to afford this. people like sears on the cusp of bankruptcy, penney's, one misstep away from going under. retailers like that, a lot of them. >> walmart if they were to go to $15. a significant margin pass it on to consumers and they're competing with amazon in a very different way in terms of

valuation in the stock market. always have. a frustration for them. >> great question, but it's going there anyway new york already raised their wage to $15 end of this year absolutely inevitable. all the conversations i've had in the back room with other retailers, people looking at doing this and accelerating this regardless amazon smart enough to be the first one to pull it off everybody knows it's coming. short term, may hit bottom line a little for a year or two, like it did when walmart was the leader, took up their wages the first time saw it play well out the back door problem, if you can't afford that $15 an hour you're in big trouble as a business. not walmart. it is not target it is not amazon it's the weaker players across the board in the economy that will struggle. pick out the winners and losers here. >> you're talking about large employers, too bill, how hutmuch could mom andp retailers sustain this >> tough anybody close to the edge, like

jerry said, will struggle with it the economy in general is buoyant, and as unemployment continues to drop and gdp stays high, that's just where the market's going to drive the wages. they're going to continue to go up, and you know if you're on the edge now, jerry said, a couple are teetering this is going to be tough in the short run. in the long run i think moms and pops will be able to survive it. >> amazon's first, getting a lot of credit and props for that for making this move, but sort of makes you wonder, jerry, what took so long you've got lower corporate taxes and better consumer spending environment. the fact all of a sudden it's profitable shouldn't this have happened a long time ago? >> telling you, people have been talking about it over the last year amazon was smartest and first to do it. it was going to happen if it wasn't them, someone else would have made the move inevitable and now on the right side of the angle. you hear bernie sanders praising amazon how else would that ever happen? really smart now we'll see the kind of wage

growth that people expected with the growing economy. and that issue will be off the table. >> bill if you're doug mcmillon right now, how are you thinking about this i mean, 11-15 is a significant percentage increase. got more time or under pressure to ratchet that minimum wage for employees? >> never been able to speak for doug or figure where he's he headed they've announced moving towards $12 and building the infrastructure and capability as far as the development of talent to be able to pay increasing wages, and if the market's driving the wage up to $15, no doubt walmart will be able to get there. i think -- jerry said amazon moved first. moved first to $15, but walmart has been moving in that direction for a while trying to move wages up and driven not by -- as much by the external pressure, the political pressure, though somewhat, the

market now is allowing them to be able to do this you know, the strong economy >> bill, quickly, refresh or memory when walmart did go, laddered into $9, $10, $11 back in 2015, what happened in the couple years following that >> margins have been pressured is for a lot of reasons for several years. a lot of it is the investment and ecommerce and a lot has been investment in wages, but you've seen, a corresponding response in growth in same-store sales for walmart. i think while they're operating in and it's taken a serious hit, the stock prices responded really well. i think they've weathered it well i think what you'll see as jerry described, short-term pain as companies sort of rejigger their financials and try to figure out how to absorb some of this stuff, but they'll figure it out. the good ones will the strong ones. >> if you want to succeed in the

future you have to match this. otherwise, you end up with a demote vated work force or all the good ones leave and go where they make more money no choice but to match it. if you can afford to do it, great. can't afford it, now you're in trouble. the noose tightening around the neck of retailers on the edge of the clip >> fascinating bill, jerry, good to see you both thanks so much bill simon and jerry stoich. >> thank you. speaking about the consumer, just wanted to hit pepsi shares under a little pressure this morning the company did put out results. beat on q3 estimates top and bottom lines up full year organic revenue forecast but snack and beverage giant cut its full year earnings outlike 5 cents citing a stronger dollar. talked to the cfo last hour. he commented on how the tariffs are impacting consumers. listen >> i think you're going to see higher pricing which will be some degree and also a degree package rotation particularly as you see a bit

more pricing increases on cans and things like that you'll see consumers move over to p.e.t. bottles response to the pricing differences they may see. >> referring there to aluminum tariffs we've seen increase costs of cans and saw a collar move from coca-cola to raise pricing. the last day ceo of pepsi after 12 years, guys looking back at some of her major contributions and some of the challenges facing the next ceo. as far as contributions she was out front on the better for you trend. also the fund for you. innovations in frito lat laid it out in three bullet points and diversified away from pepsi-cola into sparkling water. a new product bubbly doing quite well soda stream into also sparkling water and successfully defended the company against activist nelson peltz proved the to the board and convinced shareholders at least during the time that snacks and

drinks were better under one roof that's one of the questions lingering for the next ceo ramon laguarta more immediately, though, investors wonder if he would consider rebottling? something coca-cola is doing and getting more credit in the market pepsi trading at a discount to coca-cola currently. first time in a while. >> asked hugh johnston about cannabis if her term wasn't ending if his answer would have been different this morning >> i don't any the market wa enthused about this. don't have anything there. especially after the report coca-cola was looking into cbd conserve beverages excitement and opportunity here and investors like it when consolation brands, jim cramer a huge fan of cannabis growth. you see growth there like in coffee, for instance, the big beverage players will eventually

have to move where the consumer's going. >> find out more in time. when we come back, stitch fix misses the street's expectations shares are getting hammered. down 30% already doing five times their 30-day average in volume we'll talk to katrina lake for an exclusive interview in a moment. and shares of general electric moody's places it on watch for review of a possible downgrade. we're back in a moment

one-millionth order. millionth order. ♪ 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.

and market watcher art hogan says president trump just helped u.s. stocks clear a big hurdle tell you what it is and what it means more the market on tradingnation.cnbc.com more "squawk on the street" right after this

the cme and rick santelli and the exchange.

>> good morning, carl and peter boockvar, advisory group thanks for joining me this morning. >> good morning, rich. >> yesterday was october 1st for some a rather important day when mario draghi and company have qe purchases from 30 billion euros to 15. we know around mid-september any tax advantages to buying treasuries based on tax reform ended. do these issues affect the greater picture of liquidity and low global interest rates, peter? >> i think it does, and it's happening, also, with nominal gdp running 5%, 6% inflation expectations remaining sticky foreigners buying less treasuries on a net basis. so i think it's all combined to this drift up in interest rates, but i think most relevant for u.s. treasuries is going to be the direction of european yields as we get deeper into the fourth quarter and towards the end of the official qe in europe.

>> all right now, we hit a 4.3, august -- excuse me. 4.2 august read this morning on ppi in the eurozone. last month, 4.3. in 2017, a couple of months it was over 4%. december 2011, those are where you go back prior to that 17 read should we pay attention to the elevated levels of ppi >> well, a lot of it was energy. take out energy, ppi in europe up 1.5%. yes. oil prices rising, see whether it filters in throughout the supply chain and leads tore a broader core rise. yes, relevant but hasn't shown up in the core level. >> okay. you've been so good on your writings that we all enjoy so much regarding japanese yields, and even though a 14 basis

pointer, 18 basis point jgb tenure seems tilly to worry about, noneworry -- seeming silly. >> look at the 40 year i like to look at because it's the least influenced by yield curve control. in the summer of 2016, after brexit when we reached the final blow of the global bonds, that yield was seven basis points today it's just below 1.1% so, yeah very low, but quite a move and i think just the trajectory higher in japanese yields along with what i expect to see higher yields in europe, you can get higher u.s. yields just by that lift >> i gotcha. peter, then i look at italy. all the time, money spent by brussels trying to keep rates down and watching it evaporate i think everybody needs to be alert to higher rates, but not necessarily in a fast timeline thank you. sara, back to you. >> all right, rick santelli.

thank you. send it out to jon fortt for a look what's coming up on "squawk alley." >> the founder and ceo of stitch fix. investors aren't expecting growth investors weren't expecting the growth projections they got. what do they have in store for the holidays and how efficient are they coming up on "squawk alley." 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.

welcome back to "squawk on the street." stocks are trading slightly flat now as we talked about what the financ financials are doing we have renewed concerns around italy's budget weighing on that. bank of america, citigroup, morgan stanley, goldman, sachs as well. keep an eye on the large cap financials >> larger treasuries as well. manhattan real estate slides for a fourth straight quarter. this time around there's a new worry hitting the marketplace. robert frank joins us from some incredible penthouse in lower

manhattan. >> sorry about that camera trouble. as you mention, this correction of manhattan real estate is a yearlong, total sales fell 11% in the third quarter that's the fourth quarter of double digit declines. if you look at the average price of an apartment, it fell 4%, just under $2 million. the luxury sector getting hit hard prices there down 12%. the problem is you have oversupply of new condo towers, tax law changes, and fewer foreign buyers all of that means basically it is a buyer's market in manhattan, or at least a wealthy buyer's market this apartment is a perfect example. we're at the penthouse of a brand new condo tower in soho. this is just the terrace area. there are 2,000 square feet of terraces, this incredible view of liberty tower inside you've got 5500 square feet five bedrooms, four baths, three

wood burning fireplaces which is super rare in new york city, and look at the views. >> oh. cut out. we were enjoying the view. >> i want to see the rest of that i want to see the fireplaces. >> three wood burning fireplaces. >> he would go on to say it is not just the high end, looking at some numbers of new york city real estate, fourth straight quarter down, inventory up 13 is the most for a third quarter since 2011 >> so much supply. >> it is the number of people putting properties up. >> robert covered this closely, mentioned tax changes but you haven't even seen the impact for high income earners in terms of lack of all deductions gone from these states, for example, and the question as to whether you'll see further exodus of people to other places as a

result of higher tax burden. >> you've got dried up foreign investment sort of all of these factors hit at the same time the strength of the u.s. dollar especially against chinese currency, a big source of buyers is a problem it is a problem on the west coast as well. for new york, if we don't have as friendly attitude on trade and foreign investment, that's a market that gets it. >> not just manhattan, connecticut has seen a lot of inventory listed on the other hand you see "new york times" real estate section had a piece on finding value in connecticut. you can get a large property for what used to be considered a bargain. >> good news if buying a home, not great if trying to sell one in manhattan. coming up later on "closing bell" we talk to the founder of spanx. doesn't do a ton of interviews we catch up with her 4:00 p.m. eastern on tariffs and having production overseas to how you

keep a brand going without having a discount. guys, there are spanx for men products now >> trying to tell us something >> just saying, they're useful >> by the way, markets are taking a turn. s & p has gone green, dow up 84 points when we come back, we focus on stitch fix down 30% today katrina lake joins us exclusively to talk about the company's results and the future as they do five times their average volume for the past 30 days "squawk alley" starts in a moment

♪ not long ago, ronda started here. and then, more jobs began to appear. these techs in a lab. this builder in a hardhat... ...the welders and electricians who do all of that. the diner staffed up 'cause they all needed lunch. teachers... doctors... jobs grew a bunch. what started with one job spread all around. because each job in energy creates many more in this town. energy lives here.

good morning, it is 8:00 a.m. at stitch fix headquarters in san francisco, 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪