>> 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 175 before that retail sales miss.

road map begins with china trade concerns, retail's biggest sales decline in seven months, corporate earnings in focus. b of a rallying on a beat, futures point to a muted open. >> capitalism under fire a bit democratic presidential hopefuls square off and taking aim at big business and personal wealth. >> and billionaire marc benioff will join us at post nine. we'll talk tech regulation, capitalism, ipos and who he is eyeing in the 2020 race. stocks are on track for a modest open a day after the dow close the above 27 k for the first time in almost a month s&p finished shy of 3,000. b of a beats the street with quarterly results. on the economic front, retail sales were down .3 in september. revisions were better. gas stations down .7 people say maybe this has to do with gas prices. >> perhaps it does when i take a look at what is going on, if you read between the lines with bank of america, which is just a gigantic bank, gigantic consumer bank, talking

about 5.7% growth in consumer spending year to date. i wonder whether these retail numbers are accurate i tended to -- wanted to believe in them, but i find it hard to believe that you can have bank of america showing this level of growth, bank of america is, i think, representative of our country. versus the retail sales. maybe the retail sales do not capture what they used to in the numbers. because that's a tremendous disparity, gasoline or no. hard to believe. >> you would like to see the changing metrics, how they go about measuring given the significant change in place of how people buy things. they're counting for online and things of that nature. they're not missing that. >> are they? i don't know let's see what the adobe numbers are. adobe keeps track of all commerce, keeping e-com. i think e-com is harder to track. there are so many different i was and outlets that companies

that you buy things from, when you look at -- it is almost like that's a mall number mall number plus club. look at target, look at walmart, look at amazon, look at costco, look at home depot, you're seeing spending, the best in years. why is that -- how can you -- >> those are, you know, market share dynamics, potentially at work we were doing prints of . of .4, .5, .8, all summer long. >> i know that there is a propensity to believe that what you saw last night, what you see in the papers is cutting back spending, but jpmorgan had an exceptional number yesterday for consumer spending and talking about, you know, a gigantic -- talking about, like, gigantic amount of consumer spend goldman not as important but goldman had tremendous numbers on the credit card they would argue they're a big factor, not -- wealth spending was pretty darn good citi spending was good i struggle to find of the companies i follow anything that

is anywhere near that retail sales number, retailers or banks. i don't know how to rectify. i can't -- i just can't reconcile. i cannot reconcile these numbers. and i know that we can listen to people who in the previous show who talked about federal reserve and commerce department, get the numbers. i deal with the reality of bottoms up, bottoms up is much better than that number. yes, you can back out sears and kmart, i don't care. you can also say -- these are real numbers i'm giving you. the real numbers require making a mosaic of what is going on and the mosaic involves banking and retail to a level that i can't ignore >> yeah. all fair this morning, an interesting dynamic in the research that i've noticed, jim, i'm sure you too, there seems to be analysts who want to temper the prospects for growth companies >> yes. >> you mentioned adoeb why i be of their numbers

the downgrade from citi, workday over at evercore, a lot of positives, but adoption remains an evolution, not yet a revolution morgan stanley, tougher road to large opportunity on slack they also take a breather on service now. and i'm just wondering, is there an underlying tone here that perception of growth changing? we have been talking about it, but now maybe it is -- >> there is no perception, hours worked has fallen, wage growth rolling over, the payroll average is ounsel dowdown this is not coming out of nowhere. >> how can walmart be challenging all time highs >> bill gross would say, what, a quarter of the gains this year have been because of falling rates? >> well, i'll take whatever i can get. i do worry what david is talking about, the idea that the companies that sell at 30, 40, 50 times earnings are really falling, falling and -- back up what you said, david, the

workday number -- price target, slowing human capital, moderating the core business, when you look at adobe, talking about their commerce business, simply not being that -- commerce business, huge part of the business. service now, you're back trying to reconcile microsoft and be buying microsoft. >> it is the sass companies -- >> we have benioff. >> we do the stock has not done particularly well, trades well below the group, undervalued many would say what do you do to fix that, right? >> well, i've got it tell you this market likes the lowest multiple stocks, with the exception of the autos look at micron, loves micron, 43, 43 they like texas instruments. j & j, sells at 15 times earnings it loves jpmorgan citi

worth noting, very important >> yeah. meanwhile, got to keep one eye on the debates last night. healthcare breaking a big tech, taxing the wealthy here's how senator elizabeth warren defended her plan to tax the wealthiest americans. >> i really am shocked at the notion that anyone thinks i'm punitive look, i don't have a beef with billionaires my problem is you made a fortune in america, you had a great idea, you got out and worked for it, good for you but you built that fortune in america, i guarantee it, you built it in part getting your goods to market on roads and bridges all of us helped pay for. you built it at least in part protected by police and firefighters all of us help pay the salaries for all i'm saying is you make it to the top, the top of .1 of 1%,

pitch in two cents so every other kid in america has a chance to make it. that's what this is about. >> jim, you were, i would say fired up on twitter last night and this morning. >> i just feel they got to distinguish between what i thought was reasonable so-called assault on billionaires, one of them was up there, versus this rhetoric about prosecutions of drug executives. they mentioned j&j, want to prosecute alex gorsky? that's a show trial. show trial j&j, great american company. i heard it astonished okay, break up the banks the government put together the banks. do we need to break up the banks? bank of america too powerful we have so many more banks in this country than any other country. it is remarkable big tech, mark zuckerberg, he is

a pinata amazon, how do you like the way that elizabeth warren quoted the 47% amazon, versus saying that walmart never got near destroying small business like this i think amazon web services powers small business. i think that the rhetoric about attacking the companies that we follow, versus a very reasonable negotiation with the billionaires, who should give money back, versus giving it back charity, these are two different things, but when i heard j&j, i said this is america. can't prosecute alex gorsky criminally for what for 1% of opioid, which was all prescribed is that the way our country is headed >> should point out as well this morning there is a lot of different news s on potential opioid settlements, with distributors, talking about teva, close to a potential settleme settlement, j&j involved, separately from what they were talking about last night, but

important for the performance of the stocks i wonder if some of this goes back to the lack of prosecution during the banking -- >> most definitely by the way, that did come up, which is the idea we dropped the ball against the people who really almost wrecked our country. it is going to be a great discussion of marc benioff i agree with you, this is a rear guard assault on what should have happened. and there are executives i want to mention names who i thought should have been criminally prosecuted, but got -- but stated, they did skate that justice department, obama justice department failed. and you know there are -- books written about how they fail. i just felt -- i finished and said, geez, i really like a lot of these candidates, but they have got to stop talking about how business is the center of all evil business is the greatest platform for change today. >> they probably will stop, once we get past -- we're in the primary season. >> i know. look, i think it is interesting that bernie sanders is a socialist.

what do i -- socialist what do i expect rhetoric he's a capitalist he's a stated socialist, like, you know, the great socialist of france during the -- i live in a communist -- i have a house in a communist regime in italy. communist. called a commune it is different. they come in, they tell you what to spend, what to do, they take your money and say, hey, what did you think? what did you think it is communist for heaven's sake socialist is a little bit better at least they don't tell me what crop i need to grow. >> it is not as though we're not going to have a debate coming up in this election about sort of the future of capitalism mr. benioff will speak to that he does in his book as well. >> do you think senator warren is against capitalism? >> no. >> i don't either. >> i do think she wants change in the substantial way so interesting too i met a couple of people who were her students at upenn law school, and they are -- she was their favorite, and they're, like, we don't know who this person is. >> people at harvard -- the

consumer protection bureau, very important. people i know are from texas, people i no he frknow from harve say great professor, in terms of reasoned analysis. maybe you have to do this to get the nomination a lot of people say, i said -- i was at a party last night, will she move right, will she move right, will she move right she can't tack right when bernie sanders is out there raising a ton of money >> that's exactly what is happening. meanwhile, the reaction this morning, lee cooperman on "squawk" saying the market has another leg up left in it. maybe 10% over six months. but did talk about the risk of a president warren and sanders listen to that. >> if the president resorts to another round of tariffs that probably increase the probability of recession, and if we have a recession, the market drops, at least 25%. if elizabeth warren is elected president, in my opinion, market drops 25%. bernie sanders, same thing

>> all right, so echoing what he said at delivering alpha a fu weeks ago. >> right bernie sanders, if you read his platform, one of the first things he says is a trillion dollars in buybacks, that's got to end if you look at the numbers of citi, the numbers of bank of america, when they bought back a gigantic amount, you look at the numbers from jpmorgan, the first thing you say is the biggest reason why they made so much money is the buybacks. johnson & johnson, gigantic buyback f that ends, i understand what lee is talking about. you still have dividends, but as also lee talked about how the stock market is really the residence of rich people so once again, that's a continual theme. and therefore it is almost like they wish it would go down that means that you cut a check to the government for what you made in the market and that's about it >> right well, the run-up in the '90s helped with the budget deficit,

given the capital gains taxes. >> yes, it did. >> many of us have come back to that perhaps as being a more favorable way to go about trying to deal with income inequality, which continues to worsen and is driving so many of these different debates. >> wouldn't it just be so simple to say, look, let's go back to where -- i know elizabeth warren dances around this, let's go back to ordinary capital gains taxes the same i haven't been in a ton of regimes where capital gains, 84, they changed the law, that was ronald reagan. i agree with you, i think these guys are all overcompensating, trying to make it so they don't win the billionaires' vote they won't get bezos' vote what they're look at again to reference benioff, i'm hyping this interview, talking about 27 people who own the world 27 >> half the country owns no stock or mutual funds at all

>> well, i mean -- >> most people can't get past the $400 emergency bill. >> should we go back to lenin? >> lenin was not a part of our history. >> we're planning and really equalizing things. >> i don't know what we go back to, but no. >> the people united will never be defeated. >> when we come back, we'll get cramer's mad dash, count down to the opening bell also ahead, a include thclue ont night's "jeopardy. and sales force chairman and co-ceo marc benioff out with a new book, take a look at the futures here, we'll get to amazon, adobe, ual and big night with netflix and ibm don't go away. this is the age of expression. but shouldn't somebody be listening? so. let's talk. we're built for hearing what's important to you, one to one. edward jones. it's time for investing to feel individual.

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♪ go on and take the money and run ♪ ♪ go on take the money and run ♪ ♪ go on take the money and run ♪ always like the whistle there. >> steve miller. >> steve miller. and not the guy who -- >> not the guy, yes -- >> not the one dealing with purdue pharma. >> the space cowboys, the man who speaks to the -- >> let's get to a mad dash for also what we call hump day at "squawk on the street." >> yes >> united airlines.

>> okay, keeping with this notion you brought up the high multiple stocks are really under a big assault. this is a low multiple stock it roared an incredible number, they have 389 million shares, five years ago, 257 now. remember the days when they had the issue shares constantly, doing so poorly. traffic up 1.9%. they raise numbers, they could earn about 1050, now 11 and a quarter, 12.25 the buyback is 50% lower than where the stock is so oscar munoz just a fantastic interview, with phil lebeau this morning. this one has to be bought. and look, the max came up. 737 max. you can argue it is distorting everybody's numbers and fuel is higher david, this is a really inexpensive stock versus say workday, versus service now. that's what those stocks, the money is coming out of those and looking for a home this is one of the homes >> that's an important trend that we have been noting for some time.

also wondering whether or not it is going to reverse itself >> it usually does. >> growth somehow finds a way. >> the numbers are extraordinary, we say what the hell were we thinking dumping these stocks those are stocks that are momentum these are not momentum stocks. there is so much money that is pegged to momentum, but the momentum guys saturated with louse banking stock yesterday is they all kind of say there is still a window that is open, but they talk about wework, goldman's call was about $80 million exposure >> listen, they're numbers when it came to underwriting equities, were not great. >> no. i think we're -- the window is not as open as these guys say. i remember that from my french class. >> here we go. >> yes, some people call me maurice. they call me maurice because i speak --

>> we have a lot more songs from the spinning deejays at hq on "squawk on the street" and the opening bell i am totally blind. and non-24 can throw my days and nights out of sync, keeping me from the things i love to do. talk to your doctor, and call 844-214-2424.

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in three and a half minutes busy day that is so good to have cramer back at the desk because people have been asking some big questions, the ten year back to 175. what does this do? is it this a p&g market or -- >> they have gotten hit, you talk about the 120s to 117, i think everything is day to day

there is a propensity to try to go for lower multiple over high. i want to correct something i said last week about apple in terms of the back order watch, not being out of it, i'm confusing anecdotally back order, up at apple store last night to try to clarify things there are certain products that are on back order. and that is surprising when i speak to the managers there, last night, the 11, there are certain 11s on back order. again, i don't want to -- i want to -- i don't want to conflate back order with out of back order meaning you can't -- many stores we can't get in new york and brooklyn. i should not have generalized that way but then again, look at the stock. the stock is reflecting that the 11 is a huge hit just a huge hit. and it is also reflecting the watch is doing better. it is reflecting service revenue. but, look, starbucks, throwing stuff at starbucks in hong kong. who knows what will happen but abbott -- apple is a great example of what i regard as

being a low multiple stock that is getting a higher multiple and workday,bushry, gave a lot not to love about workday. i said in my game plan that workday would have a good conference, good session there an & and i was wrong. >> mixed takeaways from the workday analyst meeting, right, jim? you got a couple -- you got a downgrade today, talked about it earlier. but it is also getting lumped in with the overall -- you can see the stock. >> lack of love for growth >> yeah. let's buy growth -- look, when we look at the growth of bank of america, you can just consumer spend, 5.7%, versus 2% gdp, almost triple. i would rather own that stock than i would workday i never thought i would say that the multiples are insanely low for the banks.

i guess the multiples reflect perfection on this software as a service stock. people seem to prefer oracle which is in the claymation death match with marc benioff who we'll have on the show. >> look at the crm stock over the course of last year t has n not been a good performer. over time, without a doubt, you want to have owned the stock. >> how about the difference between microns and sty wo s a solutions. ever since micron reported and plummeted and came back up, it has been the clarion call to own the semis. let's not forget my dog. look at my dog. >> there is a -- >> you see my dog in. >> it shows you how it leveled off over the last couple of years. >> yeah. i still would rather be long that than bethlehem steel, which doesn't exist anymore. i just think that the classic manufacturing stocks deserve to be down and yet they're coming

back, deere is breaking out, those don't really mack a lke ao sense to me. the oktas are coming down. the high multiple is come down >> a deal in the making. there is the opening bell and the s&p 500, the cnbc real time exchange at the big board, new york magazine, celebrating the 2 16r9 annual new york taste culinary event taking place on monday at the nasdaq, vir, clinical stage immuneology company. >> a company, tech data, deal talk from apollo at 130. i had tech data on a month ago that company is on fire. that is ridiculous you won't get that for 130 let's watch that that is a very inexpensive stock. that's a supermarket of tech they handle everything anything you need, wholesaler.

i don't know if they have nvidia i'm picking nvidia, that's my dog. >> i'm aware, yes. >> what is your dog's name is your dog texas instruments? >> no, scoop >> what? >> scoop >> why don't you call him slack? he's an underperformer do you see the goldman conference call, solomon is talking -- he talks about direct listing and how it is questionable no kidding questionable how about horrible. >> not good for his business mr. gurley would have some benchmark, bill gurley, the proselytizin listings >> other than elizabeth warren, who else has that gig going? bernie sanders was -- he -- >> back to bernie. >> bernie is, like, i was waiting for him to say, listen, stocks must fall 25% in my regime just raise the capital gains and you'll accomplish what you want. he really, again, we don't want show trials of executives. it is too darkness, arthur

kosler, stalin -- >> let's go back to something discussed during the debates talk about the stock market ramifications for all of the different news about potential opioid litigation settlement. >> i'm all over that. >> that we're hearing about. the drug distributors, here i'm talking about mckesson, cardinal health, the three big distributors in talks to settle for 18 billion according to a number of reports. don't have this confirmed. this is relying on the journal i think in this story. you got teva as well, potentially trying to settle you got the ohio trial about to begin jury selection, i think today, nice start as soon as early next week. and that's where you got a lot of these cases consolidated, remember, with all the plaintiffs, which are not just states here, but municipalities, local governments as well, that have been so hard hit by this horrible crisis that has gripped our country for the last ten

years. >> separately you got purdue pharma, which filed bankruptcy and is trying to get the states, all the state oz on board with its planned offer. and j&j also, which you follow so closely, jim, also trying to pursue that. see the judge said he did the math wrong in the other case, they awarded them 500 something million and lowered it by 107 million. >> 4 billion number, j&j cannot be confirmed make that really clear. >> 4 billion. >> that they might pay in a settlement, not be confirmed by anybody. i don't know where it got, maybe it is true, maybe it is not. the missouri court that awarded gigantic sum on the talc litigation -- the court above it has been really in favor of j&j. the appeals court. i want to emphasize that you see those gigantic verdicts, where

the plaintiffs win, they tend not to win as big when gets to the -- >> earnings were terrific. it is the first time the medical device segment was good. i have to tell you it is -- they talked about the plaintiffs, $4 million to fine plaintiffs, more than a $30 billion industry. i would love to own stock in a plaintiff law firm you're not allowed to in this country, but, wow. those guys are making a killing. >> yeah. here is another company making a killing, doing really well, growth company huawei doesn't trade. just pointing it out >> steve bannon -- >> so far this ban doesn't seem to be -- 24% year over year increase in revenues at huawei they seem to be getting what they need. >> that's a great point you bring up there is a moment in -- an

upgrade about nvidia yesterday, talking about nvidia, not able to really sell in as much as they would like. >> the price target to 250. >> they talked about -- i went out to see jensen huang, he was talking about being able to mimic voice and it was really incredible i came on, i said, you know, this is when you can say get out of town. and it is able to recognize that it doesn't mean, david, you must go over to camden, new jersey, it means, hey, the computer can actually -- he doesn't like that >> natural language processing. >> natural language. go jump in a lake, david you don't go to -- >> happy birth day angela lansbury today. >> oh, my. >> 94. >> 94. she was wearing that card, that queen, wow >> language processing, bamle argues this is the next chapter in ai. >> we're going to -- >> rapid rate, there is an interesting new yorker article on this very subject as well this week about google and it is

able to finish sentences >> bank of america -- >> because of ai and what is going on. >> they're a huge number of people using bank of america voice. >> right >> send money this way, send money that way >> the advance, it is way beyond moors law. >> nvidia is moors law a long time ago. >> it is frightening to me. >> here is gee pie a fu minuew s ago, imagine what would happen if we let chinese companies equipment into america's 5g networks. >> i know that there is a fantastic -- >> we're not putting huawei out of business. 25%, 24.5% growth. >> want to buy stock in that brian doing a terrific special about rare earth minerals and how -- rare earth minerals go into our defense that's suboptimal. that's suboptimal situation.

>> yes we're going to are to make them less rare. >> do you think that russia is a greater opponent to our country than china >> i think -- do i >> yeah, you i'm asking you on jeopardy >> both significant foes, certain areas, russians more so in our face in terms of geopolitics. >> fill in pretty quickly there. there is a book -- >> they moved in very quickly. >> there is -- we can ask benioff, am i endless in my hype for that he's discussed privately the notion of -- of what the chinese could do to us, if they decided, boom, you know what, we're going to make it so that we're in the defense, we're doing all the things -- meanwhile, if you're talking to your -- if you're talking, you know your pc hears you now, right >> the chinese have been bugging my chinese since i did the documentary eight years ago. >> how could they not? >> yeah.

they have me fully -- >> they should, david. you are -- >> they should be all over -- how about lebron. >> china mentioned four times in the debate last night. four times that's pretty light coverage for what some argue is the existential story for two countries in the next generation. >> yeah. they're not really up to speed on everything when it comes to knowledge of china >> do you have any thoughts, by the way, on where we stand in terms of the actual talks and whether or not phase one is going to happen or they're going to follow through on this $50 billion number of agricultural purchases? >> did you know they're in the house going to put through a hong kong resolution the way they did and adam silver, hong kong resolution, the nba commissioner, you know, i got a book from marc benioff called ghost fleet. which talked about the idea of china -- really influencing all

of our military in a nefarious way. i never forgot it. it always scared me. i know we have a million things to talk about, with marc benioff, including underperformance of the stock, i think that he scared the bejesus out of me with this book he told me to read marc is everywhere right now there was a -- by the way, the book is sold out so sold out. >> long time reporter for the wall street journal, went over to sales force and the co-writer on this. >> one of the reasons it is such a good read with jim stewart's -- a lot of people who are really -- deep state seems to be sold out by -- >> elton john. >> i think it is great that -- >> how about farrow. >> they're reading books still ereader didn't become the threat everybody thought. i know people read their books on kindles -- >> it tempered. >> i like to read books.

>> i think people are back reading books after a hiatus the millennials, busy camping, taking cruises, taking picks on instagram, they seem to be reading. it is astonishing. >> maybe some bookstores that they can actually buy these books in a couple of other news stories i wanted to hit, mgm not doing much of anything they announced a large deal. $4.25 billion and then they're going to lease back the bellagio blackstone the largest single owner of real estate out there for the most part. and that is something that had been anticipated by the market place and so you see not much of a response there, at least in terms of the significant divestiture for that >> vicci properties did that already. good return. it happened already.

mgm i think has to get in the game in a very big way that's -- >> this will help -- they're raising a decent amount of money they can allocate towards newer efforts in different areas. >> i think that there will be tremendous gambling on fantasy >> yeah. >> yeah. >> all right, guys we're down 17, holding 29.90 to bob pisani. hey, bob. >> good morning. mixed open, but the banks are helping and they're saying the right things about the consumer. that's the most important thing. let's look at the sectors today. bank, kbe to the upside. most reporting on the upside today. materials sort of mixed elsewhere, healthcare. tech is weaker some of the software stocks are a little weaker, adobe, downgrade over at citi sales force, autodesk a little on the weak side software that is the weak part of tech here the banks, today, numbers were mostly really good overall again. bank of america, pnc, u.s. bancorp, trading up. comerica flat here

remember the u.s. consumer, the linchpin of the global economy, if they go south, everything goes south and generally very positive comments on the consumer we saw that yesterday with jpmorgan look at pnc, long growth was strong in commercial and consumer sectors u.s. bancorp loan and deposit growth solid, their words. mortgage revenues, they singled out, were robust that's their words this is a big midwestern bank here average loan growth has been good as well remember last year we were talking about average loan growth, 2% i use the word anemic a lot to describe it last year. it is better bank of america, pnc, comerica, u.s. bancorp, 4% to 6%, average loan growth, mix of commercial and consumer year over year, these are good numbers. and i think that's important then we have the other side of the coin, which was retail sales today. got the september number i don't know what to make of this i don't know if anybody else does the numbers were surprisingly weak, particularly for building and materials that have been

strong, food and beverage okay, and nonstore online down i don't know what to make of that my sense is this is probably an outlier. i think we need to see more data some people have advanced the idea that the purchase pulled for due to tariffs, maybe, i don't know august, remember, a lot of recession talk in august consumer confidence was weaker that may have impacted retail sales. overall, retail sales are up 4.1% year over year. those are good the second best month of the year august had really good back to school sales it seemed to me i don't know i think we should sit and wait for more data. it is not impacting the retailers if you look. this is either side of positive or negative for all the big guys that matter, walmarts, targets, ross stores, look, tiffany, gap, this is either side of positive or negative. so this data is not impacting retail sales today we'll keep an eye on that. the dow down 16 points

back to you. >> bob, thanks rates still a story. to rick santelli at the cme. good morning, rick. >> good morning, carl. rates continue to be a bigger story outside of the u.s. to some extent. now do keep in mind, the yield curve continues to steepen maturities down a couple of basis points long end unchanged looking at one week chart of 10s, you can see we have been climbing, now it is a bit flat over the last couple of days, but we did close above 175 if you open the chart up to early july, you can see that 175 had some closes to pay attention to but the big level through this really is the 190 level. if you look at one week of bunds, you can see more aggressive from a percentage basis. now hovering on the north side of minus 40, hovering around minus 39 basis points. that is the best closing level should it close under 40 since the 26th of july, we'll call it a couple and a half months and you can see on this july chart, last time we were at this

level. and if we continue to monitor why rates are moving up more aggressively in europe, it is most likely has a lot to do with policies of the past and potential changes to the policies for the future under christine lagarde. there is a lot of work being done in the u.s. about negative interest rates, san francisco study quoted in today's journal, but to the end of the day, like qe, i think the fed is protesting a bit too much, they could find all the research they want on negative rates, countries that have suffered through it and indeed suffering seems to be the operative word finally, brexit talk is it going to hatch before the 31st well, many believe so, the market sort of believes so look at one week of the pound versus the dollar. it is best level since mid-may carl, jim, david, back to you. >> all right, we're going to watch those headlines too coming out of brussels. if you did miss last night's addition of "jeopardy," a moment that is worthy of your attention. listen very closely to the clue.

>> tv morning shows for 400. >> the road in the title of cnbc's "squawk on the street" is this one, and they cover the day there from the opening bell. >> what is wall street >> yes >> it is cool to hear trebek same the name of our show. >> it sure is. look -- >> i got thrown by road. what >> i love being part of the firment. it is good good thing. >> they are -- they always -- they're fans they watch. >> how can they not be look at what we're throwing at people we're triple threat people, song, right, we can dance, we can act, there isn't anything we can't do we're fred astaire fred astaire >> had to do everything he did -- >> very thoughtful person. >> what year was your appearance >> that's a great question got to be at least six years ago now. >> no, more than that. >> maybe more? oh, my god. >> there is jabbar. >> taller than dana.

>> that's not necessarily clear. >> what knocked you out? what did you get wrong >> one thing wrong. >> what? >> but i won it was the hebrew word for day >> you missed a hebrewword >> yeah -- it was embarrassing >> that really is. >> i got everything else right. >> good. >> that's the way to play it. >> yeah, i'm looking forward to coming back one day. >> love you. >> yeah. >> yeah. nice >> when we come back, the interview of the day, marc benioff with us here on set of sales for. we'll talk ipos to capitalism to china. dow down 28 to start this wednesday. don't go away. tell him we're flexible. don't worry. my dutch is ok. just ok?

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later this morning on "squawk" under armour ceo kevin plank and sir richard branson as they unveil some new material regarding intergalactic travel dow is down 33

we'll get with stop trading in a minute

time for jim at stop trading. >> bank of america, i wonder if -- this is the tech company very close by the way, bank of america, with that sales force, but we're going to have marc benioff on don't read the book now. and one of the reasons i really like this is it's a warren buffett story. he has chosen to buy this one more than the others he has bought so much and the company has bought so much, he has to petition to buy over 10%. it's his endorsement is really paramount on why i think the stock goes to 35. >> what do you think buffett sees >> i think he sees a company driven by technology that is winning over not just millennials but all ages because there are too many people. i think he sees this i know that this is, by the way, the 11 i know that i tried to get the super 11 they were out of it. but there is just one store.

they're not doing that well. but i do think that the excellence with which they're posting technology means a great deal it can save a lot of money and the consumer likes it. >> berkshire owns a lot of apple too. it's only up 2.7%. it has not been a good year. years of underperformance for the single greatest investor >> why did you bring that up end on a negative note. >> i'm just here to deliver the message. >> tim cook, no innovation whatsoever that's why i took a picture of my wife and it was crystal keer and -- clear. there's no innovation whatsoever and it's too bad. >> there has been work done on apple and what comes next. if you look at the chart, it's kind of flattened out over the last couple years. >> i'd like to see what patents

were awarded at huawei a stall on patents innovation, there's so much innovation happening at apple. there's an hour and a half wait at the 24-hour store, at least there was last night i want to qualify that other than that the stock is the greatest performer of our life. >> you didn't do a stop trading. did we miss it >> he's going to stick around. >> after the close we may get to cbs viacom proxy. >> i'm not going anywhere. we're bumping into our own show. >> jim is not going anywhere because sales force's marc benioff is going to be here at post nine in a moment. - did you know that americans that bought gold in 2005

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the u.s. money reserve has proudly served hundreds of thousands of clients worldwide. don't wait another minute, call now to purchase your american eagle coins at cost for the amazing price on your screen. good wednesday morning welcome back to "squawk on the street." i'm carl with jim cramer and david. jim is going to stay here as we talk to marc benioff in a few

moments. dow close to session lows. dow is down 58 as we've gotten a ton of data and are about to get more. >> let's get to our road map retail seeing its biggest sales decline in seven months. could be a sign that consumer economy is cracking. billionaire's duty what allibaba thinks of the responsibility for the wealthy. in just a few moments, sales force chairman and co-ceo marc benioff will join us here at post nine. he's got a new book out. we'll talk about the changing face of capitalism and maybe about sales force itself. >> let's get inventories with rick >> our august read on business inventories is a goose egg unchanged. we are expecting a number up around .2 and last month's revised downward to only up .3 just to give you context, this is the second unchanged of the year the first was in march to find a negative number which is infrequent in this series, you have to go back to april of

2017 it really isn't a terrific number carl, back to you. >> all right, rick we're going to go to diana. >> that's right, carl. builder sentiment jumped three points on the national association of home builder index. that's the highest since january of 2018 and beat expectations. anything above 50 is positive. builders are pointing to lower mortgage rates the average rate on the 30-year fix is now well over a full percentage point lower than it was a year ago the tight supply of exiting homes for sale is also helping builders the index's three component sales conditions rose, sales expectations jumped 6 points and buyer traffic rose 4 points to 54 builder confidence rose in all regions and is now highest in the west and the south back to you guys as she said, as lenar hits a

1.5 year high. >> there's two economies brian made this point again and again. there's the part of the economy, let's just say it's even up, maybe as much of a third that is industrial which certainly jives with what we heard, but i've got to tell you, the consumer is much, much stronger. kind of confirms that versus ri rick's which confirms the other side housing is just the beginning of retail once you buy a house, you go to raw stores you do go to tjx you go to home depot. >> go to sherman williams. rgc goes to 625. >> i think lowe's is having a terrific quarter everything that goes into a house, into building just a wardrobe, don't forget dollar tree and dollar general. you don't go to sears. you don't have to workday

either, obviously. >> workday suffering today people haven't been going to sears for a long time which is why we don't talk about sears. >> when i was in mexico, they were going to sears like it was going out of style it's incredible. sears, mexico. i like liverpool but i do think this confirmatory of what we've been saying over and over, we have an economy that is serviced the service economy is not being hurt by china. the manufacturing economy is being hurt by china. anything that is involved, i still think the president's -- all these things in order to be able to make it so we have more time to get out of china that a don't do an ag buy the president will feel completely betrayed this is what happened in argentina. he's going to look foolish he doesn't like to look foolish. >> no. and he never admits that the $50 billion target is a big one for the agricultural products our high was $29 billion in a given year. >> they need corn. they need pigs

pigs are $75 a pig. >> they're dealing with a lot of african swine problems in china for their own pig population >> totally agree. meantime you've got politics to watch as well the presidential candidates on the democratic side taking the stage in their fourth debate kayla is live once again from westerville, ohio with some of the highlights >> good morning, carl p it was the largest debate stage in history candidates were treating her as a clear front runner putting warren on the defensive as her plans repeatedly came under attack here is one exchange on the idea that both senator warren and senator bernie sanders have espoused that accumulated wealth should be taxed. >> 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 pro fetect

billionaires than it is to invest in an entire generation of americans. >> i want to give a reality check here to elizabeth, because no one on this stage wants to protect billionaires, not even the billionaire wants to protect billionaires we just have different approaches >> senator amy klobuchar there among moderates arguing that the existing tax code should be reformed instead both she and south bend mayor pete bjugstad received high marks for several viral moments where they challenged the party's current policy direction. they each got about 13 minutes of screen time vice president joe biden got about 17 minutes senator warren got 23 minutes. that was the most of any candidate, but that was partly because she was tasked with responding to so much criticism. it was on a wide variety of topics from withdrawing troops from the middle east, breaking up big tech companies which andrew yang said that won't work and a host of other issues, including whether she would suspend president trump's

twitter account asked by senator kamala harris. she didn't say yes, she didn't say no but she said she preferred regulation instead >> there was a remarkable moment where vice president biden called by his old title basically just attacked everybody with just the notion of how much it would cost to go single paider. it would bankrupt our country. i know this is something that many people -- many democrats want how out of season is biden's talk about not going for single payer? because he really wanted to draw the line to distinguish himself from everybody else. >> reporter: well, he's done that in debates previously, jim. i think what was interesting this time was that biden had company. he has previously sought to double down on the affordable care act biden is the closest to that law and he believes that it works and that the public option needs to be expanded this time around he had buttigieg, he had klobuchar, he

had o'rourke and a handful of others that were backing him on this more moderate approach really creating this divide in the party of those who believe that you should have that structural big change to the way that the entire economy functions and those saying you just need to reinforce the existing infrastructure and make it better. it's going to cost a little bit more, but we're not going to be dishonest with voters about where that money is going to come from. >> kayla, carl mentioned earlier i think china only came up four times in the conversation last night. i just wanted to come to you on something you've covered more closely than the debates which is china trade a lot of talk this morning, "the journal" doing a piece on agricultural promises in terms of what they're going to purchase anything to share with us in terms of expectation there is or how important that will be that they actually hit that $50 billion mark and can they? >> reporter: well, i think there are questions about exactly what the structure is, david, of that purchase even the president in the oval

office says it will be up to 40, up to $50 billion. it seems like some of those details were still being worked out and the treasury secretary seemed to allude to that earlier this week as well. there's a suggestion that the purchases would be over a two year time frame meaning that china could essentially stale back or scale up those purchases depending on how relations with the u.s. are going certainly china is coming off of a win in washington with this deescalation they had been buying a lot of agricultural products last week in the lead up to that announcement perhaps they're hitting the pause button we'll see what detail we can get there. >> kay larks la, so much to get. meantime, alibaba's founder speaking at the forbes global ceo conference in singapore touching on a variety of subjects including the duty of being a billionaire. >> we have $1 billion. that's not your money. that's the society's trust they believe you can spend the

money better than the others you have to spend money in a smart better way so i told bill and warren buffett i want to use the money to create more jobs. i want to use this money to do the things that is more than just giving the money. >> answering some large questions which i'm sure we'll address with benioff in a few. >> he couldn't be more on point i think. you want to put food on the dinner table and you want to give health care and i think that jack ma is totally right in understanding the typical american who is about to go bankrupt because of health care. anyone who's tried to find a policy in areas where there used to be obamacare where people would write insurance, a lot of people who are not -- who can't get it because the companies aren't writing anymore he has a great understanding of the weakness of the american system that is terrific

>> listen, i'd love to -- you know, i had an opportunity to sit down with him through the years any number of times and he's always fascinating to listen to. no longer the chairman of alibaba. it was last month when he stepped down as the company's chairman >> he's really so 50ed >> jack, if you're out there anytime -- >> when we return, we also have someone else to hear from, chairman and co-ceo marc benioff. we're going to talk about his okndo nyth tngerhi to discuss

i would say on point op-ed this week, our next guest says the capitalism was, quote, dead. wow. there's been horrifying inequality because of capitalism that needs to be fix ped joining us sales force chairman and co-ceo marc benioff who is out with a new book. by the way, which is sold out. this is a business book that is sold out that's a great tribute to you. >> random house needs to start printing more copies i hope they're listen. >> they're going to be listen figure we say capitalism is broken, capitalism dead. last night i heard capitalist under attack as i've never heard it before. it made me think if it's dead, there are two visions. there's your vision, which is to resurrect it and make business debate platform and social change and there's another vision which is that the

government has to step in because the billionaires have screwed it up so badly >> i think both are probably right, actually. but we do. we need a new capitalism we need a capitalism that's more fair, more exquitablquitable, me sustainable that values not just all shareholders, but also all stake da stakeholders it can be very exciting for everybody. >> i do worry that in the vacuum of what you're talking about, i heard last night about big tech having to be broken up simply because it's got tremendous power. not even that the power has been used unwisely, but where are you when it comes down to breaking up facebook, breaking up amazon, breaking up alphabet aren't these great american companies that hire a lot of people >> you know how i feel facebook has been like cigarettes it's addicting and bad for you they're after your kids. >> that's not fair people can change, mark.

>> look at the political ads that are going on. not a commitment to trust and truth. and now they're on co mingling the data of all the acquisitions facebook probably should be broken up because they're using these assets in a way to furthe manipulate people. there needs to be change it hasn't happened fast enough you can watch that great documentary on netflix, the great hack i don't know if you watched that, but it really lays out how that's happened. you know they just unplugged 50,000 partners because they were all doing the same thing. so i think change does need to come to some of these companies. >> well, i've got to tell you that to hear you talk about it, basically just says -- >> it's not the first time we've talked about it. >> no. >> that was january, 2018. this is an old narrative for me. >> do you think that amazon web services, 47% of the market is too powerful >> no, i don't, because you're dealing with amonopoly called microsoft. there is a consent decree

against microsoft. you have many platforms that are out in the marketplace today we're still battling very much, you know, the monopoly that is microsoft. that's a major issue for all tech companies, the largest and the most important company in the technology industry for all players is to watch what microsoft is doing because of their traditional practices. there is still a consent decree out there on them. >> you've been talking for some time about -- >> and that's the new capitalism, jim, which is that we have to value all stakeholders its yrnt a we've had a great return at share source 35% since i was first here, right there in 2004. if you bought our stock, that's a 3,500% return, but i had a

great stake haaholder we've given $40,000 to nonprofits and ngos for free running on our service and we're a net zero company, fully renewable by 2025. that's our stakeholder return. we issue a stakeholder return. and i think that's something the s.e.c. can do, by the way. they can put -- i mention that in my op-ed. they can put, you know, that into the regulations that companies should mention who their stakeholders are and what they're doing for others, not just themselves. >> you anticipated my next question and actually answered it before i was able to finish it. >> good. now i'll do the next one. >> which is about the growing of esg. we hear about it you're talking about ste stakeholders and how you measure your progress. my question was going to be what are the metrics? how do you measure this given it is growing in importance we hear about it all the time

now from real money, not just sort of, you know, a broad sense that there's interest in it, but people who want to put dollars behind it. >> well, my peers certainly do and i talked to the largest ceos in the world yesterday i was in munich, germany, with the largest company in germany, with their ceo. they have a major program into place just as we do, just as many others do i was in london on monday. i see the same thing throughout europe it's probably happening faster there. the united nations sustainable development goals are the 17 core initiatives that are laid out by the u.n. of how we're trying to improve the state of the world. and companies should have to report how they're doing against those goals. that just makes complete sense to me. if we're not all in to improving the state of the world, what are we all into? >> did you believe the business round table when they changed their statement, or do you think as some do that it was really more of just kind of talk to get on the right side of the politics of it

>> the business round table has said exactly the same thing. the purpose of the corporation is to value stakeholders as important as shareholders. that the traditional milton freedman concept that is only about the shareholder, that the ceo's only job is to maximize shareholder return is dead that capitalism is dead. but a new capitalism is emerging and you can see it through the largest and most important companies on the planet which is the business round table and the business council, the international ibc which is part of the world economic forum all say the same thing, which is we need to value all stakeholders and all shareholders when i say stakeholders, what do i mean our employees, our customers, our partners but i am from san francisco. we have a horrible homeless problem there. the homeless are a stake daholdr for me that's why i was fighting for proposition "c," a tax on ourself. we have to deal with the homeless situation in situation. as the largest employer in san

francisco, i'm not focussed on that, if they aren't one of my key stake daholders, what is >> if your orientation is just about making money, you're not going to hang out long as the ceo or founder of the company. if not, then what? your board fires you your sales drop? what is the consequence of running afoul? >> you can see that in my industry which is for ceos who do not take this approach. they are really at risk and they can be extremely vulnerable especially during economic times that become turbulent. i gave that statement at techcrunch i had just come from our public schools that day we had just given $70 million to our public schools that's happened over seven years. we've adopted 107 public schools. i've adopted one personally. i was there. a i was at my public school which is in san francisco giving a speech not a speech to people like you or jim i'm giving a speech to kids.

i'm looking in their eyes and i said yeah, you know what these are my stakeholders. if these aren't my stakeholders whor who is again, here i am in san francisco. if i'm not thinking about the public schools in san francisco, what am i doing wrong? i need to be thinking about the public schools, the homeless and i also need to be thinking about not just profit, but plan it i need to be thinking about the planet, what are my emissions. that is part of the new world. that gets back to david's question on what about the sustainable development goals in the u.n. that is the connectivity that's the map we can lay it out, then we can measure. if we can measure it, we can have impact. we all know that we understand how to do that. >> jim i know has to finish, but there's shareholders listening to you who are probably going what are you talking about you seem to be abandons what i would want which is you focused on improving the profitability of this company. are you worried you freak some of these people out and what do

they say to you when they hear that if they're not on board with your view >> this is how to improve the profitability of a company this is how to make a great company. this is how to have a company that customers want to do business with, that attracts employees, that develops partnerships, that integrates local communities, that saves the planet this is about having a great company. and look at our company. look at our financial return since we went public right here in 2004. look at how we rank against everyone else over the last same 15 year period i'm sure you'll see we're in the very top echelon i'll tell you how we did it. we valued stakeholders as much as shareholders. for ceos who only focus on shareholders, let them be warned they will not be ceos very long. >> okay. let's switch bits here, mark i know that that's been a great principle of yours many in the valley simply despise the presidentof the united states. they would rather not be in the same room with him

others feel it's a hobson's choice and they have to try to work together. where are you in the continuum >> jim, i have been through now -- i've been ceo of sales force 21 years i have been through a lot of presidents and a lot of administrations. okay these administrations keep changing my values do not change. the principles of sales force do not change our fundamental value proposition to our customers, building a customer 360, helping them to know their customers better and connect with them in a whole new way does not change. so that's what i do every day. i focus on my customers. i focus on creating a great company. and where i can help the administration even in this administration, helping with work force development i just signed the workers pledge i think we have to be reskilling workers. we have to be repairing them for the fourth industrial revolution that's a critical part of what's going on today our industry has been very successful witness the ai witness the robots

witness also the new biotechnology. also witness that there's a fifth industrial revolution coming which is the youth of the world are coming to take that technology and to truly improve the state of the world >> let me parse marc benioff. for the longest time you talked about how business is the best force of change. now you've changed to it's a platform like your own product subtle difference? meaningful difference? because to me it is. to me what you're saying is hey, listen, it's out there, go paint the canvas before you wanted to paints the canvas >> this is why i wrote the book "trail blazer", jim. this is why i wrote the book that we're launching today yes, sales force is a platform, the greatest platform for change, but so is david. so is carl, and jim, so are you. so is this network are we not all platforms for

change what our work does matters what we do with our lives matters. what we do moment to moment matters. we need to be con shoscious of t that's the point we are all platforms for change. and yes, sales force is, but business really is the greatest platform for change and that's why i wrote the book >> what else matter system that we have to go because mark is going to be interviewed by me for "mad money" and i've actually of course ripped out a lot of the pages because there are many fine points that must be discussed. >> we'll have to get you another book. >> absolutely. >> my bosh random house needs to start printing more books. >> thank you, marc benioff, chairman and co-ceo. >> thank you for having me i appreciate it. >> absolutely. we'll take a break as jim and mark get ready to do more as you'll see tonight on "mad money. jim, thanks. get a check on the markets dow is down 44 back in a moment

good morning, everyone

i'm sue herera here's your cnbc news update turkey a minister telling the turkish parliament that he would convey to u.s. officials that no sanctions are threats are acceptable and will not affect turkey's resolve in its military action in syria. he was speaking ahead of visits by vice president pence and secretary of state pompeo who are trying to reach a cease-fire deal shouting furiously pro democracy lawmakers foiled a second attempt by hong kong's leader to deliver her annual policy speech. chief executive carrie lamb walked out twice at least two were killed when a car bomb detonated in eastern afghanistan. 26 people including 20 children were injured in that attack. the children were jinside a nearby mosque. back here at home, the washington nationals are moving on to the world series after beating the st. louis cardinals 7-4 to sweep their national

league championship series and the last time a world series was played in washington was back in 1933 you are up to date that's the news update carl, i will send it back downtown to. >> sue, thank you very much. time for our etf spotlight taking a look at chips, the smh moving a bit lower after coming off that record high in yesterday's rally. sector on pace for its best year since '09 gaining more than 40%. a number of top holdings are under pressure including broad cam regarding the eu, intel and texas instruments. nvidia and qualcomm are bucking the down trend. when we come back, is it time to buy the banks? why one investor thinks yes when "squawk on the street" returns ♪ ♪ ♪

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the imf downgrading its outlook for the world's economy citing the ongoing trade war with china meantime president trump saying just now the china trade deal probably won't be signed until he meets china's leader xi in chile. so where do you put your money if you're an investor? joining us now, the oakmark funds portfolio energy bill nygren always good to have you. the banks reported over the last couple of days and i'm told that you actually may think there's an opportunity there in terms of the value. >> i think there's a big disconnect in the market right now, david, between where companies mike electric utilities are being valued something like 20 times earnings and a typical bank that may be eight or nine times earnings through a long period of history, those two industries tend to trade at about the same

pe multiple. the banks are growing the top line they're improving efficiency net income is growing faster than revenues. most of them are repurchasing something like 10% of their shares additionally pay a dividend yield that's greater than what you can get in the fixed income market investors instead are enamored by the electric utilities i think taking massive valuation risk in return for not being exposed to much concern about earnings estimates getting cut whenever there are trade war concerns or recession fears coming up. the tradeoff of long term risk and we have always wanted a valuation tail wind behind us and are willing to take on the short term risk to obtain that. >> right the interest rate picture and forecast wouldn't necessarily seem particularly good right now if you're a bank that interest margin which is always a focus, bill, would seem

to be potentially pressured. >> well, you know, the banks basically have a deal with their customers that they don't give them as much interest income as they can around on a treasury bill that business model gets challenged if we go down to a zero interest rate environment at the levels we're at now, some of the companies that we own like capital one and allied financial, they're basically internet banks that don't have the large branch structure costs that the larger banks have they're offering competitive interest rates today they're still putting their money to work at -- on high return loans we think the environment is actually a competitive plus for them for the larger banks, like a bank america, if we went to a zero interest rate environment, they'd have to change their business model they're providing valuable services to their customers and they're not going to do that for

free >> aisi've seen commentary if t 10-year yield crosses 18 maybe you do see a larger breakdown in the names we've seen that have outperformed so long does that make sense and where do you think the line is on the yield? >> i don't have a good idea of where that line is exactly, but i was watching earlier this morning when one of my heroes lee cooperman was on and he was talking about how he thinks a better level for long-term bonds today more representative of what's going on in the economy would be at the 4% level the stock market's reasonably valued even if that does happen to bonds and i would agree with that any move toward that 4% level i think would be a big negative for the fixed income substitute or safety stocks >> bill, i know beyond banks you've been a fan in the past, at least, of names such as

apple, i believe where else are you seeing value right now? it does appear that value is more in vogue again as opposed to paying those high multiples for growth stocks. >> i think we've had four days in a row of outperformance i'm not going to call that a victory yet. it's been a long slog for value investors because as you know, the lower interest rates get, the more valuable the future is. at the extreme, if discount rates are zero, the future is worth infinity that's way better for growth stocks than it is for value. but one of the areas where we found value is trying to take advantage of investors overreaction to political risk in the last quarter, one of the names we added in oakmark was humana very successful of medicaid provider insurance one of the most popular products for customers, it saves the government money and they can price it at a level they make money.

it's win, win, win and sustainable earnings best. stock grows at twice the market. sells at less than a market multiple it's down about a third in the last year because of concerns of political environment, potential medicare for all and abolishing private health insurance but i think one of the things investors don't do very well is think about all the combined probabilities of what has to happen does elizabeth warren win, does she not pivot to the center, does she then beat donald trump, do the democrats keep the house, do they flip the senate, are they united enough to pass medicare for all when most americans are happy with their health care? and then even if they do all that, do they abolish a program that saves the government money and the customers love it? we don't think that's a one in three chance we think by the time you combine all those things it's a low single digit probability and we get a chance to take advantage of investors overreacting to fear

>> that doesn't mean you're not going to have a lot of gut checks going interest iowa and new hampshire and the series of more primary debates early next year >> absolutely true, but as long-term value managers who have been doing this our whole careers, we're used to those gut checks being a value manager means standing in front of short-term news flow and trying to invest in the way that you think makes the most sense for a 5 to 7 year time frame that rarely puts you in a comfortable position relative to short term news. >> yeah. although i know wore did on humana, very much of what you said may end up being true and it certainly may not be a point of which humana is forced out of business, but they could still be forced into more difficult territory, couldn't they, bill if in fact you do get a warren presidency or a democrat and you keep at least control of the house? >> certainly there's always the possibility that anybody dealing with the government, whether

it's in the health care space, defense space, that they could be put in a more difficult position what gives us comfort here is how much money the government saves with each person who signs up for medicare advantage. and the fact that the government benefits from humana being a successful business, for us it's part of sustainable investing is trying to invest in companies where it's not just the company that wins, but the customer's win as well and in this case the government who's being somewhat displaced by humana also wins because humana can provide the service cheaper. >> one last thing, bill. just broadly on the indices, bears keep bringing up narrowing breadth, pitiful volume and flows out of equities that you have to go back a decade to see something like that. do you believe retail is going

to act as a drag if in fact the sheer levels do go up? >> you mean retail investors act as a drag? >> yeah. just given the stance they've taken, given flows >> i mean, unfortunately the history of retail investors is that they tend to be going the wrong direction and looking back thinking what do i wish i hadn't owned over the past year and putting that money into what they wish they had owned so i would view the flowing out of equity, if anything, as more of a contrary indicator and a, you know, strong suggestion that we aren't seeing the kind of excitement levels that are typical of bull market peaks we don't think the valuations are typical of bull market peaks. we don't think the investor excitement is typical of bull market peaks and certainly alternative investments such as the fixed income market aren't offering anything that's at all competitive with equity returns.

so we're pretty happy about where we're at >> right maybe you'll get more than four days of outperformance of value. always appreciate your coming on thanks for joining us. >> thanks and i hope you're right. still to come this morning, don't miss a big interview with sir richard brandon is under armour's kevin plank in the meantime, some of those headlines from the president regarding the papering, so-called papering of the trade deal, phase one, has lted e ifth market dow is down 35 now in the trends driving specific sectors of outperformance. where a rising middle class powers a booming auto industry... a leap into the digital era draws youthful populations to mobile banking and e-commerce... trade and travel surge between emerging markets. every day, our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential.

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getting some breaking news regarding the fed and charles evans. we'll get to steve leishman for that. >> carl, thanks. charles evans, chicago fed president who is a voter this year is forecasting no more rate cut this is year, but he's keeping an open mind to the possibility that additional rate cuts will be needed. that said, he's said interest rate policies close to the right place and the economy is generally in good shape. but a big sort of section in that regard, he does endorsing the federal reserve acting aggressively and does support cutting rates if risks increase and he says the risks out there right now require diligent attention. the october fed fund futures have an 85% probability of a rate cut built in. but looking at december, they've kind of dialed that out and now they're looking for another rate cut, say, by march there are some people, i don't think evans is at a point he

would descent in the fed decides to cut rates, but he's r twith e forecast of those who say no more rate cut this is year. >> really quick, were you thrown by the drop in retail sales? >> you know, i kind of expected it, actually i think there was a big buildup in august and i'm kind of siding with some of the folks who think maybe there was a -- an increase in consumer -- in august consumer sales because of the tariffs. maybe people front ran those tariffs and decided to do some buying then before the tariffs took effect. i'm going to have to look at october, if there's any real consumer weakness. this may be a bounce down from the august bounce up >> we've been talking for a while about whether the consumer really knows the trade war is going on. >> i know. i questioned some of the -- >> it's a good question. >> rosenberg in particular about the people pulling back. i think most people don't have any idea what's going on,

frankly. >> well, you know, that said, we do poll about tariffs and other people do poll and we find awareness reasonably high. i think that the people who say they don't know about the tariffs policies or the trade war are in the 10 to 20% numbers, but those aren't especially high don't knows or unshoor wh unsure when it comes to the trade war. i will say it is unusual to take that action ahead in august, but rational expectations would say if you know prices are going up, you would buy now. >> yeah. you're right that's interesting keep me up on those poll numbers. thank you, steve let's get to the cme group now and rick santelli who joins us with the santelli change. >> thanks, david i like to welcome my fx expert, mark chandler. mark, welcome. let's get right into it. steve leishman with breaking news about the fed, maybe one of

the most dubbish not looking so much more aggressively on the easing policy. while the dollar over the last couple weeks has dropped over a quarter of a cent. is there a connection here it certainly seems that most of the bad global news the last year has been associated with a strong dollar. is a weak dollar making availability of liquidity and dollar readily available to investors? >> i think that neither strong nor weak dollar is good for the u.s. it depends where we are in the business cycle when the economy is strong we want a stronger dollar i think the surs econou.s. econ slowing down we prefer a -- >> is that because of multi nationals? what's the reasoning when we start to slow down a weaker dollar is better and aim your answer towards much of the impact of dollar funding that was so tight not too long ago. >> so i think the reason we want

a weak dollar when the economy is weakening is consistent with monetary policy. the central banks was tightening last year and so we wanted a stronger dollar. otherwise, it takes away it undermines what the fed is doing. i don't think that the dollar in the foreign exchange market has much to do with the tightness in the market in the u.s. i think that's a plumbing issue while the dollar is really more of a monetary policy discussion. >> well, it certainly certainlyo me that the fed when they talk about this is not qe is really addressing exactly what we're talking about. isn't it in large part the availability of dollars? dollars in the form of reserves. >> we're talking about a different problem here that's the shortage of dollars there's a shortage of people who want to participate. large banks want to participate for variation reasons having to do with regulations and the amount of demand to do with the u.s. treasury auctions so there are separate dollar funding issues from the dollar

foreign exchange value but i agree that both of them are challenges for policy makers right now. >> okay. now, when i look up, there's a lot more differentiation going on in the foreign exchange markets. >> sure. >> the yen is basically a five-month low against the dollar the pound is at a five-month high, the euro at a one-month high is this starting to free up and get back to a more normal exchange market in your opinion? >> these are still early days. i'm in the camp that says, rick, the dollar has been part of a ten-year bull market until we get positive, constructive news from europe and japan, the dollar will weaken a little bit based on u.s. macro fundamentals. >> you know, if the big story for 2019 is that this is the year of the strong consumer, your final thoughts on the notion, why would you want less purchasing power for the people that are doing the heavy lifting in the u.s. economy right now? >> yeah, no, you raise a good point. the problem here is that most

americans, most of the things that we buy are services, not goods. it just so happens that we have outsourced the production of consumer goods abroad. i don't see that the u.s. consumer has really weakened in the face of a strong dollar, despite the softness that we saw in this morning's u.s. sales number the u.s. consumer with a strong dollar has done very well. >> excellent mark chandler, thank you for your thoughts. we'll have you back after the next fed meeting to see how policy is affected david, back to you. >> okay, thank you, rick santelli now time to sending it over to jon fortt to get a look at what's coming up. we've got two former cisco executives who have a startup coming out that they say could upend the cloud market 'llien to them make their case and ask some questions coming up on "squawk alley." rah t how to pay for long-term care. brighthouse smartcare℠ is a hybrid life insurance and

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welcome back to "squawk on the street." i'm dominic chu. stocks are slightly lower but we are at the highs of the session.

the s&p 500 is pretty much flat. just around half the sectors give or take in positive territory. one of the notable outperformers is that consumer discretionary sector, the second best performer so far today slightly higher on the day despite september's unexpected decline in retail sales which fell for the first time in seven months regardless, those retailers like capri holdings, advanced auto parts, macy's, all among the names leading that sector higher that sector the fourth best performing sector so far in 2019 it's up about 2% to 3% above the overall s&p 500. now, i will send it back downtown to you guys, carl, at the new york stock exchange. >> all right, dom, thank you very much. that financials component obviously adding to yesterday's strength is one thing that's helping lift overall sentiment as dom said, the dow down only 17 continuing to look for headlines regarding progress in brexit negotiations in brussels and of course the president making some comments in the oval not too long ago

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