happens today, we need to wait until 4:00 >> good idea >> watch every second between now and then. >> don't miss any of that. maybe just for bathroom breaks that's up to you >> anyway, make sure you join us tomorrow you're back. santoli? >> i will. >> we'll all be here for now, "squawk on the street" is next. ♪ ♪ i feel like busting loose >> good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. four days up for the dow busy day as we await apple's iphone event this afternoon. bunch of downgrades with names like wells fargo and wendy's on the list europe is mixed. oil six week high. road map begins with apple's moment of truth. set to unveil its latest iphone lineup today, but for a company increasingly focused on services, will it move the

needle for investors >> we're going to talk about weworks' embattled ipo plans >> and play the long game, that's the white house's message for wall street on china trade stocks pointed to a muted open today. apple is set to unveil the latest new iphone models and other product updates today, features on the phones might include upgraded processors, new camera functionality, the event will take place at the headquarters in california, beginning at 1:00 p.m. eastern time jim, talking about what else we might hear about, content, some shows rolling out in the coming days >> i think they have some exciting tv. i want to see trailers i think people are underestimating what they have been working on. i would love to hear more credit card i think that it is too early i do think anyone with the watch, the iterations are getting very exciting. the watch sales, you'll hear incredible numbers, i believe. service revenue very strong. not sure exactly what to say about the 11, because they have

been pretty closed mouthed about it those of us who have the eight and the 10, the 10 was stolen from me, by my daughter. you're chalk full of things. we like to hear more about that. i think this is about accessories. and i think it is about content. and i like both of those >> that's where it is at right now. unless they surprise us with some functionality on cameras, bunch of theorys going about rear facing cameras, some ways they could still surprise us on the phone itself. >> the thing i think people want more than anything is a chip that makes it so our phone has the same power as any single jpl unit we can put our phone in and the party, don't need to have bluetooth. they can't do that yet they got to figure it out so the sound -- i've been open, this is really a great feature but technologically they're not there yet. there was a fellow on our air yesterday calling for the firing

of tim cook. i thought that was -- >> who was it? >> i thought that was ill advised. >> you think there will be anything today that changes somebody's opinion one way or the other? >> look, the stock has run ahead. i wish it hadn't i don't like that. i don't think any of the analysts will change i think you have to wait until service revenue and wearables cross more than 50 and i also think that we just endlessly have china nike said china sales are great. canada goose said china sales are great. starbucks, china sales are great. >> chinese consumer. >> very strong. >> contrast to the broader economy, seems strong. >> yes, i think that when i heard estee lauder having the blowout quarter, you know, with china, and then listen to peter navarro today. the seven deadly chinese sins that he likes to talk about. and i do think that anything china -- it could create a ripple, but i need tv. i would love to see some great

trailers >> more channels don't have enough channels not enough streaming services for you at this point. not enough shows to choose from. >> how can they make a mark here apple feels like they have to. they got some show with a bunch of actors from the '90s about tv that's their thing >> have you looked at the -- >> no, i'm not going to. i lived it >> you're going to subscribe because of it. it looks like the funniest thing i've seen in a long -- oh, god, just -- you know -- >> you got to admit the bar is high to break out in terms of content. >> some pretty good talent in that good morning show >> okay. >> jennifer aniston. >> i don't mean to discount apple's ability to find good people and spend a lot of money and conceivably it appears they're not going to buy their way into this by buying content company. they're going to build it. but -- >> you don't believe in content. i respect that >> i believe in it, i think to

carl's point, there is a lot of competition out there for people who have been doing it for a while now and know how to do it pretty well. >> do you think the piece yesterday about how viacom, they do not want -- history repeat itself -- they do not want to miss the viacom run? do you think malone is part of it they talk about discovery. >> i don't have any idea what you're asking me. >> there was a -- >> malone is part of what? >> remember malone -- >> are you changing this from apple to viacom/cbs. >> you make it so hard to praise yourself you broeb tke the story that mae liked discovery. >> yeah. >> they wrote a piece yesterday saying that -- moses malone. >> it is coming up. >> viacom, the piece yesterday was about how content could be very good by move ffett nathan n i watched a game last night on

my handheld, it was a fantastic game, new orleans, the texans. i think if the -- as long as they don't have to pay for seven services, roku down yesterday. i'm more bullish on services than most people i am until they get to the price. >> we'll talk more this hour about the shift in momentum and what happened yesterday between growth and value it was crazy. >> i think that usually -- that is usually a precursor for the whole market. >> people are talking about that these internal factors in the market, what carl referenced three deviations, three deviations, i thought it was back in calculus class i shrewdly dropped for art >> we'll get to the broader market before we get -- >> it is a bad sign. >> it is a bad sign, okay. >> you see those stocks roll over, usually the stocks that

they're coming for, i had zoom video on last night, what an incredible story that stock cannot raise its head beyond meat. >> recent ipos did want to get to wework this morning or the we company. >> how much does it cost we cop to call itself we company? >> i don't know how much it cost it we'll have an opportunity to discuss this in the future because as of now, everybody close to this situation indicates it is full speed ahead with the flplans for an ipo leslie picker has been reporting on the likelihood of this as well some press including the ft about softbank's potential resistance to an ipo we talked about that over the last week or so as the expected range of set ipo has come down and down and down. you wondered whether softbank has sit there and tried to protest and said please don't, you're going to force us to mark down our current investment, some $10 billion they put into

the company at higher valuations but it does appear they're fully poised for the ipo and if -- you know if it has to get done at 18 billion or 19 billion, it appears that at this point that the we company is fully ready to take that on perhaps you get down to that level, you find demand and can have a successful initial public offering. >> i think a lot of people out who are watching this are saying, how desperate -- what the heck do they need to do the deal for >> they need -- they need to raise the money, given how much they're spending they have some debt, some could have covenance in their debt as well it is important to them without a doubt. the way the calendar is working it would appear that likely perhaps they're going to start as soon as monday in terms of a road show. typically they go two weeks. not clear if they want to try to cut it short to get ahead of the

jewish holiday, rosh thhoshana, the 30th, i think. softbank may be looking at on paper at least if they do come at this kind of valuation a significant writedown or some analysts out with numbers today about -- bernstein look at what they have to take. >> periodically people have to take losses. periodically >> yeah. >> part of the game. >> yeah, it is part of the game. the question is how does it impact vision fund too we did speak to massa last march. a big fan of the we company. he wanted to buy more. he told us during the interview, mo massa, wanted to buy more but the saudis had veto power, so they did a deal for another few billion at the high valuation of $47 billion. here is what massa had to say last march about his overall view of the business model. >> they're growing so quickly, and they're investing into the

capex. but it is recurring revenue, like a subscription. you know the subscription of magazines or newspaper and now netflix. netflix is still losing money, but the value of the company is tremendous compared to other media companies. >> i do think that the one saving grace here is that when i check on weworks, a lot of them are filled it is not -- it is not like they have nothing it is just that if they hadn't played so high, i think cutting back to -- $18 billion, it is a model that works for small and medium size business when i met neuman before it went -- before he became almost like neuman from seinfeld, when i met neuman, they were just so -- so terrific. and the valuation was so low and i wanted to get an office to be

able to have an office, have a place to camp out. >> listen, the bulls will say to you, at some point, corporations are going to treat their facilities where they have their workers like they do the cloud it is going to be a subscription service. i have -- my cloud providers, i also have the wee company which takes care of all of my needs from my employees. i don't have to worry about it, don't have to buy the space, build the space, figure out, optimize, they do all of that. that's the bullish case. >> all the wes within a mile of here are filled. >> safe to say you're not a fan of the ft's reporting today that says softbank is urging them to shelf the ipo. >> you know, those two things could still be the -- true they could be urging them, but the we company is not interested in shelving the ipo. >> it is interesting that -- >> 100%. 100%. >> this tape is -- if you have anything that is high multiple,

crowd strike, it is like crowd strike is really good. vm ware, i got them on tonight >> that's the point about the market the incredible turn in high momentum stocks because of perhaps some of the positive feelings about china trade and suddenly you have the value coming in, all the things that have been on the shorter side, right? >> mnuchin speaking tomorrow on "squawk", great get, "squawk box. he's going to be optimistic. one more reason to go buy a company levered to china and not okta okta, z scaler, it is incredibler. it is almost new york giant-like in its proportions of disaster maybe the dolphins >> steelers didn't look good either. >> steelers choked sit and stand, you're sitting. you're sitting all the momentum stocks great interception between wall street fans. >> and fantasy football.

you do that better than anybody. >> well, thank you i don't like what i see in terms of the tape. it is dreadful doesn't matter, by the way some companies actually make money. i am shocked ultrex, putting all of excel to shame. i had them on last night dean stoker, what a great company. there are going to be some buys here and we're going to have to see, though they have to bottom first before you go buy them. no bottom yet. i look at my twitter i can't bare to look at my twitter feed all of it is how could you tell me you liked zendesk. >> the point is the sudden rally in the value and what was working, long secular growth, defensive, large cap was working, now it is not, that is a bad thing? because of the violence of the

move itself. >> yes, the violence, yes, the collision course, the helmet to helmet, david. >> yeah. putting the helmet right into the shoulder that's true. >> i got a personal foul on some of the sellers >> cramer's mad dash, count down to the opening bell in a moment. downgrades today wendy's, dollar general, wells fargo, altria. more "squawk on the street" starts in a minute see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade was in an accident. when i called usaa,

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welcome back time for mad dash. we get you ready for the opening bell here for tuesday on the nyse dupont. >> you rarely see this research. this is a citi piece talking about potential portfolio breakup option we are going to make sales they can do that now as you notice, this has not been a good stock in dow chemical has been bad they shrunk and it didn't grow divided a bunch of companies >> the idea was to grow. it took forever it seemed to break into three companies it all happened and no value created. >> none. ed green is with this one. he was wearing a jaworski throw back jersey, good guy, he went to counsel rocil rock

in the end, these are cyclical companies. dow cyclical you need a magician to make things work. ed green say magician. i believe the city piece will be right. >> more asset sales? >> they have a nutrition business they can break up my travel trust owns it. it has been a bad performer. >> i would say it has, yeah. >> i don't need you to double down on me >> i'm telling you -- >> are you giving me the business going down there this is a piece that says that don't give up hope and i think that it is reas reasonable because the stock is not expensive n this environment, where they don't like the z-scalers, i know z-scalers, personal favorite of yours and okta, someone called it opta, no crowd favorite cyberplays, this is an inexpensive stock. if you believe it is going to morph into a good trading partner, which i don't think it is possible, you want to own

this. >> okay. we'll keep an eye on dupont. >> would you do that >> i will. bunch of other things too, uber and lyft, and attorneys general, north carolina, minnesota, lots at stake. >> 50 of those guys, know? geez. >> story that said 50 state ags representing almost all the states what am i missing? >> is that the 600 stocks of the s&p 500? >> double? do they have double ags from some states? anyhow, california is not part of it. okay 48 >> okay. >> hawaii and alaska haven't been admitted yet. >> we're going to keep an eye on the story. another look at futures as well this morning we have an opening bell, ten minutes from now at verizon, we're building the most powerful 5g experience for america. that's why the nfl chose verizon. because they need the massive capacity of 5g with ultra wideband,

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in about five minutes. busy tuesday some of the fireworks will come this afternoon on that apple event, which we talked about at the top of the hour. what is front and center for you right now? >> i think there is aside from the fact that the high multiple buzzing about this ford moody's rating change, taking it to junk ford has been doing a lot of stuff to try to make it so it is not as dangerous i know they think that the moody's is disappointing i look at this and at&t and i think there are a lot of people who want very much to be at high yielding stocks and they recognize there are

counterveiling forces in the bond market. before the at&t, you know we're worried about the big debt load, ford has been trying very hard, they went underlying issues that i think are really helping, but this is going to cause a shutter from our viewers who have been actually saying, you know what, i can't make any money in the bond market. so i'm going to build a portfolio of ford, dow. >> after the incredible success we had in corporate issuance couple of weeks ago. >> yes so i actually believe that ford is making a lot of right moves they also point out, and i know we'll talk about lyft and uber, but the millennials don't -- they just don't seem to be buying cars and, remember, cars are lasting much longer. and the millennials like to buy a carvana. doing quite well i went by a vending machine for cars, on i-95, that -- >> i know. i have to see one. >> you do. a vending machine for cars

millennials don't like to talk to anybody they like to text. and they like the car delivered in minutes by the way, just so we know, tesla bears, i don't know if you got email, a few minutes ago, tesla select from our available inventory, updated inventory available in two minutes elon is no longer allowed to tweet. this is an interesting thing >> automotive news here has a piece about why these european companies are rushing to electric it is because these eu emissions targets are going to require them to triple sales in the next couple of years. so porsche is in, vw is in. >> i saw -- >> one reason why they're supportive of california's efforts, very similar to what is worthy of the obama regs rolled back by the trump administration, leading to the big fight. they have the doj. >> you were correct. >> investigating investigating. >> very direct last week from --

to larry kudlow about how businesses actually fighting this idea you can have one set of standards and california is not -- california won fifth in the country it costing an outfit like ford, costing billions. >> fascinating story always worth pointing out, ford didn't declare bankruptcy. only u.s. automaker. they were left with more debt. >> they never crunched the debt. >> don't actually crunch the debt you still have the debt. well done, avoiding bankruptcy >> people don't remember that stuff now. the f-150 is a great seller. >> as someone pointed out, worth more than the ev of the whole company. >> they spent -- they put -- claus klinefeld was running alcoa. i have -- they're really -- talk about america. the president doesn't seem to care as much about -- wants to

roll back a lot of regulations, but in this case, there are state regulations that are very specifically not under his control. and he can't preempt >> he doesn't believe that that is why they are trying to revoke the waiver that california has that enables them to have mileage standards. and why he's just going after them in all sorts of different ways including some say the doj to actually investigate collusion, which seems very -- >> house democrats are going to investigate the investigation as we're in that cycle now. we're going to -- our probe will probe your probe. >> also that nasty thing, the supreme court. >> yeah. >> they seem to play a role. >> they do >> what is that about? >> which one . >> roosevelt tried to pack the supreme court. >> he did. >> people like -- you heard the applause >> studio audience liked that line

the opening bell at the s&p 500, the big board, it is asex property trust, a reit at the nasdaq, genmab. let's work our way through some of the downgrades. a flurry of them today ubs cuts wells to neutral. they admit, good outperformance. >> wells did not have -- there is banks that have been talking and they do not have good net interest margin. i still wonder what it is like to have no ceo what is that like? >> you've been saying that for months. >> they have an acting -- >> yes. >> most of the u.s. government has acting. >> i don't -- i don't know what the government is per share. wells fargo per share has underperformer in the end, i know elizabeth warren, don't listen, i favor ceos

>> you think it is positive to have a ceo >> i think, yeah maybe not? am i -- >> it is fascinating that -- >> do you think -- >> a hard time finding someone to -- >> how is it possible that this company cannot find a ceo? are they worried about elizabeth warren attacking she or he would be -- >> of course they are. of course that person is why wouldn't they be >> i don't know. >> she becomes president, what do you think is going to happen to the banks >> it is not a -- it would be a suboptimal situation for the banks. >> right >> you think elizabeth warren pushes banks into a -- they're already down 20% from the high >> i just think that there were these -- in the 30s. they brought rich people in front of congress, just trashed

them >> about 20 years later the least discrepancy in incomes in the 50s and 60s. >> i don't know what's going to happen you get off the desk and talk to executives, they're more fearful of her winning i never heard anybody say, look, she's got to be stopped. she's got to be stopped. i don't know she's very -- she keeps going up in the polls. >> raised a ton of money. >> she will win iowa, i believe. she's a very compelling figure on the stump >> by the way, i hear it too, and it is another reason why companies are being implored to do things now. if you want to get something done, m&a, anything, think about doing it soon. come early to mid-2020, if elizabeth warren is rolling along, everybody is going to be, like, that's it. >> you're hearing it too. >> i wonder what china says about that exact question.

>> she's so anti-pollution in china. she was a person who talks about the -- like marc benioff and his book coming up, stake holder, the earth, the earth is a stake holder >> benioff would be a supporter, wouldn't he? >> we don't know benioff is very close to the vest very close to the vest his new book, which i fortunately had a read, remarkable, i went to the book -- the book launch for general for secretary mattis, another -- wow didn't work out -- >> speaking of progressive politics, worth mentioning california which does appear poised to pass a law that is going to kind of outlaw the gig economy right? say that in fact you got to pay hourly wages, comp, this is a key for uber and lyft, which have been lobbying mightily to not have this bill pass.

or have an exemption if it does pass that doesn't appear likely at least according to the reporting out there now in terms of the legislature in california, the governor's expectation, gavin newsom to sign it. that's a big deal for these two companies. going to increase costs for them and costs for the riders as well it is unclear what it is going to mean for the drivers. some of whom are in favor of wages that are more predictable and comp and all the things that come -- all the things that come along with that. others who like the gig economy and the freedom it gives them. >> the gig economy, the younger people, i think that these people have to -- they need to be protected like chuck they all work for very little. they all need the business there was a piece this morning, grubhub piece, talking about the cost, if you take these people suddenly have to have

healthcare grub would not be -- i'm saying that i keep hearing it, that these -- the whole business model changes. >> i'm sure it does. and if california does do it, will other states follow and it does play into the narrative to a certain extent of some of the democratic candidates >> yes. >> and it is something that to keep in mind interesting on california, which, of course, is such an engine of commerce, in the world, seems poised to sort of really put the brakes on >> that would be very big and very bad for the companies and they have not been faring all that well. today, they're not just killing the high growth, they're killing the form supharmaceutical. >> the credit card companies, global payments, pay pal, visa, mastercard, is this about jpmorgan's entry into some of this or maybe yesterday we had the biggest jump in revolving credit among households since 2017 >> the mastercard and visa, they

do well on the actual transactions it has been a horse. kip s i keep saying it is like mutual funds are saying i'm taking profits today. i have watched these gains diminish, diminish, diminish, that's why i've been advising individuals on "mad money," don't catch the falling knife. not yet. you know when the stocks have bottomed and they have not bottomed >> the momentum names we have been talking about, the growth names have been getting hurt suddenly in this violent turn around that started let's call it thursday and picked up steam yesterday. value, again, like ten sigma event i'm told by some of the algorithmic traders out there. >> waste management, unbelievable quarter, being killed today they're getting consistent growth yesterday getting consistent high growth. they're taking those -- i said

this is a bad sign i'll reiterate. >> back to value there are some good -- why not >> just that people are in high growt growth. >> right. >> you're in cybersecurity i'm not saying they're not, i'm saying that they're now hitting even the companies that have been the consistent -- procter, a massive outperformer and they're getting that the companies that are being hit almost entirely beat the market, beat their estimates but no one really seems to care. they're going after the ones that didn't beat the estimates to buy >> right >> here is a name we haven't mentioned in years, fannie mae, federal national mortgage association, at 10, treasury secretary mnuchin will be testifying on the hill, talking about their plan to remake the gses, remake the key players, fannie and freddie, in the -- in

the mortgage market. >> okay. >> they don't make the mortgages they buy them from the banks we had in place this so-called third amendment, remember, the sweep, they went to the supreme court, they have been all over the map, those who are opposed to it. but the government does seem poised to come up with the plan to stop the sweep, to return the profits to the corporations themselves and eventually although for this they'll need legislation, of course to return them to the private market so to speak. no longer be entities that are government controlled. and that's a big deal. fannie was up 20 something percent yesterday. >> yes >> and there is the room, i'm told, where mr. mnuchin will be. >> the long awaited revival has reg like come back -- >> it may be the government can stop the sweep, which aparentally they're very much poised to do prior to the end of the year.

however, to actually remake the fannie and freddie, and return them to private markets and they would need legislation which is hard to imagine anything will get past in the next -- before the election. >> yes, it does. a lot of individuals still are -- they play lottery tickets. >> yes >> we have to assume competition in the fast food space wendy's back into breakfast, downgrade out of guggenheim on the heels of that saying it adds risk to the shares mcdonald's buys a small voice tech company and is forming what they're calling mcd tech labs in silicon valley to help them leverage ai and digital tech. >> voice is the new thing. i got to meet some young people as part of a comcast venture and two companies involved with voice. and live person involved with voice and voice is important i think that's smart

wendy's, i thought the downgrade was fatuous. saying that ty penagore will have a hard time as ceo managing breakfast. you have this day part and you need to have that day part be used that was the secret behind if you want to look at what really changed the american story for starbucks, kevin johnson figured out how to do the day part that's with nitro. >> did try the wendy's, though, this morning >> it was -- >> mocha something, it was good, s very sweet. >> did you have the baconator. >> i didn't. >> it's right upstairs >> my love loves the double cheeseburger baconator >> at&t, watching at&t >> okay. >> you like that segue >> it was right there. >> it is up another 1 plus

percent. during the course of the day yesterday, day one or day two if you want to call it since elliott entered the stock with 3.2 billion investment don't get ahead of yourself here, i guess, is the only thing i would say based on the conversations with a lot of people around this thing over the last 24 hours. will take a little time. going to take a little time to play out january, late january, january 27th, when the nominating window closes opens december 28th for the direct receipts, if elliott decides to turn this thing into a more hostile approach. not that the letter was that friendly, but was not unfriendly some people wondering well, what exactly is the ask here? do they want management change i think the answer is yes. will they get it we'll see. it will take some time. >> management change at the top or -- >> nbc is reporting that they

want both stankey and stephenson out. >> that's not something that they necessarily want. but they're not going there at this point and, you know, we'll have to see how things play out. they had one conversation with stephenson, one conversation with the lead director there is going to be a lot more to follow here it is not going to happen in days or weeks. most likely -- >> people own the stock. >> own it. you want to own it >> be with elliott be with singer >> yeah. >> people need to know singer runs a big company he never takes credit. jesse cohn is very smart. >> very nice too >> very nice >> i don't mean that facetiously. >> back to 2959. to bob pisani. >> rotation, baby. that's what's going on here. we have been waiting for this for a long time. and i think we're starting to see some early signs of it, too soon to make a trend here. but remember what has been weak,

throughout most of the year, cyclical names we have seen banks weaker. energy generally weaker. industrials generally weaker holding up a little better today, banks, energy, industrials started positive, a little weaker. what has been strong throughout the year consumer staples, and semiconductors through a certain extent, different kinds of groups here. they're also a little weaker today. this is what i talk about the rotation a lot of questions yesterday that some momentum stocks had been weaker. that was the case. if you look here, some of the fin tech names, pay pal, mastercard, this is what happened yesterday, both down. some of the consumer names momentum names are price related. fin tech has been strong and consumer and defensive names have been strong merck was down yesterday kimberly-clark momentum names, weak what is happening today? how about these four names exact same thing this is what i'm telling you, a little bit of a trend, too early to take a major trend, we're sthe seeing this for a second day in a row.

deeper sick-li eer cyclical nam. john deere, fastenal, this were all up yesterday what are the names looking like today. today's performance. generally they're outperforming a little fastenal down 1% some evidence that some deep cyclical rotation may be going on right now the important thing is all year low volatility stuff has ruled the markets. i'm talking about consumer staples have generally been strong reits have been strong utilities, these are -- from the 52 week highs, these are essentially right near historic highs throughout the year. what else? rotation is going on these are the ones hit badly these are the ones that may be doing better if we finally start getting some rotation into the markets overall. industrials also only 3% from their historic highs discussion about wework. will it impact the market for

ipos in general outside of weworks? we had a great year, 28% gain in the ipo etp. that's terrific overall. no sign it is impacting yet. yesterday, recent software ipos were notably on the weak side. if you look at some of them like slack, zoom, they were all down yesterday, notably, and slack had some bad news on friday, first earnings report was not good the guidance was for decelerating earnings growth maybe something to keep an eye on here. as of now, we're holding up. there is an etf for everything today the vegan etf launches at the nyse, excludes oil stocks and includes meat-based products and you got a lot of odd groups in there beyond meat in there everything else that excludes all these other groups in here companies like microsoft and apple don't seem like they have anything to do with vegan products that's the problem with some of these restricted ipo --

restricted etfs, very, very limited amount of things to buy for them back to you. >> all right, we'll see if that universe gets any larger thanks to the bond pits too, rick santelli the at cme. >> we're certainly seeing an ongoing rise in global interest rates. now, granted, it is not a pace up like it was the downside in august it is steadily climbing. look at one week chart of our two year note yields, everything on the curve up a basis point. you can see building there, and the distance from some of the cycle lows, whether intraday or closing levels is starting to get to be a bit of a cushion that's making some that have been long nervous especially in front of central banks, meetings which are coming this week and next week. look at one week chart of 30s, same die nam nick playnamic in e asterisk temperature, boiling water technically it is a boiling point for 30 year bonds. 209 has very special

significance when we close below it, we accelerate, now we're closing above it, we should start to see some consolidation to the upside in yield if we look at bunds, bunds are the longest comp here, trading at levels they haven't closed at since the 8th of august. little more than a month, long ends less than a month finally with all the talk about maybe the talks with china are going to come to fruition with some sort of solution, we see while this has been going on , the dollar yuan, the chinese currency, has been falling against the greenback. you really can't tell a lot by looking at this chart regarding at least what the market thinks on the state of negotiations carl, david, jim, back to you. >> rick, thank you. it is the end of an era for alibaba. jack ma retiring as executive chairman daniel zang will exceed him. ma has grown alibaba into a $460

billion online retail juggernaut, china's richest man with a net worth of almost $40 billion, according to forbes kyle bass tweeting a moment ago, like clock work, ma forcibly removed and will likely be jailed or disappeared within the next year, this is how xi and wang treat any chinese that become too powerful. >> that doesn't sound completely accurate to me jack has been taking a lesser and lesser role with the company. he is a spiritual leader without a doubt and has been daniel zhang the ceo, stepping up and i don't necessarily think he's going anywhere. >> i remember he told me his hero was forest gump. >> he told us that here. i have not seen him in some time >> i was hoping he would say mao

or -- >> it is an intricate dance you do with the communist party and the government mr. ma has done it exceedingly well >> mao did not -- mao was a redistributionist. maybe kyle bass is looking at xi as mao. >> and jo tsai is very involved. >> did that entertain you enough trying to entertain david. trying to entertain david. david doesn't like anything. so i'm just trying to find things >> keep working on it. >> all right. >> i'll keep working on it i saw haagen-dazs ice cream for five bucks at the family dollar i went to yesterday. david, you would love the new family dollars you would love the new family dollar i'll take him to a family

dollar i got ten pairs of sunglasses at dollar tree for 10 bucks i got five bags of stuff for 16 bucks. >> you're not a fan of the dollar general downgrade at bernstein? >> no, that was stupid. >> 145 downgrade >> that is stupid. i think it's ill-advised >> dow is down 48. slightly off of session lows at the open 2962 we're back in just a minute. >> hero i had is forest gump, 14 years ago. >> you know he's a fictional character. >> i really like that guy. i've been watching that movie about ten times. any time i'm frustrated i watch the movie. i watched the movie before i came here again, before coming to new york. i watch the movie again and telling me that no matter whatever changed, you are you. and i'm still the guy 15 years ago.

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jim, what's on mad >> i'm browsing the goldman sachs catalog. okay we have vm wear. an important stock it's down big. i have sanjay poonen if the stock goes up after this interview we're done going down. get back to my catalog. >> that's gorgeous production. >> one kings lane. they have have a great care. >> chair. >> "mad money" 6:00 p.m. eastern time when we come back david kostin with the dow down 79 the two words whispered at the start of every race. every new job. and attempt to parallel park. (electrical current buzzing) each new draft of every novel. (typing clicks) the finishing touch on every masterpiece. (newborn cries)

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♪ good tuesday morning welcome back to "squawk on the street." i'm carl quint ta nia. sara eisen has the morning off dow down 77 after a string of gains for the dow and s&p hasn't moved a whole lot in the last couple sessions. our road map, apple's big day. we'll bring you full team coverage ahead of the product announcement a few hours away.

>> we worked some battled ipo plans. sources say it is full speed ahead. >> a new front in big tech's anti-trust battle. the states minnesota's attorney general on why he's investigating google and why data privacy is a top focus. >> some breaking news, though, we want to get to out of washington, d.c. diana olick catching up with treasury secretary mnuchin moments ago as he gets prepared to testify about restructuring the gse. diana? >> that's right. i spoke with secretary mnuchin and asked him his reaction to a court ruling friday that said that the treasury sweep of billions of dollars of fannie and freddie profits was illegal. his reaction was this. >> we're looking at it carefully and we're considering what to do about it, including we're going to consider appealing it to the supreme court. there's aspects of it, two parts of it. one is obviously the cash flow sweep and that's what the treasury is looking. >> reporter: so clearly this battle is not over yet

the treasury secretary again saying they may take this to the supreme court. the treasury has swept about $110 billion more than fannie and freddie ever drew from treasury since the conservatorship. we'll hear more on the senate banking committee coming up and we'll keep you posted. >> diana, the administration has the power to stop the sweep right now. i just want to understand what they need legislation to do and what they can do on their own in terms of remaking so to speak fannie and freddie >> well, the treasury can stop the sweep whenever it wants. in fact, part of the president's plan that was released last week from the treasury was that they would perhaps lower the treasury sweep to recapitalize fannie and freddie and get them back on their feet they wouldn't give specific numbers. fannie and freddie allowed to hold $3 billion in capital but the treasury is sweeping billions more etf quarter. would they stop that sweep in the next quarter they said in the release they

would be negotiates with fhfa and they do have the power to stop the sweep any time they want. >> all right diana, thanks. we'll watch for more markets under a tiny bit of pressure here. dow coming off its fourth straight positive session. trade adviser navarro joining "squawk" expressing optimism on trade talks and talk away for wall street. >> investors, play the long game and see the chess board. i think the chinese really do want a deal. they are getting hammered by the trump tariffs, cut their prices, manipulate their currency down into the toilet, really, and they're losing their supply chain. >> joining us this morning at post nine, goldman sachs chief u.s. equity strategist david kostin is back >> nice tosee you. >> good to see you too >> ism contraction, has it really made you change your targets at least for this year and next

>> no. the big questions on a lot of portfolio minds relate to the inverted yield curve, questions about the trade dispute with china. on the other hand, the ism services nonmanufacturing survey was actually pretty strong steady at like 56, indicating that the services side of the economy, which is more important in overall context than manufacturing at this juncture, and then there's some expectation perhaps there's some hope for a trade negotiations, discussions that are taking place. i think the market has seized on that a little bit and the market is roughly sort of 2975 and our price target for the end of this year is 3,100. that's about 4% above where we are today. pretty much in line with the idea that the economy is still growing modestly and that would be consistent with higher earnings for next year. >> yesterday, it's one day move, but the shift in momentum, the way in which some of these long forgotten energy names have come back to life, do you think

that's a sign of something >> well, i wouldn't necessarily take one day as a trend making, but we look at the fundamentals as to where the economy is going and some of the technology companies still remain growing, more of the services oriented in terms of subscriptions and software as a service, some visible revenue growth i think is a key attribute that portfolio managers are looking for in an uncertain environment if there's a debate about whether a downturn will persist or the economy will continue to or may recover, or, you know, in terms of accelerate that's been a debate, where do you find investment opportunities where there's visible revenue growth the long-term contracts, the defense, almost all the revenue coming from the u.s. government, those are areas to focus on. >> you're looking at elevated consumer spending as one of the big drivers for the economy. when we look at the nonrevolving credit it rose to a record high more than $3 trillion.

household debt, excluding mortgages to the second most high level since august of 2016. do you have any concern that consumer is stretching too thin? >> the consumer, 70% of the u.s. economy is the consumer. that's a vital issue to focus on unemployment at 3.7%, lowest in 50 years wages are rising 3.2%, latest reading on friday suggested some real wage inflation, real wage growth a positive, and consumer balance sheets are actually among the strongest they've been in a decade. as an aggregate look at the numbers but in terms of the coverage ratio in terms of their household financial obligations it's quite in a comfortable zone from our perspective on the corporate side, leverage has come up a lot and that's perhaps more of an area of concern as opposed to the consumer >> i want to get back to this idea that carl was bringing up the last few days in the marketplace. we've seen this dramatic

reversal in terms of what at least investors want to own or some, value and dividend paying stocks seem to be in favor suddenly and it's been a violent move do you think that's something that's going to sustain itself we're watching momentum names. roku, for example, over the last trade, couple trading days really decline is that sustainable? is that a sign of something? >> ten-year treasury yield is down about 1.5, fluctuating 1.45 to 1.60 in the last couple weeks. and that environment with those level of interest rates and the expectation that the fed is going to be cutting rates, my colleague, you know, at goldman, we're looking for a fed cut in the september and then another cut in october, that leads to an attraction for the dividend yield stocks, and stocks that have yield and growth, a combination of those those would be the argument why that is becoming more in favor there's a desire for income. >> do you like value and dividend payers more than you like growth right now? >> no.

prefer to own as a portfolio we prefer to tilt towards growth, the idea that the economy is continuing to grow not at a robust pace, but at a modest pace, would tilt towards growth stocks now performing. that's one of the reasons, i know jim mentioned earlier, we did an analysis of all of the initial public offerings done in the united states in the last 25 years. that's 4,500 companies one of the reasons there's such a focus on the ipo market is because the opportunity set for perhaps faster growth in some cases. some cases less growth that's basically a big area of focus. >> right you're referencing this very lovely glossy 42-page report, david. well done by you and the team. >> thank you. >> all right i'm not going to read it all, sorry to say what do i need to know about the performance of all these ipos that you studied in terms of how i should approach them in the current marketplace? >> approach it in two ways, think of it as a portfolio manager and an individual stock investor what are the characteristics of initial public offerings, those companies that tend to

outperform, and in general, companies that have revenue growth north of 40% above 40% and a path to profitability, positive net income by year two, those have the highest probability of outperforming that's been a consistent pattern for 25 years that's, if i had to bring it down to a stock picker, that's putting the highest probability of an outperforming stock in your portfolio >> the profitability in the relatively near term, at least within a year to 18 months of them going public? >> well, there is no statistical relationship between whether a company makes money in the first year and whether it outperformance over time first year is less the statistics will tell you, 4,500 ipos in the last years, that's not a relevant metric in terms of identifying signal for outperformance profitability, positive net income in year two and three is a metric the magnitude of sales growth and top line revenue growth is a key driver if you see companies with very

rapid revenue growth they tend to outperform. it's not shocking, but what is interesting is that companies as they have delayed going public, more and more value tends to the private, because your growth rate as your -- an older company if you will tends to be slower it becomes an issue to focus on as well. >> we started by talking about ism going into contraction on the manufacturing side you're not afraid of industrials. you're overweighting them because contraction doesn't mean recession in your view >> it doesn't necessarily. down 49, so is that necessarily indicative of a recession? not necessarily. something that people focus on as i said earlier think about the industrial sector there's a lot of components to that and think about it in the defense area those stocks tend to have stronger visible, more visible revenue growth there's a premium paid for, there's a desire to have some visibility if you're concerned as a portfolio manager about, you know, whether the ism falling

below 50 is indicative of a contraction tilt in favor of some of the more defense oriented stocks. >> one issue that's getting a lot of attention this morning is the investigations by the attorneys general. >> right. >> pretty much nationwide into the big tech and whether there's been anti-competitive practices. are you concerned, are you looking at this as an overhang for these tech stocks? >> when we look at precedent, we can see what happened in the anti-trust investigations of ibm, we look at at&t, look at microsoft, what is the experience been in those various episodes in the past we know two things, we know that the growth rate in sales, before the government filed its actions, and the growth rate at the time of the ultimate resolution, some cases many years later, there was a huge deceleration in the growth rate and the second thing we know is the valuations diminished from the time before the government initiated its actions and by the time the final resolution. that would tell you that the

precedent is for slower growth and a lower valuation. does that necessarily mean in every case you mentioned in terms of the attorneys generals. lots of investigations going on, this could go on multiple years. i have no insight into that. the evidence would suggest it's a potential risk and you have to evaluate the probability of there being a negotiated settlement or what have you in terms of what's taking place as it is now it's a headline certainly but not necessarily impacting the business >> one last thing, given how many times you've come on and talked about buybacks and their role in equity prices, why are you not concerned about the slower pace? >> what is certainly an issue. the pace of growth in buybacks has declined meaningfully and it's an area we're focusing on a lot of attention right now the authorizations are still meaningfully, you know, up and the pace of buybacks and some cases is actually meaningful for some companies but an aggregate

basis it's lower and an area of some focus right now in terms of how that adds to accretion of earnings growth, if you think about the overall economy will grow, revenue growth for companies, not a lot of margin expansion, frankly margin pressures, and the question is whether there will be some buybacks i think there will be relatively somewhat less buyback demand than we originally were anticipating >> okay. talk more about that next time good to see you. >> good to see you. >> david kostin. >> when we come back the countdown to apple's big reveal event is on. what to expect ahead of another big day for apple. plus, we've got the latest on wework's road to an ipo and, of course, as we told you, sources indicating it is full speed ahead. details straight ahe wn "sawonhetreet" comes right back thern new hampshire university, we believe in education built for all people. - [woman] snhu was the best experience of my life. - [man] without snhu, i wouldn't be the leader i am today. - [woman] i graduated high school 19 years ago. i still finished.

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. call it apple's moment of truth set to unveil its latest iphone lineup and other products updates. new phone features expected to include upgraded processors and new camera functionality the event will take place at apple's headquarters in california and start at 1:00 p.m. eastern time. for a company increasingly focused on services is it going to be enough to move the feedle for investors? we will bring you full team coverage julia boorstin and josh lipton live at apple's hq and jon fortt joins us on set. jon, anything you're looking for that you're going to be focused on when the event begins and during the course of it? >> i think pricing when it comes

to the i phone is the most important thing. not just the i phone 11 line, are there going to be tariffs, will there, won't there, and how that will play out different ways they can play this with still charging the same amount for memory, where the price of that has gone down so they can protect their margins there, how much do they reduce the price of the iphone x, reduce the price of the iphone 8 the margins on those tend to get much better over time and if they reduce a little less than before still attractive to people who don't need the latest iphone but apple gives themselves some cushion. then services. it's kind of similar to the disney story in that on the one hand it's not the bulk of revenue, but it might be the bulk of the valuation argument that apple ends up in effect making to investors if services look good, investors might be more willing to give apple more multiple. >> yeah. julia, speaking of the disney story, you certainly follow very

closely the content creation efforts of all of these companies. are we expecting to hear anything on that and is there sort of some buzz out there about what we may or may not get? >> well, the last time i was out here, david, was for that apple tv plus announcement and apple said that it would launch this fall so there is some hope that we'll get an exact launch date for that apple tv plus streaming service, likely some time in november and we're looking to get a price tag for it it is expected to be about $10 a month and then, of course, there's the question about how apple may bundle together that streaming service with apple music and some of the other new services it's offering definitely a question of that bundle especially in light, david, of disney's bundling of hulu with disney plus and espn plus we'll see what we learn today. >> and josh, talk to me about the apple iphone and whether you can still get people excited when there's not some big new

innovations coming, if it's just about improved camera, improved processing >> yeah. some of the updates we expect to see today at least wouldn't be the faster processor and improved camera. that is important when you look at surveys why consumers upgrade, because they want that better camera and other features stronger waterproofing and shatter resistance as jon mentioned the big thing is price. expectations are pretty muted here i checked in with gene munster at luke ventures and thinks total iphone units in the critical holiday quarter his is 63.5, down 1% year over year muted expectations for iphone revenue and units. there are a lot of old iphones throughout, estimated 200 million iphone 6 or earlier, there could be many people willing to upgrade here, guys. >> we talked with cramer about what they could fold into this

any reason to think they talk more about the show they're developing could that be another layer they add to the hardware discussion >> i think they might. we might hear more on apple arcade expect to hear that. that's their gaming based service. games are really the big kahuna when it comes to the app store, what apple really sells and makes money on there the potential really for them to do well with a game service, is big. also these iphone announcements tend to bring gaming developers up on statement. here's a prime opportunity for them to sell arcade, which really focuses on the mid-tier of the mobile gaming market, not the blockbuster games and the really tiny ones the ones in the middle sort of artfully made, but the business has trouble, really monetizing this could help them to do that. if they show something amazing maybe investors take interest. >> julia, is there a sense hollywood is somehow intimidated by the content that they've at least teased so far?

>> well, i think people are eager to see the content and that raises the question of how much of the content that they teased at that first apple tv plus announcement will be part of the service at launch you know, apple explained they're going to be really focused on these few premium shows with big names such as oprah and reese witherspoon but not going to be doing any library and how much content will there be at launch if it does cost $10 a month, how many sort of months free will they give to subscribers of their other services to get people locked in. will they announce any additional content because really going with just that top tier handful of shows, there's a question of whether that will be enough right off the bat to get people to subscribe. >> i mean, julia, you and i, i can answer it. disney is going to be out there at $6.99, $7, with we know what they've got there. i don't get what apple is thinking here. i don't understand how they think they can hit the market with a $9.99 or $10 price that

anybody is going to pay for at least what we're aware of right now with no library. >> look, i think what apple is thinking is that people will not come to them for a library what they want is new, original, exclusive content and they've been dropping some of the teaser trailers for their shows and there's been enthusiasm, but they're really just going very big on each one of these prompts. high budgets, big name producers, big name talent and we'll see if they announce more of it. the hope is that they'll lure people in with the big content and they're not going to do bingeble shows, at least it seems like they're going to be spreading some of them out over time unlike netflix where you can just show -- arrive and binge everything, they want to get people into the system where they will keep subscribing to keep seeing the next episode. >> i'm with you on this. i heard you talking about it earlier this morning, based on what they announced so far, looks like the worst deal in streaming by far take the company that has the

least experience making shows, giving us the fewest shows, charging the most. who wants that. >> it's a little early. >> based on what we know so far. talking about this for months. it looks terrible. >> people who love apple tend to give apple a chance. >> yeah. >> and then you add big names like oprah winfrey on to it, and look, she's had a golden touch in many other areas of her businesses and that's what apple is banking on. they're not banking on a library. they're banking on the big name and right now. >> i'm not declaring it's going to be. based on what we know so far this is very un-apple. they've taken some big names, old names, and they look like -- >> you're not callingoprah old are you? >> yes oprah has been around for a while. >> the actors in the key show they're going to have, come on, they're not going after millennials. >> i expect apple to step it up is what i'm saying here. >> they will have to. >> this is not what they do hardware. >> they seem never to buy a content company, they want to build it themselves, don't they? >> they're making deals with the big content producers in

hollywood but they definitely decided so far not to make any big content acquisitions i think the real question to your point about the pricing and how much they will have at launch is how they bundle it with all the services they already have apple music, which is different because music is a commoditized service, everyone pretty much has the same music, that went from nothing to millions and millions of subscribers so quickly because apple has that installed base they have the opportunity to give you a free trial, to recommend you try something out, so i think if they say you're subscribing to apple music you get this free for three months and then maybe you get a bundle with apple music so you're not paying an additional $10 that could be transformative for the service scaling up >> julia, thank you very much. josh, jon, thank you for the conversation still to come, attorneys general from 48 states from d.c., puerto rico, launching an investigation into google. we'll hear from one of them when "squawk on the see rurtrt"etns

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morning coming off its fourth straight positive session nearly erasing all of august's losses the xop leading the way with a gain of almost 3%. the broader sector on pace for its fifth positive session in a row and a deeper look at the xle's top holdings here. exxon, chevron, connaco phillips seeing significant moves still, energy remains the biggest laggard so far this year it hasn't risen more than 5% -- it has risen more than 5%, slowly. >> state ags taking on google. minnesota's attorney general keith ellison on that investigation when "squawk on the street" tus. w dn 70rern

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. good morning, everyone i'm sue herera your cnbc news update at this hour the british government has formally suspended parliament, sending lawmakers home for weeks amid a brexit crisis the legislature was officially suspended with a formal ceremony in the house of lords. lawmakers will return on october 14th former u.n. chief ban ki-moon has challenged president trump's stance on climate change calling trump's comments scientifically wrong and politically irresponsible. he was speaking in beijing >> unless we work together, across borders and political divides, the suffering will only increase only it will be be borne by those who are most vulnerable economically, socially, and politically. >> convicted insider trader raj

was released for good behavior thanks in part to kim kardashian "the new york post" reporting he didn't have to move into a halfway house because he qualified for special treatment under the first step act a series of criminal justice reforms that president trump signed into law last year after kardashian lobbied for it. you're up to date. that's the news update this hour back downtown to you >> nice to have friends in high places the anti-trust headwinds for the tech industry turns to the states attorneys general from nearly every state and territory are launching an investigation into google yesterday it comes on the heels of a separate multistate investigation into facebook. i spoke with minnesota's attorney general keith ellison a short time ago and asked him what he's looking to find in this google investigation. >> we're looking to improve competition in the u.s. tech market we're looking to make sure that

we have strong innovation, price competition, wage competition for workers. as you know, monopolies and ollie gop plies tend to tell workers here's the pay, take it or leave it. whenever you see a concentrating market, really it hurts everybody except for the people who own that particular monopoly the u.s. economy works because there is anti-trust enforcement and that's what we're aiming for. >> when it comes to the privacy concerns that many attorneys general, including yourself, are you concerned that there may have been an overstep in privacy due to lack of regulation? >> yes, as a matter of fact i am i think one of the concerns we have is that when big tech companies use people's data, they use it because they think it will be profitable to do so

but i would say there's been an industry-wide lack of concern for the security of that data and for the privacy of the individual i mean my concern is that companies profit from access to big data and individual people's data, and yet, they externalize the expense associated with protecting that data and people's privacy that's a problem and we've got to fix that. we've got to address that. >> who else is in your target? will you sign on to the new york attorney generale's investigation into facebook? will amazon come on your desk and you'll continue this investigation into big tech and how big it is with a look at amazon >> all these markets are highly concentrated all of these particular companies have demonstrated what i regard as anti-competitive behavior and i am concerned about all of them, quite honestly, to tell you the truth. >> you know, you heard keith

there talk about the lack of regulation and he has said before that he feels like the feds have failed to act on this front. i pressed him on if there's a lack of regulation, why is that falling on to the laps of attorneys general who are really law enforcement officials, to enforce laws if they don't exist? if this is the wild west for big tech and they have taken advantage of that, isn't this the job of the legislature on a federal level and legislatures at the state level, and he said he's planning to use laws on the books where it comes to competition, where it does come to privacy, and really dive down into the details there to get into these issues. >> wow we'll see. we've talked to at least three ags in the past 24 hours we may talk to all 48. >> a bunch more to come and, of course, we can't forget that the federal trade commission and the department of justice also have initiated investigations sort of split their respectably the key

companies involved here and that is ongoing as well apparently, at least according to the state ags we've spoken to, there is a level of cooperation between the federal government's cooperations an the states. >> in the meantime getting news out of the business roundtable as well, speaking of data privacy and big tech, 51 ceos from the business roundtable sending a letter to congress urging policymakers to pass a comprehensive national data privacy law. it was signed by the ceos of amazon, salesforce, ibm, jpmorgan, walmart, and our parent company comcast, among many others. trying to get details on what exactly they're looking to focus on, but pretty diverse group of ceos all focused on data privacy. >> that's a little bit like asking the wolfs to guard the hen house. >> yeah. maybe trying to get ahead of it and more legislation unclear. they've been doing a number of interesting things at the business roundtable. >> they've been more vocal than usual lately.

>> coming back to the statement of a few weeks ago, groundbreaking maybe. >> on the purpose of a corporation. >> correct which could be either it's been viewed two ways, as something very significant for them to change their view in terms of shareholder value being the one and only key metric to judge progress by and/or just lip service. >> right. >> although if it was lip service they could have done nothing. >> i know. >> would have been easy to do nothing and they took this step. we'll see whether the rubber meets the road. >> again, as we move deeper into this presidential election year next career, and this debate about what capitalism is, you know where the trump administration stands, it's going to be very interesting to hear all that. moving on this morning, let's also talk about a story that we've been following, our own leslie is here as well, following it too, which is the expected initial public offering of the we company, the s1 out a couple weeks ago hasn't met with what you would say is a rousing applause, but the company is undeterred, at

least according to people who are close to the process that i've been speaking to and you could see a road show to begin the ipo process as soon as monday of next week. i'm told they are moving full speed ahead. leslie is here as well and following it closely, saying something similar this morning, despite one of the stories about softbank's potential opposition and i've been trying to make the point softbank may say we wish you wouldn't do it, it doesn't mean they're not going to. >> the buck stops with wework despite the fact that softbank has put in almost $11 billion into this company. they're the largest shareholder opening about 30%. softbank doesn't want them to do this because of the tepid reception they've received from investors. wework has received from investors, which would cause that valuation to be slashed from where softbank recently invested from softbank's standpoint this isn't a good look for them especially after they were big investors in slack, big

investors in uber, both of those companies since their debuts are down quite substantially so if you hear wework which is looking at a valuation about a third of what softbank paid at the higher level -- >> the last round $47 billion. they had invested a good amount prior to that at a lower number. >> right. >> and the last investment came after they had at least -- massa wanted to go up past 50%. >> yes he wouldn't take control. >> the saudis, his key investors in vision fund one said no. >> now they can't control them and so to your point, you know, according to people, two people i spoke with, they had a all hands on deck meeting to figure out what to do inside wework and sounds like they want to proceed forward with this deal they need the cash to operate their business and execute their expansion plans. >> if wework were to listen to softbank, what's their alternative for finding that

cash >> that's the key question here. softbank technically could -- i don't want to use the word bailout, but if they really don't want this ipo to move forward, what wework says they need is more capital and that would be the point of doing an ipo. theoretically, softbank could put even more money into this company to allow them to postpone an ipo for the foreseeable future but it's not clear that softbank wants to do that they've put $10.5 billion in, and they've already upset certain lps that have -- when they wanted to take control, and so it's unclear that they'll even have the ability to put a decent amount in you're looking at $9 billion in capital that could be raised from this ipo when you account for the amount of equity that would be raised as well as the amount in a concurrent -- >> it's dependent on it to a certain extent them doing the ipo. >> exactly >> to that point, i mean the optics here going public aren't great, right? >> right.

>> one of your major shareholders wants you to hold off because they're worried about valuation but you want to do it because you need the cash. >> right. >> what's the bullish argument coming out of that on ipo day? >> that's the key question in any deal that we seen throughout history, i've never seen a deal quite like this one, where you've got a set -- no set plans, it's kind of everything is in flux up until this point, are they going to pull it or not. you have these various stakeholders trying to figure out what works in their own best incentives it's confusing and complicated and i don't actually know what the outcome will be for this company, especially since amid all these headlines, you've got this big overhang that is spooking investors in the process the longer you wait, the more investors are saying, okay, i knew there were risks before but now it's looking riskier and by the day, the hour, the headline looks riskier. >> one key thing and that's that guy. when they unleash him, next week

or whenever the road show starts and he starts making his pitch, he's pretty darn effective and he's a believer. some people say you don't want to necessarily go with a charismatic ceo founder, but adam neumann is probably -- many people say one of the greatest single salesman they've ever seen and so massa certainly believes that as well or at least believes in the vision and so, you know, i don't think you can underestimate the power he has in persuading people, not to mention if you come in let's call it an 18 to $19 billion valuation, may see some interest. >> yeah. >> some real interest. it's not as though the company isn't growing quickly, it is. >> investors have said that the assets are really good the underlying assets are really good, which is why you've seen popularity and interest in their bonds, not so much as of recent but in the past, there has been a lot of interest in the real estate, the assets that they hold i think the key question here,

if you're going to hold the equity, are you going to put it behind someone -- >> he's got his believers, though jamie dimon is very much involved in this. >> and david sullyman as well from goldman. >> he's got his believers. of course they see future business opportunities they've lent money >> credit facility plus underwriting fees, a pretty good deal for them. >> jamie dimon doesn't get involved in everybody's ipo. >> we thought the s1 was dramatic this is getting interesting. >> there's a book here somewhere. >> you can write it. >> i don't know. >> thanks. >> thank you. >> as we go to break a check on shares of ford under pressure as you probably saw yesterday, moody's cut the debt to junk the firm says it expects weaker earnings and cash generation as it pursues a, quote, lengthy and costly restructuring plan. dow is dow70n points. pretty steady. we're back in a minute but when a recall happens, perfectly good food goes to waste.

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the job market that could spell trouble for the broader economy. find out more on tradingnation.cnbc.com more "squawk on the street" is coming up. when did you see the sign? when i needed to jumpstart sales. build attendance for an event. help people find their way. fastsigns designed new directional signage.

...and got them back on track. get started at fastsigns.com. backster international announcing it will acquire cheetah medical to grow personalized therapy and care. meg joins us with a special guest to discuss in a cnbc exclusive interview. >> joining us is ceo joe almeda. >> thanks. >> tell us about why this makes sense for backster and your m&a strategy >> well, we acquired it because of the platform it brings to the company. it's a monitoring dialysis for patients that are critically area new products coming in this area in the next 12 to 24 months, bring a sales force to the marketplace and r&d, medical, everything we need to bring

thissing to the. >> not a huge price tag on this, $230 million if you pay those $40 million in milestones. is that what investors should expect from baxter in terms of m&a? >> we like the positions that goes with our businesses you should expect more of these types of acquisitions in the future. >> emergency preparedness, baxter makes a lot of products for hospitals including saline solution after hurricane maria there were shortages after your plants in puerto rico were affected by the hurricane. dorian missed puerto rico, but if there is another hurricane that comes through, are you guys prepared. >> we're fully prepared. we made significant changes since maria in 2017. we have significant amount of logistical changes we made we have plants now in other parts of the world which can make products for the u.s. market but also, we never leave anything in the islands for

instance more than two or three days we used to have different policies at that time so we not only diversified our manufacturing base but took the risk as well and we're ready for any event. we're very grateful that the hurricane missed the slant, but in the event if it had not missed the island we would have been fully prepared. we carry 30 to 35 days of inventory in the u.s. of those product snooze you've diversified your manufacturing but in puerto rico have you built up to the same level where you were or still investing there? >> we've built to the same level but what we did is we have three plants in puerto rico so we took the second plant in a location more protected and diversified the production line so we now duplicate in a different location we also have the ability to make those products in ireland and we have the ability to make those products in mexico. >> sterile injectable drugs sold through hospital, complex generic medicines, these are areas you're investing in and building up in, but there are also areas that seem like in some ways are going through a market failure, in terms of you can't charge a lot, they're old

medicines. how do you look at that area and making sure you don't see short annuals especially as we're approaching flu season, for example? >> our mission is to formulate injectable drugs in a way that becomes safer for administration so take an examplersexample, oun solution we just launched, that is a great product because it brings a very well-needed drug to the hospital in a format that allows the nurses to use right away no need for bulk compound in the hospital so what it does, it creates more availability for the drug and we're increasing capacity in our facility to be able to make even more of those types of products which we have more in the pipeline. >> kidney care is an area in the news recently. president trump announcing a new initiative to push home kidney dialysis is baxter investing in this and is it a big part of the business >> we're so happy to hear what

happened because our mission to save and sustain lives is all about the patients and we think home therapies are winners in this so the executive order now is going into rule in november. we're fully prepared we spoke to the hhs secretary that we were fully prepared to invest $500 million in augmenting capacity and generating work in the united states and our patients will greatly benefit from the policy. >> you described baxter as a hospital company you supply products through hospitals. how is what is going on in health care politically affecting that business and how do you even gage what is going to come in terms of that space >> well, we are also a home company. we deliver in the u.s. 36,000 patients in china we deliver to 85,000 patients, those are dialysis patients. so we're a home company as well.

but in the hospital, changes are always a factor and i think the ability for us to serve the customer in acute settings is very important but there is a great shift from the acute setting hospitals into the home so the company needs to be prepared to serve the market at home so we're launching early in 2021 a pump for the home designed specifically to provide safe thirp in the home that otherwise would be done someplace else so we call that infusion therapy in the homesy migration that is good. >> thanks for joining us. >> thanks for the opportunity. >> meg tirrell joining us. when we come back, wendy's joins in on the breakfast wars we'll fill you in next when we come right back. through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from finding out what's selling best...

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we're getting breaking news on boeing. we'll go to phil lebeau. >> it is august orders and deliveries from boeing and according to the company they had six orders, airplanes ordered six in month of august that includes three 737 maxes

that were canceled those three cancellations were converted into an order for two 787 dreamliners. totally delivery in the month of august, 18 the backlog on the max now stands at approximately 4400 planes that is roughly in line with where it was a month ago but, boy, have things changed in the last year. listen to the numbers in the terms of year-to-date, 145 and last year at this point boeing had 581 orders in terms of deliveries they've delivered 276 planes year-to-date and a year ago they had delivered 481 planes so six orders in the month of august and three 737 maxes were canceled and converted in 787. back to you. >> does this push us any further in the changes to production schedules at least on the max? >> nope. no not yet. and that is not going to be driven by orders and deliveries. at this point what it is being

driven by is what happens to the recertification process with the faa and other regulators >> phil will watch that. bogue -- boeing is a big name to watch today. dow adding to the loss one of the biggest drags on the dow, mcdonald's which you don't see too often. a couple of hours from the apple big event and what the products might mean for the company and investors when "squawk alley" skarts in three minutes.

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