box" begins right now. >> announcer: live from new york where business never sleeps. >> good morning, welcome to "squawk box" here. i'm becky quick with joe quick dow futures are up s&p up about 4.5 and nasdaq up about 1.5. markets ended a three-day losing snap for the s&p 500 and nasdaq. looking at up arrows again biggest gainer yesterday was the nasdaq looking at the u.s. treasury market at this point, it looks like the 10-year is yielding 1.74%.

>> a couple of big stories this morning. peloton pricing the ipo. price tag at $29 a share raising about $1.6 billion now valued at roughly $8.1 billion makes about a billion in revenue but loses $245 million annually. now under the ticker pton. the peloton ceo will join us live this morning. if you have questions sen them in #peloton. $245 million in losses we'll talk about the math of

that and where they see profits and what it all means. >> does anyone know about the treadmill? >> i do. it is expensive. it is about $4,000 the bike is about $2,000 >> plus. >> i have one. the bike is quite a piece of equipment. it is heavy. it is really well made >> i just got one two weeks ago. >> you can have someone screaming at you >> you can go outside. it is there, all free. >> eamon javers is with us >> the hardware is a high-margin product. higher now than an iphone. it is the services and the investment and the media

component costing them they are doing a lot of build outs >> is that recurring cost or eventually be built out? >> their argument is that those are up front capital expenditures they need to do they are building in europe, so it is not just trainers with different accents. >> it is not like you pay a trainer one time >> a lot of it is building facilities disclosure that cnbc's parent company is an investor in peloton. separately, softbank planning to put an extra $1 billion into wework the deal that was put together before the valuation was

dropped. noting that their talks are in early stages that $1 billion investment would come and benefit some other shares of previous investments >> so it is not a clean up >> if it happens, they'll get $1 billion but softbank will get more of the company for that gm and the uae -- >> uaw >> it is early there could be a deal. don't jump the gun have you heard about a deal? >> that would be news. the uaw and gm said to be close to a deal to end the strike.

negati negators have been meeting and talks intensifying >> see, eamon, it is not just you. >> that is why you are here. i can talk exercise equipment and washington stuff >> obviously you don't need to health us about that javers. it is written all over wall street is watching headlines coming out of washington this week eamon javers is with us. you spent a lot of time on this with sully awesome. >> yesterday was a day covered by impeachment talk. the president really frustrated yesterday that this impeachment talk really stepped on what he felt was a successful week at a press conference here in

new york, i asked him why, sir, is it appropriate for an american president to ask a foreign leader for information about his ukrainian rival. he gave a long answer. here is part of it >> the new president of the ukraine is looking to stop corruption there is a lot of corruption going on i just told him about senators that threatened him with no votes and no money coming in thats what people are trying to say i did. i didn't do it it was perfect there was no kwquid pro quo he didn't really answer the question today, we'll see another day dominated by this story.

we'll possibly see this whistleblower complaint itself it was declassified last night and may be released to the public this morning. >> can i say that eamon did that entire thing without anything written. that was all off the top of his head he did not say take a listen that was really good >> at the end of the day, if you could get rid of take a listen going forward. >> my jargon going forward >> when they talk about the prospects going forward. but do you know who said it best yogi the hardest predictions to make are the ones about the future. >> so true

>> insanity and brilliance, really close to each other >> so you are an outside exerciser? >> i need to swim and jog a little bit but i don't get nearly enough exercise >> you need mental toughness there. >> i want to take you to one of those marine one departures and you can see the wrestling. >> still thin volume impeachment odds are up about 60 cents now. the finishing the first term are down in the high 70s >> that is low >> well it is 20 republicans and you've got like a half mitt is like a half at this point. you need 20. i'll tell you what i mentioned

i mentioned fliecher he's not a never trump but he's not all in. this is a five-yard penalty. not a 15-yard or half way to the goal it is not all the distance and certainly not something like a spearing or whatever where you would be deliberately hitting the guy on the chin. that was his point i think republicans will probably stick with that in the senate. >> but maybe quiet >> yes you saw lindsay graham say, if this is what you have -- >> nobody is saying this is good a lot of them have been really quiet. we'll see that whistleblower complaint. a lot of this will hinge on what

is in that complaint the fascinating mystery here is who is this person or why they made this statement. >> and interesting that elizabeth warren is arrest i don't know what happens to the stock market with her. i'm not sure if lee cooperman said the market doesn't open the day after. swro he was just kidding i would think the stock market would go up. >> what is interesting to me, we don't have the traditional chamber candidate. trump is not a free market capitalist in the sense of a mitt romney traditional

republican we have seen before >> he does like the private sector he's a far cry from elizabeth warren zwroo it help or hurt trump in 2020 and does pelosi take it to a vote going forward >> we can't rule out what a first-term impeachment looks like all the bad stuff is happening to the president in the first term i think people's minds are made up on this president unless we have some dramatic bombshell >> you are leaving >> i got to get on an airplane >> i'm taking a 9:00 flight. i'm going to have breakfast and then go. >> you should go to the airport and have breakfast >> sleep is more important than

exercise >> that's what i told the producers and they didn't buy it >> dr. scott and then dr. oz start branding now >> you are mentally tough even under no sleep well done. when we come back, more trouble for facebook looking to launch an antitrust probe. we've the details after this and looking at the biggest pre-market winners and loses the dow is leading the dow this morning. this is apple card.

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started a blog shared a picture shared a moment turn your wish list into a checklist. learn more. do more. share more. at home, with internet essentials. >> welcome back to "squawk box." facebook coming under fire again. reportedly opening an antitrust probe into the company according to a prodding by bill barr facing problems with the federal trade commission

getting to our guests this morning. welcome to both of you good to see you guys let's talk about where we stand now. markets, the dow 1%. s&p down 1.4%. should we be at these levels >> one way, we are near annual-time high we back a little above january markets selling this year or next as well that is not a terrible market back drop. it is hard to believe we'll get a huge amount of return at these levels >> we did see stocks move higher after they said the president

could come to a trade deal with china. what would that mean >> clearly one of the biggest concerns right now is the trade war. you've seen evidence of that everywhere you've seen pmis here and globally there is no question if the trade war were to be actually resolved, not just a paper deal for a few things but would substantially reduce uncertainty. you would see industrial sector do better. >> and the impeachment talks, what does that do? >> today, with the movement, we are back to where we were before the impeechment proceediachment.

>> can you see a new nafta deal? a new trade deal with china? what are we going to see >> hard to predict you'll get a tremendous amount of progress moving through those things would all be positive we could come up with a great deal with china. the way to think about u.s. and china, we are long-term rivals it is unlikely you'll get a deal so comprehensive to get a deal next or or the year after that getting a deal that would address all of the underlying issues, that would be hopeful.

>> is it starting to look clear to you that elizabeth warren is looking better >> as you know, i'm a life-long democrat but elizabeth warren's stated policies are not market friendly >> but you'd vote for her? >> probably yes. in we get a recession, president trump's likelihood goes down and elizabeth warren likelihood goes up i think the most likely scenario -- >> what do you think the economy would do over the next four years with elizabeth warren was

president? >> if you go back and look at the presidency and markets, there is really not that much connection between president and policy >> you don't think it matters -- >> i'm saying as far as the market is concerned -- >> you think 70% tax rates won't be a problem >> obviously, i don't want those kind of policies >> the market has worked higher under republicans and democrats. we had 70% tax rates >> you think it is okay? you need to look down below the surface to the details look at what happened to health care compared to the status quo.

you would get a little bit of pax in trade war and that might be good for industrials overall. there is not a lot of evidence to suggest one in terms of another. we are very late in the economic cycle. regardless of who is elected in the year's time, we are likely to face overriding slow down that will be the overriding key regardless >> that is the key it comes down to fundamentals. >> fundamentals of change. >> if we do get a president where earnings collapse, that will be a negative in the market. >> do you think down in venezuela, it doesn't mat who are is president >> we are a lot different. >> i know that, things do

matter don't want to say you are a socialist. democratic socialist versus free market sector. >> socialism around the world hasn't worked. >> i think if we look at the tax rate question, it has been the case there have been higher tax rates in the past. the degree of inequality now is close to unprecedent the especially in our lifetimes. it doesn't necessarily mean you reverse to a very slow economy you go back to where you were in the '70s and '80s. certainly the wealth tax that has been proposed, it could. >> you don't think over time the higher gdp growth helps? you are not a trickle down person, i guess.

>> i think because over the years, the majority of tax cuts go to purchases. >> we have to go >> i didn't have to say a word thank you for joining us coming up, i'm hopping on a bike with peloton ceo ahead of the company's ipo. i don't know if i should encourage you to see that and don't forget to subscribe to our new podcast. special content and the latest headlines. if you missed any of the show, you don't want to miss this. it just started yesterday. it is absolute li worth a subscription and a listen. look every day and go to your favorite podcast app and

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the leading luxury suv of all time. lease the 2019 rx 350 for $399 a month for 36 months. experience amazing at your lexus dealer. >> welcome back to "squawk box." big ipo today peloton under the ticker pton. i got an exclusive tour of the control room to see how the

fitness startup transforms a studio class to an at-home experience you may get to see me on a bike now. take a look. ♪ you are building your own hardware and software. what was that about when you thought about getting into this business originally. >> we all came from software he we said, can we be a software company. we said, it's kind of a dog's breakfast of uninspired hardware we decided we had to build the hardware with the media, we talked to some players and decided we could build more integrated experiences if we build the whole staff including the media. the stricter might break the

fourth wall and look into the camera and call you out hanging with amy and tammy k nice work. >> how much do you think of yourself as a media company versus a technology company. >> let me note, we have everybody on the tread here, his heart rate here. so this is a bit of a tech piece. >> right we strooem clo we stream close to 1,000 hours a month. we have 1,000 on hand and almost 1,000 hours of live shows a month. >> we should mention cnbc's parent company is an investor in

peloton. coming up at 8:00 a.m. we'll hear from john foley live on the set. it is at the high end and that is good for the company. the company is still not making company yet. >> it is interesting to see it as a media company valuation do you want a media company valuation or tech company valuation? >> it is hard. the hardware puts you in an apple plus category, or media or te tech i asked him, what are the comparables. this is a complicated one. we should talk to him about that >> i am a little naive as you know i was wondering, comcast

but it is a media company with content. if you think tf as purely an exercise machine company >> the other issue is, soul cycle, other companies are coming out as competitors. different services or media components this is not eamon oply because at the moment. >> i would be fine in virtual classes and not going to the gym but i need the sauna the way uber goes to uber eats, maybe we'll talk about a side business in sauna construction i need to be able to do that do you after you work out?

>> the visuals i'm trying to get away >> with me -- it is in the pool section of lifetime. all clothed. i think it is weird you went there. everybody is fully clothed there is a view of the pool, floor to ceiling windows looking outside. it is really nice. don't make it something dirty. >> i'm trying not to we we'll have me on a bike coming up >> i'm disturbed by that >> when the editor showed me i was disturbed. >> are they going to reuse that bike >> they are. the very pasty arms and legs coming up. you may want to change the channel. >> this morning, stocks to watch

including another big tobacco name getting crushed first, a look at s&p 500's winners and loosers. ♪

(classical music playing throughout)

>> announcer: welcome back you are watching "squawk box" live from the marketsite in times square >> time for today's executive edge a rash of ceo departures turning out to be a big year wework, juul and more seeing a shuffle for various reasons. from board room battles to investor concerns. there were 159 ceo changes in august that is up 28% from july

the most ever in a month since 2019 over 1,000 ceo departures. changing of the guard at the top. >> coming up, the crack down of vaping and stocks getting crushed. don't miss our interview coming up with peloton ceo. stay tuned to "squawk box" an cnbc >> announcer: today's big number 55 million that's how many peloton work outs were completed in the last outs were completed in the last year to managing your fleet...

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>> shares of british tobacco company imperial brands cut its profit amid regulatory scrutiny in the u.s. amid vaping industry in georgia and florida, they've reported their first vaping-related deaths bringing the number now to 11

altria and fiphillip morris international have ended merger talks. and juul ceo has been replaced speaking now with cnbc about juul's future. >> i think juul is well positioned to be highly successful in the near future. still working through the challenges we knew they would have they along with others in the industry will have to reverse the increase of youth usage of e-vapor products >> joining us now, garrett, head of research. you are reiterating a buy on phillip morris in the last three months, would you say it has gone 180 degrees?

this has been a tough period this is in question now or is it not? >> no. thank you for having me. it is a big concern, altria spent $13 billion for that equity in juul last year i don't think they saw this impending ban on flavored e cigarette sales that accounts for about 75% of juul's sales. that is just the mint flavor if you count menthol, that is another 10%. so that's 85% of their sales also a change in their strategy contemplating some layoffs >> at this point, garrett, do you know what percentage of the

usage is what you would call sort of rehab ill tative, trying to get off cigarettes and what is new juul users that are adopting a new way to get addicted to nicotine is it 50/50, do you know >> sure, the real concern as far as the fda and government is concerned is with teen vaping. studies show about 25% of high school students are vaping right now. it is with those flavored e cigarettes there have been no talk of cutting off the tobacco flavor for those transitioning. the concern is really with teen vaping what has happened is significant of increase in the number of

states that have raced the tobacco minimum purchase age to 21 that's a big problem for the industry and cover e cigarettes. >> i would think the number of teen vapors using it to get off cigarettes is tiny but just because you are an adult, if its still a certain percentage of adults just taking up the habit initially using juul, that is not good for the entire health care system. just like we all pay for people who are still smoking. people can do what they want but it just seems like the reason it should exist is to help people get off other more harmful habits >> absolutely right. but what has happened is that the flavored e cigarettes have

become very popular with teens the tobacco industry in the u.s., we expect to be down 5% or 6% this year in the u.s. market, cigarette smoking peeked in 1963 companies for years have been offsetting the declines you through price hikes. >> it seems as a society not talking about europe everybody smokes there this country, we've got it down to single digits we were doing receipty well without juul to bring in a whole new generation of people addicted to something else there are no new smokers around

that i can see no ashtrays or things. >> it is weird that cars still have lighters. >> and in airplanes too. >> we are legalizing cannabis. i hope we thought that through don't miss phillip morris ceo at 9:00 eastern still to come, saying that right now is the time to buy old tech before we head to break, the biggest gainer iths e ftse, which is up.

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good morning, everybody. welcome back to "squawk box. u.s. equity futures this morning are kited higher after gains yesterday with the nasdaq the biggest gainer. up 1%. the dow was indicated up 65 points 789 s&p futures up close to 6 the nasdaq up close to five points in corporate news mixed quarter for k.b. homes earnings beat the street revenues came in shy of expectations the home builder says that net orders rose by 24% in the quarter. kb homes stock is up 70 % this year this morning the stock is down 6/10 of a percent. walmart sam's club is teaming up with provideers to offer members discounts on services they might otherwise put off because of the cost starting next month sam's can

you be club members in michigan and north carolina will be able to buy packages that include dental, vision and prescription. the range in annual fees from $50 for individuals to $240 for families seems like something people might be willing to check out. >> check out shares of beyond meat this morning. they are jumping after mcdonald's said it plans to start testing the company's plant-based burgers at some locations in canada. our next guest is it excited about a couple stocks in the tech sector. joining us now with his scott walker picks, scott walker picks we'll call them, partner at nchlsz advisors. good morning to you. what do you like in this crazy environment right now? >> well, we've been seeing a switch from growth towards value over the past few months and that doesn't mean that you have to switch from technology stocks into other sectors of the economy. we don't have the same kind of growth prospects of tech stocks. you look at older stocks like older microsoft, apple, intel, oracle, great businesses that have pesky metrics like cash

flow, return on capital, long-term investors really care about. yet don't suffer from call it management issues like wework or perhaps over valuations we might see from the likes of telecon as it comes public today. >> are you a fan of peloton? >> i have a peloton for years. i have yet to meet anybody that does president like t. >> are you a buyer typically or no >> we don't play in ipos because of pesky metrics we like to see cash flow, return on capital two, three years down the road when it is it's had some time in the mark, we think it might be a compelling investment. >> how much do you think about china when it comes to the tech space? >> it's hard to ignore china certainly in the technology space, the pieces parts all come from china we talked a little about intel, which as a chip maker is going to suffer if you begin to see tariffs on chips around the

globe. backing that supply chain and moving it towards india, moving it towards indonesia, perhaps south america may provide some relief to all the chip makers. >> where do you stand on apple right now? >> we've been a lodge-term apple holder the stock is, call it 19 times earnings and has a very strong business in the most current technology, current in media, current in devices, current in cloud-based services it's really hard to poke a lot of holes in the two years, three years, four years out for apple. we're not going to react to whether or not people buy iphone 11 as they wait for 5g phones. archie how do you figure out what the proper valuation or metrics are on a company like apple? as you mention there is a top end in media, technology, all these different streams. they're turning themselves into a consumer company by relying on services >> i certainly think you've seen an apple over the past two or three years a return to a more normal valuation it had been held down in valuation a long time because people thought of it was a

device maker, not a software company, not a services company. for that reason they thought it was going to become the next blackberry eventually, where somebody was going to compete away those margins if you look at it, apple has margins on the products, certainly great margins on the software they're going to weather this storm whether or not iphone pieces parts cost 25% more or not. unlikely going to shake their business the real risk to the business is whether or not things like alexa earphones change how we interact with technology. >> do you think that actually changes the game, those earphones? >> certainly they're catching up with apple on earphones. they're very much like ear pods. whether or not we start moving away from staring at our index card size smartphone the next two or three years, do you really want to be the company that's going to -- >> do you really see that happening? >> not now maybe not in the next two or three years. >> i know how you can get the same amount of information off the phone. the ability to read -- read. the ability to process

information off the screen is so much faster than listening it's unbelievable. we're talking about podcasts scott walker has new pods. i often listen to podcasts often on 1 to 2 1/2 times the sound setting. when you get up to 2 it sounds like the chipmunks you're trying to get the information. >> will the screens be ever present in your life you're interacting with screens all the time, but not the one device you're carrying with you. it won't be part of it >> really it's going to be your digital credential following you wherever you are >> tim, you like microsoft i know, and you like oracle. >> yes >> okay. we will have you back and continue that conversation when we return, a lot more on scott walker senator, tom cotton is going to join us to talk trade then at 8:00 a.m. eastern, our interview with the big ipo of the morning, so very many questions about this ipo

amid lots of questions about the teleconmarket. peloton c.e.o. will join us as the company races towards his. stay tuned you're watching "squawk box" on cnbc ♪ ♪ plants capture co2. what if other kinds of plants captured it too? if these industrial plants had technology that captured carbon like trees we could help lower emissions. carbon capture is important technology - and experts agree. that's why we're working on ways to improve it. so plants... can be a little more... like plants. ♪

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from wall street to washington, president trump saying a trade deal with china could come sooner than expected. meantime, investors are also monitoring an impeachment inquiry. we have the latest straight ahead. >> spinning to wall street, peloton set to debut at the nasdaq we're going to hear from c.e.o. john foley >> plus discovery focused on the food network, he joins us to discuss a collaboration with amazon streaming morris as much more as the second hour the "squawk box" begins right now ♪ bicycle, bicycle, bicycle ♪ i want to ride my bicycle ♪ bicycle, bicycle ♪ i want to ride my -- >> announcer: live from the beating heart of business, new york this is "squawk box. ♪ ♪ >> good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky

quick and andrew ross sorkin u.s. equity futures this hour up 60 on the dow, nasdaq indicated up 2 1/2 s&p up 5 tough to keep this market down you throw trade at it, throw impeachment at it, all these different things i guess you got central bankers in your corner but it's still pretty amazing, andrew >> okay, couple big headlines to tell you about this morning. peloton set to go public this morning its ipo friesed at $29 per share. it's the high end of the expected range values the fitness company $8.1 billion should mention cnbc's parent nbc universal is an investor in peloton. we're going to have a lot more on this peloton ipo in a few minutes. we're going to speak with some analysts later, you don't want to miss this, all the questions about the peloton ipo are going to be answered by john phony, joining us on set. questions about the ipo market that's been a tough one the past

several months separately we're going to get a look at the economic growth. the third quarter expected to grow at a 2% annual rate that would be department cal to last month's estimate. maybe that's going to raise some political questions. also new york city building owners are having trouble keeping their retail tenants new figures released by the city the amount of retail space doubled from 2007 to 2017. that amounts to a 5.8% of available space that's now available compared to 4% ten years earlier. city officials point to online shopping and rising rents as the primary culprits we've talked about in new york you walk down madison avenue and there are so many shops that are just empty, and sometimes people blame the landlords for wanting too much money but i think electronic retailing is a big piece of it it's a big piece of t. >> maybe they should have thought of that before they ripped down the sny studio and put in more space. >> there's more retail space

everywhere the question is does that mean the prices really ultimately are going to come down >> u.s. and japan have reached a $7 billion trade deal. president trump announced the outline of the agreement yesterday at a signing ceremony with the japanese prime minister shinzo abe for more on u.s. trade, let's welcome senator tom cotton, republican of arkansas senator, it's great to have you. >> thanks. >> can you see to my left? no, you can't really see it. there is also a big elephant in the room we may need to talk about, senator. but you're here to talk about trade. let's talk trade at the start, how was the deal yesterday? obviously a positive with japan at this point. but just makes me wonder does that make us more or less likely to coddle china and get something done >> well, first, i think the trade agreement announced with japan was a big win for americans. and arkansas in particular, we're very excited about japan finally lowering barriers on

beef, pork and poultry also i think the new u.s./japan agreement could be a gold standard for digital goods the transmission of videos, books, music, what have you between our two nations. and i actually think the agreement will have the happy effect of putting us now in lockstep with japan to try to get better trade terms with china. as we put more and more of these trade deals to bed, couple years ago with south korea, now it's japan. hopefully later this year it will be mexico and canada. that brings our focus more intensely on china which really is the worst culprit in the international trading system >> let's keep talking about trade. through the prism of what we've seen in the last couple of days, in your view, the latest salvo in the, you know, getting rid of trump, latest salvo is based on ukraine, does that make it more or less likely that he decides to do a trade deal with china? >> i don't know if it makes it more or less likely he's going

to do a trade deal with china given what the house democrats are doing. what the president wants to do is get a good deal for american workers, farmers, ranchers with china. china obeyed the rules of civilized nation when it comes to respecting property rights, not trying to steal technology and use it for military or intelligence purposes. the president's focus is as it should be on getting that good trade deal with china no matter what kind of hysterics you see in the house of representatives. >> but you've been in washington for a while. you know how everything gets political. you don't think none of this other stuff will have any effect whatsoever how about usmca, is it possible to get that done with this as a backdrop, impeachment as a backdrop >> i hope so nancy pelosi has said all along that she wants to pass the mexico/canada agreement. bob lighthizer has been working in good faith with her many months to give assurances to her and democrats in her caucus about enforcement mechanisms

they could live with those measures, donald trump could as well unfortunately the house democrats have been trying to impeach donald trump since the day he was sworn into office i can they voted three times already on impeachment i hope they'll focus on doing the people's business, one important part of which is passing this mexico/canada agreement. >> yes just to get down and dirty, the democrats need 20 senators, i think, if they had all their own senators to go -- if it does proceed to that level. do you think that from what you know, from what you heard yesterday and the transcript -- i don't know what's going to come out with the whistle-blower necessarily. do you think this rises to the level of a high crime and warrants removal from office >> you know, it's a little mystifying to me and i think most americans now that they've read the transcript of the president's call with the president of ukraine what the democrats are talking about. nancy pelosi said one of the

grounds would be withholding information from the congress and the people well, the transcript has been released publicly. i, a member of the intelligence community have read the whistle-blower complaint it will be released in the next few days i don't see why it can't be with appropriate redactions for a few classified matters and what's apparent is there is no quid pro quo that the president asked for anything in return for u.s. aid to ukraine it was a fairly straightforward diplomatic conversation. certainly it's not what joe biden has boasted about doing. joe biden boasted on television about withholding american aid to ukraine if ukraine didn't fire the prosecutor that was looking into his son's company let's just be clear here a ukrainian oligarch didn't find hunter biden's resume on zip recruiter and paying him $50,000 a year he did that because joe biden was vice-president of the united states >> senator, let me ask you a separate question. if you find the joe biden side

of this troubling, which by the way i think is hard not to, do you find anything about what the president did troubling? not necessarily rising to a crime, not necessarily rising to a level of being impeached, but in terms of character, in terms of what it says, in terms of being the president in the white house, does anything about this trouble you whatsoever at all or do you think this is completely fine >> so far as -- i think the president has reasonable concerns about ukraine ukraine is riven by rival factions they point the finger at each other a lot. the president wanted to know earlier this year, president zelenskiy, a newcomer to politics, was going to be better than past leaders of ukraine -- >> i'm not referring to that piece of the transcript. i'm referring specifically to the piece of the call related to biden. >> this is my point, is that joe biden, sitting vice-president of the united states, went to

ukraine and demanded the firing of a prosecutor that was investigating his son's company. otherwise he was going to withhold a billion dollars in aid. he boasted about that. he bragged about that. that was under a previous ukrainian administration now, with a new administration, the president wanted to get to the bottom of whether or not it was more trustworthy, it was going to take a more serious tact on corruption and whether there were past actions that needed to be reopened. i'm not saying that there necessarily is anything there. i'm saying these are reasonable questions when you look at the facts of a sitting vice-president's son getting $50,000 a month. it's a common -- it's a common topic of conversation between our president and presidents of other nations when we're dealing with corruption, and especially with aid to those nations. >> not going to get anywhere here, andrew senator, the whistle-blower, you've seen it so you've seen it. it's not public yet so you've seen it. >> i have. >> okay. so at this point what would it take to start flipping the 20 --

you'd need 20 republicans and i'm sure they're going to be pretty solid in their support. i just -- i don't know, as they split up, maybe sass, maybe romney what do you need to see where you'd actually -- the president would start losing the support of his colleagues in the senate? not colleagues, but senators >> i don't want to get into any detail about the whistle-blower complaint although i do think it will be made public. i don't think there is that much classified material in it. it's best that the transcript is public, to make it public. i will say i didn't see anything in the whistle-blower complaint beyond much of what's in the transcript that's been released publicly already and what's reported in the news frankly a lot of it tupd on what's public news, not classified sensitive material. >> do you think the voters -- the american public will have a chance to litigate this in november of 2020 >> this and almost every other issue we get all the time in

washington >> let's talk about your act of rebating some of the tariff money to taxpayers let's get to that. how does that work >> sure, we've added tariffs on various countries, various products over the last two years. the treasury department is taking in tens of billions of dollars. the tariffs are designed to get us better trade deals with the countries, to protect our jobs, our farmers, ranchers, our foresters. there is that money in the treasury department. a good side of it could be turning that money back to american families. my legislation would rebate that additional tariff money immediately, those past two years of money and every year after taxes are filed to the bottom three tax brackets. anyone making up to $84,000 a year or $164,000 for a family by saying to the effect -- to the extent this will have an impact on america's families, $700 so we can both try to use those tariffs to get better trade deals, butalso not hit americans in their pocketbooks >> it would only go to those in

the lowest three tax brackets. anybody who is in that, and it's not directly based on anything they're buying you're saying offering relief to families that inevitably that would be paying higher bills if they get hit with some of these tariffs for the goods they're paying in the stores >> yeah, that's right. so we want to concentrate the relief on working families who are in the bottom three tax brackets to the extent they're going to face any kind of increasing inflation pressures we haven't seen that much in the data yet, it's possible. but we want to use money coming in from the tariffs to give those working families relief. >> what is treasury doing with that money right now, what is -- >> right now tariff revenue, like income tax revenue or corporate tax revenue goes into the general treasury revenue funds. but we do have the ability to created a separate tariff fund to identify how much money comes in on an annual basis and simply turn that money back to working families it's several hundred bucks a year in the pockets of working families i think that will make a big difference >> has the administration signed off on this, are they in favor of it, too

>> it's just being introduced today, but we've gotten some favorable indicators from the administration already and i think that we might have more senators joining us in the future and have administration support behind it as well. >> senator, great to have you on today. >> thank you >> hope to see you again not too long a time. it's been too long this time would love to have you back. thank you. >> thanks, good to be on >> when we return, peloton pricing its ipo at the high end of expectation andrew gets a little workout with the company's c.e.o. and we're going to hear from nelson griggs at the nasdaq about this listing. check out the futures at this hour you're going to see things are indicated up even after the gains we saw yesterday dow futures up by 66 points. s&p futures up by 5. "sawbo wl r1/2. quk x"ilbeight back.

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welcome back, everybody. facebook coming under fire again. the justice department will reportedly open an antitrust probe into the company following prodding by the attorney general bill barr. this will be the fourth probe in recent months. it also faces investigations by the federal trade commission the house judiciary committee and a group of state attorneys general. stock is down by about 1% today. >> all right, check out the shares of beyond meat. they are jumping after mcdonald's said it plans to start testing. the company's plant-based burgers at some locations in canada >> up 13%. >> 13%

>> wow >> and coming up, when we return, peloton stinipinning ita to wall street it will trade under the ticker pton and there i am, oh, god, you're seeing it already i took a class and cycled with the company -- >> is that your first class? >> with the c.e.o. this was a private class i don't think they really do classes like this. then later, discovery c.e.o. is going to join us, streaming jazz, why content is still king. "squawk box" continues after this >> announcer: time now for today's aflac trivia question. which mall holds the guinness world co fhererdor t largest parking lot? the answer when cnbc's "squawk box" continues 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...

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>> announcer: now the answer to today's aflac trivia question. which mall holds the guinness world record for the largest parking lot? the answer, the west edmonton mall in alberta, canada, holding 20,000 cars. >> peloton making its public debut later today. under the ticker pton, company pricing at $29 a share

that's on the top of the target range. prices the company at $8.1 billion a head of the ipo i had a private spin class with john foley we talked about the fitness hardware and what he thinks built other companies that have gone public this year. >> we have 1500 people on this leaderboard right now. full keep going you're up. 2, 1 ♪ ♪ >> where did you rank? do you know where you ranked last time you did this >> i don't remember. i'm generally in the top 20% in the early days i could win a class, but those days are long gone >> what's on your wish list for this >> over time, our wish is to get the price down and make sure, you know, in the coming years, we want to make sure tens of millions of people around the globe are able to afford a peloton bike >> what do you think you can get the price down to?

>> who knows through financing you can buy a peloton bike for 5800. we're not going to rest there. >> given the ipo is coming up, how much do you focus on the markets? >> more than i used to recession, problems dominating the headlines these days are in the back of our mind not the forefront of our mind. forefront of our mind is building one of the great technology platforms of our generation but the back of our mind, recession, other ipos that have gone out this year >> is there one you focus more on than others >> i am good friends with shaw because he's a friend. peloton is such a unique business there hasn't been any real good metaphors. we're kind of a category of one. for better or worse, the investors are going to have to sharpen their own pencil and figure out how to value us on their own. >> what do you think the biggest difference is being a public company? >> i'll tell you there's almost 300 people in our cap today, andrew i don't think much is going to change certainly the capital event

adding more than a billion dollars to our balance sheet and allowing us to invest in the new growth and continued growth and new categories and new markets is really why we're doing it we're very excited about it. we still feel like we're one of the massive opportunity to impact a lot of people's lives around the globe >> john is pretty ripped there and he has a little color. it looks a lot better. >> wearing black >> did you watch that before you allowed that >> i actually tried to pull some of it back can you do it -- >> you couldn't do that? >> i didn't have the power we have producers who have a lot more power than i do i should mention it is important cnbc's parent company comcast is actually an investor in peloton. we want to mention that. so you can see more of the exclusive peloton tour studio and my pasty arms and legs on cnbc.com >> way to sell it. >> thank you right now i want to bring in nelson briggs. we should say john foley is going to join us live and we

have lots of questions for him, specifically straight out of the s-1. you're going to get to hear those questions and answers at 8:00 a.m. the president of the nasdaq stock exchange, it's good to see you >> great to be here again. >> what kind of environment is peloton walking into today and just in terms of context, obviously there's uber, there's lyft we've now dealt with the past two days, 48 hours of soap opera around wework, an ipo that did not go forward and yet these guys priced at the high end >> well, it's always going to be a company by company market. this year has still been incredible >> you don't -- when people talk about the ipo market, they say they have a window >> yeah. >> because there is a mood around ipos. do you think that's a myth >> it definitely exists. if you look at the overall market is up 20% the average ipo is 15% for a real healthy ipo market, we're talking about positive numbers and this year we passed over the amount of capital raised last year in total.

so -- and the number of ipos will be more it's still a pretty healthy market and diverse group of sectors as well. >> goldman sachs had a report just last month that talked about this year being the -- more companies that were unprofitable, went public this year this is like the equivalent they were suggesting of sort of a pre-crisis kind of period. is that reflective of anything in your mind >> it's definitely a year we're seeing the most amount of exits for top unicorn we've seen in a long time, mma particularly. going to ipo obviously they have to have scale, they have to have massive growth and the profitability question is one we know investors tend to ebb and flow about how important it is to get to playoff tablt quickly. that changes as we saw in september when growth sold off that changes pretty quickly. >> let's talk about the ebb and flow and where we are right now. when a company like wework comes out and puts the garbage out like they put out there, does that mean every other company

has a higher hurdle to leap over, you're going to get the tires kicked before anybody -- >> i don't think so. we may in one or two or three situations not necessarily wework, but they look at the overall companies. look at the market environment they benchmark against public peers. we've had -- >> profitability is all of a sudden a lot more important. >> data dog had an amazing ipo this is a unique back to back week, very large new york-based ipo, pretty cool you look at a company like data dog did exceptionally well >> profits >> do you think this is an issue about how long a company has stayed private >> yes >> the reason i ask, delivering alpha last week, we had the interview from jay clayton on cnbc he made the comment he doesn't like to step out, if you will. he stepped out on this and seemed to suggest that the problem right now is that the markets are being used, as he said, for liquidity, for the employees. and that effectively, a nice way of saying, you know, you're

leaving the shareholders holding the bag. >> and there's a lot of great points in there. the one thing i comment on, too, in addition to that is that most companies are still doing secondary rounds, six months later, a year later. >> you're saying secondary rounds in the public markets >> continue to get to scale and invest and get money >> that is different from -- amazon raised money one time >> sure. >> and, sure, it lost money for a very long time, but it was not out there constantly raising money for year upon year upon year >> it wasn't hemorrhaging cash >> i think you look at -- understand private there's a lot of cheat money as well as the shareholder jobs act, the two big drivers liquidity demands are there. so -- but it's actually a pretty healthy market right now >> what would be success do you think for peloton at the end of today's trading? >> so, i host a lot of ipos. whether it's a company that has

a rocket ship on day one or muted they say the same thing. they're investing for the long term you met john it's an amazing company, out the next five, ten years i don't know if we'll go upstairs it's the first time we opened the market at the top of the tower. amazing show, had fun. they did an amazing job at the road show. >> nelson, great to see you. >> thanks for having me. >> good luck later today the president of the nasdaq stock exchange 8:00 a.m. peloton c.e.o. john foley will be here with us on set. >> when we return, the message from c.e.o.s around the country. former e.y. c.e.o. and round table board member mark weinberger will talk to us about the message to the president and what c.e.o.s are focused on when it comes to the economy. right now as we head to the break look at the u.s. equity futures. up across the board dow up 73 points s&p futures up 6 nasdaq futures up close to 6 stick around we'll be right back. servicenow put our workflows in the cloud.

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all right. welcome back, everybody. we always are wondering what c.e.o.s are thinking b what's on their minds and it turns out what's on their minds right now is what's going to be happening with profits, what their expect asians are with earnin asians expectations coming down the road mark weinberger is a member of the round table business board of directors he joined metlife. great to see you >> always great to see you >> we talked to you a lot over the years. you have a good idea what's happening, what c.e.o.s are thinking about because you're talking to so many of them all the time i know that the business round table recently lowered its expectations for growth. what are c.e.o.s seeing? what is this about and what can you tell us

>> sure. so, i mean, bottom line, becky, is the u.s. is still strong. you know, i think the general feeling would be that the numbers in the u.s. are holding up the rest of the world is what's dragging down the u.s. right now. and certainly there is a fundamental mind shift in mize view of this china/u.s. trade deal issue people thought for a long time we were in a tariff war, there would be a deal, you get through that, you suck it of and take the cost yourself or pass it on. now people are realizing we're going to have a longer term trade issue that's going to affect supply chains, a much bigger issue that's affecting the way they're investing around the world these are topical. >> not investing in china if they're american companies or not wanting to invest anywhere >> good question u.s. and china went up the first quarter -- first half of this year compared to last year what's happening is it's investing in china for sales for china. that's where the market is

where the supply chains are, they're reevaluating whether they should have supply chains moved to other asian countries or somewhere else. it's looking at both ways. they're serving china in china and that is growing rapidly. how they serve the rest of the world is being reconsidered. uh >> you don't think there is going to be a trade deal reached any time soon or other c.e.o.s, too? >> the deal, there is a fundamental question whether china will be an ally or adversary over the longer term we had bob lighthizer at the meeting and honestly -- >> at the business round table >> business round table. sorry. there is a question whether we can resolve the issues that are bigger longer term and short term that's why they're talking about could we get some things off the table, de-escalate the tariffs and the war. that would help the business investment environment and then maybe look longer term at these issues. >> mark, how much of this is a self-fulfilling prophecy c.e.o.s are worried, so they're

worried about the economy. it makes it so the economic downturn washes up on our shores >> i still think that's the case there is no way the business community sees two quarters of downturns in the economy, which is what you'd have for recession. we see slower growth as we talked about but not two quarters of downturn back to back next year >> want to hear your view of this and respond noah mino was on the show. we got into the thing about the b.r.t. had a skeptical, dare i say cynical take on the b.r.t. statement. suggesting if business executives believe that the economy is going to go south or at least down, earnings are also going to go down that by creating new metrics, was her view, creating new metrics with which to judge a company will change the way c.e.o.s are compensated and, therefore -- >> it was awesome. for someone who viewed that

virtue signalling, at best it's virtue signalling. at worst, you can be very cynical. oh, now they're learning or trying to curry favor with elizabeth warren or bernie sanders by admitting you were right all along. >> she'd like my argument. >> hers, i say oh, man, bring it on that's giving me another arrow in my quiver was this you who were you -- >> so here's the -- >> did you want to do it >> yes so here's why, though, joe >> because you're retired. >> this is not a change. there is absolutely recognition -- >> then why do it? >> let me tell you why there is a fundamental understanding, fiduciary responsibility to long-term valuation for your company to do that, you have to focus on strategic assets and limit risk. your brand, your work force, your supply chain are incredibly important to your long-term value. today the assets on the balance sheet of a corporation are 60% intangible so if you get a hit to brand, if

you get a boycott on your products, if you have your employees, you can't hire the best, you're going to have risk to your long-term value. >> mark, it seems to me the good c.e.o.s have been doing this forever. this is like the public end -- kind of saying to people who maybe don't follow business that closely, hey, this is what we think is important but to me it was like yeah, no kidding. >> great way to impugn milton freidman with elizabeth warren as a prospective nominee great idea to do that. great timing to do that. to admit she's right >> c.e.o.s, 180 plus who signed this -- >> a lot of people didn't sign t. >> what are we going to say at investor calls >> is it okay to enhance shareholder value? >> that's the objective. you get there by looking for -- >> if you don't do the other stuff, is it actually deleterious to your employees and to society in general if you don't? >> joe, i will tell you no c.e.o. says, i'm going to throw my employees, my communities, supply chain over board.

>> let me ask you a question, then to the extent -- if we believe this was already taking place, by making this explicit, how do you think this changes the dynamic? >> does it >> yes >> it does change the dynamic? how so >> remember the statement on the business round table for the 1990s was only referencing shareholder. it didn't talk about all these other things >> so, therefore, the question, though, is do you think that companies are going to behave differently? and if so how? >> i think that now they have to be held accountable to a standard where they are going to be talking more about their shareholders, their other stakeholders, their communities, and so forth i think that is -- to bring it to the forefront, saying this is what they're going to do, now they have to be held accountable for it >> the c.y.a. move, the lawyers ram down your throat >> no, the lawyers as you would expect are -- fiduciary responsibility -- >> listen, this is why i say, joe, if you're a c.e.o. today and you're running a large business, you are focused on all

these things >> i know that i know >> you have to believe that is your responsibility. this brings it to the forefront, brings some accountability to it >> it did engender with certain -- binnian applebaum o "the new york times" come on it engendered the narrative that milton freidman has always been a false prophet, and nothing that he said -- >> that's unfortunate. >> you didn't know that was going to be part of the narrative after? >> they're not focusing on that. they're focusing on how to lead their business to the future archipelago you sti >> you still would concur the profit sector -- you need to mind your ps and qs, you need to consider consumers and how you benefit -- you need to try to beat your competition by providing a better service for your employees and for customers, and those are all noble aspirations engendered by the profit incentive, right? >> the statement starts out our principle is to create great serve skez and products.

>> good. >> it starts there the difference is it's a long-term value creation approach whereby profit is absolutely essential -- >> if you're bankrupt, you can't do any good things >> this is b.r.t.'s push back -- >> you can't take care of your employees, can't take care of your community, can't satisfy business if you go out of business >> you can't fulfill your lodge-term valuation >> can you maximize for shareholders >> shareholder profits -- you get there by focusing on -- >> not everyone in the political spectrum thinks -- you'll hear from the left that maximizing profits is an evil thing to try to do. >> it gets back to the short term versus long term. >> it does >> and the short term has been a problem where c.e.o.s are worried on a quarter by quarter basis because c.e.o.s teen you're has dropped four or five years. >> it's tied to it

b.r.t. also started to talk about you shouldn't have quarterly guidance jaime and warren bump et -- it's tied to be able to help businesses lead the way they need to lead you need to think longer term. >> why do you think there are c.e.o.s that wouldn't sign it? are they greedy? >> we only have 100 some -- >> steve schwartz man, are they greedy and unvirtuous people >> no. >> why didn't they sign it >> steve schwartz man is probably the most prominent person -- by the way, some didn't -- c.e.o.s who could, meaning wells fargo, for example was a member but still has an interim c.e.o. so there were signatures that didn't come that way for steve schwarz man there were two main issues. he genuinely believes i can't survive masters. >> i heard him, he was on. >> at the same time, i prefer to focus on one he said that but the second piece of it is

that if you understand the blackstone business more than just about any other, he's representing pension funds and other investors. if you note, the cii which represents institutional investors also has a problem with this. >> could you run a private -- could you run a private equity business could you rationalize the businesses to try to run them more efficiently if all you were worried about was keeping all your employees -- >> it's not keeping -- >> part of it, if they're your biggest stake hold error community -- >> it's a stakeholder. >> they're all stakeholders. >> we have to run. >> thank you, mark >> discovery serving up at amazon a discussion about that partnership right after the back-to-back break built for excellence. you start from the foundation up. the excellence is reaching dreams and chasing them at the same time.

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discovery launching a new direct to consumer offering called food network kitchen. it's a live interactive streaming experience with food network's culinary stars joining us now to tell us all about it is david. >> the star. >> discovery president and c.e.o. i didn't see the relation with peloton. it makes sense to me everything is interactive. >> great guy it's a prescient moment, wishing him every success. but when we thought of this product, 85 million people came

to us last thanksgiving. not on tv, but to ask us questions about thanksgiving dinner so in those three days, 84, 85 million people came. and i said, like, holy cow, you know, this means something we're not just a media company >> holy turkey >> holy turkey they're looking to us for information, for help cooking. so i thought of peloton. so i called john we salt down, we had lunch peloton is similar to what we're doing. it's live classes and on-demand classes with people that you want to cook with or, in his case, exercise with. >> so not after the thanksgiving meal you thought of the exercise bike or -- >> could use more of that. so could you >> no, but you thought about the interactive nature of peloton. you can theoretically do >> what's interesting is the media business has 8 or 9 or 10 of the greatest media companies of all time trying to do scripted series and scripted movies they're all chasing the same

thing and they're going to do a terrific job none of them can own all of it they're all fighting like hell to buy more and more in the end probably 3:00 three f them will be successful and there will be a huge amount of carnage. this isn't really an entertainment service. it's a functional product. no one needs to be alone any kitchen any more live cooking classes every day almost a thousand classes on demand martha stewart, ina, bobby flay. everybody on our network is doing cooking classes. they're super excited about it and we have over 150 other chefs. and so when it comes to the kitchen, it's not just taking cooking classes live and on demand, but we did a great deal with amazon where they're going to be -- it's built into alexa >> you get the ingredients >> when you look at the ingredients, you can hit a button on our app and it gets delivered to you >> how does it work? you'll have an ipad sitting on your kitchen table >> it will be on every device.

it's 6.99 or $48 a year. and you get live cooking classes every day. >> but you have to hit the amazon button two days in advance, have the food delivered so you can actually -- >> amazon, it's built into amazon so that you can use it hands-free with alexa. but amazon fresh is one of the providers. so if you're making spaghetti bolanaise and chicken parmesan with bobby flay, it's a week before all the ingreed ingredients. you have three choices who can deliver the goods to you what's interesting to us, not only is this a subscription service where we own the credit card we're providing a service in the kitchen with what people need and they said they really want it's also transactional because they hit a button, and we get a piece of that so we have a transactional -- >> what kind of piece do you get on the e-commerce side >> the e-commerce is not just the groceries. the e-commerce is you need a

strainer you need a lobster pot on the right side of media is a subscription-only businesslike netflix, which everyone is chasing. and that's a great business because you own the customer this is not only subscription, but subscription and transaction. for us, we think that transaction piece, you aggregate a several million people cooking in the kitchen where you can cook with your friends but on top of is that, you can buy products >> can i just ask, do you do anything with all that data? because you're collecting a lot of data on people, too are you going to sell that or is it stuff that you mine what do you do with it >> we can use the data let's assume martha, if martha is on live two days a week and people love martha, then we're looking at the data at how much of her on-demand classes, how well she's doing live. we can sit down with martha and starting next week martha could be live five days a week >> instantly ramp up for the shows. >> and you compare that with,

let's say, showtime loves billions o hbo loves "game of thrones." it takes two or 2 1/2 years and a lot of money to get that product that people love so the cost of our product is low and all the chefs love this idea of getting close. >> go to streaming can we switch topics we can return to this if you want are you surprised at some of the events over the last three months in terms of pricing and who has gotten into it and how netflix has responded? you've seen the share price. the moat was not quite a great a moat as we thought, i don't think. is it as great bottom for pricing? >> oprah winfrey, chip and joanna gains, natural history. we basically said, you guys go do that. it's going to be massive carnage. we think the reason is we own almost all the great food content and great chefs in the

world. we own almost all of the great home content with hg and great home designers in the world. most of the great golfers. they could never own all the great entertainment. so when seinfeld comes available or "big bang" every one of them start bidding. you know why near bidding? they're all saying the same thing. we don't have enough we need more if we want people to pay 15, 6, 8, $10, we need more stuff we, on the other hand, in our genres, we think that we're a different company because we own almost all the content in these areas. so people will still get two or three entertainment services, but they still love cooking. >> it's interesting you say two or three you don't think more because this whole industry is betting on more at the moment. >> i don't think so. maybe it's four, certainly not eight. and there is massive investment. you know, we see it every day. you can see it, they're pushing

with their pocketbook. there is a desperation we need more content >> are you a believer the bundle comes undone or do you think people are going to turn around and say, if i'm getting hbo, showtime, this, this, and this i'm keeping the bundle >> 50% of the content people watch is not -- not scripted series, scripted movies. we're the number one media company in america for women we reach more women in america than disney or nbc universal, with hg and food and animal planet and id and tlc. so what that says is people love our content. in the end i think that people are going to recognize the bundle is quite a compelling value because if you start -- if you buy all eight of those, it's like $100. you don't have news, you don't have sports. you don't have food, you don't have hg. but i do think the bundle is coming under some challenge, and that's why we think this food network kitchen product is --

>> more people cut the cord, what does that mean for you? your advertising revenue was up the last quarter i was looking at all those things but if more and more people are cutting the cord, what does that mean for discovery >> the good news for us is we own our content and we're global we're the largest media company outside the u.s. by owning all of our content, we can do things like go direct to consumer with natural history. we did a big deal with the bbc two months ago where we bought all their natural history and science products in the new world over the next several years as people transition to buying content on their device, we won't be entertainment. but if you love science and natural history, you'll buy from us >> how much -- in terms of customer acquisition cost in the ott world, how much of that can be driven for free or at a very low cost to you by leveraging the assets you already have in the classic linear world and how much do you have to spend on top of it in the digital world to get those people to join in? >> it's a great question

we call it, as we look at these issues, a funnel but we have the number one food network and cooking channel. people that love cooking and food are watching us all day long we'll be promoting to all those people -- >> spend off platform as well? >> we will spend off platform. we have people globally that love food at home. also with hg and own and id and tlc and discovery, we could take -- we plan to take our inventory across all of our channels and promote to this the big opportunity is that we already have a self-defined group of people that love food and all they can do in tr traditional -- in the traditional world is watch us. when i talked to martha about this, we were giddy. imagine you hit a button and the ingredients get delivered to you. you're actually cooking with martha >> are you now at a point where if someone calls you and wants

to talk about, you know, bringing discovery into their, you know, asset mix, are you entertaining calls now would you entertain a call from someone that was serious about it and could give you a great price? >> let me answer it this way everyone has called us, but they've called us for something else every large media company has said -- >> have they called you for that >> every large media company has said we're going direct to consumer you're the leader with women and family >> you're attractive in a lot of places >> you come with us with your content. every one has said that. we said no, we need to own all of our content globally. >> that's a no >> and the answer is, we think because we own our content globally we can make t. >> great to see you. come back soon >> thank you >> when we come back right after this break, we have peloton c.e.o. john foy.le he's going to join us live ahead of today's debut here on the nasdaq

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latino impact to the u.s. gdp. it could reshape the economy in years to come. >> and one of today's stock corporate leaders on a huge business week that's not even over yet former aol c.e.o. steve case will talk about ipos, we work and much more. the fienlt hour of "squawk box" begins right now ♪ ♪ >> announcer: live from the most powerful city in the world, new york this is "squawk box. ♪ ♪ >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin the futures have actually picked up a little steam, um 80 now on the dow. the nasdaq indicated up 8 1/2. the s&p indicated up about 7 treasuries, the real treasury story was maybe a month ago. we've been stuck around 1 #.7 for a while.

it's something to watch if it either heads to 1.5 or back to 2. today going on 1.7 >> big ipo, fitness bicycle maker and treadmill maker peloton making its debut on wall street, ticker pton. it's the top of the original range valuing the company at $8.1 billion joining us first on cnbc is peloton c.e.o. john phony. the parent company is an investor in your company thank you for coming on on this important day in your journey. >> thank you for having me >> were you surprised, maybe you weren't, you were able to price at the top end of this range given all the questions that seem to be surrounding the ipo market right now >> yeah, it was, it was a thing. we were following it like everybody else there was a ton of demand. i obviously got off the road the last two weeks, got in front of investors, fun process learning.

it's my first ipo. i think the demand was there, high-quality investors so we were able to price at the top of the range we're excited. >> what has been the lesson, though, as you've traveled the country over the last two weeks, also amid swirling questions about wework, which of course has been in the headlines, where uber and lyft and so many others have priced? >> as a business person, i'm fascinated i read and follow the stories like you do. today obviously we're celebrating peloton's ipo so we're excited about this moment on the peloton journey we think we've built an incredible company the foundation is great, economics are great, business model is great, the team is great. we feel like we are special. >> your first ipo, i love that really >> our cfo, joe woodward who i've been on the road with two weeks has taken 26 companies public i'm a nube, as my son would say. >> the reason i mention lyft and so many others, one of the

things that's interesting about this particular vintage of ipos, you have a fast-growing companies like peloton, a company that has revenue of nearly a billion dollars, but also losses, meaningful losses they increased over time as the revenues have gone up over time, $195 million in losses and so there is a question about the path to profitability and how investors think about that >> sure. let's reframe it let's use semantics here i call them investments. we are investing and we are in investment mode and prioritizing profitability over growth now. we are investing in the treadmill, joe, to your point. we are investing in europe so we are in the u.k., one year in and we're investing in germany we go to germany in the next 60 days with six stores in the six major metropolitan areas of germany. we're hiring instructors, opening stores, doing logistics. all of that is obviously expenses out in front of the revenue. so we call it investment stage

we think it's disciplined investing. >> in terms of, though, how much of those are one-time capital costs, meaning the development of studios and new technology and other costs which i imagine are obviously ongoing. stores, new instructors. >> yep >> employees >> yeah. so think about it's both, some op ex, some capex. here in new york city we're building a $50 million television production studio down the street where we're going to have four send it back to you in the studios under one roof boot camp, yoga, come out with other categories we're doing a $50 million studio in london, similar story our german instructors are going to coach out of that studio. and so you think about the fixed cost leverage in our subscription business over time would go north of 70% gross margin on that because of the fixed cost leverage. over a thousand basis points of margin expansion because of the

leverage >> those are one-time costs, $100 million alone right there and what year do you expect to be profitable? >> i think we're showing 2023, fiscal 2023 in the five-year plan >> and one of the other questions that's come up amid a lot of ipos, specifically wework most recently. across the board is this a dual class structure? >> sure. >> you have one. >> why >> for better or worse, we've raised a billion dollars at peloton as of today, north of 2 billion. so we're well capitalized. but that billion dollars through eight rounds of financing have crammed down the team, including me so i have less than 6% of the company and i'm the founding c.e.o., and i think if you looked at a range generally founding c.e.o.s have 8 to 12% so we couldn't do 10 to 1 voting class because the leadership wouldn't have any control. we feel like we have the right experienced leadership team in place. the board feels good about us, my partner -- the president william lynch, our cfo, founders

are still all together we feel great about the team and we feel great about the opportunity. >> do investors ask you about that >> it comes up at a quarter of the meetings, brought up dual class. >> john, how much of this, people try to figure out what kind of company you are. are you a bike company, are you a media company, a technology company? what do you think you are? >> becky, it's a great question. i feel like we're six or seven different companies in one our true north is delighting our members. in order do do that, we had to be a retail company, logistics company, hardware, software, media. we have a fashion line of apparel, we sell close to 600,000 units of apparel this year we bought a music platform integrated with our service. you can probably name five or six companies on two hands that have direct long-term relationships with all the major labels and publishers, which we do spotify has the same style relationships we had to go

direct with. it is a unique mod earns company that is focused on one -- singularly focused on one experience, better fitness in the home but in order to get there we had to do a lot of things. >> you are pretty reliant on the consumer and consumer's health for your business. it's an expensive product. it's not cheap to sign up for the subskriepcription model if that turned down, could you describe the spend could you quickly pivot to deal with the downturn in the economy? >> a peloton bike at this point is $58 a month, 0% down, 0% financing. divide that by two $29 per live-in adult. it's the same value of riding a bike we looked at the last 15 years of fitness spin, becky in 2008 and 2009 there was increased spend. it's recession proof -- >> spend on what >> fitness dollars as an industry >> people weren't cutting their gym memberships during 2008?

>> when you look at the bike, when you look at the treadmill -- treadmill is $4,000 price point, bike is $2,000 price point. they are high margin products for you now. >> sure. >> when you look at the mix between the hardware and long-term the services or software, how do you see this playing itself out where is the hardware right now seems to be the earn jen >> yeah, you're absolutely right, andrew. because the $200 price point and $30 a month subscription, top line is 80% hardware we double the company every year since inception. obviously the law of large numbers says you can't always do that it's a hyper growth company. to the extent we can continue this kind of growth, hardware -- >> if we had this conversation five years from now, do you think you'll have more subscribers to peloton's service broadly that own the hardware? i know you can buy this -- you

can buy the service without the bike these days. >> that's right. so, yeah, if you're one of the 34 million americans with a treadmill in your basement today, you could download our digital app and be transported into a peloton boot camp class, streaming live from new york city, with one of the best instructors in the world on your 60-inch television screen in front of your dusty old treadmill in the basement. absolutely >> is that a better business for you or not i would assume it is in some ways you can reach more people but you don't have the same lock-in >> what's the hook on the treadmill? is it soft on the knees? what's better about your treadmill? this isn't just for me >> asking for a friend >> are people going to shame me if i have it set at 5 miles an hour, am i going to get yelled at by the instruct er? >> sure. we are inclusive -- >> 5 is not that bad if you do it -- 5 miles an hour. creep like a snail

>> the fact you showed up, we celebrate that any fitness is great fitness >> people laughing at me >> they're laughing with you >> yeah, people doing -- i'm not going to win any of those contests, that's for sure. >> so, you ask about why the treadmill -- it does have a slat belt technology that has cushion. think of the high-end cushion tracks it's better on your body over time our equipment is the best piece of equipment ever created. >> it is >> it comps the 12 to 15 -- >> that is a crowded space to get into you could have stuck with bikes. >> andrew and i talked about this a couple weeks ago. i love the boot camp workout full body where you spend six minutes off the treadmill then grab your weights and circuit training, you think about how big orange theory is and cross fit. people like this workout where your upper body gets a workout and that's what treadmill --

>> even for calorie burn it's not just cardio it's muscles, more calories. >> couple quick questions out of the s-1. you want investors to focus on adjusted ebitda, contribution market, average monthly fitness churn, the figures you're focused on, i raise those because they do exclude lots of things including stock -- stock compensation and so many other things so, you know, when investors are trying -- i know it's very hard to comp your company against something else how should they be thinking about those numbers? >> yeah, we want people to focus on growth and net new subs think about netflix-style media business net new subs is kind of our true north as a business and more members and changing more lives is our true north on the consumer side. if we get to ten years from now tens of millions of subscribers, we're making -- allowing people to live a lot better healthier

lives. i think the street would be excited about that >> if there was one stat next quarter or quarter after you would say investors should be looking at, it is what on your business >> growth. >> just growth straight across >> well, disciplined growth. top and bottom line, we're going to be proud of both. i mean, we're not irresponsible company. we're insanely disciplined, unit economics. >> what does success look like -- i know this is not a one-day story. but success look like today for you in terms of where the stock ends the day it is an important question i think because some people say if it goes up 10 or 20% that's a great thing. some people say you might have left 20% on the table for -- >> i saw bill gurley talk about this a couple weeks ago. and so i know what you're asking about. we hope it prices up i think that's -- we care about our brand and our employees and we're not trying to top tick the valuation.

>> you're amazing. you just sent me a message from our founder and c.e.o. just hit at 8:14 from you >> that's very cool. >> it was in my pocket to my fellow members -- >> did you write this? >> i did >> as a peloton member >> can't you tell? >> so cool >> that was weird the way you did that >> but as you watch the stock today, you're looking for what how it opens how it closes? >> both. we want you can yo, you know, sy c.e.o. said we don't want to be a dollar smart we hope it prices up >> you said you left something on the table >> i don't know if i'm allow today say that, but i feel like we weren't greedy. >> don't say anything else it's going so well >> lots of luck. we appreciate you being with us first on cnbc this morning >> thank you >> a note, peloton is number 9, we should tell you, on the 2019

cnbc disrupter 50 list i think we should start a disrupter 50 etf because if you really think about -- it could be very interesting. anyway, today will become the first company from the 2019 list of ipos. you can find special coverageful today's ipo, you can follow it on cnbc disrupters >> did you fear something, couple basis points? >> if you look at our disrupter list which julie boorstin has done a great job there will be failure. lots of failure. but i think you would have -- you would have made a lot of money. >> yeah, much better than all your efg stuff that performed, andy thank you for the confidence >> thank you again >> when we come back, a special interview with long time executive, sol trujillo. new data out this morning on the

economic impact of latinos in the united states. here's a hint for you. the number is bigger than the gdps of most countries we'll talk about all of this when "squawk box" comes right back ♪ ♪♪ ♪♪ ♪♪

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welcome back to "squawk box. a revealing new report is out this morning on the gdp impact of latinos in the u.s. the report comes from california lutheran university, and it measures the value that latinos have contributed and suggests that they could become critical to the new american economy. joining us now for a look inside that report and what it means for big business in the u.s., sol trujillo, executive and founder and chairman of the trujillo group among other things, and latino donor collaborative. he joins us from san diego and latitude, latitude conference of which he's also a co-founder sol, we go way back. i don't know if everyone knows, you were telstra, i think u.s. west for a while long career in telecommunications and other businesses

>> that's correct. and good morning, joe and becky and andrew today is kind of another day, and i love the last conversation you had talking about peloton in the sense of always looking at fundamentals and numbers and having run businesses around the world just as you described, joe, i always like to look at our economy here in the u.s. and saying, okay, so how are we doing? how are we really doing from a fundamental standpoint in business you always talk about customers and you always talk about workers because you don't need workers if you don't have customers and if you have customers, you need workers to help you get there. one of the big issues in the u.s. is how are we growing today? have we taken a snapshot to look at it? so as a result, we started this process of looking at one cohort, the u.s. latino cohort a couple years ago, and now today we have a new study done that shows that the u.s. latino cohort is generating

$2.3 trillion of equivalent gdp as though -- if it were a stand alone country, which makes it the 8th largest gdp in the world, and it's growing faster than any of the developed economies, the top 10 developed economies in the world, which is a great thing for our country because what sets us apart as the u.s. from other countries is that we have a demographic cohort in the u.s., u.s. latinos, that are driving a lot of our growth today. so the report shows the whole series of numbers that are compelling in terms of how we should think about this cohort, and ultimately how we think about another issue, which is labor force growth rate. and so this cohort is driving consumption. it's, you know, fulfilling 82% of all the new jobs that are being filled in the country today. we have 7 million unfilled jobs, 7.2, already in this country

today. so we need workers and on the consumption side, the u.s. latino cohort is generating about 42% growth over the last study period of 2010 to 2017, and it's growing 72% faster on consumption than the rest of the economy. so it's a great story, a great item that we should understand but if you don't mind, i'd like to go to the second point. labor force growth rate is an issue in our economy today because if you look at the trend line of gdp as a core metric over the last 20 to 30 years, you'll find that we've been in a fade and, you know, this year last quarter we were at 2% gdp growth adjusted most forecasts for 2020 talk about 1.8% and one of the fundamental drivers is labor force growth rate we have now reached in recorded history one of the lowest points we've had in terms of labor

force growth rate. we need more workers we need more in order to grow our economy, both on the labor force side for outputs of goods and services, and at the same time more consumers that are buying our goods and services here in the united states because we're a consumption-based economy. >> you know, so we've all been -- for the last couple of years, we're very aware of the growing latino population in the united states. i think most of us probably understood the huge economic contribution, not to the extent that the gdp is greater than russia's or -- i don't know if everyone was aware of that we also are told it's much harder to grow gdp because we don't have enough workers, enough population. so we're aware of all these things how do we fix the system so the stigma goes away that's associated with illegal immigration -- what do we need, comprehensive immigration reform and what would it look like,

sol, to bring in the workers we need and -- so there's no more stigma about how it's done no one feels bad they've been waiting legally and other people get in beforehand. what should it include do you have a fix for this >> well, i have my views, because i've been studying this since -- i lived about eight years abroad, you know, running orange and over in telstra and i saw the conversation that had evolved in the u.s. which concerned me which is why we're getting this data. your question is spot on my view is whether we need walls or not my issue that as i think about answering your question is we have to fix our processes. what does that mean? we're a sovereign nation we have borders and we need to know who comes in and who goes out. and we can solve that with systems and processes. we have broken processes today in terms of how do we process somebody that comes here to work, somebody thatwants to come here to work and ultimately

become a citizen we have logjams almost everywhere in every part of our system well, those of us that have run big businesses, we have tens of millions of customers, we built processes and systems. if you go to disneyland, you look step people they process every day versus the people riding the rides, they used to have long lines. they built systems to process quicker. i think right now we need to look at our processes and we can fix them because we know how to do that. in a digital era, we can build databases to check people coming in we don't want criminals. we don't want negative people. we want people that actually want to come here and work there's ways to do that and we have to shift our conversations away from all this negative stuff, but more into the positives about let's fix the process. we need more workers it just so happens also that the people that have moved from the latin american countries, this

latino cohort, they have the highest labor force participation rate they come here to work, not to go on welfare, not to do other things, but they come here to work they have the lowest crime rates of any cohort in the u.s.. and so there is a positive answer here, joe it's about let's focus on process. we can solve that. we have to understand quotas, in terms of how many people we need because we need workers of all types. not just double ph.d.s because if you look at the 7.2 million unfilled jobs today, a couple hundred thousand requires those ph.d.s there are 7 million that are part of our eco system in our economy. so we need a come presence i. view we need to encourage workers that want to come here and work and maybe not stay, and those who want to come and become citizens that's the great american story. the founding of our country whereas a bunch of people that left their native country.

they were workers but they didn't have representation they paid taxes and all that, they didn't like that system we want pay system that's american and i think your question is the right question i think there are answers, but i think people, people like us need to solve them, not have a political conversation about it because everybody needs -- >> this is good what you're doing and you're going to continue throughout the weekend, get the word out this is a good start maybe somewhere else, but this is a good start for getting the word out, sol. it could be the beginning of a solve which hopefully it is. anyway, appreciate --good luck godspeed >> thank you >> come back and update us on the progress >> all right, joe. thank you. >> you're welcome. >> when we come back, we've got some breaking tan da ou.s. gdp stick around

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welcome back to "squawk box. breaking news. our third time around the block on second quarter gdp, exactly as expected, 2%. rearview mirror, that's what it was our second look and that's what it is today personal consumption, however, dipped a bit, but keep in mind it dipped from 4.7 to 4.6. these are still really powerful numbers. on our core personal consumption expenditure, quarter over quarter, up 1.9. the price index 2.4. the 1.9 is a little hot.

now, let's look at our august read on trade balance, which is a deficit. 72.8 billion, sequentially following 72.3 and that's actually just a smidge higher than the 73.4, 73.5 we were expecting all right. let's get into jobless claims. last week there were 208 that get revised to 210. add 3,000. 213,000 is the new number. and 1.65 million on continuing claims which is a bit down from 1.665. you think we're done no, we're not done yet we have some inventory numbers for the month of august, retail inventories on chains, hotel inventories up 4/10 of a percent. that's a big jump up 4/10. we want to monitor any potential changes that come in through that revision process that affect gross domestic product. andrew, that was a lot of numbers. interest rates haven't moved much still holding gains in preopening equities.

back to you. >> thank you for that, rick. stick around don't want you to go anywhere. joining us now is harry knappe, senior economics reporter mike santoli and steve liesman. steve, you've been on the computer looking so professorial >> i'm thinking of a bugs bunny cartoon. you look in the kitchen, turnoff the lights, mice come out, turn on the lights they go away, everything is fine it's super boring. it was 2%, it is 2%. it's running 2% q3 going on all around the 2% is the trade data which is boosting the inventories which will be run off in the inventories you've got boeing, accumulating planes which is having a long-term impact i had a long talk with mike england about the impact of boeing which makes the 737-maxes

but doesn't sell them. that boosts inventories. you come up with all that drama on the outside with 2% and i watch the data come in every month, every week, every day, and they go into a rapid update and it comes out 2% the consumer 4.7 we had this little slow down it's important to talk about in business investment. it was up 4.4, now down 1% the big change there is going to be in structures, down 11% they're not building buildings i guess is the deal. government purchases are reall helping. and the consumer so bottom line, the government -- by the way, just kind of a little footnote here everybody had wrong the government spend forgive '18 they held counter in '18 it's still helping in '19, that big surge in spending. you have the consumer doing well partially because of that. but also because wages and unemployment are doing well. that's the story

>> i see the roadrunner where coyote runs you off the end of the cliff. he's fine until he looks down. >> i don't see it that way i'm pretty optimistic. >> that's what scared me that's where i thought you were going. >> we've been able to maintain 2% the world trade is falling, some of our partners are doing very badly. you could probably put back a quarter to half a percent, i think be, if global gdp were doing a little bit better. it would surge our exports but world trade is falling you know, people were talking earlier this morning what would be the impact of endling the trade war. i think it would be pretty substantial. >> in terms of what it means for the numbers on trade or in terms of what it means for the markets? >> well, the markets, there's lots of smart people who deal with the markets economics point of view, we might be shaving a quarter to a half a point off of our gdp, in part, because it's coming off of their -- i'm not saying trade is the only thing bugging the world, but wes knwe know it's oe of the big bugs of the world

>> the issue you're getting at but most important here, in 2018 on the back of the tax cuts and jobs act, we had an absolute surge in capital investment in structures for six months. but more importantly, in intellectual property products, in software investment, and that boom was likely related to that surge we had in productivity, which has now gone on for -- >> and the tax cuts. don't forget that was a big part -- the surge -- >> that was my point, on the back of the tax cuts and jobs act. you had this big surge so if you think about what's gone on this year, you had weak consumption in the first quarter largely because of the stock market crash in the fourth quarter a year ago it rebounded in the second quarter just like what happened in '87, right? and now it's kind of trending back towards this 2 and three quarter or so trend. but the mix has shifted. you're no longer getting that surge in investment. it's been cut in half. that to me is the trade war and the uncertainty that hits the

business confidence. >> by the way, that's what mark weinberger told us earlier today. that's what c.e.o.s are doing. >> we're in a really critical spot for that right now because the long-term trend is investment tends to run, capital investment tends to run below trend in presidential election years because of policy uncertainty. >> right >> getting some sort of trade now and restarting the capital investment would be crucial to getting that momentum. some of this is secular, right the investment in software is clearly secular. but getting that restarted would be crucial and then that -- the issue, too, is the mix of growth is more inflationary this year than it was last year. last year was a supply shock that lowered the trend inflation. this year, being skewed more to consumption and less to investment actually spurs it, inflation. guess what, the last four or five months we're running well above the fed target on every measure. >> what do you say -- >> the numbers today pretty much confirmed the market's premise

domestic economy is holding up fine the u.s. has been friendly to the market roughly 2% inflation at the upper end, and maybe we getbac to 2% ten year treasury notes. that's kind of what the market wants to see in a way. it looks to the bond market to decide if a number is good or bad or worrisome this number seems to be not worrisome. the stock market really wants the pop in treasury yields yesterday to hold and so far -- >> we're in a 2% as of today but as steve liesman, my rabbi on these things, my mentor, 2.6. >> bless you, my son >> 2.6 is the number don't forget that. someone else tried to forget that and it is 2.6, which is 30% higher than 2. >> the trouble you have, joe -- >> might go down we don't know. >> let me point out the interesting uncertainty here if you guys put that productivity chart back up and get barry to comment on it

barry is not talking about -- i want to praise what you're saying not talking about investing tomorrow next week or next month. if these productivity numbers you're look at -- i guess that's over here, whatever. if they change, look at that elevation right there. if that can sustain itself, it is a new ball game because we ain't changing -- you cannot give birth to a 25-year-old. right? you just can't happen. >> thank god >> thank god, right? it just can't happen the people who are going to work more or less are working we can adjust up or down their hours. it's the productivity numbers. it's innovation. it's efficiency. that is the key to what's going to happen in the stock market and in the economy and barry, now i set you up. >> i'll hit it really quickly here i know we're running out of time leisure and hospitality and restaurant sectors, right? one sector you look at unemployment is going down wages are rising at a percent

and a half faster than the overall wage rate. yet margins are going up starbucks was on after the earnings and said our comps went from 0 to 5 in the last two years because of technology. that technology adoption innovation is what's driving that productivity growth here's my best example of that go to terminal c in newark airport and try and pay a human being for a cup of coffee. you can't do it. you have to use an ipad. running out of bodies and adopting that technology is what's likely driving that productivity growth and that means we can grow at potentially 3% only with 7/10 of a percent population growth. >> if you get the 3% >> right you need the strong productivity >> you might like it better than 2. you probably would >> all right we have to leave the conversation there gentlemen, thank you >> all right it's me. coming up on the morning of ledge endriz legendary business executives, we have one of the greats help us close out the show.

aol co-founder steve case who orchestrated one of the greatest deals in history literally joins us to break down peloton's ipo, not the c.e.o we liked him stunning fall from grace and the u.s. tech sector uernd fire. stay stay tuned. you're watching "squawk box" on cnbc ♪ ♪ i got that vibe, got that vibe ♪ ♪ got that vibe, yeah, i ain't petty, ♪ ♪ looking fly, looking fly, ♪ ♪ looking fly, yeah, they ain't ready. ♪ ♪ i can shine, i can shine, ♪ ♪ i can shine. ♪ i'mma do what i'm made to do. ♪ ♪ i'mma do what i'm made to do. ♪ built for excellence. you start from the foundation up. the excellence is reaching dreams and chasing them at the same time. ♪

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welcome back to "squawk box. check out the futures indicated up about 36 points u.s. house intelligence panel

says it has received the declassified whistle-blower complaint that they were waiting for. in fact, we had dom on, he mentioned he had seen it it is from the office of director of national intelligence and they have received it now. >> in a new quarterly survey tv technology council weighing in on antitrust investigations into tech more than 55% of respondents say that facebook is a company most likely to face punishment as a result of the various anti-trust probes 17% say it will be google. and about 7% say amazon. now, councilmembers manage technology functions at companies across all sectors of the economy. you can look at -- they support the investigations interestingly enough 28% oppose it. more from this quarter survey is available at cnbc.com/tech you should check it out because it's pretty interesting stuff. >> now we're going to talk much

more about big tech. the ipo landscape and recent drama surrounding wework joining us for that is steve case, c.e.o. of the venture capital if i recall revolution best selling author and former c.e.o. of aol, of course revolution announced a new $215 million fund to invest in early-stage companies and, steve, it's great to see you >> great to be with you. >> you go around the country looking for great new companies that are not on the radar, they're not in silicon valley. you see something like we work, how do you judge some of the ipos we've seen recently >> we category around spaces and service, the momentum they built in the last decade is extraordinary. some of the challenges they've had in terms of governance and valuation and things like that, have to put it aside a little bit. the core idea, we back the company, it's a little different, convene is working with landlords on space ands

service. it's a big market opportunity. we work this week and also peloton this week, it's also an example, now there's two companies, you know, significant companies, $10 billion valuation type companies out of new york city and ten years ago most people said san francisco owned the future and new york was having trouble breaking through we're trying to have that same dynamic in other cities around the country. how do you get more $10 billion companies in chicago and detroit and indianapolis and columbus. that's what it's all about >> what's been your biggest success story? >> a company in detroit we seeded we had a billion dollar valuation. they went from five employees in detroit, i was there last week visiting, they have 700 employees in detroit the perfect example of innovation happening most people think stock ex would be in silicon valley it's in detroit. we've backed over 100 companies in 70 cities and we're excited

by what we're seeing momentum is building still a lot of work to do, but we're seeing great momentum. >> i think stock ex has more street cred because they're from detroit. >> once you understood the story, it gave some broader credibility. the other piece we're working on, released a play book -- other cities in columbus, 65,000 square foot former shoe factory and turn it into kind of an innovation factory so cities all around the country are doing amazing things you go to our revolution.com website, you can download that play book for free >> is that part of what has to happen, you have to have somebody willing to invest a lot and be an anchor tenant or be something that is a magnet before you can build around it >> it's a mix. having something like that lead the way is helpful

having successful exit when salesforce acquired exact target for $3 billion in indianapolis salesforce staff moved from 1,000 people to 2000 people. but some people left, including scott darcy, left to start new companies. now there's 30 enterprise software companies in indianapolis and again, even five years ago, certainly ten years ago, nobody would have thought of indianapolis as kind of a hub for enterprise software company. so the story here is starting to emerge that you have venture capital, still focused on the coast. last year 57% of venture capital went to just california, new york and massachusetts three states are getting more capital, ohio, pennsylvania and michigan, virginia, all less than 1% of venture capital so the entrepreneurs are there, the ideas are there, the ability to build break-out companies are there. the capital is not yet there we need to fix that. that's what we're trying to do with the est are >> what about the stories and

investigations into big tech there is something coming from regulators >> no question, i'm not surprised. when i wrote the book, the third wave, three years ago, i said the role of policy was going to become more important. predicted a bit of backlash against silicon valley it ties with the thesis, the sense in parts of the country, innovation happening in places like silicon valley is creating disruption there, creating jobs and wealth there, but displacing jobs in the rest of the country. people are starting to recognize that more and more companies -- this third wave of the internet -- policy is front and center being in washington, d.c. -- >> do you encourage investigations will you come down on the side -- if they asked -- are you in support of these things, in favor, against it? where are you at >> i'm in favor of silicon valley, innovators in general engaging with policy makers in washington, d.c., brussels -- >> let me ask it to you in a different way. you have stakes in a lot of companies that invariably have

to use facebook and google in terms of customer acquisition. there is no other way to get oftentimes these customers if the department of justice called you up and said, steve, come to my office, i want to hear your view of whether this is anti-competitive or not you would tell him what? >> i would say the big companies have a significant presence in the market it's not quite 20 years, 25 years ago i was involved in the microsoft antitrust. at the time i think 97% of operating systems were microsoft and windows and it became an essential -- i don't think it's quite there. but the dominance a few companies have does have a chilling impact in terms of innovation -- >> you think it does they do it illegally that's the distinction >> i don't know all the details -- >> i'm not suggesting they do. >> i would say it is difficult to imagine venture capitalists funding companies that compete directly against facebook, for example, because they have such a lock on the market now, that can change over time obviously -- i had an experience when i was running aol, had 50% of the internet traffic and

obviously has been diminished. things can change. the bigger issue is the role of policy regulations in the future people don't like to hear about this particularly in silicon valley when you're dealing with people's health, drones flying in the skies, driverless cars, you need to have regulation. you need to have constructive dialogue what's the right balance how do you usher in innovation in a way that's right for society? having that discussion around the role of policy and the role of big tech is important and having more people focused on innovation all around the country and not just in silicon valley is a step in the right direction. >> with he wee were talking aboe health of the market overall you hear about people worried about the window and getting out. what do you think as somebody who has companies all over the country? >> the ipo market has been

strong what has changed in the last couple decades is now companies are going public like a peloton when they are very well-developed and very high valuations when aol went public in 1992, it was the first internet company to go public, we raised $10 million in the valuation that day was $70 million. when amazon went public, it was 300 million. microsoft was about 300 million. now they're waiting until they're 5 or 10 or 20 billion. that deprives individual investors of the ability to have that growth. generally the companies have gone public because institutional investors decided it's time to pass the baton. >> pass the baton or pass the bag, one of the two. >> the up side of 20 years ago is not there today that's not saying the companies can't continue to grow peloton is a great example of a great idea couldn't raise venture capital initially. people didn't think it was going to work. less than ten years later it's $8 billion, probably trade $10 billion or higher. the great thing about entrepreneurship, we need to encourage it for more people in

more places, not just folks on the coast. >> what do you think about the valuation numbers overall? you mentioned it in reference to wework some of the numbers are like made up numbers. apples to apples >> the late stage private valuations, last round before ipos has gotten inflated there are a lot of folks who are trying to pile into these companies. they know they're winning companies and they're just trying to get in and sometimes they're not sensitive as valuation as they should be. they are so eager to get in, they're willing to agree to any terms. as a result you are seeing some ipos that are sincere rounds we're staying in the revolution. we don't play in that. we have a seed fund, venture fund and growth fund growth fund is looking to identify companies when they're worth 2 or $300 million, make them billion dollar. >> great to see you.

>> at the new york stock exchange, jim cramer joins us. peloton priced at the high end does that say anything about the environment for ipos at this point? are they better than what we've seen the last few, i guess, in the wework situation >> i think it does look, i think that this is one that they're portraying as an eco system, portraying the subscription economy, a long-term runway versus other vehicles people stay in shape versus a health care company i think it's a company that is an exer cycle. i think it's great they can portray these things i wonder where it will be two years from now people get excited about a stock like this. they shouldn't be. i wish this would take place in '22, '23 and go higher this will be exciting today, tomorrow, and then i think we'll look back and say what were we thinking it's a very good -- my wife has it she regularly hangs laundry on it which is terrific because i

don't want that laundry on my closet but frankly, i think it's something that it's not a flash in the pan but it's not something people should be so excited about this is how people get hurt. >> the wire services say stock sell off and bond yields fall after they -- the house permanent select committee on intelligence released the declassified whistle-blower -- >> just out moments ago. >> i looked at it already. you can click on it. i scanned through it pretty quickly. the market didn't sell off that much bonds went from ten year, 1.71 to 1.69. saw the gdp number i'm not sure it's affected that much, jim. >> i think you're right. the whistle-blower complaint versus how the president handled himself yesterday, the idea that perhaps the democrats went too far, that was the narrative of the stock market the narrative of the media is the president is in a lot of trouble. there's a big gulf there, joe. you know which one i care more

about, the market. i think the mainstream media is trying to portray this as really big. meanwhile, the ukraine funny man leader basically said, i don't know, i wasn't pressured i find it somehow became a sideshow again maybe the president is very good at making a sideshow there will be people who say, jim, how can you say that? you're obviously on the hook with the president i'm not. i'm saying the stock market didn't go down, joe. it didn't go down. >> maybe we're kind of like old school that's the first thing i looked at two days ago when it first started really breaking, and andrew and i talked about it this morning people thought we were crazy they didn't want us talking about it in fact, the market was up 115 points that doesn't look like a constitutional crisis. >> what does it have to do with the price multiple with nike nothing. >> we'll see you a little bit later for elizabeth warren starts getting -- starts getting some traction. maybe the market will sit up and take notice of that. >> she's not going to confiscate

my house i have that on good authority. not my house that's over reaching by people saying what she'll be up to. i get to keep my house >> that's a second term. thanks, jim. we'll see you. depends, if you're bernie, she can choose from three or four houses and don't miss an exclusive interview coming up at the top of the hour with c.e.o. of philip morris international. who is that, andrew? and you should be mad at simple things that are unnecessarily complicated. but you're not mad, because you're trading with e*trade, which isn't complicated. their app makes trading quick and simple so you can strike when the time is right. don't get mad, get e*trade and start trading today.

that's all for us today. david faber now waiting in the wings with the big interview here from the nasdaq in a moment make sure you join us tomorrow "squawk on the street" begins right now. ♪ ♪ ♪ uno, dos, tres ♪ good thursday morning. welcome to "squawk on the street, with jim cramer at the new york stock exchange. we'll have an interview with the ceo of philip morris international. the futures are green. we'll get a look at the whistleblower complaint, ahead of