>> announcer: live from new york where business never sleeps. this is "squawk box". >> were live from the nasdaq market sight at time square. our guest host for the hour is black rock's kate moore. let's look at what happened with u.s. equity futures. indicating slightly lower. do you slightly down after it was up by about 34 points yesterday. s&p down by just over 4 points nasdaq down about 11 points. maybe not all eyes

let's take a look at what is happening in asia too. those markets were closed. hang seng off by .1 and the shanghai up about a quarter percent. you'll see at this hour, slight gains across the board italy up three major averages up. .1 to .2%. the ten-year is yielding 1.772%. the 30-year at 1.28. we were just talking about all of this. all of those moves made. pretty confusing to figure out what was happening and why >> i think there are a lot of people looking at a lot of these small events and does it have bigger implications. in this environment where

everyone is feeling uncertain. i think these fractures make more people nervous. whether this is a bigger issue, i will know this weighs on investor's sieky >> i had a 2007, summer of 2007 bnp scare. there was maybe $2 billion that was frozen, sub prime and there was a freak out. at the time, it didn't feel meaningful >> this is the first time the

fed stepped in the only time they did this was in the middle of a crisis. >> that's right. this is a warning sign sometimes technical factors are really technical factors there is nothing else. >> i can say on the black rock trading floor, there was no panic. >> interesting just a handful of headlines. trying to make sense of why they were doing this. not sure of how much it was happening. >> i agree a little confusing all of these small things can together really way on how

investors act. >> in the same vein, let's take oil and crude. the issue where even 48 hours ago, there was a freak out they jump by more than 10% after the weekend attacks. gave back much of those gains the kingdom minister said that that was lost has already been restored indication a third of it may be back on line they are ahead of where people were expecting things to be. they said the attacks won't affect or impact aramco's upcoming ipo now going to be going public and moving ahead nonetheless

the country is committed to that ipo and set to hold a news conference later we expect to hold a lot more about who they think was behind tha that attack. continuing to deny the attack. >> we can't believe anything it is going to be six months before they are back on line was the original estimate. >> i'm saying when you are trying to decide right after an event, it is best to hold tight. if we hear that six-month disruption, even though we don't report as much skbroo talking about 30 to 40-day supply. six months, i was thinking, wow, they must really be damaged. we've had power go out and

transformers >> saying, look, when there is even just a fire, it creates lasting damage >> in this case, it is not going to be six months >> bringing you the other big corporate story. new developments in wework's push to go publish still before year's end adam neumann said he had been, quote, humbled by the shelved ipo and received the role he needed to play he went on to say the weak debut for others contributed to his decision to delay. i sat with him now three or four months ago uber as ipo had taken place. i said to him, how much focus do you put, how anxious are you

at the time it was, doesn't matter to me, irrelevant >> i'm just suggesting all of this -- dare i say, there is an element of hypocrisy here. >> well, it doesn't matter if you can still get investors interested in you. having seen what happened to uber, to lyft and smiledirectclub. because they kicked the tires a little harder. >> right if the prices look right you don't have to be concerned about what came before you there will be demand for your shares fedex shares are folding like wet cardboard. that was on fast money last night. perfect et -- pretty good.

you ever put the trash out in the rain wet cardboard. it is gross. when i read that, i said that person needs a raise and then they messaged me and said i'm going to use that he's still watching this morning. we appreciate it a big drop in profit sharply cut its output for the year continuing to face weakness in its express unit buying hurt by the u.s./china trade war, amazon, many things here is fred smith on the conference call. >> there is no company or person that has been more vocal in our option to trade policies we are pursuing it is not just the u.s

i think china is pursuing bad trade policy >> ahead of stronger online shopping but also spending heavily on transportation and equipment to keep up f fedex ended the contract in months addressing the loss of amazon's business >> the amazon contracts represented a small proportion of revenues, the nature of our business is such that the profits will be affected with significant flow through to the bottom line. we have closed additional business to replace this traffic. >> they have other deals to replace that with walmart and

dick's sporting goods. >> if it flows through to the bottom line. >> small impact but flows through means it was a small impact yo impacto impact outcome chewy. i do everything i can for pet food what did you decide? about the possibility. >> a dog in the household? >> did you put it off. how long can you stall >> the boys watch the show if it was going to be coming, and it was a surprise.

>> let me ask you, the more i talk about it, the more they bug you? you believe me, you'll be just around germs all the time. i think you'll get sick less you want the dog for the kids for the first 20 years of their life for their immunity. at my point, that's over >> for mental health there is a reason all dogs go to heaven, they are all good. they are you know this. >> i do. i also have a golden retriever >> wonderful brian, he has these little dogs. >> dogs are good for mental health i'll have to get you more. >> i already have three.

why president trump will be likely disappointed. once we get to the quarter point, we are fine look at the biggest pre-market winners and losers in the dow. s been omitted to avoid

spoiling this is us for the few who haven't seen it. season 4 of this is us is almost here. to catch every past episode, just say "this is us" into your xfinity voice remote. like the one where i... [ buzzer ] or the one where we show... [ buzzer ] when he was a... [ buzzer ] plus you can watch this is us anywhere with xfinity stream app. especially the... [ buzzer ] episode. awww, that one's my favorite. catch every episode of this is us with xfinity.

>> it is a big day for the federal reserve. setting the policy decision in the next few hours and injecting another 25-point rate cut. another likely to disappoint

president trump who has called on the fed bone heads. i'm quoting. that is actually in the telepromter. >> was it? >> it was. >> look. it is right there. i want to have a band, jay and the bone heads >> bath of pride wear it well >> how you doing joining us now, alec young our guest host for the hour, kate moore i guess i shouldn't even ask whether the day will come where the overall economy is not as dependent on every minute reaction every little minute action is

just the underlying economy. >> the fed fund futures have gone from 95% chance to 65 because we had better than expected retail sales. i think the market is feeling a little more comfortable. the economy is not on life support. they are cutting from an insurance perspective. i don't think they are cutting because of tremendous near-term urgency. his range is 2,700 to 3,000. china is coming to talk do you

raise to the low end or the high end. >> i kind of see the overall point. there is a possibility we'll be pleasantly surprised they said the talks disappointment market sell off in order to get consensus earning growth is around 9%. you need current tariffs to be removed and you need a solid positive trade deal. the market is 17 times

to get the expansion you need 7, 8, 9, 10% earnings growth. we'll probably beat that and come in flat there is no room the tax cut hit a really high bar. most people are impressed the market has done as well. >> i would argue that earnings likely to get down 100% in that camp. the valuation on that story is the rest of the opportunity set. nothing is particularly cheap. can we stay at 17 times perhaps get another turn on. it is highly possible.

if the numbers come down, we'll be slightly above. >> you think we can get to 19 times? i would argue. >> i think it is possible. if we get some of the ticks on the policy side. you mention china trade stuff. you can get an environment the market grinds a little higher. while i see all of the rational for strategists on the street to keep the range between 2,900 and 3,000. >> even as a bull, you are not really pounding the table. >> relative to where i was six to nine months ago, no, i'm not. >> why not you don't want people to say, yeah, it is not an easy sale and go higher. >> no. you have all of the sentiment

stuff going for you. >> we've had to going the entire run, unloved >> some of the macrodata has been strong. we are quite constructive on the consumer in general. >> tell them, kate >> if you don't have that deterioration there, are we really worried we need to take over aggressively in the overall market >> if you look at the valuations on the home depot, mcdonalds these are not starbucks. these are expensive. we've had the move a lot of people are like, wait a minute, these stocks are running too far. companies like waste management. great companies but you've got a lot of these trading at 25, 30% earnings >> don't imply the stocks you just mentioned are 25, 30%

which ones >> mcdonalds is over $200. these are expensive. >> are they expensive with sustainable earnings growth or because they'll be able to grow throu throughout all parts of the cycle. they are willing to pay a couple of turns higher. >> i'm just saying companies will need time to grow those the fed is still in cutting mode there is no reason to think that rates are going to spike no reason to think you are going to have a multiple contraction

>> it is hard to argue trade is the only wildcard there is big structural al issues that will not be resolved overnight. if they can get rid of the tariffs. i think that's what we need to see. >> what about the election people start talking about some pretty extreme views >> the market tends to look out six to nine months the other thing, we don't even know who the nominee is. >> right it does look like that is shoerg up >> the street thinks trump is going to win so they don't take

these all that seriously the track record is just not that good. investors get ahead and overexcited and we draw down >> going to year end, do you expect higher or lower levels? >> a lot depends on what happens in october >> i think we know biden and warren are separating themselves >> two different >> it is going to be biden warren i think biden/warren he'll serve one term >> he thinks that's the ticket he thinks if biden wins, warren will be on the ticket. >> make your -- 6:23 >> i could change it at 7:23 but

right now, that's my call. viewers are demanding moore. kate will be with us when we return you have heard that before >> i have indeed today, the apple watch he's been testing the new watch. he'll join us with the pros and cons and whether i'm going to have to get a new one. back in a moment it was sophie's big day.

by the way, she's the next mozart. as usual we were behind schedule. but sophie's enthusiasm cannot be dampened. not even by a run-away donut. we powered through it in our toyota prius. because a star's got to shine,

no matter what. it's unbelievable what you can do in the prius. toyota let's go places. and now for their service to the community, we present limu emu & doug with this key to the city. [ applause ] it's an honor to tell you that liberty mutual customizes your car insurance so you only pay for what you need. and now we need to get back to work. [ applause and band playing ] only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪ when i needed to create a better visitor experience. improve our workflow. attract new customers. that's when fastsigns recommended fleet graphics. yeah, and now business is rolling in. get started at fastsigns.com.

>> welcome back to "squawk box" this morning the apple review here. wearing it with the always on screen that's the big deal. >> and a compass which doesn't sound like a big deal but i'll explain. previously, you would let the watch idle and it would turn off. now when you are on the treadmill, now it is always on certain apps >> the worst thing is not having it always on when you are in a meeting and you need to see what time it is,

you have to do this little arm twitch and now everyone is looking at you >> it is hard to go back i had the series 4 apple told me 70% of its buyers are new buyers >> this is the best selling watch in the world now >> it doesn't surprise me. >> series 3 is $200. >> this thing will set you back $400 >> right >> for those people, is this necessary? >> if you want the best apple watch now.

if you are new to this and you want to check it out, get the series 3, it is $200 >> the compass now when you come out of the subway you can use your compass and figure out where you are >> by the way, she wears an ora ring i wear one to sleep. >> joe doesn't think it is that attractive >> i think it is one of the greatest devices i don't endorse products but it has changed my sleeping patterns >> apple watch doesn't have sleeping there are third party apps >> it is uncomfortable to wear

overnight and the battery issue. you need to charge it. >> apple has said they are waiting to get it right. they bought bet it i don't know what they are doing with it. >> you walked in one day about how you hadn't slept all night you knew you hadn't. you had the read thing telling you hadn't slept which makes you feel worse about things. >> when i see i'm really trending in the wrong direction, it says take action. >> i don't need anybody to tell me that. >> the other thing is the value. the value of deep sleep, which is different than rem sleep. because i sometime ring and the watch at the same time to see how they are doing i think the ring is more

accurate >> do you remember the pioneers, they set off in a covered wagon. >> they had compasses. >> they could never go fully no fossil fuels your world is going to change. we are so pam perrperred >> i love gadgets. did you know there is a patch. it will monitor your glucose and your blood you can connect it to the phone. >> do you admire them? >> do you think you are aspiring -- >> i can't sleep without air-conditioning >> you could start with a series 3. >> i've worked hard my whole life for a nice watch. i want to be like odell.

>> when we come back, we'll tell you about new challenges for some of the biggest challenges in the united states and vaping alert. a new headline out of china. we'll be right back. when you retire will you or will you just be you, without the constraints of a full time job? you can grow your retirement savings with pacific life and create the future that's most meaningful to you. which means you can retire, without retiring from life. having the flexibility to retire on your terms. that's the power of pacific. ask your financial professional about pacific life today.

>> announcer: welcome back you are watching "squawk box." >> welcome back. it is time for the executive edge tech companies under fire in the u.s. and europe. lawmakers grilled justice department and ftc officials over investigations to big tech call the the probes empty suits. apple continues to fright european union watch dogs in court calling the $14 billion proposed deal in back taxes something that defies reality and common sense today, facebook, google and twitter are set to testify fighting on line extremeism. >> and juul sales have been stopped in china just days after they went on

sale will. part of it might be a health thing or even a trade thing. a lot of speculation out there meantime, similar things happening in new york but a bit of a different way officials here have become the second state to ban flavored e-cigarettes voting to adopt the request that applies to all flavored products other than tobacco. he left out -- i think there is a problem -- menthol that is still allowed. tobacco still allowed. retailers have a two-week grace period >> coming up, ride hailing drivers staging protests yesterday in new york. we'll tell you why and talk with the former general manager of

uber in new york and don't list our interview with ken burns to discuss his latest project pretty interesting all kinds of country music that is uniquely american you are watching "squawk box" on cnbc

through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from managing inventory... to detecting and preventing threats... to scaling up your production. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

that's where i feel normal. having an annuity tells me my retirement is protected. learn more at retire your risk dot org.

you still have service? call the insurance company sfx: [phone ringing] it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering his name is hovering? look up? by automating claims with machine learning and analytics, cognizant is helping insurance companies advance how they serve even hard to reach customers. cool ♪ that's what happens in golf nothiand in life.ily. i'm very fortunate i can lean on people, and that for me is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley.

welcome back uber and lyft drivers protesting in new york over the new app and how long drivers can use the app. this is different. congestion prices earlier this year was something uber supported. this is symptoms of what is happening across the company who is responsible for the changes and the new rules? joining us is josh moore founding partner of global capital. jed, drivers shut down the fdr in rush hour traffic something we are seeing across the country. what do you think? >> shutting down traffic is not

a good way to bring anyone to your side. ultimately, unintended consequences of laws created with good intention. ultimately, if lyft shuts down their app, uber has to respond it is more of a utilization that really take away the flexibility that drivers join. >> it is about saying if you are going to use a car on the road, it has to be used x percent or 70% of the time. sometimes the cars will be less used and more used the city has been implementing

things to achieve. they've limited the number of licenses out 18 months, there is no end in sight there. wage floors and good policy. they start to take a shot at uber when unintended consequences start >> uber has dealt with the backlash you see it in france and in california with the minimum wage laws really targeting them >> i don't work at uber. i did for a long time. i would say, the idea that unregulated is not really true in new york city, they are comply to regulations. >> go back, when uber came in. it is the silicon valley move fast and break things before they have time to tell

you what to do >> ultimately it comes down to employment laws being written decades before things like uber could exist. the question is are the drivers contractors. long before smartphone or uber, if the worker sets their own schedule and brings their own equipment, then they are independent contractors. if they are controlled by the company, then they are not this kind of falls in between. even with travis calling on a third way with unique attributes >> some of these drivers are contractors because they are working part time. but others if you are driving 60 hours a week, you are an employee now, they are working to try and

furiously come up with a fix or compromise >> i think the company has tried maybe not hard enough to try and find ways to find that middle ground in new york, they kreet aid the the driver guild to try and find this third way forward ultimately, it is not uber's job to drive laws. it is reasonable to think what is going on is not the right way. there are some benefits if they gave to drivers, they would be in trouble with independent contractor law some of the rules are over simplified they are employees, it is not that simple. >> right what do you think this means in terms of ride share employees? >> in new york, i'm seeing two

different laws passed. sensible ones come from council and the vindictive ones seem to come from city hall. at some point, you need to pick a path i think the sensible regulations make sense and are grade and uber probably supports them. things like you must be utilized 70% of the time strikes me as being the second group >> thank you for coming in coming up, one of the street's top tech picks with the top picks for the rest of the year joining us on set next as we head to the break, take a look at what is happening on the markets. we have green arrows

welcome back to "squawk box" this morning tech performing up more than 30% so far this year joining us to tell us some top names in the field right now is mark mahaney, lead analyst at rbc markets. tell us something unusual, provocative, novel >> you just ran a story yesterday about wearable devices. not in the next three to five years, but in the next five to ten years. the idea is there long term. that's the next frontier for internet interactivity. >> you had fitbit, that was a device company. >> yeah. >> go pro, i don't want to say it was a device company. >> people don't love hardware companies. >> they don't. >> apple is a unicorn on a relative basis. >> people want to be able to interact with their apps, with voice recognition, voice activation technology where it is, i think it's just a matter

of time before somebody gets it right. there are going to be a lot of write-offs, products that didn't work out well. the idea that you can use something seamlessly, that's how we went to mobile devices. this is the next step. it will take a long time. >> given the run that tech's already taken. >> yeah. >> what would you buy still in this environment. >> the most contrarian longs in large cap internet right now, the top one is netflix we still like facebook and number three you just talked about it a little bit, uber. that's a deep contrarian long. >> speak to the contrarian on netflix because obviously there's been lots of concern with the rollout plans later this fall of apple plus, perhaps even more importantly disney plus, hbo max. yesterday nbc universal, comcast our parent company announced peacock streaming service. what kind of competition -- what does that mean to netflix long term >> i think what it tells you is there's a huge market for streaming and disney agrees and a.m.le agr apple agrees

there's only one company, 150 million paid subs. they can afford to spend $500 million most easily. >> you don't want to say it's zero sum, but how big can you grow the pie in this instance? >> well, we have done a lot of survey work over the last year and a half we think 2/3 of people, internet users, would like to purchase at least two services, two streaming services putting all of this in context you could subscribe to netflix, apple and disney and spend $21 a month. you try to go out to a movie theater in manhattan for less than $21, you can't do it. it's still a very compelling value proposition. >> the biggest risk is when and if the day comes i can turn on and off these subscriptions literally and just press the button so when my favorite show is on, i subscribe. "the crown" is on, i subscribe if it's off, i turn it off if i want "handmaden's tale" i turn it off. >> that is a big risk.

>> that is a real risk if it ever happens, it would fundamentally -- >> unless andrew said you can't do it on a month-by-month basis. >> it's already happened netflix has always made it super easy to subscribe on, subscribe off. last time i checked it's a pretty popular service the services that made it very difficult to turn off and turn back on, cable last time i checked they're less popular. users want to be able to turn on and off and the way netflix has to keep them is by generating good content they're doing it. >> we had a conversation with uber and the regulatory risks. you like the company >> regulatory risks are across all of these names for good and for bad and for investors it's usually bad. uber is set up where you'll see accelerated revenue in bookings growth you have an operator running the company, not a visionary they'll bring down losses. they are taking price actions.

they can take pricing up the economics of ride sharing are getting better >> spotify >> so our number four pick in the group. >> right. >> two catalysts coming up we think they'll finish the other label deals, sony and warner music coming up secondly, we think they're going to launch a new type of revenue stream advertising, subscription revenue, anr when labels pay for artist development i think we're going to see those kinds of dollars move over to spotify. >> when you say artist development, they're going to be paying spotify to promote artists. >> go into rap caviar. you probably listen to a lot of rap music. >> oh, absolutely. >> there's $12 million of rap caviar all of it's organic results. >> i didn't know there was a channel called rap caviar. >> 12 million people use it. >> one of the things i love about spotify is i learned why

people were listening to it. >> you have to do this right google as a company did this right. they gave you organic search results and eventually began bringing in paid search results. there's an opportunity for spoti spotify. you don't put bad music in front of consumers artists spend $5 billion a year spending their own music and labels there will be a new revenue stream. >> mark, great to see you. >> thank you. >> appreciate it thanks also to kate moore for being with us for the hour great to see you and come back. >> another orr ring wearer >> a clear sweep >> we've had a couple guests this morning >> all right when we come back,documentaria ken burns will talk to us about a new project about a uniquely art form, country music, but first our guest host for the rest of the show is home depot

co-founder ken langone "squawk box" will be right back. ♪ limu emu & doug hour 36 in the stakeout. as soon as the homeowners arrive, we'll inform them that liberty mutual customizes home insurance, so they'll only pay for what they need. your turn to keep watch, limu. wake me up if you see anything. [ snoring ] [ loud squawking and siren blaring ]

only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪ by the way, she's the it wasnext mozart.g day. as usual we were behind schedule. but sophie's enthusiasm cannot be dampened. not even by a run-away donut. we powered through it in our toyota prius. because a star's got to shine, no matter what. it's unbelievable what you can do in the prius. toyota let's go places.

jay powell in the spotlight. a titan of business and philanthropy home depot co-founder ken langone talks to us about business and politics. plus, the history of country

music. >> phenomenally great music. >> documentarian ken burns with joe, becky and me as the second hour of "squawk box" begins right now. ♪ ♪ live from the beating heart of business. new york this is "squawk box. good morning, everybody. welcome back to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. u.s. equities are indicated slightly lower ahead of the fed meeting. ken langone is here. we're having our own conversation on the set. dow futures down by 22 points. there he is. hi, ken. >> good morning, everybody. >> it's great to have you here. >> how are you out here? >> buckle up, people, two hours with ken. >> buckle up we'll get you to the headlines

fed ex shares are slumping in the pre-market this morning the company missed estimates of the top and bottom lines with this latest quarterly earnings it cut its full year forecast due to what it says is increasing costs, slowing global economy and, yes, a drop in business from amazon and a bit surprising given that fedex was the one that said they were the ones that decided to end that business with amazon a lot of people imagined that was a low margin business for them and clearly it has taken a hit here we're also watching shares of southwest airlines after upbeat comments by the company in sec filings. southwest continues to experience solid demand even after the grounding of its 737 max fleet. it is maintaining its current quarterly revenue forecast and expects its expenses to increase less than it had previously anticipated. if you're out there looking for a home, mortgage applications falling 1/10 of a percent released from the mortgage bankers association.

refinancing declined but that was offset by a jump in new home applications average 30 year rate rose from 4.1% that's up from 3.82% the prior week. we are also watching crude oil prices crude oil up by more than 10% after the weekend attacks on saudi arabia facilities. they have given back much of the gains after saudi arabia said it would restore most of its oil output and return to normal levels within weeks. the kingdom's new energy minister said 50% of the production that was lost in saturday's attack has already been restored. he said the attacks won't affect aramco ipo they've said the company is committed to an ipo in the next 12 months. the country's defense ministry set to hold a news conference. we expect to learn more about who the kingdom thinks was behind that attack at that point. iran's defense ministry continuing to deny any role in the attacks, but you can see wti down by 43 cents to 58.91. >> it's a big fed day. even bigger, this is a break

through that andrew is here with you. >> i agree. >> i'm trying to figure out, did you not know he was going to be here or are you facing your fears? are you just deciding to do it head on? >> inexplicable coincidences, a handful of times that i have been traveling did shall. >> his shrink said to him eventually you have to confront the guy. you've got to show up. >> ken, i wouldn't show up you immediately started on him. >> but in a nice way. >> can i ask you a favor can you treat him as a cnbc employee, not as an employee of some of the other places that you've already been casting aspersions to him about. he's a cnbc employee he's a "squawk box" anchor. >> i'll treat him as my friend. >> who needs advice. >> from time to time. >> get these entities out of the discussion. >> thank you, joe. i appreciate that supporting -- >> just to make sure, our journalistic standards on this show, your show -- >> see >> -- oh, don't -- >> you agreed not to bring this up. >> stays at the -- >> at the highest level.

>> i'm being positive. >> going to be positive. >> we want to be the ee ppitome the best journalistic standards. >> we're going to strive for that chairman jay powell is set to deliver the latest central bank policy they're expecting another 25 basis point rate cut steve, if we get this 25 basis points i just want to tell you that everything in my life is going to be absolutely perfect. >> okay. >> this is all i -- this is what i'm waiting for. >> that's the thing. >> if i can get this 25 basis points and get 1/4 pointless on all this stuff, i think everything -- >> like the lion with the thorn, right? in aesop's fable. >> pull that out. >> comes right out. >> isn't it crazy? we obsess. >> well, some people do. i guess i'm one of them. here's the deal, joe the fed announcement takes place with i would call it unprecedented pressure on the central bank to cut here, especially from joe kernen, pressure from other central

banks like the ecb which are cutting, pressure from the markets. they threaten to sell off if they don't get the cut they want then there's pressure nearly daily from the president of the united states. the question today is do we get a hawkish or a dovish 25 basis point cut. that is is it part of that mid-cycle adjustment just a couple that were done or part of a longer, deeper easing cycle. we think the committee will signal that it is prepared to do more while avoiding precommitting to additional cuts or any specific choreography edward moya writes, if powell emphasizes the down side risk to the economy and delivers a dovish cut, we could see the punch bowl argument support. >> what about comments from the president. what kind of impact this has on the fed. first of all, i want to show you trump's comments on the fed are seen 67% of our respondents saying they're entirely

inappropriate. not somewhat, not neither, not somewhat, but 67% say entirely inappropriate here you know, here's the main question president can say what he wants. doesn't have any impact on the federal reserve. take a look at the next. i was kind of surprised by these results. 52% say no but 36% say it makes policy looser than it otherwise would be here's some of the commentary we got on this question chris rucke, chief financial economist says the fed can't not hear what the president is saying trump's criticism of current monetary policy makes it more likely that interest rates are going to go lower than they would have richard sichel, philadelphia trust company, says his statements have been correct for the most part. he could deliver the comments more diplomatically. becky, that's the range of opinions that are out there. not everybody disagrees with the president though mostly they do disagree on his descriptions for policy but there's pretty good agreement about the way he's

saying it. >> steve, can you just comment on what feels like a headline that's already disappeared and maybe really was just a technical issue but yesterday, of course, there was a question about liquidity in the market. new york fed stepping in i would argue in a big way they hadn't done something like that since the financial crisis. what does it mean in terms of short term reap poe rates and liquidity. >> i push back, andrew it has not gone away -- >> i'm not saying it's gone away i'm suggesting for reasons that seem inexplicable to me, if you pick up the papers, people are not focused on it. >> we were very focused on it. the point being, andrew, it's a big issue. yesterday the reap ppo rate, equivalent to the fed fund rate blew out it raises questions of the federal reserve's ability to reach the target rate of between 2 and 2 1/4. they came in with a $53 billion infusion of liquidity into the market at around 4:00 yesterday

it said it's plan to go do nother operation this morning, between 8:15 and 8:30 a.m. where it's going to inject an additional 75 -- or make available an additional $75 billion of liquidity with the question being can the federal reserve given the excess reserves that are out there, the huge balance sheet it has, the quantitative tightening that it did and all the other things that are going on with the post dodd-frank world, can it control the funds rate. >> i have a question steve, can you name one president since world war ii that said rates should be higher one. >> no. >> of course you can't they all want lower rates because they think it enhances the economy which they think enhappens their political standing this is natural. the fact that the president acts in a different way, stick to the message. the message is simple. >> so, ken, let me get this right. >> by the way, i don't think rates should go down. >> i want to start the first

argument of the morning with ken before andrew does. >> i'm out of shape. >> do you think it's appropriate for the president to call the chairman a bonehead and enemy? that's okay, it doesn't matter how he's saying, just what he's saying -- no, no, answer the question. >> i'm going to. can i answer it my own way >> i don't know. >> do you want to give me an answer, i'll read it >> all right. >> i'm not going to comment on the way the president behaves or what he says or what he does. >> why not you comment on everything else >> well, then let's talk a little bit about the smear campaign with this guy kavanaugh. >> so you're not answering the question >> how do i feel my style is different than his but guess what, he was elected president of the united states and, by the way -- >> so it's okay. >> -- he's acting exactly the way he was when he ran for the presidency. >> so it was litigated. >> so it's okay? >> the public has spoken the way his manners are, the way he says -- i happen to -- look, the bottom line to me is how good is he doing and i think he's -- i think he's

doing a hell of a job. >> he didn't -- when you say, gosh, i couldndon't know who's a bigger enemy, xi or powell, it's the typical hyperbole. you're taking everything he says absolutely seriously or literally instead of seriously he's just saying we've got problems with china, we have even bigger problems -- >> i don't know, joe >> there was another time where -- the chosen one. >> i find it amusing the rhetorical loops you have to jump through to defend the president. >> well then langone -- >> let there be peace and be let it begin with me. >> do we not stant for any proprietary and public discourse. >> calling the president of the united states a racist no, i a racist. >> let there be peace and let it begin with you you were about to say. >> me? >> yeah, you just said it. >> i was about to say i think maybe the fact that this guy is this way gives him the resolve

he gets beat up every single day. there's nothing that he can do that he gets any credit for. maybe because the president is put together this way he's able to resist. i couldn't take it, and i'm a battler. i couldn't take what he's taking. >> having said that, when it comes to the fed, you don't necessarily think the fed should be cutting here? >> i don't think -- what this was all about, taking an aspirin before you have a headache do you take an aspirin before you've got a headache? >> no. >> this is what this is. >> so then -- >> but you want to take the -- you want to take the antibiotic before it's sepsis, too. >> no, you should not take an antibiotic before you need to because that will give you resistance. >> you don't want to wait until you're actually really sick to take the antibiotic. >> look, rates are -- >> there are preemptive things this is a currency thing right now, ken. >> i just bought a company, closed on it last week, majority stake in a company 2.63% for five years fixed this is nuts

you're being given -- it's like saying to a gambling addict, hey, here's a million bucks, go on into the casino and have some fun. >> you don't think the economy warrants this? >> savings are up. consumer debt is down. equity in homes are going up and doing strong the consumer by virtue of their spending habits, everybody's sort of enthusiastic i'd be careful about christmas, but everybody is enthusiastic about this coming christmas season i feel pretty good about it. i don't know if i'm at 5%. i don't know where the hell i am the thing is, i think things are pretty good. >> but i think just to be fair, i think you could genuinely say, because i think this is actually how you feel but you don't want to say it, that you like the results of where the country is today with the president in charge and that you want to give him credit for that but at the same time you don't like the things that he says and the way he behaves >> no, no, no, no, no.

don't put words in my mouth. >> he's trying. >> i'm saying his style is different than mine would be and i think i've got to give him the benefit of -- he's the president of the united -- all these people ought to understand he's the president of the united states. >> he can be whomever but i imagine at some level you -- i know you well enough to know that if he was not the president of the united states and he was your child you would be very unhappy if he behaves this way and said some of the things he says. >> have you met any of my kids yet? >> listen, i'm not arguing i'm saying to you, i'm not going to judge how this man behaves. i know one thing i know one thing, i could not take the pummelling he gets every -- if he came up with a cure for every form of cancer, "the new york times" would find something bad about that. >> walked on water it's because he can't swim. >> if jesus happened to come back and say, let's take a walk on the water, they'd say -- it's a fraud. he can't swim. look, i'm not ducking a

question i'm being honest i am not going to judge this man because, frankly, i think it takes what he's got to put up with what he gets. every day. >> you don't think he creates what he gets meaning the exaggerating -- >> it's circular it's circular. >> it may be to an end you like but i'm not sure you're a person who always believes the ends justify the means. >> do you like the names he's called like a racist. that's a very serious thing. >> i think there are people of color in this country who feel that way and the fact that they feel that way suggests that there's something wrong. >> wait a minute. >> i don't know what that is and i don't know what's in his heart and i'm not going to make that statement -- >> 62 years ago when i tried to get a job on wall street a guy said to me point blank, kid, we have jewish friends, we have irish kids we put on the floor of the exchange and italian kids we make clerks in the back office i have two choices, angry and

ridicule them for what they did or say, i'll show these bastards i think i did the latter the point i'm making to you is you can't make an argument based that some people might feel that way. all i know is judge him by his behavior look at what he did the other -- mariana rivera getting the presidential freedom award go look, talk to people that did business with him. >> talk to people who did business with him? there are people who wouldn't do business with him. >> i can't think of a worse thing to be called in my mind than be called a racist. if you call me a racist -- >> i don't disagree with you i think it's a terrible phrase, but the fact that there are people in this country who feel that way suggest that there's something on the other end of this. >> you're telling me that if somebody has feelings that automatically means it is? >> no, i don't, but i think that there's been -- there's been enough commentary over the past several years publicly that has led penal to feel this way. >> i'll tell you what -- >> and i don't think it's all political. >> i'll tell you what, how about

what we did at nyu. >> which was fabulous, by the way. >> hold on. >> ken langone has effectively created an endowment so that med students do not pay a dollar to go to medical school and i think we at this -- on this set and everywhere else have given you an enormous amount of credit. >> we're talking about felt. somebody felt this way that they thought i'm irresponsible for what i did does that mean i'm irresponsible? think about that. >> ken -- >> what i did and my wife did -- >> you were at a town hall it went from impeachment to racism they're all on that page you're not going to get around. >> back to interest. i think this should not go down. >> terribly misreported and misrepresented >> hold on i don't think rates should go down. >> yes. >> i think the economy is in good shape do i worry about a recession i worry about a recession every day. >> ken is with us. we're going to have much more with ken for the next two hours. >> never one to hold back, my

friend. when we come back, ken burns has a new documentary out and it's all about country music and its roots. fascinating industry he's going to join us in just a bit to discuss in the meantime, check out the futures as we head to that break right now. we are in the red. dow off about 42 points. more on the markets straight ahead. stay tuned, you're watching "squawk box" on cnbc at synchrony, we're changing what's possible. for instance, we know how your customers shop. and what they've already purchased. like this lamp. and we use those insights to show you what they might consider buying next.

mid-century modern, nice. that way, you can keep sending them offers for the perfect products. and that keeps them coming back. how's that for changing what's possible?

welcome back, everybody. wall street's index funds have achieved a new level they have $4.27 trillion in assets as of august 31st that is more than the $4.25 trillion in actively managed funds. that's the first time the index funds have ever had more assets than their actively managed counterparts. still to come, a 16 hour tour of country music. ken burns explores he is our special guest. we'll talk about the business of c country music when "squawk box" comes right back. time now for today's aflac trivia question. nasa unveiled its first space shuttle, the enterprise, in

1976 how much did it cost to build? the answer when cnbc's "squawk box" continues we think you would really shine in the aflac program. aflac! coach saban we have health insurance. did health insurance pay for everything? no, we still have bills. aflac gives you money directly to help with those. aflac! and your deductibles, knee brace, whatever you choose. aflac sounds like a winner. umhum... umhum... we try. get help with expenses health insurance doesn't cover. get to know us at... duck: aflac! dot com

the riskiest job. the consequences underwater can escalate quickly. the next thing i know, she swam off with the camera. it's like, hey, thats mine! i want to keep doing what i love. that's the retirement plan. with my annuity i know there's a guarantee. annuities can provide protected income for life. learn more at retireyourrisk.org

now the answer to today's aflac trivia question.

nasa unveiled its first space shuttle, the enterprise, in 1976 how much did it cost to build? the answer, almost $10 billion ♪ ♪ all right. our next guest's new film documents the roots of country music and the start of music as a business in this country let's welcome documentary filmmaker ken burns whose new film for pbs is "country music" and anybody who's seen anything you've done, ken, i can watch anything you've done, but this really appeals to me, too. 16 hours. >> 16 hours. >> it's surprising. >> that's not enough time? >> not enough time. >> eight sessions. >> eight episodes. eight two hours. one is a little bit more than that i was totally surprised by the african-american influence on early country music, about the role of women, strong women from the beginning, the original american guitarest is may bell

carter of the carter family. about the tensions between commerce and creativity. but i was not prepared for the emotion. i'm a child of r&b and rock and roll the emotion in this. when you hear hank williams say the silence of a falling star lights up a purple sky and as i wonder where you are i'm so lonesome i could cry >> right >> i mean, this is poetry mixed with music which is the fastest art form there is, and it is one of the dominant art forms. >> uniquely american jazz, too, but jazz has spread to become a global -- >> so they're all the same they're all variations of the same thing we tend to think that jazz -- or that country music is a separate one thing. it's not an island nation. you don't need a visa or a passport it abuts jazz and blues and rhythm and blues and with rhythm and blues, it's the parent of rock and roll and it abuts country and gospel and folk and classical and rap and all these

things. >> if you've seen "walk the line" or anything about johnny cash, you know it's -- >> he's the patriarch of the whole story here. >> right >> we started with the carter family, which he marries into and we end with his death at the highlight of his career when he's working with a rap and hip-hop producer rick reuben there's no borders in country music. that's the interesting thing commerce and convenience categorizes this stuff into these categories that just don't work. >> you've seen "personal jesus." that is haunting. >> he insisted in doing a gospel show in everyone of the things he did and his tv shows. >> there are struggles, too, as you point out. w wayland and willie go to nashville. >> willie goes to nashville, he gets drunk and lays out in the middle of broadway expecting to be run over. he wakes up, comes back, leaves nashville and can make it in texas and he warns his buddy,

wayland, don't go. wayland goes and says, i'm doing it on my terms and totally revolutionizes artist's control of where they can record, who they can record with, what kind of production values that they're going to have. so that outlaw movement, as much of us celebrating its otherness, was actually a wholesale takeover of the music business at the time. >> ken burns redneck. >> all my people come from the mountains of virginia. >> you were a hillbilly. >> it's in your blood? >> it's in my blood but it's in all of our blood because it's connected to jazz. >> what's the origin >> so the origin is essentially an intersection of commerce and technology when you've got a phonograph, which has been around for a few decades and this new medium of radio in the 1920s, you've got what were called race records, meaning the blues, being sold and then broadcast and then somebody said, well, i wonder if there's a market for this old time hill country music which then became hillbilly music

which then became country and western which then became just country. and so the creativity and commerce went hand in hand sometimes they fought, sometimes they didn't. when rock and roll was dominant in the '50s and country music sales died, nashville scrambled and started producing the nashville sound, smoother strings, no fiddles, backup singers, not scratchy nasal voices and somebody asked chet atkins, what is the national sound? he jangled the change in his pocket and said, that's the national sound meaning it was a business proposition and all of these things coincide. you're not reaching people unless you're in concert with a business formula sometimes that works to the art's detriment. >> right. >> sometimes it works -- >> from a business perspective how is country doing relative to the others >> so right now? >> right now. >> oh, it's huge second only to rap and hip-hop.

>> hip-hop -- the gulf between where country is relative to rap and hip-hop, is it very close? >> relatively close. it wasn't always that. this was hillbilly music looked down upon by most people the songwriter harlan howard called it 3/4 of the truth it means it's speaking about universal human emotions that we all feel, like i'm so lonesome i could cry. about love and loss. and it's only because we don't deal with that that we disguise it and say it's about pickup trucks, good old boys, six-packs and beer there's a minor genre that's about that on the break you were mentioning songs that are specific to the intimate relationships between men and women and country has been able to do that the way r&b, and i'll tell you something. when ray charles had creative control of an album for the first time in his professional life, he shocked everybody in

his crowd by recording modern sounds in country and western music and the number one hit of the summer of 1962 was i can't stop loving you, a country song by don gibson. go back and listen to that this morning and that's a country song it's sung by a soul singer but it's a country song. >> ken, there must be a lot of video. civil war, if you needed old stills. >> i couldn't get an interview with abraham lincoln. >> exactly but i couldn't stop watching that even though it was all stills so you must have -- this is all video. >> we had 101 interviews only one of them is an historian. the rest are the singers themselves who know the history as good as any historian we've lost 20 of those people including meryl hle haggard we looked at 100,000 photographs and used 3300 in the final film and we listened to thousands of pieces of music for the 584 music cuts that are in there.

>> rock ain't rock either. the stones. >> they're all different every one of the beetles got into music through country music. ringo, it was gene autry and could you boy stuff. george harrison it was -- >> elvis. >> jimmy rogers and the guitar playing of chet atkins for williams, "i'm so lonesome i could cry. >> it's powerful >> i made it for andrew. i didn't make it for you because i knew i had you. >> you have wayland and hank's on his fourth generation. >> holly was the third episode called the hillbilly shakespeare. she ends the whole episode by singing a capella "i'm so lonesome i could cry." i got more texts and emails from people saying i was in tears i didn't think i liked country music. literally, i made it for you you can stream it. it's available for free from pbs. >> he did a nice thing for you. >> yeah.

i've been working for 8 1/2 years for you. >> somebody is. >> i know. i'm disqualified. >> you might believe in the american dream again. >> let me tell you something >> ken burns, thank you. country music is on pbs stations streaming online ken and ken. thanks for being with us conge've got a lot more mi up on "squawk. when we return, we'll talk markets and the fed when we come back the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3, hours. why the delay? cognizant is helping banks use digital technologies at scale to advance speed to market.

it also has the highest growth in manufacturing jobs in the us. it's a competition for the talent. employees need more than just a paycheck. you definitely want to take advantage of all the benefits you can get. 2/3 of employees said that the workplace is an important source for personal savings and protection solutions. the workplace should be a source of financial security. keeping your people happy is what keeps your people. that's financial wellness. put your employees on a path to financial wellness with prudential.

here, hello! starts with -hi!mple... how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today.

♪ ♪ ♪ ♪ really? [horn honks] man this is what i feel like when i wear regular shoes, cramped and uncomfortable. we can arrange a little upgrade. which is why i wear skechers... wide fit shoes.

they have extra room throughout. they're like a luxury ride for my feet. try skechers wide fit shoes. so, every day, we put our latest technology and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes than anyone else in the country.

doprevagen is the number oneild mempharmacist-recommendeding? memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.

welcome back to "squawk box. want to get back to the markets as we count down to the fed statement coming up on rates later today. joining us is portfolio manager at douglas c. lane he's a cnbc contributor. mike santoli is in the house cnbc senior market contributor and a man who's been holding his tongue all morning, ken langone is here. >> being nice. >> sirat, what do you expect to hear later today well, i won't make it a multi-part question. >> i think we get 25 and then the question is what do they say from there i do think they'll say things aren't as bad as everybody expects. >> right. >> is that ghusd or bad news is that good news/bad news or is that bad >> if they go that way, i think

that's more -- the market will perceive it as bad news because they're probably going to think that 25 and done. >> so you want them to say that, ah, maybe things are not as good as we want them to be. >> i want them to say what the truth is i think the reality is like we need people to tell us what's really going on as opposed to trying and see where you think the market is going to do. whatever they think the market is going to do, something else will impact it look at oil. there are always uncertainties going on but i think getting real data and real facts would be really important. >> you know, what i worry about with lower rates, i worry about people disregarding risk and that's scary, that's how you get in trouble. >> speaking about risk. >> what do you think >> obviously, that's always the concern. we've got a quarter point rate cut in july and the market did not take it as an excuse to add more risk. it backed off. it's not the cost of money that's necessarily the trigger for whether people are going too

get reckless. >> look at how big private equity is today. >> sure. >> overall that's all interest rate related all interest rate. >> and balance sheets. >> all i'm saying is i hope people are mindful, okay when you borrow money you have to pay it back. >> there's a group on the fed that's making that that's why they voted against the rate cut in july and it will probably happen again. >> speculate what we hear from powell and the same question that sirat just spoke to this issue of what the market needs to hear to go higher and what could result in it going lower. >> the pattern is the market wants to push for a little bit more and more clarity that we're going to get more. honestly, i think the instinct for powell is going to be to preserve flexibility because what's happened since the last meeting in terms of their major inputs u.s. economy has shown to be on firmer footing inflation ticked up a little bit. the yield curve was slightly uninverted again there are a lot of these things you thought it's a no brainer. they're not going to close the

door they're still in the mode of saying what we're doing now is about sustaining the expansion, not necessarily rescuing an economy. >> i think the technical factor i know doesn't mean muchbut th yield curve just when you look at it from the outside, if it inverts it just causes the algos to start selling. >> talking about technical factors, what was your reaction to what took place in the short term repo market yesterday morning? the rescue effort that the new york fed took on >> it was a little delayed in terms of it happened, but i think it's important that they do those things. that's kind of what you want them to be there as a backstop to if things happen in the economy and things are bad liquidity is important >> is that a blip or is that going to be a signal that we're going to -- are we going to look at this and say it was a weird technical thing and be we'll forget about it or when people write history three, four years from now to the extent there's a problem we'll look back at that? >> i think it's a mostly technical thing. it's a clog in the plumbing in the short end but related to real things, which is massive

treasury issuance is packing bank balance sheets. there's more collateral out there than there's cash to serve it that's really the main cause banks are a little bit constrained in terms of how they can make markets in this stuff and lend cash. >> i would feel a little better if the people in that room, some of them, had some practical business experience. they're academics. >> jay powell had some practical business experience. >> some. talking about people that understand how it works every day. and what worries me is at some point we're going to have to pay. we're going to have to pay for the freedom that we have in borrowing money because people think if it's that cheap i never have to give it back. >> and the offset is when you start raising again, the negative shocks that come with that i mean, we're so low as it is. i just don't think you go lower and people are going to borrow more it's already really low. >> low compared to what? we're going down today to just

under 2% in the short end. that's one of the highest interest rates in the world right now. right? so that's the world we're in. >> right are you looking around the globe or historically? >> relative to where we are it's very low relative to the rest of the world, but then also we have much stronger growth and we have a currency that's not depreciating. >> we all of a sudden got a growth scare as soon as real interest rates got above zero. how strong are we in terms of momentum we don't know. >> i'll tell you something else, i give the banks a lot of credit i'm really -- i think the banks today are in the best shape they've been in certainly in my lifetime i think notwithstanding that there's a shortage demand, i don't think the banks are going to drop their standards. that's important because if we get into a bad period, this time around the banks are going to be there and particularly i saw mike last night. we didn't get a chance to talk i'm impressed with the guys running the banks, jamie, mike

moynihan, mike they're solid business people and they're not going to do foolish things. >> a couple of the ones you just mentioned have done well, bank of america and jpmorgan. >> new high. >> they've done very well, too financials in general have not done well because of the low interest rates. >> because they're more -- they're more focused -- these big banks have a diversity of business activity. jpmorgan has a robust asset management business, big time, and they do a hell of a job. i say that because i'm a customer of theirs and i'm partial because i own their stock. i'm a fan of jamies. >> our over weights are in financials they've got well-run businesses. >> not given any credit for it. >> to the credit part, they're not giving credit easily away. >> that's what i'm saying. >> but they're trading at 11 times earnings, 10 times earnings, discounts to book. i mean, look at morgan stanley, jpmorgan. >> blackstone holdings. >> if you do get this kind of rotation we saw last week at the

start of it, you're going into a value rotation of companies that have secular growth rate if you have patience and you're not just looking for momentum, i think that's an area it will take a while to play out. >> by the way, you mentioned morgan stanley these other banks, morgan stanley, goldman sachs, merrill lynch, they're doing a good job, too. i'm very comfortable and i think if we had a bit of a recession it might not be a bad thing. >> that's interesting. okay we've got to go. >> sirat, thank you. mike, thank you. good to see you both. when we come back, taxing charities. the economists behind the wealth tax say the rich should be taxed on what they own and what they give away. robert brink joins us with a preview. what do you have >> good morning, becky under the creators of the wealth tax the bill and melinda gates foundation would pay over $1 billion a year in wealth taxes we look at the planned costs and taxing charities coming up after the break.

today's big number, $428 billion. that's how much money americans donated to charity in 2018 according to a report by giving u.s.a. should be guy a promotion. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis. when didwhen i needed ton? 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.

we're changing what's possible every single day. with technology that helps you offer shoppers a better experience. take your company's app. we can add in all sorts of capabilities, which help your customers manage rewards, offers, and payments on the fly. and now, applying for credit can happen in a flash. that way, more people can start shopping with you on the spot, wherever they are. how's that for changing what's possible?

fushing for a tax on giving. they say that as part of a new wealth tax, certain types of charity should be taxed to, quote, curb abuses the first is private foundations which have about $850 billion in assets so bill gates would be taxed on his $100 billion in personal wealth along with the more than $40 billion that the bill and melinda gates foundation have. that would include, of course, money given to the foundation by warren buffet so warren buffet's wealth would be taxed as part of gates's wealth the economists say that people who give to donor-advised funds or private foundations still control that money until it's distributed to charities so, quote, such wealth constitutes individual power hang on, ken we're going to get to you. i know you're going to speak up on this. and, quote, it makes sense to

make such wealth taxable warren has not publicly announced how charity would be specifically handled in her wealth tax the tax, of course, is an annual tax 2% on over 50 million, 3% over $50 billion what they're not saying is when you give $100 million to the langone nyu medical center or the harlem children's zone, that would not be taxed what they're saying is when you put that money in a foundation or donor-advised funds which is essentially warehousing that wealth, not going to charity, they say that should be taxed because you still control it but it's not doing any social good. >> you have a legal obligation once you put it in there to pay out 5%. >> with foundations. not with donor-advised funds. >> that's 850 billion. that's the biggest piece you're talking about. >> yeah. yeah >> donor-advised i don't understand what i'm saying to you -- >> you've already got -- >> all the money that buffet and bill have put in there, 5%'s got to go out every year.

>> correct. >> that's automatic. it's a guarantee they're going to get -- if they kept it themselves they have no obligation. >> some would say 95% isn't doing any good and has already been written off taxes and is not being counted as their wealth when it should be because they control it. >> the one thing this nation ought to be proud of itself for around the world, and this city, is philanthropy. >> absolutely. >> philanthropy is a decidedly an american thing and a new york thing. >> that's why i want to be clear. they are not saying you should tax the philanthropy you do. they're saying when you have a foundation that sits there for eternity. >> can i put a fine point on this. >> i'll take help wherever i can get it. >> i think there's a couple of issues here. the first is what i think they're really looking at, i haven't talked to these folks directly but a lot of people around this issue, is folks in a windfall year, in a windfall year take that money and rather than have it taxed put it into

their own personal foundation. as a result that money effectively does not get taxed and is not used for basic services you get to direct that money. >> if you didn't put it in, you don't have the obligation of paying that 5%. >> you eventually have to pay it out, but the question is in these windfall years how should people think about that? by the way, the flip side, i would make this argument and bill gates has made the argument, one of the biggest challenges is if you have a lot of money, is you are giving it away smartly in one year forcing people to give a lot away the first year doesn't make sense either there's sort of a balance. >> one of the things i admire about your philanthropy, you don't just write a check, you give your lead othership, wisdom, guidance. >> that's stretching the point when you say i have wisdom, okay don't get carried away. >> my point is shouldn't you give it while you're alive instead of putting it in a foundation -- >> i've got to -- hold on, ken

new jersey congressman josh g gottheimer you're the other half of the conversation, ken. what's the name of your group? >> problem solver's caucus. >> you're barely a democrat. probably not in favor of higher taxes at this point when you see what's happening in new york and new jersey now carl icahn is gone enjoying his money in lorida. >> i'm a proud democrat but i don't think the answer is at all to actually raise taxes on charitable giving. i think that's a big mistake you'll disincentive advise people from giving you want to encourage and ensure that money actually gets to charities and goes out the door to help people, that's the purpose of giving, but if you make a decision in that year to give it to a foundation, right, to make a charitable contribution, we should encourage that in fact, we should celebrate that the idea that we would do anything to disincentive advise it is a huge mistake. >> i don't have a foundation for one reason i want my wife and i, we earned

it, to decide where it's going i don't want to put it into a foundation where 50 years later somebody's giving something to a cause that i would not have any interest in or i might resent. but the bigger issue here to me is this. believe it or not, i have five years to earn enough money to write off -- when we make a big -- for example, when we paid all that money to nyu, there was no way i could earn enough money in those -- because it's a 30% limit on top of that. >> right. >> that was a give away with no tax benefit at all. >> right. >> nothing changed in my life. not one -- my wife and i haven't given up -- >> ken, you're doing it right. the question is what about those who take the tax windfall. then they end up hiring their family members -- hold on -- >> like the clintons oh, yeah like the clintons. >> bingo. >> christ, everybody is -- >> shake my hand on that that's true and it's a problem. >> worse than that, she had all of her campaign workers --

>> a huge problem. the point is there are people who are abusing the system you might not have abused the system if you want to use the clintons as an example, go for it. >> how about gates and buffet, they're not abusing the system they put billions of dollars -- >> this is not an argument about the gates and buff fets. charity at large and the fact that there's a lot of wealthy people who have used charity and abused it paying their families, paying for planes, paying for all sorts of things. yes, it gets put into charity. there are costs on top of the charity. let's have a real conversation about how this works. >> let me tell you what bothers me a little bit. a lot of these people that are making these decisions will give you all the barbed wire you can eat for nothing. that's their charity they haven't given a nickell away and they're sitting here saying, be careful it works in america. philanthropy -- go to colleges, go to universities. >> i agree with that i think ken's making a great point. we have to be very careful with everything we do we should make sure there's no abuse, make sure the money gets

to charity we have to be careful not to disincentive advise charitable giving just like we need to bring tax cuts back and all of these things. >> are you on board with a wealth tax, an elizabeth warren wealth tax >> you know the answer to that of course i don't believe in that i think we need to make sure -- >> i'm confused. >> i want to have a coming out party for the republican party membership josh >> every time you're on i say the republicans are leaving the lights on for you when you want to come home. >> there are plenty of fiscally responsible democrats. >> i want to throw the party for you, josh, when you come out of the closet >> let's stick with charitable giving today. >> okay. >> you don't want to talk about wealth taxes seriously, wealth tax is gaining a lot of momentum in a large part of the party -- of your party now and the republican party. >> i think it's a sliver of the party. >> really? >> that is -- that's not the answer i mean, the answer is -- >> josh, 2/3 of americans support it you talk about party leadership,

both sides, but the wealth tax is popular and getting a lot of traction, a lot of coverage. 2z 2/3 of americans support it. >> if you are in new jersey with a state level tax deduction where we got totally hosed, we've been paying more to help others let's talk about actually addressing real tax issues we have to deal with. >> joao degrees with that. >> reinstate the salt deduction. >> no. i kind of like -- that's not what happened to me. i liked it that these profitable states, i know they contribute a lot, andrew. finally they might have to get their act together, some of the salt states, right stop doing what you're doing it's not working congressman, thank you langone will be here -- ken will be here for the rest of the hour robert, you won't. >> "squawk" returns in just a moment tell him we're flexible. don't worry. my dutch is ok. just ok? (in dutch) tell him we need this merger. (in dutch)

it's happening..! just ok is not ok. especially when it comes to your network. at&t is america's best wireless network according to america's biggest test. now with 5g evolution. the first step to 5g. more for your thing. that's our thing. you spend days researching bed sheets. and weeks picking a dog bed. so why would you settle for just any bank? just do what you do with everything else. ask the internet! ask your friends. ask your co workers. we're pretty sure they'll send you over to us. because we're not just a bank. we're an ally. ally, this is pamela how can i help you? liberty mutual customizes your car insurance, so you only pay for what you need. i wish i could shake your hand. granted. only pay for what you need.

♪ liberty. liberty. liberty. liberty. ♪

♪ decision day at the fed. much of wall street expecting a rate cut but could we see a curveball from the central bank? >> shares of fed ex under pressure this morning. blaming amazon and a slowing global economy as it slashes its

outlook. vaping nation. how big could the stock be after the backlash from ecigarettes. the final hour of "squawk box" begins right now ♪ ♪ live from the most powerful city in the world, new york. this is "squawk box. good morning welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin we have langone, home depot co-founder, ken langone. >> you might not know he's here because he's pretty quiet. >> not a bad day today intimidating me, joe frightening me to death. >> oh, no. hard to do. >> first time he's been here when -- >> with me, the last four times. >> i was starting to get the signal he didn't like me. >> do you know when we see each other -- >> we hug. >> hug, sometimes kiss.

>> i give a kiss. >> i give a kiss >> you don't shave, i don't kiss >> all right we are down 40 points on the dow this morning a little bit weaker after the good week we had, nine straight days of dow gains. now we've sort of been stabilizing at least up a little bit yesterday after all was said and done. down today the nasdaq indicated down 20. the s&p off 6. treasury yields, when we had oil surging i thought maybe that would cause yields to strike oil comes back down a little and now this is moderating 177 on the ten year and the 30 year as you can see is back above 2% pretty handily. let's get you caught up on our top stories this morning it is decision day at the federal reserve. the fed's expected to cut interest rates today for just the second time in a decade although it is unlikely we will hear much about future cuts from fed chair jay powell the central bank's also expected to face some internal opposition if it votes for a cut with at

least two discents from regional fed president's likely crude oil prices trading lower this morning as saudi arabia said that production would fully recover from this weekend's attacks by the end of the month. the saudi defense ministry said it will be holding a news conference to provide proof of iran's involvement in the attacks on saudi oil's infrastructure iran is denying that it was involved in the violence but again we will hear more later today. fed ex reporting a miss on the bottom and top lines for the first quarter. the company cutting its full year forecast. fed ex is blaming the slashed outlook on higher costs, lower revenue from amazon deliveries and a slowing global economy trade war part of that fed ex shares down by 11% this morning. congressional leaders getting a chance to question some of the nation's top tech regulators yesterday ylan mui joining us with some of the drama that unfolded. good morning. >> reporter: good morning, andrew well, tensions between those federal regulators spilled out into the open yesterday during a

hearing in the senate. the ftc and doj admitted that there is a little bit of turf warfare over their duelling antitrust investigations into big tech >> i'll take that as a yes, things have broken down, at least in part. i'm -- >> that's -- yeah. i would -- i would agree with that. >> i cannot deny that there are instances where chairman simons and my time is wasted on those types of squabbles >> reporter: ftc chairman joseph simons and the doj got slammed by lawmakers on both sides of the aisle. mike lee said it doesn't make sense to double up on big tech and that companies could exploit their fight. >> doing so simply looks like both agencies simply want to have not just a slice of the same pie but the same slice of the same pie at the same time. this will have the agencies stumbling over each other and will inevitably undermine rather

than further the enforcement efforts of both agencies. >> reporter: now the senators pushed the agencies to be more aggressive in their investigations and after the hearing was over i asked dell raheem if he plans to interview sundar prihai as part of the probe. >> we may need to should our investigation lead to that i expect he'll be cooperating in this matter. this is important i think for everybody involved. >> reporter: guys, we will see if and when that interview does happen >> thank you, ylan we are going to talk more about all of the privacy issues. we welcome bob davis, managing partner at highland capital. ken langone is here as well. bob, the question i'd ask you is whether antitrust policy, as it exists today, makes sense in terms of how to address some of

the -- the size and scale of some of these big companies? one of the things we've clearly seen is the price for consumers has actually come down or at least stayed steady. we keep hearing from competitors this effectively is a tax on everybody. >> boy, first of all, good morning. this is a double-edged sword there's no easy answer in this one. it's hard to say for the big tech companies don't have monopoli monopoliestic power. the standard oils of the world, they bought all of the oil supply and the consumer was gouged what we're seeing with most of the companies today digital tech, for the most part with the consumer, that's free. google, i pay nothing for it facebook i pay nothing, it's free amazon brings a product to me for less money than anything i've seen before it's hard to look at where the consumer is harmed there's a lot of roadblocks out there that we have to be really

careful of i think this is where the regulators are right there's a real balance we look at i take a look at many of these areas and you start to say, what happens when amazon promotes its own amazon basics product in expense of all the other brands out there which they do over and over and over again. happened to google. >> people have been white labeling products in the retail world for as long as i can remember. >> they sure have, but in the retail world you at least have the benefit of walking down that aisle and seeing the product in the amazon world when you search for something, amazon basics, first, second, third, that's what you see. it's promoted to you in a really over powering way. i'm not advocating to break up amazon to be clear i'm saying there is a balance we have to find. >> what would you do, ken? >> i don't know what i would do. you think of how the productivity gains we've received in this country, which aren't included in gdp by the way, i think as a kid when i was in graduate school how i got to

new york city to the library an hour in, an hour out. i sit in my ipad. >> look up google. >> -- i've got everything there. >> my life wouldn't function if i didn't have amazon direct delivery. >> let's have some boundaries but we ought to be celebrating look at what china is doing. china is encouraging this kind of thing because it is a country asset, a major asset we have got tech geniuses in this country that we should be celebrating because it makes life better for all of us. >> hey, bob -- >> but we need a balance as well. >> yeah, i have no trouble, but let's not throw the baby out with the bath water. >> i'm with you on that, ken as a venture capitalist my whole world is about startups, getting young companies off the ground these guys truly have market power in a way that's been unprecedented. >> market power unto itself is not -- >> facebook with 2.7 billion users, that's a lot of users out there and when they gobble up

something like instagram for a billion, it's a rounding error for them consolidate the market. >> bob, here's the issue at least as i see it. a, there's nothing illegal about being a monopoly unto itself there's a misunderstanding the question is whether you created it illegally or are sustaining it illegally is fundamentally the question let's assume that it is a monopoly then what? you know, i'm thinking you're a venture capitalist you've invested in all sorts of consumer-related companies to acquire a new customer today almost by default requires you to go through facebook and/or google there's just no two ways about it but at least there's two players. no maybe a third with amazon? >> yeah, maybe a third with amazon of course, that's one of the things about these companies that makes them so strong as a software company and as a tech company, there's no marginal costs for incremental user for them as a consumer company i have

substantial marginal costs and that's all going to amazon -- i'm sorry, going to google and facebook again, i'm not advocating you break these apart. i think we need to find a right level of balance there's extremists on both sides of this issue. the folks hollering, banging to say break them apart, that doesn't solve anything they solve real pain problems for all of us. we need a little balance the other thing is we haven't talked about this. facebook is introducing its new digital currency, lira that introduces a whole new bag of worms should that be successful now we have facebook competing with fiat currency is the u.s. dollar something that's irrelevant? because facebook has 3 billion global users that are using its dollars or its currency lever? we'll see where that goes, but those are the types of things i think we need to think about important plays. >> bob, can i pick up the conversation for one second? >> yeah. >> one thing i want bed to talk about and get ken's views on, what's taking place in the ipo

market and a market you know well it feels like the bell has maybe rung or at least temporarily this wework delayed if not canceled, we'll see, ipo seems to be it you look at uber, you look at lyft, smile club direct, you look at some of these things, what do you think has happened here >> well, a couple of things. first of all, i wouldn't lay out because of a handful of ipos that says the market is damaged. i wouldn't under estimate the great value and the economic uplift that these companies have given to the marketplace i have a friend -- i have a friend, we call him eddie vacation he hasn't worked two straight days in his life he's not contributing. these companies are contributing real value, building real businesses into the u.s. economy and that's what's powerful that said, that said we have a handful you have to wonder where they're going. when a company in its perspective says i don't know if i'll ever make money, that's tricky when we were to grow parallel

its losses and revenue dollar for dollar, its losses outpace its revenue, that's a different situation. that's a world that i'm not accustomed to. >> what do you think >> let me tell you what, these values being put out on some of these companies is an argument i would use that we don't need lower interest rates there's a lot of money out there. a lot of money out there and, frankly, i think we don't need major surgery, we need some modifications, some tuneups. i'd be very concerned about messing with this whole area let the market decide if it wants to get burned. wework's probably got the message, hey, guys, don't forget they sold softbank $2 billion worth in january. >> yeah. >> for what valuation? >> 47. >> 47. >> blended down into the high 20s just to be fair. but, yes >> i'll tell you what -- >> i think part of the problem is you look at these companies and everybody wants the tech

label because the tech company trades at a high level it's tough to think of these companies as true tech one of the benefits of tech is we talked about this earlier, zero marginal cost wework has substantial marginal cost every location is a new set of leases that you find for themselves it doesn't exist they put this tech label on. wework is a property company, operating management company and in the best case we compare it in my opinion to the great hotel groups >> you know, supply and demand still works. where do we get a downturn and some of the vacancies. they're not going to move out, they're going to go broke. >> they have long-term leases. wework has long-term leases with short term leases. >> they're doing the exact opposite borrowing short term lending long term. nuts >> bob davis, thank you. >> great to see you all. >> ken is with us for the rest of the hour. who's about to get hit the hardest by the growing crackdown on vaping? we're going to talk to a top analyst about new government

bans and what ochgss tptions the industry's biggest players had i had to look over my shoulder the entire ride in so i didn't get in trouble in the car. no, i've never vaped you're watching "squawk box" on cnbc ♪ ♪♪ ♪♪ ♪♪

♪ ♪ 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. ♪ ♪

welcome back to "squawk box. dow futures down by 33 points. that's how much the market was up yesterday s&p futures down by 5. everyone is waiting to see what the fed has to say later today seventh person now has died in the united states from vaping related disease. according to california health officials. late last night new york passed a law banning flavored ecigarett ecigarettes. joining us, owen bennett it's good to see you. >> good morning. >> so who's biggest in the

flavored vape? who should we worry about for starters and how does it spreads? >> it splits between obviously retail and then online and age verified locations what happened in march, they targeted convenience stores. now they're targeting all flavors in all locations when you look at juul, it's removed flavors from convenience stores and now it's flavors online and age verified locations. flavors including mint and menthol, all of them a 70% plus and flavors including mint and menthol and then probably most at risk now is njoy who came on the scene in the last four months they have a huge portfolio of flavors. >> what are the chances that these are isolated versus

something that we're just seeing the beginning of it could be a chronic problem. it can happen the first time you do it? what kind of disease is this we need to know. >> from what we understand, it's due to a thing called acetate. it's not being linked to nicotine vape as of yet and so things like that i mean, this is our view one of the things which people worry about tobacco now is the threat and our view has been barriers do persist. one of the things that supports that is regulation we think regulation like this is a sentiment of tobacco, it takes a lot of the tobacco products off the market and ensures safe ones -- >> somebody can come in the market in four months and take 10% of the market share? >> yes they came in at an aggressive price point. they came in at 99 cents giving

devices away the consumables came in lower priced as well they can fund the mta which they need to do with the fda to get approval. >> let me be a entrepreneur. this is a brand-new industry, right? relatively brand new. >> yeah. >> this is a time to put a number on it if you buy it, you pay that amount and that amount of money goes into a fund for when they get sick, they get cancer, whatever they have, they're paying for their own health care the burden of health care -- we talk about the cost of health care in america. why should another person who's barely making ends meet have to pay for the therapy or health care of somebody who willfully, who willfully does things to themselves that requires extensive health care coverage

say we're going to have a fund which is going to be used to compensate or pay for the cost of taking care -- because it's going to happen. somebody said on television the other day, they're right, the less things you ingest into your lungs, the better off you are. your lungs are there for air, not for colored smoke or whatever the hell is -- i don't know the point is let's set it up where it's stand alone okay, you want to go ahead and kill yourselves, at least we've got the money to take care of you, you're paying for it. >> a great trojan horse helping people quit is where it started. >> that's nonsense. >> that's what they said that's how it started. >> there's a place for that, owen >> i think they are helping people quit. it comes down to now we don't actually know the long-term impact of vaping, correct. anything that's popped up around health concerns, this is using the legal thinner. not vaping itself.

popcorn longs has popped up. that's called diacetel it is used in certain flavors. in the u.k. that's banned within vapor. i remember five years ago when vapor started coming out there was reports that it contained antifreeze so you can continue to get these reports where people look at the science behind it, it's saving lives at present. yes, you can't say it's risk free but at the moment we know it's a lot safer than cigarettes. >> if you're quitting cigarettes, you don't need mango flavored ecigarettes or something along those lines to do any of those situations that was the -- when joe talked about the trojan horse, sure, we're going to help you quit cigarettes and here's 40 flavors that appeal to teenage kids or middle school kids and now you have an epidemic of kids who were never involved with this. >> i don't disagree with that but i think the u.s. is kind of unique in terms of it got out of hand the u.k., 25% of that market is

vapor. they have flavors but there's very little or small sku. >> where did i see 90% is flavored in sales here for juul, that includes menthol or mint. 90% of your revenue is in flavors. what does that tell you? >> yeah, i mean, juul, definitely that's appealing to teenagers. this is why they're taking action now removal of flavors if someone -- >> you don't need -- >> keep tobacco because the tradeoff then is go back to cigarettes, quit altogether which is obviously good or go to a tobacco flaivor. >> where is the proof that this actually saves lives that's a nice statement to make. shouldn't we have some documentation? i'll go another way. how many kids are vaping that wouldn't smoke that are now vaping that's the opposite side of the equati equation. >> sure. data thus far, which there's very little, doesn't say there's a gateway unto real cigarettes. >> give it time. >> in terms of saving lives, it's -- i mean, the data we have right now, it's 95% safer than

cigarettes in terms of the carcinogens, et cetera on that basis it is safer. we don't -- can't rule out the risk ten years from now. what we do know is what was happening actually wasn't working. people weren't quitting, people were dieing. >> in the '50s -- >> we've got to go we'll talk when we come back from break thank you. >> coming up at the bottom of the hour, some big break dagg at that from the housing sector we'll inyoth wn quk" returnshe

fun fact: 1 in 4 of us millennials have debt we might die with.

and most of that debt is actually from credit cards. it's just not right. but with sofi, you can get your credit cards right - by consolidating your credit card debt into one monthly payment. you can get your interest rate right - by locking in a fixed low rate today. and you can get your money right. with sofi. check your rate in 2 minutes or less. get a no-fee personal loan up to $100k.

comcast is stepping up its efforts to appeal to cord cutters. they're making the xfinity flex device available to internet only customers it gives customers access to netflix, amazon, prime video and hulu as well as a variety of live programming customers get two boxes for free and can rent additional ones for $5 a month >> sounds like comcast obviously our parent company, but it sounds like they are willing to cannibalize their own business in the cable business like they are -- >> somebody else is going to. >> that's right. when we come back, breaking data, the guaust read on housing starts just a few minutes away. "squawk" will be right back. ough retirement... dealing with today's expenses ...while helping plan, invest and protect for the future. so they'll be okay? i think they'll be fine. voya. helping you to and through retirement.

"have you lost weight?" of course i have- ever since i started renting from national. because national lets me lose the wait at the counter... ...and choose any car in the aisle. and i don't wait when i return, thanks to drop & go. at national, i can lose the wait...and keep it off. looking good, patrick. i know.

welcome back to "squawk box. rick santelli here live on the cme floor with breaking news august read on housing starts and permits. starts up over 12% 1.364 million seasonally, annualized units that's way above the 1.25 we were expecting it was a nice revision to last month popping it up to 1.25 which makes the 12 plus percent increase that much more juicy.

a little over 7.5% doing quick math 1.491 million seasonally adjusted units from 1.317. that was a bit less on the revision but nonetheless two nice pops in housing yesterday national association for home builders index popped nicely the best level of the year and we had strong industrial production so the recent spat of data has been pretty good albeit here we are at 1.78 and a 10-year note consider this, basically two weeks ago we settled at 145, the lowest close of the cycle. friday we were up at 1.90. you can see there's been an awful lot of volatility in august and september on treasuries >> on that, let's get straight over to steve liesman.

>> it was over subscribed. the lowest level coming in at 2.1. the weighted average, 2.2 on treasuries 2.24 on agencies and 2 point be point 26 on mortgage backs we came in we opened 3 3/4. went up to 4 1/2 remember the reason why that's a big deal is because the fed's trying to set this rate between 2 1/4. it looks like the fed took this on and put liquidity in the system it seems like a $5 billion differential some traders said if there

wasn't enough the fed might come in and do another operation. i didn't hear that from the fed. it seems like the fed is at or close its rate it's trying to set. >> steve, doesn't this really underscore that the topic of conversation by jay powell and company should be about the balance sheet and quantitative easing now i'm not saying i am looking to make an opinion on either but lowering 1/4 point, lourwering , lowering 75 would not have changed the conditions of the short-term funding market over the last 48 hours, would you not agree with that? >> definitely. it might have had an effect where people were holding off. the fed could come in other traders have suggested to me and do a longer term operation to put this stuff to bed for a little bit longer but it wouldn't do so with the fed about to cut interest rates. that would be a troubled operation.

people should have expected this the regulatory changes to more reserves and made a scarcity is something the fed can and should have done something about. so we're going to see whether or not the federal reserve takes some action to get control of its primary tool, which is its overnight interest rate. >> do you think they should lower rates today? >> my opinion? >> yes >> i'm -- i'm bewtixt and between. i look at the data it's pretty good we had inflation data on three-month average was topping 3% we've had wage data which on a three-month data was topping 3%. good industrial data prospectively, i don't think there's a lot the fed loses on this quarter point personally i would have preferred the fed hold off. >> i agree. >> hold its ammunition for when

things get more serious. the market pressured them. >> what's rick thing >> ken, i'll give you a one-word answer, no matter of fact, two word answer, absolutely not how's that, ken? >> i agree look at housing starts those numbers are phenomenal. >> yeah. >> unbelievable. >> let's get to that gentleman, thank you diane olick is here to talk about the big housing numbers we just got. >> yeah, it was a strong number no question. i'm going to say it again. up 12%. >> unbelievable. >> month to month. up 6% year over year i have to break it out multi-family to single family. big pop is multi-family. single family up 4%, 3%. the problem is we don't need the multi-family construction as much as we need single family. it's been volatile you did see the big plunge in mortgage rates in august that had the builders happy builders though yesterday warned in the sentiment numbers that there's this balance going between lower mortgage rates and fear over the economy which is

pushing the mortgage rates down. >> it seems like it's abated a bit in the last week or two. >> it has. we saw rates jump up a little bit. we still need much more single family housing we're not even near a million starts we should be over a million on single family. the problem is the price point, 75% of single family homes are priced between 250,000 and a million dollars. that is not where they need to be that's not where the entry level buyer is need to be lower. >> look, what i'm saying is you can'tmicromanage this. and if you get an excess of multi-dwelling, eventually it spills over into individual homes because people eventually move from an apartment where they're paying rent to a home where they have equity i think the good thing is the banks are holding pretty fast to the qualifications to get mortgages so we don't have happen what happened 12 years ago, 13 years ago. in other words, the loans are going to be a much more solid than they would have been. >> what do you think about the fact that so many people are moving out of the multi-family

apartments and moving into single family rentals? single family rental demand is huge right now and continues to grow. >> yeah, but that -- that corrects itself because what happens? if they can't move into a single family rental they still have the issue. am i better off continuing to rent or am i better off if i can come up with the 20%, if that's the number, that allows me to start having equity in my own home. >> you think it's ready for a correction there's an awful lot of private equity money in there. >> no, that's the point. part of that is the money is pouring in at some point it stops if it doesn't get a return. >> how come there just isn't more supply? how come they're not building more single family homes >> they will say land, material, regulation, cost they're so high they can't afford to put up the entry-level homes. >> cost prohibitive. >> no return for it. you have one builder, d.r. horton, which is the largest builder which has an express home. >> their price points are right. >> their price points are right. everybody made fun of them

no way, you can't build the entry level home they're doing very well. >> liesman, are you -- do you feel better about the repo andrew, do you feel better there may not be a too big to fail sequel. >> i really don't want to write another book. >> you were concerned. you were pale. >> i will tell you, joe, it reminds me of -- diane is talking about single family home i was a reporter in florida and i had to talk about sewage rates. lifting rates. i hate it when repo comes around if this would go away, i would be really happy. >> the viewers are going crazy >> more repo, more repo. >> are you getting that email? would you forward some of that to me, joe >> the problem is it frees up the subprime summer of 2007, nobody wanted to talk about it because everybody thought it was plumbing -- >> doesn't mean -- >> that's what we were told, not supposed to talk about cdos. >> i talked about it

listen, this thing has calmed down a little bit. it looks like it's okay. >> we'll see. >> we'll see if it creates the kind of dislocation. it's not a credit risk issue like it was back then. >> right. >> people are not not providing liquidity to the market because they're afraid a big investment bank will go down. there's a supply/demand issue that's regulatory, seasonal and has to do with the fed providing the right amount of liquidity. maybe they got control of it this morning. >> steve -- >> yes. >> a guess, you can't be wrong or right, just a guess, if the white house weren't making the noise it's making about lower rates, do you think the fed would feel any need to lower rates at this time >> in other words, if the president wasn't clamoring for lower rates would the fed be lowering rates >> we'll never know. we're speculating. >> you're speculating. the fed cannot exist in a vacuum i think the fed feels like the threat to it right now is existential in the sense that if it doesn't get this right you could have a popular movement against an independent central

bank this country did not really cotton to the idea of a central bank in the 1800s. it took jefferson everything he had and jackson got rid of it. there are the comparison between jackson and trump. we don't have time for that discussion. >> you're right. >> steve, thank you. diana, thank you rick, thanks. let's talk a little bit more about what wall street is expecting today from the fed and what a rate cut might mean joining us is david wessel he's at the brookings institution. also neil irwin is senior economic correspondent for the "new york times. and steve liesman who is not going away he's staying here for this conversation, too. our guest host ken langone also staying here neil, let me ask you one quick thought on what the repo activity means. is this something in this discussion, is this something that you kind of look at and say, it's okay for the moment? >> yeah, i think so. this isn't a solvency issue like 2007 was, this is a technical

mistake that the market made and the new york fed i don't view this as something that's telling us something about the economy. >> what do you think, david, in terms of what the fed should be doing today? >> well, i think that the repo sthing a technicality but i think it is a problem because there's two things the central bank has to do is move interest rates the right way at the right time and look like it knows what it's doing this undermines the latter i expect as everybody else does the fed to cut interest rates a quarter of a point i think there will be a lot of focus on what jay powell says going forward. he's had problems in the past explaining what is their reaction function as economists and market people call it. what will lead them to cut rates? i think cutting rates is the right decision there are risks to the outlook and the risks to having too much inflation are relatively minor in my view i think it's a close call and there's a lot of discussion and some dissent i think the really hard thing is for them to say what do they

expect to do for the rest of the year and not confuse people more than they are already. >> steve, what are the risks in terms of what he says and how the market reacts to it? >> well, it's kind of interesting. there may be some reporter out there, some enterprising reporter that's going to ask the fed chairman is this a mid cycle adjustment or not, right it was the phrase mid cycle adjustment that suggested this was a limited series of rate cuts that caused the market to have a bit of a fit last time around and then they kind of rethought it and it came back and it was okay. but the question is are we now in an easing cycle and really to david's point, a kind of framework has been lacking here david, i'm going throw this back at you you're going to cut rates and i raised my hand, i say, mr. chairman, mr. wessel, you're cutting rates based on which particular data? i get the idea that the outlook and the risks are bad, but what data do you point to for a rate cut, david >> i think they would have to

say that they're worried about the global output. the global outlook the slowing of the global economy. >> but mr. chairman, but mr. chairman, what data? what data? you said -- i asked you about the data you told me you were data dependent. now you're telling me you're not data dependent anymore, mr. chairman. >> i point to the german data and the japanese and then you'll ask me if you are the central bank of the world. >> exactly. >> they have to move based on what they expect to happen to the economy. is this risk management, mid cycle adjust , just a little bit to protect us against a bad downturn or do we think the economy is really tanking and this is the beginning of a series? i think the problem is he won't want to answer that question he doesn't have a consensus on the federal open market committee and unlike some previous chairs, he's not willing to say the heck with this big argument we had, let me tell you what my story is about the economy and where i'm going. i think that's why he's having

trouble. >> you know what i wish? >> what. >> i wish larry, lindsay, kevin walsh were in that room this afternoon. we need some more balance. i think that what's going on now with rates is nuts, nuts. >> from balance, you just mean people who are a little bit more hawkish on this? >> yes. >> kevin warsh said if they want to do anything, shrink the balance sheet. not cut the rate. >> look, we want to be careful that we don't get the world to believe we can manage the world into prosperity. recessions are like diets. you need one every once in a while. i'm not saying we should force one, but i think this concern we have and what's going on here, 1/4 of a point, what the hell does it mean? it's the message you're sending that bothers me. you're again encouraging excess of speculation and that does not have a happy ending. >> wait until 2021 until the next recession, ken? >> for the next diet. >> kidding i'm kidding. >> by the way, i don't see it -- maybe steve may disagree with me

i think this economy is in pretty good shape. >> i agree with you, ken i've been the one saying it's in good shape. >> we're finally in agreement. >> i enjoy agreeing with you, ken. i think you're a nice and smart guy and been very successful congratulations on all of your philanthropy which i drive in new york which is a big help to the community. >> i hope you can use us. >> i hope i don't need any of your stuff. >> you don't want to have a physical or something. >> yeah, but not for the serious stuff. >> no, no. right. >> i think the economy has been in good shape. a lot of people abandoned what they thought about the economy i want to give neil the last word he's been patient. neil -- >> you have to answer this quickly. >> if you're powell, how do you work your way out of this issue? >> go back to the mid cycle adjustment idea. useful idea that markets didn't like last time but it looks more accurate than some of these other descriptions. >> guys, bye-bye good to see you. when we come back, a special preview of cnbc's delivering alpha conference tomorrow.

the whole investing world will be watching plus more with our guest host ken langone you don't want to miss tomorrow. everybody from vice president ndnce to chairman of the sec a more "squawk" returns in a moment

major developed market out there not in negative interest rate. >> the fed is expected to at least cut rates. they've communicated this pattern. what's your sense of how this will work? >> the fed is in a tricky situation right now. on one hand i don't think the economy needs the stimulus that

an interest rate cut would deliver but on the other hand i don't think the economy is running so hot that an interest rate hike would be necessary. >> thank you so much >> thank you welcome back, everybody. we are just one day away from cnbc's delivering alpha investor summit which brings together some of the world's most influential money managers and political figures. leslie picker joins us with a look at what we can expect tomorrow. >> hey, becky. as you've been talking about all morning, these are unprecedented times in the markets there's more than $16 trillion worth of negative yielding debt around the world passive funds make up half the stock market and geopolitical strife seems to increasingly whipsaw the market tomorrow legions of investors, politicians and investors will convene to discuss the issues and what it means for your portfolio. vice president mike pence will be sitting down with joe

blackstone's steve schwarzman will be speaking with becky. jay clayton will kick off the event with andrew. i'll close it down with apollo's josh harris. other speakers include david tailor and nelson peltz who just two years ago battled one another in one of the most expensive and bitterly contested proxy fights and mary erdos overzing a trillion dollars in assets ms. beschloss will talk about how to do well by investing well it will continue throughout the day. >> thank you got to prepare for everything, i guess. >> get ready here we go. >> 24 hours. >> let's get back to our guest host this morning, ken langone, co-founder of invamed associates and home depot i'm told that ge is on your mind >> absolutely. >> it is >> i think larry kulp is doing a hell of a job.

i think what's left has got good futures, aircraft engines, medical. i think you've got finally some strong governance there on the board. i'm very impressed with the board and i there is real great value here the tragedy, in 2000, g ee had $106 billion market cap. today, ge's market cap is one third of what home depot's is. ge's is 80 billion -- >> you're 250. >> the destruction of value. i want to really see what the s.e.c. is going to come up with and what went on over there. okay there was a lot of rosycomment made and a lot of encouragement about a bright future. just get the press releases and read them. i think something needs to be done here. management needs to be held accountable, particularly where they promise the promised land and you don't get there. >> this is the first time you're buying shares yourself since you left the board. >> when jeff asked me to leave

the board, i waited three months so i wouldn't have to file and i sold all my stock. this is the first time i owned ge stock in 14 years i think culp is the real -- i'm very impressed with him. i'm very impressed with the board. another one i'm really excited about is option care it is a home infusion. and madison deerborn controls it, they're great people i think they're going to a hell of a job with it in two years you'll have reimbursement. >> home infusion -- >> people going to the hospital, they get vitamin or treatment for a disease, they come to your home and that's much more efficient and one more way we're going to control healthcare costs so i like the economics there. the proof of the pudding is in the eating the fact that ge -- think of the world without ge engines wouldn't happen. so -- we'll get through -- boeing, by the way, going to be

fine they're going through some agony now, but these guys know what they're doing and they had a glitch and they'll fix it. >> all right thank you. >> okay? >> yeah. okay >> we want to get to the new york stock exchange where jim cramer joins us now. let's start with fedex you're watching that stock, which is just really taking a beating this morning, jim. >> yeah, there was open rebellion on the conference call the analysts were doing a combination of saying, look, you're executing poorly, you don't know how to forecast, and i've got to tell you, fred smith pushes back and says, look, this is a different kind of environment. it is an environment where we arewhistling past the graveyard, the european problems are from china, we're causing the china problems in the trade war, and it is going to get back to the united states i heard you talking about what information would say the fed should cut i think that while fedex is a bit of a microcosm for the domestic and international economy, there is plenty of ammo

in this call there is a big company that makes you feel like you should be nervous about the economy i like fred smith very much. i think he's a really good economist and it is a surprising conference call. one that is very negative. >> and so would you pick the stock up or no >> it is just too hard i think that they are trying to expand everywhere, which is terrific they have to do that at the same time, they have to retrench because of china. don't know if there will be a deal and they have to go back in china. still integrating europe they don't have a forecast that anybody trusts you have to have a lot of hope to be in this one. i would prefer u.p.s. here which i think has things more under control. >> your point was the fed might be in a position where it should cut, i think what you're saying, isn't it, jim? >> definitely in a position to cut. it is just a very dispiriting call, and fred thinks we're all being way too rosy about the

economy and it is a matter of time he says the consumer economy is strong does fred have an ax to grind? i always felt he doesn't he was on "mad money" last time. i think he's a straight shooter. a lot of people were surprised that the last bit of amazon business was a little more lucrative, but you know ken, fred smith is a hard working, good, smart guy. >> don't bet against fred smith. he's a hell of a operator, a visionary and gets the job done. >> jim, want to weigh in on ken's view on gm ge rather. >> i think larry culp is amazing. people do not understand at the same time he's looking to find the balance sheet, dealing with the long-term care, he's also addressing power and i also really agree with ken about the accountability here. there were projections made on "mad money" that this company was going to earn a couple of bucks. and the projections were just -- ill advised. i'll give them that. but larry has been dealing with all that fallout and does it with a great attitude. he's just a remarkable can do guy. he's a bit of a belichick in

him, let's get this job done, let's hit our assignments, and i would not bet against him either he's fantastic. >> he's been buying the stock himself. the stock -- >> larry culp? >> yeah. >> jim, can i ask you real quickly, i'm just trying to play out what happens if that amazon business was more lucrative than it had been expected the last tranche of it, that means they were paying a lot of money for a reason, hard to do is this going to mean potential problems for amazon not being aebel to get the stuff delivered the same way, the bonanza for u.p.s. or the post office or whoever else is picking it up? another side to what just happened with that trade. >> the end of january, fred said there was 1.3% of the business, it does sound like it was lucrative. amazon had a lot of asks, and the asks seemed like they were too much versus the other business that they can pick up to replace it. it sounds to me like if you heard the call, you would say

amazon has got to pick it up itself, which is not good for amazon >> or for customers who think they're getting stuff in the same amount of time, maybe they don't. >> yes, yes. i don't think u.p.s. is going to bite on it u.p.s. has a good business model right now. there was a lot of confusion on the call that people thought that amazon was smaller this last bit was lucrative there were people who i thought were questioning fred's abilities, and questioning whether fred is being up front and i think the answer is he's got great ability and he's totally up front and the reason why they're so dispiriting, very few ceos do that anymore. >> we got to mention this, this tweet from president trump, i've instructed -- i've just instructed the secretary of the treasury to substantially increase sanctions on the country of iran. this is a tv. >> maybe this is the response. >> an economic shot across the bow instead of some other type of shot across the bow.

>> yeah, they're just -- they're a scofflaw great to see you last night. and just love everything you do. that can i say >> jim, just quick, fedex is high fix cost business, so that incremental buy is profitable. >> we'll leave it there. see you in a couple of minutes don't mess an exclusive interview on the "halftime report" with jeffrey gundlach, 12:30 eastern time we're back in a minute as soon as the homeowners arrive, we'll inform them that liberty mutual customizes home insurance, so they'll only pay for what they need. your turn to keep watch, limu. wake me up if you see anything. [ snoring ] [ loud squawking and siren blaring ] only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪

doprevagen is the number oneild mempharmacist-recommendeding? memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life. ♪

all right, want to thank ken langone for being with us this morning. always a pleasure. come back soon. >> i sure will. >> lots more to talk about next time and a lot happening today. make sure you're watching to hear what happens with the fed decision see you tomorrow with delivering alpha. now it is time for "squawk on the street." ♪ good morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. the dow is up 9 in the past ten days fed decision at 2:00 repo squeeze quiets down new york fed operation for a second day today europe is green. uk inflation disappoints oil down as the saudis give more intel on the attacks and the