♪ >> announcer: live from new york, where business never sleeps, this is "squawk box. good monday morning and welcome to "squawk box" here on cnbc live from the nasdaq market site in times square i'm kayla taush. becky and andrew are off today u.s. equity futures are in the green at this hour the dow would open up by 83. the s&p would open up by 11. the nasdaq would open up by 42 after u.s. officials are now issuing clarifications on whether or not the white house is considering investments being limited into china treasury official telling several news outlets they are not going forward with that policy at this time. chinese state media called it a potential step towards

decoupling markets in asia and europe were slightly weaker but here in the u.s. we're in the green. treasury yields at this hour as well, we have seen some better than expected german labor data cause some firming in the global bond markets right now the 30 year is just sitting at a 2.15% yield the ten-year, 169 and the two-year at 164. >> that story that really dragged our markets on friday. we finished off the lows on friday any way only down half of 1% on the s&p 500 by the close, but clearly if that story is turning around, it's unsurprising to see futures up a little bit this morning. broader market was down 1% last year. >> the u.s. china trade fight continues to dominate the global market headlines friday, stocks dropped amid the report that u.s. would limit eunice yoon with the latest. hey, eunice. >> hey, guys if it's true that the u.s. officials are clarifying that the trump administration is not going to be imposing any

restrictions on u.s. investments into u.s. companies that would definitely be a welcome move earlier today the foreign ministry made a rare statement at its press briefing saying that any decoupling of china and the u.s. would cause instability in global markets and harm both sides. i say it's rare because the ministry generally doesn't like to comment on what it considers to be rumors separately from that analysts were scratching their heads as to what kind of harm these types of restrictions would have on china in any case because foreign investors generally don't have a whole lot of money into the chinese stock markets of course that includes u.s. investors. then on top of that the chinese have been trying themselves to market their own markets to chinese companies. and to make them more attra attractive they established a nasdaq-style exchange in shanghai, so this

move, if it were to happen by the trump administration, was seen as one that could be playing right into china's hands. separate to that, china published more economic data surprise to the upside but for the most part most people believe that this is just a temporary blip so the pmi officially came in at 49.8, a little better than august and what people had been expecting. the new orders swung back to growth and a lot of analysts said that the stronger orders were probably because of some front loading. also, the idea these are seasonal factors and government stimulus these figures came right in time for a massive celebration that china is having to celebrate the founding of the 70th -- the founding of the people's republic and the 70th anniversary of it. today president xi jinping was at tiananmen square with other communist party leaders. they were laying a wreath to

mark -- to memorialize some what they consider to be the nation's heros. but the big festivities will be tomorrow we'll have a military parade and a big party and then there's president xi jinping's speech. most investors are watching to see if he's going to make any comment about china's attitude or any change in policy towards the west guys >> thank you very much japanese industrial production down .21%. we'll talk a lot more about china later this morning when top white house trade adviser peter navarro will join us live 8:00 a.m. eastern time corporate news this morning, shares of ab inbev rose more than 6% in hong kong today on their first day of trading this is the second biggest ipo so far this year behind only uber many analysts say that the ab inbev offers a major test of investor sentiment amid political protests in hong kong

during recent months we have our own issues here with the ipo window whether that's still open we'll see. we'll test it again. >> certainly a few data points last week not looking so positive for that market >> heard about wework today. it's like -- it's weird. >> wework, peleton. >> there's no leases being signed for wework anymore. this is the first time in history, i think, that the bag isn't being held by the poor retail investors that get in on the ipo. it's the private market taking the brunt of the revaluation of wework, 47 billion obviously -- >> that's also a positive spin to put on it the worst the public market has managed to do their due diligence and obviously did it

with endeavor as well >> when you get to a certain point and you're tainted by the other ipos, you decide i'm not coming out at this price i don't need to come out at this price. >> peleton is done since but got top of the range 8 billion valuation, an example of the flip side they still managed to get away that week. >> if you don't want to do -- >> no, of course. >> the range was lowered and then it would be below that. i'll just wait. >> wework is concerned several major banks for the last three years have been warning that corporate real estate may not be if not overvalued at least fully valued it does raise the question of what sort of governance the private market was able to provide or if they were throwing money at this company. we'll take your hands off. you do what you do best. that's on them. >> absolutely on them. there's a lot of questions for the likes of soft bank and others who took part in fact most recent wework private funding and also on the bankers who, of course, approved the s1

original version the bankers who were involved were attracted private market investors. there's also that round for investment bankers it's not as public it's not as open it doesn't go out to as many uneducated investors but they still are trying to entice bench capital funds i bet a lot of people are criticizing those people that told them this is a great deal. >> i think the vanguard, the fidelities the black rocks would consider themselves educated investors but investing on behalf of the broader public. let's tell you what's happening in hong kong where protests have taken place for a 17th straight weekend. nbc's janice frayer joins us from there with the full story ahead of a key chinese holiday janice, good morning >> reporter: good morning. what a seething sunday it was here with riot police firing hundreds of rounds of tear gas, hundreds of rubber bullets including near us, water

cannons, sponge grenades, pepper spray against protesters who were throwing fire bombs, vandalizing metro stations and pulling up bricks from sidewalks to throw at police this was the 17th straight weekend of protests. it was easily the most violent over 150 arrests were made that's a sign that police are showing no tolerance for decent. the timing of all of it, of course, is significant with china having its national day tomorrow there are huge celebrations planned for beijing, for the 70th anniversary they'll be a parade through military parade through tiananmen square xi jinping will oversee it it's such a big deal in china. the government donated 620,000 tv sets to chinese households who didn't have one so that nobody would miss the festivities. of course, what they won't be seeing is the split screen that most of the world will see with what will be happening here. it's expected to be a tense and very violent day police are urging people to

avoid violence they have banned most protests but it's not expected that protesters will listen police say they should expect a dangerous day. there will be clashes across the city with the first protests expected to start just after dawn. >> thank you very much for that. still to come on "squawk box," tech under fire. why anti-trust investigators in congress are looking at google today. first, as we head to break, look at the biggest pre-market winners and losers in the dow. what do advisors look for in an etf? don't just track an index, help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund

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welcome back to "squawk box" on cnbc. the tech industry remains under fire from regulators "the wall street journal" is now reporting congressional anti-trust regulators are looking at plans by google to use a new internet protocol. they fear it could give the tech giant an advantage by making it harder for others to obtain consumer data with all of the ways that washington is scrutinizing all of these tech companies, it's hard to imagine how they could go forward with certain new products and policies that would be seen as

such. >> huge amount of scrutiny even before we get into the election campaigns, probably only going to increase the rhetoric and fang was trading off quite noticeably last week, could argue that's also broad rotation but the politics plays a part in that. couple stories about wework this morning bloomburg reports softbank is help turn around wework. meantime the "wall street journal" reports turmoil at the company is keeping wework from signing new leases landlords are not having much interest on taking on the company as a tenant. back to the broader markets, ed campbell senior portfolio manager at qma and head of research and chief market strategist welcome to you both.

katherine, i thought we would try to stay out of getting too political around here. but one of your biggest concerns is how the democratic dominating process plays out. you think that viewers and investors need to start thinking about who wins the first couple primary. and if it's elizabeth warren, you're recommending people buy now? >> yeah. it's a great time to, joe. the fact is the s&p 500 is 49% comprised of the three sectors that she most hard hits, that's of course tech which you previously talked about, expect a breakup of the major companies there. if in fact we start to price in the risk there's no chance that elizabeth warren is priced in at s&p 500 of near 3,000. one of the three main sectors that comprise almost half of the s&p, tech, of course financials and of course health care, all three of which i think would fall precipitously if the market and when the market starts to

discount even some chance let alone pretty good chance of an elizabeth warren nomination and later presidency. >> you're okay if you end up in her campaign ads now for another bankster that doesn't like her that's a badge of honor? >> look, joe, our game here is to help out our clients and to make money on the market i think a way to do that is factoring the biggest risks. this is for me the biggest risk. markets are not pricing in corporate reform, corporate tax reform which was a very big part of the leg-up we have seen over the past two years in the s&p 500 is going to go away. we need to protect ourselves and protect positions. it's a good idea to put on a put option with march expiree. comes after the first two big caucus and primaries then you have super tuesday in

early march. i think it's a very prudent, very inexpensive way to protect one's positions. >> you like look at that backdrop >> it's beautiful. >> it's going to be october tomorrow >> i know. miami is amazing >> will you sign on for -- you have no income tax down there. will you sign off on all our end-reviews on remotes would it matter if we're not here, you think? >> move the entire show to miami? >> move the entire network >> it's also still 90 degrees. >> a lot of hedge funds. >> we don't need to go to the washington swamp. >> is that being considered? i'm joking >> only in my diluted mind only in my diluted mind. >> there's an exodus of new york and new jersey it's not just the weather. >> no kidding. >> carl icahn. that's right a lot of hedge funds, tax

benefits, quality of life and the weather is impeccable, especially this time of year. >> you keep telling yourself as the weather rises above. i hope you laugh this interview out. >> come on. >> ed, you just are worried, i think. there's no reason -- there's barely any reason for you to stay long at this point. it's all about trade as well, right? >> well, i think the outlook is as clear as mud. we have a global economy that's very weak and vulnerable we have a u.s. economy that's resilient at this point. and keeping things in -- keeping our head above water, but they're a major cross currents in both directions and i think that raises both the upside and downside risks for financial markets. so yeah, we're sticking pretty close to the shore in terms of our positioning relative to policy benchmarks. >> i like that i never heard that you heard that before, will? >> they don't say it in london

much at the moment. >> right no, but sticking close to shore. >> keeping -- >> you don't want to be out in a storm if you can't see -- to try to get the boat back in there. >> but you're sitting there at your benchmark waits and not taking any conviction course. >> so, we're overweight global equities relative to fixed income modestly because of the relative discrepancy values that have built up there. but, yeah, keeping a focus on the united states economy because it's relatively more resilient. we have bought some value stocks recently because of the increasingly wide valuation discrepancy that's built up there in favor of value. the u.s. economic surprise index has spent most of the year in negative territory we think that could spark some improvement in value relative performance. but, in general, not taking big bets because it's really difficult at this point to

determine whether the upside risks or the downside risks are going to gain the upper hand >> is the ipo asset class totally off the table for you right now? >> we're typically not buying ipos i'm doing global asset allegations. that would be -- i'm sure some of our small cap managers may be dipping their toes in there, but not really focus for us. >> if you're worried about trade, isn't tomorrow a big day. how long are the tariffs delayed? >> two weeks. >> we want to get past tomorrow, right? friday the market sort of went down when there were some comments out of china that weren't great, right then today we don't do the de-listing. >> they might be considering stopping investment into china. >> china responded how they were pretty bell close. >> yes, as eunice just said. >> so, two weeks from now, now we're back on the schedule for putting tariffs back on, right >> we are. but before that there is another round of trade talks on october 10th and 11th.

>> how are those going to do >> we'll see it will be interesting to hear from peter navarro what led to the administration coming out and categorically saying we will not have chinese companies delisted from the u.s. and which other restrictions may not be off the table. >> to do it in the first place sounded like they were angry about something, right so i don't know. >> also potential tariffs on the eu in certain sectors. i don't know whether that suggests the administration is going hard on everyone or whether it's an alternative avenue for the sort of protectionist rhetoric if it feels a deal is coming with china. >> katherine, the next two weeks specifically there's all these flash points on trade, does that skew the way you're investing? does that lead you to sit on your hands for a couple weeks to see how it all shakes out? >> no, it hasn't, kayla. one of the reasons why the market dropped almost a year ago 20% was because of trade fear. at that point, we contended that trade incentives were aligned. i think there are even more that much aligned for president trump

who needs the victory. my concern, however, is that the chinese sense blood in the waters and have measure incentive to hold out now given that he has been weakened. so, hey, these capital controls could be trump trying to countervail or counteract his weakened position in front seat of the chinese but i do think from here to november he's going to desperately try for some type of victory with regard to trade that's been my long-held view. i think if -- yeah, i think if he gets it he'll be very well positioned for next year. >> thank you >> my pleasure. >> if there's blood in the water, you want to be close to shore, too, i think. because it could be -- >> we're not ready to front run president trump. if the trade tensions do tamp down, then i do think there's a lot of stimulus out there. and that could fuel a rally, but we want to wait and see on this one. >> blood in the water could be from the great white, which is

right off the coast apparently of -- did you see that cape cod, did you see that went from above, it's that shadow it's like 50 feet from the shore. >> although great white sharks on the coast of massachusetts aren't anything new. >> well, i'm not sure i knew -- >> they have shark warnings every summer. >> great whites? >> yes. >> that was new york, wasn't it? that was long island >> you probably remember better than i do. >> i knew that was coming. didn't you see "jaws 6". >> yeah, the computer animated version. >> following people on shore i think into the sea world it did they tried to sell that. speaking of elon musk unveiling a new rocket the pictures of that straight ahead. but first as we head to break, a look back at this day in history ♪

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learn how cognizant softvision designs experiences and engineers outcomes. ♪ cool. ♪ ♪ time for the executive edge, spacex founder and ceo elon musk unveiling the company's next generation rocket called the starship meant to carry people deep into space. musk outlined a rapid schedule for the program's development. he says he thinks we could potentially see people fly next year if spacex gets into orbit in about six months

>> of course, we can to other places in the solar system, like saturn and but the critical thing that we need to focus on, i think, is the fastest path to a self-sustaining city on mars >> okay. no no please, not me >> you don't want to go to mars? you don't want to go to saturn >> i don't want to go to space at all not right now. >> maybe next year. >> you got to test the hell out of this thing. >> was he offering for you to be the first? >> it's a total va you mean. where are you going? where are you going when you're up there the entire time i would think about getting back here. i don't know, there's reasons that astronauts are heros and the bravest people that we know. >> and train for months and

months and months. >> exactly yeah. >> you don't like the freeze-dried food? >> look, i don't like that either i don't like any of the things involved maybe the weightlessness you can check that out in a different way. would you go next year? >> not next year no. maybe in 15 years. maybe when kids are in college. >> the arbitrariness of the going into space i agree with you. if they can make it much shorter for air travel, then you can travel to australia in the space of an hour. >> just go up to the moon and then back to australia >> but all the technology that's being developed i imagine in a decade or two decades time will allow supersonic air travel again or whatever it's going to be but that has a point to it. >> they want to get from greenwich to new york city quicker. >> investors go to hong kong and

australia and wherever else. at least handful would benefit our guest-host does a lot of travel. >> write in and let us know if you want joe to go to space. >> he's afraid to fly but he's going to go into space no, i'm not going. no way. oprah winfrey is known for being very generous and her latest announcement is no exception. attendees of the maya angelou women who lead luncheon with a $1 million donation. the luncheon was organized by the united negro college fund and the goal was to raise half a million dollars. the organization raised more than 2 million dollars. >> wear hats to that event it seems. >> looks like it coming up this morning's biggest market movers. plus, don't forget to subscribe to our new podcast you'll hear special behind the scenes content and latest

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♪ >> announcer: welcome back you're watching "squawk box," live from the nasdaq market site in times square. ♪ good morning among the stories front and center, retailer forever 21 has filed for bankruptcy protection. plans to close as many as 350 of its 800 stores around the world.

tough competition and aggressive global expansion have weighed on that company also gasoline prices risen in the latest week. the latest lundberg survey puts the price of gallon a gallon of unled at 2.77. bp is going to announce its ceo will retire within 12 months sky news says the announcement could come as soon as the end of the next month u.s. equity futures down, 65 points the nasdaq indicated up 33, 34 and the s&p indicated up about 9. coming up, despite google, and ellen degeneres have in common you'll find that out next. peter navarro joins us at 8:00 a.m. eastern. stay tuned you're watching "squawk box" on cnbc ♪ >> announcer: today's big number, $737 billion that's the total value of goods

and services exchanged between the u.s. and china in 2018

welcome back let's check u.s. equitieequities quickly again, they're solidly higher today i don't know how solid is, 68 points 34 points on the nasdaq. s&p indicated up about 10. bitcoin briefly falling again

below 8,000 today. i think it got down to 77, maybe even below 7,700, but it's recouped much of that and is back at 8,000. lots of tech and media stories breaking over the weekend. joining us now is ed lee and jo ann litman journalist at princeton's institute for advanced study both are cnbc contributors guys, let's start with googles coming under anti-trust scrutiny ed, how does any silicon valley company introduce a new anything >> oh my goodness. a new internet protocol of all things you're trying to fundamentally change the internet. it's not just google a lot of people in silicon valley have looked to try to make this change partly -- big part of it is to prevent hacking. there's a lot of hackers get in at this sort of root level to make this change could help that however, problem is if not

everyone makes a change or near the same time, you have sort of this fractured internet. there's also concern that the company like google will control parts of the data that other people, other companies can't see, namely isps, whether it's a comcast or internet. it's a change that has to happen more in lock step. >> is it the sort of thing that a company in google should be developing hand in glove with lawmakers and regulators right there in the room with them at this point >> yeah. i think you hit the issue on the head what we're talking about here is primarily consumer data and what happens, who owns it, who has access to it, right? so, the concern primarily the initial concern with google is the competitive concern with wireless and cable and what happens bauds they can't access that consumer data i think a larger concern could be this government regulatory investigative kinds of concern

because when they change the protocol, when they're encrypting this traffic, also means that government agencies will have a harder time cracking down on disinformation, misinformation, on abuse of data we just saw that huge story "the new york times" about child pornography. it's going to be harder to crack down on those kinds -- sorts of things the more that you encrypt this data and the more that google controls it. >> i think the question of who regulates the data, you could sort of akin to governments regulating currency. right? if it's become sort of a way that things flow and get exchange one with the other, the silicon valley always long been ahead of the government in terms of how these things are regulated which is why we talk about we need to self regulate that of course is changing given everything that we're seeing with the fallout with whether it's hacking or disinformation or as joeann pointed out with child porn, it's terrible. >> in the op ed page, silicon

valley goes soft attacks from media and government cowed tech firms from making bold moves. i missed travis calinec. do you think it's gone too far in the other direction >> i think that's a pretty extreme argument to make look where we are now. and it's not just you had wework last week. you had uber you have these companies that have these big charismatic leaders that get these extreme valuations that's led us to this technology bubble that we're in and you know it's really -- >> you think it's a bubble. >> i do think it's a bubble. when you look at the non-tech firms. we're looking at wework, uber, lyft and juul, these are the companies that have had

difficulty with their valuations and had crazy valuations and reminds me a lot of 2,000. those old enough to remember 2,000 will recall that all you had to do was put dot com at the end of your valuation and your valuation soared >> they're not wanting for money. there is a question right now over what is a tech company and what isn't a tech company. are they just trying to put this through the equivalent of dot com right now which is why you're seeing the pullback there is this sort of cowboy attitude with some of these startups the other the idea of the op ed, you know what, we need to let them off the hook so they can really continue to innovate. we're in a different phase now companies like facebook and google, they're the establishment. they're the guys a the top of the things the innovation is going to happen from these startups

whatever the next wave of start ups might look like. >> when you're seeing the pullback, is that because of the likes of wework that had to pull their ipos or is lyft and uber peloton last week decided that was a failure or too soon to know that. >> i think we're too soon to know that. it's one of those things where these privately held companies -- you have to have a business before they invest in you. there's a bigger gulf now between how private investors think about what they want to invest with versus public markets. usually you want to get to a point of maturity to be tested on the public markets. maturity means discipline, balance, et quit they haven't figured out. >> it is too soon. i also think we need to scrutinize the people putting in the valuations the investors, they're the ones who are bidding up these phenomenal valuations and a lot of them appear to be

being snowed by these big kashzmatic leaders. >> although as journalists and representing public market investors, i guess we don't have to scrutinize them they could frame it the other way, as long as our smaller group of investors are still happy with us, it's still up to them that's one of the issues with private versus public market. >> i suppose so. but you have a small group of people who are really responsible for these extreme valuations and then investors when these companies do go public, investors get hurt when it turns out the valuations are out of line with reality. >> what's the responsibility of the private company board to keep the personality of the ceo and the culture of a company as it balloons in check >> it's not just with the board but also with the investors to make sure there is a business there and we need to sort of have a reality check i talked last week about the bro culture with joe here.

>> i thought it was gone it's still around. >> but what you have -- >> it's very much around. >> it's very much there. but really i think a major issue is there's this lack of diversity of thought among the people who are doing the investing. there isn't anybody there to say wait, is wework actually a tech company? why are we giving it a tech valuation. there isn't enough questioning and there's too much group think. >> and the corporate government around control that's fundamental if you have one or two guys in control of the whole thing and they can sort of decide this is going to be evaluated. that becomes the rel lynch person in terms of the maturity and awareness is it safer for investors to park their money. >> needing a more realistic view of the market and definition of the company. wework, total addressable market every employee in the world, perhaps that was a little too much for investors to buy. we want to get your thoughts on our next story.

good news for spiderman fans sony and marvel announcing they reached a financing agreement for the third movie in the spiderman homecoming series. ed, how financially lucrative will this be for both companies? is it just good there wasn't a divorce here >> i think it's good there wasn't a divorce here. of course what it came down to sony wanting to maintain their box office revenue off of this and marvel is like, look, we're responsible for this whole franchise becoming as big as it is right now so we need to own more of that that's where the negotiations came down. it's good for both sides you don't want this divorce is sort of fracture the whole fan base the fan base really drove a lot of this up of course a deal was in the offering any way, was in negotiating position on both sides. good for both. >> i would agree with ed here in that the they needed to do this. they needed to do it for the fans if you look financially here, they had something like $22

billion, inl, in ticket sales for marvel universe. >> marvel is amazing. >> for films over the last 11 years or so. this is a financial win for both >> what do you make of hbo and ellen degeneres potentially partnering >> that's a really interesting deal because hbo has always been the prestige network and ellen is much more mass. if you recall back when the deal was done when at&t made the purchase, stanky got up there and actually in a speech to hbo employees said we need to think differently. and he's really moved them away from sort of that mass -- from the prestige pedestal that they were standing on. >> that was a stunning moment in this sort of little world of media in terms of how that's operated because for outsiders it seemed obvious, of course you wanted to broaden hbo's popularity and made this thing to make it bigger.

for a long time hbo watchers that was a huge shift, mental shift. >> is there a core lair we should look for to see if this will be successful we think of ellen, chelsea handler going to netflix not the same. >> what they're trying to do is trying to ultimately broaden the appeal ellen degeneres is a great toe tum of that idea it's more specifically hbo max is the broader service hbo is still its own little thing. at the end of the day it's not going to matter. hbo the brand is becoming a different thing. >> perhaps not going after the "game of thrones". >> just because you have mass market appeal, doesn't mean you're not prestigious. >> it's about broadening the audience hbo max also has the streaming rights for "friends," "big bang theory" and does change what the brand is the larger point is this

competition for talent that is bidding up prices for everyone i mean, we've seen this with -- >> that's good we like to hear that >> any way, keep that going. thanks coming up, we're going to get some stock picks, includingt least one bankam ne. really "squawk box" will be right back. ♪ it's the idea that if our mothers were diagnosed with cancer, how would we want them to be treated? that's exactly how we care for you. with answers and actions. to hear your concerns, quiet your fears, lift your spirits. that's the mother standard of care. this is how we inspire hope. this is how we heal. cancer treatment centers of america.

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welcome back squawk picks joining us, chief investment officer from smead investment capital. good morning, bill looking at what you picked out for us, let's start with wells fargo following the news of a new ceo. you want to buy that stock right

now? >> yes again, earlier in the show you talked about consumer discretionary before you folks came on. they are very close to the consumer they're very close to millennials because the big banks have the best mobile technology, and they're about to add the millennials as liability customers not just depost sitters. it's much more profitable to make money lending to people so we have that ahead of us therefore, the business could get better the next five years of course, they will probably be past their problems in the next couple of years. >> so some would suggest within the big banks they've got the least exposure to millennials. this is something you think they're going to change or that the market's already missing >> there's 90 million millennials. they're like 30% of the population of the united states of america

there is no big bank that isn't dealing with millions and millions of millennials. we have to remember, you know, you look at the composition, why is the united states doing so much better than everyone else and why is forever 21 going bankrupt the answer is because the youngest millennials aren't 21 there are no more millennials at 21 and they'll have to be 30, 35 and 40 when people get to be 30 to 40 and have kids, their spending composition goes from discretionary to necessity spending secondly, they go from not being a liability customer to being a liability customer. >> you've also gone for obvious si dental petroleum. tell us about that one. >> you don't stick a 2 and 4-year-old child into uber and send them to preschool everyone says when they're 23 and not married they're not going to have a van. then people get a couple of kids and all the junk and they get a

van. so the future is very bright here for the use of gasoline as the millennials move from the urban core to the suburbs or move from the most expensive cities to the rest of the country to live their life so this idea that energy doesn't matter anymore because, you know, al gore's running around talking about climate change is kind of an urban myth. >> bill, you've gone for discovery? >> yeah, discovery is where the necessities get advertised as you were speaking on the show just a few minutes ago about the explosion and the expense of scripted television, the sweet spot, the probable thing is what you folks do unscripted television. discovery is the king of unscripted television. their advertisers are people like target and home depot and that's exactly where the necessity spending is pivoting is to companieslike target and

home depot, therefore, the advertisements that you'll get on unscripted television like hgtv, "90-day fiance" is the most popular program for females. >> thanks for joining us. >>thank you. mohamed el erian will want to hear his topics "squawk box" coming right back

the impeachment inquiry and your investments the latest for washington and what it could mean for businesses the stock market and the 2020 vision. scott gottleib joins us with his take on the cdc's latest report. plus, we look ahead at the week ahead on wall street. talk earnings and state of the economy with mohamed el erian as the second hour of "squawk box"

begins right now ♪ live from the beating heart of business, new york. this is "squawk box. good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with kayla tausche and wilfred fox. in the studio is mohamed el erian, alliance. mets, 10 games above .500. >> we ended on a relative high it's a shame of what came before. >> you're sticking by the jets even though the giants are taking up a lot of oxygen around here. >> it was a good weekend we didn't lose >> you didn't play >> that's right. >> exactly >> we may talk more about that i've decided i like betting on college. nfl is impossible. it's impossible. there's so much parity

have you noticed that? >> did you see what happened to the rams >> did you see the patriots? barely beat the -- they didn't cover the spread. >> not allowed to. >> football is -- >> talking about the -- >> no. no no no they actually score points and it's fun there's offense. weird. i don't know if you'd like it. >> i don't know. odds on that. >> u.s. equity futures are for mohamed they're up a little. up 50 points nasdaq up 28 s&p up 8. >> here's what's making headlines at this hour fashion retailer forever 21 filing bankruptcy as it joins a growing list of brick and mortar stores filing. sears and toys "r" us have filed for bankruptcy protection as more customers shift to online retailers. shares of ab inbev rose.

this is the second biggest ipo so far this year just behind uber many analysts say the ab inbev is a major test. dream works animated adventure "a bon min nabl" topped the box office. it marks the seventh number one for universal or eight if you count "downton abbey." i was glad "a bon minable" wasn't in the teleprompter one more time. i was lucky to have gotten it twice. >> will you see "downton abbey", wilf. >> if lord fellows is watching, i apologize. i thought it got tired. >> you could rejuvenate it in a movie? >> perhaps perhaps. back home with mum or whatever otherwise, no.

>> you aren't interested in getting an update on what carson is doing with mrs. hughes? >> he's a good character the rest of them are tired and repetitive fat play to nbc and itv. they have milked that and -- >> why watch it when you can live it? >> that's a good point. >> we saw it on saturday and i would recommend you go see it. >> really? >> yeah. >> does something actually happen >> yes >> countess is back, right >> the visit of the king and queen. >> does cousin matthew come back to life? >> that was my wife's biggest regret. >> that's really why i can't watch it anymore heartbreaking to be reminded of the tragedies. >> did he get any good roles after that >> no. he thought he was worth too much quit because he wanted more money and thought he was going to get above his station >> come crashing back to earth right now because we're going to talk u.s.-china trade. >> is that okay?

>> tell me we don't need a little escapism lately can't we think about other things occasionally or no? you're down there in the middle of it all. >> right in the thick of it. >> anyway, the u.s.-china -- i'm heading down there, too. that's why i was asking whether you take the trade u.s.-china trade fight continues to dominate the global market headlines. eamon javers who needs weekends as much as the rest of us. >> maybe more so. >> i hope you had a good one it wasn't much of a weekend. >> a lot to follow over the weekend. >> we have the redskins. >> yeah, well, i'm from philly i'm an eagles guy. i've been living in this town for 20 plus years and never been a redskins fan. >> okay. >> so the treasury department over the weekend putting out a statement, this responding to reports from friday that the u.s. government was looking for various ways to stop american capital going to chinese companies. those reports spooked the market a little bit on friday

on saturday treasury putting out this statement from monica crowley, the spokesperson there saying the administration is not contemplating blocking chinese companies from listing shares on the u.s. stock exchanges at this time we welcome investment in the united states. i can tell you, joe, that they have been considering a wide variety of options designed to prevent american capital going to chinese companies it's not clear what the time line for any of that is. it's not clear where any of that would land, but treasury taking steps over the weekend to put the kibosh on that idea which clearly the market didn't really like meanwhile, all of this coming against a backdrop in washington of impeachment nancy pelosi and house democrats expected to continue the impeachment push this week expected to issue new subpoenas that the white house is expecting some optimism here i was texting with a senior administration official who said this, spirits are actually very

high we think the democrats have made a fatal blunder. not only will this effort by the democrats fail, but it can actually help the president. so republicans in the white house seeing democrats who are the ones making the mistake thinking they might have political opportunity in overreach by capitol hill. >> hard to sift through it all, eamon. people are so entrenched that if they go off -- can't say that anymore. if they go off their -- the tribalism where they are, they immediately have to come back in i saw cuomo appeared to be saying, our governor in new york, appeared to be saying that he thought this was a bad move, and i think he probably heard from everyone that that was -- you know, don't say things -- then he kind of walked it back then on the other side i also see when anyone says -- i heard, you know, there was one republican who supposedly said we should have an inquiry and he walked that back it's very, very polarized.

i know that's not a headline or newsflash or anything. >> nancy pelosi sent her members home over the weekend with some talking points and instructions. the whole messaging from democratic leadership to the rank and file is one of solemnity. >> she's prayerful and heart broken i don't believe her. i don't believe that, eamon. i do not believe that, crocodile tears. >> you don't believe she wants that to be the message or you don't believe she fears that in her heart. >> i believe she wants that to be the message don't believe she feels that in her heart. >> no. no no. >> i don't know what's in her heart. i can tell you what's in her messaging. the republicans -- >> that's the best we can do >> -- the white house is all over the place in terms of its messaging. we saw the president lashing out over the weekend on twitter in a number of different ways venting frustration that the whistle-blower is anonymous. the president doesn't like the

idea that he can't counter punch against his main attacker here we have this fascinating and unprecedented dynamic where an anonymous figure is a skewsing the president of wrongdoing and the president doesn't know who it is or if he does know who it is, he's not allowed to say. >> are we allowed to talk about the onion? i don't know if we're allowed to talk about the onion piece. >> which one >> "new york times." if you subscribe in the next 24 hours they will give you the name of the anonymous whistle-blower and all of his background, where he went to school, likes, dislikes, everything, but you have to do it within the next 24 hours. >> look, i mean, that's a joke, right? >> yeah. >> it's not going to be that hard for the white house to figure out who the whistle-blower is, right it's somebody, according to "the new york times" reporting, it's somebody who is a serving cia officer, who was at one point detailed to the white house. presumably this person has experience covering the ukraine as an area the list of people who fit that

description is probably relatively small the white house can sort of go through the logs and figure out who it might be, but they're ham strunk strung by the whistle-blower law. i asked kellyanne conway whether or not the president wanted to name this whistle-blower, whether or not he was frustrated she wouldn't answer that question she wouldn't say no. she simply said, nobody is considering that right now. >> adam schiff said they will testify. >> how are they going to get him in and out >> or her. >> yeah. >> all right, javers >> all right, kernen. >> eagles, big win. >> eagles. >> like walking on air. let's get to our guest host, mohamed el erian, alliance chief economic advisor he had a choice to pick teams. the mets and the jets. >> that was a long time ago, 1959. >> doesn't mean anything >> yeah, you're right.

>> long time ago it's loyalty >> mohamed, china trade. what we were just talking about. i watched the markets. if there's a constitutional crisis i assume we'll have a pretty big break in equity markets. have i got that right? or do you see no reflection on what's going on? >> joe, we've had relative stability now for a while and i think that reflects two things one is a cease fire on trade we neither are -- neither have we resolved nor have we intensified the trade war, but secondly and more importantly, is the hope in markets that we're going to have a handoff, a handoff on monetary policy to fiscal policy. >> do you address what i meant though >> let me -- >> do you see a break -- if there was something else, another shoe drops where it could change the dynamic in the senate in terms of republicans, change public opinion, would you expect the stock market at that point to saw off >> yeah.

if the senate evolves in such a way that an impeachment, then we would most likely see a selloff, yes. >> what's the time frame for that because democrats are saying this is going to be a relatively tight time frame hearings over the next few weeks. deposition of five state department officials this week and possible whethery a vote byr does this mean it could be over and done with relatively soon? >> it could be, but the market assumes the senate will continue to stand by president trump. that's a critical assumption in the marketplace right now. >> but the distraction >> i don't think -- >> the senate stays by president trump if this does not resolve. >> i think the market has to brush off all of these political maneuverings and focus on whether you can get a handoff of policy if you really want to know where we are going to be in the next few months ask where germany the assumption is we're going to get fiscal expansion from germany. i'm not sure we will. >> we don't want to talk about it we'd rather talk about all of

this other stuff maybe trade with china handoff to -- what does that mean do we need u.s.mca >> first of all, it's trade plus the possibility of an investment war which was friday plus the possibility of a currency war and watch that, okay because the probability changes. right now a cease-fire, everything is fine, we're talking, that can move one way or the other the second element is on the policy side. i don't think we've talked enough about what's happening in the repo market as a reflection of concerns that central bank are no longer in full control of outcomes it hasn't had an impact on the market yet why? because the market has -- that's okay monetary policy may become ineffective on the case of europe, but we've got fiscal policy coming. if that doesn't materialize, then we have a significant down side. >> we'll talk more with mohamed. he'll be here until 9. coming up, a new report that

ecigarettes contain primarily thc. could be behind the string of vaping deaths and illnesses across the country we'll speak to former fda commissioner scott gottleib about the cds fiinc'ndgs stay tuned you're watching "squawk box" on cnbc but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms,

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officials at the cdc say that thc could be behind a string of vaping-related deaths and illnesses. meg tirrell joins us with more i feel like i knew this. been trending for that to be the case. >> that's right. that's what public health officials have been looking at we were hoping for an update and what the maybe common ingredient was that was linking all of these vaping-related illnesses what we did get were more concrete numbers about what some folks had in common. 2/3 or 3/4 of folks who had these illnesses were using thc-containing products. 57% reported using nicotine-containing products, but some were using both of course only 16% were only using nicotine-containing products these things aren't universal across the different patients. they still haven't identified just what substance is causing this what they found in an investigation in wisconsin and

illinois are some similarities 64% of folks in those two states were using a counterfeit product known as dank vapes. we don't know what's going in them they are still trying to dig down as of last week there were 805 cases reported of these illnesses. 12 deaths confirmed by the cdc and unfortunately we have learned of a few more. now the death is up to 14 based on the vaping-related illnesses. they're working to identify common threads as of now it looks like related to thc from people acquiring them sort of informally off the street from friends and family, things like that but we still don't know exactly what -- >> do we know how much these thc-related products comprise of the overall market >> probably not because some of them are black market sort of counterfeit type of things. >> resolve the oil

scott gottleib said it's the way the thc was delivered. >> cbd oils. what people are questioning, is it the product itself? is it cut with something people are talking about including vitamin e oil or that the product had been treated with a fungicide that can become dangerous when burned. a lot of concerning elements. >> don't do it don't do it! that's my pitch. >> that's what the cdc says, too. >> with more on the latest on the vaping illnesses, let's bring in our guest who joins us now, former fda commissioner, scott gottleib, cnbc contributor and a member of pfizer's board did the cdc study put anything to rest for you? >> well, i think the best work is coming out of work of the states if you look at the study in the state of wisconsin and illinois, they looked at 85 cases of people who became ill, 87% of

them were traced back to thc the other 13% weren't aware or they didn't admit to using thc but it does seem to be thc vapes getting implicated it's bootleg vapes it appears the people who are developing these counterfeit vaping products and bootleg vaping products are cutting them with oil to make them thicker. one of the things of people who buy marijuana oils is the viscosity of the liquid. by putting oil thickeners in it consumers are misled to believe it's more potent but it has something dangerous in it. >> if a person doesn't buy a product labeled dank vape, do they eliminate the risk entirely >> no. this really exposes the problem with the marijuana law in this country. we have federal prohibition. we have a patch work of laws and loose regulation you go into the legalized marijuana dispensaries you are

getting a safe product no one knows it's estimated of the $50 billion cannabis market, only 25% is legit being sold in the dispensaries a lot of those cartridges that people are buying to put in these vaping pens are what they're getting, getting bootleg counterfeit products another thing to point out is the activity, the fashion of vaping cannabis oils really took off this last year and there were some national launches of hardware, specifically for vaping cbd and thc with the growing popularity of vaping these liquids we're starting to see these problems emerge. >> scott, i've been talking with folks in the cannabis phase who see these illnesses as a further rallying cry of why marijuana should be legalized on the federal level. if we saw that oversight i've been talking with folks who say that would help avoid the black market products. do you agree should it be legalized

will that help solve this problem? >> we need federal reckoning i wouldn't go so far as they need to be legalized we need to crack down the laws that have allowed rampant use and irresponsible use by teenagers while making it easier to study the potential legitimate medical applications. it's hard to do legitimate scientific studies because it's a legitimate compound. we need to have a federal reckoning. you see states banning ecigarettes. don't get me wrong, they have plenty associated with them, primarily the epidemic of the use of those products. it doesn't seem to be the ecigarettes in these cases sweeping the market isn't going to get at the problem. the states have a problem when it comes to marijuana law. they're reluctant to take reaction in states that have legitimized it. >> how is it we're only now relying on the after-the-fact

studies as opposed to more stringent tests before they become more widespread even if that's on the thc products of the last year. how do we get to this point? >> we don't have any regulatory framework. the states claim they do regulatory oversight but nobody's really examined vaping cannabinoids and i don't think anybody should be vaping marijuana oils you can make an argument about the delivery the lung is not a good vehicle when it comes to the ecigarettes, we presumed or thought the ecigarettes could be a way to migrate currently addicted adult smokers off of nicotine to non-combustible products that premise still probably holds true for certain adults but it can't come at the expense of addicting a whole generation of kids on nicotine. we need more stringent action. over the past few years the food & drug administration has been taking pretty stringent

regulations on that. we wouldn't be on the cusp of more forceful action if we hadn't had that. >> juul would argue that's still the core customer. i'm wondering what you think the events of the past week, replacing the ceo, stopping all advertising does to get back to that core customer and away from the teen use. >> well, look, i think the ecigarette manufacturers have changed how they're approaching the market and how they're approaching their products in the marketplace but it's going to be hard to unring the bell they've created in terms of the rampant use of these products and the fact that they've really ignored the burgeoning epidemic they've taken place in the past two years. this isn't another fashionable item that teens can migrate off of and a new one will come along. this is an addictive substance and it will be hard to get kids off of nicotine. >> although perhaps by not having slcelebrities glamor ris

it. >> it will help. still to come, a check on what's moving in the pre-market plus much more from guest host mohamed el erian u.s. equities higher pnthiern the dow. servicenow put our workflows in the cloud. this changes everything. you're right sir... everything. no not everything, i mean you're still blatantly sucking up to me gary. brilliantly observed, sir. always three steps ahead. six steps ahead. sixteen.

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still to come on "squawk box. what will be moving markets as we get ready to kick off another week on wall street. then from the impeachment to trade and more we'll find out what investors need to watch on the political front and how it could affect your investments. speaking of the political front. the white house manufacturing trade director peter navarro will join us live. "squawk box" returns after a short break. mmm... good. so i've spent my life developing technology to help the visually impaired. we are so good. we built a guide that uses ibm watson... to help the blind.

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our technology and financial solutions are changing what's possible in all sorts of ways. so, how can we change what's possible for you? >> we're back. the premarket dom chu. dom? >> wilf, it's the money markets. right now the evidence suggests it will be business as usual

the reap poe rates the higher than the market turmoil at the end of last year. the financial system was adequately supplying it. short-term interest rates. the retail space the consensus. the rates had unintended consequences they boosted the cash system

>> the fed has true. and the legal rates. >> you brought this up earlier. >> i think it speaks to not just that there was a surge in the market for cash, i think that's right, but there's three fundamental issues going on underneath one is structurally the market changed. you just heard dom on this secondly, there's now concerns about the ability of the fed to

keep control and third and most importantly i'm going to stress this over and over again, the market is under pricing liquidity risks. not just in that market but in other markets. i think that was the first evidence not the first evidence that's yet another evidence of this happening >> let's bring in christian am mama ni. a factor of the last couple of weeks has been a sell jeff in faang stocks you see that as a buying issue >> yes, first let me address the issue mohamed mentioned. why liquidity remains an interest looking at the repo rate spike, it's making an exaggerated statement. it has big banks hoarding reserves because they used it for regulatory purposes. this is a solvable problem we can blame the new york fed for not anticipating it, but at the end of the day it is really

not the end of the world the way it is being made up. as far as tech stocks are concerned, i think at the end of the day when the u.s. economy is growing at 2%, people are going to pay fancy prices for companies that can deliver significantly higher growth rate in their revenues and cash flows. and i think while we may be taking a bit of a pit stop with respect to them, eventually tech stock is where -- if the market is going to go up, tech stocks have to go up. >> in terms of the phase on liquidity, how concerned are you about that you also like credit at the moment. >> yes i think if you look at the concerns with respect to the repo market, what the implications of that was in the credit market, it's really we basically looked at it and said, okay, the fed will solve this problem, go away i think that is the reality. this is a very nuanced issue with respect to reserve hoarding by banks the fed can solve that problem the easiest thing that they can do is to reduce the interest

that they pay on reserves. they do that, the demand of reserves goes down meaningfully. that has implications for bank ability. >> to talk about that is to talk about every item as an isolated item let's look at the items that we're treating as noise, which is what you basically said forget the disruption in repo market forget the 16 trillion of bonds trading at negative yields forget the fact that we are deglobalizing the global economy. i can go through a whole list of things that you and i would have thought were unthinkable four years ago. they've all happened and the tendency in the marketplace is to treat every one as a stand alone containable issue but we are ignoring signals i would tell you what we're hearing is not just noise, it's a signal that the system is under stress. >> look, mohamed, there are significant issues in the global

marke markets. the biggest of them is a slowdown at the end of the day at the end that is the core problem. negative rates certainly help. they don't solve the problem they've softened the blow off of that negative growth maybe at the margin that increases things looking at repo market issues and kind of conflating that with everything else that the global economy is facing is a bit of exaggeration that's the point i'm trying to make. >> how far could markets fall if that happens >> if you get a policy rate, that will accelerate

the system is not built for negative yields. it's okay if it's for a yield, too, but the longer they last, the bigger pressure they put on systems. the system is not built for deglobalization. it's okay for a while but not for long we've got to recognize that the system is not built for this, not wired. >> were you pleased at the last press conference that powell said he wouldn't pursue negative rates and go that far. >> i am. if we end up at negative rates, we would break something for me it is striking that the ecb itself is now looking at the cost of negative yields, that it can neither go forward nor go back we have divisions in the ecb we have divisions in the fed and we have a very tentative handoff to another policy instrument we can dismiss this element and this element and this element.

>> i think one of the things that basically saved that is mario draghi's policy that he implemented over the last few years. it's a worse option. >> we have to construct that. >> you like that they're going higher rather than lower. >> thank you >> coming up, what a wealth tax could mean for your investments and american businesses. dan clifton, head of policy research for strategis affects

us i can think of only one person on this set that has anything to really worry about check out the futures -- you knew it was coming at some point, mohamed you're a very successful guy i admire you this comes from love comes from love. we'll be right back. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity.

♪

democrats on wall street are

pushing back against a potential senator warren they could sit out the election or join president trump. >> dan clifton. >> strategis partners head of research such a big topic to talk about >> you have some a fin niffinit you say -- egregious might not be the word. >> not a good word.

>> not a good word for you >> that's not my position. >> that's how they justify it. >> no, that's not -- >> the whacky proposal. >> so, here, i'll tell you what i think as opposed to you telling me. >> okay. i'll see how long i let you go with it. no, kidding. >> thank you >> even if the democrats were to flip the senate, a marginal vote is a moderate. joe manchin. senator cinema, tester it is unlikely that senator warren or senator sanders would be able to come in and enact the full agenda that they're talking about.

>> i don't think you can find any candidate that doesn't want to reduce the extent of wealth concentration at the top of the scale. not that some of them aspire to. >> i would say universally there is a sentiment. >> the reason that joe biden with all of his negatives they

don't think those will be a positive. >> they need to take a closer look at joe biden's tax agenda he's talking about closing the step up basis loophole >> you're saying it's just as bad as the other so don't think he's moderate. >> not bad he's more interested in building on the tax code that exists and making it more progressive significantly at the top of the scale where senator warren is talking about adding new pieces. >> dan, we had an analyst on earlier today. she gave us three areas of the stock market to buy puts on if elizabeth warren wins the primary. she said health care, she said the banks and she said technology >> yeah a market manager said the market wouldn't open

i think it was hyperbole there could be a problem if elizabeth warren became president. >> let's look at what all 20 candidates are saying. if the democrats take the senate, this is the after tax rate of return on stocks goes down all else being equal. >> you go and introduce the growth killing tax increases on top of it, i think that's going to compound the pressure

the democrats need to be careful in energizing their base with developing a good economic outcome. >> dan, the fact that senator warren and vice president biden are virtually tied in the quinnipiac poll, does that tell you that the democratic party still doesn't quite have a decision on the degree to which it wants to move in any of those directions that you just outlined >> that's a great question, kayla. i would say the moderates always believe their path to victory was that the progressive would split the vote for most of this race, bernie sanders and elizabeth warren have been splitting the vote that's starting to shift where you're actually seeing constituencies in biden's camp starting to move over to the warren camp. she has real momentum in the polls now. i'm not sure it's an ideological one. she has to convince democratic voters she can beat donald trump. if she can do that, she will continue to accelerate. >> will she beat donald trump? >> yes, i think so look, in fact, all the head-to-heads show she can

clearly beat donald trump and biden and most of the others those are the head-to-head polls. i want to push back. i want to be very clear. the trump tax cut did almost nothing for those at the very bottom is expand it. miraculously they spent $2 trillion on a tax cut and did nothing for low income people. there is no democrat that doesn't want to roll back the trump tax cuts.

>> the investors are crystal clear. >> we had positives from the tax reform. >> i think we've had a short-term positive. it's a question whether we have the longer term. jared, i want to ask you a very simple question. i agree with you there's a push back against inequality. it comes for the inequality of income and wealth. mostly of opportunity. why are we hearing more about what to do about the inequality of opportunity. >> great question. >> that's absolutely key >> yeah, no, great question. let me first say what you described in terms of the tax cut boosting the economy, i agree. that's a cainsian effect as soon as that faded from the system, gdp growth downshifted from 3 to 2% clearly what i'm referring to when i talk about the failure of the tax cut is structural longer term growth. i think we agree on that point here's the answer to your excellent question there is a strong linkage

between income inequality and economic mobility. let me tell you how it works it works through opportunities for kids if you grew up in a family that's hit with the kinds of symptoms of income inequality, stagnant earnings, living in neighborhoods that don't offer you the kinds ofopportunities whether it's libraries, th environment or quality of school, you're going to do less well there is great research, read the work of raj cheddie on this, increased equality, diminished capabilities by families hit by then. >> dan, the corporate tax cuts, do you think that was cainsian >> i don't i think some of the trade issues that happened in 2018 have offset some of the positive impacts of that tax cut, particularly the confidence which is then reducing investments. i think a lot of this about cainsian is ridiculous you've permanently lowered the

hurdle i think it will produce dividends. >> let me say a quick point. quick point. i believe that everybody sitting there in that studio, including dan, would be better served on trade policy by anyone who's running for president except donald trump so i want you to think about that elizabeth warren, joe biden, any one of those front-runners will be better in terms of global trade, reversing the deglobalization that mohamed was talking about than donald trump. >> interestingly, jared, in 2016 the trump trade platform and the clinton trade platform looked extremely similar. there was hardly any difference there. >> who's talking about platforms, kayla >> donald trump is executing what he ran on in 2016 which hillary clinton was also espousing later on in the campaign as well. >> right >> i'm sure we'll hear more on trade from the democrats jared, i want to ask you about this financial transaction tax. >> sure. good question. >> the support by vice president biden of this financial transaction tax comes in the

wake of the obama administration considering it but not going forward. you were there you were advising him there. why didn't the obama administration pursue this if this would have been a good policy and would have raised some good revenue? >> there just weren't enough cheerleaders for the tax within the administration at the time since that point there have been some very interesting and important studies. i think probably one of the ones i'd recommend viewers check out is by the tax policy center. this is a really down the middle group. there are a bunch of tax wonks they don't have a partisan thumb on the scale they looked at the financial transaction. this is post obama i think they went into their study thinking this is a really difficult tax. they came out of the study thinking it might be worth doing it we now have some actual legislation written. i think it's a tax whose time has come. >> dan -- >> so if we do 2% because of trade, the question is, do buy

want to return what jared is talking about or do nothing? the payoff is down the road if we get a more fair playing field. nkts the worse you can do for low income workers is have 2% growth it's not enough income for them to grow and it means low interest rates, high stock market returns we need 3% growth. >> we've got to go we have navarro coming on. jared, i can guarantee you he's not going to like what you said. >> i'm not afraid. >> i know you're not dan's not in the studio. he has the same dome behind him. thanks. as joe said,et nar peravro up after this. stay tuned obvious.

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"squawk box" newsmaker peter navarro will join us live. ipo rush or crush. >> it is sold, sold. >> some big companies struggling in the race to go public the names you need to know. >> plus, see ya september. investors ready to close the book on the month as the final hour of "squawk box" begins right now.

live from the most powerful city in the world. this is "squawk box." >> good morning. welcome back to "squawk box" on cnbc live from the nasdaq market site in times square becky and andrew are off our guest, mohamed el erian. the futures indicated up a little bit today 65 points on the dow jones premarket. trade fight remains front and center the trump administration has no plans to limit the investments in china peter navarro, assistant to the

president and office of trade and manufacturing policy director peter, this was fake news pure and simple really >> joe, we're going to get to that i promisei'll answer that. something i have to say first. last week president donald j. trump signed a trade deal while in geneva, switzerland, they negotiated the most radical reform in history. those two big trump wins are going to net the american people billions of dollars. there was virtually no mention of these big trump wins in the news this news cycle is overwhelmed by the second impeachment in years. make no mistake, joe

this is a coup de tat. i was astounded when al green said we can't beat donald j. trump at the ballot box. he's too good on the economy he's standing up to china. we have secure borders let's just take him out with thissism pea issis issism impeaf congress has declared war on congress and the electoral congress it's going to be as tulsi gabbard said, very divisive. the country is taking us in a very wrong direction. >> let's keep it -- how that affects the china trade negotiations we're talking about, peter do you think that with that as a backdrop it makes it more likely or less likely.

>> i want to get deep into that, joe. >> was that ever on the table, delisting the chinese -- >> i think the last time we talked i proposed navarro's rule which is that any story that comes from fake news is designed to have a man part from his money. i've read it over half of it was highly inaccurate or simply flat out false but it was market moving, joe. alibaba took a haircut other chinese companies. and it was really irresponsible journalism the problem we have here, it's kind of like gresham's law of journalism bad stories push out the good.

what happens is as soon as bloomberg puts it out there there's pressure for others to put it out there then it comes up on the cable news networks. >> peter, it doesn't -- >> hang on, kayla. just stop. i want to finish this thought. >> wow >> this -- this story was just so full of inaccuracies and in terms of the truth of the matter, what the treasury said i think was accurate, but here's the problem -- >> the treasury did not address internal discussions about outbound u.s. investment. >> please, kayla. >> i'm trying to ask you a follow-up question because we also share air time with you here >> kayla -- kayla, kayla -- >> so here's my point. when these stories come out in the press, they're designed to basically have the white house reveal whatever it is is going on there and so i'm not going to do that here, but what i can

tell you is this there's some significant issues related to chinese stocks listed on public exchanges. senator marco rubio, among others, has brought that to our attention. just let me give you some statistics on this you have the public company accounting over sight board. there's over 100 chinese companies with a market cap of over 1 trillion dollars which refused to give appropriate transparency on accounting to the pcaob. and fraud is ubiquitous. there's issues related to fake receipts, fake invoices. >> okay. >> part of the stuff is fake cash balances because it's very hard for auditors to penetrate that wall and so this raises real issues that then go down the line for example, the federal

retirement thrift board had announced the policy to start buying some chinese -- invest in chinese stocks. >> okay. >> so that was -- that raises risks. the goldman sachs dramatically increased the weighting in the m msci index which effectively forces investors to decrease their investments there. >> peter -- >> these are the issues i think that the white house and capitol hill are looking at, and that's all i'm going o say about what happened internally other than to say that that story was fake news. >> peter, generally do you support limits to capital flight generally do you support policies to weaken the dollar? and is there a view at the white house, is there an early stage discussion about how to do this if the trade dispute with china continues to linger? because that was the crux of the story on friday. bloomberg had one story. "new york times," politico, cnbc, various white house officials are talking to various

news outlets and they didn't all report the same thing but we have reported in the past that there are some things under consideration that the administration has been evaluating at different stages of development, some brought by congress, some originating -- >> how long is this going to go on, kayla. >> you brought me on as a guest here. >> i believe i can ask a follow-up question. >> that was a follow-up monolog. here's my point, kayla those type of questions it's not appropriate -- >> peter, you said we're not allowed to listen to reports according to sources you're here on the record and you're saying you're not going to answer a question. >> can i finish my point here? >> here's the thing. when these stories come out, all they are designed to do is to force the white house, people like me, to reveal the inner workings of our trade negotiations with places like china, and i'm not going to do

that the other part of the rule i have is the lighthizer rule, particularly with china and the sensitive areas of negotiation, these things are going to happen behind closed doors. i think i've been forthright in telling you that the bloomberg story was fake news. i think i've been forthright in telling you right now there are some interesting and significant transparency issues with chinese stocks but that's all i'm going to say i'm not going to talk about what's going on behind closed doors in the negotiation room. >> go beyond the stories. >> sure. >> there is a view, and you're getting a lot of support, the administration has gotten a lot of support for the hypothesis if not now, when? okay the reason why you get the when -- >> if not now when what? >> the world believes that the u.s. is serious about this. >> serious about what? what are we talking about? >> we're talking about why not press china further right now? the economy is weakening they are risking destabilization. why not force them to make sure

we get a deal that not just addresses genuine grievances about intellectual property rights, about subsidies, but also makes this snik why not force it harder right now? >> so -- donald j. trump is standing up to chinese like no president has done before and what's on the table is what i've referred to in the past as the seven deadly sins. you've mentioned part of them. it's the cyber intrusions into our business networks, intellectual property theft on hundreds of billions of dollars, the forced technology transfer, the dumping, currency manipulation, state-owned enterprises and one of the things that's very important to me is the made in china fentanyl that will kill 100 americans today and 50 million in a year i'm puzzled why you want us to go further president trump is standing up

for america on this on seven clear vectors that need to be addressed. so it's like what more do you want us to do. >> peter, you know if you tell the chinese -- >> hang on before you say i know, don't put words in my mouth before i speak but ask your question. >> so there is a view that if you convey to china it's not just about trade war we can take it up to investment war, we can take it up to currency war so agree now before it escalates. why not make that argument very explicit and keep on pressing it right now? why say, no, we're not looking at investment restrictions why step back from that? >> i -- i'm going to let commentators such as yourself speculate as to how or how the negotiations may unfold. i simply say that we've made abundantly clear what our asks are. in fact, there was 150 page plus

agreement on the table based on those seven verticals that i talked about and that's -- in terms of the context of what we're speaking with with the chinese, that's what president trump is focused on. that's what ambassador lighthizer is focused on commentators are free to speculate on whatever else you want to throw into the mix here, but that's not my job. my job basically is to have the president and ambassador lighthizer as we navigate to sensitive negotiations here. i get back to fake news by bloomberg. this kind of thing doesn't help us, joe. >> but you started off with talking about -- i think you called it another impeachment hoax how does -- with that as a backdrop -- >> yeah. >> -- just forecast how that changes or doesn't change our negotiations with the chinese over the next month or between

now and the election even? >> well, let's look at it from two perspectives one, let's look at it from president trump's perspective. this man has steely resolve about standing up to china nothing's going to change about that the probability of a great deal has not changed, right he has said very clearly we're either going to get a great deal or we're not with respect to the chinese, i think -- i think it's fair to say that throughout these negotiations they've consistently miscalculated the resolve of this president and there's a danger here that they might do the same as this second impeachment circus in three years is fired up, but, you know, here -- look, make no mistake about this, too, this -- the trump base is not going to tolerate what's going on here, and independents and moderates in this country who are

increasingly disgusted of the left ward lurch of the democratic party are not going to put up with it. america needs donald j. trump. the trump base knows it. the independents know it the moderates know it. they need president trump for the challenges of the economy going forward. they need him to stand up to china. they need him to secure our borders. so i don't think that -- >> peter, wisconsin and pennsylvania -- wisconsin and pennsylvania were two of the states that president trump won in 2016 and just looking at some of the employment data for this year, wisconsin has lost 5,000 manufacturing jobs pennsylvania has lost 8,000 manufacturing jobs what do you tell those workers in those swing states about the president's trade policy and when they will see results >> so i think that's a bit of cheri picking the data we've created through president trump's policies over half a million manufacturing jobs i've been to the state of wisconsin.

i've been to marionette, wisconsin, where they're building the combat ship i've been to pennsylvania, york, pennsylvania, where they're building the combat vehicle. all of these things have happened because of president trump's ability to get increased defense budget and his focus -- every day this man goes to work and focuses on creating good jobs for the american people who work with their hands. i'm actively involved in working with the philly shipyard issue we are keenly aware of the importance of manufacturing in this country and we are very proud of what president trump has done. >> and there were peter some gains in -- >> don't forget, kayla -- >> 2017 and 2018 but voters remember -- >> during the biden administration they lost over 200,000 manufacturing jobs and those people were on the set with joe back there in the campaign they were telling joe that manufacturing was gone forever, we were going to be a service sector. >> there is data --

>> we'd only grow at 1%. you can cheri pick the data, but 6 million jobs -- >> there are traders who warn of a manufacturing recession. >> let me ask you this, kayla. if we've got the lowest historic unemployment rates we've ever seen for blacks, hispanics, women, the disabled, veterans and you're here and kind of singing some song about unemployment in an economy which is just giving a job to everybody who wants one and still there's -- we need to fill jobs so i -- i don't even know why you're going down this path. this trump economy is strong as a rock manufacturing is strong as a rock and, you know, i've been to wisconsin and i've seen firsthand the fruits of president trump's labor on the manufacturing front. >> peter, should we expect tariffs on the eu? >> don't ask me. ask the president and ambassador robert lighthizer. >> we've got how long before

we'd need to see progress and then we'd have more tariffs back on china it's two weeks, right? what do you expect is going to happen >> i expect that on october 10th the chinese delegation is going to arrive and behind closed doors he and his team will engage with ambassador robert lighthizer and then we'll see what happens. >> i hear that a lot from president trump. we'll see what happens >> well, look, you can't -- joe, you can't negotiate in public. you just can't do that you just can't do that again, i'm telling ya, it's like -- the people watching this show who are investors, i just want to re-emphasize this point. it's like any news that you hear about china that doesn't quote real sources, like a person close -- just don't believe it treat it as entertainment, not information, otherwise you're going to get a haircut

>> have you ever given briefings to reporters, peter, off the record >> why would you ask a question like that? >> because you're saying that any story that ever comes out is to be totally disbelieved. >> what are you talking about? if you give them something off the record then a reporter can't do it. you don't even know the rules of journalism. >> the white house often doesn't allow people to go on the record, peter which is why there's a litany of background sources. >> lighthizer can go on the record any time he wants steve mnuchin can go on the record any time he wants larry kudlow can go on the record any time he wants wilbur ross can go on the record any time he wants. these are the people who are the -- who are the key players in the china negotiations. i'm just telling ya, you saw what happened last week, right you saw bloomberg puts out a story, billions of dollars change hands on what is effectively inaccurate information. now you're telling me that's okay you know, kayla, are you telling

me that's okay >> i don't report things that aren't fully verified with multiple sources, peter, but the issue is even principles often don't want to be seen disagreeing with the president in public. >> yeah, well -- >> i would ask the white house to revise that policy. >> that's another cheap shot, too, so -- but anyway, how can i help you, joe? >> no, we're done. we're done, peter. >> i appreciate it, my friend. >> okay. we'll see you later. thanks. >> i would also like to note that when president trump and prime minister abe were announcing their trade deal we covered it live. i talked about it on the air and we also wrote a long piece about the changes. >> you get to talk about it. >> if you want to read about that. bernie sanders unveiling an income inequality plan just minutes ago. i guess it's to help income inequality, not to make it worse, although -- i don't know. the details next later this morning we'll hear much more out abthe investor trade fight.

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breaking news from the 2020 campaign trail today senator bernie sanders unveiling an income equality tax plan. among the headlines he's proposing to raise taxes with what he calls, quote, exorbitant pay gaps between workers and tax increases on companies with ceos who are paid 50 times more than their median worker salary

this campaign says this plan will raise $150 billion over the next decade. follows his wealth flanges which he released last week. interestingly, $150 billion raised from this would seem to pale in comparison to what he would be looking to raise from the wealth tax for more on this, let's bring back jared bernstein, former economist to vice president biden and dan clifton, strategis research partners. at first blush, jared, dan, who wants to raise their hand to go first with some thoughts on this plan >> jared >> okay. well, first of all, i think if i may let me just say you guys are exemplary journalists so let's get that out of the way. this is a reaction to, as you said, a ratio of ceo pay to worker pay that is close to

all-time highs and rather than try to target, you know, this narrow slice of the problem i would probably argue for the type that we were talking about in our earlier segment. i tend to go with this. >> there's a difference between campaigning and governing. from a campaign theme it fits well in the theme we were talking about. income inequality, ceo pay it would be very difficult to implement. just looking at it, where do you get the ceo disclosures. those are publicly traded companies. does it force them to take them out of the capital markets. >> if you had a democratic administration and fcc, then

they could demand that ceos disclose that ratio. >> no doubt about it here you are changing the rules. that gets to your point, this is only $150 billion, kayla it seems he's throwing this on top of all of his other tax proposals. it's not a significant source of funding. it is logistically able to be done you would see changes to the broader progressivity. >> what would $150 billion get you when you look at all of the proposals that sanders is trying to get you wouldn't seem to get you much? >> you're right. of course. a fraction of a percent. but i like this idea i don't want to lose the thing you just said which is trying to pay for. you can cast all kinds of aspersions at the democrat's plans, but they're trying to pay for their ideas and i think that's admirable republicans when they

administered this tax cut, it was completely on the deficit. then democrats and republicans got together and all of their spending bills have been completely deficit financed. whether you're talking about warren, biden and sanders. the idea that you're trying to raise revenue is important and it's something that nobody seems to care about in this town. >> as for your point, governing versus campaigning, to the fact that this is a campaign offering, you're not going after arbitrary levels of wealth or income this is where there is a clear example of a disconnect between the average worker in one company and the top worker. >> look at where the polls are he's fading into the election. he's losing momentum

this is his way of trying to reassert that message and really say to the democratic base, i'm the one who will go after ceos and big wealth in this country that's why i think it's more of a political message but one that will be effective in the democratic primary as he tries to regain his footing and puts out a tax on stock transfers we're going to see increasing more aggressive proposals. >> one quick point here. one way to solve this problem is to try to do something that reaches the median worker. earlier dan made the correct point that when you look at the bottom of the scale you see pay growing quickly. that's a function of the tight labor market median pay has really lagged for a long time. one thing i like about the sanders idea is it does provide an incentive to lift the middle of the scale a lot of our policies whether you're talking about and we need to do more with middle wage

workers. >> at the end of the day you need economic growth to lift wages and workers. it's increased $4,000 over the last 2 1/2 years >> it's the same level it was in 2007. >> it was $1,000 in a previous eight years. it's not about who gets what on the tax benefit, it's about getting economic growth. >> so you think the median worker is doing fine >> i think the median worker is doing better over the last two years than the last eight years. >> just to put on the side of the latest proposal. got to acknowledge that the simplest way a ceo or company could reduce their ratio is to fire low paid workers. the ratio would improve on the surface. >> exactly. >> is that a risk? >> that's a risk that's precisely why this kind

of a surgical attempt to address a corner of the in'quality, important corner of the inequality problem can lead you down paths to generating unintended consequences. >> we'll see how the rest of the field responds to this. >> we saw that happen, jared we saw for eight years the fed was the only game in town and income inequality got worse with all of the well-intentioned programs to help people. >> interestingly -- >> the fed stays at zero and income inequality gets worse it finally starts improving under pro growth packages we've seen recently and we're back to more redistribution. >> nobody -- a couple of things. first of all, inequality, believe it or not, hasn't increased over the last few years. it's been stuck at the highest level. >> organic -- >> you and dan keep talking -- >> you grow the economy. grow the economy. >> nobody disagrees with grow the economy. it has down shifted from 3 to

2%. >> don't stunt the growth. >> the economy has downshifted because this idea that you cut taxes for rich people, you generate -- >> you said it's because of the trade wars or because of the tax cuts >> no, i don't think the trade wars -- i don't think the trade wars have yet really shifted the economy into reverse i think the trade wars have hurt business investment, that's 12% of gdp. >> anything else, dan? you gave up. >> going to come back again for the third appearance. >> third appearance. jared will come to the third studio because i note you moved in between we managed to pin you down somewhere. >> he went back and started hitting those books to come up with more stuff. >> yeah, exactly thank you. good talking to you. still to come, from uber to we work, it's been a rough run for a member of high profile ipos what's next in the pipeline? we'll ask a member at graykroft. later don't miss former u.k. prime minister david cameron

will join me live on "closing bell." squa"squawk box" back in a coupf minutes.

it's been a rough week for many ipos. check out these returns. just last week smile direct, slack, peloton, lyft and uber all down significantly joining us whether these laggards are indicative of a

narrowing in the ipo window. graykroft own shares of the we company. a very good morning to you how are you doing? >> very well thanks for having me >> so is peloton an example that we're now past the beat for this cycle? not only have we had a wework pulled, we've got a peloton listing and falling significant can'tly? >> yeah. there's kind of the great reckoning in the public markets of these public markets, the unicorns in the private market you see software is eating the world and what's happened is that has been stretched as the natural things that have been disrupted like, you know, salesforce disrupting software for salespeople now it's migrating further and further afield so you're seeing it come to commercial real estate, you're seeing it come to fitness. the key thing that we think about is some of these models have lower gross margins

attached to them and in the private markets they were trading like software companies, but if you look at some of these companies with much lower gross margins, very different businesses, i think the public markets are voting on this they say, hey, this doesn't get a software multiple because you're reenvisioning something. >> that's interesting. gross margin very binary about 15% you can still spin with this but below 15% you can't. is that what you're saying >> zoom, 81%, cloud first 77%, data dog, 75%. some of the ones with tougher times, uber, 46%, lyft 39%, peloton, 42% there's a bifurcation of these companies. zoom is doing very well. it's a high margin repeatable sticky software business in our portfolio we have icertis, work fusion these are companies that are

doing super and -- but they're more traditional enterprise software companies you get further afield from them, it's not that they aren't great companies, it's just i think the people are looking at the valuations in the private market valuations and they're asking the hard questions, which is healthy it doesn't mean they're completely bad businesses. i think peloton is a very interesting company, but, you know, does it demand a software multiple is the question >> john, what you said which i agree with is obvious. now we've had multiple, why isn't it taking the ipo multiples? why do we have to wait until it's doing badly and start talking about it >> obviously there's momentum. people want a price at a healthy valuation and there's fiercesome competition to get these listings there's a further debate around direct listings. i'm a big proponent around

direct listings. it's a healthier way giving handouts to your friends from investment banks versus having an algorithm decide who gets the allocation. there's no lockup, there's no headache over, hey, when this lockup comes up everyone is going to sell. everyone can sell immediately. i think it's a healthier way to do it. i think that will find pricing more quickly it's a good question why is a stock down 25, 30% in one day of trading like it feels like there's a better mechanism for price discovery. >> to the point about gross margin again and reading out some of those with low gross margins that may not, therefore, deserve a software type multi e multiple you put peloton in that camp why do you own wework? that's in the same camp. >> i have lots to say about wework i'd rather not talk about it. >> no, but if you're saying peloton doesn't deserve that multiple, it's a fair follow-up question.

>> yeah, i won't talk about that specifically but more generally in -- as you go further afield the questions that we ask you have to daisy chain it out, right? it starts with gross margin but it goes all the way to profitability. the only reason to raise capital is because there's a disconnect between your cash and your -- your cash flow and your cash needs so when you look at these companies from, you know, raising hundreds of millions of dollars from soft bank, for example, like the returning capital that you have to get is just enormous and they talk about investing in companies that have kind of consumed the capital they need. there are very few companies that can return billions and billions of dollars ever so, you know, we take a harder look on these daisy chain it out, like does this business actually work does it have high margin, repeatable business? sticky customers. >> so softbank made an error

investing at that valuation you're saying? >> i think it's pretty apparent. >> but you criticize peloton for going public at that level and you've also invested in wework yourself >> so, again, i'm not going to comment specifically on wework. >> i get the position you've taken. you kind of mentioned that before the interview unfair to criticize softbank and criticize peloton's multiple. >> again, i think the public market multiples that they're getting were not driven by us. that's a public market thing but we take hard looks when we're going into private companies and make sure that the fundamentals of the business daisy chain out to a healthy business it's interesting though that these companies that have gone kind of further afield in how they address the market using software, reenvisioning things, smile direct club is a good example of this, they have

reinvented this kind of old market of clear liners candid is a company we're in they're using technology to make the experience cheaper, more accessible and 10x better. >> with softbank, which side of the equation are you when you think of them as a co-investor do you think they're too big and the value proposition doesn't make sense in their space? or do you think this is great they're bringing in billions of dollars and i want them with me? where do you end up on the co-investing with softbank >> well, i would say it's very specific to a company, right all of this is specific to a company. and there are situations where you look at it and you say, capital is a weapon and being very well capitalized makes it very difficult for other people to compete with you. we're in a company called byrd which competes with other mobility companies and having capital to, you know, deploy fast, go global, invest in

innovation is helpful. in that respect softbank has the biggest capital base in venture capital. the flip side is what i said earlier, like, you know, that's a lot of capital and you have to be the best company and be very smart about how they invest that capital and are strategic about it there's always, you know, this urge when you have too much capital to go too fast, burn too much and i think we're seeing the vote in the public markets on what that means and i think the public markets is saying, hey, like this -- you know, these burn rates or this gross margin, this is kind of scary. >> thank you coming up, the u.s. could be one step closer to putting tariffs on european countries. details next don't forget to subscribe to our new podcast. hear interviews, special behind the scenes content and the latest headlines everything you expect. from "squawk box." subscribe today on squawk pod.

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we've talked china already in other trade news the wto is expected to clear the way for the u.s. to put tariffs on

europe phil will lebeau joins us. >> reporter: we know the wto will issue its ruling. the question is when when that happens this is what it means this is a long-running dispute between the u.s. and wto about sanctions or about subsidies that were being used by airbus so as a result this agreement or this ruling by the wto means that the u.s. will be allowed to put on tariffs on european goods. exactly how much remains to be seen it is likely that you will see some of these possible targets, whether it's cheese, olives, scotch, leather, aircraft fuselage there's a whole list of things that could be taxed by the united states that come from europe and we'll have to find out exactly what those tariffs are. as i mentioned, this is a long-running dispute it goes all the way back to 2004 with boeing and the u.s. saying, hey, look, there are subsidies from these federal governments or from these countries in

europe to airbus and as a result we need to have relief by the way, if you take a look at shares of boeing and airbus over the last ten years, guys, we're showing you this because for the most part these two stocks have tended to trade in tandem over time and that's still the case here. even with the split, a little bit of a split there at the end between airbus and boeing. keep in mind there is a case against the united states brought by the eu and airbus that the wto will be ruling on that's expected to happen early next year. so while we get the ruling here in the u.s. against europe, you'll see the europeans get a ruling against the u.s. likely sometime early next year that's the expectation. >> all right, phil as you mentioned, it's been a long-running dispute so we'll see if and when we get any response from the administration and europe as well phil lebeau. joining us to talk about the impact on companies like airbus

is carter copeland and gordon, i'll start with you. you have been watching this dispute for the last 15 years. what do you think we could finally see when we get this ruling this week >> this kind of fits in with the trade disputes that the administration wants to engage in in any case, this has been going on, i used to work at boeing and back as late as '92 that was surfacing. there's no questionnaire bus had implicit and explicit blown guarantees to subsidize the nonrequired costs of the a380 and the a340 pretty dry but there are, like phil lebeau said, some issues where tax abatements in the state of washington that were given to boeing to build extra plants, all of these things are being worked out i suspect it's going to get

worked out without sanctions being approved but a negotiated settlement. >> well, i think that is certainly the market's hope for this. >> yeah. >> the administration has published its list of the items it would go after. the eu has published the retaliatory list there is the preferential tax treatment and some tax benefits at the state level that's been airbus's argument. we're receiving some benefits from the french and the eu government but boeing is being subsidized as well how much truth is there to that? and how much risk is there to boeing right now because of everything else it has been through in the last year >> look, there's a lot of truth to that frankly. when you look at state tax incentives in washington, south carolina, the new facility down in charleston, you're going to find plenty of support if you go way back and look at boeing and their real success in winning in the jet age, you know, they ordered -- the u.s. air force ordered 500 plus kc

135s which was a derivative of the 707 at a time when the passenger jet fleet in the world was less than 100 airplanes. the boost from military spending and the cross subsidization there have been big benefits for boeing but at the end of the day whether each one of these companies got subsidies or benefits in some form, which they did, you know, putting tariffs on aircraft now at this point doesn't make any sense i mean, both of these companies are doing very well, selling products in both geographies they have suppliers in both geographies. up until the max crisis they had the highest margins in 100 years. it's hard to see why this industry is damaged in some fashion that requires tariffs at this point. >> carter, if they did just keep pricing themselves higher through tariffs or whatever, are there any other competitors outside the u.s. and europe playing catchup to perhaps threaten the duopoly these two

companies have >> no. i mean, the hard part about the airplane business is it takes a substantial investment to be going. you're going to be billions and billions of dollars in trying to build an of time you know, you're talking better part of ten, 12 years before airbus got up and going. so no, there aren't real competitors arising out there that we think about in the near term landscape, so it just, you know, doesn't make any sense at this point to say, okay, we need to influence the competitive landscape. both these companies are very successful and a well functioning duopoly. >> gordon, if it is china seen as the nascent competitor here, and the issue at heart is subsidies that are being paid to airline companies or to manufacturers, then how long until we have a similar lawsuit against china for subsidizing its airplanes? >> good question, kayla. i don't know the answer to that.

i do know as carter pointed out that cross pollenization if you will of technology, r&d that the u.s. air force and other u.s. government agency put in to boeing to develop space programs and the kc-135 program were in fact part of the issue that airbus i think has a point and arguably the state guarantees and the federal guarantees of money for airbus is certainly been decided. that is going to be announced like bill said this week but, there are 100 airplane -- 100 seat airplanes in china. so that's -- they're really not in the fight this is about the big boys with the a-380 and a-340 versus the 777 and now the 787. and that, i think, it is a long time until you hear from china. >> all right, we will see what in fact the ruling says, how the u.s. responds and whether in fact that does raise prices for

travelers around the world carter, gordon, thanks to both of you. >> thank you >> still to come, top movers, "squawk box" back in a couple. ♪ you should be mad they gave this guy a promotion. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis.

we're counting down to the opening bell dom chu is back at hq with a look at some of the biggest movers so far this morning. >> on monday morning movers starts with a check on apple shares f you look at those, they're up a percent or so on roughly 180,000 shares premarket volume the iphonemaker and services company gets bumped. now 265, was 243 they keep the outperform they're making some modest upside revisions to the forecast for iphone sales they think investor sentiment will improve materially from low expectations on this iphone 11 refresh cycle. those shares on the move next up, shares of newell brands, up 2.5%, 2800 shares premarket volume the company behind big consumer brands like sharpie markers, graco baby strollers, crock pot

slow cookers gets up to a buy rating, it was a hold. the target price goes to $25 from $15 they like among other things the current valuation and think a turn around is in the works. we're going to end on shares of bed bath & beyond, might find some of the newell products in there as well. shares up 4% on roughly 32,000 shares premarket the home products retailer gets up to outperform from a prior neutral at web bush. target price to 16 from 14 they like stabilizing and growth in earnings in the next couple of years as well as strategic plan for noncore asset sales shares up 6%, kayla, premarket back over to you. >> all right, dominic chu at headquarters, thank you. coming up, mohammed el-erian's aicdve to investors his big story to watch when "squawk box" comes right back. at synchrony,

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our guest host this morning, mohammad el-erian, chief economic adviser i don't know, mohammad, if you had to manage money here, you could -- how would you insulate yourself would you be taking adding on risk, taking risk off, would you be as cash viable? is there any place in fixed income to hide what would you do? >> initial conditions matter, but if i'm 80/20 as an example, i would be taking some money off the table right now. i think we have two very big uncertainties out there, and it is not the fed it is interest in -- we didn't speak about the fed today even though this week will be full of fed speak.

the amount of central bank is talking this week is incredible. we didn't talk about it because i think the market has realized it is no longer just about the fed. it is more importantly about sorting out trade and this handoff to fiscal. >> you don't think that's priced in already >> what? >> the expectation of more stimulus, more easing globally >> it is that'sy thi why i think you takm money off at this point. you talk fiscal, you talk politics, the minute you talk politics, it is not as easy as the fed. this is a good time if you're heavily exposed to the stock market, take money off, you'll have opportunities to invest at cheaper valuations >> and you don't think germany comes through with the stimulus very quickly you mentioned that earlier >> no, i don't think you get a major fiscal stimulus out of germany. it is counter to the way they think. there is a good economic argument why they shouldn't do it the problem is china and it is not clear that fiscal does

anything to help that issue. >> all right, very good, mohammad, thank you. make sure we got a few minutes left i think i'm out tomorrow you guys in? >> i'm in. >> you're in. >> i'm not. >> you're not. i think becky is back. maybe andrew is out. >> i look forward to it. >> good, make sure you join us tomorrow "squawk on the street" is next ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, mike santoli at the new york stock exchange. jim crame and david faber have the day off. final day of september, and q3 as we get set for a busy week full of pmi data, jobs number friday, more than a dozen fed speakers including powell, and the first official q3 earnings number in pepsi, that's later in the week, europe is green, ten year steady, oil back to 55. road map begins with futures pointing to small gains of the