>> announcer: live from new york where business never sleeps. this is "squawk box. >> good morning, everybody welcome welco welcome to "squawk box" here on sn i'm becky quick. u.s. futures are popping you are looking at the dow up about triple digits. the nasdaq up around 55. after hearing the uk and eu have agreed on a draft deal looking at european markets, the dax is the biggest gainer right now. stocks are higher in italy and spain. the eu and the uk saying they have reached a draft brexit deal more to come on this willem marx has more on the situation.

what can you tell us >> the executive branch, becky, and the european commission have agreed they'd like to see this move forward in about an hour's time, we'll have leaders arriving here for their regular meeting. brexit top of the agenda boris johnson likely to talk talk to them and mitch this idea if the other heads of states say they are happy with it, then they'll move on. the challenge remains there for prime minister johnson the small irish party who have proven to be a thorne in the side, we could see that majority vanish without a parliamentary approval, that will be challenging for this process to end by october 31, which right

now is the current deadline. >> juncker, as you mentioned, says he'll suggest the 27 eu nations support the deal boris johnson saying it is a great new deal you you are right to bring up the concern that he doesn't necessarily have the votes in parliament just is yet when will we have an idea on this >> reporter: so the challenge is over the next 48 hours while you have this meeting going on, the prime minister's team will try to see if they can guarantee all of the votes inside. not only 21 former votes from former conservative parties they kicked off a last month and they'll also need some of the maybor option parties in favor some will only do that if

approval of this deal was attached to the second referendum where you would see a second pitching this deal against another option that would remain inside the eu boris johnson's insis tense with this be. >> what would that move be demanding the second referendum? is. >> unclear in terms of the time line around that they've said they'd like to see the uk stay inside the european union. that would be music to macron's ears, the french president if a deal wasn't concluded by today the parliament was happy with, it would force the prime minister to ask for an extension to late january. he might turn around and say here, can we make it a bit

shorter? i think we are there, almost there. we'll try to work it out >> the reaction is one of pushing stocks higher in the united states and europe right now. how tentative do you think any of this is >> this is the real challenge is looking at how the pound behaves in response to all of this there's not been any certainty about what that pound will do. a lot of questions around how certain people are, traders in particular that parliament will come back and approve this >> willem marx >> we have some sad news to report this morning. democrat quick congressman elijah cummings has died he passed away from

complications from long-standing health challenges. he was 68 years old and has been chairman of the house reform committee back and forth with the president. investigating him, probing him the president has had not so kind words about him as well and in baltimore and those comments. he was voted in in 1996. he has been a local voice. former lawyer. share cropper's son. talk about the american dream. this is one of them. >> i think back in 2017, had some issues and was away

he was only 68 years old >> we send our condolences to his family and colleagues as well our top corporate story. shifting gears completely. netflix shares sharply higher. inner national subscriber votes beat estimates it warned that current quarter earnings would all fall short of estimates siting pricing changes. that almost hit 400 as far as the high disney, apple and nbc universal are all starting their own streaming services the company has spent a decade competing with other providers >> fundamentally, there is not a

big change here. it is interesting we see apple and disney launching basically in the same week after 12 years of not being in the market i was verying playful in the sense of whole new world it is more of the same disney will be a great competitor apple is just beginning but they'll probably have some great shows too. >> netflix says they'll take bold swings when it comes to context. the company is still the leader when it comes to contend spending projected to spend about $18 billion in 2020. everybody is taking bold swings. these shows are crazy. i'm back to thinking, the writers really are the unsung heroes it bogles the mind amazing. >> just when you thought you

were not able to be surprised by anything >> right i thought wild wild west was really good. >> back in the day i watch it now and it is like, this is like -- >> i'm thinking wasn't there a will smith version >> generationally. they had you hanging every time. they would write the show around commercial breaks. something would be happening and it would turn into a painting and everything would be fine >> for netflix, they have these massive cliff hangers to keep you watching 50 episodes

>> you know what is hard, if you have a universal remote and you are on amazon. you have to good all the way out and all the way back can you help me with that? >> you can have two remotes. >> siem posed to help becomy with her phone my mother still calls for technical support. >> brexit, china trade and earnings moving markets. we head to break a look at the biggest pre-market winners and losers ♪ this is the family who wanted to connect... to go where they could explore and experience adventure in unexpected places...

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>> treasury secretary steven mnuchin says negotiators still have work to do ahead of planned signing next month >> we have an agreement in principal. this is like when you reached an agreement to buy a building and now you have to negotiate the contract >> mnuchin says there is no

effort to bring u.s. officials there for talks. the planned tariffs on chinese goods set to be slapped on in december i put that on. we don't just put them on, we slap them on we'll hear more from the white house this morning larry kudlow will join us live at 8:30 eastern. joining us now today, gene goldman, director of market research recently, we've gotten about all we can get out of the skinny china deal people expect it to peter out. can you expect that to continue? can you explain it

>> thank you, joe. we've had some great news today with brexit. we've shifted a little bit i've been on your show a few times. i've talked about being caution or optimistically caution. right now, we are cautious you look at earnings stock prices a lot of pressure due to trade war and the stronger dollar. a lot of political uncertainty we are seeing news out of washington consumer data is a lagging data. we are seeing weakness and services that could spread to the labor market by the time that leads to the election valuation is 17 on the market. valuations are fairly high on the average. weigh need slowing to global growth we need more details

we need a v shaped recovery and earnings you are looking at s&p of about 2992 it is hard to see the markets moving beyond these levels without these really big problems being solved. >> we've got the trade issues and slowing global growth. the market is at where it should be even without all these head winds. so far, we got a boost from earnings, which we said maybe earnings will be good, maybe they won't it almost looked like it started off pretty good. >> definitely. 43 companies released earnings 85% beat out earnings. >> you said something about the

v shaped earnings. where is the bottom? >> we are at the bottom right now unless we see more weakness or the trade war takes longer to succeed. we call this an earnings hook at the end of the quarter, we are seeing strength released going into third quarter, earnings were expected to come down it is a pretty weak number but not consistent most being driven from energy. weaker oil prices. materials down 10% steel down 25% year over year. what really scares us. technology earnings are expected to be down 10% despite the fact that stocks are down 30% >> how much of that is trade talks. semiconductor pressure technology is up 35%, s&p is up 31 something is going on pushing

earnings down in technology. one thing we think about, chuck roads versus bobby axe ill rod this is something at the end that will push this together >> i just think the market is pretty focused i'm amazed it ignores so much noise. there is an election coming, i know that. think of the mainstream media or if the markets acted like the media. we'd be at about 4,000 now on the dow. >> some argue that that's the risk >> it is supposed to discount something. nine months, we are almost at the election >> the question whether the

markets properly funded that a lot of times, the markets ended up being right >> and wrong we've seen the market be wrong before they've priced in perfection >> 17 times 136 is not that much if we didn't have central bankers running these, we'd be above 20 on these multiples. rates this low warrant a higher multiple because you can't go anywhere else, right >> true. you don't think we are priced close to perfection? >> we are always priced for

perfection >> in january 2019, in the market >> you were here yesterday what did cooperman say >> still getting 10% more to roll >> also saying there were several hundred things seen in the white house. you see additional tariffs get put on things go down 25%. >> what if there's a war >> you hear president trump with his letter to erdogan. you say, if that kind of mentality -- >> he was talking about economic things to do >> i'm arguing that -- >> you are saying he's irrational and crazy as evidenced by the letter there is nothing about a threatened war >> there are congressman saying

we may need to move unilaterally >> if the president is capable of writing that letter, what else is the president capable of >> you didn't like the letter? >> did you like the letter >> he's a deal maker >> did you see what the turkish officials did with it? they made a paper airplane and through it in the trash. >> had the letter been about something more serious >> you know when you go like that and the category jumps. how many times are you going to get triggered? you get triggered every day by this guy >> that was another level. >> you have been on fire every

day. >> i didn't know he was sending letters directly for them. >> we are playing this for you and you wore a purple tie. i did congratulate you on being on board great thinking. >> thanks for the theme song too. >> you are welcome weave more -- facebook falling in a enough report in the most valuable brands. sliding out of the top ten we'll show you which gained ground and which one fell. we are back in a moment. we are back in a moment. ♪ what do advisors look for in an etf? we are back in a moment. ♪ i tell clients, etfs can follow an index, but which ones target your goals?

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>> welcome back to "squawk box." big tech on most valuable brands some at the top there have fallen behind. we are talking about facebook. joining us, the ceo of the new york office of interbrand which puts this list together every year should we talk first about facebook falling out or do you want to talk about who is at the top? >> let's talk about who is at the top. apple again with the valuation of billions of dollars

>> the methodology here. >> we look at three things financial, the roller brand. the amount of customer decision making built by the brand and what we define as the strength of the brand the top four are all effectively tech companies >> correct >> with the exception of facebook, it is all big tech companies which we are hammering about how much you trust them or don't trust them you are saying these are the most beloved, trusted brands >> 800 billion comes from tech brands they do dominate you see a switch to a focus on

trust. the recognition they need. >> how come facebook ranks further down the list. >> they've had a tough year? >> because people are concerned about privacy. something like apple has done a great job. microsoft is built into the brand. >> and google, people talk about that all the time. >> it is a trade off utility and handing over they offer an incredible service. as a customer, you are making that valued exchange and determine, i'm willing to give you my data in exchange. >> and then you've got mcdonalds. >> they continue to grow what we see is that the companies that do well on the

list are those that are endlessly responding to customer needs and managing to stay relevant it is tough. the world is moving very fast. customer expectations are moving faster the strongest brands are able to transcend and make the iconic move >> we were just talking about the ibm earnings they are number 12 on the list >> they've gone down this year it has been a tough year for them >> is this -- not just to call it a legacy brand but to the extent it has a great brand value still. is that about today, the history? >> brand is built over years and years and the equity vested. >> how is the nba brand doing? doing really well in china

>> staying true to purpose this is what is key. you have to be on message to what your brand is true for. >> you are saying that is staying true to what they are known for. >> they are not on the best global brands list yet >> i'm not sure whether u.s. consumers and fans will hold these companies and players. we don't like to talk about it -- >> look at nike with the controversial branding they knew who it would appeal to and who it would offend. >> so did the nba. 600 million of them in china >> finally, disney is at the end

of the list there. >> it is in the top ten for the first time it has not been there before >> i would have thought that would have been there. >> the disney plus is in the conversation >> who struggled the most? >> ge had a tough year with the break up of businesses not surprising >> daniel, thank you >> i think there is a big thomas edison movie coming out. no one thought of any of that stuff. >> does ge still make light bulbs? >> if they do, they don't make any money doing that >> when we come back, ibm, we'll talk about the earnings report

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>> announcer: welcome back you are watching "squawk box" live from the nasdaq marketsite in times square. >> good morning. u.s. equity futures rising on word that european negotiators have reached a draft brexit deal we'll bring you across the pond for a live report right at 7:00.

ibm shares slumping. yet to make up for services and financing. i think this is the fifth quarter after. i think this is two or three quarters where they managed to touch revenues now back to declining revenues year over year >> csx shares are rising revenues were roughly in line. want to show you alcoa shares. probably up to about 4% on that news bigger than expected quarterly loss up by about 2% in asset sales and the portfolio review >> that stock up as much as 7% last night a lot of bad news on that call reporting weaker than expected

earnings we talked trade tension and lower the out look on those issues still out by about 2% this morning and 7% last night. this morning, is the consumer cracking is this a warning sign for the state of the economy that's next. we'll be joined by ariana huffington to talk about her latest acquisition stay tuned for more here on cnbc what if other kinds of plants captured it too? if these industrial plants had technology that captured carbon like trees we could help lower emissions. carbon capture is important technology - and experts agree. that's why we're working on ways to improve it. so plants...

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>> take a look at u.s. equity futures at this hour about three hours before the stock market opens i don't know what you want to call this but right now, it looks like the dow will open about 90 points higher nasdaq about 50 points and s&p about 13 points higher >> they have a draft then they have to convince

parliament and the uk to sign off. that is the heavier lift saturday is the day he's targeting. there is still a lot of questions about whether he'll be able to do that without adding on the additional rider which the irish leaders would like to see. will they be able to do that let's look now at the consumer in the united states retail sells fell for the first time in seven months the health of the consumer joining us now, the man who knows the consumer well. bill simon, former ceo of walmart u.s. glad to have you with us today >> glad to be with you >> so how healthy is the consumer these days? >> i think the consumer is strong auto and gas, if you pull those

out, the numbers are pretty much where they were. i look towards gas prices. they've been stable and low. and employment as long as jobs stay healthy, wage growth is there gas prices remain manageable the consumer stays strong. >> we had an analyst who is concerned. the weakness we've seen, he's afraid that that will bleed over to the labor market and eventually hurt the sentiment. what would you say to that argument >> i think the employment numbers and hiring particularly and second arly any layoffs, so far, we haven't seen that. we've heard some rumblings from

the street and ceos. i think it is more climate than sentiment. it hasn't reached the consumer >> your old employer has been not seemingly all that concerned about potential for additional tariffs or ratcheting up tensions in the trade wars walmart, others, what does that mean for retail and what people can expect to pay at the stores? >> i think retail has done a pretty good job dealing with the issue so far a lot of it has been absorbed or mitigated. it is a critical issue once those factories move, they'll be difficult to get back that's why china is increasingly interested in a deal the impact ongoing that companies retailers are going to

be able to have as tariffs expand will start to less oen it could impact the consumer from a pricing perspective >> what do you think about the tariffs set to go on in december would that be the straw that broke the camel's back how quickly will this start to roll over? is. >> i don't think it impacts the consumer immediately and enormously consumers will make the decision should i buy this or that? retailers and manufacturers are forced to deal with the expansion of the supply chain or cost in the end, they drive the

retail price of the product. consumers don't feel a lot from a tariff they make decisions on what they are going to buy >> retailers have already made plans. are they ordering a lot of inventory or keeping things lighter? >> i don't think so, if you look back, they all did pretty well they beat expectations walmart and target raised guidance for the rest of the year they are anticipating a strong holiday selling season they don't seem to be concerned about the impact that tariffs will have through the year i think we are good through the year if we can get a deal done and move on, i think this thing goes away

>> some of the other companies that don't have the same flexibility. i think of best buy. everything is electronics and basically everything gets impacted there >> to be clear, there are retailers and product lines within retailers that the consumer would see where prices would have to go up because there is no ability to mitigate by moving supply lines or alternative products that are available. >> the consumer is in control as they always are, they just might not buy it the retailer or the product line could impact it but not necessarily the product overall. >> good to see you happy to do it

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netflix shares are rising. they missed on paid domestic subscriber additions for the second quarter joining us now to break down the company's results, senior analyst. internet media analyst at

rosenblat securities do either of you view the move in the stock as things better than expected or more a bounce from recent selling because things are sort of where you thought they would be, but maybe not as bad >> definite will you the second thing that you said. a little bit of a relief rally last quarter, domestic subscribers declined. >> they lost. >> sequentially and returned to growth this quarter. i think that's the big thing also that the guidance for q4, it was a little bit below, you know, what the company had been thinking previously and what, you know, the street had been thinking it was still pretty solid growth people generally expect that there could be a little upside to what they said for q4. >> the last report before the competition is there factually, in earnest, and actually happened. >> exactly. >> so all this other sort of negative perception was before

disney and apple even launched this is the last report. that was just the specter of these two getting into it? >> yeah. >> cause the weaker -- >> throw things they called out. first, lingering impact of the domestic price increase. two, the content sleeping much more focused on movies and third is competition. >> hadn't even started yet, though. >> i know. it's going to start in earnest pretty soon. apple tv plus, but more importantly disney plus november 12th we think we'll be able to grab 10 million subscribers globally at the first of the year. >> not everyone can have everything i mean, some of us are very fortunate, six, seven -- we keep netflix and get disney i need thousands of channels and can't find anything. some people will displace -- this will displace netflix. >> certainly it will be more competitive going forward.

the point that the company was trying to make last night is that all of those streaming packages are trying to take share away from the typical cable subscription, which is robust netflix at $12, $13 a month is small amount compared to what most households pay for a cable bill and, you know, i think we're moving to a future where there are going to be content options available from a streaming perspective. and it's that wallet, it's that budget that all these companies are trying to compete. >> maybe i'm getting ahead of myself when do you think we'll get to a time when these subscription services themselves are intermedia intermediated? people buying them for a month, turn them off, buying another service for a month, turning them off >> i think we're starting to see that already we subscribe to showtime for a month, binge "billions," then cancel it. you'll have some households that

don't want to pay the extra $100 there could be near-term disruption but long-term, to michael's point, that's bad for media company that can't transition from the traditional bundle to the streaming world. >> what does it mean that they'll be keeping it to themselves our teenagers were pretty shocked when we told them "friends" was leaving. >> "the office" in 2021. that's why they spent a lot of money for "seinfeld. it's more and more on original content. wall street journal had an article last april saying 80% of viewing was done on licensed programming. is it "stranger things" that are driving subscribers or "the office," which is only 3% of viewing? >> or the sticky stuff that keeps them in between? >> it comes down to library content. appletv plus doesn't have that

library that you'll stick around to watch while netflix and disney plus will. >> you think people will be turning on and off apple tv in a different way? >> apple tv plus taking wallet share. obviously they're giving it away for free to iphone customers i think they'll drive a substantial amount of subscribers. >> it's more like amazon. >> exactly amazon, they want you to use prime so you buy shoes from them, apple checkout, the morning show because you can buy iphone from them. >> do you think they'll buy another big library or service because they think they have to bulk it up right now they say they don't obviously. >> maybe way down the road they might. netflix is going to spend $15 billion in cash on original content. and they're able to do that because of their big subscriber base there's a lot of revenue and cash flow coming in, to allow them to reinvest in content. that gap will be very wide with whoever the next big spender is going to be. if we do evolve to a world

where, you know, there are lots of choices, that choice is going to come down primarily to content and then to price, and people will make that value judgment netflix will look pretty good. >> point out they're still overcoming that price increase in terms of subscriber growth. the price increase allowed them to have higher revenue per customer 16% higher that's good. with these new entrants, are they ever going to be able to raise prices again or are they going down >> definitely will be more difficult to raise prices. >> will they be going down instead, headed the other way? >> probably not in the united states, but in some other countries, that's pretty likely. you look at a country like -- >> this is it for the price increases. >> for now especially in the u.s., i think, in a country like india, they need to be relatively unsophisticated in terms of offering different price points, different feature packages that can reveal to a wider variety of

households india, an important international market for the company, they're priced at a very premium level and they do need to come up with ways to kind of tier pricing to reach more households. >> thank you, michael. bernie, thank you. >> thank you. two big hours ahead. chief economic adviser mohamed el-erian will join us. consumer earnings and much, much more. later, our big interview with white house economic adviser larry kudlow stay tuned you're watching ""squawk box"" here on cnbc make fitness routine with pure protein.

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breaking this morning, brexit deal, moving markets. mohamed el-erian is straight ahead. >> corporate attorney joins us to discuss the business round tables policy. morgan stanley quarter results 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. becky quick, joe nasdaq up 45 points lower right now. s&p 500 up about 12 points as with we may or may not have a brexit deal. >> breaking overseas after going back and forth uk and eu did, in fact, strike a new brexit deal. details, which are -- go through them again let's hear them. >> okay. the challenge leading up to this moment, joe, has been that the uk wanted to see some changes to thedeal that was finalized almost a year ago with his

predecessor, ter easa may. boris johnson hoping to see a democratic mechanism whereby part of the uk, northern ireland, could stay with the rest of the uk when it came to customs arrangement but then insisting they didn't want to see custom checks on that border between republican ireland and northern ireland, eu frontier after brexit they decided british custom officers will be able to check goods arriving into northern ireland from the rest of the united kingdom to see whether they are then likely to travel on to the rest of the eu, republic of ireland, the rest of the eu, the republic of ireland, they will charge duties on behalf of the eu british members of the customs force charging eu duties on product essentially. that is how they squared this circle what it means now is that european leaders will arrive in this building the next hour or

so top item on the agenda, brexit they'll endorse this deal if they're happy with the details presented to them by boris johnson and the executive branch of theest u. then we'll see what happens saturday when parliament will meet if the prime minister, boris johnson, can find a majority it will be very key to move it forward to make this october 31st deadline possible there's a chance he won't find the majority three times theresa may failed to get an agreement through that house of commons three options open up, one of which is a long extension through that deadline. boris johnson said he would like to pursue a no-deal brexit which a lot of individuals in this building and back in london said they don't want to see happen because of the economic consequences. >> we have mohamed here, toochlt i think he knows the queen you're running her college,

right? >> patronage of the college. >> you've been opining about these brexit negotiations recently, too. and you're going to spend some time over there, mohamed when does that start >> next year. >> you're going to be there all the time, right? >> i'll be based out of there, yes, october next year. >> you're at the best school in the world right now, basically. >> i am. teaching where your daughter is. >> university of pennsylvania, yeah okay do you believe willem? is this going to happen? do you feel more comfortable today or is there another curveball coming down the pike >> definitely this is a breakthrough if you heard what the eu representative said, with which i did, it is pretty comprehensive. the design part is in place. now the question becomes implementation two parts of implementation. one is getting the politicians to agree and two is making sure that you get durable resolution. more importantly is if you look,

we have been in this tug of war between unambiguously weaker global economy and policy hopes and policy hopes have evolved from central banks to include trade and fiscal it makes total sense that the markets moved up on the news an hour ago because this is yet another positive element on the policy side. >> i just wanted to ask you quickly about -- i saw you opining on brexit. we haven't even introduced you but anybody who doesn't know you by now has never seen the show before we'll get back to you in just a second but another question this morning, is an important change coming to federal reserve policy that's the question of the morning. senior economics reporter steve liesman may have the answer. >> andrew, thanks. pause in federal rate cuts is increasingly likely at the october meeting or more likely after one more cut according to comments on some fed officials

this upcoming october 29 meeting, positive trade talks with china and brexit deal could lean toward a pause. a strong backer of recent cuts, but he said he didn't see any more cuts this year. fed president said he is, quote, agnostic about additional cuts and jay powell was careful to say that decisions are made meeting by meeting and will act only as appropriate. recent comments suggest the market's pricing of 83% probability of rate cut. that might be a bit too high fed officials feel they've provided considerable stimulus to the economy in three forms. first they backed off planned rate hikes this year that's a form of stimulus. second, reduced their balance sheet, another form of stimulus

and third, cut rates by a third each time. they feel they're in the right place and have already curbed weakness it will give them time to see how existing stimulus will affect the economy the fed is pretty divided over the next move. pause could give time to the data to clarify the right policy john williams speaking this afternoon and richard clarida tomorrow, setting the direction as to whether the fed wants to claw back more space to make up its mind at the october meeting. in other words, move that rate cut into december or do it in october and say we need to stop and look around here. >> steve, i respect your opinion on this. obviously, your analysis of what may be happening as you mentioned, the brexit talks today, if that actually goes forward, then the idea that the china trade talks, we have

pause on that. >> critical. >> to get through to november. why would they move in october if they're waiting to see those two things >> you know, this trade thing could go either way. if you think about the idea that a third disappointment to the markets here, if nothing happens, or this idea that, hey, we're taking this off the front burner, which i think is one of those metaphors that's more literal than not, you know because it really is on the burner if that comes off the burner, that's going to be very divisive for the federal reserve. you could end up -- this thing could get immeasurably worse or immeasurably better with a signing of a piece of paper. >> mohamed el-erian is our guest. what do you think? you know them probably better than anybody. >> one reason that steefb did not cite -- steve is not going to like what i'm about to say -- is that they're putting in a whole lot of liquidity.

>> quantitative easing that's not quantitative easing? >> yes they are putting in liquidity and cascade through the markets and the marketplace has understood that. call it whatever you want to call it. they are putting qe and they may even allow the treasury to change its issuance program. it may be some sort of self qe i always said if it's purely on economic reasons, they shouldn't cut. this is not about economics. this about market expectations and i would be really impressed, really impressed if they don't cut in october because so far the market has been leading the fed. >> when you say really impressed meaning you don't want them to >> i mean impressed, i would be really surprised that's a better word surprised. last time they took on the market their nose was bloodied and they came back into market expectations. >> there's a rule, mohamed, can

you not deliver a hawkish surprise you can deliver a dovish surprise as much as you want here is more, here is more, here is more, but here is less. >> what you suggested would be viewed by some in the market as a hawkish surprise. >> which is why you're hearing all these officials coming out, saying maybe not october. >> kaplan is down the middle, right? he's not extreme in either way former goldman guy and then i reread powell's speech and i remember looking at how -- it's very hard when you're like a member of this fed press corps and everybody says this is the fed affirming that rate cuts are coming i read it. i'm like, i'm neutral on this. i don't see powell for sure that this is going to happen. >> you just knocked 100 points off the dow futures, okay? so let's see whether, first they confirm what you just said in the next two -- in the speeches.

as you point out, the speech from clarida. >> that will be important. >> was that a freudian slip, when you said impressed? if they weren't so market dependent, they would be doing this other thing and that would impress you with their resolve did you mean that or did you not really mean that >> let me tell you my image of an effective central bank. one that has a vision of where it wants to go it communicates that vision. it doesn't mean it's not subject to midcourse correction. of course, it is it communicates where it's going and it doesn't get led by markets. that is not the fed that we've had. certainly not this year. we had it a little bit last year and then there was a major policy mistake and several communications. >> depends which market. other people will say they haven't followed the bond markets lead you're saying they shouldn't be

following the stock market's lead. >> they influenced the bond market. >> are they behind the curve on where the bond market is, in terms of not being low enough? >> they delivered where the bond market is now. why do you think the correlations have broken out completely two central banks with printing presses in the basement have been -- >> are you a voting member this year that's next year. >> i can't figure out what you want them to do. >> oh, no. what i would like them to do is not cut. >> you would be impressed if they didn't. >> but what i think they will do, they will cut. therefore, i will be very surprised if they don't cut. >> we're talking about the economy on one point, if it's based on the economy, they shouldn't cut. market expectations being the reason they should, trade talks being on paused is and brexit things we don't know yet and that may give them reason not to what we haven't talked about is how much of this just keeping up with the joneses, the other

central bankers back there and saying the dollar is not going to soar on these rates we have to do what everyone else is doing. >> i think it's the other way around the fed has become the central bank of the world. when they cut, everyone else feels they need to cut because they don't want the currency to appreciate that's why you get this global common factor. the other reason is important to understand why they should not cut. central bank policy is becoming increasingly ineffective in the case of the ecb, i would say it's counterproductive the closer you get to zero, more ineffective central bank policy is going to become. >> steve >> i think the fed is hearing that from business people. i don't think businesspeople are going to the fed and saying, guys, i'm not doing any investment now because rates are too high and i think that weighs on whether or not the fed wants to use any of its ammunition. i think there's something to consider here. i think when powell said midcycle juchl, i think he meant that i think he saw that as three

cuts and he's sort of -- very into precedent and impressed by what griesman said in the past they may move this into an easing cycle i think there's going to be a break between midcycle adjustment and easing cycle. and they want to see how it happens. october rate cut could happen or they could pause, do it in december the idea is this process here is coming to an end before another process begins. >> steve, thank you. >> all right next year? next year, voting? >> me? >> yeah. >> me? >> you have a lot of juice. >> i always have the vote. >> i think you have sort of an indirect -- you might. we always say -- that was the royal we. >> depending what you say, joe. >> they watch you. company making an

acquisition that will bring artificial intelligence to the company's portfolio. she always comes in preaching sleep and we say we try but we have to be here by 5:00. anyway, we'll head to break. after break, we'll discuss it. stay tuned you're watching "squawk box" on cnbc when you retire will you or will you just be you, without the constraints of a full time job? you can grow your retirement savings with pacific life and create the future that's most meaningful to you. which means you can retire, without retiring from life. having the flexibility to retire on your terms. that's the power of pacific. ask your financial professional about pacific life today. ♪

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welcome back to "squawk box" this morning arianna huffington thrive global's ai acquisition, whose algorithms are getting people to walk more, do more with a list and engaging apps. arianna huffington joins us. great to see you. >> great to be here. >> i love these technologies that nudge you to do the right thing. tell us about boundless and what it is. >> it's a neuroscience based ai company that actually uses all the data feedback loops to feed you better and better microsteps to improve your behavior the whole point is that the way we thought we could change behavior is through new year

resolutions and that doesn't work thrive has come up with what we call microsteps, too small too fail the title of your next book. >> give me an example. >> one example is how you start your day take 60 seconds before you go to your phone 60 seconds, joe. are you listening? >> i don't have time i have to do it right away. >> 60 seconds. if you don't have one minute, you don't have a life. to set your intention for the day. to remember what you're grateful for, to do something that gets your mind in the right frame, to start the day. >> are you telling me to do this or is boundless going to tell me to do this >> we're going to feed you that microstep if we think you're going to respond to it we know joe is not going to respond to we're going to feed him a different microstep. we're going to feed him maybe a microstep to go fly fishing or to play a round of golf or something that will help him disconnect from tucker carlson,

sean hannity and all the things that he watches that drive his stress level up. >> my first 60 seconds -- >> watch shows that are relaxing. >> in the echo chamber no, the first 60 seconds when i wake up i have to remember what i'm anxious about that day. >> but, you know, joe, you -- >> that happens in the first 60 seconds when i see you. >> that's precisely what we need to change. what's happening right now is that 90% of health care costs and health care problems are stress related, lifestyle related and preventable. if we don't change that, this whole conversation around access and health care financing is like at the margin we've got to change why so many people are sick. >> how do you change ai to know what's going to work for joe, for me, for andrew, for mohamed?

>> ai is used largely to unhealthy behaviors. >> to look at instagram again. >> look at instagram again, play fort nite all night. to hook us to healthy behaviors. it sounds like a paradox the bottom line is that we need the power of ai to know exactly how to personalize the microsteps we're going to give you. >> is this going to be sold as a service to consumers is this part of the b2b operation? >> b2b >> you're working with companies around the world >> exactly. >> you're going to offer this to them as a service? >> as a service. we offer them workshops, on mental health and performance. this product will make everything else we do sustainable and scaleable around the world. and also redefine wellness right now, wellness, which is a

$4 trillion industry, has a little bit of a warm and fuzzy feeling about it, and we want to make it very science driven and data driven. >> i find it interesting you decided to focus on the enterprise customer. you are an enterprise business there is a consumer play part of it the engine of the company is an enterprise business. >> entirely. >> that's almost the antithesis for companies that go into this health space you're in, they think of it as a consumer play. >> right a lot of them are now changing look at head space, the meditation app it's now focusing much more on the enterprise what happens is if you focus on the consumer, a, you have very high marketing costs and the customer acquisition costs and also the churn is much higher. while if you go through the enterprise, you have many ways to engage the user we have to actually -- in the

interest of full disclosure, we have to tell you that mohamed is an investor in thrive. >> an initial investor. >> yes actually, early on three years ago. >> by the way, coincidence. he didn't know you were coming on. >> no, no. >> booked together. >> explain why this makes total sense and i didn't know she was coming on. i didn't know about this acquisition until yesterday. if you're running a business, you know this is a problem, right? you look around. people are stressed. it lowers productivity you are aware that this is an issue. if you can go from awareness to slow nudging, to behavior modification, you get better productivity that's a hypothesis. >> you wrote a piece about bernie sanders. >> yes. >> bernie sanders' health. are you supportive of bernie sanders as a business leader yourself right now

>> right now, all that i'm saying is that bernie sanders had an opportunity to use his heart attack that made him one of the 790,000 people in america with a heart attack a year as a teachable moment, to educate people about the power we have to prevent heart attacks you know, about the stress in our lives, what we eat you showed a picture at the beginning of what people are eating the lack of sleep. the lack of movement all of these are conditions that if they're not intervened with will lead to heart disease. >> but if it's him or trump, and i know your feelings about the president, is it him for you >> it's not going to be him. this is my prediction on cnbc. >> arianna huffington, thank you. >> thank you. >> let's look at the futures this morning we have seen them higher dow looks like it would open up 77 points.

brexit plan has been agreed to by boris johnson and eu has been pushing futures higher we'll talk about that in a little bit "squawk box" will be back after a quick break. still to come, earnings from powerhouse morgan stanley. >> plus withapg lnseon e se, will connecticut be the next to ban flavored e-liquids? we'll find out "squawk box" will be right back. everything? r 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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all right. welcome back, everybody. morgan stanley reporting results. dom chi has the results for us good morning. >> morgan stanley shares are up 3.5% on 28,000 shares of volume. the bottom line results come in at $1.27 per share, beating the average analyst estimate of $1.11. looking at total net revenues, a little over $10 billion, which also beats the average analyst estimate just around $9.95 billion in total revenues. you break down the secures and other institutional levels, institutional securities comes in at $5.02 billion, beating the average estimate of $4.5 billion, wealth management 4.36 billion, a shade light about 4.39 billion is what analysts were looking for. investment management revenues come in at $764 million, beats

slightly the $719 million we were looking for in terms of analyst estimates. couple of things to highlight here as well tangible book value per share at morgan stanley stands around $39.73 as of last night's close, that was a slight premium we are seeing valuation adjustments as well. we delivered strong quarterly earnings, despite the typical slowdown and volatile markets. the stability of our business model we remain committed to controlling our expenses and well positioned to pursue our growth initiatives joe, becky, andrew, we'll dig into these numbers a little more from a total institutional securities level, which encompasses all of that and more, it is a beat that's probably why you're seeing the shares up 3% on roughly 30,000 shares. >> dom, thanks

3.5% let's get back to our guest, mohamed el-erian, chief economic adviser at allianz if what would you have to say about the recent china deal in terms of reading between the lines? you were talking about this 20%, 80%, what president trump can accomplish, what he can't accomplish what was it? and is it a done deal? >> certainly not it's somewhere between a truce and mini deal. i don't think it's quite a mini deal but certainly a little more than a truce it is not a durable resolution for now it's reduced the risk of escalation it's a small positive. >> but maybe a negative for the fed. because they become less accommodative because they're not worried about it

>> interesting you use the word negative. >> a positive for the fed to stay strong in the face of market forces. >> what does every central bank want they want a hand-off they want to stop being under the spotlight. >> do they really? i think some of them like that. >> no. if you talk to people, they realize that their policies are going more and more toward ineffective. and i truly believe people within the ecb think they are being counterproductive. >> really? >> this point they're not helping anybody. >> you really think the ecb doesn't enjoy sort of being in sort of a powerful position? >> the central bankers care about the institution, care about the legitimacy and credibility and they don't want to become ineffective. they would love to see hand-off away from successive reliance towards what can actually help the real economy.

>> you're like waiting for godot. when did you first tell us that? >> i wrote a book on it. >> when was that >> 2016 "the only game in town," people didn't appreciate it. >> you were already saying it before you wrote the book. >> within the next couple of years we'll come to a t junction. >> if you come to a fork in the road you have to take it >> correct and the problem is that increasingly, there's recognition among policymakers that we may have to take the bad turn before we get to the good turn it's no longer about awareness among the technocrats. it's about convincing the political bosses and that's hard. >> do you get the feeling that at least for the near term china is off the table or will it be the drip, drip, drip every day >> i think we go back to the drip, drip, drip there are so many issues, joe, that have to do with china, there's growing awareness that it's about much more than trade. it's about national security it's about behavior as a stakeholder in the global economy. this doesn't go away any time

soon. >> you had a front row seat for the arab spring, obviously i think you were even -- did you ever consider a political position >> no. >> you never did >> never there was speculation. >> i know. i know which is pretty cool never really been considered to run any country, i don't think anyway, did -- do you see any similarities on what's happening in hong kong in terms of a fuse being lit on something that lasts longer and goes further than most people think >> where i see similarities is that the people protesting are focusing on what they don't want it's not clear to anybody how to transition to what they want i think the big lesson of brexit three years ago, the big lesson of the arab spring is before you

d dismantle something, know what you want to put in its place. >> the average person in mainland china, what's their impression >> they know very little what's going on. >> are they freedom fighters or agitators sh. >> to the extent they know what's going on, they're told they're agitators. i'm told by chinese friends there isn't much information on hong kong available other than the official view. >> they must have heard something after all the -- they follow basketball, don't they? >> all that stuff got blacked out. >> we've got to go morgan stanley beating expectations for profit on trading. we'll get you those earnings in a bit both on the revenue side i don't know if you saw. >> dom chu did a long report on it. >> am i an idiot >> there are times -- there are times that i say you're not listening to me, right >> that's true. >> dom spoke about five minutes

on this. >> so funny. he's talking the whole time and i'm trying to listen to him and i'm like, you know, these morgan stanley earnings popped. >> welcome to my world. >> thank you. >> hey, dom, are you still -- >> talk. coming up, when we return, i'll continue to be embarrassed but rodgin cohen will ntuecoin to talk. >> he was already on did you not see that interview ♪ most people think of verizon as a reliable phone company. (woman) but to businesses, we're a reliable partner. we're engineers.

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back to "squawk box. rodgin cohen weighing in on the letter redefining a corporation. he says he supports the brt's decision and is here now to explain why. rodgin, of course, is the senior chairman and has been, dare i say, consigliore to many a ceo across the world there's been a lot of debate about this, rodgin, in terms of whether this is pr spin, whether this is real we talked to secretary mnuchin who said he wouldn't have signed it steve schwartzman at blackstone didn't sign it why do you think this is the best way forward >> let me start with the view

that a corporation should consider the interests of nonshareholder constituencies, precisely because it advances shareholder value. what shareholder would not want its corporation to be seen as the employer of choice or to be seen as a good public citizen or to have a strong compliance record really this is not some radical new furtheory for decades businesses have encouraged philanthropical. >> right they said it was a sea change of how business operated and then it came out no, no, it's not a real change at all

it's just codifying what we already do which is it? >> i think it is definitely the latter. >> then what was the need to -- >> just listening to what you said rodgin, the inverse of what you said, what shareholder wouldn't want the ceo doing these things, take it the other way. what ceo wouldn't realize that doing those things is all part of enhancing shareholder value anyway >> i think every ceo in today's world should realize that. i'm not sure everyone does. >> the downside, rodgin, it feeds into the narrative that corporate greed is bad, the narrative to things that people like bernie sanders and elizabeth warren are saying, that you're right, we've been bad actors in the past because of the shareholder focus and we're going to change our ways. >> i would really respectfully suggest that making a statement such as this does not suggest

that what has happened in the past is bad and with what we're now going do to do is reform i think it's appropriate to make a clear statement. >> but you seem to suggest that some ceos that you don't think were following this path. >> that is true. i think some were not. >> and you think that the statement, therefore, gives them license to do so in a way they wouldn't otherwise what do you think the impact of this is? >> i think the impact is that shareholders will be going to companies and ceos and saying we benefit if you promote the public interest. >> go ahead. >> the two questions -- i had like a question about the past and a question about the future. and it was do you think that the shareholder centric focus in the past resulted in or enabled bad behavior and do you think that by purely stating this, giving it lip

service, would actually change behavior in the future and there wouldn't be any bad behavior >> we're never going to eliminate bad behavior by definition >> we should keep dodd/frank, some of the regulations? we can't just put it in the ceo's court now that he has this brt suggestions? i think we need to watch, don't you? >> we definitely need to watch. >> you think it's resulted in bad behavior in the past, the shareholder focus, the greed or whatever >> i think it has given -- i'll use your words it's given license. >> it has given license? >> license. >> shareholder focus has resulted in something in 2008? >> if it's shareholder focus to the exclusion of everything else, yes. >> it's interesting. a lot of people looked at this as a rebuke. and if you look at his words, there's no question that the headlines and a lot of the rhetoric he spoke about.

would more than suffice. if you really get into this language, he gets into this idea that you might have to think about charity and all that have is wrapped up in the profit piece. >> and i think you were exactly right. to put it in the following words, i think shareholders and nonshareholders are more symbiotic than they are divisive. >> as an attorney, this accomplishes quite a bit for corporations too i've had that point made to me in terms of fiduciary responsibility it's good to have this stuff stated overtly. >> except for the fact in some states -- it's a state's issue in terms of fiduciary duty there could be ultimately lawsuits brought by shareholders. >> fiduciary responsibility, how do you define it, right? >> yes and you've got 50 states and

there are six states only which actually have a shareholder rule of law 44 states have constituency statutes interestingly enough, there are about half the states, which have public benefit statutes, not surprisingly there's no s&p 500 corporation. >> what recently someone said on gma. i didn't do anything wrong but i promise i won't do it anymore. >> what's delaware >> delaware is shareholder privacy. >> thank you very much when we come back, much more

welcome back, everybody. as vaping-related illnesses and deaths continue to climb across the u.s., our next guest is teaming up with legislators from several states to develop sensible vaping regulation let's welcome connecticut governor lamond. >> nice to see you good morning, everybody. >> you'll be meeting with several other governors, lots of legislators, trying to figure out. as you head into this, what do you think is the right path to take >> i think the wrong path is to have every state doing their own thing, erratic patchwork of different regulations. folks from connecticut can drive to massachusetts and buy pot legally. not when they bring it back, though people from massachusetts coming into connecticut, if they're over 21 and vaping

can't do that legally in mass. it's a hodge podge right now andrew cuomo helped to take the lead we got together, talked about this a couple of months ago. whatever we do, do it on a regional basis and standardize it. >> do you think it's leaning more toward the stricter regulation or more perfect missimiss i permissive things? >> that's a loaded question but on the stricter side we want to make sure that the black market doesn't play that it's a regularitied, safer, healthier alternative than what's going on in the illegal vaping market and certainly illegal marijuana market. >> critical mass of agreement much easier. is that the case >> massachusetts, rhode island, connecticut, new jersey, new york and the governor of pennsylvania we'll be getting together in about one hour that's a start. >> and then you think extending -- or is that it and let other people come in when and if they want >> that's a pretty good start.

we're a bunch of relatively small states, packed in within each other to have everyone doing their own thing is a regulatory mess. >> marijuana overall, do you think that's sort of the attitude we should have? it's there anyway? it's black market anyway you might as well legalize it, dare i say, everywhere >> you mean recreationally >> am i big fan, no. has the train left the station i'm afraid it has. it's legal in massachusetts. >> is that okay? i'm still not -- we all say that it's happening but no one -- we haven't really thought that deeply about a stoner culture. >> it's not as bad as the black market is. kids are going to black market operators. fentanyl. >> i went to colorado. i know about pot i know it's there. i still don't know i'm torn between whether you just -- it will be -- >> it's notlike you legalize - >> percentage of users will go up if it's totally legal from

where it is when it's black market, right? >> percentage of users using dangerous stuff laced with fentanyl goes down i think that's the point. >> in terms of vaping, getting back to e-cigarettes, there was a judge in michigan banning the sale of e-flavored cigarettes there. do you think connecticut is likely to follow the same round? do you think that's something you will all be discussing today? >> is it something i'm sympathetic to, yes, if i do it in association with my fellow governors, it's much better. that's one of the things we'll be talking about in the next hour. >> we had fda commissioner scott lieb he would like to see the federal government kind of step in to the void it's left over the last many years his concern is just this that you see different regulation in every market, in every state and as a result there's no federal oversight, that the states aren't equipped to do a lot of the oversight would you agree with that? >> i think waiting for the federal government to step in is

waiting for the dough. we have a crisis on our hands and number of vaping deaths and illnesses we've seen in our state of connecticut and otherwise. i think states are stepping in to the void right now, becky. >> let's talk about the economy. what you see in connecticut. i know the first two quarters of 2019, economic growth did pick up it was helped by strong manufacturing and robust retail sales. it is still looking at connecticut from last year being ranked 45 among the 50 states. what would you say about where the economy stands, what direction it's headed, what worries you? >> been a laggard the last 50 years. advanced manufacturing, digital media, even insurance. a lot of our core industries are hiring we have a hard time filling the need it's my job to make sure people are trained for these jobs right now. >> the biggest positive outlook you have when it comes to the economy? >> biggest concern is our fiscal mess it's been a long-time coming it's tough to get the political

world to step up and make hard decisions we have to do on things like pensions and not to mention transportation we haven't invested in our transportation system in a long time we're about to do that. >> can i ask you a related question real estate prices in connecticut have fallen, as you know, flat at best, sideways at best is that something you think about a lot? >> i think about it a lot. i'll tell you, our downtown areas are going gangbusters, new haven, places where young people want to be the back country, wall street, three-acre lots. those are suffering a little bit. >> is that because of the tax rate >> i certainly think that the nondeductibility of state and local tacks was a big hit for states like mine. >> okay. >> governor, i want to thank you for being with us today. >> good to see you. >> good to see you. >> we want to thank mohamed

el-erian for being with us this hour normally he would stay another one but he has important stuff you have to give a big speech. holding on to gains. "squawk box" will be right back. coming up on "squawk box," richard greenfield on streaming service's quarterly results and 8:30 eastern national economic council director larry kudlow. trade, taxes, the economy. we'll leave no stone unturned and tell you what it means for uryo money that's coming only on "squawk box. make fitness routine with pure protein. high protein. low sugar. tastes great! high protein. low sugar. so good! high protein. low sugar. mmmm, birthday cake! pure protein.

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ask a financial professional about pacific life. >> breaking news, last-ditch brexit talks end with a draft deal. larry kudlow will join us live. plus this morning's biggest stock movers, including netflix getting a pop as the final hour of "squawk box" starts right now. ♪ i swear to you i'll be there for you this is not a drive by ♪ >> announcer: live from the most powerful city in the world, new york this is "squawk box.

good morning welcome back to "squawk box. i'm joe kernen along with andrew ross sorkin and becky quick. brian sullivan is tracking u.s./china trade i wondered where brian was phil lebeau is following the auto industry. you can imagine why. gm and uaw come to an agreement. julia boorstin is watching the big stock winner of the morning, netflix. let's start with willem and the results that may be turning out positively with the brexit talks. willem >> that's right, joe we had an agreement between the executive branch of the eu and british government led by prime minister boris johnson, who will be arriving here as we speak he will be giving a press conference in half an hour alongside the man that runs that executive branch of the eu commission they'll be both celebrating the fact that they finally reached

an agreement after a frantic couple of weeks over the legal text and, no doubt, slightly cautious about how this is received back in the uk. on saturday for the first time since 1982, a british parliament will seat on a weekend they'll be debating whether they're happy with the terms of this deal, what it means forn terms of the relationship for northern ireland and uk, and trade on the fewer there is still a possibility they will decide not to vote for this agreement. >> translator: we found an agreement with the british government for an orderly withdrawal from tor the uk frome european union and framework for future relationship. i personally would like to thank the british team, as well as our own, for their tenacity and professionalism. >> tenacity shown by negotiators, michel barnier has

been leading the negotiations for the eu side. he was asked on more than one indication whether he got any indication from prime minister boris johnson that this deal would get through the house of commons in westminster he deferred on the question. that will now be a question asked to the prime minister, no doubt, today and in the days ahead as he tries to get parliament and opposition lawmakers on his side. guys >> willem, thank you for that. from one deal to another phil lebeau joins us with the details on that uaw/gm agreement. phil >> reporter: andrew, there's something in this deal for both sides, for the united auto workers, they will get at least 9,000 jobs either added or retained over the next four years. detroit hamtramack plant one of four that general motors scheduled to shut down, it's not going to be shut down. they'll get an electric vehicle that will be manufactured there. for general motors, it is not bringing any production back from mexico. that's important because it

gives the automaker the plant flexibility it needs in its north american operations. take a look at shares from gm. remember, this company still has too much production capacity here in north america. over time, they'll need to take that capacity out to further right-size the business. the leadership of the uaw, guys, will be voting on this tentative agreement a little later on this morni morning. if they approve it, they will also make the decision on whether or not auto workers go back to work while they make a final vote on this contract. guys, back to you. >> phil, thank you very much meantime, netflix shares are jumping this morning, up nearly 8% in the free market. julia boorstin joins us. she has earning from the company. >> despite forecasting nearly 2 million fewer subscribers in the fourth quarter than analysts expected, netflix ceo reed hastings focused on three positive areas, first they're prepared for the onslaught of competition with its growing

investment in content as well as movies, in particular. take a listen. >> from when we began in streaming hulu and youtube and amazon prime back in 2007, 2008 were all in the market all four of us have been competing heavily, including with linear tv for the last 12 years. so, fundamentally, there's not a big change here. >> second hastings says international growth is promising with more subscribers overseas than forecast while domestic numbers did fall short of expectations. he also nts announced that netflix is expanding its nonenglish language original programming, that they're planning to do 130 more original scripted series next year alone. and third, the company projects it will continue to grow its margins despite growing content costs. this morning, analysts are starting to weigh in needham keeping a hold on the

stock warning, quote, netflix will lose 5 to 10 million of its 60 million u.s. subs unless it offers a cheaper service than we project. and macquarie says we expect competition coming from disney plus and others especially in the u.s. will have only modest effect on churn, but we think it will be hard for netflix to grow much more in the u.s analysts reaction has been mixed. with 70% bulllish going into yesterday they do seem positive over the last three months becky? >> thank you very much rich greenfield, media and technology analyst at lightshed partners what's your take on this >> the real questions heading into this quarter were, look, they screwed up last quarter, major missed in q2 international number was disastrous and a lot of investors were fearful that the

international story was over as you think about the next five years of netflix, nen next ten years, 90, 95% of the growth was coming from overseas when it hit a wall last quarter, people panicked. look what happened to the stock on the chart that was fear of international coming in, exceeding expectations for q2 -- sorry for q3 was a big sign. when you look at the stock up 7%, 8%, becky, it's because of the fact that international was good and, more importantly, q4 for international was fine, especially with sort of the language on the conference call, hastings ended the call basically by saying look, meeting expectations is nice, but blowing them away is even better i think there is excitement that the international story is back on plan versus the blip that we saw in q2 that i can't really explain. i don't think they can really explain. i think that's why the stock is moving. >> in terms of blowing expectations out of the water, is that them setting the stage for what they might be able to do next quarter after we see the launch of disney and these other

services, including apple? >> netflix has been terrible at forecasting its subscriber numbers. generally it's exceeded them meaningfully every once in a while it seems to miss meaningfully this is one of the quarters you can remember in a long time in which they basically came in line with what their forecast was. look, when you look at a company that has almost 160 million subscribers, given the size they're at, forecasting subscribers on a quarterly basis is really hard the thing that will move the stock over the next 12 months is do they start to see a reaction el ration? they'll see fewer subscribers than they saw last year. does that reaction el rate next year we think it does we're looking at a lot more content. the movie part of this story is being really underestimated i think. >> strategically, in terms of mix of subscribers, domestic versus international, how much is it about the moat, protecting what you have in the united states when you're going to have

all these other guys trying to capture that market share? and i realize the others are going after a global audience. right now it's going to be u.s. specific. >> disney plus is mostly u.s. >> how much of it will be about international? for example, if they kill it internationally but you start to see market share either erode or slow meaningfully here, what does that say? >> i think it's fun to talk about the war between disney plus and netflix and apple tv plus and netflix but the reality is, they're competing for time, right? you're not choosing disney plus because you want to watch "the crown" on disney plus. you may look at something like youtube tv competing with comcast. that's a true competitor for team comcast in terms of the channels you get i can watch cnbc on either i can't watch "the crown" on disney plus. i can't watch "stranger things" on disney plus these are not substitutable products you're going to have both. the consumer wants the stream. all these streaming services are

finally coming everybody is realizing they have to go all in peacock is launching, hbo max is launching. >> the consumer wants them do they want 72 services >> right now the consumer paid 90 to $100 a month for multi-channel video service and had very little choice on what channels they could pick now they can choose netflix or hulu. >> about be right back up to paying $90 to $100. >> but they get the content they want you don't have to subscribe all year no installer is coming to your house. >> you said movies are being underappreciated we showed movies, i saw "el camino" breaking bad spin-off of sorts. why do you think we're not appreciating the value of these? the cost of them is huge by the way, even though i watched "el camino" because i'm a "breaking bad" fanatic, i've

not heard enough about it, frankly. "the irishman" i've heard a lot about. >> it may be the demographic, to a degree i don't think you realize the value that "billions" has. you look at a tv show and say "stranger things" has this value. gu to the movie theaters and i say ten is the average for us in new york, $15 per person. >> right. >> value of a movie ticket, being able to see a major movie basically every single week on netflix at no incremental cost, i think there's a value perception to the consumer that is going to be far greater than any tv show they've added, especially when they do it literally week after week. >> 52 blockbuster movies. >> look, do you call "tall girl" a blockbuster? to my daughters "tall girl" was a blockbuster, romantic comedy, teen romcom. it was a blockbuster from a

viewership standpoint. >> do you buy the stock at $307? >> absolutely. this stock is going a lot higher as people realize it's not disney and apple versus netflix. it's the collection of these services winning mine share, wallet share all over the world. >> is there someone who is not a winner in all of this, in the streaming war? >> broadcast tv. >> no, i'm saying among the streamers. >> how do you define winning is everyone going to have a few hundred million subscribers? probably not many of these things will be much smaller services. disney is building a family service. they're not building something where -- you're not coming home from work on a friday night and putting on disney plus to watch "hannah montana" reruns. you might watch mandalorian. my point is that you will use these things for different purposes netflix is building something for everybody. disney is building -- >> for family? >> -- family service

peacock is to add on to the core comcast business they're each coming at it from different perspectives i think it's hard to compare and say one will be successful i think apple will be more successful than people think. >> rotten tomato score for these crappy ones, though. do you remember that jennifer aniston murder -- what was that? >> "murder mystery." >> worst movie i've ever seen. >> we talked about "bird box." >> we did. >> i liked that one. >> you did >> yes. >> it got compared to blockbuster at a theater i need it to be graded on a curve. i just want to know if it was a good movie just because it was free doesn't mean it's good. >> i've seen a lot of things in the theaters that are pretty bad. come on. >> you're right. >> rich, good to see you. marc benioff says capitalism is dead. we'll bring you those comments and the debate after this.

8:30 eastern time, don't miss our live interview with top white house economic adviser larry kudlow on cnbc ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪

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capitalism is dead we need a more fair capitalism a capitalism that values not just shareholders. i love shareholders but as important, stakeholders. capitalism value of stakeholders, your customers, your employees, partners we have many stakeholders, not just shareholders. >> salesforce ceo marc benioff yesterday. do you think capitalism is dead, sir? >> i think it has a little ways to go. i might count on it for a little longer. >> what does that mean >> i think it speaks to free markets and ability to make informed and conscience decisions about where you're going. it's an open supply, open demand and prices settle in on -- >> if you're right, what do we do about all these polls that millennials, especially, and i think even broader than that, believe that capitalism doesn't work anymore we're seeing it in debates

it's a constant refrain. if you're right, had an do you think has to change? >> i'm not sure they believe it doesn't work as much as they like to say it doesn't work. if you ask the millennials, the concern you're finding out in most of these things is that companies are getting immense power. that's where the concern comes out of they're not saying it doesn't work as an institution but it's threatening to them as an institution. >> and so when marc benioff says today profits are the table stakes, he makes a slightly different argument than the business round table he basically says you have to do the profits part that is like the table stakes piece. these other constituent parts are necessary but that's like a secondary layer to the profits piece. >> helps us stay in business, keep paying your employees >> that's part of it it becomes a circular argument. >> before you can do any good you need to make sure you can stay open. >> you have to stay open

ceos today, thinking of the ceo of ebay who actually was nailing it a lot on the purpose element in some of the other constituent parts but wasn't nailing some of the -- >> now he's gone. >> -- profit numbers and now he's gone. >> clearly at some point approves are essential the world i'm in rarely if ever are we backing a company that's profitable from the get-go always the company is driving to its profitability. my businesses are so young and getting off the ground, it's not realistic. >> are you listening to any of them that have the purpose does that play into anything >> mission is huge somebody who thinks they're changing the world freshly in new york will sell probably 40 or 50 million meals to consumer. he think he's feeding america, changing habits. he is a mission-driven guy all the way. that's powerful because it wraps around not only the management team and the company the consumers buy into that in a meaningful way, too.

>> maybe that's the distinction here this mission-driven idea is that what's changing, do you think? >> you know, i think -- >> do you think things were mission-driven in the '80s >> the more things change, the more things stay the same. i'm not buying into things are changing all that radically. businesses are mission driven for sure i mentioned freshly. everly weld that does home blood testing. mission-driven concept take quest diagnostics, and let's do it at home. >> in the '60s we had a whole -- you weren't around but there were millennials peter fonda, "easy rider." it could be -- you could transplant the same people i see today into that. they were doing tai chi and talking about certain things in their life it was identical they grew up and became, i don't know, 60-year-olds, the same people and there's a whole new crop

that will grow up. i wouldn't be taking a lot of advice on millennial polls zblie was in technology companies, but this is in the days when computers really didn't exist for the most part. small businesses, individuals surely didn't have them. pcs, didn't have them. >> no phones. >> but did we feel mission-driven you bet. we were changing the world computers were exciting. we were informing the world, releasing data to the population it was mission-driven in a big, big way t wasn't consumer brand in the traditional sense in the way we think harry's for shaving is a mission-driven brand. at least the founders think they are. but i think it was very similar to what we find out there today. >> bob, we have to leave the conversation there thank you. >> appreciate it. >> good to see you. >> good to see you, too. u.s./china trade fight playing out in a mine in california we'll go there next. subscribe to our new

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around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential. welcome back, everybody. as u.s. and china duke out the trade issues, one thing that's not getting much attention, rare earth materials. brian sullivan is live in california. >> reporter: i had to go back to high school chemistry and geology class to understand this stuff. it's incredibly important. phil lebeau talked about that hamtramck plant for electric cars if you want an electric car, missile guidance system, ipad or mri machine, you need to these

use magnets that are made by some of the stuff, the rare earths that come from a mine like this. this is the old molly corp mine. this is in mountain pass, california it was shut down for a couple of years. couple of people keeping it going. hedge fund in chicago bought it. they've reopened it. they are drilling for these rare earth minerals yes, we got to watch a very nice explosion yesterday. that was a lot of fun. here is the battle, though this stuff, this stuff that we use that you never really talk about is so vital to the supply chain. here is the problem. we used to be the world leader china took that over they flooded the market. prices crashed this mine couldn't make any money. so it went out of business china, which controlled almost none of the market 20 years ago is now almost all of the market, either through their own supplies or, more importantly, the refining even though we are in

california, ten miles this side of the nevada border, they ground this stuff down to almost like a flour, very fine salt type format. they have to ship it to china to be refined because china doesn't play by the same environmental rules we have to here. there's a lot of refining with dangerous acid there they've got a distinct cost advantage. this mine is trying to change that these elements, guys, there's really 17 of them but tlaes there are five that's key. it's so crucial to national defense and economic security that the trump administration ordered an executive order to basically say we have to secure our supply lines here. if you look at that, this is a big deal, guys the market itself is not that big. the total market of the rare earths is about $160 million what we import that's a rounding error. but the total end of the supply chain, the teslas, the ipads, all the stuff you make using these minerals is in the trillions of dollars the trump administration has said this is crucial to national and economic security and this mine has been operational for a

little bit they're trying to get the refining portion up so they can do the whole thing here. if that occurs the next year, it will give the u.s. about a 10 to 15% market share just interest this one mine alone. a little random but interesting fact, becky, because i know you like that. if you had a color tv in the 1960s, 1970s, 1980s, that screen on the color tv, every color tv in the world was made possible by the output of niodimium from this mine here in mountain pass, california that's more fun. now it's more serious in terms of the total supply chain. we'll be here all day telling the story about china and why the u.s. failed at rare earths and why we're trying to bring this entire industry back. >> which element, bri? >> niodimium. >> i knew that i saw it yesterday.

>> uropium. >> that was on jeopardy once i did see that. >> thanks for watching. >> i did see that. i've got to go back to my -- >> there's hopium but that's the fed. >> smoke some hopium pipe. brian, thank you. breaking economic news and then jobless claims and housing starts plus our newsmaker of the hour, larry kudlow, joins us live see if he inthks capitalism is dead "squawk box" will be right back.

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we're just a few seconds away from weekly jobless claims and housing starts we're watching the future this is morning they're in thepositive all morning long dow only up 43 points. we were up triple digits earlier. rick stantelli is standing by at the cme. take it away. >> a litany of numbers the most contemporary, philly fed business outlook that's still not out yet i picked the wrong one, i guess. september housing starts, they are 1.256 million seasonally adjusted analyzed units. a bit light. last look 1.364, was upgraded to 1.38, the best in over ten years. and if we look at the drop from 1.386 to the current read of 1.256, that's a drop of over 9%. if we look at perms, they drop

close to 3% from 1.425 to the current read at 1,387,000 seasonally analyzed adjusted units. philly fed just popped out 5.6, two points lighter than the 7.6 we were expecting and a little more than half of the sequential in the rear view mirror jobless claims moved up 4,000 to 214,000. and 1.69 to 1.79 just shy of 1.68 million to summarize the data, permit starts are at good levels. they were just already at really good levels. drop at interest rates had something to do with that. on the start side, multi-family, of course, always seems to rise more aggressively. dollar index coming in again a

quarter cent lower interest rates, the long end still hovering to close to the best numbers, that elf was the day before yesterday's close around 1.77. we're hovering just below 1.76 andrew, back to you. >> steve liesman, what's your reaction thank you, rickster. >> he does such a nice job there. i have to compliment him to how much he handles all that data. in this housing data, i want to make sure i understand it. you have this decline in housing starts that's from this huge pop in august remember we had that same discussion about retail sales? >> yeah. >> big strength in august. get back in september. not necessarily the sign that consumer is giving it up let me show you what's happened here i'll act as if diana olick were

here, this is what she would say. i hope anyway. you had an increase in single housing starts here is what happened to multi-family 333 july, 471 august permits and starts for this multi-family stuff single family one is the more consistent one and perhaps the one with more economic value here i think this housing number is maybe ultimately a good number and i just want to say the per s its thing was flat, 5.50 to 5.05 i'm going to take good news from the single family one. we went down 1.5% for the third quarter. some downward adjustment to this i'm going to say that when you have this -- we talked in the last hour this idea that the fed may pause. >> right.

>> there's this idea that i hope you don't think is too cliche, long and variable lags with respect to monetary policy. >> it is not a cliche. >> in monetary policy circles this is a cliche we don't know how long it takes interest rates cuts to have an effect. >> this is why the dismalscience. >> right but we know it's long and variable so i went back and looked and saw, you know what when you have interest rate declines and interest rates have been coming down for the better part of this year, since december 2018, it can take six months to a year to have an impact in the housing market that's the big place you would see it ultimately, reason why the fed may want to pause is to see what kind of impact we're going to have in housing. i think it will look closely at that going to look at autos, credit cards, the consumer and have an idea for how much weakness there really is in the economy

i'm going to take a win from this one i did not get a chance because i was so interested in the philly fed. that came in, i think, around expectations it was 5.6 consensus was 8. it was weak. we know the manufacturing sector is weak and we remain on watch to make sure that this weakness bleeds over to the consumer. my guess is that this is something you're going to ask larry kudlow about. >> you are correct. >> who is coming up in a moment. >> up next on deck top white house economic adviser larry kudlow will join us. all of these numbers, anything we can get out of him when it comes to trade talks and much more blackstone chief strategist will join us on the day's biggest market stories stay tuned you're watching ""squawk box"" on cnbc. dow futures now indicated up by 50 and you should be mad at simple things

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welcome back to "squawk box" this morning chief investment strategist at blackstone joins us now. i want to get your take and we'll try to get larry kudlowe's take if he will indulge us, on this idea that the fed could actually pause, as opposed to make an actual move, which i think is what the expectation is right now. if they do what steve is saying they might, what happens >> i think that's going to present volatility to the markets, both in equity as well as credit. i think we would see downside in equity markets, spreads widen

out. the reason is because the mark has been enamored and they've ignored the fundamentals number one, no profits growth. third quarter earnings that might optimistic come in at zero year over year basis, second quarter earnings which were basically zero on a year-to-year basis. you've had fundamental improvement yet almost a 20% rise in equities. >> mohamed el-erian says i hope they don't. >> i thought his idea was great, how central bankers want to pass the baton off to someone on the margins, we're starting to see cracks in the consumer side of the economy. >> you think the fed has to move >> i think the federal will move this time. >> whether they will -- i understand you think they will i'm asking whether they should. >> i think the fed should stay on hold. i don't think they should -- >> so you're with mohamed?

>> 3.5% -- >> you might be with -- >> yeah. 50% low in the unemployment rate, housing trend, number two. >> how crappy earnings are make up your mind. >> i don't understand. >> difference between companies and the economy. >> there's some worry now. >> trade tariffs. >> the economy leaves the market lower. now there's a view among some on wall street that says the market is going to lead the economy lower or it's going to reverse. >> that's a good question. markets have been priced off liquidity. i don't know if the markets are going to move the economy lower or not the question becomes can we talk ourselves into a recession maybe it won't be the market maybe it's ceo confidence. >> what are the cracks in consumer you see yesterday was the first time in seven months we've seen a dip. we talked to bill simon who used to run tours he said that was largely gasoline and auto sales. strip that out, jobs market

looks good. >> the very leading edge of the jobs market is where you start to see these hairline fractures emerge i'll give you an example number one thing you hear from companies, it's very difficult to hire qualified workers. if you can't hire people, you think you should be using your existing workforce more, but the number of hours worked is actually rolled over so that suggests that beneath the surface there might be something more systemic happening, like a little bit more of a slowdown than we've necessarily seen in the datea. the number of job openings has declined overtime hours has declined. these things are the leading edge unemployment rate itself hasn't moved higher it's 3.5%. it's a coincident indicator. suggesting there are these hairline fractures. >> the earnings, we had huge gains and we've had some tough comps for a while now. the gains were huge. same with the stock market stock market had been flat for however long you want to measure

it if you were a half full guy, you would say just sustaining those trends, which were really quantum leaps to begin with when they happened, just sustaining those for a couple of years, consolidating those for a couple of years and eventually heading higher, that would be a win. >> two things secularly that are going to challenge corporate profits and make it more difficult to sustain those gains are, number one, i think we do see a backup in the ten-year treasury yield we hit a low of 1.5. we're at 1.7 in change generally i think that 1.5 number is probably the low that we're going to see i think a year like 2020, we could see the ten-year treasury yield moving higher. that becomes more problematic for profits and secondly, trade. i think it's too early to say that the trade war is over i think it's too early to say that we've rolled back the damage when you look at trade friction all around the world, it suggests number one, profits are going to get hit or number two, the consumer is going to feel

higher prices. >> is it possible, in terms of earnings -- everybody has this expectation that earnings are going to be horrific. >> yeah. >> the question is, how horrific and is the expectation -- >> no. >> had an about impeachment? >> by the way, we haven't even talked about the potential for impeachment. >> can i say not it? not it on that one. >> but as it relates to all of this, are we priced for perfection or are we not estimating or really valuing the black swan is it really a black swan when you see talk of impeachment, when you see all these other headlines which, frankly, because they're often political we don't seem to talk about. the market seems to be dismissing at the moment. >> i think the market dismissed a lot of that. you look at the third quarter of 2019, for instance, the market goes almost nowhere. over the course of that third quarter, think about all the things that we faced

manufacturing recession, right the beginning of cracks in services brexit all these other headlines. yet the market stayed flat and here we are, the beginning of the fourth quarter. we're facing a lot of those same things and the market saying in the fed we trust the big question is how much further will the fed go? then i think we stop dismissing these things, right? we have to start paying attention to what does it mean that corporate profits can't advance? what does it mean that we're starting to see a slowdown in the service side of the economy. frankly, in joe's camp, a glass half full had we not seen the inversion of the yield curve back in late august, early september. that tells you that things have fundamentally changed. set the countdown timer, start paying more attention to these cracks because they signal that these are classic late cycle or end of cycle. >> i'm walking around, looking at maybe some people in the camp are like that. i'm trying to control these kids

here girls' camp over here. >> making sure we go to bed on time. >> exactly let's get down to the new york stock exchange. jim cramer is standing by. what do you think? do you think things have fundamentally changed? are you worried about some of these early cracks >> i don't see them in the consumer i'm taking my cue from brian moynihan, bank of america, jp morgan people geez, their consumer numbers are the best ever. the best ever. that's saying something. i believe citi would verify that when you talk to costco, they verify it. but then there's manufacturing economy, which is not good at all. you get that from union pacific, csx stock will be up because of expense control. no, i don't see any cracks matter of fact, the consumer is in fabulous shape. fabulous. >> we've got larry kudlow in a

minute anything you would ask him >> look, i would ask larry where is the ag buy? the ag buy -- larry is in the camp that says look, the chinese, you can trust but verify i don't know i don't know if you can trust or verify, because the ag buy should have happened this seems like argentina again where maybe the president has been had. >> we will ask him just that jim, thank you very much see you coming up. >> yeah. larry kudlow when we return. "squawk box" will be right back. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪

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welcome back to "squawk box. joining us now, larry kudlow, national economic council director been a while, mr. kudlow it's great to have you on this morning. i'm going to start with a philosophical question, larry. you've been there a while. i don't know if you were ever what i would refer to as a globalist. but at this point, do we have a domestic economy that can continue to outperform -- and we have for years, admittedly, but it seems more important and more

true now than maybe in the past that we really need to look at what's happening specifically in our country more than being bogged down by a global slowdown is it more true now than before, do you think >> i think you're asking me is the domestic economy strong enough to withhold the global downturn, joe. >> yes. >> yes well, the answer is yes. and i'll backyes i'll back that up in the -- but i'm not a purist on this, you know, international trade is very substantial so, we've had some head winds, particularly in the past year. the economy is a little softer in the second and third quarters a lot of that comes out of europe by the way, a lot of the european slow down is centered in germany we can't send, we can't export our manufacturing goods, because germany is doing so badly. so that's an issue brexit, a smaller issue, joe

major china slow down, i'm sure we'll get to that in a minute. latin america is slow. on the other hand, on the other hand, i will defend what's going on domestic economy. because despite a very severe fed tightening last year, maybe we're coming out of that now, nonetheless, lower taxes and deregulation and opening up energy we're still plugging along you know, there is a statistic -- my pal steve moore in journal in two-an-a-half years, the trump economy, people are getting about $5,000 $5,000 this is median income, joe ordinary folks, 60, $65,000 a year married filing jointly $5,000 from better labor conditions, huge jobs in income and another $2500 on tax cuts. that's a huge gain the prior administrations both

democrat and republican have nothing compared to that so that has been driving the economy. as i said, there is some softness right now but, no, i think the domestic economy is in very good shape. i think the worst of the fed tightening, by the way, coming to an end. i'm kind of optimistic, the year end quarter should be pretty good, 2020 should be pretty good so we're not immune, joe we are not immune. i think we are still the drive with rethe international driver. >> our friend steve leishman, he has different ways of gauging things and through tea leaves thinks it's possible the fed could be thinking of a pause you say they are finally doing the right thing. i assume you mean they will continue cutting do you think there is a possibility the fed could be considering a pause because of seeing strength and would that be a negative inure your view

for the economy and the markets? >> i look at the money indicators and the yield curve indicators so here's the good news, the yield curve, let's see, 10s versus bills, 10s versus twos has now finally moved back into a normal position some it's right side long rates are now above short rates. not by a lot but by some. that's a good sign i think money market futures, fed fund futures, correct me if i'm wrong. they're all predicting another 25 basis points at the fed meeting. a reduction at the fed meeting. >> that's correct. >> i concur with that. i think that's wise, jim bullard who i think won 50 at the last meeting, i'm sure he will be pushing for 25 maybe 50 again this time and they're moving in the right direction. their balance sheet is starting to expand a little bit

i don't want to get into a lot of fed bashing they do the best they can. their modems are highly flawed the deep state, board staff, of course, has not been help. oops, did i say that the fact is the fed is moving us in the right direction so, yeah, we are going to see some lower rates by the way, that's a noble phenomenon, joe. lower rates all across the world, may be saving the rest of the world from a recession if you look at the timing, it's sort of interesting. so we took some hits in 2019, the economy was softer a lot of that goes back to severe fed tightening. and some other issues. i get that >> hey, larry -- >> now it looks like the housing sector is leading us back up that's a pretty good median indicator. >> you see in a trial where one side will bring up something that the prosecution wants to bring up you brought up deep state. how do you view this whole ukraine impeachment push is that a deep state move or is

there something that the african-americans will be worried about in terms of the phone call and what's going on with impeachment >> well, i don't think the average american is in the deep state. that's the really good news in america. look, i don't want to spend a lot of time on this impeachment business i'll just say this, joe, i read the transcript of that phone call between ukraine president zelensky and u.s. president trump. i've read it i don't know, 15 times. i first saw it at the u.n. i don't see anything remotely that would constitute it some kind of impeachable offense. look, it was a, you know, it was a congratulatetory call. corruption came up zelensky, who we met at the u.n., we had a great bilateral with him, is a very bright young man. he said corruption is a big issue. i think president trump is saying why don't you help clean

up the last, you know, the 2016, 2015, 2014 i don't think the president was aiming at 2020 and i just, i want to make this point, for three years or so, president trump has said, europe must help the united states with respect to nato and other related military assistance. and so, what the president was doing and it's clear in that transcript is he's saying, i want to go back to protect taxpayers and then let's see if we can get your assistance going, which ultimately is what happened it was completely transparent. we released the transcript we released the highly flawed hearsay impeachment complaint. we released that transparentally, there was no extent -- >> explain the role of rudy guiliani and his two associates now who have been indicted >> i don't want to explain that.

i guess that's andrew asking that question, my friend, andrew, from the upper west side it's good to see you, my friend. i don't want to explain it i'm not acquainted with all these machinations it's out of my lane and probably above my pay grade >> pled me ask you a different question, though. >> hang on all i'm saying is when we released the transcript, we were transparent. we released the whistleblower complaint, which was really third and fourth hand hearsay, we were transparent. there was never any quid pro quo. the president ever linked the two. his concerns about assistance was why doesn't europe pay its fair share of cost share burden and president zelensky, again, we spent a lot of time with him at the u.n., he's a very bright fella. he said there was never any pressure >> larry, i'm trying to be

polite by letting you provide a fulsome answer there are others that have a different you 52 on this issue. >> i'm giving you my point of view i don't see anything close to an impeachable offense. >> are you not troubled by any of it, so we're clear? >> any of what >> there is nothing what the president has done or his associates in reels to the ukraine that you are troubled by in wane way whatsoever >> there is nothing the president has done with respect to that phone call and related matters. the associates, you can go to the second and third and fourth and fifth rings of saturn, andrew, and i'm not acquainted with it. i don't follow it. it's out of my lane. yo i only deal with the economy. >> since you do know the brought so very well there were a lot of people that saw that letter that the president wrote on white house stationary yesterday to president erdogan of turkey and couldn't believe their eyes. they couldn't believe what was being said is that -- was that normal to

you? >> i'm not sure what specifically you are referring to >> there was a letter in which the president i will have to go get the letter, wrote to erdogan in which he effectively -- it was a coloquial type letter he said -- >> make a deal or else it was in very plain spoken language >> well, look, i think you know the letter i'm referring to. >> yes, i'm aware of the letter. that's mike pompeo's turf, it's not my turf. i believe in conversations with the president, he is trying to warn turkey not to cause trouble in syria with respect to the syrian kurds and other parties. >> i appreciate that but the threats and the language and the type of approach, people looked at that letter initially and thought it was a fake letter >> well not everyone >> i think a lot of folks. >> now are you speaking -- >> i will speak for what i

imagine. >> if there were a trial there would be on action and i would be sustained >> there would be an objection, thank you, joe look, secretary mnuchin made it very clear over the weekend, we will use sanctions and we may use more sanctions to keep turkey in line can we just get, look, here's a point, fellas, i know we don't have all day we're seeing a lot of the head winds that held down the economy this year may wind up opening the door to next year. one of them is the china deal. you all haven't mentioned that >> your old partner, larry, i apologize, we got to go to cramer and his friends, carl and david. we got to go, thank you, larry sorry to cut you off, but it's straight up at 9:00. we got to go make sure you join us tomorrow "squawk on the street" is next [ music playing