york, where business never sleeps, this is "squawk box. ♪ good morning welcome to "squawk box" right here on cnbc. we're live at the nasdaq market site in times square i'm andrew ross sorkin along with joe kernen and melissa lee becky is off today the futures this hour, things look like they will open in the red right now. concerns over china trade a big part of this dow off about 132 points right now. s&p 500 would open down 15 points the nasdaq looking to open down 40 points. let's also show you treasury yields at this hour. look at the ten-year note, what you're looking at there is 1.522. the two-year note down to 1.395. i still always like to look at the distinction. >> absolutely. one potential drag in the markets this morning, chinese officials are reportedly growing hesitant to pursue a broad trade deal with the united states as talks are set to resume this

week price premier will lead negotiations for china is telling dignitaries his offer to the u.s. will not include commitments on reforming china's industrial policy. these are some of the big demands the trump administration has been making in the trade talks. update now on the crisis in hong kong. the city is struggling to recover after a night of violent clashes. protesters defied government threats with wearing masks and were met with tear gas they were threatened with a year in prison for hiding their faces. police arrested dozens of protesters and bussed them away under new emergency laws china's military threatened to arrest protesters who aimed laser lights more protests planned for tonight. some grocery stores, other businesses have reopened after closing early yesterday. the metro is only partially functioni ining hooch of serious

>> and in the just don't tweet about anything anymore section of our news today, also making news the general manager of the houston rockets of the nba had to apologize over a now-deleted tweet that spoke in support of hong kong protesters would seem to be something that you could do, i guess, maybe we all stand for freedom, right? >> freedom of speech in particular. >> but in this case the nba has big interests in china the tweet from darrell mori said fight for freedom, stand with wng hong kong and then it was attacked by the chinese ambassador in hoouts they urged the rockets to correct the error. spelling or what fwhu an apology he said he appreciated the support of houston chinese fans and sponsors and has had a lot of opportunity since his tweet to hear and consider other

perspectives nonfreedom of perspective. the nba is now china's most popular sports league. politicians criticized the rockets and the nba for apologizing. including senator ted cruz and presidential candidate beto o'rourke. >> i don't know if you watched this all out joe si of the alibaba of the nets criticizing him for the comment. you had the nba originally come out and say the comment was regrettable. >> but don't apologize >> regrettable -- i actually went to look regrettable and understood it deeply offended other people but didn't say that they were defending him. then later came out on a chinese website the nba later and took it even further and said that this was extremely -- that they were, extremely disappointed it played out over time in this very remarkable way. clearly whatever phone calls

were being made from chinese officials to people by the way not just i imagine adam silver but people like joe sigh to say you have to do something here. >> the nba wants to expand in china. >> yeah. >> cctv said we're not going to broadcast games. the sports retailer said we're going to cut ties. so the fallout was immediate when it cams to these tweets. >> the nba had long been seen as handling some of the issues in the united states on the court better, for example, than the nfl. >> the kneeling controversy. >> and the whole view that somehow the nfl was making it -- was not allowing players to express their own views. this is -- and they were not allowed to express they're own views for commercial purposes to some degree. this is is some ways a geopolitical version of that. >> yes what you're shaking your head. >> yeah. don't bury the league. it's like the quest for freedom

and everything that we have here can wait hooch we have some big dough to earn over in china right now as the nba that's what this is all act. >> they're not the only ones who are doing this there are plenty of other global businesses on this. >> this is like when netflix, by the way, was having problems in saudi arabia hooch hassan minaj did a show and they didn't like and they were going to try to shut them off. >> what does it mean china will not include any industrial policy changes industrial policy is i.p. is intellectual property theft part of its industrial policy >> it's all connected. >> they're saying what are we talking about soy beans now? >> they're willing to do nothing. president xi is watching all is this, with his popcorn out and is going to do nothing he's going to do nothing. >> you don't know that for a fact that he likes popcorn. >> he's saying "meet the press"

yesterday and going, this is amazing. >> theater you can get five, six, seven different popcorns. >> all freshly popped. you can get a card where you wait in a separate line. have you been to that one? >> sounds very fancy, joe. >> i think you can view this whole nba story very cynically it seemed to me that that was some sort of support for the protesters in hong kong that we understand what you're doing and you can't even say that now hooch you have money interests in mainland china. >> yes. >> if you're okay -- >> i'm not okay with that. >> as a social justice warrior -- >> the reason i raised the nfl f you're not okay with that, you shouldn't have been okay with what was happening at the nfl a year ago. >> there could be boycotts of the nba for people who believe -- >> no. if that was -- if the view was there was business interests around the nfl's position a year or two ago around kneeling on

the field, and there were people who thought it was inappropriate but there was a view that it was a commercial problem for them and if you believe that was inappropriate, or -- then you should have a different view on this, too. >> i disagree with that completely. >> i know you do. >> see, on one hand you're pushing back against a resupprer repressive regime. on the other hand, people are disparaging to the united states flag if you kneel where we have a different system that might be a little better overall in terms of human rights and freedom. >> the united states flag represents the freedom of speech so this is where it becomes very complicated. >> by the way, has the u.s. taken a definitive stand on hong kong with china? >> we've got interests there as well. >> exactly exactly. so do you expect the nba to take a higher road than the united states government? >> in the united states it's

somewhat money driven but it's also you have to tread lightly in diplomatic circles. >> sure. >> it's not purely we want to have a good basketball game. >> we haven't taken a definitive stand yet, can you expect the nba to take a definitive stand. >> we said we hope things work out okay for both sides. >> i'm sure the nba would be willing to concede that point. >> meantime, amid all that we have an update this morning on the talks between the united auto workers union and general motors here is what's happening the union vice president sending a letter to members yesterday saying talks have now taken a turn for the worse, folks. that marked a change in tone from friday when negotiators expressed hope that an agreement to end that three-week standoff could be reached over the weekend. the walk-out is now the longest for gm since 1970 when workers picketed for 67 days stock up just a little bit there. shares of gm more broadly we should say down 10% since the strike began

you can look at what that stock looked like there this morning it's up marginally coming up, new inflation numbers due this week. we'll get you ready for the data here is the a look at the biggest premarket winners and losers this case in the dow

welcome back to "squawk box. on the calendar this week, fed chairman jay powell is set to give a speech tomorrow in denver we'll also get minutes from the central bank's latest meeting and some new inflation data. yippee okay, u.s. equity futures at this hour as you can see down about 128 points, 127 points almost 400 points of gains on friday tough start to the quarter, though, as we have pointed out joining us now kevin cummings senior u.s. economist and mark grant. kevin, let me start with you, big piece in "the wall street journal," now there's worries that earnings which were right on the cusp of when we're going to be swamped, in the swamp,

which is a loaded term now, but that's coming. is that where we need to focus our attention in terms of worrying about whether there's a recession signal there or no >> i think that's right. i think the u.s., there's very much real concern here that the economy is moderating and last week's ism surveys indicated that there could be some more downside risk to the outlook in the very near term friday's jobs report was decent enough that i think at least it doesn't show that the labor market is collapsing, but it's slowing right now. but the broader economy seems to be slowing down perhaps quicker than people think. >> mark, we haven't spoken in a while. i wonder where you think we are on the big picture, still quite a bit of negative interest rates around the world we have repo issues happening here i was wondering whether you consider that to be some type of canary in the coal mine or

what's happening >> yeah, joe i think we have 17 trillion dollars in negative interest rates in the world right now it's almost incredible nobody ten years ago would have ever thought it's possible here we are. while the big story, of course, has been china, what's going on is that the nations in europe by raising taxes or selling assets the normal ways and historically they would be able to pay for their budgets and social programs can't afford them so they have the ecb to print pixsy dust money, money from nothing, and then they bought sovereign debt and corporate debt and they've lowered interest rates either to very close to zero for some of the southern european nations and far less than zero for a number of other nations. and so the fed in my opinion has to respond to this they are america's central bank. they've got to stand up and in my opinion lower rates

i encouraged them to lower rates not less than zero but slightly over zero to deal with this game of thrones issue with the european union. >> does that make sense to you, kevin? >> well, i think the big concern from the u.s. standpoint is the uncertainty with regard to trade. i think there's a lot of downside risk. i think that it's not something that we thinks will be resumed any time soon. i think if you -- going into an election year, even just removing the uncertainty with regard to trade, there's possibly two very different policy outcome approaches depending upon who wins the democratic nominee, whether it's elizabeth warren or if trump is re-elected so i think going into that, business decision makers are very unlikely to feel very inspired to re-engage in activity next year that i think

the global economy is already starting to show pretty clear evidence that the trade uncertainty is really starting to spill over to the u.s >> mark, did you -- do you think that -- i read an article this morning about zero hedge on repos. i'm not sure i buy it, but there's something -- where there's smoke there's fire does this turn into anything what do you think? no >> no, i don't think so, joe i think this has to do with the demand for the dollar for a variety of reasons that i think the fed is more than capable of dealing with by it repo activity no, i don't think there's going to be any fire, joe. >> we should learn a little bit more about it this week, as you mentioned, at the top. we'll get the minutes from the september meeting and i think the fed is going to be pretty clear in that they're trying to address any sort of stress and

funding levels, but that it's very much a technical aspect of their balance sheet unwind they're kind of going in the dark here with this new ample reserve regime that they're following. and they're kind of feeling their way along, trying to hit the right level of reserves. but i think that they'll make pretty clear and powell has kind of emphasized this at the september meeting, the press conference, that it is certainly something they're going to try to address, but it's clearly not a monetary policy issue that they're going to try to engage in qe any time soon, that they are very much focussed on this being a technical issue and not something related to monetary policy but i do think there's a lot of concern in last week's ism reports i think highlight downside risks to the economy that the fed is going to keep their foot on the pedal. i think they're in this for the

longer term than even they are leading on to, that they have to ease rates later on again this month. they'll probably have to kwont that sort of policy approach further than what they think i think up until now they categorized this as a mid cycle adjustment in taking out some insurance. clearly economy is not collapsing witnessed at least by the labor market data, but there are downside risks we think the economy is going to continue to struggle here. >> kevin, thanks mark, thanks we have nobel prize for medicine. >> we do >> you know what's tomorrow, physics. >> wednesday is chemistry. and then thursday is literature 2018 and 2019. did you know that? did you know that? >> you know -- >> you know everything. >> i don't. >> last year the literature prize was suspended. >> and they couldn't find

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welcome back to "squawk box" this morning a number of companies going public in 2019 with hybrid definitions of and high valuations in the private markets, peleton, uber, lyft all down you can look at that screen right there. they're down double digits since going public slack, software specific, down only 4% since it's public listing. that's a little better joining us is andrew mcphee, the principle research scientist at m.i.t., the author of "more from less" is surprising story how we learned to prosper using fewer resources and what happens next which is out tomorrow. nice to see you. >> thanks for having me within. >> you've written a number of books and we loved all of them particularly what's going to happen to the work force and

society. this is a little different, i think. >> yeah. >> it really relates to software >> in terms of this specific issue on how these ipos traded and how people think about these kinds of companies, why do you think that -- is it a valuation story that's taking place in the market or revaluation story that's taking place in the market or is it something else >> i think the valuation story points to something that might be pretty fundamental which is that we're moving from an economy where atoms are central to an economy that bits are central. these companies that you highlight, they're sitting in the middle of them and the unit economics can be really difficult. you have pure play software company, i think slack is a really, really solid company we have seen zoom, zoom. the margins can be really, really attractive. >> this whole idea, though, that we're going to graft software companies effectively on to more traditional companies was supposed to give a lot of these

companies both higher valuation, a better bismodel, you think not so much. >> i'm still long-term really positive on call it the sharing economy, on transportation network companies on air brbnaib the average passenger car is 95% of the time. that's ridiculous. let's put software on top and increase the utilization of those things. >> what's the appropriate way to think about the value of them? >> you have to make it upward of the economics. they can demonstrate they're doing well on a per transaction basis they're doing well, then things look rosy. >> was wework every a software company, technology company at all? >> no. >> that's the other question at what point is it a hybrid company. >> i'm a huge fan of netflix -- >> we use computers. >> that's right. >> really it's a media company. >> you're a media company and

i'm a customer of both netflix and peleton. of course they use technology, but it is in the background for their streaming and peleton's case, a really good piece of hardware. >> why is wework different from a wework if a wework is using let's say it's using -- let's say it -- isn't that the same thing, you're helping assets be utilized more efficiently. >> felt like a short-term rental company with a whole lot of dressing on top of it that's falling away but there are these assets all over the economy that are underutilized. that's bad news in some cases for the asset holders. >> efficiently only comes to the owner of the asset if you have an uber who don't own the assets can they reap those benefits we see they don't make any money even though they are utilizing assets better, they don't own

the assets. >> uber owns both people who want to ride and the drivers they own that relationship they own that transaction. i would much rather own that than own a car or taxi. >> you're saying utilizing assets more efficiently, what are those assets you're talking about? is it a relationship >> the spare room in my house. it's the car that's otherwise sitting idle in the driveway those assets are going to be put to a lot better use in the economy that we're creating. the whole reason i wrote this book is hooch essentially the total american economy is now weighing less year after year. and i think that's kind of an important, kind of a weird phenomenon we weren't expecting it i walked around with the notion that as economies grow they need more a resources they need more atoms that's not true anymore. >> where does beyond meat, that's not a tech company, but it is trying to utilize atoms in a different way. >> in a very different way with a whole lot of technology,

right? is it implausible to look back ward and find it weird and barbaric we used to get our protein by slaughtering animals. i don't know it's not crazy talk anymore. >> look back at 4 billion years of doing it that way. >> for most of our history we domesticated animals. >> i was thinking of feeding my dogs plant-based stuff i think most dogs probably can use meat as far as what nutrients are there in terms of carnivores hooch of evolution and years of that. i don't know whether we're the same we're not dogs we've moved beyond that. but i'm not necessarily convinced -- the whole hunter gatherer background, i'm not sure that's progress to go to eating a bunch of -- in fact, there's been studies that vegan lifestyles are not giving you -- >> i'm not talking about veganism there's other ways to get proteins than killing animals. >> one final question that's completely unrelated to all this, every time you've come on historically we have talked

about the work force in america. >> yeah. >> whether it's about to get up ended completely by technology. >> yep. >> and if you look at the unemployment rate, you would say something is amiss with the argument that you and i had for years. >> for years and you're winning that argument, right? >> i don't know if i'm winning it no, i think i was just as worried as you >> we don't see the era of massive unemployment technological anywhere in the evidence we don't have a good job quantity problem we have a job quality program. the great middle class jobs those are in the rear-view mirror we have to invent the middle class for the second machine age not for the industrial era. >> andrew, great to see you. >> always a pleasure. >> the book is called "more from less." thank you very much. >> thanks. coming up, a big upgrade for e uber this morning. plus, how apple ceo tim cook won the ear of president trump

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♪ >> announcer: welcome back you're watching "squawk box. live from the nasdaq market site in times square. ♪ good monday morning to you let's look at u.s. equity futures. we are in the red now three hours before the market would open dow looks like it would open down 107 points. nasdaq off about 29 points and the s&p 500 looking to open down about 11 points. we also have an analyst call to tell you about right now, citi group upgrade from uber. the analyst there says overhang from the ipo will likely persist but q3 earnings may refocus this story particularly on ride fundamentals the analyst also thinks that revenue growth will accelerate is that more bullish if the

price target doesn't change? >> well, the stock is probably lower from where -- when the analyst had the neutral ratings. >> that's fair. >> the last earnings season was tough for uber after it followed lyft and lyft had a path to profitability and uber by contrast did not it will be interesting to see this analyst call is right. paypal is withdrawing from the group of companies that facebook assembled to launch a global crypto currency base company. they will forego further participation in the libra association and will continue to discuss how to work together in the future last week "the wall street journal" reported that visa, mastercard and other financial partners were reconsidering their involvement in libra following abacklash from u.s. and european government officials. and a piece in saturday's "wall street journal" details how apple ceo tim cook won donald trump's ear, the president. it says cook developed close ties to jared kushner and ivanka trump and meets regularly with trump advisers like larry kudlow the piece says cook is flagged

to the trump administration if he disagrees with a policy before he speaks about it negatively coming up, the state of the consumer with recent volatility in the markets how has markets been holding up? we'll talk about the biggest issue in the 2020 election and what it could mean for health care companies stay tuned you'reating qu wch"sawk box" on cnbc ♪

♪ the american consumer has one of the few bright spots reassuring investors that the economy can keep chugging along. joining us now jan niffen, cnbc contributor and jerome martis. welcome to you both. jerome, i'll start with you. it was so concerning for the markets last week when we saw ism services come in worse than expected i'm wondering when we typically see that, at what point do you get concerned that that will spill over to consumer those are the dots that people were connecting. >> right the key component, the key performance indicator the highest correlation was the unemployment and that hit a

50-year low. until we start seeing that number to deteriorate, that's when we'll be more concerned about consumer spending. right now you look at the government retail sales, it all points to a slow down compared to 2018. but it is still expected to be healthy for the third quarter. it's expected to see a 2.6 growth below the 4.2 growth we saw last year and the only alarming thing here is that retailers are becoming less positive than they were a year ago. to date, we received 39 negative preannouncements and only 15 positive and this is less positive than what we saw this same time last year this is mainly because retailers are very much concerned about the tariffs. they've mentioned it over 300 times in their earnings calls this year alone and that's just the beginning. >> at the same time, while we got 39 preannouncements from retailers, we have had some pretty stellar earnings reports as well. so, where do you stand on how the tariffs are impacting.

the companies can execute really well like nike are still doing well and showed that with their earnings report. >> we're seeing a tough time to play in retail on the other hand, we have a fabulous consumer, so we haven't seen any issues with the consumer the consumer is very healthy and the consumer is spending and will be up 4% for christmas which would be a damn healthy number we're seeing a struggle as far as making money in retail because there's way too many people doing it and brick and mortar are struggling. >> you have a rule about whether there's a recession is coming or not. tell the audience the rule i think it's actually fabulous way to think about it. >> well the one you're thinking about i survey the customer, do you have a job and if they say yes will you keep your job and if you lost your job could you get one that paid just as much if more people answer all three of those positively, the world is great if they answer it negatively your sales slow down doesn't have to be recession, it can be a slow down right now i would suggest that number if i did that survey

would be the best it's ever been >> you haven't done the survey, we're back to your opinion that it would be good. >> yeah, it's my opinion it would be good. i haven't done the survey again. we did the survey all the time and we knew what the results looked like. if you went out and asked your friends that question, what would the answer be. >> it's funny. under those metrics i think he's right and yet you look to jp morgan come out with that report i don't know if you saw it where it's suggesting the feds got to drop rates because a recession is coming. how do you square both of those issues >> eventually there will be a recession. right now the consumer is very healthy and consumer is 70% of the economy. >> we have to let unemployment go to 3.8 before we worry about a recession. wouldn't we see -- w. you can't have a recession at 3.5 unemployment. >> wouldn't we see some signs of weakness there >> the thing is -- that the unemployment is a lagging

indicator kind of. >> the consumer is spending like crazy and they have an 8% savings rate when have we ever seen that? never. they have plenty of dry powder normally 8% savings rate you would go oh my god the consumer shut down who are never going to have any sales. >> a lot of people are counting on recession before november of 2020 i think there are. >> they're rooting for it. that's the problem. >> there are a lot of cheerleaders. >> not true. not true >> there are a lot of cheerleaders rooting for recession for 2020 not you maybe but there are a lot of people. >> you think the political people -- >> i'm not saying you. >> no, just some people. i don't know what party they're in but some people somewhere don't you agree, dan, that there are >> i hear plenty of it seems like that's what's happening. >> i have ears >> they were big when i was a kid. people thought i looked like a taxi coming at them. >> neither jharonne or i think there will be a recession based on the consumer. if there's a recession it will be driven by something else not

the consumer. >> the consumer is not immune from seeing the headlines about fears of recession you can make the same argument for companies and the cash on their balance sheet, they have lots of cash on the balance sheet but it will rise 3% in the third quarter which is the lowest since january of 2017 couldn't the consumer still pull back even though there's no -- even though unemployment is still low and things seem to be okay right now >> i think it's more of a retail competition within themselves. so what's happening is the consumer is rewarding those retailers. they're offering them a very convenient and effective way of shopping and those are the retailers they're investing in omni channel. the retailers are doing a really good job in luring the shoppers in and through all their channels, app, instore, internet and using that data to really study the consumer and manage it it's paying off at target and walmart. target is doing a really good job and not only investing in really winning over the

millennials, but really winning over all of the generations. and that's why they're doing so well. >> yes online is winning. off price is winning discount is winning. off mall is winning. rental is winning. resale is winning. full price on mall is failing. and that's those 26 bankruptcies we see. >> we have seen that in the performance of the stock you have a walmart, costco, target that's done extremely well and at some point do you say they've been rewarded enough and their valuations are full. >> it's hard to imagine a recession is coming when the business is great at walmart and target which is the world. trust me, the average consumer is not watching this show and the average consumer is not reading "the wall street journal. the average consumer is going around going i've got a job, things are great, i'm taking more pay home than i ever have 3% growth, what else can you ask for for the consumer. >> agree. >> the average worker i want to watch this show. >> i agree with him. the one economic indicator that

consumers are paying attention is the unemployment number they might not be watching the show or "the wall street journal," but that's the one key economic indicator that will determine if they're going to put their hands in their pockets and hold back on spending. >> thank you news alert, general electric announced a series of actions that it says will cut its pension plan deficit by up to 8 billion. it will offer lump sum payments to former employees who haven't yet started to collect it will freeze the plan for existing employees a move current participanting into existing defined contribution plans. lot more on "squawk" this morning. demand for apple's iphone 11 stronger than expected but with the stock up sharply this year, is it too late to buy apple share. we'll talk tech. and quick check on european markets right now. ♪

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welcome back to "squawk box. apple recently telling suppliers they have to ramp up production on the iphone 11 due to unanticipated demand, but now that the stock is up over 40% year to date, is it too late to buy in joining us right now to talk more about apple and other tech other tech stocks is tim lesco he's partner at granite investment advisors. good morning to you. question of the morning. you've seen the news and you've also seen where the stock already sits, tim. does it make sense to buy in from here? >> well, certainly the valuation is not at some sort of stretch multiple where we're really concerned that apple is over valued at the same time, every time there's a supplier discussion surrounding apple, it's either that they're cutting production or raising production and nobody has a really good view as to what the supply chain is doing for apple, where they're moving orders, where they're increasing orders we're not going to run out and buy it based on this news, but

we're happy to see apple get a reasonable multiple. >> when do you see apple get to a point where all this hardware news is actually old news, which is to say that tim cook's strategy of turning itself largely into a services company, i don't know if you think that's even possible, but if he is successful, that we won't be talking in the same way about, you know, what suppliers are saying this month or that month? >> i think, you know, andrew, we're probably two or three years out from a ubiquitous 5g world where more and more and more services will be available and things like the iphone will be our window into those services and that's really when you get a chance to see revenue from apple and earnings from apple be less than 50% iphone. that really will be a time. >> when you say two or three years out, you think about 5g and that happens, what are the services that you think are going to come that we don't know about now? >> well, you've seen little instances of it. you're seeing apple get into broadcast media.

you're seeing apple get into a more robust online gaming platform then you're going to move into transportation you're going to move into your information, those things that you have a digital license to following you wherever you are so it's hard to say what devices are going to have a 5, 7, 9 inch screen in them >> the issue historically has been that apple has made all of the hardware, right? that's always been a part of it. we're seeing a shift in that strategy in the tv business in that they're going to be on roku and everybody else's service we don't know if they're going to be on the amazon tv service, right? amazon boxes they said on friday may not have it. how does that sort of play itself out and, therefore, how important is the entire hardware ecosystem long term? >> well, i think that you've hit the nail on the head in that apple has enjoyed incredibly high margins on all of the hardware and it's been a profit driver they have to make sure that when they roll out the services they're profitable a lot of other services are not.

if you look at the watch, air pods, all the other ways that they're trying to make sure that they wrap you into the ecosphere, i don't see it being a hard thing for apple to make plenty of margin on whatever device it was. >> if you weren't going to buy apple, what else would you buy in tech land >> in tech land there are a lot of cheap stocks. intel, 11, 12 times earnings the semiconductor space is trading well these are low valuations for companies at the forefront of what's going on. been 25 years that technology has become the consumer staple we still only have a handful of manufacturers in semiconductors that drive the market. >> make the case for intel at this point i've heard as many bears as i have bulls at this case. >> intel was slow to thinner chips. a&d had a technology advance on them the thought was amd would be able to take the most profitable

server base out of intel then suddenly amd ran into production issues and yield issues on the thin chip. it is not easy to make semiconductors it takes a lot of capitol and experience at 11 and 12 times earnings it's hard to bet against intel and what's going on. >> interestingly you seem to like hardware. is there a services company you like >> well, you know, i guess if you look at microsoft, which we've owned for some time, that's mostly now a services company. always been a software company they actually are pushing more towards hard wear. i think what we're looking at is in a data security world people are trying to vertically integrate their product sphere the way apple has. as they're moving towards that there's room to grow. >> you saw microsoft climbing to or just unveiled, did you see this, this foldable smartphone as if they're getting back into the smartphone business using the android platform >> well, that's it

i think that windows as an operating system for cell phones was a failure. there really wasn't room for another player in that duopoly if you want to control your consumer, you have to control where their eyeballs go first. microsoft is trying to do that i'll talk about from a web services standpoint and business services standpoint, that's been their strength i'd like to see them concentrate on delivering that to business consumers. >> if you get on microsoft or google, what do you think right now? >> we own microsoft. we own a little bit of google. it's hard to look at the internet and not say that the tailwinds of more online services, more online advertising aren't there regardless of the noise generated by washington. so hard to bet against these companies on a two, three, five-year basis. >> tim, we'll leave the conversation there we appreciate your perspective this morning. >> thanks for having me. >> thank you. coming up, futures are now bouncing off of lows this morning. get ready for the start of the trading week

76 points now on the dow plus a little later, former aetna ceo mark bertolini will join us to talk about the health care sector including the potential impact of the next presidential election and what health care stocks are pricing in we'll talk about it this morning who is now likely the democratic front-runner stay tuned, "squawk box" returns.

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markets on edge as we head towards the opening bell on wall street a look at what will drive stocks is ahead. valuations gone wild a dive into the underperformance of ipos. and what an elizabeth warren presidency would mean for the health care sector former aetna ceo mark bertolini sounds off 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 melissa lee and andrew ross sorkin the futures have now pared their losses, at least on the dao,

pared their losses to 50 points. we were triple digits previous when we started this show indicated. now we have the nasdaq indicated down 12 and the s&p down 5, just about 6. so came to almost 400 on the dow on friday. looks like we got quite a bit of that that's off at this point, 47 points upticking right now. >> improvement of the two-year yield. we went from 1.38 to 1.40. that helped the futures picture at this point. here's what's making headlines at this time esther george pushed back against the fact that the fed should cut interest rates. general electric has announced a series of actions that will cut its pension deficit by $8 billion. it will offer lump sum payments to former employees who haven't yet started to collect and will

freeze the plan forexisting employees, move current participants into existing defined contribution plans that stock is up 4%. hedge fund manager david tepper will begin returning money to investors but he will continue to manage money for 15 investors who have a total of $1.5 billion invested with tepper. it had been reported that tepper would be winding down his operations. an update now on the labor talks between the united auto workers union and general motors the union's vice president sent a letter to members yesterday saying talks have taken a turn for the worse. that market change in tone from friday when negotiators suggested hope to end the three-week standoff could be ended. the walkout now the longest for gm since 1970 when workers picketed for 67 days shares of gm down 10% since the strike began. markets may have cheered the friday job's number, but not so

for the dismal scientists. for them bad news really is bad news senior economics reporter steve liesman joins us now with more on the good news bad news is good news. >> it was interesting to see how the market traded as the market equities went up because the fed probabilities went up along with it economists, especially cottoning to the number. they seem to think bad news is good news because they bring in the fed, they see signs of reduced economic data. the data remains significant with an economy that has slowed consistently over at barclays they wrote the slowdown in employment is likely to cause household spending. jan kniffen doesn't think so they support their view the consumer will keep on spending and the u.s. will avoid a recession. here's the rapid update numbers. q3 1.5

the august data has come in weak we don't have the september data yet. it seems like the august data has shaved about half a point off of gdp q4 looking at 1.9. we did 2 in q2 goldman at the top of the range of our median of tracking forecasts out there. they're at 2%. atlanta fed, 1.8 action, barclays at 1.5. 80% see risks to the down side that's down from 67% >> it's together >> it's a story.

>> exactly >> he didn't do the survey you said i think if you ask people they'd say this. >> we've been doing that survey asking those questions for 15 years. >> you actually asked the question. >> yeah, we asked the question. >> jan's great and he's -- >> i think he's right. >> -- optimistic i think if he was hearing negative stuff from the retailers, i think he'd be on that or he would be relating that to us i agree. the low unemployment rate, however, i will say our all america survey did show a down shift, right, in the most recent quarter. >> still not getting paid as athletes, right? except in california. >> i thank you for that explanation, joe >> isn't that why? >> they're so bitter. >> that is very helpful.

but that would suggest the california respondents would have been more optimistic which was not the case. >> being challenged. >> that would undercut your theory which is undercutting my survey >> all right >> no. >> when is the economic fake nobel prize coming is that coming -- >> sometime after the nobel peace prize. i hate that day because i will be forced to come on television and explain some crazy theories that i don't necessarily understand. >> i was looking at the medicine prize. >> do you know what they're talking about? >> not specifically. i didn't read enough about it. white cells -- oxygen. >> and the way the nobel committee writes this stuff, you just can't get it. if you do not have some sort of prior -- >> i'm excited that there are two literature prizes. >> i didn't see that >> yeah, because 2018 there was a scandal and they didn't give one out last year so they're giving two out which is kind of cool. double -- >> folks n case you're interested, you may want to write down that date on the calendar because joe and i will argue whether or not -- >> economics whether or not economics is really a prize

>> robert hunter and garcia maybe. we had bob dylan. >> we did have dillon. >> didn't robert hunter just die. >> robert hunter -- >> i'm going to move on. >> i don't think they do it posthumously. >> joining us now -- >> we'll return to this if we want to since it's our show. >> sure. okay do whatever you want to. i'm just a temp. >> angry, joe? >> i don't want to do that. >> managing partner at ironside economics and scott wells. barry, i'll start with you you don't see any signs of recession on the horizon you feel pretty good about where we are >> reasonably good i think there's some nuance to this inasmuch as first of all on the consumption side, the recent numbers have been flattered by the fact that we had a real down shift when the stock market imploded last year and so this was very similar to what happened in 1987

the second quarter numbers were exceptionally strong it continued all the way to july because of prime day in part but basically consumption is going back to trend of 2.5, 2.75%. the numbers look softer in the third quarter because of how strong they were in the second quarter. the other thing i would add about the labor market is it looks significantly tighter to meet now there's a lot of concern about the average hourly earning series i don't know why anyone looks at that one quite frankly the headlines have been around since 2006 it's very quirky the non-supervisory series has been around since the 60s. that's at 3.5% what's driving it is the retail sector wages are growing at 4.8 with a 3.4% unemployment rate which is shocking, right, given the retail apocalypse. retail and leisure are 4.3 low endless skill is driving the wage gains at the non-supervisory level. to me, things are looking significantly tighter in the labor market for the first time.

a year ago wages were going up because the labor turnover had increased. now it looks like it's actually getting tighter. consumer piece is fine i would say though comforting yourself that the consumer is fine and we can't have a recession is a little bit of a false way of thinking about things inasmuch as we've had investment driven recessions before 2001 being an obvious case there's no bubble, but 49 when truman got re-elected we had investment just absolutely collapse. >> investing in cap ex >> right that fair deal was actually right of -- or left of the new deal and when he got shockingly re-elected consumption -- cap exjust collapsed shallow short recession. i think the important thing to keep in mind there is let's say we had an investment-driven recession. the median decline in earnings related to a post war recession is only 13%. the meade yap decline in the stock market is only 20. the last two were big because bubbles burst. that's sort of framing our down

side i think this whole debate about down side is dubious i don't think down side is great even if we had investment completely. >> if we were to have an investment driven recession what does cap ex need to fall to? we're looking at 3% in the third quarter year on year maybe some negative quarters in 2020 does it have to go to negative or -- >> it has to broaden to the labor market. >> okay. >> businesses in 2018 were investing in capital and labor this year they've cut capital. labor's still okay the growth rate's slowed from, you know, we originally thought it was 1.9% to year on year to 1.3. it's slowed. it would have to decelerate further to actually have that permeating cause and a shallow recession. even then i expect it would be shallow. >> scott, it sounds like you're getting conservative want to go to neutral, risk off and equities as well as fixed income. >> we have, melissa. we have talked quite a bit over the last year and we've been

leaning hard we had been leaning hard towards stocks, towards cyclical sectors for years but really in a couple of steps this year as the market approached 3,000 or year end target's 3030 and the s&p 500, we thought stocks were close to fair value really for us, even though we have a constructive outlook, modest growth, modest inflation, really out through 2020, but the risks, the negative risks to that outlook have increased whether largely this trade situation, global growth or the negotiations going to go we still have obviously brexit to get through a lot of debate on the fed you mentioned the kansas city fed president, what her views were on further rate cuts. so there's a lot of uncerta uncertainties here i think the market is pretty close to fair value. just a little bit below our year end target for us it was prudent to not

lean towards stocks. we still like tech, consumer discretionary. we still like financials we're not going to swing for the fences as really, thonn nest with you, we had been doing for a number of years. >> at the same time, what did you think of last week's price action for all of the volatility we ended the week fairly flat at the end of the day. >> it was. i tell you, wednesday on the big down day, you know, that was a trading day. i mean, we came down and if you were watching the charts, if you were watching the trend line off the december low, you knew there were a lot of stops lined up below 29.40. we ran those stops we followed through. there was another trend line, a more minor trend line below that at 28.90 and when we hit that, you know, we hit two technical sell stop levels that had big-time sell stops all on the same day and that pushed us down we've recovered since then there wasn't a lot of follow through. i think that was a good technical sign but certainly as i mentioned, you know, the trigger there was that ism

manufacturing number is it going to come in that low next time? probably not maybe a little overstated if you look at the market numbers but for us, there wasn't a lot of follow through to the down side you have to say that technically, you know, last week was somewhat of a positive and as i said, when you look forward, fundamentally i don't think we're in bad shape it's these uncertainties over trade. trade discussions. if china and the u.s. walk away, market's going to go down on that. >> scott, thanks scott and barry. >> thanks, melissa. a lot more on squawk coming up in a moment in just a moment, america's health care system is in focus as we head towards the 2020 election we've got former aetna ceo mark bertolinigoing to join us to discuss what an elizabeth warren presidency could mean for the sector and a lot more. later, former nasdaq chief bob greifeld is going to join us squawk returns right after this.

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welcome back to "squawk box. what is the stock market telling us about the 2020 election jim chenos told us which market indicator he says he's paying close attention to.

>> i don't think the stock market is discounted a win by the left in 2020 you look at things for-profit education stocks, for-profit prison stocks which could be impacted by executive order, both positively and negatively the for profits were impacted negatively in the obama administration certainly those stocks until very recently were all hitting new highs we've only very recently begun to roll over. >> for more investment ideas from the biggest names in business, visit deliveringalpha.com. coming up, the latest cnbc all america survey showing that investors care more about health care than taxes or the economy when it comes to the 2020 election what would an elizabeth warren presidency mean for the sector we asked former aetna ceo mark bertoliniafter the break "squawk box" will be right back. orlando isn't just the theme park capital of the world,

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at the 2020 race heats up, health carey mains a top issue for voters according to a cnbc survey, the all america survey, health insurance tops trade impacts as the most important economic issue in the election. coming up for a closer look at the health care sector, let's welcome mark bertolini, former aetna chair. he's the author of "mission driven leadership, my journey as a radical capitalist." was it as a radical capitalist or is that wrong, too? >> yes >> anyway -- >> thanks, joe. >> you're welcome. thank you. so, listen, are you surprised that that's the number one concern? and do you really -- is it the

number one concern if you're really to drill down on that what does it indicate since at this point most people i think take for granted their private insurance that they have through their employer who are the respondent's talking about that are worried about health care as an issue or is it an overall issue in terms of cost >> i don't think it's the insurance, i think it's the cost and the fear of what happens if people get sick. so more than 50%, almost 60% of americans right now, somewhere in that range, are $400 away from a financial hardship and the next 20% are $4,000 away from a financial hardship. when you look at those statistics, that's less than a deductible or -- less than a deductible for some people if you see that as a cause, you say, what am i going to do if somebody gets sick in my family? what if i have to go to the doctor do i really meade to go? that's leading to a lot of fear in some people's minds. >> still doesn't seem like that

would become -- i would still think that other issues would move ahead of that unless you read so much about problems with, i don't know, the affordable care act being supported by the trump administration. >> i think we need to look at health as the opposite of health and poverty as the opposite of health if you can't afford to put good food on your table, if you can't afford -- it's unsafe to go out for a walk at night, the hierarchy of needs leads to health deterioration and the quality of people's lives deteriorate. people don't define their health as a disease i'm a spinal cord injury survivor don't talk about it that way they define their health by the way it limits the life they want to lead. when they talk about the things closing in around them, health is one of those things. >> i understand the health, but having only $400 for an

emergency seems more that it's having only $400 maybe income inbe equality, not making enough money, being stuck in a lower -- >> it manifests itself as health. >> apparently it does. >> health doesn't -- isn't something you plan on, right >> right. >> young people, they don't even want insurance half the time. >> but young people aren't the problem. >> you're talking about the people that are -- >> i'm talking about you and me. >> speak to what happens when we set this segment up in the tease before, if elizabeth warren wins the presidency, what happens? >> well, let's talk about single payer or medicare for all. if you look at how medicare is operated today and medicaid for that matter, private insurance companies run the business the government does not run it and so when i ask people what do they think about single payer, they all point out to the u.k. or canada as places where they have that. and that's not what we're

talking about. we're going to talk about socialized medicine, physicians, hospitals and insurance, that's what canada and the u.k. are, then we have a system like that in the united states, it's called the va. doesn't work really well so what we really are talking about is how do we pay for what is a broken system today so we conflate financing and investing. what is the investment we're making how is it rendered how are we taking care of people that's where we need the urgency because you can finance a bad investment no matter how you finance it, it's a bad investment single payer, medicare for all is just refinancing -- excuse me, refinancing a bad investment. >> so you don't think it's how it's paid for so much as what you're getting on the other end. >> definitely. we're holding onto the wrong end of the stick we're looking at what we can control, the government, insurance companies, drug companies. it's really from the consumer's standpoint what they need. >> do you think elizabeth warren does get into office, a, she

would be successful in actually turning the country and the government towards a true single payer system, do you think that's even plausible unto itself >> i don't think it's plausible because the democratic party doesn't support that when you look at polling democrats, they are in a place where they don't believe that single payer is the way to go and if you look at congress and its inability to look at virtually anything these days let alone doing something as massive as single payer, if elizabeth warren were in office, as president warren she would face the same gridlock that president trump does. >> she wants -- obviously democrats don't. you're saying the fragmentation of the democratic party. she wants that. >> she wants that, but how are you going to get anything done in this congress today even within each party there are fractions that don't allow her to make that move. >> is there something that you think could get done that would actually be a positive step forward? >> michael bennett, who's a really distant candidate in all

of this and a great guy has a great plan called medicare acts. don't love the name. i think the idea of medicare for more, which is what candidate clinton talked about when she ran for office in the last election, and i think it would have been better than we did obama care if we would have done medicare expansion and means tested medicare for people under 65 down to some age, let's say 50, and said you can buy into the medicare program based on your ability to pay, we would have done as good as or better than obamacare. >> why would the outcome be any different? >> because those two financing systems work really well. >> the care delivery wouldn't be any better >> i think the medicare -- let's talk about the president's order last week. he put out an order that said medicare advantage should have more services available, including social determinants, and in that order is a lot of really good language why medicare advantage can save the

country a lot of money i think it's a huge opportunity to fix the safety net around medicare now we have to put it into regulation it needs to be done by next june in order to price it and if it doesn't get done by next june -- >> what's ailing the whole sector if none of this is going to happen? all of these companies should be in great position. >> what happened in 2011, in 2012, in 2013 when the aca was being put into effect and all of wall street said, you know what, bad industry going to be put out of business. let's sell them short or let's stay away. the same thing is happening now with a lot of rhetoric going on around health care, and i think that's just got to -- it's just going to have to pass. until wall street sees it -- >> are they wrong? >> sounds like it's a great buying opportunity then. >> if you believe in the long-run resilience of the industry, which it does have quite frankly, i think that this, too, shall pass. >> since you're not in the

business and can speak unencumbered, if you will, when people point to the boogie man being the pharmaceutical companies or the hospital these days. >> middlemen. >> do you now sit or can you sit with some distance or perspective and say, actually, yeah, the profits in that industry are too much, dare i say, in one or the other >> i think the profits are where customers don't see value. we stand on the consumer side of it and say how can you help me live the life i want to lead how can you help me assure that i'll have a healthy state of being while i live that life then it's a fundamentally different conversation i wouldn't go out to the debate around the new capitalist model that's going on now. for a long time we as business people have been encouraged to steward scarce resources and for a long time that was capital, financial capital. that's not the case anymore. we were encouraged to put at risk plentiful resources

those were people. put another person on the line put another person in the machine. what's happened now is it's all flipped. the last i would argue 20 years we've seen a shift where financial capital is more pleasant at this full, the markets are more efficient and human capital has become more and more scarce as our education system, people's lifestyles have deteriorated human capital until we do better and take care of them and steward them like we've stewarded financial capital, we're not going to fix this problem that's why people are now worried, that's why we have an opioid epidemic. people cannot understand how the system has let them down and they're living these -- what they would view as hopeless lives. you don't believe it, joe? >> no, i think that -- i think for a lot of reasons we need to -- you know, try to equalize opportunity through education. i don't know how we're failing

people through education i don't know how we're failing people in terms of the hopelessness of being in certain demographics. >> part of that's the health care story. >> it's the health care story. >> not so much health care as it is education when you tackle education you run into sacred cows we throw more money at it, we get nowhere with it and then we're back to square one you need jobs training for jobs that exist right now not for english majors or whatever i think we need to match up what we're training people for with where the jobs are. >> it's not high school and college, i'll argue it's elementary school. when you have 85% of harlem elementary school two grades behind reading in the second grade, they're on a very different pipeline than the kids when i grew up so i'm talking about teaching kids to read when 40% of the kids in some school districts up in harlem are living in homeless shelters and move from night to night, we've got to fix those issues.

and if we looked at the root of -- we made sure our banks are safe, we make sure people's money are safe but do we really make sure our people are safe? we're not doing that we're letting them figure it out, and when we let them figure it out we're going to -- >> i'm not sure what you're arguing for, whether you're arguing for an expansion of the safety net or -- because the safety net was expanded for eight years. you saw what happened with all parts of the entitlement program. that didn't help at all. didn't help at all when you get people off a loft of the program and productive again, that actuallyhelps. disability has been going down, food stamps. just expanding a safety net and throwing more money at it is not the answer. >> i agree. >> okay. then how are you going to do it? >> you can't be productive if you can't read >> okay. >> how are you going to fix that >> you can't be productive if you live in homeless shelters. we need to take the money that we give to fancy places, we need to give it back --

>> charter schools do we try to break the strangle hold of the union? >> federal government has let the american public down we should ignore where they're headed and focus on the community and get back to community governance >> there are success stories in charter schools. there are success stories in a lot of different areas that push back -- >> now you're talking about unions. >> i am talking about unions. >> that's the real issue. >> it is that's the core issue of what we're talking about here what do you think it is? do you want to expand the safety net in. >> no. i actually think the health issue is the baseline issue and then you can finally get to the >> look, they're all one of a piece. >> you can't fix poverty without fixing health. can't do it. and there are just some basic things that aren't happening in this country anymore in san francisco they're arguing about building homeless shelters they should be taking buildings and turning them into homes, not homeless shelters.

homeless shelters are -- >> there are a lot of things wrong with how government's been done in san francisco. >> so our federal government's let us down immensely. we should go back to community governance get people engaged with community and all of us that have money to invest should invest it there, not in big institutions. >> all right thanks for being with us, mark the book "mission driven leadership, my journey as a radical capitalist." a lot more coming up mark, thanks for that. airbnb's latest funding round valued that at $30 billion it's the latest in a number of valuations being questioned by investors. what is it really worth? we'll hear from bob greifeld stepping back into his old home at nasdaq. take a look at u.s. equity futures. we're looking down, down about -- dow will tick off open 64 pntois, nasdaq 18, s&p 500

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still to come on "squawk box," signals from the ipo market as new listings underperform we'll speak to former nasdaq chief bob greifeld about the state of the market and chaes changed. violent protests over the weekend and what you can expect from china trade talks is still ahead. speaking of china trade talks, wall street jitters persist ahead of this week's goatns ren what's moving the markets is just minutes away "squawk box" will be right back. and that for me is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose.

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all this week on cnbc we're looking at the most valuable venture backed companies today's big number is airbnb deidre, welcome. >> reporter: another way to put that, 6 fwess check into an airbnb every second. it's a very rare breed of unico unicorn. it's profitable on an ebitda

basis. there is, of course, still plenty that we don't know. airbnb is more than a decade old. investors are going to wonder are the best growth days behind it or will its revenue growth trajectory impress when it releases that s-1. after the wework debacle, that is top of mind airbnb's three founders, they're still at the company with chesky as ceo the prospectus when we get it will reveal whether they'll retain control, how much they've given up over the years. what we do know is the company was last valued in the private market at $31 billion. early investors include names from across the landscape not just silicon valley. private equity, institutional investors from jeff bezos to ashton kutcher

all of which stand to make money if airbnb can pull off a listing in an increasingly difficult ipo market. >> thank you for that report. goldman sachs saying the ipo stock performance this year is as bad as it's been since 1995 shares of newly public companies are about 5% above their listing prices on average. that's significantly below the 18% gain in the s&p. joining us to talk about that and so much more is bob greifeld formerly ceo of this very institution, the nasdaq. chairman of virtue he is also a cnbc contributor. out with a new book called "market mover, lessons from a decade of change at the nasdaq." a man who took so many of these former unicorns, if you will -- we didn't call them unicorns back in the day. >> we did not. >> nonetheless, you listen to that report and you look at what's happening in the market right now, is there something fundamentally off? is there a disconnect between the private markets and the public markets

>> i would say this. the public market is putting another level of discipline in terms of valuations, and i think it's important to recognize that the ipo market was getting quite, what i call bubbly. in a sense it reminded me back of the dotcom era when you had companies coming public where there was no known path to profitability. right? not a path to profitability. doesn't that, joe, you'll remember this, sound like eyeballs in the dotcom era we talked about eyeballs >> today all of these ceos say we're the next amazon and they look at amazon as this sort of holy grail example of a company who at the time they went public there was an argument about whether or not they would ever be profitable. >> they had a clear path to get to profitability they chose to continue to rachet up the investment but you knew you'd always get profitable. when i look at the wework's attempted ipo, if they said we have this building in manhattan, it's been leased for five years,

here's our profitability with this building, that's our path we're going to do that 100 times over that might be a different outcome. we never heard that. without a path to profitability, it's an eyeball talk not going to work. >> jay clayton, chairman of the sec recently said at delivering alpha, they said the challenge or problem is the real reason people are going public is for liquidity. it's not for any other reason. that effectively means the public is holding the bag. it was always a component of an ipo but not necessarily a drive -- the driving factor. >> i would say that's the wrong way to think, right? you try to build an institution over time, right when you're running a company, whether it's public or private, you don't worry about the quarter or the year. you're trying to build this institution over a long time i hear about the timing of the ipo. the company's been private for too long. >> been private for a decade >> makes no sense. you're trying to build a company to exist for decades when you time your ipo should

not matter you're there as a ceo. the board of directors trying to build this company, do the right things, do well short term but build it over the long term. >> why are the valuations -- is masa at softbank sort of building this perverse system around the valuations? why are they so different? what happened to the discipline of these private market investors who were supposed to be, frankly, smarter than the public market? >> they're going to have to answer for that, right when we look at wework, that was in some ways a parody of some universe you see in the valley of startups. they're trying to lease real estate at the end of the day take away the hype and what is going to be the discounted cash flow of this business over time hard stop. >> the reason to go public is the liquidity. it's the liquidity and all the free money in the system that is fueling these bubbles in the

private market you have an entity like softbank, you have these entities in vc markets and they're getting their money from pension plans, who have money to deploy they have to deploy it so they're forced to invest in these companies. >> well, i wouldn't say they're forced to. you're forced to do the right thing. >> save a bunch of money instead. >> i would do that >> in theory. >> yes, but i would also caution private company valuations are different than public company. there's an old phrase. you name the terms, i give you a price. you give me a price i'll give you the terms. these are negotiated deals this is not the same thing as buying common stock in the public market. >> is the bell ripping though on the ipo market right now i mean, do you think that this wework situation is such a -- >> here. when i started in 2003 we were living in the aftermath of the dotcom bubble bursting you know how many ipos we had in

2003 essentially zero >> okay. >> so we've raised over $50 billion this year. let us keep it in context, right? the ipo market, it's alive it's well, right and it's functioning, right? do we have some valuation mismatches of course we do. we have more than historically i think so but it's still a functioning market so we shouldn't be sounding great alarm bells, but you are going to have to show path -- post weworks, if you don't have a path to profitability you have a hard time coming public. if you're growing you have a path, you're profitable, you're going to do fine >> you don't -- >> joe, no comment. >> no comment? >> i would say that i agree with bob's first comment that if you had a dotcom in '99, dotcom anything you did well. now you just say, hey, i'm a -- you know, you're peloton, i have software so that you hook me up

to the internet and i'm an internet company anybody who -- it's the same -- >> and peloton is still trading at nine or ten times revenue. >> none are technology. >> you call that a failure i don't. a lot of publicity that pricing is not good. nine times revenue, ten times revenue by any historical measure is -- >> when should you measure the success of the stocks? a year out six months out this is an existential question about all of these things. >> i always go back to the biotech where sometimes you have to wait for a decade for them to be successful. it depends on the situation. you have to make sure you've presented it right to your investors what the business plan is. >> thank you for coming in. >> the book again is called "market mover, lessons from a decade of change at the nasdaq." >> thank you. >> thank you so very much. >> thank you. >> congratulations. china trade negotiations set to get underway later this week. what is expected next. take a look at the futures we have improved the picture

we've pared our losses by more than half. dow down 60 points s&p 7. we'll be right back. ♪ ♪

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talk to your advisor or consultant what are you doing back there, junior? since we're obviously lost, i'm rescheduling my xfinity customer service appointment. ah, relax. i got this. which gps are you using anyway? a little something called instinct. been using it for years. yeah, that's what i'm afraid of. he knows exactly where we're going. my whole body is a compass. oh boy... the my account app makes today's xfinity customer service simple, easy, awesome. not my thing. hong kong trying to recover this morning after a night of violent clashes. protesters defied the government wearing masks. the metro is only partly functioning because of serious vandalism. more protests planned.

tonight this all comes as trade talks between the u.s. and china are set to resume this week. chinese officials are reportedly growing hesitant to pursue a broad deal joined now by derek scissors, american institute scholar and china beige book chief economist and bill ryan. international business chair and former national council president. bill, what does it look like now, the best that we can expect that china really has narrowed the scope of what they're going to be willing to even talk about? >> i think the best you see in the short run is that nobody walks away and they agree to have another meeting i don't expect huge progress at this one i do think sometime in the next couple of months there will be some kind of an interim deal chinese agree to buy more stuff. agriculture mostly they make some modest concession on intellectual property the president gets himself off

the consumer hook and agrees not to impose new tariffs. that kicks the can on all the major issues but i don't think anybody's prepared to make any concessions right now on the major issues. >> where did the latest change in attack come from with china does it have anything to do with the -- what's happening with the president and speaker pelosi, do you think? >> i don't think so. i don't think the chinese have been willing to make a broad deal for quite some time we had one on the table in may they blew it up. we've never really gotten back to it. so i don't think it has to do with impeachment or the president's comments about investigating the bidens i think they feel like, hey, we've gotten to this point we can stall for another year especially if bill's right and we get kind of a partial deal that keeps the president from attacking them with more tariffs as scheduled on december 15th. i agree with him, those are unlikely to go into place. >> so then take the other side and president trump at this

point given that he's dealing with a lot of things domestically is he more likely to deal with less at this point to get it off the table? >> eventually, yeah. i think the timing is important here if he agrees to something too early, it'll be -- whatever he's going to agree to is going to be less than what he wants, okay? so if you agree to something early, early before the election, then he is it's got time to fall apart chinese noncompliance has become obvious. the political success for him is agree to something about a year from now so it doesn't fall apart before people vote what that means though is he's got to keep things alive for the next year and ab interim agreement that, will kick the can for a few months come up with something else. i think derek is right you know, the chinese are not prepared to do what we are demanding. they weren't prepared in may to do what we're demanding and they're not prepared now i think their only assessment of

the president's tunnels is that he -- troubles is that he's in a weaker position. >> what incentive do they have to do anything they can say we're not going to buy soy beans? >> if they leave it gets trump off the political hook it allows him to blame them and they expose themselves to further retaliation. why do that? it's easier to talk. >> what do you make of the argument that elizabeth warren is going to hold a tougher line if she were to win >> i yield to derek on that one. >> well, i mean, we haven't seen anything from the democrats that's coherent on china she wrote a piece on hong kong that really didn't say anything. i suppose you could say she's a trade protectionist like trump and she cares more about human rights, but she doesn't have a coherent position. biden doesn't have a coherent position there's a lot of criticisms to be made of the president, i have plenty of them, but what we don't have on the other side is something that looks better. >> the democrats all agree on two things on this, one, trump's

doing it wrong, without them explaining exactly what that means, and two, which i think is a good criticism, is that he's not building coalitions. and with china, you need friends. you can't succeed bilaterally. the president's mantra is everything has to be bilateral with china, you need to gang up on them. there's some history that suggests when it's everybody against them, you can have some success. they don't like to be the outlier. when it's one on one, you get where we are now. >> even if they had a coalition though, derek, would a coalition be able to force the chinese to make substantial changes to their industrial policy or to get rid of subsidies for their state-owned enterprises? these are fundamental issues with the chinese economy they just came off their 70th anniversary with the prc doesn't seem like they would be in a position to say, you know what, we'll give in and change the way we do things. >> no, they're not going to do that coalition or no coalition, i

don't think it helps to antagonize our friends and allies as we might do with a dispute next month that's a multi--year process where people are already complaining about the cost of the american economy with tariffs that only became serious a few months ago if you want the chinese to change industrial policy, we're talking about 2022 and 2023. >> i was wondering, five years from now there's still going to be i.p. theft and probably it's tough. bill, derek, thank you i hear music we've got to run thanks. >> thank you. former council of economic advisor's chair glenn hubbard. "squawk box" will be right back. [leaf blower]

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live from the most powerful city in the world, new york. this is "squawk box. good morning welcome back to "squawk box" here on cnbc live at the nasdaq i'm here with andrew ross sorkin and melissa lee. becky is off markets down triple digits you no, they're down 45. dow at 74. treasury yield's dropped in recent sessions. ten year 1.53. couple big stories that investors will be watching this morning. here we go general electric taking steps to shore up its pension plans actions taken this morning will cut the pension deficit by $8 billion. net debt by up to 6 billion. gdp plans to freeze that plan for current employees and offer

a lump sum option for retirees who haven't yet started to collect benefits those who have started to collect unaffected so a lot of ge folks and alumnae going to be focused on that this morning. talks to end a three-week old strike by workers at general motors have now apparently had a setback. a union official saying talks took, quote, a turn for the worse over the weekend the uaw says that gm made an offer over the weekend that was the same as the one previously rejected gm says it continues to negotiate in good faith. it continues to be a difficult time for this year's ipos. many high profile companies have seen those stocks slide after their debut. overall companies that have gone public this year are trading about 5% above their ipo prices. that's maybe the good news according to data from geologic. the s&p 500, life is relative, by comparison is up 18% year to

date goldman sachs says ipo stock performance this year is the worst it's been since 1995 i don't love the s&p 500 year to date kind of metric right now because -- >> why >> because you're going to say year -- if you just -- the last 12 months it would be a different story. >> versus up 18 points >> yes, exactly. so people say, oh, look, the ipos are up 5% compared to year to date rather than if you go 12 months -- i mean, even just pick -- if you go 11 months by the way -- yeah. >> the friday jobs report forced the fed to focus with expectations that jay powell will ride to the rescue but would that be enough would it do any good senior economics reporter steve liesman is here. >> confidence in fed rate cuts is rising as confidence is falling in the outlook for the economy. ubs writes over the weekend the stall we forecast is showing up sooner than we expected. the fed is moving from a mid

cycle adjustment to a cutting cycle. over at oxford they wrote, faced with the reality of a deepening manufacturing recession, a weakening domestic economy, a cooling labor market, low inflation and the risk of tightening market, the fed will have no choice but to implement two additional rate cuts before year end to keep the economy in a good place will they deliver as much stimulus as much as these and others have hoped. take a look at where they place on the spectrum in our making the cut graphic here esther george, eric rosengren on friday, he was a little more dovish than he had been. there's the powerful middle there led by powell, the chairman he'll bring along all of the fed governors to vote with him we'll listen to him carefully on tuesday. kaplan all open to a cut not necessarily leaning there. cut now. cut more now cut a lot now.

50 basis points. several basis points to come that could lead us to a different view on the outlook. if you take a look, we have ppi -- becky's not here to say that she enjoys saying that -- and then powell and evans on tuesday. the fed minutes on wednesday cpi on thursday. i usually wouldn't put this up, but import prices now given what's going on with the tariffs, consequential put it all together into one basket, come up with a single number, 74% chance of an october rate cut 41% for december these numbers seem about right to me depending on what powell says tomorrow i think really leaning towards that cut and really up in the air for a second -- or it would be a fourth cut in december depending how you data and the outlook changes. >> for more reaction to steve's report, jobs report, what we can expect from the fed later this month let's bring in our guest,

jason furman. what is it. >> i think you're putting your finger on the fed's dilemma. the fed is in a good place in terms of the job market. it is a lagging indicator. the economy should grow 2% plus in '19, less than 2% in '20. the fed may warrant an insurance policy

it's not up to the fed's call. we're expecting the cut. >> jason, what's your view is it the manufacturing slowdown whether it's tariff related? whatever is causing it is that why we feel so dismal at 3.5% >> i agree with glenn. data isn't screaming out that the economy desperately needs a cut. a lot of the slowing is natural and to be expected as an economy, you know, reaches its potential and its potential growth is slower, labor growth is slower. i think what's worrying is partly some sectors like manufacturing but also if you look at the data, some of the softer data, databased on surveys on sentiment is weaker than some of the harder data, data like the jobs number. maybe that softer data is telling us what we have for the future maybe we want to take insurance out against that the fed seems to have this 75 basis point adjustment in their heads they cut in october, they

will have done that 75 basis point adjustment. >> jason, i've been thinking a lot about the question joe asked you which is is it a weakening economy or is it a tight labor market i actually come to the conclusion it doesn't matter in the sense that in both instances the economy will slow but the policy response would be very different, right so let me just start with jason. if it's a tight labor market, the fed should probably not be cutting -- tight labor market explaining why jobs are weakening, job growth is weakening. the fed should not be cutting into the scenario. if it's a weakening economy and we're off the track, then the fed cuts rates in that scenario. >> yeah, i agree with you exactly. you can look at it from the labor market side. you can look at it from the gdp side i think our potential growth rate is 1.75%. where it had been above that because the unemployment rate has been falling, the

unemployment rate can't fall forever. when we get to 1.75 growth i don't think we should be that upset. we can do structural policies reform that raise the growth rate but not a lot the fed can do the reason though i don't -- not too worried about them overheating is wage growth is decent but not spectacular inflationremains below target. so while i think this is mostly a tight labor market, the costs of being wrong right now cutting rates right now don't seem to be that high. the up side might be pretty high in terms of helping this economy along even more. >> so, glenn, it's a lagging indicator and we say that a lot. we wouldn't know what's coming from the 3.5%. something could be right in front of us, repo, something, i don't know, scared should we be scared? is there a 50% chance of recession between now and the end of 2020, glenn, that we don't see or some people do see? >> i really don't think so

i agree with what jason said about the tightness of the labor market there is a thought that the natural rate of unemployment is lower than we used to think which may give the fed some room to move here the fed does need to be more articulate about its long-term inflation objectives and how it's going to get there. i don't see the screaming face for a major rate cut as opposed to some smaller insurance cut. what worries me, i think is showing up in the sentiment numbers is the policy uncertainty. which is clearly weighing on business people. the fed's policy uncertainty for governance. >> that can be self-fulfilling then >> yes. >> business -- so if the guys that make the decisions aren't sure about what's happening, they can actually, you know, sort of a self-fulfilling prophecy based on what they decide to do with capital spend? >> absolutely. >> counting on those guys.

>> joe, i need to tell you the truth here, and with jason and glenn here, i think they need to -- >> that would be nice. >> i think they need -- they can see what they think about this i don't think the economics profession has any real tried and true way of knowing if a recession is coming. we can look at the data. we can tell you what happened last time there was a recession, but almost certainly if you look at two different recessions we would find two different sets of leading indicators leading up to it glenn, am i wrong here am i missing something >> you're not. if you look at blue chip consensus, it's historically before recession, it's very hard for even business economists who do this for a living to predict recessions very well what we can do though is say which forces we should be watching closely, whether you're the fed or the government. the actual prediction is difficult. >> jason, i think the other way to look at it is if you don't have the economists, what do you have i don't think the traders or the market is much better. >> yeah, i agree with that,

especially given that the gauge at that we use to measure the market especially like the yield curve has a different reading when monetary policy is being conducted with the size of the fed's balance sheet right now. i think, you know, the unpredictability that we always have is compounded now by the policy uncertainty some of what happens in the economy over the next year depends on choices that president trump is going to make about trade policy i can't predict what he's going to do. i'm not sure he can predict what he's going to do so i don't know how anyone can know the answer to that. >> you've all chosen this -- you know, this field would any of you be opposed to if we were to change the economic -- nobel prize for economic, nobel prize for video game development or something? maybe a best picture nobel prize? i mean, there -- it's fake there's no reason to give it to an economist you know nothing you know nothing. >> in all seriousness --

>> you have no idea -- >> nothing other than predicting. >> what about video game >> you don't get the nobel prize for predicting. >> you don't want to get rid of the nobel prize before glenn gets it. >> it's from -- alfred nobel knew not to make an economics nobel prize. some committee -- like video game or best picture i like best picture. >> it's beginning. how long is this going to go on? two weeks until the prize comes out and another week afterwards we're going to -- joe, what you're missing is the incredible benefit that economics brings to society in terms of making critical choices and figuring out the right things to do. >> don't you want a nobel prize for how -- >> your check is in the mail, steve. thank you. >> you guys. you should have done something else something worthwhile with your lives. >> like tv anchor? >> touche. >> you do both. >> i do both useless in both regards. on the one hand and on the other hand >> all right coming up when we return, a

different take on the economy from the viewpoint of an american homeowner quicken loans ceo jay farner is going to join us to talk about the u.s. mortgage demand and what this year's drop in interest rates has meant for the stakeholders and more. stay tuned, you're watching "squawk" on cnbc without the constraints of a full time job? you can grow your retirement savings with pacific life and create the future that's most meaningful to you. which means you can retire, without retiring from life. having the flexibility to retire on your terms. that's the power of pacific. ask your financial professional about pacific life today. ♪ ♪ ♪ ♪

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welcome back to "squawk box" this morning take a look at the futures as we set ourselves up for the open a little over an hour from now dow looks like it will open off 67 points right now. nasdaq off 21 points s&p 500 off 8 points. news today in the housing market quicken loans announcing customers can now take advantage of electronic mortgage closings in all 50 states it is the first lender with this capability joining be us now with more on this news as well as the health of the mortgage market, jay farner, ceo of quicken loans good morning. >> good morning. >> what does this mean for consumers? the whole process when you get a mortgage through quicken is electronic. >> yes. >> now you can close electronically you don't have to hire a lawyer, don't have to interact with anybody. it's all pushing buttons >> with rocket mortgage the complete application process was electronic still at closing up until a few

months ago you were doing some paper signing. now we have eclosing that means you can electronically sign your closing, keeps things organized, everybody knows you get hundreds of documents but more importantly it gives us flexibility. so let's say you were in the army and serving over seas, you would be able to sign electronically remotely without having a printer and print that documentation, notary and those sorts of things. >> does it save on closing costs? >> it certainly can help as we bring efficiencies that gets passed along to the consumer. >> by how much on average? >> i don't think we've gotten to that place jet i think 95% of all closings in the country have been conducted by quicken loans and rocket mortgage the big win for our clients is the flexibility. if you're purchasing a home and a date changes and you need to close in two or three hours, all of a sudden we can upload those documents and get that closed for you. it's really focused on a convenience play at this point

in time. when you do that, eventually the economics trickle through as well. >> second quarter for quicken loans, best ever $32 billion in closed loan volume third quarter is tracking to be what >> even more we'll have our best quarter ever approaching 40 billion in closed loan volume. applications are continuing to increase so been a great year here at quicken loans. i was listening to the earlier commentary it's interesting to watch the perspective on interest rates when we see from our end a lot of real positive indicators for the economy. >> when you see interest rates go down, when you see, for instance, the ten-year yield go to 1.5 plus percent or so, how much do mortgage rates tend to come down? at what point do you say, you know what, we're at a point when customers are going to come flooding back in to look at refinancings or purchases. >> most of our clients are focused on a 30-year fixed mortgage it's a bit different but

related. where we are today is probably where we see a lot of client interest i don't see interest rates changing significantly from this point and they don't have to to make sense i'd say most of the folks out there today should think about getting a refinance because these rates are at historic lows we're seeing the market pick up. september was a very, very strong month for us. interest rates helped that as well. >> when you take a look at how many people had already refinanced, there is an argument to be made that people who have refinanced, they've refinanced and rates would have to go substantially lower to make it worth their while, worth the cost of closing, et cetera, to actually refinance once again. have we reached that point >> no. when you think about american and the thing that they're going through in life between paying for college for their children, remodeling their home, moving to a new home, although people secure low interest rates and have been doing that for quite

some time, so many changes occur. we're talking to people who are thinking about the overall picture and leveraging low mortgage rates to benefit it in all of my years now, almost a quarter of a century doing this, i've never seen a situation where we just get to an end where there's no benefit left. with rates this low, even people who took advantage of great rates years ago are now doing it again. >> what are you seeing in the housing market, jay? >> we feel strong about the housing market my personal opinion is i think the fed should be thinking twice before entertaining another rate cut. i know that purchases typically lag some of the other indicators but like i mentioned, september for us purchase applications were great so, you know, housing market seems very, very strong. we're noticing that our home value as we measure it by appraisal is still coming in a tad bit higher than how consumers perceive the perspective of the value of their home that's a good indicator. all things are firing on all

cylinders right now from our viewpoint. >> are you seeing any issues in any particular states, particularly the high tax states, the ones on the east coast, the ones on the west coast? >> yeah. you know, last time i was on i got the same question. no, we haven't seen that at this point in time. i think you referenced unemployment or lack of unemployment and so watching that, at some point in time it affects the employer and that can trickle down and that is something that we're keeping a close eye on we've seen no effect away from taxes as it affects homeownership. >> do you think mortgage rates are going to go lower? and i ask you that because if it's a coin toss, jay, there's -- there's some thought that if mortgage rates look like they're going to climb, it could insent people incent people to come off of the sidelines. if they could go lower that would have people take a look. >> this is the way i think about it there is no harm in exploring

opportunities and in taking advantage of a low interest rate in today's mortgage market there are no pre-payment penalties you reference costs but in many cases there are low or no-cost options. we don't know what the interest rates will do. they could go up or down if it makes sense, you can lock in if they drop down you can refinance again. for me, i'd like to play the safe bet if that means saving money right now, now is the time to do it. >> just curious, jay, do you have a mortgage yourself what rate is it? >> that is a great question and i'm an adjustable rate type individual. >> you are >> i'm in the business so i have some more comfort, i suppose, in how those mortgage programs work than others. >> what kind of rate do you have >> well, something lower than we've got today, but i'm still looking and seeing what's out there right now to see if there's an opportunity to take advantage of the housing market, quite honestly, not just interest rates but real estate i'm watching the real estate

market very closely as well. >> jay, great speaking to you. thank you. >> thank you. >> i was trying to get to that but he wanted to stay low. >> i think a nobel prize for technology. >> i think that that's fair. i think there are -- >> listen, he died -- he didn't even make it to the 20th century, alfred nobel. what about for the -- look at that, he's not interested. what about for the iphone? that should win a nobel -- how about a model s? i think elon should win a noble -- >> for bit cohn? >> what about a nobel prize for developing bit cohn. >> ai. >> have you ever read what you win an economics nobel prize for? the minutia involved and the -- i mean, you know what i'm saying >> i do. >> don't you think the model s should win a nobel -- >> why don't you in parallel with the nobel prize issue your

own -- >> why don't you issue the kernen prize. >> you have to bequeath. >> i think it's a waste. maybe liesman should win for the all-american survey. >> that's an idea. coming up, the co-founder of alibaba sounds off on the protests in hong kong and draws one of the big four sports leagues into some controversy. we'll talk abouthe t impact of one of the most powerful brands in america when "squawk box" returns. in unexpected places...ure ♪ who were inspired by different cultures ♪ and found that the past can create new memories... leading them to discover: we're woven together by the moments we share. for everywhere you go, expedia has everything you need, all in one place. through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business.

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welcome back to "squawk box" this morning take a look at futures about an hour before the open right now we are looking in the red. dow off about 68 -- 67 points right now. nasdaq off 22 points s&p off about 8 points making headlines, sonos has quietly launched a new subscription service for the speakers sonos flex plans range from 60 bucks to $55 a month speakers are available in black or white and will automatically be replaced as new models are being released it's being tested in the netherlands but could be expanded worldwide if successful. >> tesla will let you customize

sounds for the horn when your car is moving at low speeds. the full selection isn't available yet. he tweeted a few options such as goats, rushing wind and even the horse clopping sounds from movie "monty python and the holy grail. he'll consider letting drivers upload their own sounds. >> you're going to need it when you're calling your car to come from the parking lot to pick you up i don't know if you saw the story last week where they're getting people in the parking lots. >> near accidents. >> knits isnhtsa. >> i want a louder horn. >> louder horn >> louder horn >> you already have a loud horn. >> i want louder i want a louder horn i like it when there's more than -- have you ever noticed if your horn -- there's two of them and it's together they make that sound of a horn. when one breaks you just have the other one -- >> you have a mono horn.

>> people don't even pay attention. they don't move. coming up, upcatdates on soo the top tech including the nba and chinese ecommerce luminary details are straight ahead ay tuned, you're watching "squawk box" on cnbc

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welcome back to "squawk box" on cnbc live from the nasdaq market site in times square. here's some stories that investors could be talking about today. kansas city fed president esther george said the fed should not cut rates to come bad low inflation. george says the current inflation levels are largely a result in forces that they are too little to counter anyway concern about low inflation rates are unnecessary and that the u.s. economy is in, her words, a good place. shares of uber are higher in pre-market trading stock is upgraded from buy to neutral at citigroup it's seen a positive shift in sentiment by wall street

surrounding the poor ride hailing business and hsbc quarterly planning to cut up to 10,000 jobs and 4% of the work force. if the bank's interim ceo is looking at the cuts. >> doesn't that affect the profitability. >> it could have a nobel prize. >> yes, for how it has changed the way we live. >> meantime, tech, sports, geo politics all of it coming together alibaba's co-founder and nets owner, joe tsai weighing in. the tweet has been deleted some chinese brands withdrew support from the rockets the nba has been thrust into an international freedom of speech debate several hours ago tsai posted an open letter, it's a long one but worth the read saying he felt

compelled to speak out and supporting what he called a separatist movement in chinese territory amounted to a third rail issue in china. meanwhile, the nba released its own statement yesterday saying any offense to chinese basketball fans was regrettable. joining us to talk about this, "new york times" media reporter and cnbc contributor noah tell is here editor in chief at "the verge. good morning to both of you. >> good morning. >> you look at the joe tsai statement this morning and i have to think that somebody in china called him and said, you need -- right? how does this happen >> you know, when i was -- at my last job when i was managing at ricoh. joe tsai showed up i met him for ten minutes in greenroom. very articulate, smart, savvy person i'm going to have to agree with you that there's a very good chance someone in beijing said you need to say something. you read the facebook post, it's like beijing could not have written it better themselves. >> yes, exactly.

>> textbook. very in lock step with their messaging for years and years and years. >> what does this say in the larger picture about the nba we can talk about u.s. companies more broadly the nba which has taken a very progressive view of giving its players and its members an opportunity to speak out on all sorts of social issues in a way frankly they were given a lot more credit than the way the nfl handled some of the situations in terms of the knee on the field two years ago and the like does this change that dynamic? >> i think it is fascinating james hardin said, we apologize to china that is a remarkable position for a player to take this is not the first time big american business has run right into chinese politics. marriott fired a 49-year-old social media manager for liking a facebook page. just liking. he didn't say anything, just liked a facebook page from a marriott account i think kbgap was forced to recl

a t-shirt that had the wrong map. i thought about joe tsai's statement was notable. it didn't reflect any of the attitudes or concerns of the people in hong kong. >> do you think the nba gets any backlash in the united states over this issue? >> even sasse is -- >> ted cruz and beto o'rourke are on the same side of this apparently >> do you think the u.s. citizens and nba fans in the united states say, there's a problem here now with the nba? >> i think -- i think it's the preseason for the nba. once games start the nature of sports -- you brought up the nfl. the middle of the nfl season, cowboys yesterday for me personally -- >> you know it's close did you watch the end? >> i did it was a heart attack. >> that was really sad they looked like they were going to maybe do it i had doubt. >> oh, no. no i'm from wisconsin i'm okay look, the nfl is back in full swing.

that gram was great. it has its own set of social issues it signs a deal with jay z it's gotten never lopez and shakira at halftime. once the season is underway the american public moves on quickly. how this goes on in china, that's a big deal for them it's a big market for the nba. as we stay in the trade war and over heated international relations in the country, how does every country that has a big business -- >> and for nba fans in the u.s., the hong kong protesters, it's not as tactile an issue as kaepernick protesting on the field. >> u.s. companies doing business in china and what they can or cannot say. >> take note of just how in lock step the chinese were. the sponsors, chinese basketball association, ten cent which streams these games has a $1.5 billion deal immediately shut it down. >> ten cent took off all houston rockets -- >> exactly if you do business in china, you want the fans.

even a tweet like that >> right. >> you can't even -- >> are you surprised players will come out against the league it's interesting that the players have -- everyone's sort of -- even within the nba in lock step which is actually different than other leagues. >> i think, again, there's so much money to be made in china even for the players that rift is going to be formed. you're still looking at endorsements, the entire face in another country. >> and in the off season, these guys spend a lot of time in china promoting the brand, promoting themselves, promoting the sport. for them it's tactile. >> criticize -- criticize our government criticize trump to some extent but you can't criticize china. that's interesting. >> totalitarian government. >> yeah, it certainly is >> joe tsai -- >> we're allowed to criticize it. >> he's taiwanese.

his family is from taiwan. if you followed the geopolitical politics of china, that's an interesting position for him to be in. >> i wrote about him many, many years ago. he went to school in the united states. >> yes >> went to yale. >> that's a chinese company, alibaba. >> his fortune is chinese. >> i want to switch topics another issue in the news, softbank masa told a japanese magazine that he is embarrassed. they pulled their ipo and valuations how other key investments have fallen what do you think is going on here >> i think with the softbank funds, the vision fund, the structure of those funds are tough for him, right >> right >> there's a huge cash component where he's got to guarantee a good portion of that in annual basically the equivalent of dividends. he's saying, look, i kind of screwed this one up. >> what happens to this next big

fund to me there are two big issues one is a second fund of $100 billion. >> which he can't get to. >> can he get that money two, if masa son gets out of the market, if he doesn't have the same influence he had before, do valuations across the board in the valley and elsewhere come in >> i think the valuation of the first vision fund company and his investments represent the promise of monopoly profits. wework, uber, all of them, we're going to lose money at alarming rates to take over the entire market we're going to value this company as extremely high. no one can compete f. it works, it works you see in those markets, particularly uber, that effectively it became a duopoly. uber and lyft. if it hadn't been imagined it might have defeated lyft it might have returned those profits they were seeking. i think it is interesting that masa has 3ipicked a number of entrepreneurs all to go in on

that have a number of leadership issues can he raise another round he has to prove that his first set of investments can return the outside investors. >> first in first up that's his i'm going to get this company because they were the first in this, we could dominate it in terms of trying to raise a second fund, if you look at just where everything is geo politically, fine, i'll guf you some money i think that is still his pitch ultimately i can give you a better return. >> do you think his approach changes in turns of how hands off he historically has been and founder first he has been? do you think if you're going to take money from him in the future that he's going to be a lot more hands on? >> yeah, i think the whole conversation about wework, is this a tech company? is this a real estate company?

>> right >> we're going to value like a software company even though what you're doing is moving cars around, you're buying office space. then you have to evaluate whether your investments are going to return software size margins or irl margins. >> the question that i'm putting to you is maybe slightly different which is as -- if masa son is going to make future investments in other companies, a, do founders say i can't take your money because you're going to behead me. >> because he's going to want to take more hands on. >> what happened to benchmark obviously with travis kalanick taking him out did they have a harder time investing in future companies after that did they change their approach >> i think their reputation has certainly changed but i think right now the cv firms in the 1r58ly are going to be good. >> yeah, softbank has distorted that whole marketplace by the

size of the market i think masa son, his approach is more hands of i like your style, brash i think he's still -- >> i don't know if mbs is going -- >> that's a whole other -- >> no, that's how you have to think about it when you think of the pressures on him to turn against adam, it was in large part because investors like saudi and others were frustrated and upset about what was taking place. when they saw the valuation of wework go from 47 to $44, they said, what gives >> that's fair you're absolutely right. where the money is coming from. >> switch gears and pivot to this the record hollywood weekend for "joker." the comic book film starring joakim phoenix earning $94 million at the u.s. box office is the most ever for an october premiere this despite security concerns at some theaters and an "r"

rating i did not see it but it is now on my list. >> i have not seen it. this is a difficult movie but she said it's worth thinking about. >> didn't it win venice? >> yeah. >> isn't the criticism that the main character is basically -- you know, what we worry about in society is -- they call it -- >> art is supposed to reflect culture. i think this is a story about a young man who's unhappy with the world and kills people on the subway that's not a great -- like i think there's a lot of angst about that issue "joker" historically is not a small-time villain he's trying to blow up the world. this is a small story. >> i'm astounded by the box office huge win for warner. >> huge. >> not just domestically, overseas as well without china. >> warner needs a win, right >> absolutely. >> right now as they go through that at&t integration, there's a lot of rocky shores for them.

>> the comic book war between d.c. and marvel. the tact that they're taking is very different. >> did you wish that the field goal had been successful to see if there was an onside kick to just see if they could tie the game up? weren't you disappointed that we weren't going to see that showdown. >> i have seen the packers lose a contested game on an onside kick i was very happy that missed. >> the first one made it there was a movement so he had to kick it. >> can we switch this whole thing and at that about the officiating in the nfl. >> i'll do that with you >> in dallas we've got it. you guys definitely did very well. >> thank you >> what's to watch out of the up and down s&p 500 coming off a strong finish on friday. check out the futures, dow looking to lose 64 at the open s&p 500 down 8 points. get you ready for trading when "squawk box" returns when it comes to your customers' expectations,

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welcome back to "squawk box. conocophillips is raising the quarterly dividends and they expect to repurchase $4 billion worth of shares in 2020. they say they are committed to returning more than 30% of cash from operations annually through dividends and buy backs. that stock is up 1.7% premarket. we are under an hour until the opening bell on wall street. let's take a look at what we should watch joined by steven whiting and mike santoli mike, i'll start with you. it was really interesting end to the week because we basically almost completely erased what happened in the first four days of the week. >> we did. so from thursday morning especially through the end of friday obviously i think economic sentiment just got too sour and then it wasn't prepared

for a roughly on target couple of reports i think the question today is are we going to see that sort of late friday levitation challenge a little bit i think it's a modest move this morning so far treasury yield is up slightly but not budging much off their lows. of figuring out exactly how negative people got in terms of leaning to negative news of the economy and whether that holds true trade deal, i don't think anything great is priced in. but i think the street is kind of quit handicapping it on a short-term basis. >> steven, where do you stand overall in your portfolio allocation underweight now bonds but moving away from defensives what does that mean? >> we spent a month and a half going from overweight fixed income, underweight equities back into the direction of a more risk taking profile at the moment, we're at neutral on equities. we have an overweight in gold, a little overweight in cash. the issue is we got global bond yields down to all time record lows

1.5%, including emerging markets, including high yield bonds. and i think that what we have seen out of the data as mike said, below consensus data through the week, this will be the weakest quarterly earnings season, but we haven't broken the expansion completely the ability to come back it from it in 2020 is a little bit underrecognized. so i think the good chance here that we have mild gains, not 11% consensus eps, might as well stay up 111, but the ability to hold this together, to absorb this industrial recession around the world, and have it just outlast and recover in 2020, i think the prospect of that is reasonable and relative valuations are telling us we can do this now. >> we're moving away from defensives, which sectors and which did you put more money towards? >> for example, a little, down a bit in staples, a little up in discretionary. cyclical industries in general, companies that are able to

increase dividends, that pay well above bond yields and are not bond equivalents, not utilities creating a tech style stock evaluation those that consistently raise dividends look fabulous relative to the bond market the u.s. bond market, we have an overweight, but globally underweight and even in the united states, these are going to be relatively stretched bond valuations at a certain point. >> in terms of what happened last week, it was interesting we had this powerful value trade going on, and by the end of the week, it was clear for instance banks which had benefited tremendously, they still were just, you know, at the mercy of yields >> they were friday perked up a little bit. you had this kind of steepening of the yield curve in a way you don't want, but short-term yields going down more i think right now, i have to be agnostic if we saw a real style shift. it was a dramatic repositioning toward value, but not something carried through. i think the large growth

stocks -- it is hard to see a scenario where the overall market performs well and gets back toward its highs and just on the back of, you know, energy financials, and beaten down retail and auto stocks just doesn't work that way. >> mathematically it doesn't work that way. >> doesn't seem to grab that part of the cycle for that. >> look, shares are up 2% from this time a year ago bond returns have been, last i checked, 11% higher than a year ago. this is not been a marketplace where we had a deep undershoot not 2016 it is not the fourth quarter of 2018 what we clearly have tremendous opportunity to see a rally and beat far overweight in equities, expect 20% type rebounds not like that it very frustrating in fact that markets appear roughly in line with the fundamental story, where the base case is, we eek out some gains. that's why we're focusing on quality, on higher bond ratings, the ability to pay a rising income, tangible returns now again, not to say we won't get

some improvement, some of the beaten down it names that come back if they're fundamentals are in tact. but this is really a time again for us to, again, shift gradually, and in this case, i think a little less defensive because the consensus has gone very remarkably defensive. >> steven, thank you, and mike santoli. let's get down to the new york stock exchange. jim cramer joins us now. you love playing the jets, don't you? jim? >> wow, felt bad for the quarterback, geez. summit hilltoppers have a good quarterback. >> what should we make of the action today, market was down based on the latest china scuttlebu scuttlebutt. big day on friday, giving back a little today where are we on that front, do you think >> i think larry kudlow laid out what a very optimistic let's say statement about how the talks

go the pushback is not in keeping with what the president seems to be going for, a wholesale change and the chinese came out and said, listen, there will be no wholesale change we're going back with the same program of we can buy off the united states, with some soybean boy buys that's not going to happen frank collin doing terrific work reporting. it is not about john deere anymore. it is not about tractor orders and combine. i really feel that what has happened is we're on two different tracks, the chinese track is to put in some ag buys and we're looking fundamental change, i don't see how there can be a deal. >> jim, i was reading your twitter feed this morning, you said two things i thought were fascinating. one, i think people don't understand warren or trump, they think our companies sold out workers. i think that's empirical, but not recognized by anyone in the media. what do you mean >> well, if you look at elizabeth warren is a very long

diatribe about u.s. companies selling out our own workers. and that there has always been multinational companies, so a little bit like trump, obviously what she is saying i'm not going to come to the table i'm not willing to deal with the chinese because they don't believe in global warming, i'm not going to go to the chinese because they don't believe in religious freedom. she is the -- she is, i'd say, if far more extreme than president trump about what it would take to be able to have a trade deal i don't understand why people -- the chinese government doesn't realize if elizabeth warren comes in, there will be no talks what so ever she's not going to roll back the tariffs. she's not going to roll them back they're not compliant to the paris accords. certainly not compliant to save something that might have happened with the general manager of the houston rockets this weekend, the biggest story of all mr. fritata, he's our guy. wouldn't you love to know what he thinks? right? >> i was going to ask when we will talk about elizabeth warren

again and whether at some point do you get defensive in the stock market if you think -- >> she's a hard-liner. why don't people -- she's a much harder line than trump she doesn't want talks at all. >> we'll see you in a couple of tenus. and "squawk box" coming right back after a quick break g, will it feel like the end of a journey? or the beginning of something even better? when you prepare for retirement with pacific life, you can create a lifelong income... so you have the freedom to keep doing whatever is most meaningful to you. a reliable income that lets you retire, without retiring from life. that's the power of pacific. ask your financial professional about pacific life today. woman: what does the word "partner" really mean? someone i can trust. (impact, click) who is with me for the long-term. who understands i'm dealing with lives, not only livelihoods. that in order to help people, i need more than products,

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quick final check on markets, dow off 68 points right about now. nasdaq looking to open down 29 points s&p 500 looking to open off

about nine points. let's show you the ten year note, real quick, right now, you're looking at that we're at 1.544 meantime, melissa, thank you. >> my pleasure. >> hanging out with us this morning. joseph, thank you, as always. >> nobel prize for physics tomorrow. >> literature on thursday. we have -- >> two literatures >> chemistry on wednesday. >> join us tomorrow. "squawk on the street" begins right now. ♪ good monday morning. welcome to "squawk on the street." futures red as the bulls try to snap a three-week slide for the dow and the s&p 500. trades will dominate the headlines as talks begin this week throw in 11 fed speakers and inflation data, fed minutes and, of course, trickle of earnings europe is green. ten-year 154 road map begins with china trade concerns with talks set to resume reports that