tuesday, october 16. the day after yesterday, which was the 15th "squawk box" starts now. >> announcer: live from new york where business never sleeps, this is "squawk box. >> good morning, everybody welcome to "squawk box" here on cnbc we are live from the marketsite in time square let's look at u.s. equity futures now. we have improved from being down about 100 points right now, the dow future is down around 43 points. a lot ofdown components out yesterday. a lot of better than anticipated earnings >> yesterday, we were trying to pair triple digit losses at this point and it was up 300 points

earnings can make a difference >> they do make a difference there had been expectations that this would be a lousy earnings quarter with a decline that hasn't been the case in the numbers we have seen most of the numbers were in by the end of this show we were still down what the hell happened we paired the losses we wrbt doeren't down 100 but h those. >> hearing the conference calls. >> the info was there. i was looking for china headlines. there really weren't any that was after wednesday, thursday, friday and monday and tuesday. kind of interesting because there is a lot of negativity

the latest thing i saw was the dooms day warning about what negative interest rates and more qe and where we are in the cycle and what that could mean we've never entered in that befo before we've thrown everything into that >> so you are worried? >> i don't know if i'm worried we don't have stock unless it is comcast. i don't know >> in the meantime, bank of america is out with the split. there are yields that make it so attractive so go higher in equities

paying higher yields forget about 60/40 load up on equities. i thought it was an interesting call >> for yield >> you say for you >> no. for yield for yield. really significant, you are in threat of losing the dividend too. >> in asia, the nikkei up 1.2% if you look at what's happening in the european markets, you'll see things are a bit mixed

the ftse and the cac a bit weaker the dax is up .2%. looking at the treasury market, this is part of the reason bank of america has that call 10-year yielding 1.763%. two-year at 1.590. >> taking a look at the crisis in hong kong carrie lam forced to deliver her policy address by video after bei being heckled by prodemocracy lawmakers on the floor she pledged to adhere to the one country, two systems act she focused on policy system and housing calling it the toughest

issue saying the available of affordable housing was a key and introduced a slew of measures and access to mortgages. >> interesting, we are having the same problems here >> here as well in metropolitan areas. do we think that is a functional issue? it is a piece of the issue >> i was thinking how come we haven't realized this could be the fuse that is hit finally for main land china and coming into the 21st century almost everywhere else, everybody knows what everyone else has i don't know how long can you keep people in that position

they are getting a lot of benefits middle class is growing quickly. you wonder when does it -- you watch what happens people want the same things don't they in their life is this the beginning? >> the people in hong kong tasted freedom >> and other people know about it >> to tell you what is going on with chinese ministry. it is all related. issuing a strong warning to washington after the house backed measures backing pro democracy movement in hong kong. china would expect quote, strong housing measures coming up strongly against the united states. >> i don't think anyone is

saying anything. is there any teeth in this is it just a show of support >> this is don't bad mouth what we are doing over here in the same way they told adam silver >> i'm expecting a call. every morning we talk like this. >> i haven't gotten the call yet. >> the top 12 -- the 12 top presidential candidates. why are some of those people there? they faced off in ohio two of the biggest issues were taxing the wealthy and health care >> sometimes i think senator warren is more poe cussed on being punitive or pitting some

part of the country against the other instead of lifting people up >> i'm really shocked at the motion that anyone thinks i'm punitive i don't have a beef with billionaires, you make it to the top. the top .1 of 1%, so pitch in two cents so every other kid in america has a chance my question is not why do bernie and i support a wedge tax, it is why is it everyone else on this stage thinks it is more important to protect billionaires than the rest of the population >> one correction to senator warren no one on this stage wants to protect billionaires we all just have different approaches >> health care was a hot topic

>> let's get to medicare for all and be honest. we spend twice as much per person as do people of any other major country on earth if we have the guts, i would like to see the democratic party have the guts to stand up to the drug companies and insurance companies and steal thto tell te function of care is the care of the people >> we can do that without medicare for all but having a public option. we can and we can afford to do it >> you have to take on the greed of the health care industry. >> the green and profiting of those insurance companies. they are as much against my bill

as any other they were strongly against obama care and the right to choose as they've negotiated health insurance and they want to keep it >> really? okay we'll show you more of the business issues later in the show i thought it was weird that nationals were playing >> and they won. >> they clinched they swept baseball weird. >> i saw a lot of people on twitter saying, are you kidding me, you are watching the debate when you could be watching the nationals. more fall out after a sexually charged speech by bill fisher announcing michigan department

and philadelphia board of pensions pulling from the fund fidelity investments is reviewing. retirement funds in iowa, mississippi and florida are reviewing those as well. fisher apologized for his comments in which he compared trying to gain a client's trust to getting into a girl's pants and many other questionable comments >> and as we head to break, a look at the biggest pre-market winners and losers in the dow. at synchrony,

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>> welcome back this morning we have an update on the wework. as the world turns here. investors holding the discussion over jp morgan to keep the office running wework leaning towards a

financing package with jp morgan rather than selling to softbank. after the many, many calls i was making, i'm not sure that is the case either. an independent committee that will make its own decision i think there is a view that the softbank offer may by better than the jp morgan offer i think this will all shape up in the next 48 hours as you know these things were so fluid, they could change >> making sure the company was a public company there is a board committee that is supposed to represent the

minority of the majority and they will bring whatever the deal they like to the larger board. i also know there are separate conversations with jp morgan trying to still reach out to folks on the debt side who would buy some >> private company having a huge impact on that market and seeing what kind of impact it could have >> you could just drop this whole thing and for goget it from my understanding, because of who he is and the way he thinks, this is not good money after bad or trying to save the investment he has a view about the world and the way we are all going to be working in this communicatal

work >> between wework and uber, he better figure out something. >> given the size and scale for him, if i'm doing this, i'm doubling down on this view of the world. >> so doubling down on the never ending growth. that's never going to work >> if you could get it to the point where it is a $10 or $12 billion company. >> the question is what is jp morgan doing and the role and the way that is structured, he could be leave this i've been baffled what they are about to do would enable it even more >> earnings season giving you a

boost. chief investment officer here on set and senior portfolio manager. you pointed out we are only 2% below at this point. i want to start talking to rob i like what you do you can talk stocks and bonds. so address me this earlier, we were talking about the idea that this was unprecedented with all of these negative yields around the world. you say you are still comfortable with fixed income and that doves are firmly in charge did central bankers put us here on did the economy of the globe put us here now?

are they manipulated or should we be here and it is all natural? >> central bankers are respondi responding to the environment. >> it is a new tool. another tool in the tool box i think there is a valid question of how smooth the business cycle should really be. there is a cycle of burning things down and building them back up. >> if stocks down down 10% monetary policies in this country will change and bonds will do well so there is room to have diversification. >> you are saying it is a tool all those credit backed stri instruments were tools also weapons of mass destruction

we have had a smoother business cycle than we would have had in the monetary policy. >> for sure we are going to learn things in some sense, this is experime experimental 2% seems low it is tough to get there that's the latest word that this is going to be one of the slowest years in brother it is tough to bet the best house in the neighborhood, not

including china. it is tough for us to grow here if the rest of the globe is that slow. >> i don't think that is really the issue. the u.s. economy is more of a closed economy than people think. a percent of our economy, trade is smaller for us than most developed nations. i think we have the resilience here even if the rest of the world is slowing down. that's not my concern. >> you don't like fixed income either unlike rob, do you? >> i think bond prices are historically high and is supported by the central banks if we suddenly see change, you could see a really big sell off in the bond market i don't think that's going to happen

i think you are right but it is a risk bonds are expensive. they are not going to get cheap soon but they are expensive. they are making stocks cheaper than they are right now. they are going to be muted positive but muted >> as a result, you like government we went the other way. we decided the spread is tightened up especially through the summer you weren't getting paid to take the risk the government is 1% less. that wasn't worth it saying, you are not getting paid for the corporate bond risk, at least you are getting the first time >> rob, no relation?

>> no, no. i won't sing ♪ ♪ i sing time in a bottle and i sounds just like >> prove your point. >> you've made too much fun. i got a name is another one. >> i don't know that. >> yes, you do >> sing it >> rob, thanks rob styler, steven tyler no relation there? >> no, no. >> thank you wow. >> commercial break is a good idea thank you. >> when we come back, drug distributor. stocks are on the move after new reports say settlements over opioid cases could be near

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>> welcome back. it istime for the executive edge we are watching shares of drug disstrib tors after reports of a potenti potential settlement over opioid epidemic >> some of the defendants are in talks. the three stop drzrib tors are close to a settlement of $18

billion. the companies are among more than a dozen defend enters along with major pharmacies like cvs and wall greens and a drug maker, they are due to be in court on monday. >> to avoid paurt pating the $18 billion settlement would address lawsuits more broadly. reporting johnson and johnson is in talks to contribute additional man shares a money. >> shares are up and maybe less than what some have feared you hear $18 billion, you don't think of that as good news but they were expecting even more. >> three companies over 18 years, that's a billion a year

that doesn't sound like. >> but if there is releif on this >> they are in talks, so it is not necessarily a done deal. bloomberg reported that they had offered 10 and the state came back with 45 we'll have to see how this thaks out if 18 will be the number >> thank you looking at mckes son the number is so big >> the earnings there. >> do you have any thought on elizabeth warren and comments made >> nothing new they use pharmaceuticals as a punching bag but they don't advance any new ideas. in terms of medicare for all and they don't push more on that >> so joe can sing coming up, big news from the las

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>> welcome back. you are watching "squawk box" live from the nasdaq marketsite in times square. >> good morning. welcome back watching u.s. equity futures they've been a little weaker yesterday, we saw the markets up sharply in the morning hours pushing the markets up over the starting points. we do have earnings seasons

including bank of america. s&p down by 5 points >> news on the las vegas strip mgm selling circus circus for $825 million to the owner of treasure island. saying the company wants to make sure, quote, if and when the next recession comes we have a fortress balance sheet also formed a joint venture with blackstone to acquire bellagio valued at 4.25 billion >> is it just raising cash for a hotel that is probably not their bread and butter >> what would you do in las vegas? they tried circus circus for

kids and amusement parks how do you get people out there? you to bring celine out. you have to bring weed out you have to. >> the high end of what's going on >> and mushrooms >> there is more revenue on f and b, feood and beverages. >> that is impressive for me >> f and a >> never mind. >> i don't know where this is going. streaming wars set to record after the bell today. later, you don't want to miss our squawk news maker.

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. >> welcome back. disney unveiling news. in the line of dropping the same week of netflix earnings joining us now to discuss whether this is an inflation point in the streaming wars. former chairman and ceo of showtime what are we going to hear today? >> i think it is a preinflection point. the amazing thing to me about all of these new streaming services is the amount of time spent talking about them none of them have watched yet.

a lot of time to get centered in the marketplace. the inflection point nearly two years from now >> has that already happened with everyone paying to get content? >> that's not an inflection point in terms of what these businesses can really be we don't know how successful they'll be the question is, a year from now, if disney has 30 million subscribers will they be the same value as netflix? >> what is your thought? >> think thought is no >> my question is, has netflix stock seen its highs for the

rest of eternity >> i'm not an analyst. i think with all of these players in the business, you'll have more of a standard. >> how did the big bowls sort of fend off this crowded field. >> you have to give them tremendous credit for doing that >> i think at this point, in that size. >> that is a slow bleed there. everybody matures eventually >> you look at the margin. disney a year from now with 30 million sub describers and say, a, that's a success. what is success for disney >> in the early stages, that

will be how much subscribers you have at some point, you have to look at what are the transfer economics. with the type of costs involved. so here is my legacy question before you go. at&t, a lot of debt. activists involved now what do you think happens? >> not everybody is going to be successful if i had to bet, i'd bet on disney they have an existing franchise that is successful that is called hbo they go into these businesses with an existing success story >> great to see you this morning. we'll be watching netflix's

earnings report this afternoon >> still to come, bank of america's earning report coming in minutes before we go to break, a quick check on the european markets. the dax is higher, the cac and ftse lower we call it the mother standard of care.

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welcome back we are awaiting results from bank of america. joining us is equity analyst and our own mike santoli is with us as well this is a bank that is sensitive to rates it will be interesting here. >> absolutely. the stock was up 2% yesterday. also higher yields i do think that almost matters

more >> ken, why do you have a hold rating on this stock >> we have lower rates, that means net rates are coming down. spreads are narrowing as well. capital markets yesterday was not a great day. even though bank of america is a u.s. centric bank. a lot is happening mortgage refinancing this company and management has a stake in the ground from the fed, that's 1% in reduced growth whether 1% or 2% in their guidance, they have you got to focus on the other businesses. in the last quarter, they had the best performance in equity underwriting yesterday, was a great day >> maybe they'll out perform

again. ipo proceeds were down possibly, that could be one of the negatives. >> what would impress you? >> the consistency and their ability to take share in consumer banking and wealth management bank of america is building local financial centers. more a kid for the small business growth not on line banking. >> we learned berkshire hathaway has requested to buy more. >> i think that's the story. it is not necessarily we want to buy a lot more like with wells fargo, they own a stake. the buy backs are in the relative position. >> let's get to wolf, what do

you see? >> the beat is 75 cents reported compared to an adjusted consensus of 58 cents or whether it is 54 adjusted for sustain a con sen sis of 51. either way that leads out to a bet of an eps beat revenue coming in at $23 billion against the forecast of $22 billion revenue is that it is essentially flat year over year. citi, wells fargo flat that highlights the general environment. this is an example of a bank very tied to the yield curve the net interest margin came in a little bit better than expected, 2.41% down four basis

points many were worse than that. on top of that, net interest income is better than most rivals yesterday because loan growth was strong. the net business income came in in line with expectations versus others being a little behind it was up 1% yearfact, bank of has a slight increase in net income and i don't think any of the others did yesterday onto the fee income. the trading is kind of in line with expectations. they didn't really get the beat in the fixed income commodities and currency trading that the others did that was stable year over year equities was up 13% year over year the beat they got in fee income which helps them a little bit was investment banking revenue that was up 27% year over year i mentioned that particularly

for them even though it's not a huge part of the business. it does show that disappointing performance for goldman sachs yesterday. down year over year. they said they had a strong backlog coming into the next quarter. when someone like bank of america has such an increase year over year to goldman sachs, it definitely highlights the hold there bank of america up 1% had a good day. alongside the rest of the banks. this is a decent beat telling all believers they can expensing growth where they can where they expected 13.1 billion. not seeing as much of an impact at the yield curve as some might have expected. >> comments from brian moynihan, chairman and ceo talking about responsible growth how they were able to grow and refurbish offices, keeping expenses flat that kind of points to some of the things that you were looking at, particularly with investment banking. being strong looks like they're stealing market share from others. >> they probably did great in

debt underwriting and including ipos they probably did better than goldman that's a plus. >> is there anything that you see here that you would upgrade the stock. >> we would not. >> what would you have to see? >> one of the factors is they're very efficient their efficiency ratio is 57%. there isn't much delta to get more improvement there they're doing smart things to improve the business, but when you look at the outlook for banks it's very difficult when you have 45, 50% of your net revenue and net interest -- >> you don't like the banks overall because of what the federal reserve andother central banks -- >> strategists will look at this as financials and cyclicals. joe has mentioned in the past, regulated businesses and you have the flattening yield curve, it's really tough at this point in the cycle. >> right now the street likes it it's up 1.4% gains of 2%. >> what would impress you you said my thought was controlling what they can control

that's literally in brian moynihan's quote today they're focusing on what's controllable a lot that's not controllable is the interest rate backdrop and the premise is they still look cheap. book value is $27 a share after this quarter 1.1 times book if we're back in a market that's going to start to try and get more cyclical and reward companies geared this way, you have massive buyback that's underway and they're going to continue to buy back a ton of stock. it's not that exciting, but it sort of supports the stock where it is. as i said, this is the fifth run to $30 a share in the last two years. see if it can crack it. >> wilf, what do you think >> it now feels like jpmorgan was an outlier to the up side and goldman sachs an outlier to the down side in terms of year over year. jpm plus 8%, goldman sachs down 6% citi, wells fargo, bank of america, three giants in this space all flat essentially revenue year over year

that highlights mike's point there's not a huge amount going on for the sector as a whole but the stocks are cheap they're buying back stock so they can continue to pull some levers the question is how many more quarters can they pull those quarters and that be enough of a driver for the stock price without top line growth as well. >> great wilf, thank you. wrapping things up with what we've seen on this mike, what else do we need to watch on earnings? we have the financials largely in. >> believe it or not, the thing to watch is the overseas markets. european banks are working that's maybe a change in tone and obviously we're going to look ahead to netflix because it's massive it's a singular company but it's a big sentiment tell in terms of how those numbers are received. >> ken, i'll just ask you finally, too in terms of what you think having seen all of these banks that have reported at this point, what's your take away >> well, the first thing, there's a relief we haven't had 15 years forward

banks report in one day. we still have a buy recommendation on jpmorgan and we downgraded goldman sachs yesterday from a buy to a hold these great strategic long-term plans, we're not going to see profitability from those areas for a long time. >> ken, mike, thank you both wilf, thank you. we'll see you soon. coming up, a big lineup coming your way. >> huge. >> you're not going to want to miss these next two hours, seriously. they are so amazing. including the co-creator of libra, senator david perdue. >> say it with conviction. >> nothing to do with chicken. leon cooperman and oscar munoz here's the futures right at the moment who says our bank isn't tech enough? everyone, look at your phones. the design thinking, the digital engineering,

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china pushing back what's at stake with your trades in the investment war. facebook is fushing forward with crypto war. the blockchain efforts and co-creator of libra david marcus joins us with a news making interview. plus, democrats battling over taxes in last night's debate we'll get reaction from senator david perdue and talk tax, trade and much more 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 welcome to "squawk box" right here on cnbc live at the nasdaq market site in times square. i'm andrew ross sorkin along with becky quick and joe kernen. take a look at u.s. equity markets. day two, three of earnings season. >> feels like day two. >> dow will open down 35 points. nasdaq off 15 and s&p 500 looking to open off 5 points. bank of america beat estimates in both the top and bottom lines in the just released quarterly reports a 27% increase in investment banking fees and strong push up in consumer banking. shares of united airlines are higher

the airline reported better than expected earnings and revenue and raised the full year outlook. mortgage applications up half a percent last week from new figures from the mortgage banking association. refinancing jumped up but that was offset by new purchase applications the average 30-year mortgage rate edged higher by 2 basis points it's now at 3.92%. earnings season in full swing at this point. joining us to talk about what investors can expect is anna stash yeah a.moroso and mike santoli. you're looking at what's going on and you think there's a chance the markets can pick up growth if we continue to see earnings coming in with better than anticipated numbers >> yeah. i actually think the market currently is not pricing in the growth that's going to rebound in 2020. if i look at the average forecast for 21 gdp it's 1.72%

to translate into terms we can comprehend it's about the level of 50 on pmi you're telling me pmis are not going to pick up into next year. that's what the market consensus was pricing in i don't think that's quite right. i do think the monetary policy, which really moved into easing mode, is going to work with the lag and by the first quarter of next year, by march of next year we could see that pickup in pmi. if we do rebound from the sub50 levels, something like 53, 54, that's going to drive earnings reacceleration the market really cares about not just the level of earnings but earnings revision and revisions have been cut down significantly. so to the extent that they start to get revised higher as the pmis come in better, that's the up side. >> i agree with you on most of that but i don't know that you're going to get too many ceos on conference calls saying, hey, we're expecting great things because they're uncertain about so many things taking place even if the numbers are going to be better i'm not sure you'll see too many

of them sticking out their necks saying that's the case. >> i don't think you see that this earnings season i do think you see that over the next six months but you really have to watch the data rather than the corporate guidance. i think you're right, it's going to be on the conservative side i think what's encouraging about the earnings season is earnings estimates have been cut down also the number of negative preannouncement is higher than the 5-year average it suggests to me a lot of negative guidance has already been put out there so that makes us more encouraged on the potential up side and the potential beats from things like technology, for example. i would also say financials and health care also two other sectors that i think could see up side as well. >> mike, what do you think >> i think growth expectations embedded in the market have been beaten pretty low. we're at a point especially through august and with this tiny pull back in october where just normalizing investor positioning and sentiment and growth expectations i think gives you a little bit of a tailwind the market yesterday kind of suggested that

essentially united health care as an example of a stock that just popped huge on, yeah, sure, good numbers but because it was cheapened, because exec pepectas got very low european banks acting better this idea that yields are lifting from very low levels if you can believe that that has a little bit of force behind it, it probably does give cover to this idea that -- and that's, by the way, i think the term of this trade doesn't matter too much to me the most immediate concern was an intense hard landing in china and another leg down if you had been data turning for the better it insulates you for the outcome. >> you think that's the case even if the china trade deal never actually is finalized or formalized or anything there's tensions that are still popping up with the u.s. congress saying they're in support of hong kong protesters and china getting mad about that so who knows where this goes. >> yeah, i mean, it's definitely not a done deal and i think a lot of the optimism around a

mini deal has been priced in i would say not enough optimism about signing the agreement and getting any sort of grand bargain has been priced in the thing i would come back to is the election calendar that's upon us. with economic data slowing as much as it has on the manufacturing side, i think there is a desire really from both sides to put some sort of a floor underneath this economy so so i suspect the news flow on the trade front is going to be more constructive. >> the other thing is the fed, right, cuts twice. market thinks you're getting another one. maybe a fourth what was the pain that was extracted from the u.s. economy in exchange for a full percentage point of fed rate cuts i think the market is trying to see through that and say, you know, we might have gotten a little bit of a freebie here in terms of the domestic economy and what the fed did in response to it. >> interesting call from bank of america, 60/40 portfolio, 60% equities, 40% bonds. yields are so low that it's not

worth it you can get higher yielding equities >> look, i think it's a very accurate call. a lot of the equities out there pay more than the 10-year yield treasury today as mike was saying, a lot of the growth expectations embedded in the 10-year treasury yield are quite low as well. they're concisistent with the 1.7% to the extent we see growth improve you're not going to be all that well-served hiding out in the 10-year treasury. i think they're looking for yield in cyclical equities is a very interesting proposition take health care, for example. here's a sector that offers you above-market yield where they look at u.s. health care, european health care it has been beaten up quite significantly due to some of the regulatory proposals. >> in some cases it's a pretty good thing it's been beat up because they're worried about changes that are coming from the politicians. when you look at the democratic debate last night, you would have to agree there's a huge risk potential for a lot of these names. >> here's what i would agree

with, that it is very unlikely that either of those sweeping changes are going to make it into law whether you talk about medicare for all, drug pricing, these are big and important proposals, however, the legislative odds of them getting enacted are actually quite low so when i look at -- >> elizabeth warren said she would do what she could with executive order. she will take and run with that. >> you can do a lot with executive order on the regulation front but in order to pass sweeping changes you need to have a sweep of both houses of congress. that is not the scenario if you get that, we need to readjust our thinking but at the moment if i look at health care, it is discounting trading at a 20% discount to the market which is at the depth of, you know, some of the fears we had about affordable care act and health care uncertainty a lot of the worst case scenarios has been priced into the valuation. i would say especially in the pharmaceutical space. >> the disclaimer on this whole scenario is the overall market

might not necessarily go galloping higher just because the defensive stocks and the kind of traditional growth stocks and tech have been such a big part of the overall index that if a lot of these kind of lagging areas start to perform, it might be at the expense of what's already done well that's not a harm. >> for the second day in a row i'm sorry to see the repo stuff again. >> yeah. >> 208 today it is starting to rise despite qe4 if you want to call it that. >> it is ticked to the upper end of where the fed is comfortable with. >> are you sure it's nothing >> the arguments -- >> is it okay? >> it seems -- it's linked to the timing of treasury settlements and treasury issuance that was the word yesterday. that was the reason that you had this. >> all right not to worry. >> yeah, i think there's two things that drove the repo market dislocation last month which is the coincidence of the corporate tax payments and the budget deficit i think what's really eye

opening here is the budget deficit is continuing to go up so these sort of funding needs are going to continue to be with us by the way, we have forecasted the fed balance sheet all along. 2019 was supposed to mark the low part of the fed balance sheet always calling for that expansion in 2020. so, you know, i think we have the tools, the fed has the tools to fix what they're calling the plumbing issue i don't think that's the number one market concern. >> all right so just for argument's sake, we have a global oil shock, i don't know big resection, what cession, who globally >> you go to treasuries. >> what do we use for tools? qe >> oh, what does the fed do? >> it finally -- >> qe. >> moves the fiscal needle a little bit. >> what does that mean cash for klunkers? >> no. it almost doesn't matter it almost doesn't matter. >> we're doomed? >> fiscal response can work even if it's not highly productive

economic areas. >> keep up -- >> raise aggregate demand, that's what the germans should be doing. >> i think qe is definitely going to be the first response for monetary policy. i think the fed would argu we're not tapped out of those tools. fiscal side is part of it. i think it's going to be challenging to pass something meaningful on infrastructure unless there is economic pain that is sufficient enough to incentive advise. >> we have 1 3/4% down to zero on the fed. >> you think they'll go below zero >> hopefully not >> negative interest rate? >> go to minus 1,000 >> doubt it. >> mike, good to see you. >> that's where you put your money in -- that's what we had put your money in and get nothing back. >> make mattresses. >> put money in and get nothing back. >> we have an update on what's going on in hong kong. embattled leader carrie lam

forced to give her address by video. she condemned the violence in the city she pledged to adhere to the one country two systems structure. a little bit of a play case to folks in hong kong and then said though that any acts to abdicating hong kong's independence would not be tolerated. she focused on a policy which was housing. she wants to tackle, she says, the unrest calling it the city's toughest livelihood issue and blaming it to some degree for the unrest and the protests that we've seen meantime, china's foreign ministry issuing a strong warning to washington after the house of representatives passed a package of measures late yesterday backing the pro democracy movement in hong kong. china says to expect, in its words, strong counter measures if congress chooses to pass the entire bill. i guess, andrew, you saw the lebron jerseys over there?

>> yeah. >> being torched by the demonstrators. >> in hong kong? >> taking china -- >> there's jerseys over -- >> that was part of the reason. >> the level that's going on this is why -- >> it's complicated, right. >> it's complicated. the ceo of volvo will be joining phil lebeau in just a moment the company making a big announcements on its efforts to become a climate neutral company. details on that next later, you don't want to miss this, the head of facebook's blockchain project libra is real and 1/4 of the original backers leaving won't change the company's ambitions david marcus is going to be our special guest at 7:30 eastern time "squawk" returns after this.

volvo cars announcing this morning one of the most ambitious plans in the auto industry, to try and become carbon neutral by 2040 the automaker is set to reveal later this morning the first car in the new recharge lineup phil lebeau joins us with the

first on cnbc interview. phil, good morning >> reporter: good morning, becky. let's talk a little bit more about the big push for evs as well as carbon neutral manufacturing. hokan, i know you're showing us the xe 40 recharge a little bit later on this morning but give me some sense of what kind of demand you believe is out there for a fully electric suv >> i think it's coming i mean, we started with the twin engine cars because they don't require the charging but it's coming electric car is not just environmentally friendly, there are some other really big advantages they have a super response, it's quiet and i think one of the most important thing is you can fuel it at home. i think that is what our customers appreciate with an electric car so it will be growing numbers. >> reporter: let's be honest here, hokan, with relatively low gas prices certainly here in the united states and other parts of

the world, ev sales, while they are growing, many people look at this and they say the demand is not going to be as great as originally thought what's your sense? >> yeah, of course the fuel prices are there, but it goes up and down we have to act long term you have to remember the other advantages with the car. an electric car is quiet, a really good response and that you can fuel it at home. so -- but of course it's a headwind knowing the u.s. with low fuel prices. but you can see what's a clear development to higher numbers, especially on the west coast. >> hakan, where will you manufacture the xc40 recharge? >> it will be manufactured in our factory in belgium and the ones for the u.s. are built in belgium and europe we will also produce it in china for the asian market.

>> reporter: the reason i bring that up is because you guys are in a unique position in the world of autos where you already are seeing the impact of tariffs for vehicles imported from china, potentially that could happen with vehicles imported from europe if the trump administration follows through with potential threats of, you know, tariffs on vehicles coming from there have you noticed so far that that has dramatically slowed down what you expected in terms of sales here in the united states >> not really. the only one is the big sedan which we make in china of course, that's difficult now to sell in u.s. with very high duties, but we have very luckily opened our factory building a slightly smaller sedan which has taken that market. so i think we are still growing in a healthy way in the u.s. market close to 5% so we're quite happy with that. >> reporter: how is that manufacturing manufacturing plant doing down in south carolina are you finding the skill labor

that you need? that's long been a complaint for a number of manufacturers that in this tight labor market, finding the workers that they need, that they truly need is getting tougher and tougher. >> no, but we have been very successful with that so, i mean, we have very good people on board. we are increasing the volumes and also with this now car line recharge where we will sell more of the plug-in versions we plan to sell more of the 60s made in charleston. >> reporter: one last question, hakan. you spend a lot of time in china. china is a huge market for volvo. give us a lay of the land in terms of the economy and the consumer >> yeah. the economy is definitely slowing down and you can see that also in the volume car market it's definitely down, but against this trend the premium segment is quite strong and it's more or less flat and we are

able to grow with around close to 15% so against the market we are growing i think with good products and that will, of course, below cali manufacture. >> do you expect the overall market in china to stabilize it's been trending down over the last 14 months are we at a point where it stabilizes or do you expect it to continue going lower? >> i think -- it has dropped i think we will see it a bit flattening out, but i think also we have to understand that china is also going to be normal market where you have business cycles we go up and down. china cannot just continue with an internal growth that has never happened on any other market. >> reporter: hakam samuelsson joining us they introduce their first fully electric vehicle xc40 recharge this is the beginning of a number of automakers saying they're going to roll out

electric vehicles. >> the co-creator of libra, david marcus joins us. here are the futures and where they're traded the losses on the dow down less than 30 points down 27. you can see on the s&p indicated 3.5 lower and nasdaq a little over 11. "squawk box" returns after a break. coach saban we have health insurance. did health insurance pay for everything? no, we still have bills. aflac gives you money directly to help with those. aflac! and your deductibles, knee brace, whatever you choose. aflac sounds like a winner. umhum... umhum... we try. get help with expenses health insurance doesn't cover. get to know us at... duck: aflac! dot com

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♪ ♪ viva las vegas we've got news from the strip, las vegas strip. mgm resorts trying to bring in billions in cash they're selling circus circus las vegas property for $825 million to an affiliate of phil ruffin he's the owner of treasure island the head of mgm's board real estate industry said the company wants to make sure, quote, if and when the next recession comes we have a fortress balance sheet. with everybody talking about recession on the conference calls, phone calls, jamie dimon -- >> that comment was taken -- i couldn't believe the story he said there was going to be a

recession some day >> yeah. it's more and more part of the vernacular. >> that's not surprising given how long the cycle has gone on people start looking for the end of these things. >> a recession or great recession. someone said there will be another great recession. i sit up and take notice if all you're saying is a garden variety recession will happen at some point in our lifetime -- >> that's all he was saying, i think. >> i think so. >> that's not the way we're going to -- >> let me tell you what -- >> that headline drove me crazy. >> this is probably the bigger news they're forming a partnership with blackstone and lease it back to mgm after acquiring the bellagio >> circus circus is sort of -- >> it's different. >> it's had its day. >> trying to suggest it's down market what are you saying? >> yeah, i am saying it's down market it's been around for a long, long time. the allure and newness of it way

in the past. >> yeah, but this guy -- the guy who bought it has done that with properties before. >> you have to love the water show at the bellagio. >> yes >> though it's been outdone. i hate to say it in dubai at the dubai mall they have effectively replicated and upped the ante on what a water show like that looks like. >> i'd rather go to vegas and i don't like vegas. >> vegas is -- i mean, when i went long ago, you know where i stayed at the d.i. >> the where >> dessert inn that's so far gone. >> you are like rat pack. >> like the rat pack where howard hughes lived on the roof >> i dropped my -- >> yeah. and once you drop it, it's like -- >> i can't pick it up again. >> you're on a boat. >> i broke the thing. >> that's gone that's gone. bank of america beat estimates on both the top and bottom lines. just released quarterly reports. among the factors boosting the

bottom line, 27% increase in investment banking fees and strong growth in consumer banking. >> they also had growth in commercial lending i think they were up 6% there. that stock was up yesterday when we heard the four other banks came out with pretty strong numbers. it was already up 2% yesterday, now you see it up another 2.25% this morning. still to come on "squawk box," david marcus he's our special guest then elizabeth warren under attack from her democratic counterparts we will hear from senator david perdue about last night's debate, trade and taxes. also in the next hour we welcome investor lee cooperman of omega investments we'll find out where he's putting his money to work and what he'll do ifhe doc temrats win in 2020. "squawk box" will be right back. . sometimes, they just drop in. cme group can help you navigate risks and capture opportunities.

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♪ ♪ all right. welcome back, everybody. let's get a quick check on this morning's movers dom chu joins us with more on that dom, what you doing? >> i'm watching all of the financials in focus. let's take you through the early

morning movers from the financial institution side of things we'll start with shares of u.s. bancorp out with results not a lot of huge pre-market volume 1.5% gains it posted a profit and revenue beat benefitting from among other things, higher loan growth those shares ones to watch we have other regionals. shares of pnc which are higher by around 1.2% right now just around 3,000 shares prooe-markprooe pre-market volume. pnc increased the revision for credit losses but saw an increase in lending activity as well those shares getting a bit of a boost. we'll end on shares of bank of new york melon which are higher by 1.5% on premarket volume. the custody bank and trust buyer posted an earnings beat. they missed the mark as fooe income did decrease. the banks doing their job.

we'll see if that sticks back over to you. >> dom, thank you for that going to pivot because this week founding members of the libra association met for their first council meeting. 21 members formally signing on they included uber, lyft, spotify and coin base, but a number of big founding member names also pulled out in the past week. those include ebay, visa, paypal and stripe joining us right now to talk about all of it and where this is headed, david marcus, co-creator of libra and head of calibra. good morning thanks for joining us. want to understand more than anything else, this has been what looked like a tough week given some of the companies that have dropped out yet at the same time you did have your first meeting to establish all of this what does it mean? >> well, i believe that it wasn't, you know, a tough week i would rather have all of these companies come with us like i said before, i felt that

tvs great for them to want to explore and disrupt themselves all the way up to that point but i also understand and respect they have shareholders, employees and stakeholders that they have to respond to and it was probably the responsible thing at that point in time given the pressure that they were under to focus on that. and now we have an association that's 21 members strong we have a board that's voted in and since two days ago we finally have an association that has a proper governance structure that will enable us to go and address all of the concerns that were raised by a number of regulators and stakeholders around the world. so i think it's a lot of progress this week yes, you know, of course it wasn't great to have all of these companies leave last week, but at the same time, again, i appreciate the fact that they wanted to try to join in the first place and spent all of that time with us. >> david, can we talk about some of the pressure that they were under and, therefore, i imagine you were under

senators brian schatz and sherod brown sending letters to visa, master card and stripe effectively saying, if you take this on and i'm quoting you can expect a high amount of scrutiny but on all payment activities. when we mentioned this on the air to secretary mnuchin, as if they were responsible for -- as if those senators were responsible, he seemed to suggest that he was also responsible given -- meaning responsible for companies wanting to back away from this given his own concerns about the issues >> well, first, i believe that it's kind of odd that all of this is happening at the stage of this project because it's a project. it's an idea, it's a white paper. nothing is operating yet and it's kind of sad in a way to see all of the issues that we currently have with the current system, 1.7 billion people left behind even in the u.s. if you want to be part of a modern financial

institution, your average balance is $1500, you pay $15 a month, 7% to send money across the border and the people who need it the most paying the most the fact that we're not even open or some people are not even open to the idea of exploring how to improve those things for their very constituents is odd to me. we're not dogmatic about the approach. >> do you think this is about the idea or do you think this is about facebook let me just read to you. this is the financial times, digital transformation in banking is welcome but regulators are right to argue that facebook has yet to make the case for its own ebucks. >> well, first of all, it's not our own ebucks since monday i can't speak on behalf of the libra association. we're one out of 21, soon to be one out of 100 that's one i believe that, you know, as far as facebook is concerned, we have a duty to our users and our stakeholders to continue innovating on their behalf we have a platform that reaches

2.7 billion people and 19 million small businesses that are active on our platform and if we need a better system for people to pay and we can facilitate all of these things so i think it's our duty to continue to innovate on this i understand the criticism as well and we have to do a lot to demonstrate that we need to be trustworthy or we can be trustworthy for this and the one thing i want to stress again is that no one needs to trust facebook to use libra and to on board this platform. you'll have a choice of wallets. you'll have an ability to actually move money around wallets because you'll have interoperability built in at the core i think that we owe to at least get down the route of exploring how weaddress these concerns t solve the very issues that are playi plaguing so many people around the world. >> which is a worthy goal. digital transformation in the banking and the unbanked and everything else.

i'm starting to sort of understand that that could be something libra could satisfy. just seeing andresen who ahorowz and him involved, do you own any cryptocurren cryptocurrency do you own any bitbitcoin. >> i started looking into it, i'm a big fan of bitcoin what i see as digital gold. >> totally different i think. >> totally different, yes. >> than libra. see, that makes me more comfortable with the co existence of libra and bitcoin obviously that's the first thing i noticed. you're not trying to do the same thing. there are very few similarities between libra and bitcoin. some of the things that the real bitcoin advocates love about that technology or whatever you want to call it, none of that seems to me to be present with libra. >> so, look, if there was stable low volatility, scaleable version of bitcoin that we could use today, my life would be so

much simpler we could just focus on embedding that. >> do you think that day could come as time goes by in words of bogey or whoever that was? as time goes by it could become? the volatility may not always be like this. they have a pretty good head start. it's 150 billion already libra went to zero. >> that's absolutely zero, but i believe that bitcoin is like digital gold the problem is if you're a hard working person here in the united states that sends money back home to support your family and you send $100, by the time people can get it out it's $80, that's a huge problem. and that's why we have to take the hard way to try to build a very high quality stable digital asset for people to move money around and to be part of a modern financial system i believe we have a duty to make progress on it.

>> i realize your point, as of this week it's no longer a facebook project, it's a joint project between a lot of different companies. because this was a facebook creation, a facebook idea, because of your association -- long association with facebook, too, do you think that that is going to be something that regulators and lawmakers recognize or acknowledge or do you think this is going to forever be a facebook project and does that matter >> i think that's going to take time we're not trying to run away from our shadow. we started this project. certainly by the time this goes live we will have such a small governance part of the network piece of it and, you know, the payment system that we're trying to build, we will be one of the many wallets operating on top of this network i think it will take time for the perception to evolve and the governance system we've put in place but i think it will

happen i think it will happen once most of the hard work is behind us and once they are more vocal and build on top of the network. the one thing i want to stress, one does not need to be a member to build on top of the libra network. >> sure. >> so i think things will change as we make progress addressing the legitimate concerns that were raised by a number of regulators. >> were you surprised to hear senator shatz and senator sanders coming after partners and saying if you focus on it we'll be focusing on you and scrutinizing you, too? >> well, i believe ideas that are supposed to make things better for a lot of people should at least be explored and the fact that some people are trying to dissuade people from exploring ideas that are here to make things better for their constituents is probably not the right approach in my book to try

to move things forward in the world. this is a reality of a core system that has not changed in 50 years there's been a lot of fin tech the core of the network that moves things around the world whether it's swift or ach hasn't changed in 50 years. meanwhile, on the internet you can do group high definition video calls for free which, you know, was brought in by the internet and before that it was the telecom systems where you used to pay $1 a minute for long distance call. so things have evolved in all other industries thanks to the internet the core of the financial system to movemoney around hasn't in 50 years there's probably a reason for that. >> david, the sort of thing and philosophically, one of the criticisms and the reason that libra in certain circles is sort of looked at not as favorably as some other crypto is it's based

on fiat. that gives you the ability to help the bank. that stability helps you to open up to the debasement of currencies now that we're on qe4, 17 trillion in debt so it's a blessing and a curse to some extent that you're basically just tied to a currency that's going to be devalued by government. >> well, i'm glad you bring this up, joe. i think this is definitely a view of a lot of the crypto community. >> maybe base it on bitcoin, david. instead of basing it on the dollar then you wouldn't have the stability. >> yes, that's the problem that's the problem but i want to say one thing. >> okay. >> the way that libra is stabilized is by backing it to a basket of stable, low volatility currencies and by committing to not move that reserve from a one

to one fully backed reserve. never going to the land of fractional reserve and printing money. the swiss licensing machine that libra is looking into and which finmise is working on would actually prevent the association from money creation, which i think is really an important point of one of the many concerns raised by the project. >> david, one other question >> i'm trying to think, did you finish everything you wanted to say there? was that the end >> yeah, that was it >> all right good i guess i understand >> one of the things that people are always wondering in terms of you were talking about how much money effectively the system takes from users today at some point if i were to want to interact or transact with libra or use it and maybe 23 i'm an uber driver i'll be paid in

leeb brampt if i were to have to take u.s. dollars and buy libra, what kind of transaction fees do you see associated with it to get my money into the libra system, if you will? >> so this is something that at calibra, the wallet we're building, that we've looked at a lot. if you're currently banked and want to on ramp and off ramp, costs are going to be very minimal. so, you know, think about it as, you know, 10 to 25 basis points. if you're unbanked, you'll have to rely on cash in and cash out. there it will vary on 1 to 2%. in some places of the world maybe 3%, but that's still less than half of the current cost of 7% of moving money around the world and there was a goal from the united nations of reducing cross border payments to 3.5%

and we would be way, way, way below of that goal that was set for many years away from now >> and just to put a fine point on it, does facebook collect that transaction fee >> no, that would be partners that will actually operate agents network for cash in and cash out or in the case of banked users they would use a debit card to buy libra and there would be debit card fee rates associated with it. >> so there's revenue associated with this for facebook it comes in what form? >> so revenues from facebook, one indirect so 90 million small businesses, 2.7 billion people on the platform being able to transact with one another by the way, a lot of small businesses around the world cannot accept digital payments nor buy ads on facebook or buy anything digitally because they don't have access. out of the 90 million small businesses that we serve today we'll have the ability to serve more and enable more commerce so

that's the indirect effect then over time i believe that with calibra we'll be able to build a lot of services, notably in part with banks and other financial institutions you can think of lending and all of these different services. the same way a lot of people are doing around the world with a reach that is going to be much broader because of all of the people we would be able to bring on through a modern financial system. >> thank you appreciate it. >> thank you. >> talk to you soon. coming up, senator david perdue talks taxes at the top of the hour leon cooperman joins us for the ful url "squawk box" will be right back.

still to come, senator david purdue with reaction to last night's debate the trade talks and much more. as we head to a break, here's elizabeth warren on her wealth tax. we'll be right back. my question is not why do bernie and i support a wealth tax, it's why is it does everyone else on this stage think it is more important to protect billionaires than it is to invest in an entire

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president trump is here. >> reporter: the oldest vice president.

there's jobs and the economy there was one very notable shift and that is the candidates on stage are treating senator elizabeth warren as a clear front-runner warren'splatform coming under sustained attack, most frequently from senator amy klobuchar and mayor pete buttigieg who are trying to claim the ideological middle of the democratic party and repeatedly seeking to paint warren's proposals as radical and unaffordable >> your signature, senator, is to have a plan for everything except this. no plan has been laid out to explain how a multi-trillion dollar hole in this medicare for all plan that senator warren is putting forward is supposed to get filled in. >> we owe it to the american people to tell them where we're going to send the invoice. the difference between a plan and a pipe dream is something that you can actually get done >> reporter: the field had a common foe in billionaires and

big tech, but the field was less formative in what to do about it you can see a range of plans from taking a closer eye on monopolies, introducing more regulation warren and sanders saying the big tech companies like facebook and amazon should be broken up but entrepreneur andrey yeah yang said that's not feasible. >> senator warren is 100% right in divesting competition doesn't solve all of the problems it's not like any of us wants to use the fourth best navigation app. there's a reason why no one is using bing today sorry, microsoft, it's true. >> reporter: that was one of the most viral moments from the debate added to that the most tweeted about moment, guys, julian castro on gun violence and vice president biden on syria policy. we'll see whether that causes any bump to the polls or to

fundraising. the deadline to announce which was last night >> all right, kayla. thanks president trump tweeting a short time ago, i don't know if you saw this, our record economy would crash just like in 1929 if any of those clones became president. joining us now, senator david perd perdue, rebook and close friend of president trump you live in washington now i don't know if you're a washington nationals fan or not, but that was on at the same time so you got an excuse, senator, if you're not up to speed on everything that went down last night at the debate. or do you know -- did you watch it >> of course not i had more important things to do, like watching the nlcs if you blinked your eyes you missed it this year no, i had more important things to do, joe looking at what they said, this is incredible. it's so obvious that these people have no clue of what capital formation is all about what they're talking about with this wealth tax and all of the other things they're trying to

perpetrate would actually kill capital formation. it sounds like lyndon johnson's promises with the great new deal back in 1965 where they said, give us all your money, we'll solve all your problems and he stole the surplus from social security to do that and all of those investments pretty much failed >> i haven't done the actual math i've seen it done. i don't know if i trust it adding up all of bernie's plans, you know, since i haven't done the math, i'll just tell you, it was well into the tens of trillions. it was almost 100 trillion not quite but i don't know whether bernie is -- you know, is going to start moving up again in the popularity contest or not, but it's not a whole lot different from some of the other plan -- some of the other candidates' plans being band did ied about. >> there's no reality in anything they're saying. the socialized medicine proposal that they're talking about would cost now bernie says $4 trillion a year put that in perspective, joe, we only collect 2.2 trillion in

income taxes and the other thing, the green new deal that they're not talking about now all of a sudden, would cost $9 trillion a year is the best number i can find on that. the only way i can compare that for your viewers is that the entire adjusted gross income of america, not the tax but the adjusted gross income, the total earnings of america is about $9 trillion >> yeah. i also just to switch gears, we'll come back to trade and economic issues, but i did see lindsey graham yesterday making the case that the senate at this point, notwithstanding something else, i guess, coming out from this investigation, inquiry, whatever you want to call it, but that the senate, you may not lose a single senator was his prediction in terms of republican senators. you might not get all the democrats. his point to speaker pelosi was don't go through that. i think andrew yang eludeds to

that you think there's a fantasy if there will be a removal. do you view it that way? >> of course there's a fantasy this has nothing to do with impeachme impeachment. they won't get there they won't call a vote for a formal inquiry this is the first time that the speaker of the house did not call for a formal inquiry. why is that important? this is a show trial this is nothing but one side trying to drum up something to counter the president with they'll never get to that vote in my opinion and it's dead on arrival in the senate. no, there's nothing here that has risen to the level of impeachment. we all know that and most people in america are going to realize that when they see how shallow all of the arguments are that the democrats are making now. >> if you keep the leaks, you keep going forward, interview people, leak it to the times or the washington post what the wch witnesses are saying and then public opinion starts to turn and then you get pressure on the republican senators. perhaps is that the m.o.

>> god trust the common sense of america. we saw it in 2016. i saw it in my race in 2014 in georgia. people know this town is broken, joe. this is one manifestation where the speaker of the house will not put usmca on the table but will waste all of this time on a pipe dream that is nothing more than political partisanship. >> senator, even if you don't believe what's taking place is an impeachable offense, are you troubled at all by any of the actions either the president's taken or perhaps what rudy giuliani did or has done obviously two of his associates have already been indicted. >> well, what i'm really troubled by is the fact that the media never talks about the other side of it as well corruption is why on the obama situation -- >> senator, but that's -- senator, that's the point. the point is that you've made lots of statements about the character of the previous president, about the character

of others when you've seen issues that have troubled you. what i'm asking you is putting aside the impeachment piece of this, to me if you look at some of the other people that you've talked about over the years where there's been an issue of character or at least things that have troubled you, does any of this trouble you at all straight up. >> let's get the record straight straight up. i never questioned the character of president obama what i questioned were his policies that absolutely failed. what i question here is why we can't get at the true issue that we're talking about around the edges here, and that's corruption that's what that telephone call was about if you look at it. no, this is nothing different than anything else that's happened yes, i'm troubled that we have corruption between the united states and ukraine but it didn't just start in the last 18 months. >> all right, senator. we talked more about the -- as we get closer to find out who the nominee is we can look at the economic proposals we have to handicap the chances

of anything happen if the republicans hold the senate. i see a lot of democrats saying, they don't mean it they're fine they're not going to do any of that thank you, senator >> thanks, guys. >> we'll see ya in the 8:00 hour when "squawk box" begins right now. good morning taking flight. united airlines ceo oscar munoz pulls up to the "squawk" gate. we'll talk earnings, outlook and when boeing 737 max might make it into the air. legendary investor lee cooper man joins us on set >> key read on the consumer is 30 minutes away. final hour of "squawk box" begins right now ♪ ♪ live from new york where business never sleeps, this is "squawk box. good morning and welcome back to "squawk box. welcome 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 our guest host, leon cooperman u.s. equity futures at this hour are indicated on cooperman day down about 22 points that's not too bad, leon what we've seen in the past four or five sessions have been pretty solid given the backdrop. >> day to day who knows. >> day to day who knows. treasury yields, take a quick look they backed up a little bit in recent sessions. i saw 1.70 earlier here we are on the 10-year, 1.74. let's tell you about other headlines this morning, bank of america posting better than expected quarterly revenue strong growth and the consumer banking section. also some other areas where they saw growth, things like commercial lending which was up about 6% bank of america right now up by 2.25% and this comes after a 2% gain for bank of america shares yesterday when we heard strong results from many of the other

banks. drug distributors are reportedly in talks with state and local governments to settle opioid litigation for $18 billion. wall street journal says the johnson & johnson is in talks to contribute additional money. other stocks exposed are also moving now including mallinckrodt, endo and teva. if a deal has a chance at being approved by the e.u. and then the u.k. over the weekend, it must be reached by today. ahead of all of that, the pound down a little bit. just over 1/3 of a percent. united airlines reporting better than expected sales and profit in the latest quarter also raising its earnings outlook on the year in a surge in bookings. phil lebeau joins us with a ceo exclusive interview with united ceo oscar munoz. >> reporter: congratulations

what's working for united? >> what's working. gosh, our team is doing an amazing job across the board two years ago we started this journey and our strategy, our focus on customers and our focus on our people and just great efforts around the whole course. it's great to have yet another quarter. >> reporter: you have raised your guidance for the full year this year a hefty amount you've said we're going to meet or exceed what we're expecting for next year. what's working more now, leisure bookings or corporate bookings >> across the board. internationally is strong. pacific region is strong mostly because of hong kong the domestic market is strong. the regional network and catchment area and strategies we laid out in 2018 is working remarkably well. our product offerings. our customer investments have proven to be a big deal. and so it's across the board this is a difficult business and a lot of times historically people have either focused on

the top line or on costs individually i think we've focused on profits and we said that when we announced our guidance on capacity, that it's not about the growth, it's about the eps goals and proud of the fact that we can meet our numbers for this year and more importantly that we can project for next year and meet or exceed for the next goal. >> how much not having the max is hurting >> clearly it hurts. at this point we would have 80 to 100 flights that would be in the air but, again, it's just -- the important part about that conversation is that the aircraft will return safely and that's all we really care about so we await the faa and regulators. >> reporter: last week they pulled it off until early january. you talk to people in the industry, i know you do all the time, there is increasingly less confidence that this will be returning by the end of the year southwest saying we don't expect it back until at least february. do you have confidence in that early january start date >> no one knows, right we've been doing this for seven

months the important part is that it's returned safely. the aspect for us at united is i have great confidence in our pilots, our training, our max product when it does return. we will do it when it's safe to do so. >> reporter: hong kong is a mess now. you even said that before we started this interview. >> it is. >> reporter: how much is that spilling over and impacting corporate bookings for china, whether it's shanghai or beijing. >> tokyo is the predominant driver of the impact on the pacific region for us. both shanghai and beijing are softer but not noticeably so it clearly is a hong kong market the rest of asia is great. we think it's taipei, tokyo, all the other regions are actually pretty strong. it's a collective region but hong kong is definitely the driver we've seen the recent bookings, a little bit of stabilization there. it continues into the third quarter. >> reporter: are you seeing hesitancy by ceos and executives to fly in. >> beijing and shanghai is the

predominant level. softness but nothing noticeable. >> reporter: overall when you look at the economy, we have people doing the hand wringing over whether or not we start to see things slow down heading into next year are you seeing any of that right now? >> you know, we talked about this constantly because everyone's always talking about it i think the collective wisdom of my team as we discussed this yesterday was we've never seen a bigger gap between the headlines and our actual physical data that we have about our business. so, no, we are not in agreement that we are on the slowdown of any sort our bookings into the fourth quarter are really, really strong we've been saying that over the course of the year i am confident in our business and market and what we have done strategically to align us. having said that, there's always softness around the corner one of the things we've learned as well is to be flexible. would he have a lot of contingency plans to make sure that, again, we make that eps number that we set for 2020. >> oscar, becky has a question for you. >> oscar, good to see you.

we had ed on last week with his earnings for delta the point he made he is taking market share, he thinks, from united and some of the other carriers that do have the 737 max because they've been able to add flights, paying their pilots overtime to try and get some of those up he seems to think that those market gain shares will stick. what do you say to that? >> wow, it's a competitive business i think our competitors are allowed to say what they want. i say good luck to them. i think we like to earn our customers by giving them great service, not because of something that happened to somebody else. we're confident in our own markets that the places we fly and the way we make you feel are a significant benefit. not completely worried about that. >> lee cooper man is here too. >> shout out i have positions in the family office you're one of the three. you've done a great job for me and i appreciate it. i wanted to let you know but my wife and i flew back from rome your polaris project is

fabulous the best seat in business first class i've ever been in. tomorrow morning i will be flying to florida in coach my rule is under 3 hours i go coach. over three hours i go business first. and i just want you to feel good about yourself because you're doing god's work basically >> wow. >> i'm giving pledges to mr. buffet and the more money i can make the more i can give away. that makes me feel good. >> mr. cooperman your fiscal policy is something we've aligned with we've talked about your views on our business and i'm glad you're continuing to be a supporter and glad you enjoy our product and thank you for your philanthropy as well. >> keep beating and raising, beating and raising, that's the secret >> eight quarters in a row we've done that, by the way. >> by the way, these guys have 35% of their company in the last three or four years, the stock is 50% higher than the average price they paid. they have an authorization to buy back another 16% on the books.

>> bernie sanders has his way they won't be able to buy back his stock. >> i don't think bernie sanders has the chance to be the next president. i'm happy he's healthy happy he's back on the trail but i would like to have him relax a little bit i was told i was in a list of ten people he wouldn't take money from he doesn't have to worry, there's no chance i'd ever give him any money. >> phil? >> oscar, one last question for you. >> sure. >> reporter: you talk about costs and the expectation that they're going to be rising in the fourth quarter are you worried that that trend line continues into next year? >> first and foremost, we always manage costs we have i think the best sort of performance over the last three years. 0.3 when we finished the year over three years of our costs which is significant as costs go up, the reason they're going up is because our profits are going up, right? we're investing in our customers, in our people and that's creating an eps line. it's important to focus on the bottom line but of course we'll always worry about costs

we'll be guiding on our call later this morning. >> oscar munoz, ceo of united airlines, the day after they post better than expected earnings in the third quarter and raise their guidance. >> thank you good to see both of you. lee cooperman is our guest host today as you heard, he owns shares of united lee, you said it was one of three positions in your home office that has 5% of your portfolio. >> uh-huh. >> how long have you been an owner in united? >> one of my heroes is warren buffet before warren got involved we have more than doubled our money. but we're taxable. we try to go long term and minimize our tax liability. >> do you fly any other airlines or just united >> well, from the diversification standpoint, we're in united. if united works, delta will work, southwest will work. >> what are the other two positions that have 5% >> cigna and on a value proposition i find it kind of interesting, everybody's worried in the health care group about

elizabeth warren >> right >> the stock market's at a high and the health care stocks are in the cellar. it makes no sense. >> we saw that with unh yesterday, better than expected results and the stock was up sharply. >> if elizabeth warren is president the market will go down quite rapidly. >> that's a hedge for you? i don't understand. >> no, no. i'm a value investor and a value investor tries to get more forless. so i look at the s&p the s&p's about 17 times earnings, it's going 6%, deal's 1.9%, the capital around 40%, enterprise, ebitda 12, 13 times. 3.5 times book value cigna has $8 billion of free cash flow next year. they're buying back 3 or 4% of the company annually selling around 8 times earnings. a decent business. i don't think, you know, we're going to get, you know, free health care through medicare for all. not going to happen. too expensive. >> what's the third position

>> third, 5% position is google. >> because >> great company you know, i get away from this debate of growth versus value. google's 21 times earnings it has a fortress balance sheet. growing quite nicely the biggest threat seems to be the government which is going after the most successful technology companies to break them up. i don't get it they've provided the great growth and employment for the economy. i looked at microsoft. when microsoft was challenged by the federal trade commission justice department, the stock went down 20%. nine years later it compounded at 23% a year for the next nine years. so i think google is worth more broken up than not i don't think it will get broken up it's a good value situation. >> lee is our guest host for the rest of the program. we have a lot more to come with him. more investing ideas right now as we head to a break, don't forget to subscribe to our new podcasts you'll hear interviews

special behind the scenes content. what taping us during the commercials? i hope not everything you expect from "squawk box. you can look for us on apple podcast. subscribe today. stay tuned today you're watching "squawk box" on cnbc we'll be right back with lee cooperman. fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you.

welcome back to "squawk box. take a look at futures right now ahead of the market open we're close to an hour and a half before it opens, but right now dow would open off 13 points nasdaq down 13 points as well. s&p 500 off about 2.5 points as you know our guest host is lee cooper man. the chairman and ceo of omega family office. we talked about a few specific stocks that you like but what's your overall take on the market? we've got earnings coming in we've got fears of a recession in some quarters what do you think? >> i don't see a recession and i don't understand monetary policy basically consumer confidence is high retail sales are strong. employment is strong consumer net worth is probably at a record or near record level. corporate profits are decent i think so far the 80 odds companies that reported in the third quarter exceeded by a

couple cent. business men are not pessimistic about the outlook. rates are already very low you know, the need to lower rates. i would say that the stock market is okay not great, okay. i like my stocks better than i like the s&p and my devil theme for a couple of years is we're in an abnormal world why are we in an abnormal world? i don't get it 15 trillion dollars of sovereign debt carry negative interest rate the idea that i lend money to germany and they give me back less than i lent them is crazy the idea i live in denmark and get money every month is crazy rightly or wrongly, my definition of normal is the labor force in america grows at half of 1% productivity grows 1.5% growth another 2% for inflation is 4% nominal. in a 4% nominal world i think the fed fund rate should be 3

not 2 heading to 1.5 10-year government shouldn't be 170, 180, it should be 4 in that world i say a 17 multiple on the market's reasonable now the bulls tell me 17 is too low. the bears say 17 is too high i'm comfortable and i can explain why if you ask 17 times i'm using $175 in s&p e. 17 times 175 if my arithmetic is right is 2975. the s&p is 2950. it's fairly valued not over valued, not under valued i keep coming back to a great, great observation by john templeton. i wish i were smart enough to generate it myself bull market is growing on pessimism, they die in euphoria. i don't see euphoria other than the ipo market that's been corrected. >> where are we then in your -- >> i think there's one more leg left in the market. >> we haven't hiteuphoria. that could be a big spike then >> no, it could be 10%, you

know. >> 10% up still? >> yeah, could be 10% up over the next six months. don't forget, the market has a capital market it should average 5, 6% per year. >> to the extent that everyone is talking about a recession if you go with 10% are we talking about a recession going up 10%. >> no, recessions general's -- look, every economic expansion creates the seeds. every recession sews the seeds for the next recovery. recessions last about a year and the market goes down 25%. >> it causes an over heating which causes rates to go up which causes a recession. >> yeah. >> those are garden variety. this is totally different. this is not -- >> it will not only happen but it's not happening now which is a good thing. >> totally different way i don't know if that makes it deeper. >> you haven't seen the general motors strike, you haven't seen the labor strike for quite some time i think two things to watch carefully, okay? one is iran. a war with iran which spiked the price of oil, which would be

very negative. and the second thing to watch is china. if the president resorts to putting on another round of tariffs, it's probably increasing the probability of recession and if we have a recession, the market drops at least 25%. elizabeth warren is elected president in my opinion, market drops 25%. bernie sanders, same thing in my view i listened to the debate last night i kept on thinking of a great statesman by the name of winston churchillwho said you don't make poor people rich by making rich people poor. he said the main vice of capitalism is the uneven distribution of prosperity the main vice of socialism is the even distribution of misery. billionaires give back more. bernie marcus was a depressed dude -- >> a different bernie? >> bernie marcus, home depot. >> bernie marcus, founder of

home depot he got fired in christmas week he was very depressed. he called up ken langone to express his depression ken is one of the great people in the country said what the hell are you depressed about i'll raise you money and you'll pursue your dream, okay? his dream was super stores he said i can run a hardware store. today home depot has $258 billion market cap, they employ 400,000 people they have thousands of associates who are millionaires and bernie has given back a fortune to the economy starting with the atlantic aquarium, $250 million. ken langone is a legendary -- >> we did a show from there. >> ken langone, i can't count his money. give him $350 million to nyu he led the initiative to provide free medical tuition for the lucky students that get into nyu. then you look at bill gates, mike bloomberg i recently interviewed david rubenstein, i turned the table on him, my new distinguished

speakers series. rubenstein's old man was a postal worker, started with nothing. his patriotic philanthropy is legendary. this is bull attacking billionaires what we have to do is coalesce around the question, what should the maximum tax rate be on wealthy people >> you can get your message out more if you finish the term bull more people will pick it up. it will get you going. >> no, we're on cable. >> on cable you can say it bull shit, too. >> -- you have to agree on what the maximum tax is on medium people i believe rich people should pay more i have no problem with that. the wealth tax is baloney. >> here's the question i asked of you you look at the inequality numbers in this country and over

the last 30 years, rights? relative to the world 50 years ago. you look at the ability of somebody in the bottom quartile -- >> everybody is better off than 50 years ago. >> economic -- >> i'm talking in general. >> let's not -- >> i'm talking -- >> in general everybody is better off. >> you're not going to make poor people rich by making rich people poor. >> i understand that my question to you is what would you do >> i'll tell you what i am doing. i pay college tuition for 500 kids in newark, new jersey. >> god bless you >> education and faster economic growth is the answer. >> you don't -- >> and i believe we should have a tax code that's fair rich people should pay more in taxes but you don't do it through a wealth tax just get rid of the loopholes. seven years ago on this show i said if we're serious about dealing with taxes, get rid of the carried interest yes. we had democrats controlled

congress in the government, republicans. we still have carried interest section 1031 of the irs code allows the real estate guides to disrupt. get rid of it. let's decide what the max in tax rate should be i'm willing to work six months for myself and six months for the government i will be happy to give six months of my income to the government >> and, lee, i will say what you've been saying for years, this is not new for you. >> there's nothing my view of the market is not new. >> i want to say this is not a response to what we've seen from the democrats proposing these wealth taxes you have said this for a long time. >> seven years ago i had a wonderful dinner with warren buffet, bill and melinda gates on the giving pledge what i told warren buffet was that it's a very noble idea. asking for half isn't asking for enough you should ask for more i gave away all my money i said it's not an interesting concept.

andrew carnegie said he who dies rich dyes in shame when president kennedy said ask not what your country can do, ask what you can do for your country. the difference between warren and i is i am giving my money back to those who -- >> we're going to continue this. you're lucky you live in florida because it's only six months you work for the government. back here is eight months. >> we'll get to that. >> coming up, we'll have more time breaking economic news straight ahead.

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welcome back to "squawk box," everybody. we are on cnbc live from the nasdaq market site live from times square the federal reserve releases its latest beige book a little later today. that's the region by region assessment of the u.s. economy it's out at 2 p.m. eastern time. as usual, fed watchers will be looking for any clues for the economic outlook. mortgage applications edged higher by half a percent last week according to the mortgage bankers association. an increase in refinancing activity was largely offset by decline in mortgage rates.

and two high profile earnings reports are out this afternoon we have ibm and netflix, both releasing their quarterly numbers after today's closing bell ibm's revenue is expected to drop for a fifth consecutive quarter and netflix subscriber numbers will be getting close look. mgm reports is selling las vegas resorts bellagio and circus circus in separate deals. here's jim moran talking to contessa brewer last night all about it >> we created a joint venture with blackstone and be we're going to retain a 5% minority interest and what thatdoes is allow us to reduce the tax friction on the transaction. so that the multiple that we're getting for the real estate, 17.3 times, is of course historic the highest multiple ever achieved for real estate here in las vegas. >> take a look at shares of mgm, they're up this morning, $28.30. all right. we are about a half a minute

away from retail sales the futures have turned positive on the dow no, now they're negative that's interesting they were for a second, weren't they up about 9 i don't know what that is. dow component is moving around obviously. probably one of the higher priced ones. that is -- >> back to positive. >> and up. >> and up. rick santelli is at the cme, chicago. rick, the numbers. >> reporter: yes, september read retail sales down .3 of 1% that's exactly backwards we were expecting up .3 of 1%. now we did gain .2 in a revision originally released to .4 headline last month now stands at up .6 if you strip out autos, the number rises to only minus .1. we were also expecting up .2 there. and if you strip out autos and gas, you reach unchanged now all of these have positive revisions.

i told you .2 on headline. we also gained .2 x auto which stands up .2 last month and we gained .3 x autos in gas now up .4. neutral read now if you look at the control group, which kind of is the number we make and then insert into other numbers higher up the number chain, that number is zero the control number is zero our last look, it was .3 unrevised. now that isn't terrific news obviously and we do see a slight deterioration in the futures markets joe was just discussing on equities. we're who ha ar're hovering on s global interest rates have firmed up over the last several weeks. andrew, back to you. >> thank you for that, rick. appreciate it very much. want to get over to steve liesman who's in washington this morning for his take on what's happening here >> reporter: good morning, andrew there were concerns about a

weaker number. i'm going to explain why i'm not sure i believe all of this explanation here, but i which is that you saw the upward revision in august, up .6 of ag there and shepard son from pantheon shepherded this idea. the august number was boosted by the tariffs. i have a hard time believing this because i'm not really sure how aware consumers are or were back then of the tariffs, but his argument was that people came in and bought stuff in august in part because of the tariffs and that he expected a pretty sharp falloff in september. so kudos for him whether he got there for the right reason or not, it's worth pointing out it's also worth discussing the issue of it has been the consumer that has been the high point or the highlight of this economy. if this were to continue, it would cause reasons for worry. as i look down the list here, everything is negative some of it looks like a snapback

from the last quarter strength, which that would be okay if that's all it was was just september giving up gains in august if it continues, i think there will be more concern what might happen now and we'll have to monitor this as the day goes by is that this 1.7, 1.8% gdp average for the wrap it update may come down even more i don't know how much. maybe as much as .2. we'll have to watch it depending on what the economists dialed in this would be concern about weakening of the economy in the just completed third quarter and it may be that you get more depending upon what happens with tariffs and people's attitudes and knowledge of tariffs this would be the first time that we have actually seen definitive effects of tariffs from the consumer side, andrew. >> hey, liesman. >> yeah. >> new york fed repo, fully subscribed 75 billion injected >> okay. >> it was 208 or something we're talking about it again everything okay?

>> yeah. as far as i know i didn't see what happened yesterday. i was at the imf world bank meeting. >> it was over 2 again there were operations again. i see it on the different websites that are trying to make something of it. i'm just wondering whether we still -- you know what i mean? you know the ones i'm talking about. >> i know what you're talking about, joe as far as i can tell, i'll have to take a look at this, is they have been injecting enough liquidity into the markets and you know they made that big change, joe, which we talked about which was that they decided to take the temporary operations and make them permanent and come back and buy a whole bunch of -- >> by the way, mohamed agrees with me, it is qe. >> okay. >> it's a skinny qe. >> reporter: if you guys need to call it qe, then you should do so. >> skinny qe >> liquidity at the very least it's liquidity. >> reporter: in terms of the q, which is the quantity, it's much

less than other qe operations leading to less e, which is the easing >> liquidity is liquidity. >> reporter: okay. i'm not going to argue with you, becky. i don't -- >> that's what i was going for >> reporter: i think that when the fed wants you to believe they're doing qe, they have every interest in wanting you to believe that this is on the short end not on the long end i'm happy to debate mohamed on this look, i'm partially caught between i don't want to be the guy saying, well, this is what the fed wants you to believe i actually think they're pretty much right on this they were feeling around in the dark for the right level of reserves there's a lot of unanswered questions here but they feel like they got it a place where, hey, the reserve level is not high enough to keep the rate where they want it to go. >> we're bringing back santelli. >> reporter: rick, you want to call it qe, go ahead if it makes you happy, call it qe. >> reporter: what we should really have the discussion about

is how bad of a reputation quantitative easing not only has here but around the globe. the chairman has to go out of his way to try not calling it that listen, they're now up to 60 billion. >> reporter: i don't think that's the reason at all, bik. >> reporter: you can think whatever you want. that's what i think. you can think whatever you want. >> reporter: no, but let me just say. it's got such a bad reputation that everybody copied it all over the world it can't a be that bad of a reputation. >> reporter: there's a lot of people copying socialism, too. how do you feel about that >> why is that all good stuff. the height of stupidity is keep doing the same thing. >> reporter: bingo >> japan has done nothing. that's the next boarder. europe has negative interest rates, not doing much of anything germans should be spending $1 trillion on fiscal activities. >> mike santoli said the same thing. >> why ten years of economic

expansion are we resorting to these artificial things, which is why i assume a 17 multiple. degree of intervention by government is without precedent. >> what would your multiple be if we weren't doing these crazy things >> interest rates were where they are >> oh, my god, over 20 times i just give you a statistic. 50 year multiple in the market has been 15 in that 50-year multiple, it was 6.20, it's 170, 180. the fed funds raid was 5 it's currently 2, heading to 1.5. >> reporter: leon, which crazy things are you talking about the fed should not be doing? which ones >> well, i think the cutting of interest rates interest rates were already low. the saver in this country is being screwed, right >> reporter: right. >> what's happened is bernanke correctly understood the economy was going down the toilet. he said what he had to do, he

had to resuscitate the economy we had to get wealth up because there's a so called pergo effect where 5% change in wealth will work into consumption. get the stock market up to get wealth up. there he is a disproportionate ownership of the stocks. they got that back by creating a negative interest rate so the savers were not getting a real return in their savings. now they're trying to get a second bite of the appleby basically wealth taxes and be things like that, okay it's unnatural it's unnatural and i think it's creating an environment where they're having people moving out on the risk curve and borrowing from the future. we have a budget deficit today when the economy is reasonably fully employed that's not the way it goes we should be budget neutral, budget surplus >> reporter: i'm not going to sit here, leon, and disagree with you on these rate cuts. i was a guy whothought the fed ought to have stopped at 2.5%

and i would have loved to have gotten them to 3 to have a lot of ammunition for an actual recession or downturn. i lost that argument and, by the way, the split on the fed, there are as many people who agree with leon on the federal reserve as who disagree with him this is an extraordinary time guys, right now. >> we're going to continue this conversation with lee cooperman in just a minute we're going to talk politics and your money rick and steve, thank you to both of you. we're going to get his take on last night's democratic debate including the idea of a wealth tax. you can imagine where he stands, but you've got to hear it from him personally you're watching "squawk"n bc o

i'm really shocked at the notion everybody thinks i'm punitive i don't have a beef. you made a fortune, you got out there, worked for it, good for you. but you built that fortune in america. i guarantee you built it in part by workers we all helped to educate. you built it on getting on roads and bridges all of us helped pay for. you built it in part protected by police, firefighters, all of us helped pay the salaries for and all i'm saying is you make it to the top. the top 1/10 of 1%, then pitch in 2 cents so every other kid in america has a chance to make it.

>> senator, thank you. >> that was senator elizabeth warren last night defending her plan to tax the wealthiest americans. let's get back to our guest host, leon cooperman that sounded a lot like president obama's you didn't build that i understand that. i guess in -- >> i don't actually understand it they make it sound like rich people don't pay taxes i went to my accountant last night. my effective tax rate is 34.2% tax rate the only difference is long term tax gains. the federal tax rate is 37%. you live in new jersey, 10.5%. you live in new york city, 12.2%. you live in california, 14.1%. obamacare tax is 3.4% obamacare 2.35% no cap social security taxes, wages, 6.2%, cap $132,000 >> is this nails on a

blackboard >> if you have a problem, you need more revenue -- >> go ahead. >> just -- >> go on >> he can cite the statistics, but the question, the fundamental question, i don't think --, by the way, that elizabeth warren is looking for you. i don't know if you're one of the wealthiest 400 people in the country. >> i'm not i wish i was so i could give away more money. >> if you look at the top 400 people in the country and you decided the average rate of taxes that you're paying is less than you, is less than you, okay. >> get rid of the loopholes. we don't need a wealth tax. >> i'm not saying a wealth tax i'm asking you, what's your answer what do you think should happen? >> i said this and i repeat myself nobody listens they all talk by each other. what should the max in tax rate be on wealthy people i called warren buffet i hope he's not disappointed i say this i called him five years ago. one ke wonderful human being. you know his answer?

if you made a million dollars a year, 35%. if you make 5 million, 40%. >> the reason it comes down for those top 400 people is a lot of them have capital gains. >> fine. >> if you want to raise the capital gains tax rate, raise it raise the federal tax rate, raise the federal tax rate julian castro said it last night. the wealth tax has not worked. >> if there was a -- what i would describe as a progressive capital gains rate, would you be in favor of that >> i have to get the specifics rather than the generalities i am willing as i said before, i'm willing to work 12 months, 6 months for uncle sam, 6 months for myself when you get past the 50% tax rate it's a question of morality it's wrong ask yourself, you work hard. you get up at some ungodly hour in the morning. >> i do. >> you sit here, do a lot of reading, you have a view, you're to the left of joe, joe's to the right of -- becky i can't figure out where she stands basically how many months -- >> left of bernie.

>> how many months do you want to work for the government and how many months for yourself >> that's a fair question and there's a separate -- >> how did the wealthy people get their wealth >> i'm paying 55, 60%. >> because you live in new york. >> i live in new york and that's what i'm paying. >> don't you think you pay enough or do you want to pay more i do think i pay enough. there are people who are being paid tens of hundreds of times what i'm being paid -- >> your question is is there a minimum? is there a minimum. >> i think you can deal with that by getting rid of loopholes. >> i'd love to. >> get rid of loopholes. 1031. >> let's do the 1031. >> i said this on your show. go into your nexus, lexus, whatever -- the show seven years ago i said if they're serious, get rid of the carried interest. the democrats controlled the whole game the republicans controlled the whole game nothing has changed. i said if you're worrying about the budget, get rid of the department of education. $100 billion at the federal

level. we don't need the federal government to tell the states how to educate children. we did when we had segregation we don't have that anymore thank god. there are things we can be doing. i believe in the progressive income tax structure i happen to believe i'm my brother's keeper, that's why i do what i do with my money i get the greatest pleasure of seeing my children and grandchildren grow old, healthy and purposefully and giving back to the system. >> i'm not going to fight that >> but i don't need a wealth tax to do it decide what the tax rate should be and stop portraying billionaires as criminals. >> that i agree with >> it is counterproductive the american dream -- i hate talking about myself to be honest because self-praise stinks my father came to america at the age of 13 as a plumber's apprentice no formal education. he died at 70 years of age carrying up a sink up a four story ten amount building from a heart attack i grew up in the south bronx i went to public school in the

south bronx. i went to high school in the south bronx. go back to the movie for the apache of the bronx. the opening scene is two kids throw a third kid off a sixth floor of a ten a meant building. i was lucky. i could have been that kid i went west. i go to hunter college in the west bronx now kuld lehman $24 a semester wonderful wife i apologize, i have to finish. i have a short stint at columbia business school, opensthe door to goldman sachs i started with a student lone, a 6-month old kid who is 54 years old today and negative net worth. >> god bless you. >> that's the american dream. >> that dream is not the same today. the question i ask you is a different one which is, a, do you believe we need to create more revenue do you think the government needs more revenue is there enough money? i can tell you -- >> it's not. we should not be running deficits. >> by default we need more money. >> yeah. >> we have to figure out how

much money we need and then we have to figure out -- >> you could take all of the money away from the wealthy people and we're not -- >> i'm trying to figure out -- >> you're not? >> my answer is education. the average lifetime earnings of a college graduate is well in excess of $1 million more than noncollege graduates. >> 100%. >> educate the kids. give them an educational opportunity. >> who's paying for that >> the government through tax revenues and the private sector. >> we're spending $1 trillion -- >> our economy would be better off if we had more billionaires. just tax them. isn't the world a better place with jeff bezos? isn't it a better place because of bill gates? isn't it a better place because of bernie marcus and ken langone? >> absolutely. i don't disagree the question is how you're going to tax them. the people you just mentioned, the majority of them actually -- well, actually, i would say bezos is in a different category you look at warren buffet and bill gates because they're giving their money away, most of their fortune will never be taxed. true story.

>> the most of the wealthy people are that way. >> i call them fill lan throw mi throw -- philanthropist which is a capital p. i'm with a little p. >> give your money away and you don't have to pay taxes on it. >> the tax rate is not 100%. >> that's what i mean. do is you can pleasure yourself. buy art, buy planes, buy homes, i happen to be the view that material possessions brings -- less is more i'm not a collector of things. the second thing you do with money, give it to your kids. if you have a lot of money, leaving your money to kids is a mistake. the third thing you do with money is give it to the government you don the fourth thing is you recycle it back into society and make it a better place and that's where my money is going. >> you choose to do philanthropy

than taxes that's the point andrew is making. >> no, no, i pay taxes >> is that a good choice for most billionaires that their fortunes pass through to -- >> he had to pay taxes >> i understand. but many -- many are -- i know -- is philanthropy okay or should that go to uncle sam. >> i'm a better custodian of my money than uncle sam is. >> don't go anywhere you're going to stick around jim cramer will join us live from the new york stock exchange to give us his take on where this market is headed.

u.s. stocks had an incredible run for ten years you have concerns, though. >> i do. it has been a great run. what we have seen because of the great run is portfolios overweight growth and not having enough international exposure. >> so then what is the solution for investors? >> it is about getting back to basics and making sure you're appropriately diverse fide,

having even split between value and growth and taking advantage of the opportunities that we see current state overseas >> when you look at the total picture, how should a portfolio be diverse fide aified and what thinking behind it >> 70% in u.s. stocks, 30% in non-u.s. stocks. it should be an even split between value and growth and as we look overseas, really 30% is about where we see based upon valuations today more opportunities for returns especially over the long-term. >> thanks so much. great insights. >> thank you >> for more expert analysis, search for jpmorgan solve it online all right, down to the new york stock exchange, jim cramer joins us jim, i have one question for you today. the answer is what is wall street what is the question >> what is under attack by the democrats? >> no, no, no.

this is jeopardy last night. the question was, the road and the title of cnbc's "squawk on the street" is this one and they cover the day there from the opening bell the answer was -- >> get out that's what happens when i go to mexico for a couple of days. that's sweet >> last night. yeah, yeah, yeah, check it out really cool. >> just made my day. can i just say, i have loved the discussion this morning. i'm a disciple of lee. lee taught me. i believe there can be others. i don't think the barriers are that great i welcome his thinking it is very tough right now to try to work and do well and feel that you'll be rewarded after listening to what i heard last night. >> lee, what do you think? >> i have expressed the view i think that the world is better off because of bezos, gates, marcus, rubenstein, the american dream, the american dream, here, i never finished my thought,

here i am, first generation born american, first generation college degree, make a lot of money, giving it all back. that's the american dream. why do we want to deny that? all this negative talk, we have the best economy in the world. best economy in the world. people are the most philanthropic in the world basically. we keep fladulating ourselveour. a lot of what we have been done in the economy is good his tackling of the chinese problem is reasonable. his deportment is nothing short of disgraceful we'll have to see what happens but i had a conversation -- i shouldn't go this direction, i'll get in trouble, but i had a conversation a year ago with a 74-year-old gentleman who came to america, from hungary, at the age of 20, broke he didn't say this, but i believe he's worth $15 billion to $20 billion, thomas pettify,

he said he saw how socialism destroyed hungary and america was heading down a socialist path under obama and clinton and i would say that would be accelerated under sanders and warren, okay he said, and therefore he supports trump i did not vote for president trump, okay. i respect what he's done okay i did not vote for either one, trump or clinton i wrote in mitt romney who is not a jack -- he's a terrific human being. he looks presidential, acts presidential, and he would be a good candidate for president okay and -- but, what isaid to him is if two years from today, now a year from today, the best democrats could do is a socialist candidate, i would vote for trump where i did not vote for him last time the end of the day, capitalism is what distinguishes america. >> they're playing us out. jim, lots of earnings coming up and we'll see you in a few minutes.

glad you're back >> thank you >> we'll be right back after a quick break. but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you.

want to thank our guest today, lee cooperman, who had a lot to say on so many different issues i think you know what would be good today, the squawk pod, the -- lee cooperman. >> check it out. >> i've been privileged to be born in america, like all of us we love the country, we want the right things to be done. >> you think the american dream

is still possible? >> i would hope so i think we can do everything we can to perpetuate it and have it in a 50% motharginal tax rate 32-year-old socialist that quotes faulty economic data, makes faulty assumptions, influencing elizabeth warren, it is all wrong >> i think you should appear a lot on a lot of places because it was very apparent lee, thank you join us tomorrow what is "squawk on the street" is next. ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. futures have flipped between red and green this morning amid some reports of a hiccup in brexit talks, more bank earnings and the worst retail sales print in seven months more data is on the way today. europe has mild gains. the ten year yield hit