>> announcer: live from new york where business never sleeps, this is "squawk box. >> good morning, welcome to "squawk box" here on cnbc, we are live from the marketsite in times square let's take a look the u.s. he can quities. futures are up 268 points after gains yesterday based on a tweet president trump sent out suggesting he's going to be meeting with the vice premier of china today. that means the vice premier will not be leaving early as was stated just building thoughts of optimism that is playing out in the markets. s&p up 30 points nasdaq up by 34. take a look at what happened

overnight in asia. the nikkei higher by 1.1%. hang seasoning up 2.3% and shanghai up .8%. you'll also see green arrows in europe the dax up 1.9%. cac is up. gains for italian stocks too in the treasury market, at this point, 10-year yielding 1.67%. two-year at 1.551% 30-year up at 1.61%. iranian officials say two missiles trunk an iranian tanker in the red sea crude prices, as a result of this, they are jumping up close to 2%

wti crude now 54.47. they are saying that damaged two store rooms aboard the tanker and caused an oil leak that attack happened about 60 miles north of the city jeda six months after the attack of the oil tanker in hermuz and the saudi attack >> never good to conjecture anything they have been the attacker and you wonder -- >> was there something else going on >> because they didn't point

fingers, you wonder. >> was it a screw up but we have no idea. >> no idea they were attacked by someone. who knows. >> two missiles hit a tanker that much we know. >> let's talk about the trade headlines. futures up sharply down -- dow futures up sharply eunice yoon will be with us shortly but first to kayla >> reporter: negotiators will meet again as they work towards what to expect this afternoon when the vice premier meets with president trump at 2:45 p.m. announcing starting next year, it would remove a requirement of partial chinese ownership in financial firms that are foreign

owned. facing that in to 2020 much quicker than china originally proposed. according to the executive vice president of u.s. chamber of commerce, they have already clued potential progress for huawei suppliers saying this will show progress but is not a grand slam. the president seemed pleased >> we are doing well we have another one tomorrow i'm meeting with the vice premier at the white house i think it is going really well. i will say i think it is going really well. so we had a very, very good negotiation with china they'll be speaking a little later but they are basically wrapping it up we'll see them tomorrow right here >> reporter: president trump and the vice premier have met on three of the vice premier's last

four visits to washington. in those oval offices, there was usually a positive development whether announcement of purchase of agricultural product, delaying tariffs, or discussing with president xi, so expects are good for today >> october 15 is the date when we anticipated seeing higher tariffs. 30% versus 25% if things go positively, you think that would have to happen. not to mention the idea of two leaders sitting down together next month >> i think you are right in saying the very least. the reason that date was chosen is not a coincidence president trump and xi are expected to attend the apex

summit in chile on october 16 and 17 one of the reason there is so much pressure and focus is the belief if there was just enough room for agreement, maybe they could work to get something for the two leaders to sign. >> thank you right now for the reaction from china, let's get to eunice yoon in beijing >> reporter: the tone in the state media is much more upbeat than it has been the state paper wrote a headline that said, smiles seen on the first day. one of the leaders here told me similar comments as you and kayla were talking about it looks as though negotiators are moving towards not a deal but deescalation that the

tariffs that were supposed to kick in on october 15, next tuesday, as well as the one in december could likely be suspended as the trump administration is expected to grant suppliers licenses the sale of components even though that company is on a black list in exchange, the chinese would offer greater purchases of products as well as signing on to an agreement that would discourage more currency manipulations. for the most part, they would welcome this kind of deal and lift the uncertainty the idea would by to tackle some bigger structural issues down the road securities regulator did

announce a time table for greater access for foreign firms in the final industry. the timetable is that of january 1, futures companies would have foreign numbers scrapped as to april 1, to fund management companies and december 1 for security management companies. an important point is that one of the criticisms for china is that they've been making a lot of increment al steps in terms of reforms at the end of the day, they haven't had to push through a lot of these changes they have wanted to see. it looks as though the way these conversations are going, they may not have to do it at the end of the day >> thank you joining us now for more, michael froeman, the former u.s. trade representative and joining us is

alec young mike, let me get your take on what is happening here we've been trying to read through and determine what is happening. are we looking at deescalation but not necessarily a deal >> remember at the beginning, the administration said they wanted not just to get more sales of pork and soy to china s but also fundamental reforms it looks like we are moving now into intellectual products and currency in exchange of not further escalation moving away from the theft of additional tariffs >> is this a move ahead? >> i think it is a welcome step. they've been going at it about 18 months now. they get back on the path of

true deescalation. and getting fundamentally to the structural issues. independent property rights, sub sidations of state-owned properties those are not currently on the table in any meaningful way but hopefully down the road. >> is that ever something we can hope to accomplish chinese hawks have come out in such a big way >> the imposition and threat of tariffs have impacted. how do you use that leverage if we get a few billion more soybean sales. great for farmers but has that been worth it or can we use that leverage to work for us? >> we tried it the other way in

the past and hasn't been successful do you think this will be more successful >> you need a combination of the security you need all the tools at your dispose al including bringing them to the wto. back in the obama administration, we were about 90% done with the agreement. i think you can get there. the question is if these tariffs enhanced the ability or created more noise we have to walk back from >> alec, the reaction has been one of relief. >> it is amazing how low the bar has gotten on wall street. i think the market is pricing in an announcement later today. this is just preventing an

escalation on the goods. it is not actually getting rid of the tariffs >> well we don't know. >> we don't know but based on the trial balloons out there, i don't think they are talking about getting rid of existing tariffs. i think that's what you need to get to new high territory. >> what would have happened if the vice premier would have left >> i think you saw in the futures overnight. you would have been in a major sell off in order to break out and make new highs, youneed an end to the existing tariffs that would be like a tax cut something weighing on corporate earnings, we are going to go through a weak corporate earnings season next week. >> markets are at an expecting low. if you come in with anything less than a 4% decline -- >> right the challenge is that trade is

much higher. without a deal that ends existing tariffs, it is hard to believe forecast for 2020 are realistic. a lot of people are hair cutting those. if the chinese were to leave washington, i think those numbers would go negative. i think that's why markets are really swinging. >> thank you both for your time today. coming up, we'll have some breaking news more about the oil price rise after iran said one of its tankers was attacked by two missiles we'll get a live report up next. a look at the biggest pre-market winners and losers talking about the dow in this case

news breaking overnight, iran said one of its tankers was attacked by two missiles in the red sea. we'll go now to tehran for more. what can you tell us, ali? what happened? >> reporter: that's right, they say this ship belongs to them

and sustained damage to its hull after two explosions iranians are saying that this was an act of terrorism and they suspect the damage was caused by missile strikes. they say it was about 60 miles off the coast of the port city when the attack happened iranians are denying any serious damage they say two store rooms were damaged and some oil leaked out but that has been contained now. they say all the crew are safe they deny reports that the ship was on fire. state media have released images of the vessel, which we can't verify but it does show a

minimal amount of damage efforts are on their way to get the ship back to iranian territorial waters this will spike tensions even further in a volatile neighborhood they are just calling a meeting to determine the cause of this attack, which comes right on the back of the heels of recent tensions in the region from oil tankers being hit. drones being down and the saudi facilities being hit iran has yet to blame saudi arabia if they go in that direction, it will be shorter enflamed tensions even further. both sides will try to show some willingness to deescalate. they'll be willing to mediate through the third party. i don't think there will be must

deescalation much anytime soon back to you. >> right off the coast of saudi arabia, we'll see. does it make sense that the damage that was caused, is it indicative of a missile attack do you know? does anyone know at this point >> reporter: it is too err wiar say. all iranians say it looks like an attack. i think in coming hours, they'll say what caused the attack and will possibly say who was behind it but it also comes at a delicate time the pakistani prime minister is due to arrive tomorrow to negotiate a deescalation

after that visit, he's going to riyadh one has to wonder why these attacks come between saudi and iran >> we can definitely believe what iran tells us whatever they say will be the absolute truth, right? >> reporter: well, we are in merky waters there has been a lot of blaming and counter blames, so it is hard to decipher exactly what is going on in troubled waters. >> so we'll just ask questions and not draw any conclusions thank you for your reporting on that appreciate it. okay another big story in the news this morning an update now on the grounded boeing 737 max an international panel of

regulation body known as the joint authority technical review found that the boeing mcas system was not evaluated properly and that boeing failed to explain that system to regulators and said there was not enough faa specialists involved in the certification and the faa has been criticized for delegating saying boeing employees were certifying work. they upheld for that practice and called for more engagement in the process and the faa said it will look at the claim and take appropriate action. to some degree, the report is obvious. when you have two planes go down and hundreds of deaths, it is

what it is the question on the certification is, do you want boeing employees doing the certification for the faa? if not, does the faa have the capability to understand what is happening? >> which is why you saw the national authorities saying, we understand the practice but we'd like to make sure there is more of a working relationship between the two. >> i think there is a connection between the working relationship, who is reporting to who a boeing employee that could be paid by boeing if you are working for boeing and paid by boeing, are you necessarily an independent source >> so it continues

general motors is urging united auto workers to agree to around the clock bargaining and end the strike today is the 26th day of the work stoppage. any potential deal would not mean an immediate end. it would still need to be approved separately, gm ceo secretly met with the workers she called the meeting because she was worried talks were off track. pretty unusual to have the ceo meeting with union leaders many are taking this as a sign of a positive return reports out overnight that wework may be getting a rescue package. squawk returns after this.

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wherever they are. how's that for changing what's possible? >> a new report from the financial times saying a rescue package may be in the works for wework jp morgan leading a fundraising talk for the struggling startup that needs cash after that failed ipo attempt facing a year to go public in addition to the $3 billion that would have been raised. reporting staff cuts and a major effort under way to try to rescue the situation given their growth plans the question is how far back to

the ratchet back the growth plans. >> soft bank, how much of this rests on them? >> i think softbank will be putting up money i don't think there is anyway to do this without that i don't think you can get must money to come in with both ceos and the plan coming forward. >> is this throwing good money after bad. what is the valuation on this company to get to in order to make that money not a loss >> it may be good money after bad. an extra million to keep it alive. >> especially if you can get third parties. >> exactly the wall street journal saying saudi aramco could bring in

numbers. they reportedly want to close the closely watched ipo by next month. that will take place in saudi locally. the idea would be to float only a small portion to establish a floor. >> it is half a trillion less than they wanted >> in this environment where you leave a lot of money on the table. weird this is half a trillion less >> but look at the news out of iran this morning. unless you are the target. >> if you recognize you are only going to float a tiny amount of the company. >> you cannot afford -- >> you figure people would want it if they float a little bit, they'll have a big jump.

>> it is not about a big so a year from now when they do go on the new york stock exchange or whatever >> so the stock is there >> yep that's the way to think about it this is just table stakes to start the game. >> they don't need money >> did you learn anything about cancer research yesterday. >> yes >> you were all about ipo and money. she was a pediatric oncologist sitting here >> you were asking about science. you were asking about the money. >> are you saying there may be times we are complimenting from bringing totally different perspectives on everything >> it was a great interview and i learned a lot on both sides. >> so nice >> my job, right >> good news for fans of "breaking bad. >> this is what i'm doing

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you about the tech stock already up 280% year to date and is climbing over 300% if you add in this morning's pre-market trade. here is the mystery chart. see if you can figure it out >> later sap ceo stepping down he'll join us in a first cnbc interview. first, a look at the biggest winners and losers >> it was wonderful. >> it was great. there was parts that were bad. >> i agree >> it was terrible >> awful >> boo ...every curve, every innovation, every feeling... a product of mastery. lease the 2019 es 350 for $379/month for 36 months. experience amazing at your lexus dealer.

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>> announcer: welcome back you are watching "squawk box" live from the marketsite in times square >> u.s. equity futures sharply higher hoping for some type of deal with china up now almost 300 points 279 on the dow up yesterday and the day before. s&p indicated up 30 and change nasdaq indicated up about 90

>> we should tell you, it has been a huge week really for the shares of roku wednesday shares soared on news of an analyst upgrade. news after a stake of the company. stocks up this week. the whole thing is like a wild ride take a look at that full year-to-date chart i totally got this wrong i thought this was a hard wear company like gopro i didn't get the joke. i didn't appreciate what would happen here. it was a remarkable situation. >> i think that was the day comcast rolled out its box saying you could use its box and hold onto it even if you were not a subscriber

>> right if you had told me at the time even a year ago, i hate to say i wouldn't have believed you i didn't and i was wrong >> coming up when we return, talking about fidelity announcing it will follow all their on line brokers and eliminate fees on trades we'll talk about the changing model and what it means for the industry a big shift. next, you don't want to miss this our interview first on cnbc with bill mcdermott who just announced he is stepping down as ceo of sap stay here only on cnbc through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from using feedback to innovate...

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let's take a look at u.s. equity futures. all coming as it became clear the vice premier of china would not be leaving thursday night. they will be meeting today and that has created a lot of optimism around the idea that some is sort of skinny deal will be reached today and tariffs will not be increased on october 15 as had been planned s&p up by 30 and nasdaq up by 90 fidelity to go to zero commissions. the latest to do this. the trend in the fidelity's stand apart model, kathleen murphy is joining us president of vesting at fidelity discussing how what you are doing differents in large part

i made a comment yesterday really in reference to robin hood which is a competitor of sorts in terms of how they are paying some of these noncommissions by selling. that is something fidelity is not going. i want to be clear about that. speak about this trend and how you are paying for it. >> as you noted, we announced yesterday. in addition to offering free on line commissions, we are making sure customers get value by higher interest on their cash as well as best execution we do not take payment for order flow many do to the tune of hundreds of millions. the three essential elements,

the interest on cash and trade execution that are interests align with our customers in terms of how we pay for it, it is making sure our scale benefits us but our clients. >> when you project out your margins, do they go down as a result of this move? >> in terms of our margins, we are a private company. we make sure our margins are never too high whether it is repricing the funds. it is about us challenging ourselves to disrupt practices with our value we are really comfortable but we wanted to make sure that we didn't sacrifice customer's

interest in how we did it. many of our customers are paying for this by taking trade execution on terms of the p payment to the tune of hundreds of millions they don't get per customer >> that is a real difference i'm sure you had to think a little, or more than a little about how you would approach this we were having a debate about what it means. we've said there is no free lunch. how should customers think about when there on competitors site, what is the true impact of that so people really understand it >> very specifically, fidelity, we gave 17.20 on 1,000 share order back to our customers.

the industry average is $2.89 much we gave $630 million back to our customers if you are going to somebody else's sight, check to see if they are transparent do they quantify how much they give you back compared to how much they take for themselves. the other thing, when you open a brokerage account where do they put your cash and how much do they pay in this rate environment, many are offering 0.1 to your cash. we are paying 1.58 competitors are paying much lower. >> take a step back to where you think the head of the average investor is today in terms of how they are vesting and how

they feel the daily score cards are. you see flows and what is your biggest take away now? >> two things, the more actively engaged, they get busy trading we see them actually lean into environments to some degree. the active investor that doesn't trade a lot. we've seen in a lot few months, there was more money on the sidelines. this has been a very year of volatility and roller coaster. people are staying the course, which is great they are not panicking i think they are in a little bit of a wait and see mode >> you are a fan of crypto how and when do you think people will be truly trading crypto on

your platform in a meaningful way? >> we are really careful about that while we embrace crypto, we are also very careful about where we offer those types of things. they are not offered broadly on the retail platform. we want to be very careful making sures that investors that are not institutional investors don't make a mistake with cryptocurrency >> kathleen, come back we appreciate your time this morning. coming up, the ceo of europe's largest software company stepping down. we are going to talk to bill mcdermott about his decision and his successors next. a break down of theue ropean markets now.

largest software company s.a.p. is announcing long time ceo bill mcdermott is stepping down and will be replaced by co-ceos. bill over the years we go way back, you go way back with the company, too, as ceo of s.a.p. america and then co-ceo, but in -- you were either co-ceo or ceo for ten years. great run. 175%, 39 billion to where is it now, well over 100 billion why are you leaving? >> close to 150. first of all, let me thank you, joe, you're right. we've had a great run together i've been with s.a.p. 17 years, and i've been ceo 10 years and

that's a long time at the beginning of 2020 i would have had to announce a decision to renew my contract or not renew. i had made the determination that i wasn't going to renew so right now is the perfect time to make this transition as you saw from our earnings release, the company is at maximum strength our revenues are growing faster than everyone else's in the cloud. total revenue, operating income, everything is at an all-time high in fact, this quarter reactually expanded the operating margins 1.5 points, which is something the shareholders have really been looking forward to, which is why the stock is up heavily so company's in great shape. we hit the ground running with new co-ceos and they're going to do a wonderful job christian clyne and jennifer morgan are fantastic people and i've been working with them on the board for many years and i recommended them the chairman agreed with me whole heartedly. >> analysts and others do point

out, bill, that it's cloud computing, it's obviously really a fast-growing area to be in and salesforce has been more successful in gaining market share than s.a.p and the stock has done great, but in the last threemonths or so it's down down about 14% and the last report the profitability of s.a.p. wasn't up to its global peers is that sort of why elliott came in in apriland does that have anything to do with you leaving? >> absolutely not. first of all, the stock was up 21% on a year-to-date basis and it will be up a lot more after people digested the earnings, i suspect. but let's just clear the air salesforce.com is in an area of crm. s.a.p. has cloud computing solutions in a broad spectrum of offerings which is why we're growing at 37% in the cloud and

they're growing at about 10 points less than us. so that's just factual on the operating income, as i said, we have done a lot with organic innovation and some strategic mna moves. the capital markets have been waiting for the margin expansion story, meaning the margin rate, and that was our pledge this year, to improve the operating margins by one point per year between now and 2023 this quarter alone we were up 1.5 points so this inflection now for margin expansion is in full flight now let me touch on elliott management let's clear the air on that. elliott management has been an excellent investor and an excellent advisor, and we have many excellent investors and advisors and elliott has been a total positive and i've enjoyed my interactions with them very much that might be contrary to what some people have experienced, but that's my experience

>> okay. the future -- i looked at -- these are some relatively young people joining one of the co-ceos, 39 years old. you know mr. klein and ms. morgan, 48 she ran the cloud computing business so, i mean, these are the two people that you would have suggested or did suggest to take s.a.p. into the future after you? >> absolutely. absolutely, joe. myself and our chairman and dear friend of mine, we started looking at, what is the big bench strength that we have at s.a.p. and who are the ones that we are going to groom and give added responsibility so they're ready when the day comes, and jennifer and christian were both given very large responsibilities about a year ago. jennifer running the cloud business group primarily, which is all the acquired companies of

s.a.p., so we trusted 30 billion or so in acquired companies in her hands. christian was running our flagship s 400 and being the chief operating officer of the company. both did an outstanding job. i firmly recommended them, the chairman agreed with me, it was ratified on an 18-0 vote by the board. >> the market likes it as well, i think, today, bill, likes the choices. i think the stock is up about 9 points from 115 back about 124 we'll see you soon who knows what your next move is you're a young guy, really young as far as i'm concerned, 58 -- >> joe -- joe -- >> hopefully we'll see you here soon. >> you'll be seeing me, joe. i count on it. >> could be anything take over the world. >> thank you, bill mcdermott appreciate it. when we come back, the futures are soaring this morning. we're going to dig into the

latest news this morning and tell you what to expect this morning and the markets are expecting a datante if not a skinny deal. [leaf blower]

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is coming up, plus, do top earners really pay the lowest tax rates? a breakdown of who pays what and why the tax system is still highly progressive 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 it's friday. we're headed for a cure. i'm joe kernen and becky quick with andrew ross sorkin. a couple of strong sessions based on i don't know a thawing

of the negative perception of what was happening with china. these guys looked happy yesterday. did you see our friend, treasury secretary mnuchin smiling. >> he was very smiley. >> that's about as -- >> the vice premiere of china -- >> smiling. >> he's sticking around for today and that tells you a lot >> the president saying some things in tweets the ambassador furman called it a mini deal. >> skinny deal i like a skinny margarita or skinny bundle or -- >> you like a skinny bundle? >> no, i don't like skinny bundle i think people should have big, thick cable bundles from comcast but i like the term skinny skinny burrito. >> skinny cow. >> skinny cow? >> good ice cream. >> i don't know about that the -- yogurt, i don't like that i want full force like

haagen-dazs or graders >> that's great. here's what's making headlines at this hour, an iranian oil tanker has hit by two explosions while making its way through the red sea. that tanker was hit by missiles about 100 kilometers off the coast of saudi arabia. the attack on the saudi oil facilities that we saw last month as well, this is giving credence to that some executives in charge and leaving in january to become ceo of air new zealand he will be replaced by john burner who is running the sam's club warehouse chain the stock is up by 27 cents. wework is said to be on the verge of financing a new emergency debt financing package. j.p. morgan chase is leading negotiations with major banks

and considering making a large contribution the paper says that softbank is considering 2.5 billion in new funding that would bring its investment to 11.5 billion which is interesting because valuations for the company have been on the rumor mill around 10 to 15 billion. >> see how that all goes meantime, big topic of theday, trade talks picking back up in washington president sounding optimistic at the end of yesterday's negotiations what can we actually expect to take place today kayla tausche joins us with the latest kayla? >> reporter: good morning, andrew negotiators will meet again this morning to hash out areas of agreement and potential de-escalation to announce this afternoon when the vice premiere meets with president trump that's happening at 2:45 p.m china's security regulators announced a timetable to remove a requirement that foreign financial firms have a chinese investor this is something it announced it would do in july but is putting some dates on the calendar chamber of commerce executives who met with leo hood this week

said an agreement on currency and some licenses for huawei suppliers are also expected. don't expect a grand bargain there are also some new questions about president trump's call for china to investigate the biden family his outside advisor, mike pillsbury, yesterday told the financial times and washington post he discussed the bidens with beijing but gave conflicting accounts about the information he received. president trump was asked yesterday whether he was joking last week when he asked china to investigate the matter >> china has to do whatever they want if they want to look into something, they can look into it if they don't want to look into it, they don't have to frankly, as far as i'm concerned, if china wants to look into something, i think that's great and if they don't want to, i think that's great, too. that's up to china yeah >> reporter: so separate issues until the president tied them together but in a rally last night he did pay the chinese negotiators a compliment

president trump called them tough as hell. >> thank you for that, kayla want to bring in our guests, wendy cutler, good morning to you. >> good morning. >> we keep talking about the skinny deal, small deal. what kind of deal could actually be hatched here. i would even ask if you get a deal, how significant is the deal if you think a bigger, grander deal is what ultimately needs to happen? >> yeah. i mean, we're going to have to look at what's in this deal but key for me is has china done anything that is the reason china came to the table. is anything on ipr in this deal? forced technology transfer in this deal? if it's just about rolling back tariffs and huawei prices and agriculture purchases, that's not moving the ball forward on why we initially came to the negotiating table. it's a step forward but it's -- you know, it's just a step.

>> yeah. then we'd be back to where we were -- >> exactly. >> -- obama administration, not doing anything. >> i wouldn't agree with that. >> you know what i mean, then we'd be back where we didn't do anything ever before that would be horrible i'm kidding. i'm kidding. >> okay. >> i mean, kidding/not kidding is how joe's really approaching this my question to you is politically within the context of china and to the degree that you want to see a deal that captures the i.p. issues and some of the more contentious issues that brought us to this debate or much larger trade war, is that something that you think is even plausible within the next year before the elections >> i think it is plausible i think, you know, up to last may both sides were making progress on these issues and then things seemed to fall off the rails. so i think it is possible and i

think in this interim or skinny deal or whatever we're calling it, it will be important to see if there at least are just some aspects of those issues that are captured in this interim deal. >> can you speak to the -- to the pressures inside china on president xi right now to come up with a deal that actually incorporates some of the issues that i know you care so much about? the reason i ask is the pressures on our own president are relatively clear right now, but in terms of -- in terms of the pressure on xi to come it a drielt now >> i think the pressures on xi are really about getting some tariff relief and lifting some of the tariffs and i think that's why china is so positive about trying to find a way to have a partial deal. what worries me is that once an interim or skinny deal is concluded, whether china then decides, you know what, let's just leave things the way they are, wash our hands of this, and not go ahead and address the issues that brought the united

states and china to the negotiating table. >> my one question for you is even if we don't increase the tariffs from 25 to 30% on that $500 plus billion worth of goods, if we leave those tariffs standing, would that be something that would motivate china to say, okay and the other question is, how has the entire calculus changed because businesses are just saying, forget it, i'm not going to do sourcing there, i'm going to find other ways i can do this >> right a lot will depend on whether this deal just avoids future tariff increases or we go back to the $250 billion last summer. and if we go back to the $250 billion china won't like that, but i don't know if that's a motivation for them then to make the really tough decisions that they need to make on subsidies and state-owned enterprises and other issues along those lines. >> hey, wendy, totally different question but same topic in many ways are we to weigh in on this dispute with the nba and what it

really says about the way american businesses have to operate within the context of china and the way they should operate and speak either freely or not based on what we're seeing take place right now. >> yeah. i think in every board room people are struggling with these types of issues. china is a huge market i think for the nba it's a market of over $4 billion and it's a growing market. so i think all companies are going to -- companies and associations, they're going to really have to see how to balance domestic, you know, necessities to speak up as well as not to offend the chinese. >> but what is your take on that meaning should u.s. companies effectively silence themselves to do business in that country >> my view is u.s. businesses like u.s. citizens, we have

freedom of speech. we should talk about how we see things, and if that upsets the chinese, so be it. >> even if that costs access to that market? >> i think u.s. companies need to be true to themselves and true to american values. >> wendy, my only issue with that is it kind of leaves ceos in an uncomfortable position these feel to me like talks that should be taking place from administration to administration, not a company left to negotiate with an administration is this something you think could be brought up in these talks and resolved on a level like that? >> i think it's hard for two governments to reach an agreement here i think, you know, at the end of the day it's going to be business to business and china is just going to take -- you know, do what it wants to do here. >> do you buy into the argument that there's a view among ceos that somehow previously

washington took care of some of these issues or at least ran interference on some of these issues and so the companies could actually -- companies were just doing what companies do and they were following the lead of washington and now there's a view that somehow washington is either taking a step back or so gridlocked that companies are now forced into this new role and position of having to take on these policy positions in a different way? >> yes, i do think there is some truth to that. i think washington can quietly, you know, make progress on -- you know, in this area, and i think -- but i also think this problem's getting larger and larger given the nature of the chinese regime. >> okay. wendy, we're going to leave the conversation there we always appreciate seeing you and this debate/trade war continues. thank you. >> thank you. >> the nets versus the lakers. >> back to the basketball game. >> i only knew the halftime

score. anybody? the nets won. >> thank you >> all right i won! no, i did not bet on that. >> either you could say new york won or you could say jeff tsai won. >> i don't know how to -- it's not a -- is there a spread like a normal -- there is all right. because baseball -- >> 114-111 >> colorado. anyway, coming up, oil markets reacting to news of a missile strike on an iranian oil tanker in the red sea we're going to check on oil prices after the break and then earnings, trade, the fed and more in focus for investors. we'll get a market outlook and see what you need to watch next week forget that notre dame is on nbc. >> on the other side of that, aren't you >> i'll probably take that seat. whether your beauty routine is 3 steps...

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some news breaking overnight. iran said that one of its tankers was attacked by two missiles in the red sea. oil markets are reacting we've seen wti up by 1.3%. brent up 1%. joining us on the phone is he m

heli helima croft. iranians say they won't say much until they investigate what do you think? >> it's rachetting up tensions iranian officials were saying the missiles were launched by saudi arabia they have backtracked from that, but if this were a saudi attack on iranian tankers it could potentially trigger further escalation in a region where we've seen a steady stream of attacks on energy infrastructure since the middle of may. >> it's odd to see the iranians backtrack so quickly how do you read that >> i think that the iranian government is often divided in terms of whether they want to pursue a more conciliatory approach in terms of testing the waters and actually getting a deal with the trump administration or whether they are going to go the path of showing strength and trying to force the administration's hand. the revolutionary guard want to

have sanctions removed and are willing to push the envelope in terms of provocative attacks in order to get the sanctions removed. i think we're likely to see further escalation before we get a diplomatic breakthrough. oil may not react particularly sharply because of this. there's a deal we are awash in oil, concerns about demand i do think the geopolitical tensions in the middle east will remain high. >> having said that with what you just added up, u.s. being a top producer of oil and with concerns about a potential slowdown because of the global economy, do you expect oil prices to rise much above this even if geopolitical tensions do rise >> no. i think right now the market is just not particularly concerned about supply outages that said, if we were to get more serious attacks that led to prolonged outages, if we were to get a type of attack that brought the americans more directly into confrontation with the iranians, i think those are the type of things that could

get oil to move higher, but the fact that we had such a serious attack on critical saudi infrastructure on september 14th and the saudis were so quick meeting customer demands, i think the market looks at it and says, if we can get past what happened on september 14th, i'm not going to be particularly worried about further disruption in the region. i think that's complacent but that's where the market is now. >> helima, thank you >> thank you. coming up when we return, market reaction to trade talks plus it is trade season. fourth quarter is here next week a number of big reports will be released look at it right there on our wall we've got wells fargo, goldman sachs, johnson & johnson, netflix and so much more what you can expect all straight ahead. time now for today's aflac trivia question. how many gallons of beer are consumed annually at oktoberfest? the answer when cnbc "squawk

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now the answer to today's aflac trivia question. how many gallons of beer are consumed annually at oktoberfest? the answer, over 1 million ♪ roll out the barrel ♪ bring back the barrel of fun >> wow that's a lot all right. let's talk marketsahead of nex week's earnings parade jay jacobs, senior vice president of research and strategy at global x funds cnbc senior markets commentator mike santoli we'll start with you, mike >> yeah. >> what is this, third day of pretty big gains on a skinny deal. >> yes. >> is there anything left after the deal is announced? >> yeah, that will be the test look, i think we're kind of just retaking the ground we lost. we keep handing back the same few percent. we ended september with the s&p just over 3,000.

this rally this morning would get us within sight of that again. so i don't think it's irrational for the market to say if we can just lift the threat of imminent escalation in the trade war, i don't think details matter a lot. they matter a lot for determining if this was a good tact to go on in terms of economic policy. they don't matter a lot for the market i think a lot is going on. yield's up significantly around the world. i think that that's sort of the pendulum swinging in that direction suggests that maybe we got over done in terms of anticipating a bad economic result so the trade war would be coming just in time for seasonal effects to start getting good, sentiment is very subdued right now. it makes sense to me that the market is leaning in the direction of finding the excuse to rally >> so, jay, global x funds, is this like the x games? is this like gnarly radical investing? >> no. >> high risk >> we're looking around the

world at investment opportunities. >> okay. and same question to you is there something left for bowles based on china and a successful -- even though it's maybe not what everyone wants but some type of resolution, no more tariffs, something like that >> every day we see the two heavy weight forces duking it out in the markets we see the fed and central bank policy supporting the markets and the trade wars sometimes negative, sometimes positive news as the other force. what we're seeing from our clients is people are really losing patience with this kind of volatility. we've seen down weeks. this is an up week people are starting to see more risk in the system i think they're really starting to lose faith that any sort of trade deal is going to have a sustained positive impact. >> what's it translate into in the calls, they want cash? >> people are pulling back they are getting very defensive. people are looking for yield from any source because that's a way to get return in a flat or volatile market. people are getting -- >> do you have smart clients

what's it mean if your clients get frightened is it a wall of worry signal or is it time to pay attention? >> this can be worrisome for the longer term. if people are -- >> they're so smart, that's why they're dealing with -- normally consensus opinion -- i don't -- i mean, there's no come play sense si, is there, santoli? >> there isn't complacency we're at a place where it seems very rational to get more defensive, right >> that ever work? >> it works when the big one hits it works when you actually get a recession. >> you're not predicting -- >> the market is acting kind of squirrely. if that's saying something beyond people are getting defensive, then it is. in general to your point, joe, i agree. the fact that people are very risk averse right now, somewhat risk averse and cautious is probably a net positive because you have greater room to react to less disappointing news than you have vulnerability to things not going well. >> if you had to guess, if we

ever broke out of this, is it going to be the up side or down side what comes first >> i think it's more likely at an attempt to breaking at the up side first of all, we're only 3%. >> we broke to the up side, jay's comments, 320. your clients are selling. >> the earnings season i would point out, it seems somewhat similar in shape >> radically -- >> a deep recession. >> radically cutting back estimates going into the reporting season then better than expected but not great and what we saw in april and in july which were the other two months that equate to, you know, the post quarter and ye we're pretty good months you had relief. >> nobody told us anything. >> that's kind of where we were. >> but, jay, you would -- what are you normally 60/40 or something what -- >> on average. our business is more skewed towards equities maybe more 80/20. >> are you still 80/20, 79/21?

what are you there >> the flows of our business, much more on the fixed income side more money going into preferred stocks basically fixed income. >> into reits? >> seeing flows into reits, high dividend stocks. if you're in a sideways market getting a 3 or 4% yield is a pretty good return. >> right okay there's 4 and 5% on blue chips which makes you wonder santoli, you leaving >> yeah, i'm going to move on. >> going downtown? >> see you down there. >> day is just starting. >> beginning. >> thank you >> the x games i love that. throw an x anywhere. i think the name -- >> like global x like the apple phone. extreme investing. when we come back, general motors urging the uaw to engage in around the clock talks to reach a deal as the work

stoppage continues to ripple through the automaker's operations we'll speak to the ceo of an auto parts manufacturer and find out what it's meant to their bottom line, too the futures. dow up 313 points. nasdaq up 100 points and s&p is up 34. "squawk box" will be right back.

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♪ i'm in love >> and it's friday still to come on "squawk box," the uaw/gm battle having ripple effects on the economy. when it comes to taxes, who pays the lowest rates? elizabeth warren would argue the super rich robert frank brings you the real numbers. coming up at the top of the 8:00 hour, former whithoe use strategist steve bannon is our guest. "squawk box" will be right back. ♪ i got that vibe, got that vibe ♪ ♪ got that vibe, yeah, i ain't petty, ♪ ♪ looking fly, looking fly, ♪

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skbloerm togeneral motors ig united auto workers to around the clock bargaining today is the 26th day of the work stoppage. that's the longest in quite a while. any potential deal wouldn't mean an immediate end to the strike

it would still need approval from local union leaders, also rank and file members but maybe there's a light at the end of the tunnel hopefully it's not a train coming at you. joining us right now to continue this conversation is dramatic -- tripmatic, bill adler. what's the impact been on your business >> good morning. thanks for having me on your program. stripmatic has about 90% automotive-related parts gm is about 30% of our total sales. the recent impact, we get two very strong years. grew 20% in '18. we were growing on track for about a 30% growth this year up until we hit the gm strike we found our first impact of that was just a few weeks ago. we were like a second or

third -- third tier supplier so we started seeing roll back in our releases our september numbers, we lost about 15% revenue september and our forecasts for october if they don't settle, we're looking at a 25, potentially 30% reduction in sales in october. >> and thus far, how have you tried to adapt or dealt with this >> well, good question we have been dealing with labor shortage so we've been running a lot of overtime and that's actually completed some of our safety stock so short term we're focusing on replenishing our safety stock while we're getting this little breather after that we have some productivity items on a list that we've created that we haven't had manpower to address so we're focusing on that. if this goes more than, you know, a week or so, then we do have to start looking at

reducing hours and potential layoff >> okay. so this -- i know this is a far easier question for you. who do you side with in this battle >> it is a hard question you know what, i think we've got two huge bohemoth entities they both have so much to lose by not getting this resolved i drive gm cars. you know, my workers, we're non-union but we sympathize with, you know, the wage side of this they've got to come to an agreement because they have too much to lose and they have to get back to work supply chain small family businesses like us, all the hard work we've put into earning profits in the first nine months, every day we're out we're losing profits that we gained. >> are you communicating with gm

are they calling you saying, we're almost there we're working on this? what's going on behind the scenes with all of the supply chain you're talking about >> well, actually, again, i'm second or third tier supplier so i've got a buffer between me and gm we're in very close contact with our customers and to be honest, i mean, sometimes we get a 24 hour notice and not even that on changes in our shipments >> right bill, before we let you go, just wanted to get you to weigh in on the situation in terms of the china trade war that's taking place. is that impacting your business as well? >> immensely i think we have to give a lot of thanks to the president for putting china on the table they've been the big gorilla in the room as far as impacting global economy we need to get a trade deal agreed to. we've got -- their over production is probably one of the key factors in manufacturing

in the u.s. not being as competitive. they're the ones really hurting the u.s. steel industry and that's -- you know, they've got to address this and get these issues resolved and get china to play fair in the global economy. >> if the president only gets a skinny deal as they're calling it now or at least joe's calling it, would that placate you or would that not be enough >> i have to admit, i'm not sure i know exactly what the skinny deal is yet. >> i'm not sure we do either but we will hope to come back to you and continue this conversation i hope this gets resolved for your sake and for the many suppliers and families that work for those suppliers aroundthe country. thank you. >> thanks very much. >> appreciate it. check the markets before we go to break. up 320 points on the dow nasdaq triple digits up 100. s&p up 36. "squawk box" will be right back.

now do the top earners really pay the lowest rates? robert frank looks at who pays what and why the tax system is still highly progressive we debate the results of his rertig aerherepo rhtft t bak make nature's bounty hair skin and nails step one. it's the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. nature's bounty, because you're better off healthy. ♪ ♪ ♪ ♪

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several headlines this week announcing that the rich now pay a lower tax rate than the rest of americans and should be taxed more do the numbers tell the whole story? i've seen things that totally

repudiate that entire analysis. that's why you're here, robert frank joins us now >> yeah. so there's a new op ed this morning along with those articles earlier in the week that say that for the first time in over 100 years the richest americans paid a lower tax rate than the bottom 50% of americans. the research is from a new book by emmanuel saez and gabriel zookman. they are advising elizabeth warren and bernie sanders on both of their wealth taxes they say that the 400 richest americans paid a total tax rate of 23% compared to the bottom half of america which pays 24% they're not looking at the federal income tax they are taking all of the estimated taxes paid as a share of total income. so they include federal taxes, state taxes, local taxes, payroll taxes, property taxes, even estimates for driver's lie zoneses and other fees and they take out the earned income tax

credit and other transfers and their tax figures for the top earners are just estimates because we don't have irs numbers for that group yet based on corporate profits the reason numbers from the cdo show the rich do in fact pay higher rates top 10% paying 33% versus the bottom which is 11%. jason furman who was obama's former economic advisor and he tweeted a chart saying the top pay 40% while the bottom half pays 20% as furman wrote, the standard data shows that the tax system overall is progressive it's fine to argue about whether the wealthy should pay more, whether we need revenue for things like infrastructure, health care, education, but to say the tax system is not regressive flies in the face of -- >> sorry, is not progressive

flies in the face of every other piece of data out there. >> i was trying to figure out how to approach the whole argument we have to decide if we want to make it more progressive, do we go after the 400 you're talking about? do we go after the 1% we're talking about? when we do that, does it raise enough to come close to paying for everything they want to do with it? >> right. >> how low will we have to go? and then do we promise it will do something good with the money? will we either make sure that it's not some crazy boondoggle can we make sure that it's well spent to try to help in the areas where we want to help? >> right. >> can we do deficit reduction i just want to know all of this. i don't want to go blindly rushing in to saying, you know, there are a lot of billionaires who are too rich and they don't neat their yachts when people are homeless. >> two sides are they going to raise what they need to raise and would

they spend on what's necessary. >> it shouldn't just be the politics of envy and being po'd that people have money. >> for more on this, let's bring in our guest joining us is barney frank alex brill who is american enterprise institute focusing on tax policy congressman, let's start with you. you've been a liberal democrat but you listened to some of these numbers. you hear what jason furman had to say you hear what larry somers has said and how these numbers don't match up with anything the cbo is talking about either. is it an honest debate >> well, it's an honest debate i agree with someone, i can't see who's saying what. >> probably robert. >> the question is not -- the question is not a comparative who's paying more or less in the

first place you really can't tell there's so much uncertainty there. people's emotions and ideologies influence that the questions are, one, could we use more revenue to accomplish purposes that are important to the society that can only be done through government? secondly, how do we raise that revenue in a way that is not going to interfere with economic growth and then there's also a fairness question who can afford to pay it without having any kind of diminution of their quality of life. so all of those argue for me, yes, we can increase taxes on the wealthy. the problem is that we have many unmet needs. the biggest example for me is infrastructure there's a bipartisan agreement that we need infrastructure. i notice the world economic forum just downgraded america's competitiveness -- >> i just saw that singapore is number one, we're

number two. >> one of the reasons is infrastructure one of the major reasons i read is we have an inefficient infrastructure instead of the massive tax cuts that went predominantly to wealthier people in 2016, we put half of that into infrastructure improvement, we'd have more productivity the promise of that was 3% growth in fact, it didn't it gave a short-term rush but it's petering out. had we put that into infrastructure, both in terms of employment, and also the ability of the economy to function much more efficiently we'd be able to function i want to raise money to do that yeah, i want to spend the money more wisely. one of the things we should do in my judgment is reduce the military budget. i think the mr. ez is half right here i agree with him that we have over extended. i think the best thing to do is

not to start new ventures. once you've gotten involved it becomes complicated and you've got people who have relied on you. we could save more money p if we were much more prudent my dilemma with the president is he argues europe should pay more and we should pay more and we should do less but he budgets if that wasn't the case. if we want europe to pay more which i have been for a long time, we ought to save up now. we're cutting billions out of what we're spending there. you either pick it up or not. >> alex, that is a lot to try to wade through let's get back to the basic question of if we're going to be raising taxes on somebody, should it be the 400 top wealthiest people? should it be the 1%? what do you think? >> i think the question's not really the distribution of the nato budget but the question is who's paying taxes today and what are their taxes relative to what their income is and i think that everybody except two or three economists

in california are telling us that we have a progressive tax code that as incomes rise, taxpayers tax rates tend to rise as well and the congressional budget office tells us that and other economists who are looking closely at this issue tell us that as well to be fair, it's actually a pretty tricky question to answer because we have to figure out how to allocate taxes to various households first we have to aggregate tax returns and determine what is a household and we have to figure out what people's incomes are. >> although you can say the top 400 taxpayers, 400 wealthiest people 400 wealthiest people are paying lower rates than a lot of people much farther down on the scale that happens just the way they make money sometimes it's capital gains. >> obviously we have a lower capital gains but i don't think it's an easy question to answer because it's unclear what the income is for those 400 wealthiest we know what they report on

their tax return but the research that we're debating is not based on the people's adjusted gross income, it's thinking much more broadly about people's incomes, what their health insurance benefits are. these are all estimates. the estimates that are catching the attention to the left, "the new york times" and this morning the washington post, those estimates are out of line with what the consensus is. >> alex, some of this all started with the buffet rule warren buffet famously came out and said he pays a lower tax rate than his secretary because, of course, he has wealth and his secretary makes wage income. that has proven to be very popular. how do you get around the reality that as becky mentioned, the wealthy, i.e.,, not the highest earners but the highest asset wealthy do pay a lower rate due to capital gains program? make it the same as ordinary income that would be regarded by

many americans as more fair than taxing labor at a higher rate than wealth. >> it's a -- it's a really important economic question, whether we should raise the capital gains tax rate to raise income for the wealthiest americans. could we we absolutely could. we've fought for decades to tax capital income at a lower rate the reason we've done that is because we think the tax on capital income affects people's decisions to save and invest people's decisions to save and invest help drive the overall economy. we could undo that no question we could elizabeth warren is not proposing changes to the capital gains tax rates, she's imposing a wealth tax obviously, something that goes retroactively back and imposes taxes on people's accumulated gains. my concern is the response it will have for the high income taxpayers. they'll choose to earn money elsewhere or invest differently. that's not in the interest of the u.s. national economy.

>> congressman frank, you understand the markets well and the financial system well. do you have concerns like that >> i do if you go too high i don't think we're in any danger to do that. i would have voted to lower capital gains but not as low as it's got let's make some comparisons. the highest taxes that we've had in a long time i voted for, '93, the clinton tax bill it had a marginal tax rate higher than we had the capital gains rate was the same until 2017 and the economy performed very, very well. secondly, we have a tax cut in 2017 which clearly has not met the projections that people said this notion of a permanent or almost permanent,we would have spent some of that money much better taxing above 400 is a straw man. anybody who says we should do that is just wrong i do think -- i look at the

charts of 100, thousands of people, make millions a year i believe you could raise taxes on people who are making millions of dollars a year annually and not have any negative effect on the economy frankly, i think with a lot of the wealthiest people, i don't think they know how much taxes they're paying exactly until their accountants tell them. there is no evidence that what helps, by the way, is tax cuts i'm glad that people talked about this, it's for taxes that are paying, the payroll taxes. that's the one that hits working people that's the one in itself is very regressive it's washed out. >> that was supposed to be an insurance plan, not a tax. >> it is yeah, but that originally was, what, 190 years ago. it shouldn't be an insurance plan it hasn't been and there's no point in pretending. the fact is when we temporarily

reduce the, what, first 2% of income, that had a good economic effect i think from the economic standpoint taxing a fairly small increase of a couple of percentage points on the richest people brings you some revenue and then you, i think, could reduce the -- >> get rid of the limit altogether >> i would not do it right away. i begin -- i'd have a gap up to, say, 200 and then reduce it after that i don't think people making $150,000 in this economy should be taxed more highly but i would at 200,000 give it a limit as we've done with medicare. >> another conversation. yeah, there's a lot to dig through with some of these tax proposals. congressman frank and alex, thank you for joining us both. >> thank you. we've got a lot coming up the rest of "squawk box. steve bannon is going to be joining us we're going to talk about the

trade talks, the state of the economy and so much more in just a couple of minutes with mr. bannon in the midst of a trade war with china take a look at futures right now. they are up in a big way dow up 301 points. s&p 500 looking to open 33 points higher. the nasdaq up about 95 pois. ckn memontnt ♪ the amount of student loan debt i have i'm embarrassed to even say i felt like i was going to spend my whole adult life paying this off thanks to sofi, i can see the light at the end of the tunnel as of 12pm today, i am debt free ♪ not owing anyone anything is the best feeling in the world, i cannot stop smiling about it ♪ is that pgim, we see alpha emerging in the trendsete? driving specific sectors of outperformance. where a rising middle class powers a booming auto industry... a leap into the digital era draws youthful populations to

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breaking news. futures surging on hopes of a u.s./china trade deal as officials from both countries meet in washington we're going to talk to former white house advisor steve bannon live. developing story oil prices rising after iran says missiles hit one of its tankers in the red sea. plus, the rise of the unicorn. we'll introduce you to the largest private venture-backed company in the world the final hour of "squawk box" begins right now ♪ ♪ live from the most powerful city in the world, new york. this is "squawk box. good morning, everybody. welcome back to "squawk box" here on cnbc

we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. the dow futures up by almost 300 points s&p futures up by 33 the nasdaq up by 95 as the market is anticipating some sort of a deal or at least a detante with china and trade talks today. the british pound rising sharply after european council tweeted promising signals on brexit you see right now 126.42 is the latest for the pound oil prices also sharply higher this morning after iran is reporting what had happened with an attack on its tanker. they say it was hit by two missiles you can now see wti up by 1.6% and brent up by 1.4%. got a lot more on trade with our newsmaker steve bannon in a moment first want to get through some of the morning's corporate headlines. a couple big ones coming up this morning.

big one, s.a.p. ceo bill mcdermott has stepped down he's being succeeded by jennifer morgan and christian klein mcdermott joined us on "squawk box" earlier this morning. >> at the beginning of 2020 i would have had to announce a decision to renew my contract or not renew. i had made the determination that i wasn't going to renew so right now is the perfect time to make this transition >> take a look at s.a.p. shares because they are up on this news the new announcement of these new co-ceos. stock up about 8.5% just this morning. roku shares are rising again today. this coming on the news that citadel ceo ken griffin is taking a 5% stake. general motors separately urging striking union workers to agree to around-the-clock

negotiations the work stoppage we've talked about it so many times before began on september 16th. the strike has cost the automaker now over $1 billion. president trump set to meet with china's top trade negotiator later today >> right now we're doing very well we're having another one tomorrow i'm meeting with the vice premiere over at the white house. and i think it's going really well i will say i think it's going really well. so we had a very, very good negotiation with china they'll be speaking a little bit later, but they're basically wrapping it up and we're going to see them tomorrow right here. >> all right where is he now? joining us from athens today, greece, squawk newsmaker of the hour you bring us some great shots, steve. that's a beauty. looks very familiar up there that structure looks a little run down they've neglected some infrastructure over there as well in greece, i think.

welcome this morning that's a great shot of the parthenon. >> the home of democracy the acropelous and the parthenon. >> i just finished debating, globallism versus nationalism. >> who won >> i'll let the judges call it "the new york times. >> no, no, we would. i don't know what you think about the latest developments. treasury secretary mnuchin was smiling, no teeth but smiling yesterday. everybody seemed to be getting a lock pretty well we've started calling this -- what may come out of this a skinny deal. is that what you expect? is that something that we should have probably expected all along and not what you would have done?

>> we've had increased agriculture, increased purchases. we had something on the cnbc site earlier this morning about potential financial services opening up in china. you just had a greste on the previous segment, mr. khan, about the strength of american manufacturing in the economy president trump, his policies, his negotiating position have worked remember, the key here is the state-owned industry and the forced technology transfers. the bigger overall deal to restructure the economy, this was the may transaction that lighthizer and le hu negotiated. what they're doing is anything possible to get president trump i think to delay or nullify the october tariffs. i wouldn't be surprised if you

saw some interim deal as i have been talking about they might do some interim deal, but president trump is very focused on the overall deal that starts to bring the supply chain back to the united states. this will be inextricably linked to something more powerful he's up against the cheerleading section of wall street and the chinese that have been for the last three weeks signaling this. i believe this shows the strength of his negotiating position if we see something that's on the smaller side, i think it's leading overall to a larger transaction. clearly the hawks and super hawks want to see the entire deal and want to see the supply chain coming back. you saw president trump last night in minnesota, his focus is to bring high value-added manufacturing jobs back to the united states. >> steve though, speak to this there's a concern that if you take a small deal now, it actually will give the chinese leverage, that it won't give the president, president trump that is, more leverage to actually get to the bigger deal >> yeah, i think -- i think that

if you see particularly the way that he deals in these tariffs in october, i think you'll see where his negotiating leverage is trump's a master of knowing how to use negotiating leverage. i think this deal will clearly have springs to it if tlsz a dehere is a deal, if s any recalcitrance, slow walking, the two key instances are subsidies and forced technology transfers. that's the beating heart of the chinese economy, integration into the world economy and what will start to lead supply chains back to the industrial democracies including the united states it's he one of the reasons usmca needs to get passed is so important. it's part of the whole overall trade package that president trump has been working on. remember, the devil is going to be in the details here this once again i think shows you its he the chinese that are coming and offering all types of opportunities, all types of give-ups to get the tariffs.

he was right from the beginning. the tariffs have forced them to the negotiating table. this is what the wall street cheerleading section has forgotten. it's the tariffs that have forced the chinese to the table. i think you'll see in the tables, if there is something announced, president trump will leave himself plenty of room to go back if there's any back sliding and trying to get the overall lighthizer deal eventually done. >> steve, i think you're going to agree with this op ed it was an op ed in "the new york times" yesterday it's a quote that i think almost you could have written he says, a darker truth is now donning on the world china's economic miracle hasn't just failed to liberate chinese people, this is the part i'm curious whether you'll agree with, it is also now routinely corrupting the rest of us outside of china this column referring, i think, to freedom of speech issues related to the nba what's your take on that >> you know, we've talked about this many times on the show over the last six months. this is the whole what president

trump has been laying out, quite frankly what the hawks and groups like the committee on the present danger have been talking about. the ccp and globalists and party at davos have infected the entire system. you've seen that this week in the nba fiasco what was really shocking is espn last night put up the map in china and it included the seven dots, it included this highly controversial area in the south china sea that they take for their own sovereignty. it's stunning to me how they've corrupted corporate america and corporations around the world. this is what people have been saying and i think now you're seeing it. whoever wrote that, yes, i 100% agree with it. quite frankly wish i had written it myself. >> steve, what's the alternative? you look at many multi-national companies and apple obviously comes top of mind. they've done things like when they report their sales they report sales for greater china,

which includes hong kong and taiwan which is the way the chinese like to have these things done. they've taken hats off of different situations these are companies that say they're operating under the laws of the nations that they are serving. while they are trying to promote democra democracy, freedom of speech, they can't do things that the country thinks is illegal. is the alternative you can only operate in your own country? >> no. the thing is there are certain rules you ought to be able to as a country abide by in china with the weeder situation, with the organ harvesting, the suppression of the chinese people, the chinese work force is a slave labor work force. that's what the people on the right and president trump has been saying. the slave labor has been making goods for the unemployed and underemployed. that's the tragedy of this frankenstein monster, the city of wall street, wall street have

allowed to be built. you have to stand for something more than the bottom line. the company used to stand for basic american values and basic values of the west look, i'm here in the home of the democracy right from the parthenon. we were begooqueathed this. every company is going to have certain things that are -- that you have to abide by in their business code, but these are fundamental about human rights look at the streets of hong kong we've talked about this, guys, since june 9th look at -- that's the fight for capitalism english common law and chinese tenacity has built hong kong look at what's happening in the streets. look at the kids who are fighting. >> what do you say to every american company doing business in saudi arabia or any other country. >> or russia or china. you can go down the list what's the answer then >> look, i don't think you

see -- there's clearly not in saudi arabia or russia what you see in china you don't see what they're doing to the weeders you don't see what they're doing to the buddhists and dalai lama. the house christians and the catholic church. you don't see the human harvesting of organs this is not the chinese people the chinese communist party are suppressed by these people clearly the monarchies in the gulf and russia have certain problems i think america is trying to address those problems clearly with our allies in the middle east certainly you see liberalization starting there in russia we've got to confront what cleptocracy is doing there. finally people are stepping up to it. corporate america is getting smash mouthed now by the ccp for what are small outside their lanes and you see that these people are dropping the hammer on them. i think this is a lesson for

every american how the chinese nationalist party treats their people. >> i don't want to take anything that they're doing for the weeders. if you look at places like saudi arabia, women for a long time have not had any sort of freedoms you're right, things are opening up places and, again, i just want to say it's tricky to operate. >> hold it i agree with you i agree with you the women -- you've seen with mbs, you know, with all his faults, you're starting to see they're getting driver's license and nobody supports the suppression and nobody supports the suppression of the christians in saudi arabia, but you can't compare that to the weeders. these are not re-education camps. these are concentration camps. we put sanctions on the companies that are doing it. you've seen the tibetan people and the buddhists. you can't compare all of them with their faults, you can't compare those with what the

chinese communist party has done to its own people. you see that in the streets of hong kong. >> unfortunately, steve, the nba situation really drove home the market opportunity in china, which is, you know, the elephant in the room, that it's going to be hard, you know, to go after your own interests and -- i mean, a clean divorce from china would -- we've got 500 million basketball fans, nba fans. in china we have 300 million people in the whole united states that drove home to me the type of market potential there is for everything in china and that's why for 25 years we've sort of been able to look away because we're getting all this cheap stuff from walmart and, you know, inflation stays low. i don't see how you have a full divorce from a market opportunity like that, steve and, i mean, i know it's about profits -- >> i can see -- i can see how you have a decoupling. we're going down a decoupling right now. it's the chinese that are in

washington, d.c., to try to present president trump with an interim step they know the path he's going down is a decoupling they're petrified about that in beijing. they see the west can do that. will will be some disruptions? the democracies in india and japan. the supply chains all come back home all of it to western europe. that's why the usmca is so important you can see this happening. companies are going to have to understand the ccp is a totalitarian dictatorship and they're seeing this. if they want to be in business with that, let their shareholders and board holders, they're the fiduciary. let history guide them if we take a hard line here, you're going to see massive changes in china you're going to see massive changes. the freedom of the chinese people will be the greatest story of the people in the first half of the 20th century

one of the people who have driven that, with all of the grief he gets is donald trump. they want the october15th tariffs either pushed back or removed. >> last time you were on i think just to switch gears just for the final part of the interview, you were talking about some of the tossup states and that it was going to be tough, but i think in the backdrop we were thinking about biden, he was the presumptive front-runner then. i don't know if it's changed with everything we've seen, all of the other stuff we've seen in the past two weeks how would an elizabeth warren presidency -- what does china think of elizabeth warren and what do you think of her chances if she becomes the nominee >> it's interesting. she's coming out with a series of white papers. she's trying to get to the right of president trump except for her not understanding the tariffs. if you look at elizabeth warren, some of the democrats, they're trying to get to the right of china. one of the reasons they understand biden is compromised by china, they understand they

have a real opportunity to blow joe biden out of the water he's tot he's compromised with his history during the obama administration, particularly about the south china sea and ore issues that's why i've said and i think i've said this from the beginning, elizabeth warren is going to have a centrist challenger that will be michael bloomberg or hillary clinton i think clinton and bloomberg are looking -- as biden starts to collapse, i think biden's collapse is imminent by november, december i think that democrats in the wanting to replace donald trump understand that elizabeth warren and some of the populists have been so driven to the left, some of these other things that we're going to discount an ali/frazier rematch in hillary clinton and donald trump. >> steve, what's your political

calculus on impeachment of president trump and what it does for the election and even potentially the trade talks with china, especially given the indictment yesterday of the two associates of rudy giuliani? >> look, chris rudy is a friend of the president's what chris said the other night i think it was on nbc when he said the other night he thinks this is a moral threat to president trump's presidency, i believe that's true. i think the president's got the whole burden of everything on his shoulders, defending himself on impeachment, negotiating with china, dealing with the situation in the middle east with the kurds the staff at the white house has to step up somebody's got to step up and understand that if you look at the polling right now, the narrative is going in the wrong direction. president trump has galvanized his base his actions galvanized his base particularly on things like trade, the wall, getting out of these endless foreign wars the battle will be on 40 districts the democrats run, particularly the 26 that went to

president trump in 2016. i think a focus has to be on that i think nancy pelosi understands there's no one thing, as i've said before, no one smoking gun but it's this process she'll have to wear down president trump. he's a fighter and he's a great counter puncher. we'll see in the coming days and week other people are going to have to step up to get this narrative right. the president of the united states can't do everything he can't negotiate every deal. he can't be the communications director he can't be the head of messaging and negotiate with congress particularly with the geopolitical situation in china, in the middle east, in nato, somebody is going to have to step up and help the president if he gets the help that is needed by the white house staff, you have a lot of competent people in here people step up and do this you add people to the legal team and particularly since rudy's had these -- i love rudy giuliani, he's had these issues in the last 24, 48 hours he may need to restaff the legal team also. >> do any of the allegations against the president or rudy

gool d giuliani disturb you at all? >> the president, no i clearly don't think they rise to the level of impeachability, at least what we know. nancy pelosi knows she has the votes. she's going to bring two articles of impeachment. this is like a moscow show trial. so that process is going to go on this is not legal. the rudy -- the entire thing, and i love rudy, but some of this messaging, even you saw on laura ingraham and other shows where he starts talking about these investigations he's doing, what's going on, there's a process in the house intelligence committee much of this information is known and this information was in these 40 subpoenas that were given to rosenstein. this is what i said on trish regan the other night. all of that information ought to come out they ought to see all of that. that's why nancy pelosi and the democrats are holding off a vote in the house, because they don't want any possibility of due process.

they don't want the president to get his side out i think the american people are going to have the highest part of political drama over the next six to eight weeks not just trump's presidency but china watching this very closely, they believe trump is getting weakened by impeachment. president trump thinks he might be strengthened by this process. >> before we let you go, steve, you mentioned the possibility of an ali/frazier rematch at this point this time, what do you think the chances are that hillary clinton is going to jump in 20%, 30% >> as joe biden implodes, when he drops out of iowa, new hampshire, south carolina. i think elizabeth warren is going to have a centrist challenger kamala harris and other people haven't been able to step up if it takes hillary clinton or

if it takes even michael bloomberg, she's going to have a centrist challenger. that's going to be the real primary. i think as you see biden go down, i believe it could be a high probability that she could be the challenger. i don't think centrist democrats and that they are prepared to give the nomination to elizabeth warren now that bernie sanders has had his health issues and joe biden is being compromised by china and how weak his campaign is, his fundraising, i don't think they're prepared to turn it over to elizabeth warren, particularly the fact that she's so far radicalized on so many policies that may turn off people in the upper midwest. i think she'll have a centrist challenger i think that will be hillary clinton. >> hillary said she'd like to beat him again i guess no one's told her yet, she needs to -- someone's got to break that news to her that she didn't beat him that first time. anyway, we'll see in that

happens. we appreciate, once again, the nice shot you set up for us. today the seat of democracy. perfect. thank you, steve bannon for all the time >> thanks, folks appreciate it. when we come back, the opioid crisis. the maker of oxycontin fighting multiple battles and today it's trying to freeze litigation. live report from the courthouse. first as we take a break, futures up all morning long. optimism about these trade talks. dow futures up by 286 points s&p up by 32 nasdaq up by 91. stay tuned, you are watching "squawk box" on cnbc meone i can. (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, i need quality support and insights. can i find someone who partners with me to achieve people's long-term success?

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all right. welcome back, everybody. the maker of oxycontin has multiple battles to fight as it makes its way through bankruptcy the decision is a chance to freeze it and the sack ler family meg tirrell joins us she has the full story meg? >> well, good morning, becky this is no straightforward bankruptcy for purdue pharma it's going through the chapter 11 bankruptcy process as part of a settlement it's trying to offer in the more than 2,000

cases that have been filed against it over its role in the opioid crisis. purdue values this settlement at more than $10 million. he's converting it to a public trust. cash and opioid overdose reversal medications would be the ploy to abate the opioid crisis purdue's billionaire owners, the sacler family would contribute at least $3 billion in the settlement there's a major divide over whether to accept this settlement purdue is asking whether the investigation be suspended temporarily while it tries to work through this process and potentially get more people on board with the settlement. 24 states and the district of columbia are opposing the settlement and asking for the stay to be denied. that's what we're going to hear about today. we may get a decision about that many state trials are pending. coming up early this year if

that state isn't granted, guys a lot of news coming out today it starts at 10 a.m. back over to you >> meg, thanks we're seconds away from the latest look at import prices and we go to rick santelli for that. he is standing by at the cme in chicago. rick, can you give us the numbers? do you have them yet >> 3, 2, 1, bingo! we have them up .2 on the import price index for the month of september. that's of course month over month. if you yank out petroleum it drops to down .1 of 1% if you look at these prices, year over year they are down 1.6. now down 1.6 sounds like a lot, but we're expecting a number bigger than minus 2% and in the rear-view mirror we went from minus 2 to only minus 1.8 in august so just to put some perspective, let's look at the other direction. export prices, they were down on headline .2 of 1%.

we're expecting a number negative that's close. if we look at year over year down 1.6 unlike import prices, export prices are .2 more negative than the last month in the rear-view mirror, which is unrevised at minus 1.4. i guess that we can lump it altogether there doesn't seem to be any pricing pressures here we see that petroleum, oil, all of that is figuring in made a difference of .3 but at the end of the day i think we all harken back to a lot of issues going on whether it's oil or trade, which of course is the story of the day as we looked at the pre-opening equities don't only look there, folks interest rates have been going up it isn't only about trade. maybe it's a bit about brexit. maybe it's a bigger bit about europe christine lagarde is going to hold some surprises, conventional wisdom on what her policies may be. they've been recalibrated over

the last several weeks watch some of the comments coming out andrew, back to you. >> thank you, rickster appreciate it. west coast now this week we've been looking at the biggest private venture backed companies julia boorstin joins us with the number one company on that list. julia? >> reporter: andrew, the largest private venture backed company is tiktok valued at $75 billion. the chinese byte dance has $4.3 billion from investors including sequo sequoia, softbank now the man behind byte dance is 36-year-old zank yhming. he founded bytedans in 2012. pushing the most valuable content to investors now he's worth $16 billion according to "forbes" which makes him the 26th richest

person in china. in addition to tiktok, bytedance owns dozens of apps. it owns selfie app, face you, duoshan and helo now the company reportedly generated $7 billion in revenue in the first half of this year that's about as much as it reportedly brought in in all of last year. and bytedance says it reaches 1.5 billion users every month around the world now bytedance is pushing into new areas. last month they launched a search engine. they acquired bica.com which is similar to wikipedia and it has lark to take on slack. we'll have more on the company's ad potential here in the u.s. as well as risks to its valuation that's coming up in "squawk

alley." >> stay with us. joining us to talk more on chinese influence on tiktok, alex harness here. technology editor for "the guardian." this is a controversial company. i know it has a huge valuation but they're doing stuff that i think at least in the west people are looking at thinking, what is going on here? in part because of the role of the chinese government in all of this >> yeah. i mean, the thing about tiktok is it is owned by a chinese company. the company itself sort of has a strong self-image as a silicon valley startup and it says its chinese owners are just that, owners they don't control it. but based on documents that i received in may this year, that doesn't really seem to be reflected in how the company's run. in fact, tiktok takes a much, much stronger attitude against the sort of content that -- well, that the chinese government wouldn't like to see on a social media app. moderators were told to remove

references to tianamen square and they were told to remove references to taiwanese independents these were phrased in terms of trying to reduce political arguments on the site. they weren't explicitly done in a way that would make beijing happy but it doesn't -- it's not hard to see why those rules were in place. >> two of the other big investors, i don't know if we mentioned it, julia, i don't know if you wanted to chime in kkr has a stake, general atlantic these are u.s. big investors have they come out publicly one way or the other and discussed their role in this situation >> they've not it's not -- they've not -- it's not going to be -- >> sorry, julia. >> no, he's right. alex is right. alex, please continue. >> yeah. it's one of those things where so far tiktok really until this week had managed to keep its head down on this issue. >> is your sense by the way -- the other piece of this is that there's a view that the chinese government is actually using all

of the images that we are providing to tiktok for some kind of large scale ai facial recognition program. >> i would be surprised if the chinese government was doing that because it's too easy a loss, right? that's the sort of thing that if it came out would be a genuine scandal. >> there's been speculation about that. >> there has been. >> there's been concern in washington about that. >> the problem with a lot of the way that the chinese government uses its soft power abroad is that it rarely leads to tell companies what to do it acts in a way to tell companies the way that they're doing it and there's no orders coming down from on high there's the understanding that you will do what beijing wants and you'll try and guess what they want and do it without being asked. >> andrew, what's the chatter in the valley about this company in terms of its role and relationship with the chinese government >> reporter: you're right. the number of companies invested

in bytedance is very long. goldman sachs, morgan stanley, all of them have participated. kkr was part of a private equity round. they've raised over $4 billion you're going to have a wide group of investors alex is right, this is a company that's been focused on from a tiktok perspective for the fast growth in the u.s. tiktok is considered one of the few social media companies that's really been able to potentially challenge snap chat and facebook in terms of quickly growing popularity but i think people like the fact that it's about sharing music videos allowing people to lipsync which is unusual to have that licensed music. right now people are increasingly starting to skrut niez its relationship with the chinese government, particularly that question about censorship earlier this week senator marco rubio, we heard of him call for

an examination of that potential chinese government influencean censorship issue it will be interesting if there is a push to have bytedance sell ticktock i think having senator rubio weigh in this week could be the start of something new here. >> julia and alex, we've got to leave the conversation there we appreciate it it's a fascinating one and i know it's something we'll continue to talk about. coming up, oil prices rising this morning after iran said missiles hit one of its tankers. we'll talk to john kilda next. first, this year's delivering alpha conference, david taylor after a years' long proxy value over peltz's seat on the board. the former foes told jim cramer how they've been working together since then. >> we ended up getting to a place at the end of the proxy

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just out involving match group. the parent of tinder and other dating services. iac which owns 23% of match has put forth a preliminary proposal that would completely separate match from isc's other businesses the proposed separation would result in two independent companies. we had the ceo of iac on the

program just a month ago and actually he hinted at the prospect of some additional spinoffs >> they've done this this has been a long-term -- this is the model for iac. they bring it in. >> make a big -- spin it out >> spin it out it's sort of a -- it's a different version of berkshire hathaway. >> it's a private equity or john malone you think of the things he's done along the way. >> both of those stocks -- >> breaking news overnight iran said one of its tankers were attacked by two missiles in the red sea. john kilduf, cnbc contributor. john, welcome. we're hess sent to say anything about what's really going on here that's why we have you can you say some really inflammatory, incendiary stuff >> i'm here for you. >> would the saudis attack iran? did iran -- did something happen that they -- i don't know,

things happen, right things explode does it look like it was actually missiles from the outside? do you know anything at all about what's happening here, what's likely the real story >> i mean, there's complete disinformation about the whole incident, and i'm calling it an incident, not an attack. could be a very scared ship captain whose engine room blew up, felt like a missile, sounded like a missile so he's calling it a missile listen, the saudis swallowed their pride in whole but not responding to the abcac attacks weeks ago. they want to get the aramco ipo out the door they don't want any trouble. it's unbelievably unlikely they had anything to do with this if you are going to respond to the abcac a take, a pinprick on a tanker doesn't send a message. there's so much that wreaks of being sketchy that the oil market i don't think is priced

ten cents of risk from this incident into the price of the oil right now when you have the stock market up 300, when you have positive brexit news, positive u.s./china trade talks. even a pretty good demand setup. we know that the iea said there's demand for crude oil, 102 million barrels today out there in the world this is just a complete distraction in my view. >> we know how many times iran has said that's a false flag someone wants to make it look like -- wants to make it look like it was us to drag us into something. they always seem to say that and whatever, but there's no way that they would do this so that they could say that the saudis did this to ramp up tensions there, do you think, john? is that possible >> no, i don't think -- i don't think the iranians did it to themselves if anything, it would be a third party, an anti-iranian government splinter group, for example, the m.e.k., others like

that who are against the iranian regime wanting to stir the pot i mean, this is a low level incident and it's in a bad neighborhood, too, joe this is in the red sea this is nowhere near the strait of hormuz. you're near somalia. you're near ethiopia you're in that part of the red sea where there's -- it's a busy trafficked area. all of these ships are heading to or from the suez canal so it's easy for any party who wants to make trouble, wants this pot to continue to be stirred, joe, to do this do i think the iranians did it to themselves? no do i think the saudis did it no. >> who knows this is all conjecture but if you don't conjecture, then all you have -- all you need to do is say two cents is what happened and you can't say anything. >> look, conjecture is what's part of driving oil prices it's part of a discussion. >> we have to go we'll wait and see what iran

said they'll tell us what happened. let's take a look at what's been happening in washington as the trade talks continue for a second day there's trade secretary mnuchin entering the building at 617 northwest by the plague on the wall the market has been up all morning long you've seen the futures indicated up by 300 points on the session on the idea that there is more optimism that either some sort of a deal or a detante will be reached at the conclusion of things today the vice premiere is expected to be meeting with president trump. that's what president trump talked about yesterday and tweeted about as well. with that there is the expectation that potentially something could come out of that at the very least probably pushing off the higher tariffs that had been planned to kick in on october 15th. >> were they hang dog expressions walking in

kicking pebbles. was there a bounce in his step >> no bounce but he moved up the stairs yesterday when he came out there was smiling but no teeth >> right yeah he forgot 'em. >> no, it just wasn't like, yeah, but it was -- >> sort of -- okay earlier this hour we talked to steve bannon about china here's one of the things he said >> i wouldn't be surprised if they saw some interim deal as i've been talking about. they might do some interim deal, but president trump's very focused, i think, on the overall deal that starts to bring the supply chain back to the united states this will be i think inextricably linked to something bigger, more powerful. >> let's get down to the new york stock exchange where jim cramer joins us now. how has your thinking evolved recently with the possibility of a skinny deal? then maybe down the road maybe something more substantial with all of the other contentious

issues, is that what we're looking at >> i think hate him or like him, the president has him just where he wants him. >> really? >> yes the tariffs are very high. much higher than anyone thought possible a year ago. there's no inflation in this country. hasn't hurt our growth there are other reasons why the growth is slowing down but it hasn't hurt directly our country. them, they're hurt very badly. something happened the other day. we restricted costco, cosco, giant shipping company it's killing them again. the president has squeezed the noose so tight by saying, listen, we're not going to take it up again, he's going to get a concession hate him or like him, he has them where he wants them the hong kong situation, loss of face there doesn't help their cause. can you imagine how desperate they are, joe, when they're worried about the nba players talking about hong kong? how desperate? how afraid are they, joe >> that was a weird serendipity

that seemed to play in the -- sort of in our favor, that that -- who could have thought that the houston gm guy, it's highlighted to a lot of people, anyone who wasn't sort of a china hawk, a lot of people became a little bit more hawkish seeing them trying to, you know, control free speech over here. >> well, yeah. we saw who they are. we saw who they are because they are against adam silver who says you can speak your mind. in america you can speak your mind hate or like trump, you can speak your mind. we suddenly learned if you are an nba player and you are not in favor of the police and the repression in hong kong, you don't belong in china. there's a stance there's a tough stance that's what a communist regime does it represses what are the people who think we're equal to them really about, joe >> equal -- >> hold on. >> they got not world trade, gmto >> jim, but then the question is, what's apple supposed to

say? what's every major american company that's doing business in china supposed to say, let alone the businesses doing business in russia, saudi, everywhere else i'm not defending it, i'm saying, here we are. >> well, i think it's a crucial moment i think when billionaires run for the hills like they did in the nba because they didn't want to challenge china, it's shameful and maybe it's it is s companies aren't willing to speak about free speech. i'm going that way because of what happened. au i just -- i could not believe that i gm of a major sports franchise probably the best gm had to cave and take off his tweet. i think it all showed us, you know what, that regime is fragile. if enough companies speak out and say, listen, we want more of a -- more opening in -- and everyone speaks together and if they repress in hong kong, the germans and the french will come around this is a critical moment for china. they better be careful

the mainstream media is coming out against china. hate them or like them, trump is not morally equivalent to xi >> all right, jim. >> sorry, like, you know, love the politburo, prefer congress. >> i want to bring us some news on gm, because just out with gm just out now with a letter updating its workers on that strike we have been talking about that has been going on there, now for nearly a month. automakers saying its original offer to the uaw is a strong one. another offer was presented on monday and said so far no agreement has been reached we have talked about it before, it cost this company now close to a billion dollars in the meantime, minneapolis fed president neel kashkari sitting down with steve liesman a short time ago. >> i think it is worth analyzing the potential of yield curve control as yet another policy tool japan is doing it across the whole spectrum, zero to ten.

i don't know we would need to go to ten, even if we need to control the first couple of years of a yield curve, that could be another tool in the fed's arsenal. it is complicated, it is not without risk, i think it is interesting and worth studying. >> joining us now to talk about this and much more is congressman and candidate dr. ron paul thank you for being here today >> nice to be with you, thank you. >> you heard what neel kashkari had to say you think the problem is the fed is not doing enough? >> they're doing too much since i don't have much confidence in the fed because they have a job and i sympathize with their job, because it is an impossible job because they believe they can do economic planning through manipulation of money supply and interest rates and that's the price of money and the one thing that pushes you over into socialism is when you regulate prices. in the economy, that's true socialism, if it is in the monetary system, that's a socialist monetary system. there is no market the market is trying to tell us

that they're all messed up and they can't manage it, so last week you noticed short rates went up to 9% and 10%. that's the market rate but, no, the fed, they have to reassure, you know, wall street, don't worry, we'll put in there and we'll go back to quantitative easing if necessary, $75 billion it is managing something that they can't manage. and i don't think it will work because they're designed to keep the markets up an take care of the deficits, trillion dollar deficit a year and keep this thing going. it is only temporary eventually the market will rule. >> it has been such a complicated market when you look at central banks around the globe. got negative interest rates to the tune of about $17 billion at this point >> 17 trillion. >> $17 trillion. it is hard to get your head around how big of a number that is $17 trillion in negative interest rates we look like the best place to be because we're paying you something if you give us your

money. what do you think happens after this grand experiment? >> well, i think it is insane. i think it is all temporary. you know, the fed is in there now and there is trade negotiations and people feel good but we don't even know how they're going to feel at the end of the day, let alone next week. it is up and down and up and down it is central economic planning, mainly through the manipulation of money and credit, and then we get into manipulating trade. i don't like, you know, tariffs and things and sanctions and punishing people so we're so far removed from capitalism, and yet we get blamed -- the socialists come in and say, see what you guys did to our economy and it is a disruption of the distribution of wealth, and there is no doubt that, you know, there is a lot of wealthy people and it is an incitement for people but interest rates, you know, are problems for poor people too. if they get credit cards, they pay 17 and 18%

so it is very unfair it is a real incentive for the socialists to chime in and for the first time in my lifetime, socialists sort of have credibility. they're listening, it used to be they wouldn't get on tv. here are the socialists what are the socialists thinking and i think it is very dangerous in the moves we're doing, we're not willing to think about what we have to do we have to cut the spending, get rid of the deficit, get the fomc out of pretending they can do economic planning. we might move in the right direction. unfortunately that's not going to happen. i believe we're going to see a collapse that will force us to reassess the monetary policy and that will be very disruptive >> you say you don't like tariffs, that you like to see free trade but when you're trading with nations that don't have a fair playing field, how do you handle that it has not been an equal relationship between us and china for a long time. >> well, i don't work on the assumption we own the world and we tell other people what to do. tariffs, when we put tariffs on

china, we have the president saying we're collecting money from china, tariffs are penalties and taxes on our people so if china is going to put tariffs on, they're punishing their people we don't have a moral right, we don't have the authority to do it and we can go to the wto and get the wto to get permission to do this but tariffs are not beneficial and even though there might be imbalances, once you start this, you get in to a tariff squabble. today, everybody is satisfied, they're going to work this out, we're a long way from working this out because people believe in tariffs they will work. but we don't have the authority, we don't have the ability to go in and tell china what to do but we do have a responsibility for ourselves, and to tax the american people, you know, by putting on tariffs it raises the prices of imported goods we haven't felt the full effect of what has been going on now, and it hasn't really, if you look at the last year or so,

there is not a tremendous excitement and tremendous increase in value even in the stocks which is the dominant theme of what the fed does, have to keep the stocks up. i take a different opinion about no inflation i think it is too much inflation. but they -- people measure the inflation by cpi. >> can i point out, we're looking at live pictures now, the secretary of the treasury steven mnuchin shaking hands with vice premier of china and you see the two delegations walking in at this point what do you think, dr. paul, about the trade talks today? what would you like to see come out of it? >> i think it is worth talking, but i think i would argue the case for the benefits to everybody if they would follow the market place and not pretend that people know what the interest rates should be that is a false pretense that we know what the interest rates should be. should the overnight rate be 10% or 2%? it makes a big difference.

but under the circumstances, they have no choice but say whatever is necessary, we're going to print the money, and we're really, if we're honest with ourselves, we're back in the qe not so big but we're moving whatever is necessary, we're going to print. that is not a way to defend a unit of account. we don't have a unit of account. nobody knows how to define it. how can you measure things and this is where we have a chaos and this is why we have stats and this is why nobody really expect any cutting of spending because it is too painful. and i think the market will dictate, you know, there was a time in 1970s where they pretended they're $35 an ounce, the market overwhelmed, it turned out it was worth a lot more than $35 an ounce of gold so the market is very, very powerful and it will overwhelm, and when you see rates going to 10% overnight, and everybody getting panicky, that's the market talking. you see interest rates for the

poor people, who have credit cards and pay 18 and 19%, that's the market talk. and you can, yeah, you can ring the rates for overnight and make wall street feel better, say, whatever is necessary, we're going to be there, that's what powell says. lately he's been very aggressive in saying we're going to take care of you. you don't care of the people who are really suffering, all they can do is go borrow more money and they follow the pattern of what government does but they don't get bailed out. they didn't get bailed out in '09. but the mortgage companies got bailed out it is a system that i think is very biased, it is doomed to fail, the federal reserve if you have a federal reserve of some sort, just get rid of the fomc who think and believe that they have this naive belief they know what the interest rates would be somebody said what if you were there, what would you do raise or lower interest rates? i don't know what the interest rates mean nobody knows what the interest rates would be if you believe in capitalism and market and we have a very weak conviction that

freedom of choice in the market economy is worth something, and that's why we're vulnerable. >> dr. paul, thank you for your time today ron paul. >> thank you >> final check on the markets. up 288 now on the dow. similar moves we're seeing in the s&p. up 31. nasdaq up 86 it is friday >> yea >> you're in love. >> i'm in love becky would like to say make sure you join us next week "squawk on the street" is next >> bye-bye ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. stocks looking to erase their losses for the week as hopes for a so-called mini deal here gained traction. trade reps meet today by a sit-down in the oval this afteoo