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 the house complaint

q2 is at 10% the president says markets would crash if impeachment moves forward. plus, vaping fallout philip morris joining us after calling off merger talks and shares of beyond meat soars, as mcdonald's begins testing, the plt, a tomato burger. the house impeachment inquiry remains in focus futures are pairing their gains as the house releases the whistleblower complaint. joseph maguire is set to testify on the hill, before house intelligence we'll keep you apprised of headlines for that the president did retweet a comment this morning, suggesting that the markets would crash, if impeachment happens. >> the history of when clinton was impeached is one of the first day tech was down, 4.5%.

nasdaq, after that, it was the greatest buyup effort. i'm not going to buy-in if the markets crash. i would buy-in if he was convicted by the senate. you need two-thirds of the senate i feel like where we are here is -- like, the whistleblower -- you know where we're back to we're back to one of the situation where's there's people that hate trump so much, you see what this whistleblower said that's a lockdown. what's lockdown? this is not the smoking gun that a lot of people were expecting, except for the people that hate trump so much that anything is a smoking gun. >> this is not a trial impeachment is a political process, not a judicial one. >> right >> it's up to the house. according to politico, they have the votes if they want >> i think that speaker pelosi is a great headcounter

but a week ago, i know she didn't want this new evidence changed her mind. it's great to people change their mind i believe, even though the democrats assured me this would not happen, you read the stories and you don't know what happened other than the legendary ukraine funny man seems to be happy. maybe he was the wrong guy to say that trump bullied h im. again, you say, i don't know this is too hard forget about it. how did nike do? >> how this inquiry process impacts trade. passage of usmca any spending deal. november 21st, you're facing a shutdown of the government not to mention gun control and drug pricing >> usmca is a big deal there's a lot of great companies in a need that i know that speaker pelosi wanted that to happen last week.

was worried about safeguards speaking with the president's people yesterday, it is harder to challenge thimagine that som trying to impeach you would sit down and make a big deal with you. that hurts u.p.s., ksu, the companies i spoke to wanted this >> kantor is out there, saying transport is essential >> transport is hurt by that there's no two ways about it, that's just true you need nancy pelosi to say, this is not a risk the american person needs it that's a harder dialogue, a harder storyline from what she said yesterday it's disparaging from the view of stocks. we want to pay less for stocks, because of the fight there are people that say, listen, jim, this is a constitutional crisis.

we should sell all stocks. every crisis, other than 2007, have buying opportunities. the fundamentals matter. really, great read across the board for the technology k.b. holmes, really amazing. whistleblower, ukraine funny man. hard to dovetail i pick up t"the new york times." and it says that trump has been found guilty oh, no not yet. it's so hard to understand i'm not saying democrat or republican i'm saying it's hard to understand >> if we're going to have a conversation about fundamentals, corporate profits are starting to get squeezed. there's trade and incremental costs on trade but wages are um we get pce now >> i think wages should be up. workers have been underpaid.

and they're catching up. in the k.b. holmes call, the labor costs are going up there's a shortage of workers. we don't allow immigrants to come in as we used to. you just have more immigrants come in. that's part of the price -- that's part of the collateral damage going for 2% unemployment this economy is still strong, except for the companies that are related to china those that relate this to china are missing the point. you go over to nike. this is a company by china and for china, of china. and nike was incredible. starbucks in china china is the strongest part. if we had tim cook, he would say, china is really strong. it is steel. it is -- there are lots of

certain lumber today the lumber companies that made a big bet with china that's strong. when i look at the retailers, like walmart, amazon, which is in the crosshairs of the government target and costco is doing so great home te depot, another report today. >> it's all about the consumer here and the wheels of commerce are continuing to turn, david faber. whether it's mma or a big ipo where you are. >> we'll talk about pel peloton later. the talks between philip morris yesterday. joining us in a cnbc exclusive, is the ceo of philip morris international, andre

calantzopoulos they concluded without reaching an agreement, yesterday or the day prior. why were you unable to reach an agreement? >> as you know, we already have a relationship with altria because of the license for distribution in the u.s. what we looked at is if there's a better way to get value for shareholders, in terms of additional revenue, and inner jis. in additi more focus on both sides. the environment taken into consideration. shareholder sentiment. the effort required and the priorities on the market the best course of action is

discussions on the merger. and focus, instead, on the forthcoming partnership. >> my understanding is there was a likelihood of a deal, until this vaping crisis, if we can call it that it began to become something of great significance do you think you would have reached an agreement, were it not for banning products in the u.s. and around the world. >> yeah. it is an evolving environment, just now in the u.s. and i think what we see is -- first of all, to look at the bigger context, all tobacco-containing product, including nicotine products are regulated by the fda we had an exception for a period of time for the vape category.

if i remember the conversations, it was a small company and small procedu entrepreneurs and it was a process. it is an emotional issue, as you know it involves using by teenagers and vaping this should be the priority by everybody to address this is a serious issue. i think, over time, if we take a two-year of three-year horizon, we will be going through the application process, say end of '21, '22, we will see a highly regulated, in terms of product, marketing and other restrictions category but i do believe that at the end, strong brands and companies that have size and are doing the right things, will be the ones that will be the winners

forecasting exactly how this is going to happen with high precision is a bit difficult today. >> is that why, given the lack of ability to forecast right now in this moment, to reach a deal with altria? >> no. i think that's not the case. we took everything in consideration. including investor sentiment >> tell me about investor sentiment. >> do you think they failed to understand the strategic rationale for the deal you weren't able to talk about it >> exactly >> people were talking to me about the ability to bring together the two organizations, invest more in r&d, using the window that is open now, as an opportunity. did your shareholder base appreciate why you wanted to do it >> shareholders have their own opinion, we couldn't explain this is closed the discussions have ended for the foreseeable future

we can only focus on getting the product that has authorization by fda on the market we have a corridor because there will be a lot of change in the vapor market that's where the companies are going to focus >> i think, aren't you in some ways, not in line with your own shareholder base are they not understanding some of the weakness you see in the overall business or the need to move more aggressively or are you failing to understand their concerns in some fashion >> i think sometimes there is a little bit of confusion amongst shareholders in general, about all of the new categories. that's understandable because the category is new. there's discussion about decline of cigarettes. and obviously, as the new categories emerge, and consumers and smokers, move from

cigarettes to this alternative, hopefully they will be proven to be better. we will have a decline in cigarettes if we take japan, for example. we have a 25% decline in the cigarette market because products hit like others, have convinced consumers to switch the product. this is good for public health this is what is going to happen. however, who is going to be the winner and the loser is what shareholders are worried about we're positioned in this market and internationally. we have the portfolio of products for, you know, the new world. we have the first, as i said, that is approved, by the fda

i think we're well-positioned to be the winners in the longer term, where we hope one day cigarettes will stop existing and better products will be used by people that will not otherwise switch that's how i see it. now, i understand that anytime there is transition in industry, shareholders are worried but i think both companies are very well-positioned for the future >> okay. >> i think also, you know, we see very good first steps. announced yesterday, from juul, that has been at the center of the discussion >> yes, it has >> it's not the only vapor company out there. but it's the first very good step and i think that was the right decision from the board of directors. also, with the experience from the regulated category, playing a role

and playing going forward. we need to focus now, on getting the products through the process of the fda, because there's a lot of emotion and a lot of overreaction sometimes and address the youth use of nicotine and that requires quite a lot of action not only strict regulations of flavors but requires age limits, access control of retail, technology to do that, technology in the devices and education. we're told that children don't smoke. >> i want to stop there, if i can. my colleagues at the new york stock exchange, have a question. >> i have to question whether you think that both companies have a good future only thing that altria had a renegade company called juul you chose to go through the fda. would you have advised juul to

take the strategy they did or would it have been better had they gone through the fda, rather than fool people -- i'm sorry. convince people over 21 -- i'm sorry, they used a lot of underaged people what i'm saying to you, is they did it the right way did you expect juul would do the back door? and did you think that was right? i think juul and any other product, has to go through the fda. we think a nicotine product must be regulated and the fda has the best process in the world and i encourage everywhere else to adopt similar processes it eliminates confusion and a level play field we're in the process in the u.s., as of may next year,

everybody has to submit pmta these things take time and a lot of investment to do. the companies can do it. i think the thing will be better addressed. premarket will be reviewed and postmarket, they will be followed by the fda. and i think, under this scenario, we will have a much better industry and the best players and the best brands will prevail. i encourage everybody to go there as fast as possible. >> shouldn't juul just pull its product? suspend it everywhere in this country and maybe the world, until we get the data we need? why shouldn't juul say, full stop let's do this. wouldn't that be the right thing? i have kids. i wish they would do that. >> well, as i said, product is one thing and i think we need strict regulations of flavors. i'm not mistaken

juul is the only company that's removed flavors. i see states regulating the products and taking them out of the market we have to be careful not to have another exaggerated reaction we need to focus on kids not putting their hands on this product. but also, take into consideration the millions of americans today, that use a vapor product. you know, be careful that what is going to happen to these people, if we have a blanket elimination or ban of the product. i think we need some moderation here and longer-term thinking once the fda process has finished, things will become calmer and much more clear >> what does that mean for the u.s. market for the time being and i mention that imperial brands slashed its growth expectations because of next generation products in the u.s., namely vaping, for example,

deteriorated over the last month or so. given the concern. is that tyour expectation is the market for new and replacement tobacco products going to be in flux, if not doing well for some time >> the companies do things right. we put them for a scientific assessment, clinical and preclinical. and then, we submit to the authorities, including dfa consumers get the assurance that they can trust the product and what we communicate as a manufacturer is truthful and not misleading >> should make it clear. the tobacco product, you're partnered with altria, here in the u.s. >> we should not be conflating vaping in general. i think when products go through the fda process, and they do the right assessment, we'll see that

vapor products are better than cigarettes and more appropriate for public health. >> you believe that? >> they have to go through the process. >> you believe they will be better for health than tobacco >> yes, i do >> why >> they have much more toxicity and exposure to chemicals, vastly lower than cigarettes the thing is, they have to go through the process. once this is done, i think the category will recover. but with the right restrictions, the right limitations, the right access controls, so we don't have, you know, kids using nicotine products. >> right >> and then, adults have options to switch. and this category is the future. and i think we are very well positioned to succeed in the category because we are the leader in this category. >> you believe, your goal is to replace tobacco. >> absolutely. >> is that going to be hindered

in part because of the concern, now, about vaping and, perhaps, even simply because people are concerned about the replacement products overall are they just going to stay with tobacco longer >> i think some of the comments made are confusing people who smoke today. sometimes they don't know if the products are worse than secrets. 50% of americans believe that the vapor products are worse than secrets cigarettes >> i think that's wrong. >> we have people dying from vaping >> it's deeply concerning that people die, irrespective of the reason from what i understand, the fda and the cdc, are investigating the health reasons for that. but my understanding is, this is not concerning traditional vaping products that contain nicotine it concerns other substances we should be careful not to create confusion among the

millions that use vapor products this is not traditional vaping products with nicotine and actually, the products existed in the market. >> right >> for so many years and we never had an issue i think we have to let the authorities conduct their investigation. don't buy products from the black market that's where we have an issue. >> before we end, let's get back to the deal itself you're not talking with altria any longer about this merger of equals do you think you would re-enter those talks when the conditions are clearer in terms of the products that you're talking about? >> well, the talks have ended. and for the foreseeable future, we'll focus on other things that we do together there are many ways to continue our collaboration. i think coming out of the

discussions, we're better aligned on many things >> why are you better aligned on many things? >> we're spending time much more closely. we are aligned obvio ee eed on . and we have enough ability, without the merger, to further both portfolio of companies and create shareholder value for both companies that's still a good collaboration. >> we look forward to checking in with you along the way. appreciate you taking the time this morning >> thank you very much >> andre calantzopoulos back over to you peloton is going public today, after pricing the ipo on the high end of the range. also ahead, capitalizing on 5g we have an exclusive with the ceos of verizon, qualcomm. facebook, gm and a lot more en weomba ce ck.h

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david faber at the nasdaq today. my colleagues are down at the new york stock exchange. we're awaiting the open of peloton here at the nasdaq that's not why it was here but it's always interesting to be at the same place where the ipo will open. let's get to "the mad dash." jim, take it away. >> yeah. very exciting news if you own stock of beyond meat mcdonald's is testing a plant-based burger in canada i talked to the ceo this morning. this is a dream come true. he is confident that people will

like it. of course, it's his. he is talking about mcdonald's being the moby dick. and he's gotten moby dick. i would not bet against this faux burger. i would not bet against this better delivery system for grain for your body than going through a cow. i think this is going to succeed. i welcome mr. eastbrook to come on he has always been shy this has the stock flying and i don't think it's done. >> you don't >> no. there's a lot of people who like it you know, look let me be careful here where they did the big secondary, not far from here, has been a lid but the stock is shorted there's a lot of excitement for it is it a flash in the pan no should the stock be as high as it is? no but people will be juiced by the fact they're at mcdonald's

we've been waiting and waiting maybe you have to go to southwestern ontario, which is also the cannabis capital of the world. >> it's only 28 restaurants. and it's only 12 weeks how do we know it's going to stick? >> i have never seen ethan brown be this excited. these a proth selytizer. people believe in the ethos, no cow no, methane. no cholesterol i would bet with nonmeat, not against it >> another big piece of news, is reports that disney will add plant-based recipes for its park menu at disney world and disneyland >> people have to recognize this is not an vegetarian issue

it's an ethos millennial thing i've had burgers with ethan. i've had a lot of things with ethan. steak, tacos i would like to add them to bar san miguel and i think it's a wider issue they like the taste and they like the fact that it's not beef and slaughtering cows. there's a lot of people that care more about these things than my ygeneration we thought, we need to shove a bolt in his head and kill it a lot of people think that's bad. i don't blame them for thinking that way my daughter who feels that way, loves beyond meat. someone was criticizing me earlier. vape, you're upset because it's your father-in-law i'm upset because there's 150,000 people who will die of lung cancer. a lot of people think this is heal healthier. >> we're going to watch it a big move in the premarket.

let's get the opening bell at the stock exchange celebrating 20 years at the nasdaq peloton, interactive fitness platform, celebrating the ipo today. we'll have more on pton, high end of the range valuation over $8 billion, twice the last round >> yeah. it's a shame it's doing this the good ones don't go the good ones don't work like this the good ones aren't priced at the high they are ho-hum and they catch on the bad ones are priced at the high, open way too high. suck a lot of people in. first day is real good and then goes down. i urge people to not buy at the opening. it would -- you might be able to make a few bucks but you'll never get out in time. interesting enough, that who is interested in peloton, mark

bentioch i would like to put a stick mic in his face and be obnoxious, like i did with dara >> the net new subs are the true north. he said, we are prioritizing growth over profitability. >> the numbers are great there was a moment in time, when people were prioritizing growth or profitability, had the best stocks that came and went this is the opposite right now, we're in a terrible market for that. maybe today is the first day that people want that. i had toolio their stock is straight down their company is profitable. the market doesn't want that right now. i appreciate that peloton wants us to think that but people buying the stock have to recognize that's not what the

stock market wants or wework would become product >> in pricing the deal, they said, we weren't xwregreedy they left something on the table. >> i'm sure you've taken a look at smile direct recently that's somethinothing short of disastrous, since its initial public offering, one that was touted of being strong at the open and has proven otherwise. what wework would have meant if it tried to come to the public markets. it would have been public, which would have been a key thing for it it's a tough market right now. and i'm sure you saw endeavor, lowering the price range, and lowering the number of shares or the amount it's going to offer the ufc, no doubt, is a popular growth property. but there's concerns about the rest of that business. i know you are both represented by them. we can talk about it a bit,

right? >> smile direct is the disaster of this era. endeav endeav endeavor, i don't mind a stock where the range just kind of holds in there a stock where the range goes down, is usually a sign there's no institutional support whatsoever endeavor, they are, my agent i'm reluctant to talk about that i'm saying in general, you want a stock that comes at pretty much the range that we thought it has good demand, it isn't exciting and goes up high. and then, it goes up over time ali yeti, which i lot of people thought was going to be a dom. it's absolutely true peloton's red-hot. but also true, is red-hot stocks on an ipo, have not been great >> at one point yesterday, 75% of the ipos were down for the week >> that's the problem. i don't want people to lose money. maybe this is the one, where you can make money

but i have to tell you, that would be unusual >> all right i got some calls out this morning. adding target to the number one slot >> target is fabulous. this is the same day and macy's is going same day jeff gwinnett is talking about how important that is. he's reinvented target unless you've been to one of the small format targets or targets where there's no other store, you probably don't understand why it's going up. if you're next to a greatland target, the old-fashioned. the new targets are exciting and they are local they are all about the neighborhood i love that. >> there's a lock at costco, home depot is that w.a.t.c.h.

it spells w.a.t.c.h. i am looking for the etf to make money. and they blame me. >> speaking of acronyms. f.a.n.g. d.o.j. is following up on facebook and if you include ftc, state a.g.s and house judiciary. >> i'm looking for the defense department going after facebook. enough how many people can go after facebook if it's bad, stop using it here's the amazing thing -- you can stop using instagram it's allowed the government acts like we're all stuck, handcuffed to facebook and we're going to break the handcuffs. it's a voluntary thing, for heaven's sake. did they destroy everybody else? >> antitrust law is not a popularity contest >> no. there's two kinds of antitrust

antitrust that says, we have to keep prices low. which facebook does. and the old style antitrust, against standard oil we're in an era, where we're using the old style aenlt trust. they're too powerful i care about the products that drive other people out of business i think facebook has never -- they have not driven amazon, they haven't driven google out of business. they're smart, snap, twitter, all in business. look at twitter. both mark bentioch say they bought twitter >> snap might argue differently. we had ideas that were stolen. >> what was priority about what snap did >> you don't think stories is a complete copy of snap? >> what did nelson pelt say when i was interviewing him last

week we'll steal anything and it's great. the public domain. they're smart. i use instagram. i use instagram. my daughter used it to build a business my wife uses it to look at what my daughter is up to everybody uses it for different things but the government has decided -- how many agencies >> four. >> four. okay i want to know right now, why isn't the secretary of the navy looking into this? can we have one agency one agency let's amalgamate them. >> overlap >> one agency. that's all they have to do is investigate facebook why don't we amalgamate them why don't we have a czar >> speaking of all this, guys, amazon, a big product announcement using voice assist bezos spoke to reporters saying that needs facial recognition. >> facial recognition, the time has come

regulating the new facebook product, was a lot like carrie, when she was able to move things with teledenikinesitelekinesis. are they listening to what i'm saying i don't want that. that would be bad. and a lot of people feel that because i downloaded whatsapp, they're following me everywhere. if that's the case, i don't like that have an agency look into that. the two things the government look into, is a memo to ukraine funny man president. and they're looking into facebook i think people are looking at me that might cause 150,000 deaths, which is tobacco i don't find these are enemies of the people. i think china -- i like that as

something to look into but they're not in congress. >> we're not in a 5g world yet, david, which you're going to talk more about this morning >> looking forward to around 11:00, on "squawk alley. i'm going to have a unique panel. we're going to talk about 5g in the way we haven't before. hans vesberg from verizon, and this is not going to be specifics about their companies, as we're going to delve into the opportunity here, where we stand. we talk often about what it means for consumers, in terms of handsets and speeds. the internet of things and the applications for the factory floor and driving, for so many things is probably far greater than what it means for the fact you're going to be able to download a movie more quickly. we'll focus on that. the opportunity and the threat

for companies like ibm and where we stand rare to get three ceos of these companies together very much looking forward to what i hope will be an interesting discussion >> you know, last night on the conference call. talking about 5g it's going to be a savior for tech companies it will be a savior for dow chemical 5g keeps a lot of companies, not just american tower, doing, as a reason why you should own their stocks what do you think? >> it's possible, but we're a ways away from the industrial revolution, that you're talking about, in terms of how things can be further automated with artificial intelligence, as well everything have a chip in it the lack of latencies, so you can connect to the edge of the network. that's where the computing power will be. will amazon move aws, there,as

where it currently is. there's going to be the potential for great efficiencies i want to talk to vestberg, and mollenkopf and rometty, when that will be here because that's uncertain. >> this is huawei in china they're way ahead of us. and a lot of people, including the president of the united states, we may have to have sprint merge with t-mobile, to stay in the race john ledger is not there but it's the elephant in the room we need that deal to close david, is that deal going to close? i keep reading things about how there's roadblocks >> it's hard to say, jim the states are lit gagt. they're going to potentially go to trial it's unclear most people believe that the companies have a better than 50%

chance of getting it done. there is a key question mark, if states are going to prevail. despite the fact that the department of justice, has reached a deal with the parties involved, that they feel will retain and actually enhance competition in the requireless mark wireless market. it's a strange situation >> we lost our gains at the open mcdonald's is leading the dow for the moment let's get to bob >> sort of a flat opening. but a very typical pattern when there's less interest or followthrough on the china trade talks. you get cyclicals underperforming and defense sectors, outperforming there's your cyclicals metals, mining, bank stocks. defense stocks, staples, utilities, sitting at historic

highs. let's talk about the hot ipo market and the market overall three of the four haven't changed. trade war issues, global and manufacturing slowdown and flat earnings, lhigh valuations it's the same as the secoquarte. down slightly. but it's been flattish, the main story all year and the new x-factor here. the impeachment inquiry. a lot of questions about what that means for the markets we don't have answers. we don't have answers about the u.s., mexico, canada trade agreeme agreement. and whether nancy pelosi is going to push that through or not. we don't have the answers to that drug pricing out there this is an added x-factor for the overall market we've been talking a lot about the ipo market and how it's doing here we're waiting for peloton to come here. they priced at the high end of the range. that's good news

it's been an ugly month for ipos this happens when markets get jittery. look at the ipo, etf, up 30% going into september, the big performers and we're sitting at the lowest levels since february. this is a basket of the last 60 or so larger ipos. it's a good indication of pricing for recent ipos. what are the issues? what are the problems out there? we've seen a big valuation pushback, particularly on things like software ipos, that are based on potential for future problems and future earnings out there. when the market gets jittery, they get pushed back on the valuations profitability issues come to the fore again and that's a major issue and i also think legitimately, the wework governance issues, the issues around there by wework, the multiclass

structure, the family ties, that's become more important it had an effect on the valuation question on wework and has an effect on ipos in general. that's still coming to the fore. recent ipos this week. lyft, this is a new low for lyft down 10% for the week. we see some of the other names pinterest, they went public in april. that's a new low for slack and smile direct, that's not aty p typo 20% down we're in a process of evaluating the ipos and how much you want to push back on the valuations and that's infecting the ipo market we're waiting for endeavor group. they will be pricing tonight this is the old william morris i haven't seen any changes in their s.e.c. filings 30 to 32 haven't seen the price talks in the s.e.c. filings that matters right now

we'll keep an eye on that and let you know if anything happens. let's get to the pits, as well rick santelli is at the cme group in chicago >> good morning. the data was fascinating no surprise on gdp some of the numbers moved a bit. for all practical purposes, as expected, some inventory builds. but if you look at a chart of the market, what's fascinating on the interday of tens, is the minute we tawalked in and opened the futures market from that bell, it started to drip away. it didn't pay much attention to the data that was as much exp t expected you look at the one week chart and you will see we gave back yesterday's rate gains. but the market has bitten a bit. it's grabbing. these are important levels between 165 and 173 in tens. maybe the biggest news, how many weeks or months ago, the curve,

everybody was biting their nails over it. let's look at it since august 1st. there's stabilization here it's not very positive but then again, it was not very negative minus five on the bottom and yesterday, did a lot of work at plus 4 or 5 and the biggest news of the week, continues to be with regard to exchange look at the euro versus the dollar, yesterday was a 20-month low against the greenback. and the dollar closed at the best level since 2017. as the two-day chart shows, we rallied up and we're giving it back we lost the bid here we're down about one cent. it seems many times the profile of the dollar index is, it goes sideways, spikes and retraces. we want to see where this takes us back to you. >> thank you

as we said earlier, shares of beyond meat are way up today. mcdonald's will test the plt, plant, lettuce and tomato sandwich we talked to steve easterbrook in may >> when you look at the meat ideas, what will be interesting for us is see who is interested in that? is it an existing customer that wants an alternative option? is it bringing a new customer in we're exploring it to understand it better. and customers' acceptability of that particular type of product because if there's a buzz around it at the moment but it's clearly prepared in a different way than a traditional beef patty is. we're keeping a close eye on it. watch this space >> that's telling, jim, they didn't go anywhere gmos.

if they can engineer this in the kitchen, wow >> i had a professional chef make a bunch of dishes when i ate with the ceo i think the gmo thing would be a big issue. as great as it tastes, is gmo. and the ethos of the people who are eating this, are anti-gmo. i love easterbrook i think he recognizes this is not about vegetarians. it's about another way to think about food that's why i think it's going to have more popularity than just vegetarians. >> we're going to watch this test >> oh, my god. i'm going to fly up there and eat 1,000 of them. when we come back, we will watch peloton's ipo. stick around for the first trade, obviously the dow is down 15 and the s&p is down 7. i get it all the time.

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still hanging on to the 49 level as we wait for earnings

after the bell stocks up more than 50% so far for the year we will have an exclusive with the ceo tomorrow 9:00 a.m. ene men time wh wco back, it's stop trading with jim dow's down 9 well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade iit's not "acceptable or nothing." and it's definitely not "close enough or nothing." mercedes-benz suvs were engineered with only one mission in mind. to be the best. in the category, in the industry...in the world. lease the gla 250 suv for just $329 a month

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let's get to zwrjim and stop trade. >> procter & gamble has been a great leader take a look at the chart it's up 35% since the year began. that was the one to buy. not all this crazy growth. i have to hand it to those guys. when i interviewed david taylor and nelson last week, it's pretty clear that this is not done it can go higher still. >> the thesis that the giants couldn't innovate their way out of a paper bag was -- >> i know. >> although maybe peltz was the -- >> well, i think he would say they had a lot of good things in place. no slight to union labor, but they have become the big growth engine. >> how about tonight >> i've got taylor morrison on tonight. the conference call, housing punches. housing is not needed with china, so it's just terrific

sheryl is a fantastic spokesperson for the industry. some said jim, you care too much about juul i care about 250,000 who die from lung cancer >> one of the biggest stories in business as you say on twitter a few moments ago. we'll see you tonight. "mad money" 6:00 p.m. eastern. when we come back, what a morning. will peloton have an ueat pb public debut we'll wait for that first trade with the dow down 28 because they need the massive capacity of 5g with ultra wideband, so more screaming, streaming, posting fans... can experience 5g all at once. this is happening in 13 stadiums all across the country. now if verizon 5g can do this for the nfl... imagine what it can do for you. liberty mutual customizes your car insurance, so you only pay for what you need. i wish i could shake your hand.

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welcome back to "squawk on the street." david favors on his way to the global citizens t2 summit. he's going to join us in the next hour with the ceos of verizon, wall com and ibm. early gains got lost quickly we're down 22 as we watch the peloton ipo, house intelligence and a lot more. >> including some economic data pending home sales let's get to diana with the news. >> pending home sales increased

1.6% in august for the month up 2.5% annually this is right along with expectations pndi p pending home sales measure signed contracts to buy existing homes. the real news is in the west sales were up everywhere west but in the west they were up significantly, 3% for the month and a startling 8% year over year we had seen supplies very low in the west, especially for affordable homes, but we're really seeing the action in this market on the higher end, the realtors saying clearly people are getting a boost from this big drop in mortgage rates that we saw over the summer we saw that in the new home sales numbers yesterday. big beats on newly built home sales. we're seeing the reaction from the bayers, but mostly in the mid to the higher end of the market and realtors are watching closely to see where mortgage rates go to see if we can figure out the end of the year out strong a nice jump, 1.6% for the month, 2.5% for the year on pending home sales back to you guys. >> the latest in the string of good housing our road map for the hour

starts with peloton's public debut. we'll take you to the nasdaq as soon as it opens for trading. plus what the ceos of phillip morris saying about the health concerns about vaping. and shares of beyond meat soaring as mcdonald's begins testing the plt. first up, though, peloton set to go public. fitness company pricing at the high end of the expected range, $29 per share. bert bert bertha coombs. >> what's been a volatile week and month for ipos, it was something that did clear peloton investors to see the price at the top of the range become the fourth largest deal of the year raising $1.1 billion selling 40 million shares giving it a valuation north of $8 billion. this morning on "squawk box" the ceo says what he'd like investors to focus on is its

growth certainly it is an addictive type of service that a lot of people sign on for they buy those expensive bikes and treadmills the company's growth in terms of top line doubled in the last fiscal year to nearly $1 billion in revenues. but its losses have extended it costs a lot to create the content. they lost north of $240 million. nonetheless, with the pricing today, one of the things that ceos are hoping for is the stock does end higher. >> we want some momentum we think we generally left something on the table in pricing. my cfo said we don't want to be a dollar smart, so we hope it prices up. >> we saw a couple of weeks ago smile direct club went above range, really got a very huge deal, but then the stock did not perform well they are hoping not to see that today. it's going to take a while we're right now they're starting

to open and take some bids jay kuler cullor is at the helm. we'll be back to you when we start seeing indications. >> keep us posted. we'll check back with you in a bit. we also wanted to mention nbc universal is an investor in peloton. turning to the markets, call it political risk for stocks, the impeachment inquiry or the continued trade war uncertainty, yesterday on closing bell we spoke with a voter here's what he had to say about how trade is impacting the outlook for the economy. >> i think trade is the biggest issue. i think the global trade war has expanded quite a bit compared to what people might have expected. i think it's going to take quite a while to get to agreements i think the chinese might have incentive to wait out this administration and see what happens at the election. that's slowing the global economy. that could come back to bite the u.s. economy

>> joining us now here at post 9 is the vice chairman of investments and ken se back, asset management and a cnbc contributor from florida kenny, welcome to you. how do you look at -- trade has been one of the key movers of the market does it change at all given the impeachment inquiry risks? >> no. i think it's just that, it's noise and short term risk. political events don't really price stocks in the long term. they do create opportunity in the short term because of the nervousness and angst from the headlines. you saw it yesterday the minute the algoes get ahold of the -- he comes out and changes it completely and the market does a complete turnaround. i think the long term investors have to understand that you've got to eliminate that noise and although the risk is out there with the impeachment, in the end

it doesn't go anywhere the house may vote to impeach him. the senate will never vote. >> is there a link an between the trade strategy for the administration >> i think for china there is a big link maybe they'll find it better off to play hard ball and sit back and watch how it plays out on the other hand trump may be feeling pressure to get something done, so you maasai him start to wiggle a little bit, but my sense is he's too defiant. i don't think he's going to end up doing that. i think the strategy really falls -- the ball is in china's court at the moment. >> how do you think investors play it? >> the most important thing about trade, after recognizing it's the most important issue the markets, for the markets to go higher we don't need to resolve all the issues related to trade all we need is for things to get not meaningfully worse if we stick with tariffs, the

slowdown in the economy have built in that expect taeation. these negotiations will go on for a long period of time. looking for a resolution is probably waiting for it to go down i think markets can go higher because economic data is stabilizing and the financial easing is kicking in we are seeing that in the housing data in space. >> do you believe that the pressure that comes with the n inquiry on the white house makes it less likely to go forward with tariffs, more tariffs >> i think from trump's reelection perspective, the one thing that he needs to see is for the economy to work. and i think it's really that far mar than impeachment impeachment is not going to get through senate what matters is economy has to come back and we have slowed down to a level. >> he gets more dovish on trade. >> he has to be dovish on trade because he's a rational actor.

>> do you agree? >> that's what i just said if this continues to go on, he's going to have to be -- he's put in a position to try to figure out how am i going to keep this going and should i become more cooperative and compliant to try to get something on the table, because every time we see a headline about trade, you see how the market reacts. i don't think it's completely built in yet i think the market is yearning for something, even if they're small pieces to keep it going along until we get to a point where the economy continues to not slow down. >> i think the data in the back half is going to strengthen enough to support the market the trade issue can take things away from that and if we don't have a resolution or if we continue to go down this path of exasser bag exass exasseration -- >> it's the u.s. consumer and now housing. yesterday on closing bell we talked to the ce otha owns oreos

and nabisco. listen to what he says about the u.s. consumer. >> we see basically a consumer that feels pretty good as you said, snacking is not necessarily going in line with all the economic twists and turns that you would see, but overall the snacking market, particularly the biscuit market in the u.s. is growing more than it has in the last two or three years. we do not see any signs the consumer is sort of affected by all the news going around. >> what does that ultimately mean for the markets >> listen, i've been saying it for a while. i think our economy is strong. i think the consumer is strong by the way, oreos are great, let just say that. >> finally something the country can all agree on >> so i don't see this problem which i keep asking why, especially now bullard he's so dovish on cut rates, cut rates, cut rates -- >> let's hold on there for a second the consumer part of the economy is doing fabulously well there's no doubt about that.

consumer income, unemployment, everything looks good. but the manufacturing side of the economy is not doing very well capital expenditures have dropped off because of trade issues i think that is really the driver at the margin it's not the consumer. consumer economy is strong for the manufacturing to go up, we need resolution on trade. >> why do key weep hearing about nonmanufacturing margin compression because of higher wages? is that not a worry? >> that is certainly a worry, but i think you have seen in the data enough productivity growth to kind of make up for that. margincompression is happening primarily because the underliyig growth trends have deteriorated from last year with the easing of financial conditions, that is going to improve the back half of this year if not this year, in 2020 for sure. >> bottom line, what it means for where you should be invested seeing a bid for bonds again today, that means utility, staples and real estate are leaving the market is that the place to be? >> listen, i think it's

certainly -- those names have to be part of your portfolio, but i'm also a big believer in this shift from these my growth stocks more into the value, especially if you're concerned about the economy slowing down or about the trade war continue to be dragged into 2020 along with the impeachment, all that other noise around it, i think there's a real shot at picking up some value names. >> what's value to you >> i like energy i don't think people -- >> deep value. >> i like deep value i think there's a huge opportunity in energy. we saw it come down after that spike yesterday. i think there is an oversupply in oil that being said, i think there is a huge opportunity in energy going forward. >> what's your playbook? >> so i think for value to really come back in a big way rather than just make a dead cat bounce, you have to have two things happen. interest rates going up meaningfully and likely and growth picking up substantially. again, unlikely. i'm sticking with the true and

tried which is technology on the equity side, maybe e emerging market equity. >> the fed's done enough already? >> yes the fed has done enough. they'll probably do one more this year, maybe two however, the data has stabilized things are looking much better relative to expectations >> but i will say when value names, there are value names in the tech sector. may not be, you know, facebook and twitter. it may be other names that are much more -- >> i think that's a fair point. >> microsoft is valued within the tech factor. i think when you talk about tech, microsoft is a name that also is part of it. >> everybody was catching kb, the banks. can they recreate what housing has done in terms of the fed >> you know -- >> maybe i should have ended the

interview. >> no. i struggle with that because if we're going to continue down this road of pushing rates lower and lower and lower, i think the financials will have a tough time and i don't think we should continue down that road. i didn't think we should have the last time. but one way or the other, i think financials are going to struggle. >> i think financials have had a tough time they would probably continue to have a tough time. it's the ultimate value trap in all of the large sectors. >> so we'll end on an agreement point between the two of you thank you. when we come back, we are awaiting peloton's first trade over at the nasdaq we're going to take you there live as soon as that happens pretty big deal in the ipo market plus what the future has in store for the cycling craze. one of the founders of spinning giant soul cycle and fly wheel is with us when "squawk on the street" comes back from managing inventory... to detecting and preventing threats...

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. as the nationwide death toll due to vaping related illnesses rises, phillip morris is expecting a tighter regulated market within the next few years. the ceo joined us the last hour. he didn't say whether the increased scrutiny led to the end of the merger talks. instead, focused on shareholders take a listen. >> what we looked at is if there is a better way to maximize value for shareholders looking at this strategic rational in terms of revenue in addition more focused resources on both sides. at the same time, clearly, like

in any merger you take into consideration the environment, shareholder sentiment, and i would say the effort required versus the priorities we have just now on the market we concluded that the best course of action is to end the discussions to the merger and focus instead on the forthcoming partnership going forward. >> he also commented on the current state of health concerns with vaping and regulating tobacco. >> all tobacco-containing product including nicotine products are regulated by the fda. okay we had an exception for a period of time for the vape categor-- r category it was a heavy process i think the process is ongoing it is a very emotional issue as

we know, because it involves using -- use by teenagers and vaping and this should be the priority by everybody to address because this is a serious issue. >> one thing's for sure. for the first time we're hearing that fda approval is what's going to give the products legitimacy ever since juul came around, it's been a free for all. >> which is why ul altria and phillip morris ongoing to vote on it. they'll have to deal with this cloud. the fact that these illnesses are getting worse and now confirmed reports of 10 people have died. it's unclear whether they're all linked with some lung disease, but the common denom nainator ad the common factor is that there was vaping involved. >> talk about putting the cart before the horse, right?

you would think in this country this research would have been done before it went on sale, but not this time. >> now states are trying to catch up so is the federal government when we come back, shares surging. we'll tell you why plus we'll hear from the new ce, -- ceo of blue apron. dow down 63. a new level of privacy and security. daily cash you get back every day. and no fees. not even hidden ones. oh, and if you happen to be somewhere that doesn't accept apple pay yet, there's this. nice. ♪ woman: what gives me confidence about investment decisions? rigorous fundamental research. with portfolio managers focused on the long term.

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[upbeat♪action music] (pilot) we're going to be on the tarmac for another 45 minutes or so.

. time now for our etf spotlight with mike santoli. >> obviously have the revised ged numbers. but look within the consumer discretionary sector what types of groups are working and not working. it has not been across the board. xly is the consumer discretionary sector within it retail is kind of driving at the rth i should mention it has things like walmart in it which is technically consumer staples within the s&p system, but it shows you that domestic retail spending has been strong

of course, xhb, home related, home building and home improvements hd is i think the second largest stock in the xly, but carz is the auto etf obviously been a lagger. gm and ford make up 4% of the xly. media is also -- used to be consumer discretionary not really anymore you're kind of left with this grab bag of restaurants, retail, holding things up. anything that seems more big picture, durable goods, autos, not as much unless it's houses. >> we got gdp final, consumer up 46 we've seen some downgrades of costco, for example, who think people might get tired. >> yes a little bit of fatigue. the sentiment numbers haven't been great they've come back. i do think that gives people pause. things like costco, star bucks, they have these very full

valuations right now and i think you the have student to say how much better can the story get. interestingly enough, people talk about rotation. they're really talking about people spending at the mall. they're really talking about industrial sentiments. >> i'm just looking at a chart of amazon. what is that chart >> it underperformed the s&p normally, in fact, when you talk about it, you have to give that disclaimer and say this is mostly amazon. it's really not been so this year it's been kind of struggling. >> 14.5% off the highs is that a consumer story or an amazon story >> it's an amazon, a fang story. all of them are below where they were topping out last year. >> thanks, mike. when we come back, the future of the fitness industry and the ipo market, one of the co-founders of soul cycle and fly wheel is with us as we await peloton'puics bl debut "squawk on the street" is back in a moment with the dow down 65 at fidelity, we believe your money

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welcome back, everyone here's your cnbc news update at this hour. white house officials suit to lock down records of a phone call in which president trump urged his ukrainian counter part to investigate democratic viriv joe biden. it was released ahead of scheduled testimony of the acting director of national intelligence who was asked why he went to the white house asking for direction on what to do >> when i saw this report and complaint, immediately i knew that this was a serious matter it came to me and i just thought it would be prudent to ensure.

>> i'm asking if the conflict of interest concerned you. >> sir, i have to work with what i've got. a russian spaceship carrying a crew of three including the first astronaut from the united arab emirates docking with the international space station. he will spend eight days aboard the station. jacque chirac a french two-term president has died. he was the first leader to acknowledge france's role in the holocaust and oppose the invasion of iraq in 2003 his death was announced to lawmakers sitting in france's national assembly. he was 86 years old. you are up to date that's the news update this hour sa sara, i will send it back downtown to you. we are awaiting peloton's first trade. let's get back to ber stha for n update over there. >> they are still settling the

book they just got an update here this morning right now indications look to be somewhere between $30 and $31. peloton of course pricing last night at the top of the range at $29 a share. its initial range had been somewhere between $26 and $29. it did raise the full $1.1 billion we'll have a valuation of about north of $8 billion or so. the company not yet profitable one of those companies that is going public here, but it does have tremendous growth it did see its revenues and its memberships double and its last fiscal year ended in june. it had revenues near $1 billion, but it did post a loss of about $240 million or so one of the issues is the fact that it costs a lot to create a lot of that. one of the things they like, if you follow me around, they've got a big crowd. they like having energy. they like producing the live contact. they have to hire a lot of folks that keep them and there's the

issue of music peloton, of course, revealed it has been sued over licensing of some of the music that it uses and a lot of users tell me that is a key issue, particularly with some of the instructors who like to use certain play lists that really get people revved up that is one of the issues they will have to resolve no word on when they'll be profitable and no timeline on when they might be open. goldman sachs tends to take their time on opening these ipos and they are the lead banker this morning back over to you >> bertha, that's a big story. we'll come back to you for more on the ipo and the billion dollar fitness industry we're joined by the author of the book "riding high" how i kissed soul cycle goodbye, founded fly wheel and built the life i always wanted

it's great to have you people say peloton is a soul cycle killer, fly wheel killer how do you respond to that >> i think there will always be room for both, for the groups that miss experience as well as the at home. no doubt peloton has changed the landscape drastically. people can ride at their own convenience and have this experience in their home, but it's changed in that the days of people taking spin classes in the studio six days a week, they're over everyone is kind of doing what is most efficient for them which means at home and group fitness. i think there's room for both. >> the company got its start legend has it because it was too hard to get in classes were filled and they said let's make a bike so people don't have to rush monday at noon and try to get into that instructor we love so much. >> that's exactly right and peloton built a great group of instructors. one of our greatest instructors at fly wheel went over there,

alex tuscon who is a rock star. >> how do you take on the question about whether or not cycling, peloton, soul cycle, fly wheel are just fads, like so many fitness fads we've seen before the fly master is getting a lot of play as we write about this story. >> potential investors would ask me that question, is it a fad. i never believed it was. the reason was first and foremost it's a really safe w k workout. it's low impact. i have riders from age 18 to 75, so you can do it throughout your life it's all about health and wellness and longevity and how we stay healthy and that's why i've always thought spinning was here to stay. >> one of the knocks on peloton i guess to some degree on soul is that it's expensive it's so niche because of the price point, maybe the geographic dispersion. to what degree do these companies need to start addressing the loweren, making

things cheaper >> to a big degree and it's already happening. i've heard rumblings of companies starting up to offer spinning to a different demographic and i think it's so important. >> do you think it works outside of big urban centers >> absolutely, yes, i do. >> who are your target customers? >> right now >> average income, what can you tell us about them >> definitely people who end up in a higher price point demographic because they're putting so much focus on health and wellness i mean, they can afford to that pretty much does make u the demographic, the one that you're talking about, but everyone wants to be healthy and well and grow old. so i think there is room for the market to expand to different demographics for sure. >> do you need to pay $2,200 for a bike to get into your living room that's one of the questions facing investors from peloton. >> no. again, there's room for a different bike that doesn't have

to be that expensive with talented instructors, absolutely. >> what do you tell investors who wonder why soul hasn't come public >> hard for me to speak to that because i've been apart from the company for so long, but so much of the group fitness experience is not about a formula there's this one area of it which is so important that has to do with a certain spirituality and human connection sometimes that's not something you can chart or figure out in a formula way. >> they pulled the ipo last year, cited market conditions. some of the analysts were speculating maybe it had gotten too crowded. there were so many spin studios, there was pressure on prices. >> yes the industry has changed so of it's so oversaturated. boutique fitness is everywhere. >> one of the things people will watch today and the weeks to

come is how peloton addresses concerns about streaming music rights how big a deal is that can you explain it to the people who have no idea what we're talking about? >> it's a big deal back in the day when we started soulin 2006 or fly wheel in 2010, we weren't that cognizant of it, that it would be a problem, but instructors are pulling music from all kinds of places, youtube, remixes, mash ups that artists are not profiting from so now that it's so mainstream it's become a problem. >> it's one thing if you play it in a room. it's another if you're streaming it on the internet. >> exactly i do feel with peloton it drew so much more attention to the issue. >> have you tied the $4,000 tra treadmill? >> i have not. i've heard great things about it people say it could almost walk by itself, but i have not tried it personally. >> you sound fairly optimistic about a company that's a big competitor would you buy a piece of this ipo? >> very good question.

i'm not sure i thought about it not sure john foley who started peloton has always been a friend and i'm happy for him. >> he's worked very hard. >> he has. >> finally, fly wheel and going public. >> yes. >> will there be a connection there one day? >> i don't know. i never say never. >> does it depend on how this goes, maybe? >> i think that will be one factor. >> certainly driving investor in into into the space. thank you. >> thank you for having me. >> her book is out now came out -- >> last october. >> and is a good look at the industry. >> absolutely. >> thank you. when we come back, shares of beyond meat surging after an announcement from mcdonald's we'll tell you what it is. speaking of food, blue apron mpy.turnaround strategy for the coan "squawk on the street" will be right back dow is down 62 don't go away.

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semis making a comeback and one technician says this key level could be flashing a buy signal find out more on cnbc.com. more "squawk on the street" coming up. when did you see the sign? when i needed to jumpstart sales.

build attendance for an event. help people find their way. fastsigns designed new directional signage. ...and got them back on track. get started at fastsigns.com. i'd like to welcome my guests deutsch bank securities chief economist. this is 122nd month of this expansion which began in june of '09. historic in size, not necessarily in terms of how much gdp we've created in that run, but you think maybe it's run its course and you have several reasons that you can share with us so tell us what your reasons are on the expansion >> jay powell has talked about this as a mid cycle adjustment and the question we're discussing all the time is is this mid cycle or other signs we're getting late cycle one of the worst sign system

we're beginning to see some kinds of consumer rates going higher the biggest fear we have is that the consumer is strong still because the economy is strong, but if you look at the rates for autos have been going up, rates for credit cards have also been moving higher. interest rates on auto loans you have seen that move i here generally speaking, there are some cracks beginning to appear underneath the u.s. consumer that we're worrying about. >> another issue i really find fascinating is that we know that trade issues are impacting all the global economies are any of the reasons that you've just given us, can they be reversed or is one set in progress does history dictate we will get a recession before we get, for example, an expansion in profits as a share of gdp? >> absolutely. i mean, the various indicators both peak and profit share have started to decline the rates for consumers have

started to go up consumers are much more optimistic about today than they are about the future those three things combined basically are things that can be reversed think of this as how easy is credit and where we are in the cycle and at some point in the business cycle credit is very, very easy and the pendulum begins to swing back you begin to see more fears at the low end from payback their loans. are their worries some of these things cannot continue forever and is some of this different between consumers also on the corporate side that makes us more worried that maybe this is not just a mid cycle adjustment. these are signs we could be getting to the point of being late cycle than mid psyche zblel wi -- cycle. >> this affects economies like germany and japan that are more into exports we're a consumption economy. is there going to be a differentiation on the recession

as it affects the u.s. versus potentially other developed economies? your final thoughts. >> absolutely, rick. you had talked about this also at great length. the very important debate here is is this going to spread from the manufacturing sector to the services sector. 10% of employment in the u.s you could say the trade war is just in manufacturing. this is not really a big deal. the problem is we're beginning to see signs the service sector also beginning to slow we're beginning to see signs of the workweek coming down in the services sector. we've seen also overtime hours, particularly in manufacturing begin to slow. we're getting worried that this may -- there is a risk this may not only be an issue for the manufacturing sector which is a lot smaller in the u.s. than germany and japan, but the fear we have is this could be spreading and there are some signs that this is indeed what's been happening more recently >> thank you for your thoughts we're going to continue to talk to you as we get more data on the employment reports about some of the metrics you just

outlined sara, back to you. >> rick, thanks. let's send it to john with a look at what's next. >> the ceos of ibm, qualcomm and verizon will be talking 5g rig renew york that is coming up in a few minute stay with us latform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪ a new kind of credit card. created by apple, not a bank. with a better way to track where you spend. a new level of privacy and security. daily cash you get back every day. and no fees. not even hidden ones.

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shares of beyond me way up today, plus mcdonald's announcing it will test what is calling the plt, plant, lettuce and tomato sandwich. it's going to last 12 weeks. 28 restaurants in southwestern ontario. the burger will sell for $4.90 plus tax we're going to be watching to see how this does and whether or not they can roll it out farther. >> it's what the bulls have been waiting for on beyond me the mcd announcement. >> holy grail. >> the analysts out this morning saying super bullish the only reason you're not seeing price targets it's hard to see valuation trading so muc higher. blue apron restructuring the company after struggling since its ipo. the company is down 94% since

its debut. it is doubling down on its direct to consumer approach and adding popular names like beyond meat to the menu joining us is the company's new ceo leading the company's transformation now six months into her tenure, her first interview since coming on board welcome, linda. >> thank you so much it's great to be here. >> you were coo of etsy. >> yes, i was. >> and then went on to take this task of turning around blue apron. how did you feel about it at the time when you came in in april >> i saw a lot of parallels. i tend to take positions they believe strongly in the product and i see a huge opportunity for growth that's untapped there is a lot of similarities between when i joined etsy and also joining blue apron. for me it's about having an amazing quality product. there's been a ton of work done on the foundation of the business so all of that is a really great platform to think about growth. >> what happened here? how did this go from a unicorn

to a microcap? >> well, honestly, i think a few of the things that we could have done a little bit better and that we're actually now focused on the new strategy really revolve around the three key areas. how do we expand the audience and really atract more people that are going to be great customers for blue apron rather than going for broad really, really high expenditure growth which a lot of companies are doing this right now which is growth at all costs. we're moving away from that and focussing on our most efficient marketing. we're within 12 months of payback and everything is going really well on how we can scale back i think the second piece of it is really about the product itself there's a lot more we can do to evolve the product to today's needs. more healthy offerings more choice. we just launched our first pilot in california that's actually going to offer more recipe options across the healthy and indulgent menus which is what our customers have been asking for. our final people is about how can we use partnerships and

larger scale marketing efforts to get more customers that are going to be with us for a really long time. it's already paying off. >> does the menu option need to get simpler? one of the complaints we heard was recipes are complex. >> i think it's funny because t something we've already solved 50% of our recipes are below 30 minutes to prepare they're simpler, we are testing with a variety of skilled cooks and more novice cooks to be sure they're easy, accessible for us, how do you have fresh ingredients, give people easier ways to cook. >> and targets >> we're thinking how can we set ourselves up said in 2018 that 2019 was a year of buckling down, see continued softening in customer base over that time while we prepared for going forward, we're on track for growth in 2020 we announced it in q2 earnings

and that's what we're aiming for. >> the company struggled the last few years, how many customers have you lost and how do you turn it around? >> for us it was moving away from the concept of just throwing a lot of dollars at customers that weren't necessarily going to retain. >> talking about the growing restore in. >> no, if you look across the industry, there's roi marketing, and we're focused now on how to create value for the best customers that stay with us a long time. when you think about the metrics and look at the tam we have set forward, we think we have $45 million in the u.s. >> addressable market. >> addressable market is really strong, and part of the reason we think this is strong, you look at meal kit purchases, they purchase 15 times a year with $58 average order value. that's a strong business when you think of stalg thcaling it,d

on those customers the questions are how to retain those customers and give them a product that keeps them around. >> do people want to cook at home, i look at the restaurant stocks, they're trading at record highs. >> there's a few things you're seeing we're seeing 82% of meal resource is up from a decade ago. you're seeing changes in spending when it comes to in the home versus out of the home. that's not because people were eating out more, it is more expensive than it used to be more of cooking at home than ever before. when you look at takeout, you're not getting flavor and quality, and it costs you with delivery fees and everything involved. >> on the margin, you think you're taking share from other meal kit services, restaurants, what's at the top of the list? >> we see a variety. what we hear from customers and

what they love, it is the experience of cooking with loved ones, family. >> it is fun. >> it is fun we're seeing some share taken from traditional cooking at home from the grocery store, some from takeout, some from eating out. they find it more of a relaxing evening to stay home you're seeing more people staying home. >> have you had a tough time talking to investors, trying to get them to buy in after the big fall >> i think the reality is we're in an interesting space. we're in the food space, we remove decision making of what am i having for dinner which is frankly more painful than going to the grocery store for people, it is decision fatigue we have so many things to think about. you also want it to be good. our recipes and ingredients, culinary authority, brand recognition is by far still number one we feel confident when we talk to investors, they appreciate and understand that there's something here it is really just about getting execution right, making sure we capitalize. >> kevin o'leary was a big fan

in the power lunch, chose you, thought you were getting bought because you were cheap, in a hot space. i wonder is it still that kind of environment in meal kit delivery >> for us what we're focused on, we think we have a long term sustainable business, just need to execute on it and that's where we're focused. >> thanks for coming onto talk about it there's plenty to watch in terms of sectors let's check with dom >> carl, i am feeling hungry after that segment stocks are lower, off worst levels of the session as the s&p avoids a fourth day of losses in the last five. energy and communication services are dragging the market as you can see to the down side. let's focus on one of the other underperforming groups today, consumer discretionary that sector is trading 5% off recent highs for mid july. you have carnival, down 7% after slashing full year outlook,

citing higher fuel prices and disruptions from hurricane dorian that weak outlook weighing on other cruise ship operators, watch that entire travel and leisure industry carl, i will send things back downtown to you guys at the new york stock exchange. >> all right get ready for lunch, only an hour away. we have a big show tonight on "closing bell." we speak with the wife of carlos ghosn. this picture that you're looking at was taken last time they saw each other, carlos awaits trial in japan that was in april. she hasn't seen him since. looking forward to an update from her on the charges and what she knows about her husband. shares of carnival sinking, cutting guidance on weather and

cuba policy. we speak with the ceo about his outlook and the stock's 8% decline. if that wasn't enough, micron earnings after the bell, see whether china trade tensions have impact, after the president mentioned micron in a high profile u.n. speech. >> and speaking to micron tomorrow, we have the ceo on "squawk on the street" at 9:00 a.m had a crazy good week on "closing bell. we are awaiting pell ton's first trade. we'll take you to the nasdaq when that happens. dow is back, down 40 sanjay mehrotra. who's dog is this?

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it is 11:00 a.m. at peloton headquarters in new york city, 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪

snoelts ♪ -- ♪ ♪ good thursday morning. welcome to "squawk alley." i am carl quintanilla with morgan brennan and jon fortt a big show is ahead. awaiting the open of peloton, set to go public at the nasdaq hopefully this hour. in a few moments, ceos of verizon, qualcomm sit down for a conversation about 5g. we begin with peloton. for that, bertha coombs, our eyes and ears today. >>