>> depends what they're telling people exactly. boeing is bored. stripped ceo jim mcinernie of his chairman title >> mullenberg. go back. i thought they were going to say they did it back then. now they're also doing it to mullenberg is that what they're doing or do they just -- >> they did it then and they're doing it again that's true. >> okay. then that is true. what's behind that decision can't be good. calhoun will be non-executive chairman monday october 14th, 2019 "squawk box" begins right now. ♪ >> announcer: live from new york where business never sleeps, this is "squawk box. good morning, everyone, welcome 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 bond market is closed today

for the columbus day holiday the stock market is on a regular schedule if you check out the u.s. equity futures a in the hour, the bulls may be wishing it wasn't dow futures indicated down by 110 points s&p futures off by 13. and the nasdaq down by 42. joe mentioned that headline that seems to be moving these futures this morning that was coming from bloomberg saying that china wants to have further talks as soon as -- the end of october before they will even sign the phase one deal that's being touted right now by the united states. it goes on to say that beijing may send a delegation led by the vice premier li hou. they would finalize the deal before the presidents met next month in chile another person said that china wants trump to agree to suspend the additional tariffs due to roll on in december on top of the ones he suspended for the ones due on october 14th we'll see what happens you can see the pressure that's put on the futures this morning after some big gains on friday

as this news was kind of announced and rolled out the big deal that we thought we had at this point also take a look at what's happening in europe this morning with some of the equity markets there. at this point, green arrows across the board -- actually we're looking at the nikkei, which closed overnight that the ended up by 1.1%. the shanghai composite up by 1.1% as well then in europe, there is some active trading taking place at this hour, you're going to see right now accept or take rather one of two financial rescue packages sources telling us that softbank has prepared a financing package to take control of wework. that potential deal would reportedly shift adam newman's voting power to softbank which already owns a third of wework my understanding of that transaction is it's a mixture of equity and debt. there's a separate offer on the table that would not up end adam's control of the company. that plan is a multibillion dollar financing package

arranged by jp morgan chase. sources say that is a debt deal, strictly a debt deal and could be marketed to prospective investors as soon as this week so the board has to decide effectively whether to take this softbank deal and the control issues that that relates to or take a debt deal from jp morgan. what's interesting is that these are competing offers. >> right softbank already has a third of the votes. >> but historically you would think that jp morgan and softbank would work together given that jp morgan is on the hook for parts of the business already. softbank is. but these are effectively two very different opportunities there's also -- >> that doesn't make sense to me, though. >> there's also an element that softbank would pay, although we don't know all the details, some reporting that softbank would pay certain types of moneys that would allow adam to pay back some of the money to jp morgan for the shares that he has loans out against. so very complicated.

>> it makes sense, though. if you have partners on a deal who are all looking to take a haircut on any new deal that goes through, you can imagine tho those bids would be competing. it's what happens when a deal goes awry. >> right. >> anybody who is putting additional money in at this point want to make sure they're getting additional votes and additional control and additional representation. >> right my understanding is the jp morgan deal does not do that, though. >> it benefits somebody other than softbank. >> unclear the jp morgan deal is structured we'll find out the next 24 hours. >> does it leave the ceos with more control >> adam effectively doesn't have to give up as manyig issue a lot of this is all around adam and jp morgan has been -- >> that's crazy. >> jp morgan has been very nice to adam over this time we'll see how it ends up squaring up. meantime, joseph

>> yes, my love. what is happening -- >> you tell me what's happening. >> nothing. >> it's columbus day. >> 4 out of 6 on college and actually 2 out of 3 -- >> of your games. >> do you believe i had the jets >> yep, i did. do you know how i started with $500. >> now we know. >> this is like six weeks ago. i've been betting every week betting every week and hitting it out of the park $550 in there now. >> good for you. >> six weeks of hard work. >> six weeks betting on -- which is good, i think. >> it's better than buying greek bonds. >> you do this on draftkings >> i do it on draftkings. >> you walk over to a bar? >> no, i do it on draftkings if you leave the state, i was going somewhere, heading up to massachusetts for a wedding. i started picking all the ones i wanted, your phone knows tried everything tried getting off the location, tried taking the wifi off.

tried airplane mode. no matter what i did, they knew where i was. that shows you something. >> you're being tracked no matter what. hello. >> i was driving >> all of a sudden you have a problem with it. >> also said slow down and stop texting while you're driving also came up on my -- >> were you driving when you did that. >> no, it didn't did it >> let's move on. >> it should. the u.s. and china striking phase one of a potential deal to end their month's long trade war. eunice yoon joins us now with the latest reaction from beijing. eunice, i don't know, did you see these export numbers they're staggering. >> i did. >> maybe there's not a deal but both sides want a deal is this how both sides save face they deny there's a deal and work one out to delay the tariffs. it's weird, isn't it >> well saving face would be good but, yeah, the trade data, the export and import numbers were both pretty bad. what i thought was interesting

so the export figures were much lower than what people had expected and the customs said the trade with the u.s. was particularly hit hard by the trade war. but what i thoughts was interesting was the import figure as well was down quite a bit. i think it shows then that china is not the om one suffering in this it's also the u.s. so, in terms of the trade deal, you guys were talking about some of those reports that had just emerged bloomberg was reporting that china wants further talks as soon as the end ofoctober t hammer out the details of a phase one before that -- that's supposed to happen around the apec summit. china also, according to sources from bloomberg, says that it wants trump to also scrap a planned tariff hike in december. now, that isn't particularly surprising because in the conversations that we've been having here and one in particular with the former adviser to the commerce

ministry, the feeling has been that china actually came out of those conversations very well, that there was a lot of progress made, that the u.s. decided to put on hold the tariff that was supposed to kick in tomorrow and the deal is now going to be in phases, which the chinese have wanted and also in the past have used as a delaying tactitactic that's been one of the criticisms by the trump administration by previous administrations. another point that was made quite a bit is the discussioning over huawei are now put on a separate tract that is something that the chinese also wanted to have to discuss some of the national security issues separate from a trade deal so, what is china doing? they said they're going to be buying up to $50 billion worth of agricultural products from the u.s. again what's interesting is the

state media has barely mentioned this pledge. there was one mention in a state media blog which is quite influential when it comes to trade talks that people watch it because they think it's somebody who travels with the vice premier. and that person posted a reminder that china uses these purchases as a bargaining chip and that the purchases need to be complimentary to the country's needs. so in other words, china won't necessarily just willy nilly decide to buy as much as 50 billion dollars worth of agricultural products. everything up in the air you were talking about some of the caution in the state media in fact, there was a reference to champagne, as you guys were talking about it, the champagne, according to the state paper the china daily, the champagne should probably be kept on ice at least until the two presidents put pen to paper. guys

>> yep thanks, eunice you know, i guess it's a work in progress, isn't it >> you know who we get to talk to today to ask about just this w stephen mnuchin. >> we'll get his take whether there are additional things we should anticipate before you see pen put to paper >> and a day doesn't go by when we don't hear that china will never change their ways. >> they have been running down the clock, waiting to see what happens. >> in which case was this deal -- >> no, no, no. i'm just to say to drag them into some type of compliance whether it's 20% of the way, 30% of the way, 50% of the way, to extract anything is going to be like extracting a tooth without novocain, i think. and we don't know how it's going to turn out. i don't think we immediately say that no good will come of this because you saw those trade numbers down 22% for exports. >> sure. but i think it's too soon to celebrate just as the chinese --

>> no. i think -- >> they got the better of us down 22%. >> they're doing what they're trying to get away whatever they can. >> we'll see i don't know. >> i'm sure they have that conversation with us they think we're trying to get away with whatever we can. >> but in an objective world, is anyone wearing a white hat, andrew >> the problem is -- >> we're really not in a better position here. the whole world knows they keep people in internment camps. >> did any of the things on friday address any of those things >> we're trying. >> the issue is that you had all these people sitting in the same room and none of them walked away thinking the same thing had been agreed to >> that seems to be a similar refrain, right >> right >> which is why you need it printed out on paper and signed. >> there's good guys and bad guys in this, andrew we can say 51% good, 49% bad

can't you be the slightest bit maybe that there are things that need to bring china -- >> yes >> if we were fighting for that, if you really thought -- >> it's part of it at least we still hope that economic freedom eventually brings reforms in other areas. >> we haven't succeeded at that. >> as i said, it's phase one phase one. multi-phases thank you, eunice. in a note this weekend, morgan stanley said an escalation in tariffs remains a meaningful risk that could come any time. despite the partial deal, joining us with more on the trade agreement and impact on the americans let's bring in simonion hymen and andy green is going to say better stuff than you on this stuff, andrew. center for american progress action fund economic policy

managing director. you hate everything that trump has done he hurt america and got nowhere. does that sum up your comments >> that's not far off. it's pretty consistent across trade, taxes, it's not good stuff. >> constitution, everything. >> not good, yeah. just about. >> all right but my question to you is going to be, though, seeing that exports to america were down 22%, in total exports to china down 3 there is over there at least it's on the radar that maybe we need to try to do something to get back to the relationship we had before there may be something good come of this in the end or it's impossible anything positive ever happens? >> this is not make america great again, not about getting back to a good relationship with china. look, president trump has picked up the playing book that the democrats have been putting forward for a long time saying we have real problems with the u.s. china economic relationship just as with his tax policy, his

financial deregulation policy, he put u.s. corporations first and the american people last this deal, this not even a deal, the thing about it is at best it is fraud because it's not a deal and worst it's harmful to american national economic interest by further making u.s. farmers even more dependent upon the chinese state government for buying american crops. while addressing none of the challenges that are there in intellectual property, in the -- he doesn't even bring up the lack of labor rights, environmental protection, human rights, a bunch of other things that make the playing field very unlevel for american workers and consumers and businesses. >> i understand -- i know where you're from, center for american progress, you probably spell that out, people don't know what to cap is. just in interest of fair disclosure you don't see any benefit to make our corporations more

competitive so they hire more people and so wages start going up, 3.5% on unemployment nothing about deregulation or tax reform has been a positive at all, andy, it's been bad for american workers sort of flies in the face of what we're seeing in the labor market, doesn't it? >> this has been a recovery that's been going on long before president trump took office. >> i understand that >> the u.s. corporations -- >> but this is -- >> have absolute important role to play in the economy >> just a role. >> they do hire folks. let's be very clear. the president promised $4,000 to families he has not delivered that >> what's more important than the corporations and american business for the economy, the government can't pick that mantle, can it >> if you look what's created wealth and jobs and economic growth. >> what is it? >> the government investments in things like the internet,

research and development, so many of the major technological and other innovations come from government and public investment so, you know -- >> that's investment but most of the gdp generated from the private sector, no? have i got that wrong? >> absolutely. absolutely absolutely. >> simeon. i don't know where you want to start. >> i want to get back to regular stuff. we've quietly or maybe not so quietly had a bond market selloff which is useful to look at on day when the bond market is closed. but ten year yields have risen 25 bases point which is says something -- >> sell off? >> well, it's a directional thing. here is what's interesting they also went up 25 bases points in germany where the macro data is considerably worse than even in the u.s so i'm just throwing out there that complacency might not be a good idea even if the economy is

a little weak. >> we went up on wednesday, thursday, friday the deal whether it's a deal or not we'll talk to the treasury secretary at 8 is it a deal is that warranted? are we now ahead of ourselves in terms of the equity prices >> so, we've got about a 10% discount the fair value on the s&p just based on 1.75 on the ten-year you could get to a 22-p on that bases. we're about 20 you have a little valuation cushion, not very much i think the trade deal is probably the only real source of upside in the near term because i don't think we'll have great earnings season. we have banks reporting this week it's been a tough environment for banks, deal volume is slowing a little bit and the yield curve was inverted up until just a week or so ago. so i don't think you'll get a big impetus from the earnings side we certainly know politically a win on that front sometimes as

we approach the height of the election season is not terrible to bank on. >> of course we have earnings season what's today's date? it should be soon, shouldn't it? >> this week is big week all the big banks reporting this week. >> the height. >> about 10, 12 days >> yeah. >> what's the bottom >> trough. >> i don't particularly like it. i say nader, you think of ralph nader. >> i don't think ralph nader i like him, though. >> great man. >> thank you we have a lot more coming up on "squawk box" this morning boeing's board voting over the weekend to strip ceo dennis mullen berg of his chairman title. we have the details of what that means next. then later, don't miss our news maker of the morning. treasury secretary steven mnuchin will join us at 8:00

a.m. eastern time to talk about this china trade deal and so much more. as we head to a break, here is a look at the premarket winners and losers in the dow. here, it all starts with a simple...

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♪ boeing's board is tripping dennis mullenberg of his chairman title phil lebeau joins with the latest of this, i think, big decision, phil. >> i think it's a huge decision, andrew for the longest time i would get questions from people who said why haven't they done something about dennis mullenberg being chairman or ceo. on friday, the board met in a meeting they held without dennis mullenburg and decided you'll split these two titles he remains ceo david calhoun has been on the boring board since 2009. he has a long tenure with the company and also has some vast experience when it comes to aviation one-time ran ge aviation so for dennis mullenburg, this

sets up a fourth quarter with him losing the chairman title. he has a lots of hurlds that the company needs to clear over the next two and a half months they have to return to the max to service, first of all they expect the max to be returned to service, at least in some countries around the world in the fourth quarter. they have to also maintain max production which is currently at 42 per month report lid there may be some tension between calhoun and mullenburg over whether or not they should change that production level then there's a congressional hearing that dennis will be at on october 30th. not only will he be grilled by senators and representatives it's a house hearing so representatives will be talking to him at that hearing, but there will be a lot of questions about the oversight at boeing. so that is going to be the most important flash point, if you will, coming a couple days after boeing reports q3 earnings take a look at the stock since march 13th grounding

this is generally speaking a stock that's basically held where it's at since the grounding. if you go back to the high last year, it's lost $30 billion in market cap towards the end of last area when this stock was trading well over $400 a share for dennis mullenburg, if he concentrates on the day to operation and getting the max back in the air and getting the production ramped up next year while david calhoun and the board concentrate on broader business for the company overall. >> phil, i'm not trying to spin this one way or the other, but to me my take away actually was in a maybe backwards way this was a sign of confidence in mulenburg and creates a new -- not a honeymoon period but probably gives him at least another 12 months to get the company back on track which is to say i think there was another

view out there that was even more skeptical about potentially his own future at the company and had -- that by doing this, it -- by default gives demonstrates the board is confident in him still being there. >> i think the board has confidence in him. >> fair way to put it? >> i think you have a pretty good read on that. i do not get a sense, andrew, talking with people with boeing that this is a case where the board sliek, he is not the man to run this company. certainly not the man to get this plane back in the air and i don't think they want to change the leader of the company in terms of day to day operations at such a critical juncture now there are questions about whether kevin mcalister, whether or not he should be removed from his job or there should be some leadership shakeup there, but they made a number of moves in the c suite in terms of responsibilities, et cetera. i think right now the feeling is dennis mulenburg is the person

to get us through the crisis you want to revisit that at some point down the road, that was suggest. >> this was made in advance of a hearing that dennis will be speaking at in washington and that this was an effort to effectively get ahead of that. >> i think that's a fair read on things that's a very fair read on things i think if you look at not only this move, andrew, but look at the other moves they made in terms of the safety committee, more direct reports in terms of how the engineering is structured at the company. they clearly are trying to make it obvious, not only to regulators, but also to the people in washington that they understand that things have to change at this company and they're making those steps. >> phil, you mentioned that there's some tension that's been reported between calhoun and mullenburg when it comes to the production schedule. which one wants to slow it down more than the other? >> well, the concern here is if from boeing's perspective, you

slow down that production much more than 42 per month, do you get to a point where your suppliers they're going to have to start laying off people at a time when it's hard to find skilled labor, worldwide, then the concern becomes when you ramp up, will these suppliers be able to ramp up. that's the concern there at the same time, they've got these planes, guys, that are piling up at different places around the country that creates not only an issue in terms of those planes that are built but not delivered yet. then you've got to get those ramped up in terms of getting ready for delivery in and when the regulators lift the grounding. that's the concern there how do you balance that? i think that's at the heart of this question, becky. >> phil, thank you phil lebeau, a story we'll be watching throughout the day, too. when we come back this

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she challenged the policy by running fake news ads on the platform her ad contained the false claim that facebook ceo mark zuckerberg endorsed president trump's re-election bid. how could this possibly be true? well, it's not sorry. the ad accuses zuckerberg free reign to lie on his platform. >> to me the most interesting part about this story was the response from facebook which then compared their role with tv networks and the fcc mandate effectively that you put on anything as long as it's approved by candidate but then also puts them in to a whole another regulatory sphere. they reference the fcc. >> hosting board. >> exactly. >> we had this conversation last week >> which one we have a lot of the same conversations. >> on cnn didn't run the ad and

then msnbc and all the networks ran the trump ad facebook ran the ad. it was the same discussion cnn thought there were trump facts in there which they don't -- aren't the same as cnn facts. >> andrew is right if they are saying we're no different than a network, that's a much higher bar than they said to this point. to this point they've been ruling oen the compuserve ruling based on the '80s. i'm a posting board. it's not my responsibility. >> that to me was the response was more interesting i thought what she did was clever but to get that response from facebook, i think that said something. >> that is the least they should do i don't know anything makes its way on to that >> live streaming of shootings. coming up, earnings season got that going for us. kicks off this week. we'll get you ready for the big reports. later, treasury secretary steven

mnuchin. that's the treasury secatory >> yep. >> joins us to talk about china trade. the escalatining tension with china. here is a look at friday's s&p 500 winners and losers ♪ through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from managing inventory... to detecting and preventing threats...

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we're listening to. u.s. equity futures at this hour, let's tell you what's going on dow off about 87 points right now. nasdaq down 38 points. s&p 500 off about 11 point earnings season kicking off this week and tomorrow san especially busy day we'll get results from s&p morning and citi group and sels pargo and hear from the united health and united airlines analysts are predicting the s&p 500 will drop for the first time in more than three years. when we return, auto workers, union strike against gm is now almost a month long we'll talk about the impact it has across the industry and what it means down the road. also, later, don't miss our first on cnbc interview treasury secretary steven mnuchin china wants additional negotiations before they sign

anything. stay tuned you're watching "squawk box" right here on cnbc ♪

welcome back u.s. equity futures are giving back some of the gains we saw on wednesday, thursday and friday 11 so far on the s&p

11 and change. premarket dow indicated down 93 and change nasdaq down almost 40. the auto worker's union has now been striking against general motors since mid september. negotiations continued through the weekend without resolution joining us right now for a look at the effect on suppliers is maintenance technician at magnet dexis. also darren giffords leads strategy consulting practices. and gentlemen, welcome to both of you michael, maybe you can tell us what you've seen happen and what this means at your plant >> well, obviously the doors are closed we have lots of people at my company that are out of work along with several other suppliers in the area along with the gm workers. >> the gm workers get benefits from the uaw are you part of that, too? >> no, we are not. >> how do you feel about that? >> well, i mean, it's the way

the industry is. we're supplier to gm we're not covered under their contract so, it's nothing that i've ever expected working outside of the gm contract. it is difficult under these conditions when there is a strike because we don't have the aid that they may have >> how do you feel watching this play out because it's taken a lot longer than people had anticipated? who do you think is at fault >> well, i'm not going to point a finger at anybody. what's difficult is people -- you know, a lot of people being out of work. the difficult thing is the media is covering a lot of the gm workers when, in fact, there's probably, maybe three times more workers affected by the strike that are out of work that really are not being mentioned as much. >> so what is your message to uaw and to gm? >> well, my message is hopefully they can work out an amicable

agreement and we can get back to work and start producing vehicles and everybody can start collecting their paychecks and start catching up on their bills. >> you have any idea about anything that's happening or you know what the rest of us know watching from the outside? >> yeah. i'm an outside looking in and just seeing updates on tv, social media and things of that nature. >> yeah. just kind of hoping for some sort of progress were you -- >> absolutely is. >> heartened by what you saw last week when it looked like things maybe were taking a turn for the better, the ceo of gm sitting down with the union, which was a pretty unusual move. and then the union, i guess, saying this weekend that they've offered another bid that they hope will be one that gm will accept what do you think when you hear all that >> of course, you want to stay positive and hope for the best, you know, but that's what negotiations are they're offers and counteroffers. so, at least progress is being

made to where each side believes that they have a fair offer to pass on. we go from there >> darren, what do you think as somebody who watches the industry and looks at consulting practices along the way, were you surprised by how long this strike has actually lasted >> well, it is surprising only from the standpoint of if you look at really what the issues that they're talking about are really not that far apart and really the critical part for the two parties is how to make this a much more collaborative arrangement going forward. right now they're kind of caught into this battle between the two of them, at least from the media standpoint and probably in the negotiating room as well p it's become a lose/lose proposition for both of them by having a strike at all, let alone having a strike that's lasting this long and continues to go on >> you think the strike is really about the switch to electric cars. can you explain that >> well, i think in the

long-term gm is trying to reposition itself just like all the other ones around the world, how do they adapt to electric cars in the future and people may want to deny that just need to look at really what's happening there's over 100 new models that will be introduced in electric vehicles over the next four years. the duration of this contract. it will take on for battery electric cars to be cost competitive completely but the other governments are pushing harder to do that. we're moving in that direction in that regard, those kind of vehicles require a different kind of work content different kind of worker frankly. that's where the clollaboration between the two parties the gms and others will be involved eventually and the uaw need to figure out how do they reposition the work force and

reskill the work force as well into this new environment. suppliers have the same kind of issues frankly from the tier ones as michael works for, down to the tier twos, supply to them, tier threes, supply to them they have to figure out how to reposition their companies as well to make these types of new technologies in the future. >> darren, michael, want to thank you both for joining us. michael, i hope there's some settlement to these talks soon to the benefit of you and all your colleagues. thank you for joining us. >> thank you. a lot more on "squawk" when we return, what do all these companies have in common they announced decisions to exit facebook's libra in the last few days ghafr e eangn what's goi o rit tethbrk.

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welcome back to "squawk box. more trouble for facebook's digital currency, libra.

visa, master card and others have joined paypal in withdrawing. good morning >> morning >> there's a lot going on to unpack here but why is everybody dropping libra the price of bitcoin and everything went up because it was viewed billions of people would have digital wallets and it was going to be a game changer. >> i think there's three key components there was a letter sent by two senators to a number of these companies that essentially said, look, we don't want you par cities tis si pay thing in this if you move forward we'll scrutinize libra and your other business. >> isn't that a disgrace can we make a political statement here politicians sending letters to companies including like a stripe which wants to go public, visa and master card which

people already consider to be virtual monopolies, effectively saying if you don't get out of this, we're coming after you. >> it doesn't surprise me at all. >> i think most people think this happens anyways to put it in a letter and post it on a website. it literally says, if you do this -- >> is this the death nell or not? >> i don't think so. >> you think there will be a libra? >> in a venmo -- here's the sad part they're going to kick out all of the american companies if it's successful, american companies won't benefit. >> this is the prime example of libra and bitcoin. >> exactly. >> i was trying to think of an analogy that all of my -- i must not be one when you talk about unforgeable value and how digital gold helped crypto, i think compare libra to bitcoin it's like bitcoin would be an actual end piece when you start with that, i know

you're not listening, you have no interest and you're going to say something before -- with bitcoin you've got actual an antique that takes 120 years with libra you've kind of got restoration hardware you know what i mean they manufacture something that looks like it was old and it's like from a previous era it's not digital gold. >> we have another guest, that's why i was pointing, because we're going to have a guest joining us right now. >> i cannot wait fantastic. >> you can't wait. i know you can't wait. so thrilled. >> when the finger comes up i know i have to hurry. >> good morning. help us understand this piece of it which is if libra doesn't exist or doesn't get to all the same people, what does it mean for the rest of crypto >> it was actually a big boost for the rest of crypto because you would on ramp all of these facebook users so now you don't get that boost, but i think on the other hand, people will understand the difference between a public cryptocurrency

like bitcoin and a permission like libra so they are completely different. i wouldn't compare it to antiques and restoration hardware. >> why not one has actual value, inherent value, centralized that exists and it's a distributed ledger. facebook was just based on currency. >> the part that makes no sense to me. the facebook one would ultimately be controllable if you were -- if you were a government, you would think you would like libra libra should be something you'd like because it's completely and utterly controllable centralized situation. >> i'm not trsure that's true either the governments are threatened by either of them. in libra you have big tech authority. in the case of bitcoin you just replace all central authority. so i think governments are threatened by both equally

>> here's an idea i think that if facebook was to say, look, we have two products. there's libra, the association, a bunch of different organizations and calibra, the digital wallet we're going to launch this digital wallet and embrace bitcoin and the crypto currencies that exist, that might change the narrative. >> i think it would change it in the opposite direction if everybody has a digital wallet and bitcoin is now available and other types of currencies that are completely uncontrollable, i would think it would create a bigger problem. no >> possibly, but the governments are upset about both, right? so i think that by providing digital wallets, it again on ramps a bunch of people to digital currencies which is inevitable. >> by the way, libra says they're going to become public five years from now. they're going to start working on it. to their credibility, they really couldn't be public today because it wouldn't scale for them so they did have to develop

their own technology. >> aviva, we want to thank you we've got to run anthony, thank you. >> looking like a rug, like a persian rug that's two years old, three years old or one that's -- you cannot get the batina of a real authentic rug if it's really a bright pattern, you can't -- you can't do it it takes time. it's called unaffordable value it only comes over time. that's what creates scarcity and then you do the stock to flow. >> i'm pointing because we're way out of time. so out of time. >> you're pointing again. >> back to time in the show. stock futures under pressure we're going to dig into the latest trade reports down 73. that's better than we were before and we're going to talk -- we have time for -- we will talk to treasury secretary steven mnuchin about the big trade deal or was it coming up?

banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances.

stocks set to drop we break down what you need to watch as we get ready for a big week on wall street. did the legalization of pot make vaping more deadly? former fda commissioner dr. scott gottleib joins us to talk about his latest op ed on the issue. plus, bernie sanders slams elizabeth warren as a capitalist we'll speak to john o'brien about his comments and the 2020 election as the second hour of "squawk box" begins right now.

live from the beating heart of business, new york. this is "squawk box. good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and andrew ross sorkin u.s. equities down 72 points we were down triple digits at the beginning of the show. a little bit of improvement. we're down about 29 on the nasdaq on the s&p down 9. in the headlines it will probably tell you there were some headlines this morning that china wants more talk before they even sign phase one and that's why we sort of started off on the wrong foot after the big china trade related gains on wednesday, thursday, friday. >> we will get the chance to speak with treasury secretary steven mnuchin and get his take on those headlines. in the meantime, here are other stories in our headlines it is a normal day of trading for u.s. stocks. most banks, the postal service

and government offices are all closed today because of the columbus day holiday boeing ceo dennis muilenburg is no longer ceo. he's focusing on returning the 737 max back to service. u.s. air lines have now taken 737 max flights off their schedules until at least 2020. directors of wework parent the we company are set to meet as soon as this afternoon to decide on one of two rescue packages as andrew reported earlier, one would effectively hand control over to the office sharing company to the biggest investor which is softbank. the other would raise billions in new debt with the help of j.p. morgan chase. futures falling on a report that china wants more talks before signing off on any kind of deal. this sending futures lower this morning. kayla tausche joins us with the latest we thought we had a deal now maybe not so much, kayla

familiar refrain. >> reporter: yes the u.s. side is calling it a deal the chinese side is calling it progress most of the details are waiting to be sketched out president trump acknowledging that this partial deal, even as partial as it is, still needs to be written a person close to the talks says another in-person round of negotiations is likely the deal includes a commitment by china to buy u.s. farm products which trump said in a tweet will happen immediately. china will also open its financial services industry on a pre-set timetable. the two sides have also agreed to transparency on currency moves. the tariff hike set for this week will not take place and negotiators suggested they would work to avert the december 15th tariffs but that's not set in stone and that's something the market is watching closely here's how the trez ri secretary steven mnuchin described the partial deal yesterday. >> phase one includes very substantial issues i think people thought this was just going to be about agriculture purchases. there are multiple chapters.

the intellectual property rights chapter will be included in its entirety this isn't just buying soybeans, these are structural issues around biotech and other things that the ag department for years and an enforcement chapter now along with it it includes substantial purchases of agriculture and other issues >> reporter: so that is a lot more than the president was talking about on friday afternoon, but the president has also said, andrew, that congress will not need to sign off on this, that that will make it more expeditious you can bet if there is enforcement in intellectual property language that you could see lawmakers working to make that language public so that they and we can see exactly what is in it, what both sides are committing to and what that means for the relationship going forward. i know you'll ask the treasury secretary this and many more questions when you have him on "squawk box" coming up next hour >> absolutely. kayla, thank you for that report meantime, joining us to talk about this and more, william foster, moody's vice president

and lead u.s. analyst and mr. timmons. thank you both for joining us. you look at this deal, non-deal, what is it how should investors think about it >> right it's a step forward but we can't expect too much. you're seeing that from china. fundamentally we see some progress in terms of pausing on the tariff front the core issues are still at stake, intellectual property, transfer. >> was it a knee-jerk weird -- >> this is what we've seen over the last several plonlts any positive news, positive response, negative news it's the opposite so i think that's -- you know, we've come to expect that but the substance of the deal right now is obviously not there so we're going to be -- we're going to see more of this move forward. >> aaron, did you know this was a head fake on friday? >> even if skinny deal is progress if we can save christmas by delaying or postponing tariffs,

the chinese clearly need to buy a lot of ag products because the african swine fever has wiped that out so it's clearly in everyone's interest to do something, but still the notion of an all-encompassing deal that fixes everything is i think extremely unlikely so there will be other iterations, other chapters in this story over the coming year or so. for now, you know, this creates some visibility -- >> creates visibility into what? just this christmas situation. >> tariffs matter, right it certainly matters to profit margins, to consumer prices so even if they're only delayed and not completely taken off the table, it buys companies some more time to maybe re-engineer supply chains. we'll probably see the same thing with companies guiding lower and then beating those lower estimates. >> is this a de-escalation or is this just a freeze on potential

additional escalation? >> it's probably the same thing, right? a de-escalation by not enforcing the new tariffs which are going to hurt a lot more than the last tariffs and getting, you know, the ag purchases i mean, ag purchases by china from the u.s. are running at half previous years. so it does matter but ultimately we have to wonder, you know, what the end game is and the end game probably is a long one. >> but one of the things that's been fascinating in terms of what stocks have been working, even on a -- even on friday when the news was better, i mean, everything moved obviously, but clearly everybody's still in a defensive posture, which is to say is there any pocket of the market that wouldn't be a classic defensive stock that you think should be working or a sector that should be working right now? >> i mean, in the end this is really about what you expect to happen how bad is this trade situation going to be? will there be escalation moving forward? there should be pockets of

opportunity but in the end our view is that you're going to continue to see -- this basically buys more time for the two sides to try to come to some kind of agreement on some of the core issues and that will give the market more time to kind of digest and hopefully not -- basically put the baseline in there where the fed can help as well. >> caterpillar were up sharply. >> you have the structural trade. the bond proxies is part fear of recession and everyone's been fearing a recession for years now. everyone is still looking for the big one and it hasn't come and now the fed is starting to add balance sheet expansion so maybe it won't come. part of it is also demographic the search for yield utilities, you know, earning 20 multiple makes no sense unless you are filtering it through that lens. but i think if we stave off a global recession, then certainly the banks and other cyclicals could at some point start to shine. banks have very robust cash yields at this point they are getting more.

>> like banks. nobody likes banks nobody's liked banks for years. >> nobody likes banks, but if you can get past the late cycle phase and back into an early cycle fai psycycle phase, typically the bs do well. >> final word on that? >> no. >> you're going to leave it to jurrien? thank you. coming up, the link between thc and vaping deaths leading form j former secretary scott gottleib to pen an op ed. what you need to noah head of some of the results of some of the world's biggest banks are reporting its -- i don't know where wilf is. 'sitr ryhe eheve anxious or very excited. stay tuned, you're watching "squawk box" on cnbc

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as a result you saw the dow futures down right now down by 72. "joker" took the top spot again adding $55 million bringing the total domestic haul to $192 million. comic book origin stars joakim phoenix. the addams family came in second coming up, former fda commissioner dr. scott gottleib said the federal government's refusal to challenge state laws legalizing pot is partly to blame for the vaping epidemic. don't forget, at 8 a.m. treasury secretary steven mnuchin joins us to discuss a partial trade deal with china. "squawk box" will be right back.

scott gottleib calling on lawmakers and regulators to change pot laws. that's what he believes is one of the reasons behind many of the recent vaping deaths dr. gottleib joins us this morning and, scott, it's good to see you. >> good to see you. >> first of all, why don't you

explain the link between vaping and these recent illnesses and deaths we're seeing? >> now it seems a lot of these vapin vaping-related illnesses if not all of them are connected to thc. burning the flower is one, vaping liquid is number two not far behind in terms of what consumers are doing. now it appears some of the people who are selling these vapes are mixing oils into them to increase the viscosity because the thingness of the oil is seen as a measurable trait in terms of how potent it is. they're putting oils in there that shouldn't be there and they're damaging some people's lungs. the best analysisis out of the states of illinois and wisconsin which looked very closely at the cases that they reported in those states fully 80% of the people in those situations had reported vaping thc. you could surmise there's underreporting 5 to 10% people who use thc don't want to self-report

especially in the throes of an acute ill chbs. >> let's talk about why this is happening. >> we have a policy, a federal policy of prohibition that's not enforced effectively it's illegal at the federal level so it should be illegal at the state level the federal government doesn't enforce that prohibition because they know it's not politically practicable. you have no federal regulation practically. very little federal regulation the only federal regulation you have is the fda. dea by and large isn't enforcing that much anymore because the state laws now supersede federal law under what congress has done congress passed appropriation riders that say the federal government can't enforce the federal law in states where marijuana laws legalize it in part recognizing that that federal law is too draconian i think what we need to do is have a federal law that can be enforced and allow federal

regulatory authorities impose supervision. what you've had is a wild west of unregulated products. now we're seeing the consequences of that. >> you're not advocating for the idea of saying no one should be allowed to do this, you just want the federal government to oversee? >> well, i think the reality is, look, i wouldn't be in favor of recreational marijuana laws. i think they're a sequelae for people using pot frequently. we see impacts on executive function, short-term memory, especially harm in expectant moms and children but i think that that ship has sailed. i think the reality is with so many states legalizing marijuana and legalizing some form of recreational use of it that any kind of federal scheme is going to need to take some accommodation of that. the time has come that we need to grapple at this the federal government wanted to ignore this problem. both the federal branch and successive administrations and congress they wanted to say, we're not going to change our law because we know doing that would be controversial.

we're not going to enforce it. that's not working anymore these tragic illnesses demonstrate the harms that could happen when no one's minding the store. >> the states do not have the ability for oversight? >> no, they don't. they claim that they provide regulatory oversight but there's a patch work of different schemes. some states do more than others but i think by and large the states don't have the capacity to both police what's being sold in their so-called legal dispensaries as well as shut down the black market. very big black market has grown up alongside the legal state dispensaries no one's really taking action to shut those down. i think you need federal authorities in there to do that. >> the federal authorities would be which authorities they would do what they would basically give an approval to say, okay, this is decent vaping? this is decent stuff you're okay to do this does that send mixed messages for people who are habitual users? >> if you are going to make clinical claims, medical claims, they should be held to the same

standards. we should be able to get medical marijuana if there are medical claims to be had here. many think the dea and other authorities including fda potentially could regulate what's being sold for the potency, for the manufacturing, for the ingredients for the claims that are being made look, i would like to see the recreational uses shut down entirely and the clinical uses held to an appropriate standard, the same standard other drugs are held to. that's a debate we ought to have i just am being practical. i don't think that's a debate that's going to be winnable. you have both republican and democratic states legalizing marijuana. it's going to be hard to get something like that through the senate even if we were to federalize it and allow some form of recreational use we could limit what could be sold, the potency of what could be sold, the forms of what should be sold the reality is no one should be vaping thc putting something into the lungs is inherently dangerous. we shouldn't allow the vaping of

these concentrates these are formulated that nobody should be inhailing into their lungs in the form of a vapor. >> that's what i want to get to. you're opposed to the entire way of doing this. instead of the federal government saying we're not going to disallow it, you would regulate it out of existence i'm all in favor and it's not very popular good luck with that, right >> i don't think that the agencies could regulate it out of existence if we had a national debate and federal reckoning on what we were going to do, where it would end up, if we were to have the debate and come to a commendation, it would end up with tighter controls, holding them to a higher standard and allowing some form of recreational use probably for products that are lower concentration that are only delivered in forms that pose less harm than vaping eliquids like what we're seeing cause the illnesses. i think there's a way to have a compromise where you allow some form of recreational access in

the states that want to allow it something that looks far different than what you want to have something far less permissive than the state laws. that's not a great outcome in my view from a public health standpoint what we have is far worse. you have a federal government not enforcing the law at all, barely enforcing the law because they know the existing law isn't practical and the state's not imposing any supervision because they're incapable of doing it or they don't want to step in in a vigorous way. >> i had an interview with a guy who represented the industry of independent vaping shops he said the fault and problem all lies with juul because they were the ones that started marketing this towards minors. the independent vaping shops are the ones that have been there to help people ease their way off of smoking into something that's a little better for them, vaping what do you say to that argument >> this is with the ecigarettes and nicotine. >> right this is the difference between who's helping smokers actually stop smoking. >> right the reality is that the vaping

stores, which are adult only vaping stores, by and large do a good job of keeping kids out there is a very low violation and they're selling open 10 vape willing systems that the kids aren't using the kids are using juul and njoy and one of the things i was saying in the spring, the 2019 national tobacco data survey is showing a big jump in teen vaping you need to as a regulator target what is causing the problem. what's causing the problem are cartridge based products like juul they could target the cartridge based products and leave the adult vaping stores to sell products to adults that would be one alternative rather than banning all of the flavors which is going to hurt the adult vaping stores and it will leave the cartridge based -- sorry, what's going to happen is kids are going to

start putting counterfeit pods in those juuls. >> i've always asked you, why would you want to bring up a whole new generation that, you know, sort of initiate an addiction to nicotine. we never really thought it would be that bad since it doesn't have all of the carcinogens. you saw that study in mice do you have any faith that that is pointing to something in terms of nicotine actually being a carcinogen in its own right or do you need more studies on that before you would conclude that >> there are a lot of studies that have looked at nicotine to see if it can cause cancer it doesn't it might be a tumor promoter they've said that there's a potential that nicotine is a tumor promoter but it doesn't cause cancer this was with 20 in bred mice. they isolated the effects of nicotine they said vaping caused cancer what it looked at was the nicotine it seemed to demonstrate that the vaping doesn't have any -- >> the nicotine did. >> right. >> they had big incidence in cancer with the nicotine vape.

you took the nicotine out and did the vaping and there was zero incidence. >> i'm skeptical i'm skeptical that nicotine causes cancer. that said we had a signal when i was at the fda of damage that vaping was causing to the lungs in an animal study the results of this should be out soon that was a reg rousely done study, large study where fda was evaluating whether it had an impact on the lungs. it was a toxicological study that answered the question on whether or not vaping is having an impact on the lungs that was negative i believe it is. you can't inhale something into the lungs on a repeated basis and not cause some damage to the lung the question was was it always less harmful than smoking combust i believe tobacco. i believe it is. if you could fully switch off of combust i believe tobacco, you will improve your health. >> dr. gottleib, thanks for

getting up early and joining us. go back to bed. >> thanks a lot. bernie sanders calling for a revolution slamming elizabeth warren as a capitalist his comments and reaction straight ahead. head to a break, take a look at u.s. equity furutes dow off about 72 points right now. back in a moment high protein. low sugar. tastes great! high protein. low sugar. so good! high protein. low sugar. mmmm, birthday cake! pure protein. the best combination for every fitness routine.

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still to come on "squawk box," financials in focus as wall street gets ready for some big reports. we've got a breakdown of the banks straight ahead. then, what business leaders should take away from the nba/china situation. chairman and ceo of operation hope john hope bryant will join us. after that, treasury secretary steven mnuchin will join us. we'll hear what's next for america, what the markets should be taking away from all of this. "squawk box" will rhtacbeig bk. ♪ ♪ ♪

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welcome back to "squawk box" this morning huge week of earnings on the way. dom chu joins us now with a look at what investors need to watch ahead of it all. dom. >> andrew, it is one of the busiest times of the year. four times of year for all of us at cnbc when we talk about all of the corporate earnings

report this week one in -- let's just put it this way. nearly 50 stocks in the s&p 500 are reporting their results throughout the course of the week seven of them are dow components let's take you through some of the big highlights we've been talking about the big bank earnings. they kick off on tuesday, wells fargo, goldman sachs dow component johnson & johnson. bank of america and csx come up on thursday. morgan stanley and honeywell on thursday friday, amex, schlumberger coca-cola. according to data from refinitive, s&p earnings are slated to decline by 3.2% over the same period last year. technology, which has been a leader in terms of earnings growth and the market, are seen having earnings drop by 7.6% and the big issue facing a lot of these companies and the

outlook going forward is how important is that global trade uncertainty specifically between the u.s. and china how much will that weigh that's a quick preview of what we should expect, joe, out of earnings season as we start and kick things off tomorrow with the big banks. back over to you, joe. >> has anyone seen wilf, dom have you seen him? >> i have not because he's probably in a hole somewhere trying to prepare for all of these things that are going to happen with the banks this week. >> i wonder if he's excited, anxious? >> i bet you he's excited. i bet you this is like the most wonderful time of the year. >> probably a mix. >> he shows it in such a cool manner. >> he does but he -- he gets -- i mean, i guess it's his job but he gets into the most minute -- like this mosby character we have coming on, the most minute details. >> he really, really kind of has a real thing for these banks and the roes, roas. >> you have to be that type of individual unique. >> just like marty mosby.

>> let's get to him. director of bank and equity strategy earlier we did have someone recommend banks. andrew's right they have been out of favor. i've seen some people come on here and say, this is the time, because all the bad news is out and interest rates are as low as they're ever going to be this is the time when you build a position based on price to book and all these different things i actually have heard people recommending that. are you recommending banks >> we are, but you've got to take the timing of when it's going to be, like you said, the right time banks are a trade built on are we going into recession or not into recession andrew, when you talk about banks have been out of favor, the reason they've been out of favor is after the tax reform and since then it's all been about the inversion of the yield curve. are we going into this recession and the probability, at least what people talk about, you hear them on here, the probability's been going up. in relation to the earnings growth that we just saw on the numbers, down 3%, if you look at

the banks in general year over year they're going to be up 2% now we parse that out a little bit more, money center banks are going to be down 1% and the super regional banks are going to be up 6%. you're seeing the momentum that we're able to see come from the super regional banks and we think that eventually that's going to be your best play valuation wise and also momentum wise >> what should we be looking for? and which reports? within the reports what are we looking for and who will be most ichb dick indicative of the health of the sector this week >> there's two pieces of that question and they're very important. if you look at what you're looking for, the recession question is on two axes of earnings for the banks one is net interest margins. so what happens with interest rates. the second piece of it is what are we doing as we are looking at credit? what we continue to see and a lot of the banks perform better every quarter on earnings season

stock wise is that credit hasn't risen its head there's no deterioration in credit as we're going through this process if there continues to be no deterioration, that pushes that expectation off into the future. what we have seen is that the inversion of the yield curve and the drop in rates has impacted net interest margins while we haven't seen chargeoffs go up, net interest margins are starting to come down. we are going to see the negative impact what we want to see is which banks can fight that net interest margin compression and that's regions and 1/3 we can see those two banks talk about at least going forward how they're being able to restructure the balance sheets and be able to defend their net interest margin, then you can have both of those elements working in their favor. >> what do the latest moves by the fed mean if anything >> what it means is -- well, it matters because when you go through this, now this is where it gets a little complex when we talk about wilfred and i getting

into the metrics. >> you're smiling. >> the moment is here. >> so weird. >> yes, i am. >> this is the super bowl. you get it four times a year. >> that's right. this is the point. this quarter we're going to see net interest marnl begins compress more because when we went from rising interest rates to declining interest rates there wasn't much you could do with the deposit betas your deposit price was frozen. asset yields when the fed reduces rates, asset yields go down if you can't change your funding costs, there's going to be a lot of compression however, as we've gone through the second and third eventual cut, what we'll see is that those deposit rates will start to come down that will be a benefit for the margins that we're not seeing in this particular quarter. >> what's interesting and what i'm going to glean from all of this, if we see disappointing numbers and the bank stocks go down and people start saying, see, a recession is coming, you really need to look into where the weakness lies. if it's not credit weakness and it's net interest weakness, then you shouldn't automatically

conclude that a recession is imminent it just means that it's a flat yield curve. >> that's right. >> we need to watch for credit credit is going to be the ka naryury in the colal mine. >> and bank credit the impact on the bottom line and returns is it's pretty manageable we can maintain returns at this level which valuations don't reflect that, right, andrew? >> right >> if you maintain or sustain your returns, the price of tangible book value which is 165, which is supported by recessionary levels, dividend yields, cash returns, if we sustain the returns the valuations have to go up two times towards tangible book value. >> so does wilf call you to get some info? >> not yet we probably need to go to lunch one day and compare notes. >> do you tell him stuff

does he tell you stuff is it an equal exchange? >> collaboration. >> ideas and analysis. >> over these interviews, yes. when we talk and go through the online and go through the -- >> what do we need you for if we can do a cnbc guy? have him come in and talk. >> what i think we add is 30 years of experience of -- >> you don't have to answer this question don't answer him there are sometimes -- >> we pay anyway >> we're going to talk about that >> see you like six times this week. >> we're thrilled to do it. >> yes i'm saying that. i'm saying that. thank you. when you leave, i'll shake your hand i'll show you that he'll give you some kind of -- and then put cream all over his hands. i do appreciate you being here. >> i appreciate you having me. >> marty will be back tomorrow. >> we will. >> you don't need to shake my hands. >> lucky marty >> all right when we return, what executives should take away from the nba spat with china right after this break. and at the top of the hour,

treasury secretary steven mnuchin is our guest we'll get the latest on the details with the trade deal that we think we have with china. "squawk box" will be right back. >> get the best of "squawk box" every day in our new podcast subscribe to squawk pod on apple podcast, spotify, stitcher or wherever you get your podcasts ig even better? when you prepare for retirement with pacific life, you can create a lifelong income... so you have the freedom to keep doing whatever is most meaningful to you. a reliable income that lets you retire, without retiring from life. that's the power of pacific. ask your financial professional about pacific life today.

welcome back to "squawk box. with senator elizabeth warren continuing to climb in democratic primary polls,

senator bernie sanders explicitly outlined their core differences in an interview with abc this week. >> elizabeth considers herself, if i got the quote correctly, to be a capitalist to her bones i don't. the reason i am not is because i will not tolerate for one second the kind of greed and corruption and income and wealth inequality and so much suffering that is going on in this country today which is unnecessary >> bernie sanders using capitalist now as an epithet joining us to discuss this and whether corporations will take a stand on china, another issue that relates to all of this in many ways, john hope brian ceo of operation hope. >> operation hope not operation and hope >> we're all hoping. we're all hoping, john capitalist as epithet. does that create enough light between the two of those candidates and is there light >> it creates greater headheadl.

i am who i am. first of all, i think they mean well. >> you think bernie sanders means well >> i think bernie and elizabeth mean well. i have a couple of people i have hesitations about, but i think -- i grew up in confidence south central. without capitalism and a banker teaching us financial literacy who was white, he came and taught me financial literacy my life fundamentally changed how did you get rich legally i wouldn't have been who i am in china, or in france, or in russia so it's -- people hate rich people until they become rich. >> do you think the people that you spend time with oftentimes in inner cities that you're trying to help think of capitalism as a good thing or they hear bernie sanders and they say, right on what's the prevailing view among the -- some of the folks you're talking to

>> we're feeding frenzies. most people who i have, 4 million clients, love it because they're participating in it. we show them higher credit scores, capitalism needs a software brand. >> pgrade. >> no, that's a clever way i understand what you're saying. at least you want to keep capitalism getting an upgrade. we shouldn't be surprised. he honeymooned in moscow we all know about bernie he's not a factor at this point. >> with all due respect, he's participating in capitalism. >> that's an understatement. >> people hate america well, go somewhere else. no one is jumping on a plane. >> don't say go back to where you came from. >> no one's leaving. >> i'm going to pivot. you talk about -- >> we have to make capitalism work for god's children. that's what i'm doing at operation hope.

>> hold on is that capitalism or -- >> free enterprise. >> free enterprise. >> free enterprise it's best embodied through -- capitalism is like democracy >> where are you then on taxes some people say let capitalism do its thing, free market do its thing but then on the other end the way -- the way to balance it is then redistribution on the tax side. >> let's see if i can get joe to -- >> go ahead. go ahead. >> i don't think it's about taxes, i think it's about aspiration we need to take the tax system and reimagine it grows the economy. tax me more but assign my revenue to massive internships, a gateway up massive apprenticeships, a gateway up, to thinks that grow the economy. people who have wealth resent it being thrown away. >> john always talks about the other side he doesn't talk about bringing down and trying to cap income with the billionaires, you talk about using it in effective

ways >> yeah. we massively agree on that >> incentive advise people for an opportunity you think i want to disincentive advise people for opportunity. >> i think he wants to tax people on the -- i think you want to tax more on the higher end? >> yeah. >> there's not enough. you have to go beyond that to really do some -- >> absolutely. >> right. >> now he's talking about taxing people more broadly. lower and middle income people >> you can't tax lower income people we're going to give -- >> we shouldn't be france, all right? you'll drive everybody out, right? but we also -- we don't want to be greece but we have to find a -- we need a ladder system like we've had 100 years ago. >> second question, talking about the capitalist upgrade that you always talk about. >> yes >> capitalism needing an upgrade. how should capitalists or american companies behave, this goes to the china -- >> freedom's not for sale. >> when are they supposed to speak out? >> after you have your first

ferrari you can speak out. if you have one ferrari, you don't need to be complying about having three ferraris. reality is the coach had a voice. he used his voice. >> gm, it wasn't even the coach. >> general manager he had a voice we should be applauding his independent voice. it's part of what made him successful in america. freedom, i commend silver for what he -- >> adam silver. >> i think he's in a tough situation. i think he made a balanced statement. i think that we have got to find a balance here our values can't be for sale we cannot put our economy -- our culture inside of our economy. that's what we're at risk of doing. it's not just the nba. we're playing a short game, china's playing a long game and they're cheating at the long game we're focused on money, they're focused on wealth and power. we're supposed to be smart you don't make money when you can build wealth. >> what should we be doing >> we should be standing up for

the thing that makes america the greatest, freedom and our values. >> what about companies that do business in -- and becky talked about it last week, russia, saudi arabia, you named the other country. president trump talking about the wonders of saudi arabia because they spent hundreds of millions of dollars buying defense products from us. >> respectfully, i think that that's wrong, my view. >> maybe we shouldn't be multi-national companies. >> oh, no, no, we should be all over the world. >> if china says you have to apologize and we're not going to run your games. >> china, when i stop buying you stop building so watch you talk. i think they overplayed their hand i think we'regoing to see them walking this back gentdly. i think we walked it back too much and i think that we've got to find a balanced view. we have to stand up for our own values you don't let a bully pop you in the face every bully i met was just that, a bully. when you pushed back, they went away china needs us more than we need them again, when they stop building -- when we stop buying, they stop building

china needs to understand we are in a collaborative global economy. we have to start using our mite in a responsible, ethical way. go ahead. >> john, you gave kudos to adam silver you think he should push back -- >> i think he's in a tough spot. he's herding cats. he has a lot of interests that he has to align. i'm just saying, look, when we have -- when joe and i have our first ferrari, maybe we should say we're successful enough and we can afford to stand up for our values i don't need four or five. when i was coming up i did a couple deals i was not proud of. nothing illegal, a couple of deals. after that i said i'm never going to do that again i'm proud to say i've been able to succeed without doing that. other companies can do that. >> you need one other car if it's a ferrari because it's always going to be -- >> in the shop. >> in the shop >> i don't disagree. >> push back. >> no, no, but which is this idea that some people may be getting ferraris, but there's a

lot of people in this country who have benefitted from the china relationship i'm not talking about people at the top, i'm talking about everybody else who goes and shops at walmart and gets much lower prices and has actually been able to live, dare i say, even higher standard of life, if you will, or at least higher standard of living as a function of those lower prices. >> which is exactly why every person needs to have financial literacy so you know the deal that you're locking yourself into president bill clinton did something that was poignant. that applies to so much. it's hard to get somebody to agree to the truth when the lie is paying their paycheck the tech companies are all about freedom in china. >> right. >> why are we having this -- why do we walk back a comment that the gentleman made of his own voice? he's not talking for the team.

>> right. >> call it what it is and have an honest conversation i'm willing to discuss we've never discussed this before. i'm not blaming anybody. this is unchartered territory. we've never talked about giving up capitalism in total by the way, maybe this is a constructive way of getting us to a point that we advance or upgrade capitalism. >> that works in so many areas, john when people are -- f for self-interest. enlightened self-interest probably in the end benefits a lot of people. >> absolutely. >> you can say why do we have trouble with teacher's unions? are they ever going to face the truth of what we need to do with our education system >> joe, this is brilliant. let's not just talk about what we're against, what we're for. here's two examples, kkr, yes, i said kkr and delta airlines. so pete starvos and henry kravitz has taken their industrial division and they have incentivized their workers making 20 bucks an hour with profit sharing

guess what morale goes up friction goes down delta is profit sharing. >> bastian is doing the same thing. >> when you've been around a town, get in front of a crowd, make it like a parade. we have got to find a way to let america share in the prosperity. unions should not be at odds with companies. >> john hope brian, appreciate it thank you. >> coming up, treasury secretary steven mnuchin that news making interview is up after the break. check on the futures right now we've compared the losses to 50 points on the dow we'll be right back. is the monolithic view of emerging markets obsolete? at pgim, we see alpha in the trends 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. more headlines about u.s./china trade talks keeping the markets on edge. treasury secretary steven mnuchin joins us first on cnbc. boeing's executive decision. the company stripping the chairman title from dennis mooul lenbe mullenberg the candidate versus the social media titan senator warren is dialing up the heat in a feud with facebook's mark zuckerberg. the third hour of "squawk box" begins right now live from the most powerful

city in the world, new york. this is "squawk box. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin the futures have pared their losses getting back friday's gains. it was anticipation of what happened friday. wednesday and thursday were solid. s&p just under 3,000 again for all the talk and bearishness we've seen over the last six months trading range has really been between 2800 and 3,000 on the s&p. we're back near the high end of that range andrew >> couple big stories we're talking about this morning directors of wework company the we company will be meeting as soon as this afternoon to discuss two financial rescue packages one under consideration will give soft bank effective control. the other will raise billions in

new debt with the assistance of j.p. morgan chase. we'll keep our eyes on which deal gets chosen saudi oil production facilities had virtually no effect on gasoline prices. this is interesting. at the time it seemed like it was a very big deal. the latest lundberg survey showing gasoline prices unchanged at an average of $2.73 per gallon also 24 cents lower than just a year ago. the strike by union workers at general motors entering its fifth week today the two sides did talk over the weekend but an agreement does not appear imminent. the uaw announcing it was raising strike pay for 48,000 workers by $250 a week to $275 the latest developments on the u.s./china trade talks which seem to now be up in the air all over again kayla tausche joins us with the latest. >> reporter: good morning, andrew friday marked a significant de-escalation with china which is calling the event simply progress over the next five weeks the

partial deal must be written a person close to the talks says another round of in person negotiations is likeliness to get that done before the apex summit in chile. president trump tauted the deal's agricultural purchases and currency transparency. licenses for huawei will follow a separate tract it includes less than the administration had been hoping china will lift operating barriers in three financial sectors. that's a small portion of industry openings that the u.s. had been asking for according to my sources for now tariff hikes are off and negotiators are suggesting they'll work to avert a scheduled tariff on september 16th. >> for more on the trade talks

good morning steven mnuchin. >> a lot of headlines. it's being finalized >>. >> we have the subjected documentation. it also includes very significant structural issues in agriculture on top of significant purchases. so i would describe phase one as quite substantial. the president has said as soon as we get phase 1 complete we'll move to phase 2.

>> one substantial thing that we've seen, the concrete thing is that the additional tariffs that were due to be imposed on october 15th have been put off by our side. is there anything that you can concretely say that this is going to be done by the chinese as a result of this or does everything still need to be finalized on paper >> no, china has agreed on agriculturago kucult tur that they're going to take off tariffs and they're going to start purchasing. they had been in the market but they had been stepping that up we'll be working very closely with them over the next few weeks to try to get this agreement to a signing in chile. >> one of the things i read in terms of the agricultural purchases is that the chinese side seems to be laying some conditions to that saying that any purchases would have to align with the need of chinese companies or state-owned businesses that they didn't think it would be fair to be asked to divert purchases from other countries like brazil in order to make these purchases and this is rich, they also think it should

be up to wto standards to not affect or influence any of those markets. was that your understanding in terms of what they've been doing from an agricultural buy point >> we did not discuss specifically whether they're diverting sales or not diverting sales. that's obviously up to them. we did discuss very specific targets. they're very big targets i think they had some concerns as to whether our farmers could meet those numbers we think they can. but we expect this is a great deal for our farmers. >> i'm guessing you mean the $50 billion that they had agreed to, at least that's our understanding of it. was that an up to $50 billion? like when a company says they're going to buy up to $5 billion back in stock? or is that your idea that these targets would be targets they would hit? >> it's 40 to 50 billion and that's the range that we would expect them to hit, although there is some scaling up to get to that given the amounts. >> mr. secretary -- >> and, again, short-term scaling. >> short-term scaling. let's talk a little bit about the additional tariffs for

december 15th that are also still being threatened to be imposed by the united states if there is not a deal that's reached between now and then, would those tariffstake place if there's not a deal that's actually signed? >> i have every expectation if there's not a deal those tariffs would go in place, but i expect we'll have a deal. >> what else can you tell us i know you had laid out there were things like intellectual property and some other issues that were hard -- that were negotiated during this what can you tell us about the overall structure and what you think will actually take place >> well, i think, you know, we've always talked about there's multiple chapters so in this case we've closed out several of the chapters. in the case of services we broke it into a financial services and non-financial services the financial services will close out this time. the rest of the services we'll deal with in phase 2. >> meaning closed out meaning that's not going to be renegotiated

>> meaning closed out, we've reached a fundamental agreement and now it's subject to making sure the document reflects that. >> how do you think that this will be enforced >> both sides have absolutely agreed to that there needs to be a dispute resolution and that it needs to have real enforcement mechanisms it's something we've talked about extensively and i expect that the agreement we signed does have a dispute and enforcement provision. >> my understanding of those enforcement provisions in the past and the real sticking points came that the united states wanted to be able to basically unilaterally decide whether china was agreeing china wanted to make sure they had a seat at the table. what's your understanding of what that enforcement mechanism would look like? >> we've developed a very extensive process. there's still a few words that need to be agreed on i'm into the going to go through the specifics of how the enfo e enforcement worked, but what we have talked about before is that both sides will set up large offices to deal with these

issues and my expectation is that most of these issues will be dealt with from usgr and china before it gets to actually an enforcement process. >> but can i just ask again. i realize you may not be able to tell me every word, a few words that are being negotiated there, but would this be an enforcement mechanism where united states would have the upper hand or where the two sides would sit jointly at the table >> i know you want the specifics of the chapter i'm not going to go through it but what i will assure you is it will have an enforcement mechanism that we can enforce and we're comfortable with. >> to me it sounds like we have agreed to not continue to escalate tensions between the two sides. it does sound like there's still quite a ways before we get to some sort of a deal that we can say this is an actual deal >> no, i don't think that's fair at all there is a fundamental agreement in principle we've gone through the chapters

many times there are still some issues that need to be worked out in wording but i would say we have every expectation that phase one will close. >> mr. secretary, related issue a little bit different than trade specifically but a lot of u.s. companies are watching both the trade war play out but also the situation with the nba play out last week and they're thinking through what they can and cannot say when it relates to doing business with china and doing business with other countries, frankly i'm curious where you land on whether you think a player or a team member or a member of the nba or any u.s. company can or should be able to speak freely about their views which might be at odds over this issue in hong kong with the chinese government and the implications of that. >> well, i think in this case you're dealing with issues of

people at the companies, meaning the nba, the nba itself, it has processes in china and this is up for them to work out. it's not for us to dictate what they should be doing but i would hope they work out these issues >> mr. secretary, i think part of the conundrum, of course, though is so much of what the united states represents is this idea of the first amendment and the idea that you can speak freely on these issues and yet obviously in china you can't and there are some people, including some of our guests earlier today who said, look, you know, from a values perspective, from a moral perspective they should be able to speak out and they should what do you think ofthat >> well, what i think is there's no question there are values and morals that the united states stands for and we try to push around the world on the other hand, there's different legal and political systems and we're not looking to change china's legal and political system what we're looking to make sure

is that as it relates to the issues that we're focused on, there are laws the laws are enforced. that people have property rights that people can have contracts but as it relates to the overall political system, obviously they have a very different political system than we do. >> what's planned at this point, mr. secretary, in terms of the next phase you going there? they're coming here? any details on that? >> well, the next phase is there is deputy level calls that will be going on this week. ambassador lighthizer and myself will have a principal level call next week with the vice premiere my expectation is we'll have the deputies meet between now and chile. my expectations are that we will be meeting with the vice premiere in chile before the presidents meet to finish the deal. >> two other quick topics before we let you go because we've talked a lot with you historically about bitcoin and libra. a number of the libra

associations or associate companies have dropped out including visa, master card, stripe in large part because sherod brown and brian shell tra and other congressmen wrote them letters saying if you don't drop out you're going to receive a lot more scrutiny. do you think that's a fair approach some people said those letters were threatening. >> well, i wouldn't give them too much credit because at treasury we wrote letters as well and we've been very clear i've met with the representatives of libra multiple times i think you know that we oversee finsa and we've been very clear with them, you can call that threatening, that if they don't meet the standards of our money laundering standards and the standards that we have at finsa, that we would take enforcement actions against them i think they realized that they're not ready. they're not up to par and i assume some of the partners got concerned and dropped out until

they meet those standards. >> also, mr. secretary, can we ask you about turkey and the threatened sanctions there where does that stand right now? >> i met in the situation room yesterday. this is obviously an evolving situation. it's complicated we are monitoring it daily we'll be having another meeting in the situation room this morning with the national security team. we'll be updating the president later today and we'll be presenting different options as i've said, the sanctions are ready when the president wants to move forward on them. >> at this point does it look like turkey has gone well beyond what they had told us they'd be doing? >> i'm not going to comment on those discussions but i would say it is a complicated situation. on the one hand we have turkey, who is a full member of nato and an ally with us, fighting the kurds who have helped us on isis and obviously we are very concerned about the humanitarian issues and we're monitoring it very carefully.

>> secretary mnuchin, thank you for your time today. >> thank you. coming up when we return, the candidate versus the billionaire. senator warren taking on facebook's political ad policy with some fake news about ceo mark zuckerberg. we've got that storey when we return meantime, want to take a quick check on futures they've gotten better as the secretary of the treasury was speaking dow now off about 50 points. nasdaq off 15 points, s&p 500 ayf about 5 points st tuned, you're watching "squawk" right here on cnbc.

welcome back to "squawk box. futures down 50. s&p down 5.5 points or so. senator warren using facebook in her feud with mark zuckerberg ylan mui has the story. >> reporter: elizabeth warren and mark zuckerberg are at it again. warren took aim over the weekend. she accused facebook of throwing its hands up and saying when profit comes up against

protecting democracy facebook chooses profit warren started a petition calling on supporters to hold zuckerberg accountable she ran an ad on facebook that claims zuckerberg endorsed president trump for re-election. that is obviously untrue but her campaign said the point was to test the limits of what facebook would let stand on its platform. the company recently said that it will not fact check content or advertising from politicians and that decision has turned into a flashpoint after joe biden asked facebook along with youtube and twitter to take down a trump campaign ad that was attacking his son. none of the companies did it but warren has taken facebook to task in particular on this the fight has turned personal. in a statement facebook said it believes political speech should be protected and that if senator warren wants to say things she knows to be untrue, they believe facebook should not be in the position of censoring that speech guys, between debates tomorrow night and zuckerberg's multiple appearances in d.c. over the next two weeks, i bet we're

going to hear a lot more about this issue coming up. >> ylan, thank you for that and more i want to get to joan stearns. joan salts mzman. >> good to be here. >> i was more fascinated by the response from facebook on this story than i was by what elizabeth warren did the idea that facebook is taking a position that it should be considered in the same breath with the fcc i thought was news. >> same. same you've had facebook saying we're not a media company. oh, hey, look, look at all of these other media companies being under fcc guidelines, under fcc regulation we should be held to the same task as them >> so what happens though? will they be as a result of this >> i think that what this really addresses is the fact that zuckerberg even said in that leaked audio that they see

elizabeth warren as an existential threat are his words. it's because of the threat that they are clapping back the way they are. >> do you think she's an existential threat to that company? >> well, if her mission to break up big tech is to be believed, then that would be existential instagram -- a lot of people don't even really understand consumers that use instagram understand that it's part of facebook which is stunning but if those things were to be broken up, split apart from each other, then that would be a gigantic -- that's where all of facebook -- not all of it but the majority of its growth is housed. >> can i ask you a separate related facebook question. we didn't talk about this before i saw you on libra have you followed this whole situation? >> i have been following the fallout of libra. >> is that a function of the hatred for facebook or is that something else >> i mean, i think that's unclear yet. we will hopefully find out more as zuckerberg testifies in a couple of weeks. i think a lot of that is many of these partners not really realizing before the partnership what kind of regulation would

come from this. >> i thought it was tone deaf on facebook and every one of these partners. >> they didn't expect it. >> did they not realize this was going to be the snap back? for the partners -- >> but was it doing business with facebook was the issue or the actual concept >> no, to be taking it a step further and say we're going to create currency and be part of your digital wallet. you had people concerned about the privacy and other issues. >> there are already arguments that facebook is a quasi state and one of the most powerful in the world. >> now you have a currency too. >> exactly you've already got this communication distribution system that is -- far surpasses any other sort of semi-governmental body you're defining freedom of speech issues. we don't want to define this you're getting into we'll also operate a central bank. >> it's going to be based in switzerland. >> correct >> different question, amazon, i don't know if you saw this they have a new policy manifesto out talking about everything from the minimum wage. they say it should be increased, climate change they think it's

real or say it's real. i think it is. regulating facial recognition. they say it is necessary is this all pr what is this >> i loved this post because it was line by line defense of recent articles and recent attacks that have come at amazon. >> right >> it was like, we're okay look at all of these things we're doing. everything from climate change to safety and counterfeits on the platform which "the journal" had a big piece on a couple of months ago you had them on there with the climate change and minimum wage. each of them point by point were going through we do not say the same thing. >> even if they felt like they were in a corner and they needed to say this? >> absolutely. >> does it change the dynamic at all? >> no, i don't think so. >> it doesn't? >> they didn't say anything new. that's the point they were responding to what they've already said piecemeal in response to reporting that's been done so far they wanted to put it all in one place and say, look, we are doing all of these great things

but none of it was new. >> this was after last week two big pieces on bezos and just more and more reporting coming after these companies on -- >> how much of this is about these -- the sort of monopoly issues and questions is that what this all relates to ultimately >> some of it was in that list i would say certainly the environmental stuff seemed to be directed at that certainly some of the minimum wage stuff seemed to be directed at that. even talked a little bit about acquisitions, facial recognition. some of the other stuff is genuinely trying to talk to consumers. on the counter fits and safety, talking to consumers how it was big but it's safe to shop on the platform. >> final issue, apple, facebook, amazon, google, their emails have been demanded in this u.s. probe. do you think we're going to see -- was there a lesson ten years ago never to put everything in email? are we going to see lots of crazy things come out in these emails >> i think i'm really excited to see them. >> you are >> i'm really excited to see

what they put in the emails. to your point, it's interesting particularly facebook they talk about how the future vision is encryption which speaks to the fact that those are things we would never be able to see if facebook is moving to an encryption feature you wouldn't be able to see consumer messages and executive messages, too. there will be things that come out. >> i'd like to see the emails today thatzuckerberg is sendin internally about warren? >> do you think he does? >> do you think -- you don't think he does it on what's app signal >> it's not a thread the new instagram app they came out last week that you didn't know about because they come up with a million things. >> you're my guru by the way what is the best messaging app with disappearing messages >> signal. >> you can message me after but no one -- i won't even know about it. >> now we will. >> thank you appreciate it. much more to come on "squawk box" including what's next for boeing following the move to split the chairman and ceo

roles. what should a u.s./china trade resolution mean for the next possible move for interest rates in this case that's coming up first, here's a look at the futures as we head to break. when it comes to your customers' expectations,

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welcome back to "squawk box," everybody. the futures this morning a little bit lower we did come in this morning to

the futures down by about 100 points now the dow's half that. it's down by about 55 points s&p futures down by 6. the nasdaq off by 16 coming off from some big gains by friday. of course, people wondering what to make of the trade deal. what we have and what we don't at this point additional discussions sound like they're going to be very likely from this point on. that's what we heard from treasury secretary steven mnuchin. when we return, boeing's executive decision the company taking the chairman title from ceo dennis muillenberg. how this will impact the future. as we head to break, take a look at u.s. equity futures one more time in case you missed it. as a principal i can tell you this. when one student gets left behind, we all get left behind.

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welcome back to "squawk box" this morning right here on cnbc. live from the nasdaq market site in times square. a couple stories investors are talking about. turning cautious as you might imagine on the stock market to the extreme. according to data from

morningstar, $60 billion pulled out of stock funds in the third quarter. highest number since 2009. separately, california utility pg&e had turned down an offer from san francisco to buy the power lines and other infrastructure within the city the $2.5 billion offer under values its assets. the company is working its way out of bankruptcy after being held like for california wildfires in 2017 and '18. lyft and uber have filed suit against new york city, right here, over new cruising rules for drivers. new york is limiting the time how long they can drive in manhattan without passengers the company said the rule does not effectively affect congestion and hurts drivers and riders. boeing stripping the chairman title from ceo chairman dennis mullenberg. what does this mean? >> it means that dennis mullenberg will focus on the day-to-day operations of the company.

there is a new non-executive chairman of the company. for dennis muilenburg, it means all of his attention -- the board has sent a very clear message. you focus on the day-to-day operations specifically on the max. we'll worry about the broader direction of the company they are now going to be led by a boeing director, a lead director, david calhoun. he becomes the non-executive chairman who is he? he has been adirector since 2009 he is a blackrock senior managing director. also on the board of caterpillar. briefly served as chairman of caterpillar. he has vast experience in terms of industrial company. many years of experience at ge including a stint running ge aircraft engines for dennis mule lenberg, he will focus on getting the max back in service by the end of the year they are sticking with the guidance to have the 737 max return to service in some

countries and some regions by the end of the year. he will be testifying on capitol hill on october 30th before then we will hear from him when boeing reports earnings next week. i want to show you shares of boeing under dennis muilenburg you might look at this and say, that's fantastic look at the blip at the end which is going back to last year when it was well over $400 since then, since the high, guys, the stock has lost about $30 billion in market cap. so that's the kind of hit that the company has taken and still a lot of uncertainty out there regarding the 737 max. >> all right phil, we're going to talk more for more on boeing, let's bring in jeffrey sonnenfeld, yale school of management in your view, what's the real meat on this move, on this story? it allows muilenburg to focus on the max and bigger issues get pushed up into the chairman's office or it's -- there's some

covering your butt on this as welby splitting the chairmanship is it a good -- should muilenburg be happy he can stay ceo? >> i think this is a win-win this is a great move for muilenburg and the board and the public, investors. this is a separation of roles, joe. i am not one of these gone governistas. it's not the panacea for everything the chairman of the 2000 era all of the crumbling companies, enron, they had a separation of roles already. it wasn't preventive it certainly didn't predict better governance. however, at time of transitions, ceo successions, general motors,

procter & gamble the best times are when they had people running cover for them. at caterpillar, david calhoun took on that role very successfully, quite recently until last year, at caterpillar. so i think it works well you know, there's a -- at raytheon in an earlier era, there was a great engineer who got the job earlier, tom phillips he created the patriots missile system he was ceo charles francis adams ran cover for him as chairman handling the regulatory front i think that can be a very effective partnership. it surely will in this case. >> i've known calhoun, dave, a long time. is -- what's the role of a non-executive chairman is he going to be more of a hybrid between executive chairman and non-executive chairman would you think, jeff >> that is such a good question, joe. one i didn't mention that you would know well would be the transition to the new york stock

exchange when john fein became ceo at a time of crisis after dick grasso left we had a ceo, somebody step in there who was a former citigroup ceo, john bank he was executive chairman. that is a little bit more blurring of roles. they're obviously quite hands on in this case a non-executive chairman is very little difference than a presiding or lead director, the role he previously had they're going to define it in a way which gives them a little bit more authority, gives calhoun authority. calhoun, 26 year career as phil mentioned at ge, aerospace, infrastructure. >> nielsen >> battle tested worst thing you can say about him, he was ceo at the evil nielsen which never gives us at cnbc the proper respect that we deserve. they don't do the daytime ratings right. that's the only bad thing you can say about calhoun.

the rest of the board has bench strength navy admiral this new safety commission is more than cosmetic the safety committee on the board is a very smart move. >> jeff, to the degree you think this was done ahead of this congressional hearing that dennis is going to be speaking at, do you think it placates the regulators does it placate those who were planning to make headlines over this very issue? >> well, i think that's a very interesting nuance to all of this because we do have at least two rounds of congressional hearings coming up and this ongoing interaction with the global regulators is quite an unwieldy bunch and the national highway traffic safety board, the faa and all the global regulators including china to have somebody that can take on that heat is great, but my own senator here dick blumenthal is pushing them hard not unfairly either. pretty fair pressure he's putting on the company wanting to hear from the board

you don't hear from random board members but you can hear from a chairman sometimes it's confusing bp, royal dutch, shell, others you're not sure who's speaking for the company. in this case they both should go forward to testify it's candidly making this company stronger what doesn't kill me makes me stronger i think the resilience from this, i wrote a whole book on this on firing back. this is just the kind of thing that they should be doing in terms of leveraging it they would do well to testify together calhoun brings elegance and drill down on technical specifics. having dennis mullenberg there would be an effective team. >> jeff, we'll see what happens. we want to get that -- eventually get the planes back up, get everything working again safely and -- >> yeah, there's been a little -- you can't dmie theny t

these horrible fiery deaths are terrible they're filled with shock, shame. this is a proud company. a lot of great engineers, great employees but this is not a point of pride that this has happened they're trying to figure it out. there are commissions after commissions, internal studies, external studies nobody's found any fraud and deceit the centralization of safety will help. i think they have a software fix for this software, the max, the mcas system that was on the 737 max that would confuse some people who didn't -- you know, part of the problem here that's not discussed, let me just put it out there, there's a new generation of pilots coming along that are less experienced. that wasn't anticipated in the training it can be perhaps confusing where you have 23, 24-year-old pilots and captains on board how you respond quickly. so this new software i think won't have the immediate reversion of the mcas system so

quickly. >> jeff, that's kind of a big charge though. you're saying operator error nothing wrong with any of the systems put in place even when some senior pilots who have had a lot of time behind the control panels had some complaints about this as well >> i think they're deafening issues where people can identify the problem, you're exactly right. if there's too much noise and distraction of too many alarms -- >> and there weren't alarms for companies that hadn't paid for the upgrade. >> well, see, that's a complicated story. take a half hour on that there are 900 vendors involved here rockwell collins had created there's an angle of alert system on how the plane lands no commercial airline system puts the angle alert details on there. you would find that in a military jet landing on an aircraft carrier there's an inconsistency signal

between the censors. that could have been on the instrument panel. >> right >> unfortunately unbeknownst to boeing, that was coupled together, these two devices, and then not put on the instrument pam. they didn't know there was that inconsistency between the sentences censors. >> i thought that was a feature that was sold to some airlines and not others am i misconstruing the fact on that >> it could have been purchased. again, that wasn't known to boeing that that was combined and separate it should have been on the instrument panel but what was the add on was the angle of attack which was intended to be a premium that is a detail that commercial pilot would never use on the -- you know, the angle of attack on how that's -- how the plane's coming in unfortunately, that did get packaged and that's the kind of thing where candidly i think in chicago they were learning about that only a little bit ahead of the public we're not sure how much it was known at the commercial aviation division in seattle, which is

part of the problem is was there anything known in seattle that should have been known at the company's headquarters in chicago? we're getting a little granular here, but frankly that's part of what they're trying to learn about and trying to centralize safety right now as of today safety is being centralized into the chief engineer of the company instead of being parcelled out into divisions. there's a guy on board, kevin mcallister in charge of that unit he was reasonably new to the company but he came on in 2017 in time for the faa controversy. the delays haven't been good either of course in terms of what the airlines have been hearing about when we'd be ready. that's in the hands of the regulators. >> phil, do you have a thought on that as well? >> just what jeff was saying you were saying, becky he's suggesting that it was operator error i don't think that's what jeff was suggesting i don't think anybody is saying that, but he brings up a good point. we have a world where there are more and more airplanes and a

lack of pilots out there, which means you have yunk gounger and younger pilots, particularly over seas. the question becomes are you doing everything possible so that they are not overwhelmed in the cockpit when under these situations comes up. >> let me push back. part of the entire story was boeing was looking to call this the 737 maxine though it was a different airline because they wanted to make sure you didn't have to have additional training before you could fly this plane. >> true. that's true. i think you and i are on the same page here, becky. no push back here. what i'm saying is it was not operator error but it did play a role, the pilots were overwhelmed, that is clear that played a role in these two crashes. >> got it. >> that does not mean they're responsible for those crashes but it does get to the question of how will the company deal with the cockpit for pilots in the future because there is no question given the shortage of pilots around the world that five or ten years from now as airlines

add more planes and more flights, they're going to be putting people into these planes who don't have as much experience as a pilot maybe 10 to 15 years ago. >> understood. >> beautifully said, phil. that's exactly right. >> tom -- >> go ahead. >> thank you very much when we return, what will a trade deal with china mean to the fed? will a resolution change chairman powell's path on interest rates we'll have that discussion next. right now though as we head to a break let's check out the futures this morning dow futures down by 61 s&p off by 6 the nasdaq off b20 quawk box" will be right back. (gasps and screams) i got in! yes! woah! oh yes yes yes yes! to start a college savings plan, find an advisor at massmutual.com ♪

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we made substantial progress last week in the negotiations. we have a fundamental agreement. it is subject to documentation, and there's a lot of work to be done on that front but it includes intellectual property rights, it includes financial services, it includes currency and foreign exchange and it also includes very significant structural issues in agriculture on top of significant purchases. so i would describe phase one as quite substantial. as the president has said, as soon as we get phase one complete we'll move to phase two. >> okay. that was treasury secretary steve mnuchin on air the u.s. and china making progress on landing a trade deal what will a resolution mean for the fed? that's a huge question on the table. steve liesman joins us with potentially the answer or at least a thought. >> andrew, the fed is going to

likely look at this trade deal with a certain amount of optimism and skepticism. perhaps moving in the right direction or at least not getting worse. there will be skepticism any damage that's been done will be quickly undone and a desire to see an actual signed deal and positive impact show up in the economic indicators. three things i think the fed will look for, stability in the trade regime for the united states reduction in uncertainty and a turn around in economic indicators that have been affected by trade. economic policy and uncertainty is measured by the university of chicago steven davis running at a seven-year high and trade seems to be a large part of it as uncertainty has risen, ceo economic confidence has declined most of the trump bump is gone except for 44 points this has led to a capital investment all of this is not trade but a bunch of it is thought to be the question now can a deal undo the damage that's been done? for the moment the market is confident in an october rate

hike but has been pricing out one in december. >> thank you, steve. >> what do you think >> i think it's going to confirm what the fed's been doing. a lot of people want the fed to front load the -- its policy because of potential damage but if this can go away with a deal or at least partially go away with a deal -- >> do it. >> it will address the impact of it rather than front run the idea. >> that's interesting. the deal itself putting off the idea that the fed would act sooner, wait and see what happens in december? >> right it's worth saying that if the things that are being talked about happen, there could be economic up side to it, like the intellectual property thing that will be beneficial. >> of course. >> some of the other issues, the currency thing when china subsidizes it industries, it is a positive actually for united states consumers depending what you're consuming, for example, cheap steel is good for people who use steel in the united states cheap goods, some people lose their jobs here in the united

states but it is an economic inefficiency overall right. so if china stops subsidizing what it is doing over there, that would be a rise in global economic efficiency over time. >> steve, thank you. >> thanks. >> for a check on the markets, let's bring in samir samana at wells fargo investment institute. samir, you think that we have seen all the gains we're going to get this year why is that? >> we do, becky, just because if you look at the trade deal, it is probably a political win for both sides, which we're in need of such a win. unfortunately, just doesn't mean a whole lot for s&p earnings, probably doesn't mean a lot for economic data, at least not over the coming months. from our standpoint, you got good gains, in calendar year 2019, even if you stretch back to q4 last year, they're not spectacular. >> that's my point we have gone nowhere in a year. >> absolutely. unfortunatel go anywhere in a year. that's why we're so cautious now, with this deal in place, probably doesn't do a whole lot for earnings, we're leaving the

existing tariffs in place and you don't have the certainty that businesses need, like steve mentioned. >> we were expecting another round of tariffs or heightened tariffs to go in on october 15th, tomorrow that's been taken off the table. maybe that gives companies a little more certainty. >> it is possible. but the trk tricky part is a lo these came about a few months ago, the trade issue with the new round of tariffs the tricky part is it is addition by subtraction, you announce and then push them off. that's one more thing where do i order inventory now, wait three months, wait six months, is there going to be a grand deal, a reescalation it is how quickly these things move around. >> that uncertainty has been baked into the market at this point, no? we're looking for earnings decline of 4.1% if you believe the consensus estimates. earnings may come in better than that when we start getting them this week. >> the tricky part is the

earnings for this year probably reflect that if you step out to next year, there is pretty healthy growth rates, especially if you look at for small companies, russell 2000, analysts are still expecting north of 30% earnings growth for small u.s. companies. that's going to be hard to hit if you a lot of tariffs still in place and the economic data continues to be as sluggish as it has. >> so that's where you are least favorable when it comes to the small caps, when it comes to domestic large caps, you're neutral on that sector >> we are. we're still playing it pretty cautiously they tend to be lower quality, tend to have fewer levers to pull we're also underweight high yield, we think credit is overdone, spreads are tight, we would take some of those dollars and put them in large caps, because again those are the companies that have the most, you know, flexibility, in terms of navigating the global environment. the growth isn't in china, they switch to india or some other parts of asia. we want to try and play it that way until we get more clarity. >> some of the sectors you like are the ones that are caught right in the middle of the trade

talks or anything else that might come down the pike including consumer discretionary or technology. >> unfortunately right now that's where the growth has been we have been kind of slowly stepping back a little bit so recently we downgraded industrials. we downgraded energy we upgraded reits and utilities with the thinking that income at this point of the cycle becomes more important, maybe rates aren't as much of a threat so, yeah, we had been leaning cyclical, dialing it down. but, yeah, it is something where we continue to kind of evolve towards a more defensive stance as the cycle does mature that's the other part of this, even if there is a trade resolution, you got politics coming into focus next year and the fed is done cutting, you also have to try to figure out what is fair value for equities in that environment. >> financials, the other sector you like, even at a time when the fed looks like it is going to be lowering interest rates again. >> so the tricky part about financials is, people feel this way, they're so cheap, people are looking at them as this is one area that maybe has some

room for catch up in the off chance that there is a rotation. the tricky part for financials has been the curb continues to flatten, continues to remain invert in certain parts of it. again, they probably don't do a whole lot until you get the curve to resteepen but there probably isn't a lot of downside in financials either with financials, a lot of people want to be early as opposed to being late. >> samir, thank you. good to see you. >> thank you coming up next, a papal blessing that led to a big win >> what? >> yep. >> one of your picks >> not yesterday, no don't miss a "squawk alley" guest later this morning, nasa administrator jim brydidbridens. lisa jones! hey carl, what are you charging me for online equity trades?

laughs/umm.. and do i get my fees back if i'm not happy? like a satisfaction guarantee? ugh. schwab! oh right, i'm calling schwab. thanks carl! wait, lisa! lisa... are you getting commission free trades and a satisfaction guarantee? if not, talk to schwab. a modern approach to wealth management. ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪

this is out there, brought to my attention by the incomparable darren revel, our friend i guess the pope was talk about some of the new saints that -- >> i did see this. >> they do make -- you have

saints, you have to go through the process. anyway, now, you combine that with twitter and it has millions of followers his official papal account tweeted today we give thanks to the lord for our new saints and then #saints with the nfl's new program for emojis they put the new orleans saints -- >> the fleur-de-lis. >> the fleur-de-lis, the new orleans saints they walk by faith and now we invoke their intercession and the saints were able to beat jacksonville 13-6. i don't think the pope really meant -- >> it is what happens on twitter with certain words, people pay for the -- >> exactly. >> used the word and the emoji as well. so -- >> it adds the emoji i don't think he put the emoji there on purpose if you write the word, it adds the emoji. >> he meant to canonize saints but new orleans got a bonus, a

papal blessing and a win. >> well done well done. by the way, tomorrow on "squawk box," we'll be debuting our new set in times square. we'll be back downstairs with times square and all the people walking around, right behind us. and we're excited about it we checked it out last week. >> it is going to look cool and we can all hang out together because we can see each other, we can look at each other. joe is looking forward to looking at this -- >> the stuff that has been going on outside of the ground floor in times square -- >> that's a reason to watch. >> you do not want to miss this. you're likely to see just about anything >> yes, you are. >> i'm not kidding it is really good. >> if for no other reason to tune in, do it for that. it does look good. >> tomorrow. for all of that and more, "squawk on the street" in the meantime, begins right now ♪ let's get it started let's get it started in here ♪ ♪ let's get it started let's get it started in here ♪

good monday morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, morgan brennan. faber and cramer have the morning off. it is columbus day banks, government offices, bond markets closed, futures red as the chinese not only don't refer to a deal in their talks, now reports they want more meetings before signing anything. earnings kick off this week. europe watching brexit hopes fade a bit oil down nearly 2% road map b