all right, everybody it looks like the dow futures is down by 105 points the ten-year yield all the way up at 1.5% still a lot to come before the opening bell, which is just about a half hour away make sure you join us back tomorrow right now it's time for "squawk" on the street. good monday morning. it's time for "squawk on the street." there's one stock to watch after the attack on the saudi facilities and what's the impact on the global economy futures are weak, but chevron will add 50 points to the dow at the open coming up later on this

morning. education secretary rick perry calling it a deliberate attack on the global economy. plus oxycontin maker, pharma filing for bankruptcy this morning. first up, though, a series of attacks on two of the world's largest oil facilities in the news the u.s. is rejecting that notion saying the scope and the precision of the attack suggests the launch was made by the houthis but, in fact, originated by iran. iran calling the claims baseless and unacceptable guys, we've been talking all year long about what it could take to produce a true supply shock. >> i think they'll come back 5.7 million barrels. look there's a temporary inability to

get permian oil. you can only ship so much. you have one harbor who can handle it, two others. corpus christi not yet i guess what i'm saying it can't. we're pumping too much and it does remind you if we had even more pipelines, we could just turn the spigot on it's not the strategic petroleum reserve. it's the permian. >> there are a lot of key questions. one, is there going to be some sort of response with the saudis or the president's tweets in some way are we drawing iran in because we believe they were responsible and, therefore, what would that mean for the price of oil if, in fact, there was a back-and-forth. >> we're saying cruise missile >> we're saying a cruise missile was sent in addition. >> i don't know. i think it's wide open because

we're itching to do something against iran last week i thought -- when bolton was fired, i thought -- >> the praise of oil went down because the likelihood of potential hostilities with iran was going down given how hawkish he is. but this is a crisis. >> i'm not saying it -- it's a crisis, but i'm saying in terms of the price of oil and what's happening, it's not -- it's not the way it would have been, say, 40 years ago where it would have been -- you know, up $20. >> are you creating a difference between texas and brent? because some of the projections now on brent, $5 to $30 from jpmorgan, $75 out of goldman. >> if they turn on canada, they don't even bother anymore because their stuff is too expensive. i just don't think -- i think that david's right the one you've got to focus on is iran. i actually feel like the defense

stocks are the big winner here, because if you know ten drones can take something out, you're going to have to have radar everywhere we're going to have to have radar. >> reuters is talking about sharing more intelligence. >> you need raytheon, l 3 harris those are the two best -- i don't want to cast too much, but you need this. think about this let's say you have a solar-powered drone. everybody, everybody's in trouble. >> it's a scary thought. >> right >> it is it's likely as the technology only continues to expand. >> i'm not saying it ooh di's ay suitcase bomb. >> you're saying some may come back this processing part of it got hurt badly we still don't have a lot of details, do we

>> no, we don't. there are some notes today saying the oil service company is going to do well. some say it will do badly. i don't think we have a read on what was destroyed remember, the saudis are an odd beneficiary. they need prices up. >> they need prices u. they're still planning on taking aramco up. that figured in prominently. invests may sort of want a lot of insurances in their ability to defend their production. >> who wants that? i'm not saying they have the same corporate governments action we, but this is another deal that the market doesn't want but you can't stop. >> because the risk factors are so significant. >> the risk factors -- until today, these stocks have been the worst. it is interesting that wednesday and thursday you really started talking about the endless bear market so there are some shorts in the oil. you want to sell into the shorts you have to cover the etss and

the algos that are nuts. they were like, if oil went up, man. >> a lot of people having an interesting morning today. >> i ya, real interesting. speaking of the saudis we have more. >> i have to tell you the rumor mill a lot of rumors, a lot of concern from the saudi government, but no comment from the saudi foreign ministry which has been extremely hawkish aramco really only coming out with that initial starjts although, we were told again yesterday we would hear more from then. i want to get through a walkthrough over what we've seen

in the past few hours. reuters suggesting that the damage -- frankly, the damage was much more significant than we originally thought. then "the wall street journal" report talking about the aramco deal and yet again the mother of all ipos that's in terms of the timing. a week ago you remember the minister got the boot from saudi arabia's crown prince and many were speculating it's because he was never truly behind the aramco as the chairman of aramco, the person in charge of the investment fund seeming to want to get that ipo must more fast tracked on its way to fruition that's interesting in terms of what's happening and the geopolitical sphere.

frankly, the tight-lipped nature means they have significant worries over what the escalation of this issue could be and whether or not the united states could have their back. president trump and mike pompeo very quickly signaling out iran in tweets. even the president a few hours ago saying they're locked and loaded united states is by far the most present in the persian gulf. i spent time on the ""uss abraham lincoln"" just a few months ago if the united states wants to find out what's going on, they know it. that seems to follow the conversations you're having as far as saudi arabia and the united states. certainly the fact that we haven't heard anything on exactly took place is king can't, i think, because it just seems to me they don't want to make a commitment where they

don't know if they'll have the united states to followup. >> hadley, thanks for that hadley gamble will be coming back to that this morning. one last note, whether this gives them an incentive to deal. china and japan. >> i said, okay, look. peopledon't recognize that a battle for resources comes into technology the chinese are short-resourced. that's one of the reasons why when you look, you see how much they have to import. this is another, of course, all we ever hear about is they're playing the long game. you cut off oil. do you know that most of the -- a huge percentage of what we ship goes to china there's no trade deal. they just need it. oil trades, obviously -- >> right it's a global commodity, regardless of where it's coming from >> you don't hear them say, hey,

listen, we're putting a tariff on oil because they need our oil. they need our oil more than our soy. soy. >> yes, soy. >> soy. >> i'm aware of soy. they make a lot of it -- grow a lot of it in brazil, though, a lot. >> it turned o it to be a big win. >> a 17-year-old low fixed asset investment. >> why don't they put out the numbers? >> 6% is going to be very difficult to hold. >> why do they put out real numbers? remember people would accuse obama of putting out fake numbers? i mean we're a democracy why are they putting out numbers that -- what is this what is -- >> i would say it's for you, not at the viewers. >> we have a podcast when you do this, people are

thinking is he doing thumbs-up thumbs-down? >> without shannon see mans, our producer, you would have a hard time thinking. >> we rely on them a lot maybe the chinese feel similarly. >> i think the chinese should put out better data. if they start talking inflation after this, i'll start thinking they're the democracy. which they're not. >> nobody is claiming they are. >> i think the five-year plan passed us. and now it's real. >> to burn a spin on "seinfeld." tens of thousands at gm have

gone on strike it's the first since '07 they failed to reach an agreement. the u.s. looking at profits and job security gm saying they've been on top. >> remember in the old days what would happen they would say, look, we're going to take temporary worker fos 15%. we're going to month ray we're going go to mexico you can't do that. the president and the union. who would have thought it. elizabeth warren, the president,

prounion this is really interesting what leverage does gm have they lost their mexican leverage they can't go to mexico. plus, we don't know if there's a deal yet i'm going to nancy pelosi tomorrow. >> excellent. >> i'm going to you. >> i heard the speaker is coming. >> that's good news. >> we're talking about an interview -- why don't we ask speaker pelosi before you decide in doing one of those things for the podcast. this is david moving his handses sideways david, can you see in the podcast when you do this >> crossing my arms? i'm not crossing my arms fully attentive. i'm paying complete attention to

you. >> speaker pelosi will be on "mad money" tomorrow >> that's going to be a newsmaker. when we come bamer bam at it favors a wave of lawsuits. david's got an exclusive with ceo stephen miller and keep an eye on oil today squau "squawk on the street" by nyse will be back in a moment. >> announcer: sponsored by pimco. always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence.

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welcome back purdue pharma announcing this morning what they're calling an agreement in principle on a landmark opioid litigation settlement of course, purdue, the maker of oxycontin, number one on the hit list when you think about the potential -- or those responsible for or are being held for the horrible opioid crisis that has engulfed the country over the last decade, over 4,000 deckaths now, remember, there already has been a settlement with two other states, but there are 24 states that have not yet signed on.

this morning the company's chairman steve miller who's been there over a litter more than a year sat down to explain to me why this is an important moment and why he's hopeful he can convince any other number of state a.g.s to join said settlement take a listen. >> this is a fork in the road. there are two choices here one is to inplea meant the settlement, which means we have to get more states than beyond the 24 we already have, and we'll be working on that starting today but the other choice is instead to revept the litigation we think the best answer is put the company on the table, have a settlement so that all of the value can as soon as possible go to the unfortunate victims of the opioid crisis. >> right now, a key part of the

resistance of some of the state attorneys general, at least judging from this morning since you announced the bankruptcy and settlement is the sacklers' contribution overall how much are the sacklers contributing to this settlement? >> the sacklers are contributing, fiftd owl. the company is worth $3.5 billion. >> $3.5 billion. >> $3.5 billion and the rescue drugs amounts to about $4 billion estimated. >> over a period of obviously many years >> so there's 7 billion dollars or or that's the company on top of that, $3 billion in

resources guaranteed and on top of that, the lion's share of the proceeding in selling off their overseas pharmaceutical businesses. there are some people who will never be satisfied, but the only way to test that would be to revert to litigation and expend all ore this resources that are available. that's instead of helping communities who have suffered. >> the idea isthey will get a judge to agree on this plan. and the hope is other states will go along, it will be approved by a bankruptcy judge, and then they'll emerge from the bankruptcy, but it will be run by trust tees as a not-for-profit company that is going to fund the various treatments and whatnot for --

and continue to make oxycontin birk this bap p. we'll see. this morning judging from all the statements by thee on cnbc.com, the entire interview they want them to pay more you saw the story ore the weekend, about a million dollars worth of wire transfers. they confirm there was money taken out of the country so it's early days here, but purdue is obviously filing for bankruptcy and hoping the penalty is going to stick. >> what is mr. miller's relationship with the sacklers >> i asked him that. he took over a company that is a sackler company, but the board is now completely separate

the management to a certain extent as well is separate but he had negotiations with them beyond the company itself, but the cash settlement comes from the sackler family. >> aren't litigation costs at this point difficult, painful? what leverage do they have to fight this in court? >> the point is if we keep fighting, we're going to put all the money in in terms of both treatment, in terms of you heard him talking about those drugs that can be helpful. and so that's the -- that's the main point it's like why spend it all on litigation we're going to have as much as we've ever had right now. >> wow i don't know i mean i just think why are they still making this stuff. >> it does have -- it does have a. >> no. >> for painful diseases. >> there's j & j getting sue and

they've done the same thing, something they think is doing good obviously the lawyers don't think so. >> incredible story. something to watch for today. >> we'll get cramer's mapd dash 'lgewatching wel t the latest since the saudi attacks. don't go anywhere. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪

everyone has something to say. but in a world full of talking, shouldn't somebody be listening? so. let's talk. we are edward jones. with one financial advisor per office, we're built for hearing what's important to you. one to one. edward jones. it's time for investing to feel individual. when i lost my sight, my biggest fear was losing my independence.

mmm... good. so i've spent my life developing technology to help the visually impaired. we are so good. we built a guide that uses ibm watson... to help the blind. it is already working in cities like tokyo. my dream is to help millions more people like me. let's take a look at futures. the etfs are set for their best day of the year. we'll see what ps when the eng llin i4 2 minutes.

welcome back we're counting down to the opening bell before we get there, let's squeeze in a mad dash. what do you have

>> alder bio, ald is the symbol, danish company this company has a way to combat a my grain an infusible one you have to have a drip, which some think it's not as quick as an injection, but what i like is i think someone else should come in and bid for it. this is a very fast-acting way versus the placebo it did well in the test. >> there's a lot of progress made against migraines that can be so debilitating. >> i'm the chief spokesperson for the american migraine foundation it is a very big deal. there e there's several. i'm surprised one is steeling this that's how big this is this is -- others fail

i know as others fail, you're going to be put on this. the market's 30 million people in this country. i'm surprised they're going to get this 80% premium is not enough. >> the opening bell. s&p 500 at the nyse. together for girls, dedicated to ending sexual violence against girls at the nasdaq wilmington trust, a provider of institutional trust services jim, do you chase some of these american apaches in the open in. >> no. i think some are constrained by the natural gas production they have so much natural gas, they domino where to put it. it's too expensive to pump could there be a day two only because there's so many shorts someone upgraded whiting some of these stocks have been

down for so long, they're reflecting well through where oil was when it was at 26. these things are -- some of them cut in half from there don't chase. just don't chase. >> you mentioned whiting i think whiting is up. schlumberger as well. >> i'd take it as a loss it was updated last week don't forget you have this company slug hey, talk about being mucky. they could have sold that today and take an little more money. >> yeah. >> i just don't -- look, they're not up enough, you could argue with oil up 5. as david said, we're getting so many different reports about when things will come back online, but how about the fact that it's so easy to take things out. >> that's the scary part is that these tools are so cheap to operate, and the defenses are not there yet. >> no. >> who knows if they even will be us that these facilities are

increasingly vulnerable? i think every one of them is vulnerable they dom have radar set up to detect. >> no. but there does seem to be a level of sew facetyfication in the attacks where they went after these spheres where they have this hydrogen sulfide gas where it can be removed before it's taken away by oil tankers, and those spheres are very complex technologically apparently, and it's not that easy to just patch them. they may need to be fully remade. >> they're dangerous. >> they're huge holding tanks that we're talking about. >> this stuff is all combustible. i hate to say it but it's easy to have these destroyed. these are combustible. but when we had a fire at marcus hook in philadelphia, it's like, wow. it's hard to put out i mean i don't know. are all of them out? the fires? >> i have no idea.

>> we're not getting great information flow out of there. >> no. but at the same time the rebels in a statement warned that more facilities could be targetted. >> that's the thing. drones are easy and cheap, you know remember, if they run on solar, you can send them 5,000 miles. >> right we don't talk often about the war between saudi arabia and yemen, which has been raging for some time. hundreds of thousands. >> greatest humanitarian crisis. no journalism over there. >> a huge migrant issue as well. >> look it it's a bad situation, but the wrong stocks -- you have to buy the stocks -- i'll give you an example. caterpillar. now, caterpillar is 5% to 10%, china. their most labored, oil. that makes sense again, i want to reiterate you want to own l.e. harris, really

the clear-cut play the symbol is lex, the merger of all three companies. it's only up $2. that's crazy i'm not kidding. >> people pointing to rtn, which is raytheon. another to your earlier point about defense. >> these are companies that have been trading off the budget. i think some are going to be saying, wait a second, they have a whole new set of clients and plenty of production i like those very much i think raytheon -- united technologies, people do not like that >> people do not like that deal, but perhaps they could get a little more. >> i like those stocks a little longer term. the pipeline stocks are good for a couple of days don't forget, mass partnerships

have been horrendous it's been just horrible. i think some of the groups could be run because of the etfs, but then they'll have to have a run again. >> speaking of runs, jpmorgan gets cut today down to neutral they say 30% premium by definition, there's less room for improvement. we'll see what powell and company says on wednesday. >> it's fairly valued. amazi amazing. this group is so undervalued historically, but no one wants to own these they want to own visa. that's what they want to own they want to own the next generation they want fintech. that's all they care about. >> visa's market cap is only below that of jpm, of the big banks at 312, $313 billion

jp's market cap exceeds that bank of america, not wells fargo. >> of course, paper right to actual digital is paypal which acted well one other totally wacky one i'm going to give you. the old dow chemical was not that leavered. the new dow chemical is oil. thank you. that stock was actually down at one point. they're so levered to oil, the stock's going to be up so down and out. >> dow has been -- >> oh, dow -- jim fitterly doing a great job. don't forget they vote with their sustainable. >> you can join all the sustainable plastics associations it's not going to help in terms of the forward-facing part of the company. i don't know how you deal with it. >> how many continents are there in the world >> seven >> no. eight. there's that plastic continent.

>> go with seven. >> that one is big it's a nice continent. you can't live there yet. >> the great pacific garbage patch is what you're referring to. >> some of it is 30, 40 years old. they have old mr. clean bottles in there. >> they do >> at some point plastic in the ocean will weigh more than fish. >> that's scary. >> they'll buy it down today and the millennials will shoot it down they will. >> maybe they'll buy iphones >> the widely watched watcher of am, rosenblatt threw some cold water on on friday. >> if you watched the game, you saw the camera that the 11 is. now, here's the problem with the camera you could make a full-motion picture with it, but who's going to make a full-motion picture, right? they already did one picture

with it. i'm just saying unless you're complete completely, completely involved with the makeup of high cinematography for instagram, it may not be necessary, but it looks pretty good. here's the saudis coming out and saying it's not yemen. we've anticipated that, haven't we >> i don't know. the trump administration is saying it's likely iran. iran has denied it. >> okay. well, doesn't that mean the corollary is -- >> the next focus for everybody will be on what the response will be, right and to whom it is directed. >> i know. and that's us. we're locked and loaded, right >> well, i mean the commentary among some on "squawk" this morning, theous of the word "terrorist" gives us an out where we don't have to have

sovereign-on-sovereign warfare it might take some of the heat off of all of this. >> this is the second time we didn't do anything the first time and then i thought the first time, i thought they would do something, if fulton were here, i think they definitely would do something. i don't know you're going have to watch the transports the transports could get hurt here. >> obviously the airlines. >> yeah. >> boeing, incremental bad news out of the uae saying they do not see a return of service for the max this year that runs contrary going's guidance, not mentioning the board looking for structural changes within management within boeing. >> what does that really mean? what kind of shakeup is that >> what does it mean when it's all said and done according to

muhlenberg. >> if the board has issues -- >> someone has to -- >> do you mean someone just takes the fall >> yes i don't know don't you. >> i don't know. >> let's hear what the board has to say it's not an insignificant crisis for this company. >> no. i don't know whether that's the answer i mean the answer is they've got to get the plane back -- they've got to get the plane back into -- selling that plane, you know. >> to your point, jim, about oil exposure, sealed air, highly exposed to petroleum, you could argue, not to mention the carnivals and the world caribbean caribbeans. >> and carnival is about to report some say you could buy carnival ahead because it does yield for. i don't know that group has been really bad the bookings have been bad, the hurricanes have been bad that's a tough own that's a tough own i don't know if i want to go

down there. >> yeah. speaking of tough owns, guys, we wo work i think tomorrow they will begin the road show at the wii company. my understanding is based on a number of conversations, they'll start tomorrow with the hopes of potentially pricing this thing farley quickly various news reports, will softbank come in to ipo for another billion. and then, of course, there's also the question whether the market itself can simply swallow $3 billion worth remember, that's what they're raising here in part the idea is -- or not the idea that has been the number because that will enable them to enact $6 billion in debt financing but there's perhaps a way to work with the banks. if you issue less than that, there's a question of how deep the market can be, jim, for a $3 billion offering >> there have got to be people

who say, listen, at a certain point i don't like the revenue growth here and i'll make that bet or maybe they have something else going we don't know one of the things that's really interesting about uber is that uber freight is doing incredibly well you don't know uber was saying it's a platform, and one of the reason that freight has gone down dramatically, he predicted in early spring, late winter, freight would be down 1% 8% to 20%. >> you said that back when we talked about trucking prices. >> it's happening. it's happening. >> you would think they would let us know about it. >> you think so. dave, give us the progression. what was the last round? what was the high? >> it's kind of an artificial high, but it was $47 billion it. was sort of a consolation high softbank when they did not follow through on their plan to acquire a majority stake, but

other firms that owned it along the way, mid-20s to even as high as $30 billion. >> so long, suckers. >> it's looking like they'd be lucky if still they could get somewhere near 12. >> on the podcast, david is putting his thumb down. >> no, i'm not stop doing that. >> unreliable narrator dow's being led by dow, exxon, chevron. let's get to bob miss spisani. >> hong kong is closed, china for a holiday, and japan as well chi china's numbers were not real good china's mainland is closed but you see hong kong's week here. here in the united states, the usual suspects this is an oil plate moving things naturally you'll see air stocks

weaker royal caribbean and the cruise lines will be down gold stocks like gold fields moving to the upside fairly typical of course, energy stocks typically shortlied. if you look at the production stocks that are u.s.-based, permian bakken associated, whiting, laredo petroleum, you see here up double digits here drillers are very heavily shorted here it doesn't matter what you're talking about, it doesn't matter these are generally associated with offshore drilling but diamond offshore, seadrill, noble corps, transocean, all trading up double digits what are the other issues? mainly two the first one is can this cyclical rally continue?

energies and transports and retailers even, last week, can that continue? is this the start of a longer-term cyclical rally and secondly for this week, the fed is going to be cutting everyone, but will they provide the ration ale to keep cutting it may be a little more stliv on future guy dance that may be at issue down the road if you take a look at what's going on on the bottoms-up analysts, a new number of analysts have been cutting numbers because the rally has been so noticeable today buckingham downgraded jp missouri began we still like it wells fargo downgraded dick's sporting goods for the same reason, they hit their price target we've had all these run-ups and some of the bottoms-up guys are saying that's a problem.

last week loop capital downgraded broadcom. they talked about tough environmental going forward or tougher environmental going forward. they said the same thing thursday, wells fargo downgraded caterpillar on the same, the saming are buckingham downgraded jpmorg jpmorgan unless there's an earnings boost, global economic growth getting bet eric prices going up, eventually analysts note this and say is there a reason for the prices to be this high and some of the cases as you see here, that rationale is not there. you have to get a little better news on the economic front, particularly over in europe and china where as i mentioned today's economic numbers, not so good guys, back to you. >> thank you. we'll get to the bond picks

as well. >> good morning. fascinating how saudi arabia is affecting the markets, not how it used to but in some ways completely different obvious will i the big bumps that we had last week particularly after the ecb meeting still reigns supreme it's currently at 1.76%. notice we were down to 1.66% the day of the ecb meetings maybe more to the point that really encapsulates how it happened in august has turned into large part a memory in terms of the dropping rates, and that is we've had eight sessions in a row of no yields. many other maturities are close. this one is probably not going to make nine, but we'll wait and

see. down five basis points the front of the curve is down four basis points. you can see the same dynamic in bund yields. things have dramatically changed. as to what is moving fixed income, how much more they can ever give us to the downside, of course, i spoke last week. there was a good chance the bottom was in. that was before the ecb meeting. i think it's a much safer bet now. if you look at the ten's minus, what's fascinating is it's the widest separation between our yields going back to july. call it what 2 1/2 months that's a big deal and once again i think it demonstrates at least the perception of what's going on with trade is truly affecting the markets in a way that sh showcases that things are changing in the economy even as retails are getting stronger may get stronger

of course, put aside the minute normally you see safe harbor of things like treasuries but in japanese yen, and even though the yen is higher against the dollar, it really has not been the benefit lately of the trade. and, finally, tens minus twos, now at nine basis points this is the steepest back to you. still to come this morning, a hawkish message for iran from secretary rick perry during an energy speech this morning. >> make no mistake about it. this was a deliberate attack on the global economy and the global energy market >> secretary perry is going to join us exclusively in about ten minutes at the top of the hour in the meantime the dow's down 112. the s&p energy sector, long in bear market territory in the wake of those attacks.

we're back in a minute >> announcer: the bond report is sponsored by pimco.

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nearly all of the top 20 s&p gainers are oil related. you see marathon, apache, devon, halliburton. american airline down almost 5%. we're back in a moment be sure to watch jim's interview with the speaker of the house nancy pelosi that's tomorrow on "mad money" at 6:00 p.m. eastern time. cut. liberty mu... line? cut. liberty mutual customizes your car insurance so you only pay for what you need. cut. liberty m... am i allowed to riff? what if i come out of the water? liberty biberty... cut. we'll dub it. liberty mutual customizes your car insurance so you only pay for what you need. only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪

. time for jim and stop trading. >> there is's good piece in morgan stanley talking about the health care korcconference for apple. apple was pretty much enraged about the call goldman made. we don't have to cut numbers on the subscription and josh lipton wrote that story and i keep thinking the goldman downgrade was very powerful, but apple is saying no cut should have been more powerful but it really didn't happen. maybe today is the day apple snaps back. >> what do you got tonight >> one of these things, digital currency it's actually funny. it's like libra from facebook. yet it's kind of quietly doing

it's thing i can't wait to hear because i think a lot of people want an alternative to the u.s. dollar per se that's digital, but they want to have it so there's transparency that's block chain. i'm bringing this guy on because a lot of people thought libra was a good idea. >> speak are tomorrow. >> that's a good one see you tonight. when we come back, the energy secretary rick perry on the oil attacks. dow is down 75 this is a problem that affects each and every one of us. together with ibm, we created a whole new kind of school called p-tech. within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. you know what's going up today? my poster. today, there are more than a hundred thousand p-tech students around the world. it's a game changer.

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good monday morning. welcome back to "squawk on the street". we're at the new york stock exchange oil is front and center but markets trying to climb back we've got s&p 3k we've got china data, the strike and more. >> stocks are trading on the heels of the saudi attacks, so in addition to energy stocks, it's defense stocks to keep an

eye on in terms of outperformance our road map starts with the oil surge rising after those attacks on saudi facilities. we'll speak with energy secretary rick perry and get his thoughts in just a few moments. plus new york moving to ban some e-cigarettes. what this means for the rest of the country. and oxycontin maker perdue pharma files for bankruptcy protection we'll hear from the chairman steve miller is what he's hoping will be a settlement with all of the plaintiffs involved. oil is the big story of the day notching the biggest i intraday spike ever recorded rick perry will join us blasting iran for the damage done today take a listen. >> i want to reiterate that the united states wholeheartedly condemns iran's attack on the kingdom of saudi arabia. and we call on other nations to do the same.

this behavior is unacceptable. it's unacceptable and they must be held responsible. make no mistake about it, this was a deliberate attack on the global economy and the global energy market. >> our brian sullivan is live in houston with more and can talk about it brian, what we know so far and what this may mean, are we entering a new chapter in terms of geopolitical risk in oil? >> i think, carl, there's no other way to say it but that we are help we had attacks on tankers in the straits of hormuz it takes it up a notch you can make the arguments that there there's plenty of oil supplied, saudi arabia has 27 days, if they had zero production that they require all of its members to have 90 days, you can make all those arguments, but the

reality is the risk premium certainly is on. to put this into size and scope, bear with me here, 5.7 million barrels offline. they obviously hope to bring that back online later today, tomorrow, going forward. the facility itself was about 7 million barrels a day. it's not a pure refinery they also pull oil out of the ground here is the size and scope the biggest refinery in the united states which is about 30 miles this way is called mativa is -- our biggest refinery is 600,000 barrels. we're talking 10 to 12 times offline the biggest refinery that we have so this is the single big unfortunate supply disruption in recorded history, 5.7 million barrels. we're seeing this reaction in oil trickle through to the energy stocks. jim talked about it in the previous hour. so many of these names are heavily shorted. all these investors are betting they're going to fall. they are getting crushed today and squeezed big time.

look at whiting petroleum. look at oasis, look at chesapeake energy. the heavily shorted names, they're up 20, 25, even 30% in today's market it's a little bit esoteric bear with me this is going to be confusing. the energy stock reaction is one part of the story. i don't have a good way to visualize this, but brent crude, the spread between brent crude traded now and in 2020 a year from now is one of the most heavily traded hedge fund contracts. if you were in that contract and if you were levered up to that contract, you are getting i think the correct term is blown out of the water today because it's not just the equity side, guys, that is seeing a second derivative impact. it is all these hedge funds that bet on the spread between here or brent which is absolutely getting crushed. a lot of angles. the reason i'm here is tonight i'm actually going to be sitting on stage with former president

and first lady laura bush in a wide ranging interview it's not going to be televised we'll do that, but of course i'm going to ask the former president about this, what should be the property response. i'll have that tomorrow but i look forward to your rick perry interview. there's a lot to say here with secretary perry. >> yeah. absolutely, brian. going back to this idea of hedging, the flip side of that is if you see prices higher, it also allows the oil producers to be able to lock in on higher prices going out into 2020 which i would imagine is considered a positive for them. >> it has to be, obviously, morgan that's a great point we've talked so much about the debt levels of these companies and if you're hedged out, today if you're a cfo of an oil and gas company, you have one job and that job is to try to lock in hedges for next year while you can. your equity is up to try to reduce the risk of all that debt that you've got on your books. here's the reality a huge attack. hopefully nobody was injured or killed over there.

that's one story and they've been covering that from saudi arabia the other story is here. if you are an energy hedge fund trader or you are short these names or short some of these spreads, you're getting crushed today. >> brian, one more question for you. given the fact that oil and ga is considered critical infrastructure, the fact that you can see strikes like this take place in saudi arabia, how safe are oil and gas assets not just in the middle east but also here in the u.s. i would imagine it adds another layer in terms of security >> i think your other job if you're a ceo or cfo on how to invest in your security anywhere in the world, morgan. >> brian, thank you for that we look forward to a lot more. in the meantime the president as you know on twitter say we are, quote, locked and loaded adding in a tweet we don't need middle eastern oil and gas. in fact, very few tankers there but will help our allies joining us on the phone with reaction from the white house, secretary of energy rick perry thank you for the time

good to talk to. >> good to be with you we are presently in vienna at the international atomic energy meeting and an interesting time in front of the international atomic energy folks talking about the bad actor in that world happens to be iran as well so we're not only giving some clear messages to the global community about the bad activities that iran has been involved with in nonproliferation of our nuclear material setting on top of that is obviously the attack on the saudi arabia oil supplies. so you've got a country in the middle east that's causing great ha havoc and the message is clear and i hope every country in the world joins us in saying we are not going to accept their malign activities the people really getting hurt out of this are countries that are major oil importers, japan,

china. both of those countries really will pay the huge price for a big spike in oil and gas prices. with that said, i think the message is clear we've got big supplies of oil around the world and the united states we're sitting on 645 million barrels. saudi arabia has 188 million barrels of oil i think 97 million barrels of oil products and worldwide the international energy agency member countries -- with that said, we need to send a clear message that this type of activity and the obvious spike that could occur in the market is the

result of iranian activity and real clear message the president is sending to iran about their malign activities. >> mr. secretary, for our audience who's interested in the status of the facilities, what intel do you have on what was affected and how long it will take to restore? >> i'll leave that to my counter parts who i talked to at length 24, 30 hours ago prince bin salmon and i have a long time relationship he would be the better source of information about what they saw as far as direct damage and how quickly they'll have that facility back up and operating >> you mentioned other streak reserves already the world are those already being tapped

on to make up for the loss in production right now if they're not, at what price would that happen? >> i think the president was spot on when he said that this would be available if needed i think we are yet a little premature in making any comments on the actions, actually, about whether or not it is going to be needed until we get a real handle on the length of time that this facility is going to be down, i think the sawudis are already saying they're going to be able to get a third of this production back before the close of business today, so there's going to be a spike in this, but again, i want to be really clear that the market out there has a fairly substantial amount of oil available. does this disrupt it without a doubt. does this put people on notice

that we've got some bad actors in the world and you need to be addressing the security side but the president made a really good point that i want to hone in on today. he talked about this ought to be a wakeup call all across this country, particularly around the world, but particularly in america, the number one oil and gas producing company in the world, we need to build out our infrastructure to ensure america's record amount of oil supply gets to the global marketplace. we've got some challenges over in the north eastern part of the united states being able to move product across new york state because their governor and their legislature think that that's, you know, good policy. well, it may be good politics, but it's bad national security it's bad security for our allies around the world we can't get the product

not only is this a time for us to be globally sending a message that iran cannot be allowed to act in the way that they're acting, whether it's with the nonproliferation issue, dealing with nuclear weapons, or they're attacking oil supplies to try to disrupt the global economy we also need to look at the places where our infrastructure is being throttled it's being slowed down for political reasons that aren't necessarily in america's best interest >> secretary perry, you've made it very clear and others in the administration have as well given your comments just now that you believe iran is responsible. is it your expectation understanding you're not a part of the defense establishment, nonetheless, that we're going to do something or there will be something done by the saudis to

respond? >> i think the message is clear not just to iran, but the message is clear to the global community here that this is not -- this is not activity that's acceptable. i think there will be a coalition effort both our friends in the middle east that understand having a crazy neighbor is a real problem a neighbor that will literally attack you out of the blue, whether you are saudi arabia, whether you're isreal, whether you're qatar or the uae, all those countries in that region should have the hair on the back of their necks standing up watching a country attack someone to manipulate the energy market, to send a message, whatever the reason was that iran attacked this facility, it

is a time for a coalition of sane, thoughtful, energy producing and energy consuming countries to come together and put a stop to iran's malign activities. >> secretary perry, this has been the market's biggest fear for years now, this idea you could see a potential conflict in the middle east that centers around oil how real is that risk in light of the attacks we saw over the weekend? >> here's the interesting thing. my bet is that there are people that have said if there were attacks like this it would go to $100 oil what we've seen is obviously a spike, but i think because of u.s. production, because the united states under this administration in particular has really pushed american resources to 36 countries on five different continents now

we can send a message that yes, it's going to be a disruption for some period of time. yes, there's going to be a spike, but not anywhere near as devastating as what some five years ago we would have said and quite frankly would have probably -- would have been a reality at the united states not leaned into natural resource delivery around the world we've had. we've actually been planning for this in a sense because we've made our product saveable. lng in particular, but today we're about a net i think 5 million barrels of oil exported a day out of the united states there's actually a silver lining, if you will, to this story in the sense that had this happened five years ago, it

could have absolutely brought the global economy to its knees. today we're concerned about it we need to address it. but it's not anywhere near as devastating as what it would have been let's say five years ago. >> finally, mr. secretary, what do you say to people who are worried that the cost of these weapons and the technology of these weapons are going to overwhelm the ability of these facilities to defend themselves? >> well, i'll let someone who has the background and cost of weapons, the type of weapons you're making reference, but obviously spending against these types of attacks, we're very advanced in our ability to do that i'm sure there are conversations going on with our allies about technologies that could certainly be of assistance to them in protecting their

facility >> mr. secretary, thank you. important intelligence for a lot of our viewers on this story we'll talk to you soon thanks again secretary rick perry joining us now our former senior white house energy adviser and president of rapid energy bob mcnally also with us jason bordoff, secretary on global energy policy and former energy adviser to president obama gentlemen, thanks for being with us today bob, i'll start with you your reaction to the comments we just got from energy secretary rick perry >> well, the most important thing is doubling down on the message that iran was involved the world economy suffered a stroke on saturday and the extent of the stroke and whether it's going to lead to an authentic heart attack depends on two things. the extent of damage to the northern stabilization plan at

the processing facility and whether we have hard intelligence that iran was involved in sponsoring this, because i think we can expect that there will be at least a limited military retaliation against the territory or the entity or the hardware that was involved in this attack. so it's at least a stroke and it may be a heart attack. >> that's a key point, the idea of whether you see some sort of military response to this. jason, i want to get your thoughts when you look at crude prices up 10%, whether it's brent or wti today and the expectation that you could potentially see those go higher, depending on how things unfold here, how much of that is production related and how much of that is risk premium related and the idea that a conflict could potentially ratchet up here? >> well, i think it's both i mean, when the secretary says there's plenty of oil in the world, that's not quite right.

there were pretty thin margins of spare capacity before this happened and the u.s. shell revelation doesn't provide spare capacity that can be ramped up and down quickly and supply emergency stocks into the market when we need them. of course we have the strategic petroleum reserve, but nearly 6 million barrels a day may not be enough depending how long it persists the new factor is the market recognizing that relatively small but well targeted and sophisticated attacks on the saudi infrastructure can cause huge disruptions in the global market, that's not going away because the threat against those sources of infrastructure is going to continue. >> bob, just to wrap arms around the attacks and the actual level of sophistication of those attacks, i know your firm's been calling for heightened risk of potential attack in saudi arabia since may. how safe and secure are these structures and these facilities

that such an attack could actually take place and i guess what does that mean for the future when you have the houthis coming out saying there could be more >> clearly not safe enough protection wasn't adequate jason and i had the same jobs for different presidents, but we both went to bed and woke up every day worrying about the facility, by far the most important piece of real estate on planet earth. if you look at those photos yesterday released by the trump administration and i suspect we'll see more photos later today, the hits on those spehere ads were precise and they smoked the towers with precision and skill. who did that did it well i think it's well beyond the means of houthi tribesman. this was a sophisticated actor who knew what to hit and hit it well nobody can be confident here

that this kind of attack was perpetrated on that facility >> bob, those fears i'm hearing the same as what was said there. do you agree that it was a very specific hit and apparently they're not going to be easily repaired. >> no. >> it's not something you can just patch from what i'm hearing. >> this is not amazon prime delivery look, a friend of mine who is very knowledgeable said if you want to get one of those stabilization columns on a rush basis, six months. we're talking about taylor made engineering, logistics, supply chain. this is not a replaceable piece of a pipeline or something that's why the facility is so important. it has equipment that's very difficult to replace if hit. and at least five of those, maybe seven spheroids and i cut roughly five of the stabilization towers that is not good. >> bob and jason, thank you. when we come back this

morning, gm workers on strike. it is their first nationwide walkout against the automaker since '07. we'll get a live report from detroit when "squawk on the street" comes back and our technology powers markets from indonesia to chile. great markets are built on a foundation of trust and integrity, forged through leading edge technology and a smart regulatory framework. as technology advances, regulation must keep pace to allow the markets to evolve. today we see an opportunity to modernize regulation, to make markets more accessible to investors and entrepreneurs of all the gr, to an institution investing in thousands. the markets belong to everyone and stand as a symbol of economic advancement, social progress and limitless opportunity.

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. welcome back to "squawk on the street." oil prices spiking on the saudi oil attacks and economic data out of china coming to weigh on markets this morning what does this mean for the fed's interest rate for the meeting set to begin tomorrow? weighing in now are david rosenberg. brian, i'll start with you what does this mean for the fed's meet. >> 25 basis point cut is still baked in the cake and the key is going to be the median dow plot for then of the year whether the fed fulfills the 100 basis point reduction that's still in the price. i think that's beyond what they do will be the dop plots and tone of the press statement, the number of descents, and the tone of the press statement if i'm at the fed right now, this is not an inflationary event. this is actually a deflationary

tax on the u.s. consumer if it persists and oil prices go up further and when you take a look at what the fed's been talking about mostly it's been this heightened level of uncertainty and how that's impaired business spending if anything, this actually tilts the odds that the fed is going to be more dovish than less dovish. >> brian, do you agree with that >> i do. the other key for me is the way the calendar works, which the tariffs, because of what happened over the weekend in saudi arabia, but that's sort of a similar effect it's not inflationary, but it can result in a temporary spike in prices. the feds will see this impacting their negative growth outlook rather than pushing inflation up the way the calendar lays out the rest of the year is we're not going to know until the last minute if those tariff hike goes into effect. i'm looking at potentially two more cuts after this week because the fed may just not have enough certainty to say we're going to stop here, we think that from a policy

uncertainty perspective we're d good to go for 2020. >> you're talking about tariffs imported from china and there was reports that you could sea european tariffs on goods coming into the u.s. as well. i want to go back to the idea of spiking oil prices and potentially diagnosebeing a defy event. you see higher oil and gas prices that could have an impact on consumers on the other hand, we saw this play out the opposite in 2015 and 2016, you see higher prices that could be good for the industrial part of the economy no >> it should be good especially for the fracking situation, so i would agree with that. but remember that 70% of the economy is a consumer. i love it when the bulls always talk about how well, you know, the consumers go together in a 70% gdp but we saw the retail sales numbers on friday. it wasn't for the relief from gasoline prices, retail sales would have been flat on the month. take a look at what's happened

to the u.s. consumer there's been a lot of precautionary buying number two, the reduction in gasoline prices has been a bit of a tax cut now that's going to go away. my census that the immediate impact on consumer spending from this and the overall secondary impact and what it means for the general level of uncertainty which has put business spending not just the past few months but the past couple quarters, that general level of anxiety domestic political uncertainty, nobody knows what their tax rate is going to be post near 2020. then you layer this on top of it it adds one more player of complexity it is something that leads more to slower growth in the next several months and it's going to be difficult to get inflation out of that. >> what is an investor to do right now? >> we came into this period under weight energy. our analysts are recommending we cut back on the underweights because there's a potential for this to escalate, for the

attacks to continue and if there were to be a tit for tat it could involve the united states. i think it's ambiguous with respect to the united states economy how big of an impact it's going to have europe and china don't have the import/export where we are a producer and exporter of energy so it has that slight positive effect for certain industries in the u.s. i think it's less ambiguous it's going to be negative for china and europe which will keep the fed cutting which means it's still okay to own interest-bearing securities because we see those do well. >> precautionary buying by consumers ahead of tariffs, really people are aware that the price of what? socks were going up and they were buying them beforehand? what are you talking about >> that's exactly what i'm talking about. if you look at consumer buying activity, it's not much different than what's happening in the uk ahead of brexit. there was a lot of precautionary

buying going on. that's what's happening this time around. if you think that walmart or target are going to raise their prices because of tariffs, you're going to start doing some precautionary buying ahead of time that's one part of it. you're seeing it also in the inventory situation as well. there's been a lot of inventory building as well this will all come out in the wash i think the fourth quarter gdp could come in flat when you look at all the spending both on inventories and on consumer spending that's been brought forward because of this. >> inventories i guess consumers i don't know they really knew about the tariffs coming >> well, pardon me for a second. if i'm not mistaken, the administration's brought in four rounds of tariffs just over the past year and a half the latest one -- >> did you have any idea they're really tariffs. >> what peel don't know -- >> we don't need to get in an argument. >> the retailer is going to pass that on to the consumer but if they think the prices are going

to go up they would obviously buy ahead of time. >> we'll see how this all plays out including air freight which has been pretty weak thank you for joining us. uaw workers going on strike against general motors it is the largest work stoppage in a decade. phil has more from detroit >> we're outside the plant here, one of four plants that general motors has scheduled to idle production, potentially close at the end of the year. when you talk with the workers, they almost all say the same thing, this is a profitable company and they want a bigger slice of the pie has profitable has general motors been under the recent contract $45.7 billion in profits in north america. i'd say about 90 to 95% was coming from the united states of that $45 billion 60% increase in profits in north america in this contract compared to the previous uaw contract and yet at the same time general motors is in the

process of idling four plants here in the u.s. wait a second, why are they doing this after all the concessions we've made over the last ten years, especially almost a decade ago when general motors went through bankruptcy here's one veteran of the uaw talking about this what's interesting about this strike, if you look at shares of general motors, not much of a reaction today it's as if everybody kind of built into the expectation that this stock -- that this company would have a strike. the other thing to look at, this is a 10-year chart look at shares of general motors today compared to when the ipo happened shortly after they came out of bankruptcy. we're still in the $30 to $40 range. this is a stock that has been dead in the water since they

came out of bankruptcy >> phil, thank you very much covering the strike in detroit today. dow's down 143 we're back to 2,995. >> good morning, carl. good morning, everyone here's what's happening at this hour a saudi military spokesman says the initial investigation into the oil installation attack over the weekend suggests iranian weapons were used. saudi arabia's minister of energy prince bin salmon visiting the oil facilities on sunday iran says a meeting between the presidents of the u.s. and iran on the sidelines of the u.n. general assembly later this month is not on the agenda an iranian foreign ministry spokesperson says the meeting will not happen. the u.s. has said it will remain open for talks south korean president moon says he will actively support the efforts to restart the suspended

denuclearization dialogue between the u.s. and north korea. back here at home, the musician ric ocasek who was the front ma for the boston rock band the cars and help defined the american new wave movement of the late 70s a'70s and esharly a died ocasek was 75 years old. you are up to date that's the news update this hour i'll send it back to you. >> sue, thank you very much. time for our etf spotlight we'll stick with oil this morning. both on pace for their best day of the year in reaction to the saudi oil attacks. more than a third of the xop components trading up more than 10%. energy related names get a big left including whiting soaring more than 40% today. they are leading the group. when we come back right here, the opioid cries and focus, oxycontin maker purdue

pharma filing for bankruptcy protection as it faces a wave of lawsuits we'll hear from the chairman steve miller it's a cnbc exclusive. "squawk on the street" will be right back [ applause ] thank you. it's an honor to tell you that liberty mutual customizes your car insurance so you only pay for what you need. i love you! only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪

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purdue pharma, of course, the long time maker of oxycontin declaring bankruptcy this morning. also announces what it hope system a landmark opioid litigation settlement with 24 state ags that had been conceivably suing the company. the settlement structure estimated to provide the supporting to purdue as much as $10 billion of value to address the opioid crisis. key elements including the owners of purdue contributing all of its assets to a trust in another entity that benefits the claimants and the american people of course the owners of purdue are the sackler family this morning i sat down with the

chairman steve miller who took that job roughly a little over a year ago to discuss the settlement with those 24 states. two have already settled previously, but 24 states remain not a part of the settlement and many of the states that object to it are focused on the sacklers and on what they say is simply not enough money being paid by that family as part of this settlement. >> the sacklers are the owners of the company of which i'm chairman they no longer serve in management and they no longer serve on the board of this company, so they're completely independent board who came to this conclusion. but yes, the sacklers, there was a lot of discussion over the last year as to, you know, what to do about this they finally came to the point of supporting what is on the table right now. >> and what are we supposed to make of the story that was in "the new york times" on friday or saturday, new york state

alleging the sack zlers have transferred as much as a billion dollars out of the country in years. >> here's my answer to that. we over the last year have been completely transparent with the plaintiffs and have shown them every penny that went from the company to the family, period. what the family then did with the money is, you know, not our business as the purdue company it is what the family does the family is scattered all over the world, so it's not surprising that there may have been transfers but that's not our issue as purdue. >> and so separate litigation against the family would be just that >> well -- >> or is it always connected to purdue >> the proposal is finality for both the company and the family, but if some of the ags instead choose to litigate, i would be very disappointed if they come to that conclusion, because i think this is the oem wnly way o

get help to the victims of the opioid crisis. >> so how do you convince them i can hear it right now and certainly the argument one would expect makes sense in terms of the cost of litigation going forward versus the opportunity right now to start using the money for good purposes, but how long is this going to go on and how many of the states do you have to bring in does it have to be all of them >> it has to be a sufficient number that the bankruptcy court can enforce the settlement. >> what's a sufficient number? do we know >> that's a very complicated legal question but it's a substantial majority of states will have to produce. >> so more than the 24 or 26 who currently, either the two have settled and the 24 you have? >> we have 24 that are already agreed to this there are some states that have been vocal in their objection thinking there may be more

money. i don't know what their objections in total will be but i remain hopeful we will get to a solution they will all buy into. >> it seems to come back to this judged that the sacklers have a lot more money as a family outside of purdue and i'm not -- well, if i could speak for some of these statements, it seems like they want to bankrupt the sackler family as well what do you say to that? >> there's a lot of anger, but i come back and focus on there's two choices here you want to litigate in order to do whatever you want to do or do you want to get on with getting help to the community that's been hurt? it's really interesting that included in the 24 states who have already signed up are the ones who are hardest hit by the opioid crisis. that says a lot to me. >> well, of course you can hear what else mr. miller had to say there is this idea that this is a fork in the road either you get the money now when we're in our best position

to potentially dispense it with the idea of going bankrupt and then reorganizing an existing basically as a trust almost for continued money going to help the affected communities or we litigate and go through all the money litigating with you because you want even more from the sacklers. >> i wonder whether -- i wonder how much hinges on this deal with hpurdue and with the sacklers you look at the other publicly traded company whose have sold opioids and have exposure to potential litigation and i wonder how much is riding onseti on setting a precedents for the industry as well >> the corporations we talked about have much deeper pockets it is not unimportant. they're certainly watching it closely in particular to see how the other states in objection react as he continues to try to

push forward that this is the best settlement to take and take it now. when we come back, new york moving closer to ban the sale of e-cigarettes what that means fothr e growing industry dow is down 129. ♪ ♪ i've been a caregiver for 20 years. no two patients are the same. predicting the next step for them can be challenging. today we're using the ibm cloud to run new analytics tools that help us better predict and plan a patient's recovery. ♪ ♪ ultimately, it's helping thousands of patients return home. ♪ ♪

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nearly 400 cases of a mysterious lung illness that's caused six deaths across six states new york governor andrew cuomo moved the state closer to a ban on flavored cigarettes piper jeffrey estimates more than 60% of juul's business comes from its mint and menthol flavors. the cdc says many of the cases involve vaping with thc. so in the cannabis industry recreational vape product sales appear to be slowing down according to cannabis analytics company. since the outbreak, sales of vape pens are down between 2 and 4 percentage points. in colorado that's a loss of about a fifth of the market show and one of the fastest growing -- a big share of the cannabis market fell to 28% from 33% but it's unclear whether that's part of a seasonal pattern. here at harborside the ceo says

they have about one in ten customers asking about this illness. >> we're being very proactive with our customers as well we've done some postings on social media we've certainly let folks know here we've let our customers know through postings and of course we have a very strong compliance department >> interestingly enough, the data also shows a growth in the entire industry in the last few weeks which means that the people who are turning away from the vape products are migrating to other products like flour or free roll. back to you. >> huge story. thank you for that with new york and michigan moving to ban the cigarettes, the president calling for federal prohibition, what will the growing pressure mean for vaping and cannabis industry joining us is matt hawkins, a largest cannabis private equity firm and an early investor

good to have you do you believe these numbers are these legit? >> probably so look, we're as bullish as we've ever been on the industry. we're about to raise our third fund we've got close to $100 million under management we're going to have at the end of this, raise $250 million and we're going to deploy it rapidly into the space. >> how much for cannabis was rising on vape technology versus products and flour >> well, i think the stats show that people are moving to other products if they're u uncomfortable with the vaping. we can get into some of the rgzrg rational that's different between cannabis and nicotine, one of which is the natural part of the plant provide the cutting agents which don't use the problems that are in nicotine, for example. >> so there's something specific to vaping? >> there absolutely is and the reality is most of this is from the illicit side of the business which is another reason why this should be federally legalized and regulated to where we won't

have issues like this, because it's vitamin e acetate it uses close loop system, uses vitamin e in tiny amounts for coloration and thinning and that's it. >> in terms of federal regulation, do you think the health crisis as we see it play out because of in many cases black market offerings, do you think this pushes the government to more more quickly on the regulations and accepted more on the federal level? >> your guess is as good as mine what they do, but sure, why not. this industry is undeniable. there's a black market bigger than any of us imagined. when we started in '14, had no idea of the size and magnitude this is conversion of an industry the quicker we convert to a legalized market, the better we all are.

>> the vitamin e that's the culprit of the problems? >> those are the facts as we know it. again what i don't know, what people that are breaking the law are doing, but i know the companies we look at and people i advise to invest in use it the way i mentioned a second ago, focus on closed loop systems. >> does it make the international part of the story more important if you run into true policy risk in the states >> potentially look, the international markets, there are some just as big as the united states. again, we're in the first or second inning of this. there will be things like this that occur in the growth of an industry, i hated the way it has become a black eye, but the reality is if we regulate it, these things may not happen. >> from a cannabis standpoint, what's more lucrative for cannabis companies vaping or other products >> truth of the matter is some of the profit margins on edibles and liquids are higher than just

flower or vaping products. >> we're early days of technology in terms of vaping, certainly possible there will be other iterations that don't vape as well, but allow for intake. >> i would think so too. again, i'm not on the science side, ooici'm on the investment side we look at the right opportunity for the industry >> they called for a vote on marijuana banking, that sounded big, is it >> i think we're likely at the bottom of where we think things are going to be on the public side we invest in the private side, but if things get traction on the house floor and senate floor and we pass bills, there will be exciting things about the industry going forward >> thank you got to keep our eye on that space. don't miss an encore presentation of "vaporized"

america's e cigarette addiction. 7:00 p.m. eastern time on cnbc let's send it to jon fortt for a look what's coming up on "squawk alley. >> hey, david. disney ceo bob iger resigned from the apple board effectively ending one might argue one of the most productive media and tech partnerships of the modern era. so who wins and who loses in this move? we will dig in from the investing side coming up on "squawk alley.

welcome back to "squawk on the street." momentum slowing in consumer discretionary and staple stocks. let's drill down on another underperforming group, the material sector. that sector under pressure after data from china showed industrial production hit a 17 year low, that's fueling renewed concerns over possible slow down there. and you have packaging firm ppg industries, freeport-mcmoran on the mining side of things, keep

an eye on material stocks. back downtown to you guys at the stock exchange, carl. bob iger is stepping down from the board of apple. what does that mean for the two companies as they launch into the streaming space? "squawk alley" is up in three minutes. i knew about the tremors.

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good morning it is 6:00 p.m. in saudi arabia, 11:00 a.m. on wall street. "squawk alley" is live. ♪ ♪ ♪ ♪ >>