live from new york where business never sleeps, this is "squawk box. ♪ good morning welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. we'll show you where the futures are trading. before we do that, let's look at yesterday's choppy session the dow traded in a wide range it was down more than 300 points ear early, then climbed into positive territory before the minutes from the latest fed meeting indicating the bank was leaning towards more rate hikes. traders took notice of cnbc's interview with wilbur ross who said u.s./china trade talks are on hiatus for now but not at an impasse. the futures are barely budging one direction or the other traders are still trying to figure out what they think about

these things if you check things out, the dow futures are indicated down by 2 1/2 points. s&p down by 1. nasdaq is up by less than a point. that's similar to what we saw yesterday there the s&p 500 and d nasdaq if you're looking at what we've been doing lately, neither the s&p 500 nor the nasdaq have posted back-to-back gains in october. the dow hasn't done so since rising on the first three days of the month s&p is down 8 over the last 10 trading sessions despite that we could look at our biggest weekly gain in four months for the s&p because of the big gains we saw on tuesday. we'll check this out let's look at what's happening in the treasury markets. you'll see the ten-year note right now is yielding 3.216% european equities right now are hanging in there talking about a half percent

gains for the cac and the dax. ftse up 0.2% stocks are higher in italy just down in spain >> stocks in china are tumbling overnight. the shanghai falling nearly 3%, hitting a four-year low. much of that weakness driven by the currency the yuan hitting its lowest level in two years after the treasury department stopped short of labeling china a currency manipulator lots to watch for there. >> it wasn't just china. they said they're watching germany and a bunch of other nations. >> in addition to that, talking to chris hughes from facebook later -- not from facebook, he's no longer at facebook, by a facebook story this morning. facebook opening its doors to its first ever war room to fight election manipulation. bringing together more than 20 teams from across the country to track trends and shut down suspicious activity. the teams are now working 20 hours a day and starting next week they will be working 24/7

>> so we've essentially done much scenario planning and war games internally within the war room to plan out different types of problems that we may see. we practice. we've done drills to see how we can detect that, come to quick decisions, how we can take quick action facebook claims its new artificial intelligence and machine learning combined with the teams represented in that war room would have prevented russian manipulation of the 2016 election >> i trust them. and google >> sarcasm >> i trust them to do the right thing. i trust them this time around. i'm sure they have no preference google has no preference >> hold on, but the whole argument is that the frpreferene was the other way. >> they won't let that happen

this time. in general, if they were going to fall one way -- you know how it is. >> i don't disagree that the pref vens in terence in the vale a liberal preference >> i just hope it's a better outcome this time. a lot of people were crying. we saw those tapes at google senior officer, just tears bawling like children. in other facebook news the company has tentatively determined that spammers were behind a data breach and not hackers. the "wall street journal" reports an internal investigation found the people behind the attack were facebook and instagram spammers posing as a digital marketing company. last week facebook said hackers stole data from 29 million accounts, that's far fewer than the 50 million it had initially reported >> president trump is ordering his cabinet to find major spending cuts in their departments. at a cabinet meeting yesterday he ordered a 5% budget cut across the board

>> i'm going to ask each of you to come back with a 5% budget cut from your various departments, whether it's the secretary, an administrator, whatever i will ask everybody to come back with a 5% cut for our next meeting. i think you'll all be able to do it there may be a special exemption, perhaps i don't know who that exemption would be if you can do more than 5%, some of you will say i can do much more than 5% >> the belt-tightening order after a new treasury department report shows a 17% rise in the annual federal budget deficit. >> and immediately one side is saying this is a way he's going to try to cut entitlements that's the -- >> they can't. >> no, but that supposedly is what republicans are planning. that's one of the flaws, for me,

of president trump is that he has the populist approach, things we need to address at some point the fixed spending that we do with social security and medicare -- >> 10 or 15 years ago there was much more of an effort >> it's unsustainable. >> simpson bowles was never put into place since that time we have stepped back from any attempts to figure out where we're headed >> especially with the fixed side of things the stuff every year that glows. we'll have alan greenspan on a bit later. he points out how many people will be in the receiving, in the age of receiving things versus the age of producing the stuff that they're receiving it doesn't work out. there will be so many people that are getting medicare and social security that there won't be enough working people to support. >> one thing that people wanted

to do was have a conversation that revolved around revenue raising or lowering based on taxes. so what's happened is it's become a two-stepper, and in fact one side has a view that we don't need to get into you know where i'm going >> the taxes are -- we're not undertaxed >> but the taxes have been good for the economy in the short-term the question is whether it pays for itself >> it's not whether it pays for itself we still have record revenues in taxes. it's just spending is up 17% >> he's talking about the corporate side of things they were only 11% -- >> the offset is whether 3% plus growth and whether jobs at 3.7% offset that. if we can get it from the private sector, from individuals, who cares >> if you can. >> revenues are up >> we'll see >> we cut taxes, tax revenues are up

over the last year when we didn't have the tax cut. >> that is true. >> so what -- where -- we may grow at -- >> a lot of the revenue is up because it's money being brought back >> there's a lot of things going on, but the reason we're spending more is for defense, too. >> we are continuing to follow the latest in the saudi journalist jamal khashoggi, secretary of state mike pompeo is back in the united states after fact-finding missions. that's what they were calling them he is expected to brief president trump later today. yesterday the president said he did not want to abandon saudi arabia and asked for audio recordings that indicate khashoggi was killed by saudi agents how do you censure the country if they're responsibility. some u.s. officials now believe

that the crown prince was involved or culpable is the word they're using for this murder. how do you censure the country and at the same time try to maintain a relationship with the country? that's the thread or the very difficult needle to thread >> let's talk about the broader markets. joining us for that is elizabeth herrod and james camp from eagle asset also joins us. james, i'll start with you i saw something you said that was interesting. you still figure we're anchored in terms of the long end with whether it's europe or for whatever reason. you don't expect an immediate move to 3.5%, 4% on the ten-year with short rates going up that will cause trepidation maybe and a flatter curve. >> i think the curve flattens, and i think the long end will respond to the inflation indicators the interesting thing about the fed minutes yesterday to talk a bit about the short end is they

actually mention financial excesses for the first time i've seen in a while. it indicates to me that the fed may be moving on the short end regardless of the inflation anchor at 2% or therein. the long end of the bond market is cheap relative to international yields i think it's going to continue to attract assets and really allows u.s. investors to derisk portfolios at an opportune time. we've come up 180 basis points since the lows in the ten-year that stays in this range the short end will get interesting if this financial excess and financial conditions and risk taking mandate that the fed seems to now have adopted takes hold we may be in for a few more tightening on the short end. >> a big piece in the journal today is investors are recalibrating what to do around the world as money becomes more expensive and less accommodative. the last couple of weeks in equities, we were maximum, down 7% maybe from the highs after

being up 45% whatever average you decide to use. 35%, 45% so that seems like almost background noise i don't know if that's anything to get concerned with yet, elizabeth. or since it's not that much, maybe there's more to come to reflect a change in central bankers stance tofrnl >> to a certain extent it is background noise, but it's background noise the fed takes into account we've seen in the meeting minutes in the past where they do consider this kind of extreme equity market volatility as an input when they're considering the broader landscape. so i think when the november meeting minutes come out people will definitely be looking to see are they looking at this equity volatility. that's going to be something that's interesting to see. >> that may be one of the

problems with being outspoken about the president and powell criticism. even if you see a little body language that he's less intent on following the dot plots, it will be oh, he's folding he's succumbing to pressure from trump. so there might be good reason for him to walk back some of his hawkish rhetoric but he may not be inclined to do that because it looks like he's giving in. >> right there's very little upside let's let elizabeth answer fi t first, jim go ahead, elizabeth. >> i think there's little upside and tru in trump criticizing fed policy but there's no risk for people

following powell or this committee that they will base their thoughts around this >> maybe he was a little too hawkish, jim, to look different than yellen? >> i think the disconnect between what's happening with the fed to me is if you look at the doull mual mandate and infl, there's nothing to suggest we should be tightening aggressively if financial markets and risk taking becomes extreme, that gives additional justification for tightening this is the first year, 2018, where the markets began with a down draft in stocks january/february time frame. the fed probabilities of tightening barely budged so the fed needs to understand the powell put doesn't exist and the fed is not going to bail out

markets at this point. >> is that a surprise? everything you just said sounds like, yes, i agree 100%. is there anybody who would be caught offfwaurd by thguard by r anybody who would think my gosh, i had not realized >> it's the first time in the post crisis period that we have fiscal stimulus taking over. so i just think the markets and investors need to take heed of the fact that this is a very tifr different environment. we have fiscal stimulus, budget deficits to deal with, and the easy money and the macro trade that's driven by very low interest rates and deleveraging phenomenon that can coincide with that is something investors need to pay attention to the inflation is well anchored the long end of the treasury curve is inexpensive relative, but the cost of financing is going up that will show some of the risks in the economy >> so where do you expect in the

next month or so, elizabeth, in terms of support levels on the averages, how much work we need to do to -- can you actually say we put the correction behind us? are we going to retest the lows? >> i do still think that we have some choppy trading and volatility ahead of us because this does play out a lot like the february selloff that we saw where we did revisit the lows there. we still have a lot of uncertainty in this market we have the midterm elections coming up. we've got a fed meeting right after the elections where we're not expecting a policy change, but i think people will be watching the fed very closely to see what the language is in that policy statement and then we'll be looking at those minutes closely as well.

we do still have some choppy trading and volatility >> that's a nice backdrop. i think that's a shot, you're not actually there >> it's a shot of kentucky >> are you there >> no. i'm in cincinnati. >> beautiful morning james camp wishes he could be there. he does have a blue thing behind him, but it does say the name of his company. thank you both when we come back, the dream is still alive for millions of lottery hopefuls no winner in the powerball we'll tell you how much money you probably won't win in saturday's drawing next. >> i'll be playing >> good. >> as we head to break, a look at the premarket winners and losers in the dow. place, the xfinity xfi gateway.

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welcome back lines for lottery tickets are about to get longer. a day after mega millions reached its highest jackpot ever with no winner, powerball failed to find a winner, too. mega millions will inch closer to $1 billion, and on saturday power ball's jackpot will be over 4$400 million the odds on winning both of them, 1 in 88 quadrillion. >> what are my chances if i do one? i should do both i don't care if i win both one would be good enough >> if i say one in a trillion versus one in a quadrillion,

does that mean anything? how about one in 100,000 >> i put my money in that or bitcoin, which is a better -- >> bitcoin >> anything is better. i was hearing about the lines. how long is the line some people wait two hours three hours? unfortunately people were waiting seven, eight hours to fill their gas >> it's a dream. >> i understand that i got it i've seen this happen. i've seen this movie before. for people to stand in line for three hours to not win -- >> that's crazy. >> how long will you wait? >> me? three minutes, four minutes maybe. if there's a good magazine >> i wait for bagels on the

weekend, every weekend for 20 minutes. >> my apologies. the bagels have to be good >> they don't have a line for just bagels. people are getting all this other stuff. all i want are bagels. i get them for a reason. it's something that i know will be consumed. >> i'll send jeeves every saturday for you >> i know 20 minutes of my life saturday and sunday will be spent here but for something that won't work, andrew -- what if it was 1 in 10,000? >> that would be pretty good to win a billion dollars >> but do you think you'd win? >> no. >> but i would still buy it. would you buy a ticket for 1 in 10,000 to win a billion? >> i guess i know i'm not going to. i'm not a pessimist. i'm an optimist. >> mr. sunshine. >> go to the track >> let's talk about halloween. the scariest thing you might encounter this halloween, burger

king's new nightmare king sandwich it's a green sesame seed bun stacked with a bee patty, chicken filet, bacon, mayonnaise and onions. >> green food, unless it's like lettuce -- >> i do not like green eggs and ham. i do not like them sam i am. >> don't eat green meat. typically not good >> speaking of meat and burgers, beyond meat is planning an ipo the plant-based food company has hired jpmorgan, goldman sachs and credit suisse to lead the public offering. it would be the first public offering -- >> we had these guys on years ago.

the products closely mimic the taste and texture of meat. they gained entry into restaurants even tgi fridays coming up crude prices tumbling yesterday. a weird time to tumble we'll tell you where the price could be headed next as we head to break, here's yesterday's s&p 500 winners and losers

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up to fifty thousand dollars, decided in as little as 60 seconds. the powerful backing of american express. don't do business without it. welcome back you're watching "squawk box" live from the nasdaq market site in times square. >> good morning. u.s. equity futures at this hour are not really the story they're off a little the real story at the top of the show is the action yesterday really it looked like a decent retest of some of the downward

momentum we had from last week the lows yesterday down 300. came back and was up down 90. there was some positive things to take from the action yesterday. today it's kind of flat. we're waiting around >> even after the release of the fed minutes, it's more likely that they'll keep raising rates. it still ended down 90 points. >> i think ibm and -- >> ibm was a decliner. home depot was downgraded. >> exactly >> i was thinking wuonce again katie stockton said it was oversold >> 80% of individual stocks. >> stocks to watch this morning -- >> the reverse on that, just a few stocks are holding things up

novartis striking a deal to buy u.s. cancer drugmaker endocyte for 2.1 billion in cash. novartis will pay $24 a share. that's a 50% premium to yesterday's closing price. nice alcoa reporting better than expected quarterly numbers among the drivers ar higher aluminum prices and sales of raw materials, prices have risen on that tariff on aluminum imports. alcoa's reliance on aluminum from foreign smelters have cut its able ability to benefit from those. >> and results for sealed air deflated this morning. the maker of bubble wrap citing currency headwinds and higher shipping costs >> ebay is suing amazon claiming the online retail giant tried to poach its sellers. the suit alleges amazon messaged sellers to get them to sell on its site which ebay says violates its user agreement. >> the key is they used an

internal ebay messages system to do this. it's not like they found their e-mails and reached out to them. >> it's extraordinary. sort of an extraordinary way to get your competitors third party sellers with key to amazon's growth. last year more than half of the items sold on amazon were from third parties. do you look at them and say this was a clever thing, that amazon was being clever or worst? >> amazon's response is they're investigating the claims >> maybe some rogue employees. >> we'll see more about it as we continue here. oil prices dipping below $70 a barrel for the first time in a month after the u.s. reported a fourth straight build up of crude supplies, that's triple what analysts had been expecting. joining us is matt smith from clipper data maybe not a surprise that we see a pullback when the stockpiles

here are so much stronger than anticipated. longer term some of the crosswinds, the issues happening in the middle east, they have to give you cause for concern, right? >> absolutely. that's why we got up to a multi-year high the beginning of october. since then we pulled back because of that rise in inventories. we've seen an increase of 22 million barrels over the last four weeks last year we saw a drop of 16 million barrels. quite a swing there. also we've seen demand fears kicking in also crude has been swept up in this risk-off appetite the combination of those three things have eased brent back below that $80 mark. >> you would say the levels that we reached, $80 for brent, that was based on worst case scenarios for what might happen with iran. >> it's pricing in what would happen next month. so we are seeing exports starting to drop off there

when those sanctions kick in in early november, we'll see those exports dropping off because they can only send so much out in terms of customers going to china and also iran-owned vessels because of insurance issues that will kick in. we got ahead of ourselves in terms of pricing in that fear. >> every issue you raised seems like a minor issue relative to an impact if the saudis were to say we won't sell you more oil because we don't like what you're doing in response to this >> that's not likely to happen >> the market is discounting that idea? >> in the u.s., saudi is the tech largest supplier to the u.s. behind canada last month 1.1 million barrels a day were coming in >> when the crown prince says that the country will respond effectively in kind or worse, if there is some kind of censure or

worse by the u.s. what do you think he means >> it's rhetoric in the same way as we've seen from president trump as well. so it's that tit-for-tat >> is there anything that you think they would do? >> if they wanted to send a signal they could dial back flows to a certain area. the u.s. would be the best place. the u.s. is the largest most timely market. that said saudi aramco has the largest refinery in the u.s. on the gulf coast port arthur, 600,000 barrels a day there. they're sending a third of their crude here to go to that refinery >> did michael not do much damage >> hurricane michael missed the refiners >> but did it run up in anticipation of it and come back down

>> it wasn't an issue. we saw some production come off in the gulf of mexico a bit. that's pretty much all come back now. really a nonissue. >> it was weird to watch it go down below 70 when we're listening to these tapes of a bonesaw, put your headphones on. >> when you have sanctions, we've seen it with russia and europe, you have those issues, but they don't affect the energy flows. >> i know you spend time thinking about the geopolitical issues and the bone saw and the issues that have come out. we've all been awaiting this aramco ipo, which has been delayed, now there are questions on whether it will even happen the future of saudi and its economic plan is dependent on that the question is how this geopolitical issue doesn't just affect whether people show up at this conference next week but how it effects the country on a

long-term basis. where do you land there? will saudi aramco go public? if they d what valuation would they get all of that is in question >> there's still 2021 now, we're talking about that being there's such a long time before that happens they have their long-term plan they will be sticking to it. in terms of the ipo of that that's a separate issue. >> all right matt, thanks for coming in today. >> thank you >> matt smith from clipper data. still to come, some huge interviews on cnbc today to tell you about. first, former fed chair, alan greenspan. he will join us on the set right here to talk about the market volatility and rising rates. then former fed fis chair stvice chair stanley fischer. then at noon, steve liesman has an interview with gary cohn.

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we've been watching the u.s. equity futures this morning, after a flat ending yesterday you will see this morning there are some red arrows. we were flat essentially about 20 minutes ago right now futures indicated down by 30 points s&p down by 5. nasdaq down by 14. the markets trying to absorb everything the fed said yesterday with the release of those minutes. look at treasuries check out the ten-year, right now yielding 3.211%. overnight in asia there was a selloff in china some concern as the treasury commented once again not naming china a currency manipulator but putting it on a watch list shanghai composite down. hang seng was flat. time for the executive edge. we will start with squawk booze

new news >> constellation brands rob sands is steppin down from constellation brands he will become executive chairman in march. rob newlands will succeed him. sands ran constellation since 2007 during which it bought the u.s. rights to corona beer and just recently made a $4 billion bet on marijuana, investing in cannabis producer canopy growth. barbara underwood has opened an investigation into movie pass for misleading investors about its financials the movie ticket company stumbled in recent monthsed a justing those ticket plans it has taken out hefty loans to cover massive losses and the investigation is in its early stages the stock has lost practically all of its value, trading for 2 cents per share with an implied valuation of 3$30 million. the problem was you could go for

as many times as you wanted as a consumer, but they would pay full rate. >> in big cities this would be a problem. you would be paying $12, $13 a ticket and people would be going to movies once or twice a day the thing was crazy. i think the effort was to become too big to fail. the idea was if you could become so large and every movie distributor, amcs of the world, which didn't participate in this, if everyone was doing this, they would get a discount on the target. the whole idea was to have enough scale, and if enough people didn't use it, almost like an insurance business you wanted a lot of people not to use it. >> but the people signing up were the heavy users >> the movie theaters would like this service because the real money is in the food if you can get them there. the whole idea was so crazy. >> amc -- >> amc had its own pseudo version of this, but one more

economically viable. >> i'm talking about something interesting. >> oh. >> amc is not allowing halloween michael meyers masks >> that's good i'm glad to hear that. >> rex reed says it is awful >> the movie >> yeah. >> i read a great review in the "new york post." >> he said he loved halloween movies, but it's more of the same >> the review i read said it took it back to its original >> i know. i was looking forward to it. but have you ever seen the second "scream" movie. everybody had the scream mask on seeing the movie so that the real guy with the scream mask could go in and stab someone >> right >> if the real michael meyers were to show up at one of these things -- >> i don't want people wearing masks in theaters. >> you're not allowed. mo michael meyers masks are allowed. >> from interesting, back to

relevant >> um, it's a universal movie. i would beg to differ if it's relevant >> he was talking about amc, i wanted to talk about this part of it. you guys are always interesting. >> i read a good review of it. >> i read a lot of them. but rex reed says jamie lynn curtis lost her mind or something. >> the cinematics or something, with the lights coming by, it's a playback to the original >> don't you love the original >> it was amazing. >> it was. >> i tried to get it -- when you're talking and i'm typing, when i talk he types that's the way it goes >> that's how it happens >> our interests do not overlap at all >> two circles come about here >> they are -- we are outside the circle let's talk about trade war news china's soybean imports are expected to drop by a quarter in the final quarter of this year

that's the biggest drop in 12 years. chinese buyers are expected to curb purchases because of the 25% tariff on soybeans and also they have high domestic stockpiles and importers say they're reluctant to import u.s. so i bea soybeans because they're afraid the cargos may not be approved china is expected to shift purchases to brazil, canada. soybean is down about 3% this morning. >> "halloween" is expected to do $65 million. >> wow does it open the weekend before halloween or this weekend? >> it's in the article here somewhere. rex reed said jamie lee curtis is out of her damn mind. she was in "halloween h20.

>> i never saw that one. this picks up -- >> 40 years later. he's being transported you should never move the guy. it opens tomorrow. >> oh. >> yeah. not relevant huh? >> what? >> relevant to universal team player. sim sympho symphony it's like synergy but better call me maestro. later on, alan greenspan will be here when we come back, the dow transports are on a four-week losing streak. plat for the year. we'll look at the winners and losers in the index and whether they belong in your portfolio, that's next. as we head to break a quick check of what's happening in the european markets the cac in france is up 0.4% the dax is up 0.3% the ftse is flat

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just like its industrial counterpart. it's a comeback. it's come back a bit now down by 7% despite that, the next guest says under valuing data in the sector looks good. joining us for what's working, the principal and managing partner. good morning to you. explain what sort of -- in favor doesn't look good to you, is that what you're trying to say here >> yeah, to a certain degree to a certain degree. the bottom line,transport has had this for years predicting the economy, the reason is because they move the goods. the underlying freight flow is the read on what's going to happen i can look at, say, the cash shipment index up 8.2% it's not indicative of an economy that's contracting that's indicative of an economy that's expanding i want to look at retail sales i can look at say, the sonar

index out of the chicago area, the joliet area. seeing that's a clear indication of the number of containers they're landing in that area that are going out to retailers, getting ready for the holiday shopping season. i know that's indicative of an expanding -- well, a really strong shopping season >> so, those are positive indicators as you look at the transports themselves, meaning the individual companies, where do you think the opportunity lies right now? >> so, we continue to log names like fedex, the e-commerce who expanded their fedex service from five to six days. and xplar one of the most prolific, takes these companies, integrates them, applies massive

amounts of technology and innovation and boosts margins and turns what is a creed of acquisitions into highly used acquisitions >> when you look at fedex, where are you putting that price in terms of expectation >> i think fedex is every bit of a $300 stock a year from now i think xpo is every bit of $140 stock in the next year there's a significant amount of upside especially now, we had this concern about is this the top of the cycle? is this a correction, or is it a change in direction. and the freight flows clearly say that it's not a change in direction that it's merely a correction >> right >> and again, again and again. literally, you know, you go back to post-world war ii, the last 70 years, we've never had an expansion in the u.s. economy without there first being an expansion in freight flows

we've never had a contraction in the u.s. economy without first a contraction in freight flows >> how do you think of oil in terms of this country? >> well, there's a very sufficient and adequate fuel surcharges in place for the likes of xpo and fedex, and j.p. hunt, they actually benefit from higher fuel so their margins actually improve when fuel goes higher >> don, we just had a story talking about how u.s. shipments of soybeans to china are down 25%. it's part of a tariff story there's got to be areas where you're seeing an impact like this how significant is this, or does it matter? >> well, it does matter, becky so, you find instances like where there's been a reaction, but broadly speaking, there hasn't been.

we're continuing to see up and to the right in almost every single chart so little nuances in container flow we saw a pull forward in the import containers in may and june and a little bit of a lull in july and august then it's just been balls to the wall going after it throughout september and even more so in october. >> don, we're going to leave the conversation there donald broughton >> on a throttle is what the expression is. >> appropriate for transports. >> on the throttle of the balls, you move them forward to the walls. >> relax >> it's appropriate for the transports >> exactly let's talk about one quick stock to watch before we head to a break. mobile company ericsson reporting stronger than expected third quarter sales. they were boosted primarily by high activity in north america

it jumped 8% from the previous quarter. coming up, our "squawk" news maker of the morning it alan greenspan, he's in the studio today. a former fed chairman to talk about the fed. we will talk about interest rates, market volatility, and the president's criticism. we'll see. that's coming up at 7:30 check out the ten-year, "squawk ♪ irit cka ♪ a business owner always goes beyond what people expect. that's why we built the nation's largest gig-speed network along with complete reliability. then went beyond. beyond clumsy dials-in's and pins. to one-touch conference calls. beyond traditional tv. to tv on any device. beyond low-res surveillance video. to crystal clear hd video monitoring from anywhere. ♪ ♪

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your money and the markets the earnings calendar remains

busy today american express, paypal, travelers and others are reporting. we'll tell you how to play the seesaw market as they look for direction, corporate news, the fed minutes. capitalism in america. former fed chairman alan greenspan is here to talk about his new book, the state of the economy. that "squawk" making interviews just minutes away. home is where your heart is. recent data shows a slowdown in the real estate market we're going to show you where the money is going and how you can profit as the second hour of "squawk box" begins right now. ♪ >> announcer: live from the beating heart of business, new york this is "squawk box. ♪ good morning, welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site in times square, andrew

ross sorkin with becky quick and joe kernin the dow off 45 points. s&p 500 off by 6 points. making headlines, earnings just out moments ago from component travelers, insurance companies scoring a beat on both the top and bottom lines earnings $2.54 a share travelers saw a growth in both personal and business insurance, as well as strong retention numbers. >> they're also up against some very tough catastrophic numbers a year ago much less catastrophe stuff that happened in the most recent series but a year ago, there were three different hurricanes that happened in the fourth quarter that was part of the problem >> separately, the labor department is set to release its initial jobless claims analysts are looking from a drop of 4,000 to a total of 10,000. lows remain at decade lows ebay now suing amazon,

accusing the market giant of approaching its sellers. claiming they did by approaching sellers through its own online system amazon said it's investigating those accusations. >> let's discuss markets with dom chu. >> as of yesterday afternoon, we took a count in this earnings season, depends what you define earnings season to be, we always unofficially kick it off at the banks. we took a look at a ton of the numbers with regards to earnings seasons going back to last month, right, the tail end of what call the last one and beginning part of this one in any way, there are 50 some s&p 500 companies reported in conference calls, 54 of those. of that number, 18 companies, call that a little more than a third of them have mentioned tariffs specifically, in that word, in their earnings an calls. call it a third of the companies so far

to extrapolate that, we're going to talk about 130 companies that are going to say this san issue going forward. >> did any of them -- u.s. steel might mention tariffs. >> possibly, yeah. >> but you don't know if it's a positive impact. >> no, no, we are -- >> i thought that was just -- >> no, no, any mention of tariff, positive, negative, neutral, whatever it is. >> that's not diminishing what is positive or negative? >> no. but we did take a look at what spanned the sector whether that be positive or negative connonation let's take a look at some of these comments, one of them is a large retailer big box retailer, this is costco where their cfo said i think everybody feels that tariffs, people smarter than me don't like them. probably a small net negative. small net negative certainly, whatever negative it is we can weather it better than

others they're not throwing it in some way -- they're not blaming it like weather, how it's going to impact the results another one, you guys had a transportation segment on. take a look, this is fedex a month or so ago. the chief marketing officer says the uncertainty around the issue and the potential for additional tariffs is affecting the market and we're beginning to see some of that in the economic activity in china and we're starting to see it moderate as a result of that >> what i will say, we just talked to don broughton about that, fedex is one of his favorites. he loves that stock. he thinks that anybody in e-commerce is going to have a good time with it. >> we always think of it small in terms of u.s. impact. >> but we did the math on how much fedex does in china and what percentage is, you know, covered by this. >> right >> we multiplied one decimal

point by another decimal point and came to 1% below that effect >> to that point, joe, grainger, they came out applying 25%, we estimate our cost will increase by 2 fir% for the u.s. segment 2%, you can call it material or not material, but it is something. it is not hefty as some people view them as as we start to progress this earnings season, maybe a quarter, halfway through, three quarters of the way, i'm going to try to continue to update those number us and see whether those comments seem to be more intense as it goes forward for right now, it's still early in the earnings season, that's a sampling of how the companies say that will affect them. >> joining us to talk about this

is ellen hazen, she's portfolio manager. and you guys think earnings season came in just in time to save the markets from all of these worries that maybe we've been watching the last week and a half what do you think? >> i think that's exactly right. i think when you look at when the downcast was early in october it was during a vacuum of information about companies and now that we're seeing numbers come in. stocks follow earnings earnings are still pretty strong, second quarter, over 20%. so far, we're looking at 20 percent, but as dom says, it's still early days the stocks will follow the numbers. and now that numbers are coming in and we're getting more tangible evidence of what's happening, i think the market can relax a little bit >> brian, that may be the case in the short term as we're looking at this with a lot of these reports. but all of these worries we

don't worry about until we do. and all of a sudden, the market can focus on fundamentals. >> i remember a story saying all of the gains were happening around fmc days. fortunately, that's not happening anymore. earnings season needs to stay positive, we know going into the next couple of quarters we expect to see positive growth but there's going to be pretty sharp deceleration so, instead of this 20% or 25% earnings, we may be in an 8% or 10% earning next year. >> are we in a position where the declines are coming around >> just that the fed is meeting in these earnings vacuum periods, too where the market is reeling for reasons that has nothing to do with the fed, but the fed has been setting off alarm bells sand coming out with a more hawkish forecast >> ellen, how do you try and

figure out how much of the market's movement is what you're hearing from jay powell or fed officials versus how much is based on fundamentals? or does it matter what the calendar shows? >> it really is a matter of what day it is, becky the market responds to whatever is in the news that day. some days it's earnings and some days it's fmoc to brian's point, last year, the market was up almost 22% guess what, earnings are up 20%. next year, the forecast is 8% to 10%. y we're at 6.5% now. and the market tends to be a forecasting mechanism. it wouldn't be surprising to seeing the market end up in high single digits this year. >> what dom has been bringing up, this idea of tariffs being mentioned, again, we're trying to get a measurement of how much of an impact that has, if it's something that's a big player.

is it something that hit your radar screen at this point, or are you looking at it as background noise >> not only is it early in earnings season now, but in addition to that, the tariff impact won't be felt immediately because some companies bought ahead. there were inventories built up. we may not see the full effect until it's in effect >> are we still waiting to see the boogieman, especially? >> i think it's another quarter before we really see meaningful impacts reported >> brian, what do you think? >> more worried about the tariffs that are yet to come to go to 20% the last $260 billion worth of imported goods from china gets taxed next year if the trade war continues to escalate between the u.s. and kleichina. that can affect consumer value >> consumer companies like

costco said they don't see such a huge impact. they can weather it better than others? >> the goods that are taxed so far don't seem to be the goods in stores. but you're talking technology, cell phones, those are things that could absorb. >> i will say this, one of the things we did notice in the marketplace over the course of the last couple of weeks with the market stresses is that a lot of the outperformers have been u.s. consumer focused retailers. you're talking about dollar tree, kohl's or nordstrom's. if you're talk tariffs there may be a view among some investors that they're going to play it by looking at more u.s.centric either midcap or multicap. the consumers are relatively stronger compared to other consumers around the world

>> ellen, good to see you. dom, brian, good to see you both kwlouyour house is one your biggest investments. and the data on a slow housing market what you can expect in a rising environment. and later former federal reserve chairman alan greenspan, we'll ask him about the current state of the economy and what he thinks we should be doing, with the fed. stay tuned you're watching "squawk box" right here on cnbc place, the xfinity xfi gateway.

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simple. easy. awesome. click or visit a retail store today. welcome back to "squawk box," everybody. we're watching the market this morning. if you check out the futures right now, you're going to see some red arrows. they've moderated a little bit s&p futures off by 4, nasdaq down by 12 back in april, real estate investor barry stearns was one of the first to say he was already seeing a shift in real estate markets thanks to the new tax laws robert frank joins us with more. with an update back in april, huh? >> yeah, the tax variation that barry talked about way back in april has begun. falling limiting the deductions for state and local taxeses. new data out today show that

real estate prices are falling in connecticut florida posted the strongest gain in years, especially at the high-end average prices in miami up 15% get this, sales were up 51%. and in broader miami, sales up 24%, with prices up 3% meantime in greenwich, connecticut, a different story the average sales price falling 15%. and sales down by the third consecutive quarter. this home owned by leona helmsley purchased in 2010 for $35 million. put back on the market for $50 million in 2016. now they're down two $29 million. they're pricing it $6 million below what they paid for in 2010 in contrast, in miami, dj khaled bought this home for $20 million. it was on the market a short

period of time really a tale of two markets right now. >> bringing you into the conversation to dig into the numbers is jonathan miller, ceo of miller samuel we just heard this so, the big question, i think, that everyone is trying to grapple with there are cities or suburbs around the cities like new york, then this other sorry tory goin in miami if you look at it in the next 12 months, is that same trend going to continue? is there a slowdown in places like florida how does this look to you? >> i think what we're going to see is a continued migration from the northeast to south florida for specifically the federal tax law impact >> how long does this last do you think this is a long-term frien trend, a decade? >> i think it's a structural change the tax law is in effect for basically a decade i don't want to give the impression that everyone in the northeast is going to pack up

and move to south florida. really the wealthy >> what's the cutoff line, is this affecting homes over half a million dollars or $20 million >> actually, as you move higher in price there's more tax associated with it so there's more reason to pause and reflect. i know a lot of people on the margin about this decision to make this move and i think the impact of this law sort of makes the answer more clear >> and that's the question, because a lot of the wealthy and big taxpayers in the northeast are the working wealthy. they work for companies that are here unless you're a corporate owner or you own your own company, you can't move to florida. do you think you'll see a little wave, as you mention, people thinking about doing it and now will just do it. and once that wave is gone things will settle back? or do you think, let's say we're down 10% in new york, we've got a ways to go in terms of price increases and a continued push

of people to florida >> i think this is a multiple year process this is not a flicker of any kind i think what you have to also realize is not only is there migration, say, from the northeast to south florida, you are also have cross-county migration, suburbs of new york, westchester to greenwich >> but sales velocity leads price direction. so, in this quarter, there was a 26% increase in greenwich sales >> do you think there's more that's going to move that's the other piece that we haven't talked about >> not too much. unless they're having a hard time getting down. i think the people that are pivoting from a locational standpoint is pretty much work

anymore. it's really a question of declaring your domicile in south florida and they have not done that >> should people invest in florida right now? if we're expecting this wave, wouldn't it be a good time to buy whether your investment property or your home? >> well, we're already seeing an uptick on that in the more affluent towns >> what part of florida is headed for the biggest upturn? would it be miami, ft. lauderdale, delray, would it be palm beach >> well, right now, we're seeing the biggest change in markets like palm beach, boca raton and ft. lauderdale miami's a different animal >> right >> that's a lot of sort of multifamily new development. but for single family, for the affluent, those are the markets that are changing. >> and long-term, on the flip side, for those in greenwich, long island and new jersey, is

your view long time, that those prices still have a lot to drop? >> i think there's going to be continued softness for quite a while. >> what's quite a while? a year, two years? >> oh, i think over the next five years five to ten years. what we're seeing right now is buyers -- >> if you're thinking about getting out, you should get out now? >> well, it depends. each person's situation is different. >> it's not going to get better, it's going to get worse, is what you're saying? >> the interesting question is for families should you sell your home and rent that's a different story >> so, we're actually seeing that so, what's happening in new york, we're seeing, especially at the higher end of the market with the rental market at the top being so soft, you're actually seeing people camp out in the luxury rental market before they make a purchase decision and that's been something that we've been observing over the last year. >> is there any other place in

the country that people aren't thinking that's going to turn into the next florida, if you will >> really, anything that has low exposure to taxes. it's not that people make moves based on their property tax and state and local loss of deductions, but it sort of tips -- it's a tipping point so any low-cost tax state is fair game. >> new york is being particularly hard hit, if you go up into massachusetts, boston, is this a similar story in some of these other blue states? >> sort of in other words, we're still seeing a booming luxury market in boston whereas as time passed a couple years ago so every market is nuanced the timing is different. crash the west coast is much, more exposed to the impact of the federal tax law. the economy, although we're seeing some easing still seems to be defying that so, it's a timing thing.

it's not going to all happen at the same time. >> jonathan miller of miller samuel and mr. frank. coming up, when we return, the gap under pressure on the downgrade. that stock ready to drop have you guys been to gap lately old navy >> no, a block away. >> alan greenspan is here. the former reserve chairman sitting down with us to discuss his new book maybe president trump's comments about the fed recently and so much more. back in a moment

♪ times for "pops and drops. we like the sound effects. jpmorgan downgrading the gap so, that's down. you can see almost 3%. lowering forward guidance as well 2019 earnings per share coming in at $2.38 or 12% below the street estimate. price target is now $24. this is up chairs of u.s. cancer drugmaker endocyte it keeps going up.

up and up and up up 50% that's gets four of those sound effects. president trump is ordering his cabinet to find major spending cuts in their departments. at a cabinet meeting yesterday, he sorted ordered a 5% budget c across the board >> i'm going to ask each of you to come back with a 5% budget cut from your various departments, whether the secretary or administrator or whatever i'm going to ask everybody to come back with a 5% cut for our next meeting i think you'll all be able to do it there may be a special exemption, perhaps i don't know who that exemption will be. if you can do more than 5%, some of you will say, hey, i can do much more than 5 >> the belt tightening comes as the treasury report shows there's a 17% rise in the annual federal deficit.

until you touch nondiscretionary, though, you're dealing with such a small pool of money in the nondiscretionary, it's hard to make a different >> as you mentioned populism -- >> yeah. it's a voting -- it's an election year sort of a stance >> it's always an election year. >> well, it is i think there's one this year. >> there is. in a few days. new york attorney jegeneral has investigating the moviepass. adjusting its ticket plans it's taken on hefty loans to take on massive losses given that it was paying for so many of these movie tickets at full price. we should say that sources tell cnbc that the investigation is in its early stages. the. the stock of analytics has lost 2% of its shares.

implied value at $30 million in other facebook news, the company has tentatively determined that spammers were behind a recent data breach and not state-sponsored hackers. "the wall street journal" is reporting that there's an internal investigation and found that people behind that attack were looking to try to make money by posing as a digital marketing company. last week, facebook said hackers stole data from 29 million accounts when we come back, capitalism in america. former fed chair alan greenspan tox about his new book the state of the economy now and what advivice he would give to a powell and the fed's independence >> hi. i'm alan greenspan, how are you? >> the indicator

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good morning, again. welcome back to "squawk box" here on cnbc we are live at the nasdaq market site in times square among the stories that are front and center private equity firm blackstone is out with quarterly numbers. numbers that the analysts used for the stock came in at 72 cents a share. two cents above expectations revenue, the firm had record $125 billion in capital inflows over the last 12 months with assets under management jumping 18% to a record $477 billion facebook believes a recent theft of 30 million user tokens was done by spammers seeking advertising. that's according to "the wall street journal" quoting people familiar with facebook's internal investigation those sources also say it

doesn't appear the hackers were associated with any japanese state. and the $62 billion acquisition of shire thakeda is await decision by the november decision. and in the wake of recent criticism of president trump, let's welcome longtime fed chairman alan greenspan and historian adrian woolrich, political economist. we'll start out with the new book that is out then we'll get to fed and trump. the book is called "capitalism an american history. you're writing a book on the history of capitalism. do we have an aaddendum or epilogue or chapter for where we are right now, in the viewpoint

of capitalism, given that 62% of democrats and a lot of young people are convinced that maybe it's the wrong system for us >> this is an issue we discuss at length in the book, because as we move up through time, going back into the 1630s, we move up through time that are ever closer to current policy. and where we come out at this particular stage is that there is stagflation ahead of us and unless human nature is changed or just does tricks on us, this necessarily implies that real interest rates go up because this is the tightest market, labor market, i've ever seen and so that means, if rates go up, if rates go up, ultimately, prices take hold but concurrently, we've got a very slow productivity increase.

1.25%, maybe 1.5% a year we used to have twice that or more this is having a significant impact on the gdp growth and, therefore, it's ultimately the source of a populism which has infected the united states as it has europe and others. >> you point out that 10, 15, 20 years from now, the people receiving entitlement that they've earned throughout their life are going to vastly outnumber the people that are providing the work and the output to fund those entitlements there's going to be a lot of people that's going to make it hard for productivity to go up, so it's going to be hard to grow. >> very much so. congressional budget office is currently forecasting very large increases in the deficit

and therefore in the debt. and debt, as a percent of gdp, just a few years out, unless we reverse course is getting close to peace time high >> david, just for a second, back to the original question about why we're once again questioning what economic system brings us the most prosperity, it has been postulated that the longer capitalism is in force, there's a permanent class? absolutely >> is that where we're at now? >> yes the question in the half of this book, why did america become the world's greatest world power, why did this country come from nowhere to become the world's great economic power and we argue in the book, america has had an appetite for

creative construction. it's also more productive areas. america, because of its size, because of its newness, because of its entrepreneurial ability and that appetite is fading now. and all sorts of ways. you can see endless indicators in terms of people's willingness to move, people's willingness to create new companies people's attitude, as you say to capitalism one thing we have a whole class of people who don't believe in capitalism >> but it is tied into your ability? >> absolutely. that is a big problem. absolutely. >> there's no question, though that our success has been part of the culture, the entrepreneurial culture that you're talking about but part of the thing that i wonder about, the real engine of the u.s. economy, success of our global ambition took place

effectively after world war ii >> no. >> no -- you don't think -- if you look at all of the u.s. companies it was the government. >> that's what he's getting to i'm not arguing with the government this is an argument of the rest of the world being out of business until 1980. you look at wages in america the first time that they start to stagflate which when the american world came on lie >> i just want to point out points of fact, the real history is 1865 and 1940 that is the period when america becomes almost a round country from being the dominant in almost every sort of industry from cars to steel to oil. >> it's hard for you to even say that because it was your country -- >> that's when the government was paying a minimum role. >> i'm not talking about the government playing a role.

i'm talking about the fact for many, many, many years, that's true the u.s. had a huge advantage over the rest of the world >> but it was an advantage created by america's ability to create companies, which are the best in the world. >> i think, anderson, we think we're exceptional like the belgiums think they're exceptional. >> china, a capital gdp, only the third of the size of united states >> and they got a lot more people >> and that's basically where we are in 1960. >> right >> so, what happen is, if you look at china, the biggest steel producer now by far, that's where the united states was in 1960 >> but we're never more, i think, a president once said this, we're never more than one generation away from losing all

of this, theoretically and i can't believe we're back arguing about why america is exceptional again. and trying to discount the effect of free enterprise and entrepreneurial spirit and capitalism and everything else let me ask you about powell because we got to do this at this point i don't want to put you on a spot i remember another president that was very angry at you -- the first president bush >> there's been more than one. >> is this unprecedented to see president trump jawboning the fed about raising rates? >> presidents don't like higher interest rates, typically. >> you go through the history of the federal reserve, especially in most recent years, you'll find every president has an insight into how the markets work and where interest rates ought to be, which is always superior to that of the federal -- >> so, they think. >> i mean, the best thing you that can do if you're in the fed is put ear muffs on and just

don't listen i mean, it's -- i was at the fed for 18 1/2 years i had gotten innumerable notes, requests, et cetera, to lower rates. i do not recall a single instance where somebody in the political realm said we need to raise rates, they're too low. >> did you ever get direct either letters or conversations with the occupant of the oval office, directly on that issue >> all the time. >> all the time? >> you know, jay powell has said, you know, president trump has said he hasn't spoke with jay powell about it. you had directly -- >> jay powell say first-rate federal reserve chairman and he will be -- he will observe -- this guy knows what he's doing i've known him for years he's extremely competent

and while i don't comment on what the current policies are, or how they're doing it, his competence is really such that i don't worry about where the fed is going. >> mr. chairman, the world economic forum, or wef, said that the world is now the mo strongest economy in the world in ten years we've regained that. what do you attribute that to? is it policy, is it time, what is it? >> i attribute it to the fact that the rest of the world is doing worse. we're not doing that well. our productivity increases are 1% to 1.5% a year. they used to be 3% >> that demographics >> no. it's policy. it's basically, as we say in this book, and i've said in the

previous book, what we're looking at is the impact of entitlements one statistic which grabbed my attention, i was accidentally doing some ratios. i came up with the fact that from 1965 to date, that the -- i don't know how to put it in simple terms -- but some of the entitlements plus gross domestic savings is as a percent of gdp has been remarkably stable as you look at the two individual components of that sum, they work against each other, which very much implies that one is crowding out the other. but the question is, is it entitlements which are government-authorized. or is the market adjusting

and all of the evidence suggests that entitlements are embodied in the outlook and they will never change their pattern. they're mandated by law. therefore, all of the impact is on the reduction as entitlements go up, gross domestic savings goes down as a percent of gdp and that plus savings borrowed from abroad, we've already accumulated $8 trillion. >> we've never seen entitlements the increase flattens. and we never will. how will we ever get out >> the answer is, we're going to have to. and as we pointed out in the book, following sweden a decade or so ago, which had the same problems we're having now, only

much worse, converted some of its entitlements, for example, to a way of accounting for them. and to significantly reduce the level of entitlement growth. it's still there and also we reverse it, we're in trouble >> how do you think about the tax cut? and we were having this debate in the 6:00 hour, the tax cut, what it's done, either -- i mean, there was a report earlier this week that showed that revenues did increase. i would argue they didn't increase as much as they would have otherwise i know that doesn't seem to hold water with you that's for joe, not you. >> well, you're amazed if i cut corporate taxes that corporate revenues go down you cut the taxes on the corporations -- >> hold on hold on. corporate tax revenues would have been higher this year --

>> yes >> -- but for the lower taxes. >> yes >> they did not pay for themselves. >> well, no. >> they paid for themselves on the individual side, because we actually have higher tax revenue. if we cut -- >> overall tax revenue would have been higher -- >> i understand that >> so you don't -- >> whole point of cutting -- >> the idea that tax revenue is up this year is completely irrelevant it would have been up anyway it would have actually been higher. >> we wanted to cut corporate -- go ahead >> with this conversation, lower fewer decimals >> my question for you, though, my question for mr. greenspan is when you think about this overall problem, in terms of entitlements and revenues. what is the open answer? do you think where we are in tax, makes sense to you? and the only thing we now need

to do is reduce everything else? >> i'm basically -- the actual corporate tax cuts were very helpful. they replicated what went on in other countries. and it's good. however, they're not funded. >> yeah. >> you cannot -- you cannot create a large gap in the budget deficit without significant negative consequences. eventually so, while it's true that the tax cut per se is good, it's only half the story >> the american corporate tax rates -- >> unless we fund it >> the point of cutting the corporate taxes was to leave more money in the corporation to risk and expand. >> yeah. >> you'recriticizing what we did on purpose >> the tax rates were completely out of whack with the rest of the world. >> that's right. >> very high with respect to the

rest of the world. companies were responding to that by keeping huge cash piles sitting outside of the united states doing nothing at all. the evidence that we're seeing from ireland, if you cut the tax rate, quite quickly you get a cut in tax cuts. >> that's the height of it >> alan, if you say you want to fund it, how do you do that? raise taxes on individuals at the same time? >> i'm basically saying, i'm not going to suggest where the revenue side gets changed, i'm merely saying in answer to question, is it good in and of itself, it's the right policy, but only half the. >> maybe you raise rates on individuals.

>> i'm not about to suggest fiscal policy. i have enough problem -- >> but spending, nondiscretionary spending is where cuts need to come, don't they >> well, look, sweden has gone through the same thing we have they made a major switch where the entitlement problems have now been resolved. >> but through accounting? >> well -- >> well, one of the thing is reaching retirement age and linking retirement age to the average life expectancy of people. >> that's anti-populist. >> it's anti-pop puulist. >> back on page 299 or something, in this year's report by the trustee's old age

provider program, social security, says if we wanted to have an actuarially sound social security system, we have to cut benefits by 25%. indefinitely in the future i suggest to you it's on page 299. that's the actuary speaking, not the politicians who signed the report, but it's still there and that's what the facts are. the way sweden got out of it, they go from defined benefit system which is what we have today to a defined contribution. a 4 o 1 chl01(k). 401(k)s are never in deficit yes, they will slow down, and they'll slow down for exactly the same reasons that sweden saw. >> we have an election coming

up the sole or the geographic center of the democratic party at this point seems to be much higher, much greater entitlements in terms of single pay payor. in terms of medicaid fraud we've seen the sbiemenexcitement would that make things worse >> trump is not worried about entitlements he's not doing anything. >> i know. but bernie sanders, or alexandria ocasio-cortez or elizabeth warren >> they're all involved in single book entry. they don't want to do the debit side they want the equity side. the world is double entry. if we want to get ourselves in real serious trouble, don't attack this problem. i'm telling you, sweden solved it the solution is not economic, it

is political and the question is, do we have the guts to do what the swedes do >> well, sweden also, i think, does have single payor, does it not? that's always held up as an example of how we should run our health care here and the critics point out it's 9 million people or something >> all you have to do is get the correct financing system that creates the revenues that the entitlements create, to be sure as the population ages, we're going to have to middle up everever ever-increasing entitlement levels and as far as i can see, everyone is blinding themselves to that fact it's built into the data, congressional budget office, forecasts that majortrouble is ahead. nobody is listening. the reason they don't listen is that the financial community

doesn't care about bookkeeping what they care about which is what they're going to confront is inflation remember, inflation, back in the '70s, 1971, 4% or 5%, caused richard nixon to put price controls on. the reason he did, as the inflation rate went up, politics got extremely unstable but it is not the fact of entitlements per se that's doing it >> do you remember when you told to us put the ten-year up and we have ever since? we always have the ten-year. you want to see it on the screen that's what you need to see. so, are we in a new normal in terms of where the ten-year is going to be over the next five years or so? would you have ever predicted this would be normal to see a ten-year struggling for the year

to get above that? >> let's put it this way, all of the interest rates, short-term interest rates in the last several years have been the lowest in american history it's part of the data system in our book that we carry interest rates all the way back and we do have -- we do have government yields, with the exception of two years those two years didn't have any. because there was no debt. that sounds incredible i don't mean there's no deficit. but there's no debt. and as a result, we are uncharted territory, really. >> what were those years that we had no debt? 1834 and '36 andrew jackson >> andrew jackson. >> you know, he may well have been a populist in the

conventional sense of the world, but he was a fiscal bear >> you can write the next ten-year chapter on capitalism in america what do you see? >> well, we really argue in this book that america's current growth in productivity is a policy choice. it's not something as a result of being a mature economy. it's not something that is the result of technology or even demographics because the demographics is not as bad as many other countries america could easily go back and a rapidly growing economy if it wasn't for some very foolish policy choices the problem is to have better policies, you need to have better politicians and governments and we're not seeing that at the moment >> can i just go back to capitalism that is at least the challenge or people are raising questions about it this is where i go back to what i was telling you sort of post

world war ii and the get 2igs, or lack of competition for the rest of the world. i would make an argument to you the fact that there was less of equality back in that period was a function of the fact that we were not competing on a global scale. because we had a monopoly, the labor market was able to move forward. all things were able to be paid for effectively, if you will that today are much harder to pay forgiven the global competition that we have and therefore it raises question to people of a view of capitalism and the american dream looked like in the 1960s relative to today. >> one is public policy and public policy choices and the other is global competition. when you think of inequality, there are two different sorts. one is inequality produced by somebody like bill gates that comes up with brilliant ideas. and the other is inequality that

comes from cronyism. the first sent of ipoint of inei don't worry about bill gates but i do worry about connections and cronyism somebody has come up with something that has made everybody's life much, much better in terms of the size of the american middle class, i would say if you have a functional successful education system, you're doing much more to create the foundations of a stable middle class >> wouldn't in a get dcompetiti world they're competing with us and also allows them to solve it you're a globalist, but you're worried that globalism is not allowing the american dream to happen anymore can't we sell to the billions of people in china, can they wear

levis? >> absolutely. >> so, it was the labor movement that allowed all of the prosperity -- >> i'm not saying the labor movement created the prosperity -- actually, that's not true the labor movement created to some degree this -- >> so, because of world war ii, we really didn't build these companies? >> i'm not making a government argument at all. >> no, but -- the american exceptionalism it was a loaded deck from the -- >> i believe in the late 1800s and early 1900s, there were remarkable companies that were able to get a huge leg up because the rest of the world was out of business -- >> mr. chair, thank you. thank you. capitalism will survive. thank you.

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>> announcer: 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 from the nasdaq market site in times square, i'm joe kernin along with becky quick and andrew ross sorkin the futures right now are giving back some of the gains we had two days ago it gave back 90 points on the dow yesterday. but it was really mostly ibm and home depot to some extent. and we did recover from sharp losses to close down less than 100 point. giving back another 57 on the dow. another 8 on the s&p nasdaq indicated down about 24 the ten-year note at this point is back above 3.2, but just barrel 3.201. here's some of the stories investors will be talking about today.

former federal reserve chair alan greenspan praising jerome powell with us on set in the last few minutes greenspan called powell very confident and in the tighten labor market we've ever seen he also had advice when dealing with u.s. presidents >> every president has an insight into how themarkets work and where interest rates ought to be which is always superior to that of the markets. >> so, they think. >> the best thing you can do if you're in the fed is put ear muffs on and just don't listen dow component travelers out with third quarter earnings. the insurance company beat the street's expectations. earnings more than doubled from a year ago they were helped by premium increases. and the labor department is set to release jobless claims at the bottom of the hour forecasters calling for 210,000 new claims last week down 4,000 from the week before.

a few other stocks to watch. blackstone pushing better than expected quarterly results surging 18% from just a year ago to a record $457 billion a mixed quarter for bank of new york, mellon topped earnings revenue was below the street forecast the company added it was cough accide confident it can boost it. and that company raising it's three-year forecast. if there's a list of power players that wall street needs to know, our next guest is on it now the congressman says he's been promised by senate leader mcconnell that a senate vote will happen before january joining us is congressman jeb hensarli hensarling

>> i've known leader mcconnell for many, many years he's never broken his word to me before i'm hoping this will not be the start. this will not be the first i'm expecting the vote i'm disappointed it didn't happen before the election but if it may be to our benefit that it happens after. i just want it to happen historically, these capital foundation bills held strong by bipartisan support i have learned never underestimate the senate's ability to do nothing. so far, they've done nothing on it but i am convince they had will do something, at least after the election and it's important we have a great economy today, but i'm concerned about the economy of tomorrow. again, if you look at entrepreneurships, small business startups, ipos we have a lot to do. to ensure that your previous segment with alan greenspan that again creative constructionism

worked that the dna comes forward. >> what do you think just about the premise of the book, chairman greenspan and a agree i adrian's book. we had this appetite for creative destruction that allowed us to gain preemence in the world. do you think we still have that? or do you think there are areas that we're not as strong as we used to be >> well, i think public policy matters. and i think, unfortunately, there's probably too much risk aversion i mean, ultimately, people had to take risks. in our garages, we have too many old cars and not enough new startups i don't think necessarily our dna changes. listen, i'm in public policy, public policy matters. >> thrust of his book is that it's the size of our entitlement spending at this point is what's causing us to no longer be able to have the productivity necessary to do the creative construction should we be surprised

we've benefit for 50 years how europe has grown and they have much larger entitlements than here in our society, it's 2018, we want to give as much as -- we're a kitch a rich country entitlements seem to be the right thing but not in the long term if you don't look at them right. >> indeed, if you look at the eight years of obama administration you can make a case that we were morphing in a european style democracy we couldn't be surprise fd if w get returns from that. it's also kind of the regulatory avalanche. and if you go to any boardroom of any financial services industry, service company in america, they will tell you how much time they spend on compliance, versus doing the risk taking and the strategic

planning necessary in order to grow their businesses. so, yes, we have a huge entitlement spending problem ultimately, there's only way to deal with it economic growth is helpful, but it would take double digit economic growth for almost a generation >> the point made on regulatory oversight being pulled back. but you said in the last two years, we've turned that around on entitlements. that is not something the trump administration has any interest in >> no, i didn't mean we have turned it around on entitlements for many americans this is obviously the strongest economy they have seen in their lifetime but unfortunately, no, the entitlement explosion that will occur one day is still out there. it's the most foreseeable crisis in america's history as i get ready to leave congress, if you had several hours i'd tell you about my disappointments but the number one disappointment i have is the inability to convince a sufficient number of my

colleagues and frankly, my fellow citizens, of the peril we face by not addressing this debt my ipad is awash with it to sustain it we know it, for future generations there's no other solution >> paul ryan might agree with you on that point. i know it's something that he's been concerned about for years >> there's no might. he does. >> we used to look at these things saying we can fix these things with minor changes. maybe you increase the retirement age by half a year, two years down the road. what would it take now >> well, every year, we put it off frankly. it does get more difficult it does get more expensive the public policy solutions are really the same. i give speaker ryan great credit he has normalized the idea of premium support in medicare. there's no more important idea in entitlement spending reform than premium support in

medicare in the private segment, dr. greenspan was talking about age reduction in social security the average lifespan of a male was -- it was actually 60 or 61. and you wouldn't gcouldn't get until 65 a great deal for the government. so, as obviously age spans have increased the math simply -- >> where are you on means testing. >> i believe means testing is part of the solution i would put that into the package. listen i'm a veteran of simpson bowles, regrettably two failures if there's a grand bargain out there, i don't want to see taxes increase but this debt problem is huge. if democrat s would come and agree to entitlement reform, obviously it would be a tax increase it would harm the economy in the short term but in the long term,

if we don't -- we're not going to become greece, but we will become europe. >> the political climate before trump we had paul ryan pushing grandma off the cliff just because you talked about reform. >> joe, politically, that didn't work. >> we didn't get anywhere. >> i'm saying politically, you're going to hear it again. since we have election years every two years, how do you run on entitlement reform? if you can't get elected, you can't govern >> well, i didn't say it was easy >> paul ryan's out of here i would be, too. >> clearly, i didn't crack the code. >> call eric cantor up where are you headed >> good question i'll talk to you in january. i'm putting all of those conversations off till january >> your linkedin account is on

fire sending out -- >> we'll figure that out in the meanwhile, i've got to run through the tape on my current job. my point was, again, speaker ryan has at least normalized the idea within the republican party. this can be done and politically you would not necessarily suffer i still believe, i hope not naively -- >> look at what's happened for him -- i don't think it's normalized at all. >> for what? >> the idea of premium support in medicare is something that is in the republican senate conference as well but until my years, very few democrats have ever cared about the dead issue >> we're closer to medicare for everyone than we are from premium-assisted medicare. >> socialism is alive and well in the democratic party. i at least applaud them for

being more transparent the american people need to take a careful look and decisions will be rendered here in just a few weeks. >> and, you know, what, obama lost 60 seats. how do you lose less than 23 it's almost impossible >> i don't necessarily say that. if you look at the polling data between 2006 and now -- with the generic re-elect with the right track/wrong track, which party do you trust the most with the economy so -- >> do you have a real number on whether republicans hold the house? do you have a separate set of books from what you say on tv on whether they hold the house or not? >> i'm not ready for re-election. i think it's 50. >> you do? everybody is at 80/20. >> i think it goes a half dozen seats either way i don't see a big blue wave coming if i wake up -- one, i don't sleep. i wouldn't be shocked if we kept

it i wouldn't be shocked if we lost it i would be shocked if the democrats had a big blue wave. whoever governs is going to have a razor-thin majority in the house. i think the republican party is almost assured to take the senate >> what's your friend going to do with the 38 million >> well, we don't spend a whole lot of quality time with each other. he's certainly not offering me any of the 30 million. apparently he's not offering it to his fellow democratic candidates >> what's the -- >> he's going to get re-elected. take that to the bank. beto is going to have to spend this 30million -- this is texas. >> the chairman of the house financial services committee thank you. coming up, facebook

co-founder chris hughes is joining us in the studio we're going to talk about everything, including labor markets and more first check out the faang stocks down 1%. alphabet is up "squawk box" returns in just a minute executive finance committee is now in session. and... adjourned. business loans for eligible card members up to fifty thousand dollars, decided in as little as 60 seconds. the powerful backing of american express. don't do business without it.

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welcome back to "squawk box," everyone we've been watching the futures all morning long after a relatively flat end to both the s&p 500 and nasdaq yesterday, the dow was down by 0.4% this morning. this morning, you're seeing red arrows the dow by 20 points futures of s&p down by 6.5 points and nasdaq down by 17 points facebook believes spammers were behind the latest data breach and thinking they're not affiliated with the nation state. out in silicon valley, facebook opening its doors to the first ever war room to fight election manipulation.

the project brings together more than 20 teams from across the country. they plan to work together to quickly shut down suspicious activity teams are now working 20 hours a day. starting next week it will be 24/7 >> so, we've essentially done much scenario planning and like war games internally within the warroom, in order to plan out different types of problems that we may see and we've practiced and we've done drills, to see how he can detect that. how he can come to quick decisions and how he can take quick action >> facebook claims its new artificial intelligence and machine learning combined with the teams in the warroom would have prevented the manipulation of the 2016 election the next guest made over $500 million in his 20s, ynow, he's pushing forward tax reform for families welcome chris hughes, a facebook

co-founder author of "fair shot rethinking inequality and how we learn. >> thanks for having me. >> you have a different view relative to the conversations we've just been having about tax and what should happen sort of lay out your plan and then we'll get into it >> well, i think, first of all, to take a step back, from something that's actually happening in the economy even though it's a tight labor market, stock market near record highs i think all of that actually covers up the lived experience of most working americans. 10% of americans capture, or have -- capturing the vast majority of these gains in the stock market everybody else, they're making the same amount that they made in 1978. median wages still have not budged what's more, cost of living, health care, education, you up in the right people are feeling squeezed. a lot of people in new york and san francisco are like, economy's great.

that's actually not try for a vast majority of americans there's a new report out today, toactually repeal the tax bill and give all of those savings to working people in the form of a tax bill that comes every month. up to $500 per month, not just for the working poor, but also the middle class i think if we did that it would give a boost to the pockets of the people who deserve it the most it would rebounce the economy. and it would actually create the growth we want to see. >> when you say repeal, repeal corporate tax cuts or individual >> both. both specifically, on those who earn $100,000 or more i mean, the question to me is not necessarily how and which of the tax cuts do we repeal. if it were up to me, i'd repeal the whole thing. do we create tax cuts for the people, what we see the effect of the tax bill, the highest

buyback rates which i think are problematic. it's not investing in r & d, not investing in things we want to see in consumer growth if we invest in the american people, we would see mieconomic growth >> you look at the current economic growth which is happening which is real. you can argue it's a sugar high, you can argue lots of things, but it is happening. do you believe that's a function of the tax cuts? and, so, is there a way to think about tax cuts? and perhaps we were talking about it earlier, the idea of corporate taxes. maybe you could leave the corporate taxes where they are or the issue of raising revenue would be an issue in a different way? >> sure. there's no doubt the macro numbers tell us the economy is growing. >> there's a dignity to work >> of course >> the idea we could put people in the labor market, even under some of these circumstances. >> right but it all depends on your perspective, if you look at a

studio in manhattan, and you look at the gdp and macro numbers it all looks great if you're a working person at walmart in topeka, kansas, on in the bronx, you're not making more money than a years ago. >> we're starting to see wage gain >> 3% higher than 1978 >> right, so far >> so far? it's modest. they've been telling us it's coming and coming and coming all of that is overwhelmed by the cost of housing up the cost of health care, the cost of higher education, the cost of student debt >> looking at walmart because you brought that out as a particular example walmart decided to raise rates they were among the first to do that amazon raising their own -- >> they did, they did. >> -- raising their own wage above the national, amazon, too? >> and we should applaud that. amazon recently, where at the same time, they pulled back some of the investments of some of

the manager which is gave me a little pause after the fact. but it should be applauded when the companies take on that responsibility however, i don't think we should sit around and wait for companies to be good samaritans or citizens. the federal minimum wage is $7.25 an hour. that needs to change >> endless argument, you're never going to convince me and i'll never convince you. there's two ways of approaching economic growth. and one is to tax the producers and then take that money and redistribute it to yireveryone else the other way that people decide to maybe do it don't tax the producers more allow them to do what they do, risk capital, start companies, create jobs. you'd have more jobs, people are able to move between job where is they make more money. you do it organically. minimum wages go up. the company suddenly to keep good workers has to pay $15 an hour

>> that's a theory >> have we tried redistribution for eight years. we got nowhere we got zero interest rates assets went up in value because the fed stayed at zero everybody that was in stocks made more money. and no one at the bottom got anything even with the reis distribution >> i think we found somewhere where we agree -- >> which is? >> -- which is redistribution. i think we do a ton of redistribution right now right now, the taxes that infamous 1% are lower than most americans in america that is a tax that we designed to move money up to the people who own capital and not to the people who will i believe deserve it because they're out there, woulding every single day. the kinds of hours that i would never be able to personally manage i do agree that recapitalization is happening. >> there are always going to be people like you made $500

million. and there are people that never in their wildest dreams can make $500 million and that's a great way to do it. you wouldn't want to take that opportunity away >> i would argue that my story is exactly what tricks people. because i did grow up in a middle class family in north carolina did go to harvard. did become part of the facebook team did make a boat load of money. however, i made that for three years' worth of work that's a lucky break and my story may be unique and extreme, but it's not that uncommon there are lucky breaks happening every day for people who are part of the 1% >> that's a lot of lucky breaks. >> right >> but when you talk about, you know, fair taxation, and people need to pay their fair share so, you work for three year, you've got half a billion dollars. if a wealth tax were proposed for you at 90%, you'd have $69

million. you give 450 to the government is that fair -- seems fair to me if you have 50 million left. >> sure. i think we should look wealth tax should be part of the conversation >> 90% wealth tax? >> you'd still have $50 million. and nobody can spend $50 million. >> you can pick up these strong bands of economic policy >> what's fair, though >> at the most extreme point in the united states, it's been 100 year there is a wealth tax of 90%, okay -- >> but we have a pretty progressive system right now >> oh, i would disagree. >> you don't think -- >> no i think we should bring our marginal rates back to where they were for the 20th century to an income up to above $250,000 i'm sure you think that's extreme. most importantly, it's what we had when we had the most robust growth in economic history and

growth that is widely shared, that is shared prosperity, that's the country i want to live in. >> i don't think moving money through redistribution helps growth if you take it to its logical conclusion, just do a socialist -- do you think a socialist system makes more sense? >> listen, i think capitalism is the most productive economic system that we've had in human history. i just think capitalism needs to be accountable nobody wants free riders in the system nobody everybody wants to say, if you work hard for something for yourself, your family, you should have a leg-up in the american economy look at jared kushner, he has not paid taxes in years, according to the "the new york times," zero >> and yet -- >> but the law makes no sense -- >> a report came out from the institute on taxation, the economic policy, show people in

the lowest 20% they pay 50% more than people in the 1%. >> you heard greenspan or others that talk about our problem is that entitlements are already too much the entitlement you're talking about right now, sounds like we'd almost double the entitlements on the book right now? >> here's what i don't get about that perspective it seems like we have plenty of money to add to the deficit, plenty of money for the 1% all of a sudden when it comes to entitlements which are the mmbric of the economic counity, that doesn't square in my world. >> it's a longer debate. you have to come back. chris hughes something is transforming and our world.. it's the longevity economy - americans 50+ driving 7.6 trillion dollars...

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welcome back some october news, breaking read on fed don't see it yet let's go to jobless claims they were slightly revised from 214 to 215 take 5 away, brings you down to the most recent read at 210,000. 1.46 million on claims philly made it, 22.2 22.2 that's closer to expectations and very close to our last read

of 29.2. overnight, it's waken up the curve closing in a flat as a pancake area, they've expanded a bit. as a matter of fact, we're now tradie ing 320 and 10s. same for 30s currently the high yield close for four years, trading 4.27 yes, 2.90 on the short end equity markets a little squeamish. this is the way we went into the minutes. this is sort of the way we came out of the minutes but that treasury complex was rumbling yesterday. it did give indications it was getting ready to sell off, pushing rates higher back to you. >> what do you think that was, rick if it was headed that way before the fmoc released its minutes. and then headed the same way afterwards, i was going to say it was because of what they saw in 9 minutes

but it's rumbling that direction, is it because of general nervousness with what the fed's going to do? or is it because of positive news being heard in earnings at this point >> bingo, i think it's the latter obviously, the central bank plays into any strategy. i think after that jolting jolts number things changed a bit after all of the issues and hand-wrangling in terms of what they may do or what the president may or do make them not do more or less of i think it's really the diversion of local economies, how sensitive the rates were with equities i think underscores that the u.s. is on a different path even though most economists and analysts don't believe diversionendiversio en is something we have to wait to see what the market thinks about that >> rick, thank you joining to us talk about

this is joe lavorgna he's a cnbc contributor. joe, what rick just pointed out, that jolts number from earlier this week. that is something that people are talking about. watching so closely. the job market is the strongest he's ever seen that's what greenspan told us. i'd be careful about greenspan's prognostications the labor market is very tight, becky. 50-year low. labor market is very tight however, there's very modest wage growth. very modest wage growth. and inflation is not an issue. the cpi is back beyond 2% i don't think that's greenspan's view or yellen or powell or others, but that's what i would do, let it run >> what happens if they keep raising rates at the modest pace they've been doing >> raise rates modestly from '04 to '06, it rolled the economy

over gradual is relative and the fed is aggressive. clearly, we're at very low rate. i'd just let it be let it be. get inflation. yet yield curve resteepen. >> the fed chairman doesn't seem to care what the president thinks about it and doesn't care about the markets, although he is a student of the markets. >> my old boss paul mccauley resigned yesterday he talked about having the more democratic approach. the fed is not immune to political criticism and it shouldn't. it's responsible for things partly for which they can control. a lot of what the fed has done that started under primarily greenspan and bernanke has a big target on its back with the qe and everything else. >> greenspan just popped that narrative that trump's the first one to ever -- >> i'm not sure, i remember nick brady bashing greenspan. >> i know.

he's said every president has done it, even sending letters. >> reagan used to do it to - >> and h.w. does it to -- >> paul mccauley was your boss >> yeah. he hired me on the street. >> how did it end up you -- although he's an enigma. >> paul's a sharp guy. there are things that i agree with him on. the thing is the fed got into parts of the market and it's done things it wasn't supposed to do. what they're finding is it's very hard to get out it's kind of where monetary policy is. it's the same thing in europe and asia as well you have to wonder where are rates going to be when the next recession hits? are they negative? are they close to zero -- probably >> so with the economy here going on strong with regard to what you've seen around the globe. can that continue?

>> it can continue as long as the dollar changing dramatically it's not sustainable you cannot have one industrialized economy perform as well as it has from a growth speshl perspective, as well as equity returns. so it is not sustainable part of those returns we're discussing are fed-led yes, the fed is going gradual in its own mind but what if the central bank is tightening therein lies the crux. everything is relative >> joe, good to see you. >> thank you coming up, top stocks to watch. pops and drops, if you will. been there, done that. and don't miss david solomon live on "closing bell. he's going to talk about the quarters and volatile markets. stay tuned "squawk box" will be right back.

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hand the increasingly heavy rainfall the more development the worse it gets because there are fewer places for water to go that's why instead of looking on the ground for answers, new companies are turning to the cloud. finding new ways to control what comes out of the sky ♪ >> reporter: a recent day of heavy rain in albany, new york, caused this localized flooding not exactly a national headline, but it should be because of what increasingly frequent and heavier rainfalls are doing to the bottom line of local economies across the nation hitting both infrastructures and budgets. joseph coffey is albany's water commissioner. >> the extreme rainfall events are causing flooding basement backups and combined sewer overflows into the hudson river. >> reporter: know in albany's search for a solution, he turned to tech, the tech-clarified cloud. and a four-year-old company that

manages water in lakes ponds and draining them in advance to hold more water precisely when storms hit. marcus quigley is the ceo. >> we're able to take the weather forecast and use it to predict how much offflow is going to occur and drain the facility down in advance to create new storage without building a new major capital asset. >> reporter: quigley says nationwide there are close to 1 million lakes like this that could opti to control local flooding >> the lake is held back by a large panel to make sure the level is maintained at a certain elevation. at the bottom there is a valve that valve is connected to cloud infrastructure >> reporter: the valve is directed by a control box which connects to the cloud. watching weather every second and changing the water level in the lake a far cheaper solution than building more storm drains and reservoirs >> typically, the savings are in the range, on the capital side

from 50% to 90%. >> the business of water management is growing exponentially, and stormcon, over 200 companies big names like oldtara businesses are booming and money pouring in you can see more stories on cnbc.com >> most of that money coming from local, federal? >> local, ferderal. the mayor of boston announced that for boston which has seen a lot of flooding lately. >> diana olick thank you. oil prices dropping. $70 yesterday. check it out, 68.68 for wti. we're going to drill down on the factors. first, check out the trading picture in europe right now.

germany's flat but france is a little higher, 0.4% ftse flat, too stick around, you're watching "squawk box" right here on cnbc. 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. ♪

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♪ welcome back to "squawk box. futures now down just under 50 points 47 and change. on the dow, nasdaq, down 14. s&p down just under 6. treasury yield, they were just about under -- they are now, under 3.2.

3.198. joining us now, the fixed income strategist at merrill lynch. and u.s. trust and john kilda, former partner at capital. a cnbc -- disock d-i. was there anything in your motion, john, on oil, we saw runup that we saw disruption in the gulf, now it's coming back down, from michael, i'm talking about? >> yeah, i think most certainly. the market got a scare going into it last weekend when that editorial came out and there was talk about you want to see oil go from 200 to 400, try our patience in saudi arabia rick was having a heart attack on that report the other morning, all of a sudden, they were holding their heart because

there could be a zbart tour. it's so against it to do it, joe. they've more than backed away from it. they've done a 180-degree turn on that posturing and their actions. i mean, they are working, really, heaven and earth to get more oil produced and exported at the moment. >> do you have to be a cynic about geopolitics, to wonder why we're not much higher in oil we're going to eventually overlook this entire situation >> i guess, somehow, some way, we're going to work our way through it as tragic as it is. look, this is how important saudi arabia is to the global economy and to us. as much as we like to talk about energy independence, we're intradependa intradependant >> we talked about it a million tiles and during the commercial break, is there a way for president trump and the united states -- and by the way, many other western countries, to come

out, publicly and center the crown prince and the country without upending the relationship and by the way, could there ever be private conversations between the crown prince saying, we're not happy with this we know what you did you have to understand it's not good for you to come out with a completely madeup story because that's not going to help anybody long term either i hate to say for them to collude but that seems to be happening anyway >> i think that's exactly what's going to be happening. there's going to be wouldn'indo dressing >> the question is what does the window dressing look like? >> the over/under is whether bin salman has to step down or not if they're somehow or other able to keep him in office that will be an amazing feat beyond that, also, there's talk about journal efforts sjournalr cities

they didn't kill some maggot from isis. this is a washington editorial person that's what makes this thing worse than saudis or other equivalents trotted out. the over/under is, as long as we work through this, it's not going to be an oil shock, i can tell you that. >> we're below that level again. what's our range do we have a current range >> our range at the end of the year, we're forecasting 3.25 by the end of the year. we're right where we expect to be again, this year has played out pretty much as expected. the fed has been pretty clear to look in the hike rates the if you look at the minutes yesterday, they're slightly on the hawkish side they're trying to convince the markets. in 2020, they're trying to condition the markets for more rate hikes here. >> more rate hikes and the 3.50 that people are now assuming that we get to, that

cast in stone, do you think? or not necessarily >> notally not cast i absolutele the trajectory, the future is uncertain. the path for rates should be higher, especially end. that being said, if you look in a global context, german ten-year rates are about 50 basis points. that counter balancing effect means you are not going to see rates where you have seen the previous cycle. the current growth environment in the u.s. and cpi you would expect a four percent treasury yield historically. you are not getting that now. global rates are lower and it is very likely that the neutral feds fund rate is lower than it used to be. the fed thinks about three percent is about the rate. >> do they because that was what caused all

the problems a couple of weeks ago when powell said we are going three percent and beyond >> i think they have been very clear. they don't know what the rate is. it is not a precise number. >> those comments we shouldn't pay much attention to? >> i think one comment, the comment he made where he said we are a long way from neutral. that was we thought a very telling statement that he is trying to tell the market. that is probably -- if you looked at the minutes yesterday, at least half the participants think they have to go above neutr neutral. the gap is closing but the market is not 100% in belief that the fed won't take a pause next year. >> thank you. when we return we will head

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jim cramer joins us now. good morning, jim. we are talking about the fed and

so many different things. we had chairman greenspan on talking about capitalism. did you see much of the discussions today? >> absolutely. and i know that where we are frankly is this full employment. everyone is so scared of full employment. i think it is going to be under control. i think the old fed as represented by allen greenspan said full employment is an inocment to our nation. i think at any given moment you are going to lose jobs. checkers will be wiped out if bezos has his way. they should be far more cognizant of what is going on and stop looking backwards and saying we are out of workers. >> what about everything else that is on our plate today i thought it was interesting

that chairman greenspan said every president tries to influence the fed. >> i think this has put the fed in a box. this is a great economy. does it have to be unbelievably great? you know trump better than anybody. he has to say this is the simply greatest economy maybe in the history of any country in the world. to do that he needs to keep rates low. >> the one thing in my way is the fed. it is a disaster. i think that was pretty -- in terms of perception -- don't take him literally. just take him seriously. >> he's not sending powell up the elevator into the board room where you are one of the judges and he turns to you and goes i want to keep the guy but joe

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let's get a final check on the markets on this thursday morning. futures have been under pressure for most of the morning. you see s&p futures off by six. the ten year was trading around 3.2%. make sure you join us tomorrow. right now it is time for "squawk on the street. good thursday morning. welcome to "squawk on the street". futures trying to get out of the red as the s&p is down eight of the past ten sessions. china down across the board overnight. today more cautious guidance from more industrial names. europe is mixed. u.k. retail sales are a miss. watch the two year close to a fresh ten year high as the