Transcripts For CNBC Squawk On The Street 20171019

Stocks and a retreat from record highs in the premarket. Amex, nike, and apple are all leading the dow lower. Plus, a big change at the top of American Express. Ken shenalt is stepping down after 17 years at the helm and 30 years later, lessons for black monday for todays stock market as stocks continue to break new ground we are set to open lower after wednesdays rally, in which the dow closed above 23k for the first time in the meantime, two dow components out with Quarterly Results this morning verizon posted revenues above consensus, helped by some Strong Performance in smartphones travelers, better than expected results, although it did suffer 700 million in catastrophic losses related to the hurricanes, harvey and irma. This nike downgrade, guys, is going to take some wind out of the sails, too you know, its funny. I question the value add of the downgrade. Which is, by the way, goldman. And the reason i question the value added, theyve got a big Analyst Meeting come up. Its all the same thing. Look, theres excess inventory, there are issues with ebay well get to that later, and with amazon and the headwind the tailwinds are now headwinds. I read it and i said, guys, this is the kind of call that i want at 63. I dont want it at 51, where you basically say the price earnings to multiples is low enough that its going to support the stock. Its just not a lot of value added. And the people who really helped you with nike were the people who told you, listen, the inventory going to be really bad off of footlocker and the inventory is going to be really bad off of what is basically a kind of a glut of jordans. So, i mean, i know its going to hurt the stock im not recommending it. I just think, come on, guys well, goldman does say that the excess inventory and the inability to resetna north amea is well known. They come out and say that they just say its going to take a long time and these markdowns are going to get high visibility because of this new amazon they are. And amazon is everywhere on the ebay call, amazon comes off about auto parts and apparel. So this is, again, its in the business only vf corp. Right now has really been getting a lot of analyst support, as not being amazonable it is rather remarkable to read the nike call and say, okay, tell me something i dont know and thats not bad work. You dont want there are people who were saying that you should buy it into the Analyst Meeting, but the only thing he did wrong was that he made this call at 52 and not 62. Meanwhile, weve got decent industrial results dover, dana heher, adobe with gd guidance danaherr, we managed to catch someone at 84. Thats really ridiculous adobe, so bankable what i did is went back to the june forecast when they announced their last quarter and in it, there was talk that perhaps they had taken their organic growth from 18 to 20 . And what they said last night is thats completely wrong. Were not taking it from 18 to 20 . Not only that, but were raising the total adjustable market by 20 billion. He is so bankable. He literally, he literally is telling a much better story than he did on june 20th. And the analysts all got very nervous, very nervous after that last Conference Call and i speak to him all the time. They didnt even know what he said that made them nervous. But, boy, did he ever blow the number way take a look at the fiveyear chart on that stock is a thing of beauty. This has been a continuous performer. Its not just an overnight wonder right, hes a genius and uses a lot of artificial intelligence, process trillions of transactions every day. Anybody i know who does anything commercial spends the money to get the program. 400 in five years. But he went from being a company that was acrobat to a company that expands cloud, everything, whether document, marketing, and most importantly, he went sass he went a subscription he is the real rival yeah, no, a friend of our show, rosen on the board yes, chegg was at 3 when he came on. By the way, talk about another turnaround he came on the call and he was like, i was trying to fight back tears i had the hanky all set for him. And i said, listen, i think you just made a strong case. Its up five times and i think even number 86 for the eagles, the hottest tight end in fantasy football was a buyer after that interview he probably was we should get to verizon we mentioned it briefly at the top. Its a good number or a decent number in terms of versus expectations lets not get carried away here. Were not talking about incredible Revenue Growth, of course, at the enormous wireless carrier, but the stock is up its been a difficult year for verizon, as everybody knows, facing difficult revenue comparisons and a lot of questions for the firm overall for some time, there appeared to be a focus on the company in trying to perhaps use m a as a way to obtain some growth or at least protect the future that seems to be dispatched to a large extent my last interview, not that many weeks ago, of course, they really seemed to be focused on the 5g future. However far away that may be or however close it may be, and there are different views of that but the numbers themselves this quarter, guys, postpaid phone net ads of 603,000, 274,000 to that were actual smart the smartphones. A lot of tablets in there, as well postpaid churn at 0. 97 the rpu or rpa number, 136. 31 better than expected so overall, a decent quarter for verizon. And by the way, it was the Second Quarter of 17 also was not a bad quarter, either, for the company. So they put two together here, at least, in the face of a course, a very difficult, competitive environment where they went unlimited. Where they didnt people didnt think they would. And theyre at least starting to show a little i dont want to call it momentum well, i would poke a ledger in the eye the revenues beat the ads, were good but david, how about the breakout, the 2 billion breakout of tim armstrongville what do you think of the oath business. Thats an 8 billion run rate on that zpr do you wear by the oath i dont zbl well, to be honest, the facebook tbh you told me about that yesterday. Yeah, your boy no, my girl its the 12th quarter of churn that low and those wireless subs, thats 36 year on year the ledger must be going crazy. The only wrinkle, you tie it to apple, whats happening to apple this morning some of these newspapers in asia are reporting its the classic story soft suppliers having their eight orders revised down. This is good. This happened from, say, 50 to 160 in apple we heard about the revision orders down. Youre not supposed apple suppliers are like fight club. The first rule of apple suppliers is youre not supposed to talk about apple. But these guys do it who knows. Maybe apple took away their orders people always trade awe off of stuff. Its why i say own apple youll get some story from some chinese or taiwan paper that says this is the end, this is the end, kind of like its an homage to the doors. Skpu and you feel like the blue bus is coming for us, and you sell out, but for no reason tonight equipment supplier side, its important to note in verizon, this is from the citi note this morning, they said the capex guidance from verizon at the low end, were talking 16. 8 to 17. 5 billion in capex. But that could be a negative data point for the Communications Equipment company. Yes, it could be. And thats going to be hard to pin down, because we dont know where it really is david, i want to point out, theres another because i believe in vox, were getting an inquiry here that says, are we seeing the same results, Service Revenue down 11 quarters, why, oh, why, bad its a guy named ledger magenta and twitter. So i dont know. He may be authoritative. He may be there he is im glad he surfaced because he was out late yesterday, throwing a little shade. Is that what they say . Verizons way. He was doing a little trash talk its kind of the josh norman of this business. Lowell mcadam doesnt have 4. 5 million followers on twitter. Lernl dodger does. Shannon will do a gift of his gift shes our gift person. But i think its good that the ledger came back immediately i was saying the ledger, this could be a better number than you think. And he actually has used twitter to say thats not the case hes not taking down numbers, verizon, okay . Hes downgraded to a sell, sell, sell already so theres not any place to go after that hes got his plate full as i tweeted back to him and of course didnt get an answer, hows the Due Diligence going on sprint or tmobile he was spinning or hes going to identify time for dumplings in seattle. A guy who did a 4. 06 mile did he run a 4. 06 mile. When he was younger not yesterday i didnt even make the harvard team notice how i had to drop harvard in, because im so insecure on this 30th veeranniversary day. By the way, while were on twitter, really quick, just left frankfort, great meetings, great weather, really enjoyed it gad, because ill be spending a lot more time there, brexit yes, i said thats london lite that was a real shot hat the bow. Basically, i hear a lot of people stay frnkfort is kind of, i dont know, what would you say, like omaha . Really. Apparently going to become the new london of europe if frankforts so great, open space there. Wow, thats actually not an insignificant thing. Blankfein trying to sort of no, i immediately we both tweeted it out, because its the most significant thing that hes said his twitter account is not particularly its like it was one tweet for every 30,000 followers but it is, i thought this was very important, because London Real Estate is ridiculously expensive. Frankfort, which is not necessarily known for being beautiful but and not to mention in the Bigger Picture that the talks between Prime Minister may and the and everybody else in the eu, not said to be going particularly well so far, in terms of meeting any of their hope for end points and trying to figure out how their going to actually negotiate a soft exit as opposed to a harder exit. Is it going better than madrid versus catalonia . Thats another tough one, as catalan refuses to drop their independence bid and spain says were going to go in and take constitutional control you want to get to geopolitics here because once you go down that road, you start to wonder, in general, why the market is so strong you would have been a member of the lincoln brigade, david, in the old days. Youve been over there, youve been on fifth coluonist. I always said that stability in spain was important. It was. Im with you. Well go see gornka its in madrid. Its in the we know whats in boston, if you look at prompter tape. Please come to boston i will go to boston for a celtics game . I spent some time there many, many years ago in boston what are you doing there . Im going there tomorrow, jim, to do an important interview on squawk on the street. Thats what it says right there. With the celtics . No. Were going to have an exclusive with that man, general electrics new chairman and ceo. Remember, hes also chairman now and John Flannery will be my guest. Ill be alone with him and no, i will be you will be with me in spirit. Like i was with wilf yesterday with tim sloan i was very much in the spirit with that. Or as wilf today with david im actually in the spirit with that. But i like to be in the flesh. And your time will come this is the business ive chosen it is the business youve chosen you will not break the peace that youve made here today. I will not, mo green hey, mo green i know, you always get me on the godfather references ge, tomorrow, of course, reporting earnings you have flannery about 6 30 in the morning and there are expectations that perhaps well get some signs as to what the company will really be focused on on november 13th it has its big Analyst Meeting, that in many ways people expected would sort of set the agenda for mr. Flannery. We continue to hear, of course, nothing is sacred with the company. There is a sense, certainly, that there is a great deal of change to come at ge my dear friend to my right here, as talked often about the inability, perhaps, to continue to serve a dividend at this level given the levels that the company has and its lack of overall Free Cash Flow so a lot of questions and perhaps beginning of some answers tomorrow i want to ask you, will it be an empty plane following your plane no, i get no, the american flight that ill be taking, i think, will so its not just too plain. You have an exclusive with flannery were going to talk more about immelts doubling on the plane thing. Well talk about ge. Well talk about amex, ken shenalt stepping down as ceo got to get to me bey and travelers. Well talk to art cashin about the stock market crash of 87 30 years ago today. The s p hasnt closed doing ten points since september 5th i cant wait for her to have that College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right financial advisor, life can be brilliant. Ameriprise the stock market crash known as black monday occurred 30 years ago today. The dow tumbled by almost 23 . The worst oneday decline ever lost half a trillion in market value. And as a result, nyc institute and all of those Circuit Breakers we talk about now that reduce volatility, 508 points today, guys. 2. 2 not 22. 6 you need a 6,000 decline, obviously, in cash for that day. I want to thank karen cramer for that, who gave me an unbelievable call, saying the last week, the week before, had been the worst week in the market forever saying theres no bids underneath the only thing i had on my sheets that monday were Johnson Johnson puts you couldnt even sell them, because nobody even knew a bigcap stock. Nobody knew Johnson Johnson were trading if you want to take advantage of the crash the next day, terrible tuesday, which stewart won a fabulous Pulitzer Prize on, was by far worse it looked like it traded through 1,100, and there was liquidity concerns, a lot of the big banks, its been said, got together, including Steve Mnuchins father from goldman. Also, greenspan was pretty involved in that greenspan said well make all liquidity available. When that came out, the selling stopped. That was midday after the private conference with the heads of all the major firms the problem was you couldnt i went in to buy 50,000 shares of caterpillar, and people gave me a market which was 40 70. 40 to the sellers, 70 to the buyers thats how Little People knew. People said, when did you start buying stocks again, i said, when the stock market started to function again it couldnt function it is true if you called nasdaq, you couldnt get anyone on the phone. Theres a big debate about whether there are lessons to be learned. Whether the rulesbased portfolios can be tied to etfs do you think there is or can do markets just crash sometimes portfolio insurance created a false expectation among a lot of the gogo managers that they would be stopped down 5 people didnt understand the power of chicago versus new york back then. I think people should remember that japan was the ascending market they got to 39,000 soon after. The japanese were buyers used to come in every day with bigcap stocks, they would be up 2 every single day the market was levitating, had a bit it did have a bad august, where you started seeing the mercks of the world going down but people have to remember, when i say, no bids, and what karen cramer meant, she was help running a big trading desk she said, aisle trying to sell 100,000 georgia peach. Theres no buyers. She wasnt telling me, but what shes basically saying is, every single stock that she tried to sell, there was nothing underneath and what that means for people who have not traded is that you see these markets and we take it for granted that when something comes over the tape and you see its union pacific, 109, 109. 01, first, we were using quarters. But more important, it would be like, the offered side, the side you can buy is 109 the bid side is 104. So you couldnt do anything. So people were frantically trying to get out. The japanese backed away that week so they werent in the next day. There were some terrible comments by james baker that weekend in the times about not letting the germans kick us around, and you came in on monday and it was just like an extension of what was happening friday and yet, how many months later, into 1988, and all the gains im sorry, all the losses had been made up. Oh, it was great. Nice chart today in the journal it looks like a blip. You can barely see it down 22 , black monday you had to buy it. Its interesting enough, the stocks that really came back the fastest were the materials because the economy was quite strong it was really, youhad to buy the chemicals and the papers those groups arent even really talked about anymore or theyve all been combined. The papers and chemicals were really strong. All i can tell you is, there was nothing in the fundamental economy that was at all weak so people make fun, because in 29, people said, the fundamentals were fine and they werent in fact, in 87, the fundamentals were fine, and you had to get back in and buy stone paper. A stone container. You had to buy international paper. You had to buy dow chemical. And John Flannerys big exclusive with david, i always yeah, he split it we split. We split, but we cant i want to be we split liveris, i get flannery, and you get everyone else how did you get that interview . Guys, settle this during the break. The mad dash on the other side of this commercial dont go away. It can detect a threat using ai, and respond 60 times faster. It lets you know where your data lives, down to the very server. It keeps your insights from prying eyes, so theyre used by no one else but you. It. Is. The cloud. The ibm cloud. The cloud thats designed for your data. Ai ready. Secure to the core. 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Ebay is worth discussing i understand theres a bias downside for a lot ofstocks today. But ebay, the Conference Call, which i thought was okay, really stumble on stub hub, where they just said the numbers were plain disappointing. Obviously, then there were questions about, was it because of nfl attendance. But they said, no, its because the various sporting events are beginning to restrict tickets, making it tougher for stub hub to get business. Also, they spent a lot of money and didnt see a lot of acceleration they talked about a korean holiday. No one ever wants to hear about a holiday theyve never heard of and why it might be hurting their numbers. But they did also there was a very interesting query about Automotive Parts and apparel that amazon has targeted ebay. And you know what, no one ever says, yeah, amazons eating our lunch, but that was a very important moment, when you say, listen, theres a lot of inventory in these various stocks i do like ebay here . I was concerned about stub hub, because i didnt think it was answered correctly i would like to know more. That would have been a growth driver but, you know, ebay is not a disaster and people are going to sell it down two or three, thats probably a mistake in a way, theyve done a decent job differentiating their business to a certain extent they sure have. But remember, paypal has been the star dan shoalman, who had a vision theyre no longer together, of course. The splitup has worked. Creative value. Weve got to go, an enoping bell a few minutes away stay with us for squawk osquawe stree street. Question. What is an answer and how can you measure the value of one . Today trusted answers from trusted sources are rare and precious commodities. And when industries are undergoing massive transformation, opportunities are only opportunities if you can find an answer that separates fact from near fact. 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Youre watching cnbc, squawk on the street, live from the Financial Capital of the world, the opening bell in about 45 seconds a busy day for earnings and it will continue tonight. Yellen is set to meet with the president later today, to talk about the fed chair position we do have the 30th anniversary of black monday. Well get a budget vote on this key path to tax reform the president tweets this morning, i think we have the votes, but, who knows . Yeah, and the compromise that we are talking about for health care i mean, it is rather odd to have that yellen meeting today. People love to find 30year parallels. And its fun, but its not anything to theres the opening bell and the s p at the bottom of your screen at the big board, it is stupid cancer celebrating its tenth anniversary at the nasdaq, and its monogodb celebrating its ipo, another 1 billion valuation here, jim. After we had two yesterday we had that, too, and maybe some people are going to say, thats speculative, well put that in the camp of speculative. But what im watching is oil once again failing could not get through. This is just endless pinning of oil futures by u. S. Producers, pine year out last night talking about some things that made it so you obviously know, there is so much oil in the permian and the u. S. Companies that need to dig, to drill, they need, they need all the cash they can get. Whats interesting, by the way, is to drilling to some degree, but not as much. United reynolds did an awesome job, but thats because of florida and stormdamaged texas. Travelers not hurt that badly, a dow stock. Theres a lot of positives, but because its the anniversary of the 30th and because there are a couple of quarters we can point to, ae dover quarter, not that significant to me. And some of the selloff in the semis that have been so strong, i think it colors a lot of things but you know, verizon and travelers should color things. They should verizon is the gainer on the dow. Amex and apple are two of the worst performers and amex, although they beat and revenue was ahead and loan growth was good, ken chenault is going to leave people wonder whether its enough of a high note of that whole costco thing its opinion subeen such a h. And to say that this last run could have been continued would have been hard no matter what happened and chenault had really listened hes really done a lot of things that were terrific to get things together its been a remarkable stock i salute him he is absolutely going out on a high the stock has had a real rebound. We spent a lot of time talking about the misstep on costco, they wanted to justify it on cost terms the Value Proposition to your amex holder is still somewhat unclear to me in terms of actual card and rewards what youre paying for that and the competition on reward, particularly from the likes of a jpmorgan, with some of their new entrants by the way and market cap is essentially equal to paypal is, you know the first thing that i remember when i got out of college, my father said, youve got make enough money to get an amex card. Ive been an amex member since 1980 like c. F. Frost yes and i dont leave home without it even the commercials, i remember but my kids, theyre paypal people, because they dont go to stores at stores, you have to talk people thats something theyre very reticent to do they like to text. Reticent is the correct word, actually, in term, reticent means not really interestinged in reluctant to speak to speak requires a level of intensity that the millennials are not happy with that means like actually pick up the phone and call you ever called wait until your kids get old enough no, im already im at that point i text with my kids. Thats what they do. Thats what i do. My daughters are both together in oregon and texted me in fabulous picture of them i was thinking, geez, i could call them, but then that could wreck the whole karma if i call them really . Easier just to post sympathetic or right my daughter face timed me, i was at the supermarket, she said, i couldnt believe i picked up i said, whats the difference . Speaking of posting and social networks, watch facebook. John mccain is adding some bipartisan support to an effort they call facebookville. So this would essentially require social platforms to retain copies and information about ads, make reasonable efforts to make sure foreign entities are not purchasing content to drive elections here. Im still in the world where stifel came out and said that channel checks are really terrific and people are using. Youve got to push back against washington, because i think the quarter is going to be fine. Interesting, by the way, we talked about the nike downgrade. Down 40 cents. People are saying, what else do you have for me. Give me the gilead people are excited its interesting, though, yesterday, ibm, of course, with that very Strong Performance, following through today, not down at all. In fact, still up 27 cents and this morning, as weve said, verizon on the strength of better than expected earnings, powering the dow again, up 4. 5 . I had Martin Schroeder on last night for an exclusive interview. Yes, you did. It was very clear that he made it, this is not a oneoff quarter. Its the beginning but next year could be really, really good. It was an exclusive interview on mad money. And you have been exclusively, quite positive recently on ibm. Yes, i have because exclusively, i have felt that remetty has put together a company thats good. One of the things thats absolutely true about these guys, the ibm guys, a security network, encrypted, is what the jpmorgans like walmart likes it and security is very important. Its a lead sales point these days we had always felt that encrypted meant that it slowed the transaction down the great thing about the new ibm mainframe is that ten krihes encryption is done with the same speed as if it isnt encrypted if youre in equifax, they should be saying, rip out our system and go with ibm i know you hit it briefly, but apple is down over 2 today. Is there any other reason . Well, i mean, you know, when you go over they always have theyre always able to point to a couple of suppliers they very specifically point to some suppliers that are trash talking the situation. Talking about orders, just to give you to complete magnitude orders for the iphone down 50 i see that kind of thing and think, how many times have people sold it on that kind of stuff. And im uncomfortable, but it is literally the type of thing that has plagued apple owners since the beginning of time. And it has just kept people out of one of the great runs of all time and i think its going to do it again. We mentioned the mongeaudb i ipo. One of the ipos we had not too long ago was blue apron, who is now laying off 300 but their reason for that was very interesting why theyre laying it off, to accelerate growth. Now, see, thats really interesting, right wow, thats almost actually getting close to the market cap that i assumed it would hit eventually you accelerate growth by cutting people ive never really thought of that its shrink to grow if you get down to like three employees, youre going to be in great shape. Thats true youre burning a lot of gasoline with airplane engines and shut off that fourth engine, it just stops burning. We havent mentioned unilever, which had lighter than expected organic, and that was disappointing. I thought that unilever, you know, youve got the unileverprr smp initially down badly overseas on cloud weakness wait a second, cloud grew 19 . That makes no sense. But unilever cites storms. They cite storms, cold weather i dont like that. I mean, it wasnt cold for procter. No. But they do sell ice cream. Unilever, i like i know you do did you get your Dollar Shave Club announcement today . Though. You dont get dollar shave . I do, i do. I get it in the mail every month. I get my blades. All right united air, by the way. We didnt hit united with a beat, but some losses on hurricane. You know, i listen to paul listen, when you listen to phil lebeau talk on that, on the thing i mean, he asks very pointed questions and he does it in a way thats very sweet, but it basically got out the fact that theres a lot of capacity coming on and it was not a great quarter. Kbro you know what, its been the weak sister in the group and it really did have storm problems it did it did have storm problems its the weather is waiting for cons im like like the godfather. He was hot saying stupid things he was a hothead. But just so we know, it was him. It was sonny who said to michael, you went to college to get stupid, stupid, which i always thought was my watch word overall, jim, f. A. N. G. Is not having a good day. Netflix, tesla, apple, facebook, broadcom, nvidia look what theyre doing to apple. Nvidia, i could barely wake the dog up today and this is bitcoin coming down. Look, these are redhot stocks and the redhot stocks with the exception of adobe are getting crushed today. Thats part and parcel of the, well, 23,000, record, record, record, and those go down on these days and you can take your cue and wait like 48 hours and come in and start buying them, which is probably not wrong, but this is a market that suddenly likes value. They like ibm, and they dont like likes ibm, likes gm how about ge . Anything there no. No, were going to hear tomorrow from ge. And we will also have an exclusive interview with the companys new chairman and ceo, John Flannery, as well ill be sure to watch that. Im glad. All right, really quick, as we hear more about these initiatives to reduce the number of research centers, journal today is raising the specter of thousands of layoffs is that legion thing, the dividend is speaking of november. Youve got davids interview tomorrow maybe it kind of preps you for something that could be a change in the way that they actually report i hear their going to start using industrial reporting, the way all the industrials do and that could make the company look not as good as it has looked, under the previous ceo i also think that it will be i personally think it will be correct to trim the dividend, because i want growth. Right and i dont Want Companies to sit there and buy back stock and trim now, one of the things i liked about Martin Schroeder, who i had exclusively on yesterday, the ceo of ibm on mad money, was that he said, listen, if we need the money to grow, were going to spend that money. Which is a little bit of a difference, very nuanced thing about, were going to keep buying back stock for warren buffett. Listen, gm also dealing with that pension, which is, you know, something we dont talk about as often with so must have those newer companies, because they dont have them, but that is a significant weight as well. Will you ask about turban accounting okay. Will you ask about the need to keep locomotives. We can, locko is co is a quen will you ask about predex theyve hired so many people in the Digital Transformation that immelt talked so much about. Will you ask about company cars sure. Will you ask about Boston Celtics tickets. They had like 700 cards Boston Celtics tickets, no but the second plane, that was the best thing from this journal story today. One plane, two planes, hey ive never heard for viewers who havent read it i have never heard of that. Unless youre the president of the United States. The journal reports that immelt would take duplicate planes for security, logistics purposes its interesting, because in a boeing, theres actually a duplicate plane. I dont know if people realize that i was in a plane that got hit by lightning. And the power went off for about maybe a few seconds and then a new plane lights up within a boeing thats one of the reasons why ive always loved boeing so much now, we couldnt we had to bounce, the foam runway, it bounced, it bounced, it bounced. I was busy writing the whole time the stewardess said, do you mind not working . What am i supposed to do, hold hand with the person next to me. You know what pilots say, if it aint boeing, i aint going Jim Mcinerney says, i love what theyve done. A second plane within a plane, may you never see it, but when youre hby a lightning bolt the redundant systems are so great. Ive got to tell you pb the u. S. Air, i went and i called the ceo of u. S. Air. They dont want tube these things, but it was just a miracle that second plane comes on, it didnt work for the landing gear, but you bounce and you bounce and you bounce, and then you say, shoot, im late for that next meeting. Lets just move on. Finally, guys, before we get to bob, financials yesterday had a decent day sure, but Interest Rates were working off a week where Goldman Sachs did not have zbl it was up four yesterday. It was. How much can they Goldman Sachs is flat for the year absolutely flat for the year as opposed to many of its exerts, which are up at least sort of in line with the market corbat at citi has done a remarkable job and he continues to be underrated its really starting to bug me youll have to get another exclusive with him, like you have in the past i will, like i have with ryan, whose stock is leading today, adobe i do those exclusively by the way, you have martin anstes, from lamb research, but that is going to be a battleground stock people are going to say, wait a second, are his customers really going to be reasonable and rational they tend to have not been for various times. Because they see, oh, dram prices are so high, lets build a lot of factories you have to channel mllenge marn that i lost that exclusive. Well hear from goldmans David Solomon in the next hour this is the worst drop for stocks in about six weeks welco, going back to september 5. Thats how low the volatilitys been. I think a lot of these problems started over in asia let me show you, the happeninhag was down about 2 . A lot of very High Sensitivity over there this were talking about rising Household Debt and asset bubbles being concerned about that occasionally, they came out with these comments you can see the hang seng dropped on that. You can look at the emini futures. Very, very early in the morning, they started dropping before the Chinese Markets started closing. You can see that and i think this is the same thing happened in europe, largely what went on over in china today. You can see some of the sarcastsectors here, the United States, some of the high beta sectors, apple is weak, banks are weak, and utilities and telecom more on the upside energy just went positive. Apple on the downside. There are some sources in china saying that apple might be revising orders for the iphone 8 and 8 plus we have not got any confirmation about these. Our chinese newspaper source, so take that with a grain of salt but you see some of these suppliers are on the weak side a lot of earnings today, but i want to highlight one of them, United Rentals this is the big play on construction in the United States and reconstruction around the whole hurricane issue. This is an historic high for United Rentals the numbers were fantastic, and basically, they raised their guidance on everything, for sales and ebitda and cash flow all their metrics were risen here look at that, its gone parabolic. Its up in the last two months, 30 to 40 . Again, historic high for that. A couple ipos. We talk about a chinese debut. Weve got mongoldb over here, on the nasdaq in a few minutes. One of the big database platform companies. Look at that number, 8 million shares at 24 the price talk was 18 to 20 and they raised it to 20 to 22 now 24 a couple of ipos above their range after a lot were pricing below. This is on the cnbc disrupter 50 list here. Another one tomorrow down at the nyse, another chinese one backed by ten krecent a big Online Gaming and shopping platform, sea, a tencent and alibaba backing tends to help a lot. Were talking about october 19th, 1987, when the dow dropped 22. 6 . I think the important thing you want to know, 508 points is not the same equivalent decline is 5,000 points that would wipe out all 18 months of gains that we have seen here. There was an official president ial inquiry president reagan apointed the Brady Commission to look into what happened. They talked about the stock market running up, and it was up 40 going into it that year. There were some dollar issues, there was portfolio insurance, of course. Thats where they hedged portfolio and stocks against the risks by short selling index futures. That turned out to be a bad idea the markets were very linked everybody figured that out and then, primarily, they focused on the inability of systems to handle the huge order flow so many orders came through the system, people couldnt handle them orders got delayed, tape got delayed, people conn get information. It was a systemwide problem. And thats what the Brady Commission focused on. Two things came out of this. First was, the implementation in 1989 of systemwide Circuit Breakers, when the dow and now the s p dropped a certain amount, the market will stop this only happened once in 1987 during the asian flu crisis. But it did create interesting changes in the market and the most important thing is all of this led to great efforts to improve the overall trading environment and the trading systems. And overall accelerated the move toward electronic trading. The bottom line is very simple, if a lot of people suddenly want to start selling, the market is going to drop and nothing is going to stand in the way of that right now, dow is down 89 points carl, back to you. Thank you very much for that, bob pisani lets get to the bond pits and Rick Santelli. Good morning, rick good morning, carl. I find it so fascinating, dropping claims should be bullish, even though theres probably some issues on delays with people signing up for a variety of reasons related to not only weather and global issues, but just how slow things may be coming in but philly fed, theres no argument there it was a pretty strong number. Rates are down what an interesting day for all of this to happen. Were on the anniversary of the crash. And im not suggesting a crash but the world learned something then and ill talk about that later, my own experience. That when equities look iffy, treasuries go straight up and their yields go straight down. Thats sort of whats happening today. And bob is absolutely right. You know, between 3 00 and 4 00 a. M. , something happened we can debate if it was china, what the catalyst was. But all markets moved in line like they were roped together. Look at intraday tens, right around 330 is when they made their biggest drop the dax, same time hang seng, same time boounds, sa bunds, heres where it got interesting. All the counterexchange markets moved at the same time as well, but in a counterintoouitive way the euro was going down, but it reversed as the dollar index did. Very important to realize that at a time where Central Banks are pulling large levers with unknown consequences, just how tightly wrapped all of these markets still these markets stl are, jim, carl, david, back to you. At 3 30 the Chinese Communist Party Federal reserve chief said this markets too high to use the term, minskying which meant that basically this market is not even 6. 8 growth still have to be careful that created this incredible downturn the hang seng was down 1. 9 s p numbers were negative but the dollar did reverse by 5 15 rick was right the most compressed action ive seen in a long time. Vicks of 11 when we come back, well hear from Goldman Sachs David Solomon. Dow is down almost 100 points. Back in a moment ive been thinking. Think of all the things that think these days. Businesses are thinking. Factories are thinking. Even your toaster is thinking. Honey, clive owens in our kitchen. Im leaving. Oh nevermind, hes leaving. But what if a business could turn all that thinking. Thinking. Endless thinking into doing. To make better decisions. Make a difference. Make the future. Not next week while you think about it a little more. But right now. Is there a company that can help you do all that . i can think of one. Has grown into an enterprise. Thats why i switched to the spark cash card from capital one. Now, im earning unlimited 2 cash back on every purchase i make. Everything. Whats in your wallet . Black monday 30 years ago today as you now know. Well get somerections from art w wnin later on this morning dodo 85 points back after a break [vo] when it comes to investing, looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. The strikingly designed impolexus nx turbore. And hybrid. Lease the 2017 nx turbo for 299 a month for 36 months. Experience amazing at your lexus dealer. Throughout history, the one meal when we come together, break bread, share our day and connect as a family. [ bloop, clicking ] and connect, as a family. Just, uh one second voice guy. [ bloop ] huh . Hey . I paused it. Bam, family time. So how is everyone . Find your awesome with xfinity xfi and change the way you wifi. Jim, whats on mad tonight an. Apple is the lose arer today. The company that has the most intellectual property is sky works. Hes not allowed to talk about apple. Well get a tone for cellphones, probably one of the most important interviews well have within the 72hour period. Winnebago, the millennials love them lets check it out thats exclusive with sky works. Hands off, david. Youll be in boston tomorrow . I will be tomorrow morning joining you at 9 00 a. M. So we can cover everything ing is in madrid. The exclusive im here schlepping around i dont know what ill do tomorrow maybe ill work on honeywell. Slumber jay david, thanks for that. Jim, well see you tonight. Well see you tonight 6 pp eastern time when we come back, Goldman Sachs president David Solomon, an exclusive interview. Downtown dow is down 93. Whoo woman class, lets turn to page 136, recessive traits skip generations. molly i reprogrammed the robots to do the inspection. Its running much faster now. See . Its amazing, molly. Thank you. thank you. Expestandard. E lexus rx with advanced safety. Lease the 2017 rx 350 for 399 a month for 36 months. Experience amazing at your lexus dealer. Throughout my career, ive been fortunate enough to travel to many interesting places. Ive always wanted to create those experiences for others. With my advisors help along the way, its finally my turn to be the host. When you have the right financial advisor, life can be brilliant. Ameriprise good thursday morning. Welcome back to squawk on the street. Im carl quinn kneeia. Markets are down were watching big earnings from the likes of verizon and amex and ebay and travelers and adobe. Not a good day for tech. Nearly every component in the semi index is down. Our markets, retreating from records on the 30th anniversary of black monday. Stock market crash the dow today seeing its worst drop in six weeks. Then later in the hour, goldmans president and cocoo David Solomon been sit down with wilfred frost in an exclusive you dont want to miss. Painting the town orange. New york city among the many making their bid to be the home of amazons Second Headquarters. The deputy mayor of new york city will join us with her pitch in just a bit. First over to Rick Santelli for data on leading Economic Indicators rick hi, carl. Most of the day has been leaning in a positive way if youre looking for a stronger economy but not septembers read on leading Economic Indicators. Expecting up. 1 we ens up down. 2 you have to go back to august of 16 to find a minus sign but you have to go back to almost two years december 2015 to find a bigger minus than down. 2. Not a good read on indicators. Many dont think it is a leading trading indicator. Weak as we look at yields on the soft side, equities on the soft side the dollar index on the soft side carl, back to you. Rick, thank you very much the pressureis on for republicans in congress after failing to approve trumpbacked bills to overturn obamacare, tax reform is a must win today marks a first key step the senate poised to pass a 2018 budget resolution which would allow tax legislation to move socalled reconciliation requiring a simple majority vote president reports i think we have the votes but who knows joining us this morning is former white house chief of staff josh bolten. Josh, its great to have you good morning to you. Good morning, carl. The president says who knows. Ostensibly john cornyn knows and says he thinks they do any risk to this not passing yeah, theres always a risk when theyre operating with as thin a margin as they have in the republican conference in the senate but we share the optimism of the president and the whip that they have the votes to pass this budget bill because it is crucial for the most important economic agenda item which is tax reform which the secretary of the treasury this week said is vital to maintaining the stock rally today the journal sort of throws cold water on that and says if it were not to the pass would stocks collapse, probably not. What is the Business Roundtables view on the risking to assets if this legislation does get sticky . I dont want to take a view on predicting the stock market if i could do that, id have a different job. But i do have this view, and its based on polling our 200 ceos of americas Biggest Companies though the members of the Business Roundtable. And we asked them what will you do with employment, with hiring and with Capital Spending if the kind of tax reform thats on the table goes through and well over twothirds of them said that we will hire more and we will invest more. Well do more Capital Spending we also asked though the flipside of the question which is what will happen to the plans you have on the books today if tax reform either fails or is long delayed and a majority of our ceos said we will have to take planned hiring and spending off of the books. So theres no question in my mind talking to our members that if the tax reform goes through big boost. If it fails, negative reaction from our Member Companies. All right so help us understand that, josh, because corporate profits have been rising for several quarts now in fact, theres such a rise, another 4 plus percent over the next quarter what are companies waiting for why do they need the tax cut and the repatriation deal to go forward . They are hiring and raising wages now but theres a lot more room to go were still really operating in a 2 growth environment. And to unleash the forces, unleash the potential thats there in the u. S. Economy, we need to get that higher. The one Public Policy step that can get things and get the economy going at a substantially higher rate i believe it can get to 3 on asus attained basis is tax reform so our Member Companies arent waiting but they are making their plans based on an expectation that tax reform will go through. So wait its your expectation therefore that more money will be spent in this country than might otherwise be the case or be spent in other places by these corporations you mean spent here in the United States and abroad yeah, listen, corporations are going to do whatever is in their best interests obviously benefit one would expect the underlying business. To her point, given the success in terms of earnings and Free Cash Flow that weve seen over the last few years there seems to be certainly plenty of ability to invest. So it would seem to me not to be a function of needing more money but simply how to allocate it. Exactly and so if were getting 3 growth in this economy which is what i think is possible if tax reform goes through, they will have more attractive places to invest their money theres also well over 2 trillion trapped overseas as a result of our uncompetitive tax code by a lot of our members would like to bring back to the understand and invest here but theyre prevented by tax penalty from doing so. Theres a lot of good opportunities to invest here in the United States that i think are being left off the table because we have such an uncompetitive tax code that can be solved in the next few months. Yeah, do you think it will be though i mean it, take put on your Old Washington hat put yourself back in the white house if you can and sort of look for me at the senate right now. Easy. Sorry make an assumption though in terms of were going to have deficit hawks. We have a plan we dont have the plan yet to be fair, mr. Bolton and there is seemingly a lack of revenue coming in from all the cuts being contemplated. How is this going to actually pass even with reconciliation . Yeah, not easy. Reconciliation is essential. I believe, to getting the tax reform done. So the budget resolution thats on the Senate Floor Today must pass in order to get this done and then it must it be conferenced or agreed to by the house. So thats absolutely essential its never easy to do tax reform its been 31 years since weve had a tax reform i believe the stars are aligning here in washington now in a way that i havent seen in the 30 years since i served on the staff of the Senate Finance committee in the mid 80s. Weve got a republican president strongly supportive. Weve got Republican Leadership in the house and senate strongly supportive theyve got the outline on the table through their framework of something they all agree on that is tax reform that can pass. So put me in the cautiously optimisticcategory that this can get done either by the end of the year or soon thereafter. Josh, one last point. When it comes to members of the roundtable who are going to push against some of these pay forces, realtor is a good example on the standard deduction and mortgage interest, how do you handle that thats the challenge of tax reform which is there have to be pay forces to offset the lowering of the rate that is crucial to be a successful tax reform some of our members arent going to like it theyre eliminating an interest deduction, that kind of thing affects Different Companies in different ways and not everybody will think that boy, this tax reform is the best thing that ever happened to their company but i think the vast majority of our members and the Business Community overall will put that aside and say look, whats good for the economy . Because whats good for the economy overall is going to be whats good for our business and i think they will see that this tax reform when it finally comes together will be good overall for economy and despite disappointments on some of the pay forces, i think the vast majority of our members will be supportive in the end. Thats certainly where the Business Roundtable is and organization is planning to be. We hope youll come back as this makes its way through the hill over the next few weeks thanks again, josh bolten, former white house chief of staff, president and ceo of the Business Roundtable. Today does mark the 30th anniversary of black monday. The market crash of 1987 that saw the dow lose more than 500 points it was the largest oneday percentage decline for the index to this day. Stocks shedding more than half a trillion dollars in market value on that day. Were joined by a man who has been there that day, ubs director art cashin. We always turn to him for some of the moments in time here on the floor of the New York Stock Exchange take us back, if you could you wrote about it in your note today. The emotion, the panic, what it was all like. Well, the year itself was interesting. The market was up a stunning 43 until it topped out august 25th. And i watched as the managers and senior traders would tell the juniors dont get too caught up lighten up here. Theyre getting ahead of themselves every pause was followed by another rally to the point at which the juniors began to say dont listen to the old guys they dont know what theyre talking about. Keep buying. Everybody was buying right up until august and then things started to slow a little bit secretary baker, treasury secretary was in open argument with the germans about the deutsch mark versus the dollar and accusing them of manipulation the week before the crash, things started to come apart a bit on the wednesday before, there was a rumor about possibly a very large tax on marche mergers and acquisitions rostenkowski. That spooked the markets pretty good. That wednesday we closed down Something Like 95 points, the largest point drop in the history of the dow up till that point. The next day the market didnt rally at all it was off another 50 or so. Then came friday which was was an expiration day. And it started to sell off and continued further. There were rumors around that nancy reagan would have to go in for cancer surgery in the hospital and that she was the president s right hand and everybody was terrified about that so the market sold off particularly heavily in the final hour or so and it was down 108 points, which was then the largest point drop going into. Then the london storm, was that that weekend . The london storm was that weekend. And london was closed on friday or closed early on friday. And people who needed liquidity had to come to new york. So it kind of piled on. You write about this so brilliantly in yesterdays note, you say the situation felt more unreal orders flowed in faster and faster the tape ran later and later one broker said it was like a bizarre dream sequence nothing seemed real. Thats correct. It was like being one of those dream sequences in a movie i have the order in my hand. I can read it out allowed to you to sell a thousand shares of x, yz at a price that looks ridiculous but thats the price up on the screen so you kept talking to yourself to some degree and saying i know im here and i know this is going on, but it doesnt make a bit of sense to me, but the client wants this sold ive got to sell it. We bring you on not just for the incredible history you share with us, but for the lessons we can learn everyone that applied to today is there anything applicable from what you learned on that day and in the years since then we should be thinking about in this market today . Well, i think while its not up 43 , this markets been up in a rather unloved fashion as everybodys talking about. So that kind of puts you maybe not on an extreme but youre at a leverage point we saw that this morning when mr. Ju in china mentioned the word minsky moment and that is what we saw in 2007 and 2008 over here and in europe. That scared the heck out of their markets and thats a little bit of what were seeing this morning in maybe not a full flight to safety but a move to safety i would say and i dont mean to discourage the viewers, but i dont want them falsely reassured. Everybodys talking about Circuit Breakers or whatever many of us cynics believe that those Circuit Breakers are somewhat like lifeboats painted on the side of the ship. You look at them and youre reassured but when it comes to use them, theyre not really available. My point there is what did the Circuit Breakers do to prevent the flash crash in 2010. What did they do to assuage the 700 and some odd point selloff when the t. A. R. P. Vote went the wrong way . There is nothing more powerful than a market that changes its mind and when it happens, you want to get out of its way. One last thing. Most viewers know you are a cautious guy. Right. I wonder if living through 87 helped color that. It has, carl. I mean that and several of the things ive seen over 50 years i say again and again, when i walk into a room, the first thing i look at is the exit sign i want to be able to know how i can get out of a place as much as i can to get into it. Cautious, not pessimistic. Right. Art, thank you as always for sharing some of your memories. Were going to continue this conversation on this black monday and the crash of 1987 what parallels or differences do we see any todays market. On some of the cracks behind the crash and whether or not there are warning signs for todays investors, mike. Building on that context that art said up there which is to push against this idea a lot of times the crash is talked about as a oneday fluke, this air pocket that showed up no economic recession and it was somehow a mechanical thing, a market failure but the backdrop was as art suggests a market going straight up not just year to date into the august but for five years. It bottomed in august of 1982. It went up 25 a year through that august of 87 a lot of air underneath the market by the time that the monday arrived of the crash, october 19th, 1987, the market was already down 17. 5 , down almost 10 the prior week people thought that was really the crash. So essentially, you had all markets under stress around the world. Treasury yields on that year to date 7 up to 10 . There was kind of a fear of an overheating economy inflation. A new fed chair. The dollar in free fall. So you had a lot of pressure building up in the markets that did give way in kind of a mechanical failure on that monday but you dont really see those things right now it was not a very unusually calm market in a gentle upward slope which is what this rally has been this year with firm credit markets in 1987. We dont see the preconditions not saying it cant happen but you dont necessarily have a lot of those ingredients that contributed 0 to all that selling energy that was unleashed on the crash day. We talked about in this morning on worldwide exchange. Different cycles in terms of where we are in politics, reagan was in his last year in office, a preelection year, the first year for the Trump Administration this year different periods with the Federal Reserve you alluded to that could play a role as well, right . Yeah, all of it is in the mix. Back then you had a stock market that had elevated valuations, arguably you had overconfident investors. Right now you definitely have elevated valuation buzz not a lot of the other stuff weve not got it all figured out now and the market cant go down big. Im saying you dont have the organic vulnerability we saw then it can build over months but we dont see it at this moment. The thanks. As we go to break, shares of American Express the companys long time ceo ken chin nault announcing he will step down the beginning of next year stock moves a tad lower on that news well hear from goldmans president and coo David Solomon. Dows down 73 potsin well take a quick break back in a moment coo David Solomon. Dows down 73 points well take a quick break back in a moment i think its t. Your kids go to college and you start trading. Yeah, 5 years already. 5 years, hmm. You ever call your broker for help . Once, when volatility spiked. And . By the time they got me an answer, it was too late. Td ameritrades elite service team can handle your toughest questions right away with volatility, its all about your risk distribution. Good to know. Thanks, mike. We got your back kate. Does he do that all the time . Oh yeah, sometimes he pops out of the couch. Help from real traders. Only with td ameritrade. Wantsure ack . Alright, looks like weve got chips, popcorn, pretzels . Pretzels plain, sourdough, spicy, sesame, honey mustard, chocolate covered, Peanut Butter filled, this ones in german, it says, reindfleisch . Plain. Great. So what are we gonna watch . Oh show me fall tv. Check out the best of the best handpicked fall shows on xfinity x1, online, and the Xfinity Stream app. Thirsty . Throughout history, the one meal when we come together, break bread, share our day and connect as a family. [ bloop, clicking ] and connect, as a family. Just, uh one second voice guy. [ bloop ] huh . Hey . I paused it. Bam, family time. So how is everyone . Find your awesome with xfinity xfi and change the way you wifi. Shares of verizon up over 3 the company did beat revenue estimates, matched eps estimates which were 98 cents a share. Phone that is churn at least among the Customer Base was lower than anticipated 63,000 post paid net ads was higher than the analysts anticipated. That churn of. 97 also. And the ebitda margins generally quite positive they lost 18,000 video subscribers. Perhaps that doesnt compare to the loss of at t directv unit. Being well received by verizon invests at this point as you see. It has been the Second Quarter in a row in which the Company Seems to be performing better than anticipated were not talking at all, of course, about significant Revenue Growth but coming into this year and through the early parts of this year, it was a very difficult competitive environment for verizon. It chose to guess offering unlimited plans to try to meet some of the Competitive Pressures it was facing from the likes of tmobile and sprint and at least seems to on the most important metric typically subscribers in terms of post paid ads meeting or beating expectations and getting rewarded for that. Lets move on now to bids for amazons Second Headquarters due today. With promises of more than 5 billion in investments and as many as 50,000 new jobs, cities around the country have been scrambling to woo that giant new york city submitted its proposal and for more on what that city says it can offer, were joining by alicia glenn, deputy mayor of new york city. Nice to have you here. Thank you other cities are rolling out the tax breaks that is not typically the way new york city rolls. Why do you think you have a shot if youre not willing to give them the money that amazon typically looks for when making a big investment i think what amazon really needs to continue to throw their business is the most talented workforce in the country and in the world. If youre looking to hire 50,000 really smart people, new york city is the place to do it i dont think this is about a race to the bottom of throwing money at them. Cy read governor christie is throwing 7 billion for a 5 billion headquarters i dont know, as an exbanker that sounds like a bad deal to me were putting on the able access to the smartest people and the most diversified other sectors that are businesses amazon is continuing to grow in. Between our Academic Partnerships and media, fashion, technology, advanced manufacturing businesses here, theres a real Business Case to be made for amazon to come here. Give me some examples what differentiates your bid do you believe from the others amazon is going to be reviewing. Their number one priority is to have the most talented workforce. Human capital will drive their business there is no other city in america that has more than 2 Million People with bachelors degrees and has the strength of our Academic Partnerships. We have a variety of neighborhoods that are ready, willing and able to take on them as a company in those neighborhoods. So they need ready space now and they need the ability to build a significant urban campus over the next decade we have four neighborhoods weve put forward which offer them interesting and different opportunities to become part of new york city. This is a company that is an urban company. They are not a company that wants to be in a suburban office park they want to be of the city and want workers to walk and bike to work this is a company that really has urban roots. If you want to be a big global urban company, theres no better place to do it than new york city. In your conversations did they ever articulate why they need a second Head Quarters . We have not had direct conversations with them. Weve had conversations with some of the staffers about what will be in the bid but theyve been very clear that they are not interested in people sending them cactuses trying to meet them on the street to get the inside story you know, they have been very clear in both their rfp they issued and all the media coming out of amazon what theyre really looking for is a pro business city with a deep talent pool. New york city is not a pro business city. I would have to disagree with you. The level of regulation, laws and all sorts of other things you have to go through. If that were the case why do we have growing sectors like google and facebook and over 350,000 new private sector jobs. A great subway system and Diverse Workforce. Mayor bloomberg for creating silicon alley. We have over 350,000 people working in the tech ecosystem. Again, this is work thats been done over the past 25 years. For it to continue to make new york city the safest big city in america with an extraordinarily Diverse Workforce and sectors that are completely unrivaled. I think the case has made people want to put down roots here. Youll see amazon feel the same way. Has the city modeled if you won it, what it would do to housing prices, traffic, things like that . Yes, weve done some work impact on various neighborhoods that were putting in. Two of the neighborhoods in the bid Lower Manhattan and midtown west are areas where those buildings are built or going to be built anyway. And so the impacts of that development has already been studied. There are mitigation measures in place. Mass transit as much as everybody complains how tough it is right now in the system, it is still the most efficient best network in the country by far. And weve been very clear the mayor has been very clear we continue to push the governor and the state legislature to adequately fund the subway system. One of the greatest assets city has do you really think you have a shot people are going to be surprised. Out there in the ether, its been theres no way we can compete because everybody will throw the kitchen sink at them i really think the proof is in the pudding. The tal lebbed woented workforc, diversity of neighborhoods and a city with a wealth of commerce and culture and innovation theyd better come to new york city if they want to be the big guys we appreciate your joining us on this interesting subject. Alicia glenn, deputy mayor of new york city. The buildings are turning orange, right . Empire state. Orange dress. Where is your orange dress, everybody . When we return, Goldman Sachs president and cocoo David Solomon will sit down with wilfred frost with an interview u llotyowi n want to miss. The dow is down about 70 points. Stay with us rise higher than ever. As the world leader in unmanned aerial systems, were attracting the worlds best talent to central new york. And turning the airport into a firstclass transportation hub. All while growing urban areas into vibrant places to live and work. Across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. Traders theyre always looking for advantages. The smart ones look to fidelity to find them. We give you research and datavisualization tools to help identify potential opportunities. So, you can do it this way. Or get everything you need to help capture investment ideas and make smarter trading decisions with fidelity for just 4. 95 per online u. S. Equity trade. Fidelity. Open an account today. Im Jackie Deangelis heres your news update. Former president bill clinton met with the theresa may in london today the two discussed the current political situation in northern ireland. Meantime, haerts is buying mens health and runners world terms of the agreement have not been disclosed and retailers are in for a treat this halloween americans are expected to spend more on costumes, candy and decorations than before. The National Retail federation estimates it spending about hit a record 9. 1 billion with more than 3 billion spent on costumes alone the yankees are one victory away from the world series. New york shut down the Houston Astros 50 in game five last night. New york is now up three games to two game six tomorrow night in houston. And thats our cnbc jus update for this hour. David . Thank you, jackie when we return, we are continuing to keep an eye on a Big Technology initial Public Offering taking place at the nasdaq mongo db set to go public this morning well take you there live for an ayteheitpens st with us trust 1 doctor recommended dulcolax. Use dulcolax tablets for gentle dependable relief. Suppositories for relief in minutes. And dulcoease for comfortable relief of hard stools. Dulcolax. Designed for dependable relief. Aggressive styling, so you can break away from everyone else. The bold lexus is. Experience amazing. Morning. Cloud Database Company mongo db making its market debut at the nasdaq this morning. Berthing that coombs has been following the story after they raised their expected pricing. Morning, bertha. They raised their price initially thought they would price somewhere in the range of 18 to 20 a share they boosted that and priced at 24 a share. Weve already had about 1. 25 million shares paired off. They are trying to get toabout a 1. 5 million pared off before they open. Twominute warning theyre watching as the shares are being paired off Goldman Sachs is the lead underwriter running the book they have a valuation of about 1. 6 billion after having sold 8 million shares at 24 a share. This is a new yorkbased company. Very excited to be going public here ten years almost to the day after it was founded this is a company that is b to b, and among the tech firms that have gone public this year, those are the ones that have done relatively well and a lot better in terms of the debut they dont necessarily get the biggest pop in the debut but in the after market, they are the ones that have been performing much better in terms of tech ipos so far this year. Again, last night, they raised that level to about 24 a share. We are awaiting that opening trade. You can see here nasdaq a lot of champagne. A long ways for them to come here and get public at this point. This is a firm that if you have been a follower of cnbc, you may have had your eye on them. We certainly have. Theyve been part of the cnbc c tech disruptors list for four years running. This year number 24. Weve already had four on that list go public this year the ones btob again are the ones that have ed pretty well in the after market so were pretty close here, guys well be watching it, not sure if were ready to open just yet. We havent indicated you but the deal does appear to be oversubscribed and it does appear that were going to get a pretty nice pop here at the open well be right back as soon as that is stock is ready thank you for that. If it happens, well come back to you well go over to wilfred frost in california today sitting down with a special guest morning, wilf. Good morning. Thanks very much im here with president and coo of Goldman Sachs, David Solomon. David, good morning to you. Good morning. Thanks for having me. Thanks for having me here at your conference. The builders and instraighters conference i guess we think of Goldman Sachs often is a wall street titan with big listed companies and in fact, the exposure has grown significantly in terms of prunes i guess i dressed based on former rather than the latter. Were in santa barbara. Its beautiful you wonder whether or not we should move Head Quarters out to the santa barbara. This is a terrific event its actually a couple days here year that i enjoy. We bring together 100 entrepreneurs to spend a couple days talking about their businesses and the way they disrupt. Entrepreneurship and innovation so important to the American Economy and the opportunity to brick a unique group of entrepreneurs together to kind of discuss what theyre doing, think about ways they can build their businesses and add to growth and change in the economy in is exciting. Lets talk about the broader strategy and the update where harvey said theres 5 billion of new growth opportunities. The majority of that came in terms of lending and Investment Management which is not traditionally the areas that Goldman Sachs has excelled at. Coming that lending growth at a time where other banksing ar talking about deteariation in credit qualities why you are not concerned about that kind of credit theme given that you grow lending . Of course were concerned with the credit cycle. Look, weve been in and around lending businesses and in and around extending credit to our clients for a long, long time. And so you know, were at a place where were focused on growth weve laid out a set of 5 billion of initiatives those touch a wide range of things i wouldnt describe them as predominantly lending. Our fixed income business were extremely focused on our client franchise there, weve got about 1 billion of that billion is focused on on our efforts with corporations given the way we have been set up historically. Theres more tune for us there in the Investment Management business, theres significant opportunities to gross our assets but there are lending initiatives. Look, were a bank thats an important part of what we do and we have an opportunity because we werent as exposed to those activities as other people were, we can increase our focus on those activities and still be relatively small visavis most of the banks that you talk about or think about when you think about lending activities what is your advantage in lending . Who are the types of clients youre going after theyre all different places where we have edge one of the places where weve increases our Financing Activities over the last five years is around the Capital Markets business and to be a capital commitner that business and actually if you look at our performance in this quarter, very, very strong Capital Markets quarter that have puts us in a position where our performance in that business is the best weve had for a ninemonth period so far this year our shares have risen. Thats an activity where youre committing capital to support corporations making acquisitions they need capital lent to them thats a place where we have a differentiated edge. With markus, a new platform for us and new product, were looking to build a product that really helps customers of that business you know release pain points were in an interesting position because we dont have the same legacy businesses that other people have. If you look at the deposits were taking in, were offering a very attractive deposit rate and if you look at the loans were making its a very, very attractive rate visavis other alternatives like credit cards for our customers. The reason we can do that is we dont have all the legacy business, the branches, infrastructure, and so were in a position that we can grow that business you know cautiously, slowly and really have a product that relieves customers pain points and is differentiated. Markus wrote in the new era, will bitcoin be the next new area lloyd has spoken encouragingly about it whats jamie dimon missing when he calls it a fraud . When we look at it, were not endorsing it or dismissing it. Our clients are saying we want to learn about this and talk to you about this and understand if we want to take a position in bitcoin. How do we deal with this so when our clients are asking about something, were focused on it. Like everybody else, were learning and trying to get up to speed how this may evolve. Theres certainly the potential for Cryptocurrencies Blockchain to play a significant role in the future were trying to make sure we put ourself in a position to help our clients work through the issues want to touch on brexit lloyd tweeted this morning had he great meetings in frankfurt and will be spending a lot more time there he said, which was quite a tasty tweet on that topic. We know youre investing heavily in frankfurt and developing more English Speaking schools in terms of the city. Youre moving really meaningfully not just back office jobs, significant jobs to frankfurt because of brexit . Theres no question our footprint in europe will lead to anincrease in the number of people on the continent. From our perspective at the moment, were doing that because regardless of how this develops or plays out over time, we have to be in a position to service our clients across the continent. Yes, were adding some people over to europe its not just back office. Its client basing people, too but look, loifd spent more time in germany ive spent a lot of time in the uk and germany my guess is well spend a lot of time in both the uk will continue to be extremely important. But the scale of the risk to the uk as a Financial Center, london as a Financial Center is significant from brexit . I think its too early to see how this evolves theres no question that brexit is forcing a movement to some degree but look, there are reasons why for both the uk and for the continent, there are reasons to figure this out to the benefit of both. Well have to watch and see how it evolves. Whats your view on lloyds tweeting is that something that Goldman Sachs should be doing . What youre seeing with lloyds tweeting, youre seeing the real Lloyd Blankfein lloyds very good at it. Im not. So well leave that to lloyd for the moment. David, a pleasure thanks for having us today and we look forward to more coverage throughout the day. Appreciate you being here thanks very much. Back to you. Thank you very much for that interview. Coming up, be sure to tune in tomorrow favor is live in boston with the new head of ge, John Flannery. Theyve got earnings in the morning. First calling it the crash ll re it happened in 1987 weget Rick Santellis exchange in a minute feel that . Thats the beat of global markets, the rhythm of the world. For most, the cadence of today. To us, the pace of tomorrow. Its people and machines uncovering opportunity. Cloud computing providing endless capacity. Blockchain making transactions safer and faster. New markets born where they werent before. With ingenuity, technologies, and markets expertise we create the possible. And when you do that, you dont chase the pace of tomorrow. You set it. Nasdaq. Rewrite tomorrow. This budget is a political statement. The only reason were doing it in this form this year is to get to the tax deal. Tax reform or lookout below. Look at s p earnings estimates for this year and next year, no one has in those models a tax cut into any little dip cash comes to work if he ever came out and said fine, tax cuts are off the table, no doubt the market would drop a little bit because the markets look for a reason to sell something. Its been a great year for stocks but what are right now some of the biggest risks to the market . Find out at trading nation. Cnbc. Com. More squawk on the street coming up. Lets get over to the Rick Santelli with a special santelli exchange, a reflection, rick. Yeah, thank you you know, if you go back in history and i was in the pits and my guest, he was there, as well not in the pits but most of the notoriety of who called the crash fell on a female named elaine guard rely. She was famous for it. But there were many others saw it coming. Mark skousen was one of them welcome and happy 70th birthday. Thank you i feel pretty good although its been 30 years since the stock market crash i gave a sell signal six weeks before that event. The only time ive given a sell all stocks never done it since. And i think theres a lot of reasons why that has changed, that crashes are certainly possible but were not crash proof. But i think were crash resistant. Not to say were not going to see bear marks we will see a lot of bear markets in the future. If we dont get tax reform and a few other things, we could have a major correction finally you know, when you look back on those times, and im going to talk about it more as the day goes on, but what was it in your case that gave you such a strong inkling that you should send out that recommendation . Well, i think there was a little bit of hubris going on, there was a famous book that was out at that time, how to make 100,000 as a stockbroker. How easy it was to make money, that you couldnt lose you had portfolio insurance and some Computer Trading at that time, time and by the way, today, 90 of all trades on the stock market are Computer Generated i dont know about the bond market, but thats scary to indicate if this starts selling, for whatever reason, we could have certainly a major drop in the market that where everybody just gets involved and everybody starts selling and it was the go, go 80s. My other memory, of course, the japanese economy at that time was perceived to be cooking in grease it was a strange relationship between government banks, land owners they created sort of a pyramid scheme theirs didnt top out until a few years later, but that was also a big deal. The American Economy at the time felt like it was losing significant ground to the japanese from purchase of pebble beach on why dont you finish us up in that line of thought well, look, were the big elephant in the room now the japanese market is never really recovered from its 1990 crash, and but we have this surreal low Interest Rate scenario you keep talking about and it never seem it is to end i remember in my news letter five years ago predicting Interest Rates had bottomed and we have no proof thats happened when that happens, we have to be a little bit worried when real Interest Rates start rising or we dont get tax reform, theres a lot of factors that are involved that could turn, and we need to be a little bit more conservative these days, i think, with the market well, i couldnt agree with you more, but its going to be a road were going to have to build right as we get to the point you need to make the next step, and thats what i guess creates so much nervousness and tension around Central Banks and their exit thank you for your thoughts, your memories of that time, and happy birthday now were going to send it back over to carl rick, thank you for that. Rick santelli at the cme were getting an opening trade on mongodb bertha we see the stock up 33 , opening well above 32 a share that gives them a valuation of about 2. 64 billion. This is a b to b company in the Cloud Database platform space, ten years old. They took their time going public, new york based, but certainly the champagne flowing here this morning. The deal very much oversubscribed right now looks like they are going to be amongst the best performers here on their debut in the nasdaq, 96 ipo still on the nasdaq so far this year. Carl, back to you. Bertha, thank you very much for that dow beginning to erase some of its losses were down 54 potsin s p is down six. Well take a short break back after this. Its not just a car, its your daily treat. Go ahead, spoil yourself. The es and es hybrid. Experience amazing. Is. Welcome back dows down 54 points as we continue to watch losses erased. We look forward to tomorrow. Of course, apple pressuring the dow today. Given the performance there, and tomorrow were going to speak to John Flannery, the chairman and ceo of ge. Of course, new in that position. Tomorrow, an important day for the company. Will report earnings in the morning. A lot of expectations in terms of the changes to come at ge, and those changes are expected to be quite significant. We may learn of some of them tomorrow and then november 13th the company will have a large Analyst Meeting, as well, to talk about not just ge in the morning, but p g. Yeah, that should be interesting. The company is under a lot of pressure now to perform after that super close vote that is still up for dispute nelson peltz says its way too close. 0. 2 it will be interesting to see whether david taylor comments on that and whether hes taken any lessons from that in terms of a change of strategy he certainly has to move fast. Dows down 52 half of that is apple, to davids point about weakness in both apple and the semis quick break, squawk alley is up after the break dont go away. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. For her compassion and care. He spent decades fighting to give families a second chance. But to help others, they first had to protect themselves. I have afib. Even for a nurse, its complicated. And it puts me at higher risk of stroke. That would be devastating. I had to learn all i could to help protect myself. Once i got the facts, my doctor and i chose xarelto®. Xarelto®. To help keep me protected. Oncedaily xarelto®, a latestgeneration blood thinner. 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Do not take xarelto® if you have an artificial heart valve or abnormal bleeding. Tell your doctor before all planned medical or dental procedures. And before starting xarelto®about any conditions, such as kidney, liver, or bleeding problems. Its important to learn all you can. To help protect yourself from a stroke. Talk to your doctor about xarelto®. Theres more to know™. And her new mobile wedding business. Tte at first, getting paid was tough. Until she got quickbooks. Now she sends invoices, sees when theyve been viewed andtadahpaid twice as fast for free. Visit quickbooksdotcom. Welcome back to squawk on the street, im kate rogers stocks are pulling back from record highs with the s p tech sector among the worst sectors Hewlett Packard enterprise shares are lower after giving a mixed 2018 outlook and approving 5 million more to buy back stock. Now back downtown for the start of squawk alley. All right, thank you for the, kate good morning, it is 8 00 a. M. At apple headquarters in cupertino, california, its 11 00 a. M. On wall street, and squawk alley is live