Transcripts For CNBC Squawk Box 20240714

By. 7 the hang sang was up by 2. 1 the shanghai composite up by 2. 1 in europe right now where there is active trading taking place, green arrows across the board. The biggest gainer is the footsy up by. 8 . Quick check on treasury yields which was so closely watched last week when you saw the temporary inversion in the middle of the day between the 10s and the 2s this morning, 1. 618 the two year is 1. 15 so showing more room than we have seen over the last several sessions. We have a huge week ahead for wall street. Kicking off today, big tech executives testifying at ustr hearings then tomorrow, quarterry lults from home depot, kohls and t. J. Maxx wednesday, fed reports on existing home sales plus reports from lowes target and l. Brands and thursday jackson hole symposium kicks off where, of course, Steve Liesman will be. All leading up to fed chair jay powells big speech which will take place on friday but meanwhile, we want to pivot right now to an update on the big story over the weekend, demonstrators in hong kong, tens of thousands of protesters hitting the streets yesterday. Janice mackie friar joins us more with more good morning reporter good morning. It was a show of strength and really being regarded as a measure of the wider Popular Support for the protests here that have now continued over two months organizers figure there were 1. 7 Million People, thats 20 of the population of hong kong, the police estimate a little more conservative around 130,000 people regardless, this was a huge crowd defying a police ban to march as well as heavy rain, and the police for the most part were hands off, werent even seen in the streets. There was this sense that both sides were wanting to take a step back and push reset on this movement after the violence that we saw at hong kong airport last week meanwhile, on the mainland and on chinese social media, the propaganda offensive continues now seeming to focus on multinational corporations and businesses, threatening in particular the big four accounts firms, suggesting that if their employees or executives show any sort of support for this protest movement, that they will be punished alluding to what happened with Cathay Pacific last week showing video of chinese pro military forces have been conducting massive security drills less than 20 miles from here so beijing telegraphing all of the options it says it has before it in order to end these protests, but among them, compromise is not one of them. Janice, appreciate it very much i was curious about what you think the future of the Cathay Pacific situation will be but becky may have a had a question. Go ahead first. On Cathay Pacific, obviously it is going to take on a world of hurt, but in terms of who is running that company now and whether the Chinese Government has real influence over it, what happens . Reporter well, there was the sense that Cathay Pacific and river hog was being pressured by beijing. Either directly or through a major share hoemder after the commotion at hong kong airport, the cancelled flights, the allegations that some employees were heavily involved, beijing at first had banned some of the flight crews from even landing on the mainland because of their suggested involvement. What this has done unofficially is sent a very strong message to a lot of the multinationals here, although so many of them wont go on the record to say so, they are feeling some pressure, this sense that beijing is keeping is close eye and a close ear on this situation, that targeting the big four Accounting Firms was the direct result of an ad that appeared in a local hong kong newspaper last week from employees of some of these firms voicing their support for the protests so beijing over the weekend and particularly on social media came out swinging. Just to add to whats been happening with china, you saw that stocks were up there despite what weve seen with some of these protests and beyond thats because Chinas Central Bank on saturday unveiled a new key Interest Rate reform thats going to be steering borrowing costs lower for companies. People are looking at this as a stealth rate cut if youre watching whats been happening with the markets there today, thats why you see these big gains for both the china markets. President trump and apple ceo tim cook sat down for dinner friday the president s golf club in bed minister, new jersey, about ten minutes from my house. Im sure that could have pulled up another chair i was around if the phone had rang. Literally ten minutes. Any way, president told reporters yesterday that cook made a good case about how a new round of tariffs set to go into effect in september could hit apple products and set the Company Behind in competition with samsung which is a south korean rival its tough for apple to pay tariffs if theyre competing with a very good company thats not. I said, how good a competitor . He said they are a very good competitor so samsung is not paying tariffs because theyre based in a different location, mostly south korea, but theyre based in south korea, and i thought he made a very compelling argument, so im thinking about it. And south korea and the u. S. Struck a trade deal last year that kept tariffs off electronics. Apple relies heavily on production and sales in china. Stock has been on a bit of a roller coaster since the latest tariff announcement on august 1st. Sam sunk captures 23 of Global Market share trailed by huawei and apple according to the latest data. What does he mean when he says hell keep an eye on it either lower the tariffs for china or throw more tariffs to south korea . I dont think you want to we have a trade deal carve out apple in some way that its individualized and special. Then every other worker will come rushing to bed minister to ask the question. Right how do you correct that so tim he didnt check with me either obviously. You think he came back just for this i guess probably. If you can get 00 meeting with the president right now and this is your issue, you make the flight, you take the flight. Morris town probably for tim. They can take pretty big jets in morris they can take the president s jet. Up next, much more from President Trump as his advisers rejected the notion that the economy is in trouble. You think the yield curve could know about some kpoj nis event no. I dont see anything probably not, but what if it does in thats what scares me. How could it possibly know that. I dont know. Wisdom of the crowds. I dont know how it knows that how does when everyone bet on georgetown, how do you know its going to be villanova or something. It happens well talk about the odds of a u. S. Equity futures right now. As we head to break, a look at the biggest premarkets winners and losers in the dow. Welcome back to squawk box. Take a look at u. S. Equity futures this morning because they are surging lets show you whats going on right now. Youre looking right now at the dow up triple digitdigits, 273 s right now. Nasdaq looking to open close to 80 points higher s p 500 looking to open higher as well. Close to 29 points higher. The Economy Taking Center Stage this morning President Trump and his economic advisers pushing back on the idea of a looming u. S. Recession, a threat that sent shock waves across wall street last week and pushed the 30year treasury yield to its lowest level ever i dont think were having a recession. Were doing tremendously well. Our consumers are rich i gave a tremendous tax cut, and theyre loaded up with money theyre buying i saw the walmart numbers they were through the roof. I sure dont see a recession. We had some block buster retail sales consumer numbers towards the back end of last week. We have the strongest economy in the world money is coming here for our stock market, its also coming here to chase yield in our bond market joining us now, alec young, managing director of Global Markets research at ftsc russell and kevin yaman. Very popular in jamaica cool running. Ill start with you, kevin yes. That was the story last week. And i was just positing whether theres something we dont know. 18 months is a long time given the current economic forecast, a recession looks really unlikely. Yeah. Im just wondering is there any way a yield curve could actually know something that we just dont know . You never know what you dont know or could we say its different this time and probably not likely to be correct i dont think you can entirely ignore the yield curve inversion but record low unemployment numbers, moderately rising wages, confident consumer that continues to spend, the fact that the tax cuts will stay through the end of last year, more relaxed Regulatory Environment that should bode well with the stocks and more dovish leaning Federal Reserve, there are opportunities there. I think the bond market is telling us they would like to see rates lower. I dont know if they necessarily need to be. You can think of so many and i use the term exoj nis events oil shock or something in hong kong 1. 7 Million People thats hard to put the things back in whats starting to happen there yep. I dont think it could be that smart, but then it just makes me wonder, we have 18 months is such a long time, especially with the news cycles we have now, i dont know how you can say that we know there wont be. Theres a lot of risk still throughout. There are things that are pushing the yields down and flattening the yield curve. That have nothing to do with the economy. With our economy. Global savings glut. Its weird you hate to say this time is different, but there are some pretty unprecedented things going on people are talking about negative rates here eventually that seems like a stretch because of the strength of our consumer were in this weird world where we have ultra low rates. Rates are collapsing but our economy is healthy. Brian moynihan spoke last week and said that he didnt see anything out there, bank of america has one out of every two households in t United States and usually banks can see it out by about 18 months. From an equity perspective, theres a couple things you can take from that number one, its encouraging it means the market doesnt fall at a bad, dips get bought. Until trade gets resolved. Youre not that bullish. No. Were bouncing around. Im glad that the strong consumer keeps us out of a major draw down, but right now Earnings Growth as you know is low single digit the street is at 11 for 20 over 19 my side people look at that number and say well be lucky if thats five. Until trade, until you get rid of the current tariffs and agree not to slap new ones on left and right. Even with what walmart said the markets doesnt make new highs. Well bounce around. I was surprised that walmart would really go out the market is differentiates the consumer games are rocking and rolling. The globally hurt names are in the tank theres huge swaths of the market that are a train wreck energy and probably value there but financials, most pharma, its very by fur indicated. Do you think its tough to do double digit earnings return its a very positive environment for u. S. Companies, maybe globally not so much, but in terms of unemployment and gdp. Back to 2018, joe, we had two consecutive quarters of corporate growth more than 20 were not going to get back to those levels were slowing but growing environment. We have a lot of geopolitical risks. Boris johnson having to navigate a tough Brexit Merkel is not going to rerun. Stood in front of those tanks or something. Other thing thats interesting is that obviously well hear from the ecb this week but the market is betting a lot on the fed and easy money and you have to wonder the cost of capital is record low, so is the fed cutting rates really going to stimulate cap x and Business Investment which is the weak spot of the economy i kind of question that a little bit. Why are stocks moving up so sharply today . Peter shack says he thinks its because yields are firming up. That makes as much sense as anything else to me. I think its a reminder of how strong the underlying economy is at this point and moving eight bases points from a yield inversion is a lot of confidence. In hong kong there was no violence the market here is taking its cue from over there but a big relief rally at least it wasnt Chinas Central Bank, too, the rally in chinese stocks. Yeah. I think that tweak theyre making to their lending. Yeah. Helpful. So, you think 5 year over year is good as were going to do for earnings . I think thats i think thats constructive as well. I think were going to have a strong Third Quarter i think Holiday Shopping sales will be strong i think the online commerce segment of retail spending will continue to grow. What will 18 months of no recession, that will put the life of this expansion everyday is a record, right . I wouldnt be surprised to see us hit all time highs again. The only problem with the expansion is long in the tooth thats why its not so fun. What happens is people keep second guessing it people bet on meaner versions. I think theres a good chance it lasts a lot longer, but people i think will continue to second guess it the problem i have with stocks here is just if were in a 5 Earnings Growth environment, were fully valued at 17 times youre not going to get a 20 multiple on the russell at least 8, 9, 10 . If i was a worrywart, i would say were long in the tooth, got the yield curve and Start Talking about iran, north korea, china, hong kong i can give you im so worried about so many things that in 18 months i have no idea, we never know forgot about afghanistan. Over in russia they have these stations that measure radio activity they like turn them off. Yeah. When that happens. Right what oh, no, were not registering anything you turned your stations i just anything can happen right . We have a pretty big election next fall as well. That might be it. Biden warren thats my new pick sorkin. I think its a little that will be big but its a little early for the market to be trading too much on that because we dont know enough about it. Trump wasnt expected to be anywhere near the victory taking a victory lap at this point before. But historically six months, eight months prior to an election, cap x, think cap x isnt going in the right direction already, it goes down materially. Because you wait to see what happens. I cant do anything. Biden warren the closer biden and warren get to if white house. Think about it for the economy, thats like add all those things i said together thats the sum of all fears if those two get in seriously. Think if warren got closer, you would have a different situation. She would take veep and then he goes one term right . I have no under your scenario, maybe. I dont know one thing thats interesting i have seen a lot of polling investors overwhelmingly see trump reelected. As of today they do. Its 5340 with i like where they come out and say, 50 didnt like his response to the shootings. He said investors. I know. Oh, investors. 50 hate him no matter what 50 . Im talking about Portfolio Managers. Those greedy, all they think about is their pocketbook. We dont want i dont want to give them credit for that. Any way, thank you when we come back, the biggest water cooler stories of the world of business. Well talk about teslas new solar power push and bourbon backlash both those stories right after this dear tech, lets talk. We have a pretty good relationship. Youve done a lot of good for the world. But i feel like you have the potential to do so much more. Can we build ai without bias . How do we bake security into everything we do . We need tech that helps people understand each other. That understands my business. Weve got some work to do. And we need your help. We need your support. Lets expect more from technology. Lets put smart to work. You should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. But youre not mad, because you have e trade which isnt complicated. Their tools make trading quicker and simpler. So you can take on the markets with confidence. Dont get mad. Get e trade and start trading today. Dont get mad. carrying up to 50 times its tbody weight. Essly marches on. It never questions the tasks at hand. But this year, theres a more thrilling path to follow. father kids. Change of plans vo defy the laws of human nature. At the summer of audi sales event get exceptional offers now welcome back to squawk box. We are in the chairs this morning, tesla relaunching its Solar Panel Business by letting customers rent, can you believe this, rent rooftop systems. What . Homeowners in california, arizona, connecticut, massachusetts, new jersey and new mexico, thats the list, will be able to rent the solar Power Systems for between 50 and 65 per month. But if you decide against keeping the system, it costs 1,500 to remove the panels and restore your roof. Thats a total ripoff. Its a beautiful roof its unlike the sort of solar panel roofs. Why are they letting you rent them are they having trouble selling them to people well rent them to you because we have this stuff sitting around and we need more customers . You pay monthly for everything, wework, solar, its supposed to be cheaper eventually than electricity. Its like rentacenter you pay off your couch 20 years later. I know they struggled to get the technology right on all of these roofs because remember about year and a half ago they showed these beautiful, beautiful videos when elon musk was demonstrating this stuff and they have not hit the market. This may be it. Just so you can have the burbs. So you can have a roof, so you can solar power it and feel really good and feel virtue s. I have a generac. With climate change, you need one. Can the roof also power a generac . I would worry about any time you need i dont know shes got a wind powered car no, i dont. You dream of one still. The leaders, this is a good one, leaders of some of americas Biggest Companies are changing their view of the purpose of a corporation in a letter published this morning, the writing is on the wall, business round table no longer base decision solely on whether it would yield a higher profit for shareholders. Take into account all shareholders writ large i dont know how to use that the group says corporations should commit to in their words delivering value to customers, investing in employees, check, check, that will happen normally, dealing fairly and ethically. Well, if you want to compete that will happen normally. And supporting the communities in which they work and protecting the environment yeah, the round tables old statement of purpose, espoused milton freeman, hes so yesterday. Any way, his decades old theory the only obligation is to maximize value for shareholders. The two go hand in hand trying to maximize value for shareholders why not put out a statement to virtue signal for everybody good idea. The two go hand in hand, you would be protecting all those different constituencies. Creating jobs, creating generates taxes for things to happen, all the good things. Giving people a stepladder to a career giving your customers Great Services competing with others. Competing globally all these things are great you can do tasht things to the environment. Not anymore i think that used to be the case it comes back expectations have changed this is acknowledgment that expectations have changed. Thats my point fine, then you have to do all these things why shouldnt you articulate them fine, articulate them then go back to everything that these horrible, greedy ceos do after writing their little statement. I think its an acknowledgment of how society has changed. Yes. Probably can merge the two statements. Move in the positive direction. You look at what we talk about on a daily basis and where, you know, democrats are right now in terms of whats important, yeah, i would say that this is not too much to write considering where we are right now. I dont think its about democrats or republicans i think republicans feel this way about the environment. Have you looked at what the big issues are for people on the fringe of your party do you read whats happening everyday as a political issue. I think around the entire globe by the way take the United States out of it globally these are big issues in europe you may say thats a political statement. If i were europe, i would have other more pressing issues right now, like growing an economy, which would be a whole new con cement for most of those places. Can i tell you about squawk booze news we teased this tariff backlash is hurting the u. S. Whiskey business. Shipments to europe plummeted. The eu currently levies 25 tariffs on u. S. Whiskey. Here is the problem. Good bourbon needs to be aged typically between 4 to 10 years. Distillers have been scaling up operation to meet a surge in global demand. 2018, production of kentucky bourbon reached the highest level since 1992 but distillers were counting on demand from europe to soak up inventory and that demand is drying up because of the tariffs jack daniels said it lost 125 million because of the european tariffs and escalation could be on the way the u. S. Is preparing to slap tariffs on 100 of 1. 8 billion european wine and spirits. That will lead to more retaliatory tariffs on u. S. Tariffs again, youre looking a a back and forth. There are no absolute truths in economics there are none but the closest things we have to a principle that you would see in physics or chemistry are milton freedman, adam snit, you dont suddenly find a new system that somehow supplants milton freedman, andrew hopefully they have a doorman at their building when the mobs are coming thats all i will say. I will argue what theyre doing is to avoid the mobs. Exactly. To try to make the sim fairer and less unequal thats the whole point of this, joe. I think its changing a statement. Youre all about fairness it works so well when the government tries to legislate fairness such a good system how about legislating freedom and let Everything Else take care of itself. Well talk about a couple other big topics when we return. A Work Life Balance adjustment may be coming for traders in europe jack walsh used to say there is no workplace balance a programming note, Deliverying Alpha investor summit is back for its ninth year in new york got a huge lineup of influential investors. Prominent advertising space here mike pence and joe will be talking one an one september 19th register for tickets now at deliverings alpha. Com. As we head to a break, look at fridays s p 500 winners and losers dont miss your golden opportunity to experience our most advanced Safety Technology on our full line vehicles. Now at the lexus golden opportunity sales event. Lease the 2019 es 350 for 379 a month for 36 months and well make your first month payment. Experience amazing. That could allow hackers devices into your home. Ys and like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Announcer welcome back youre watching squawk box. Live from the Nasdaq Market site in times square. Good morning u. S. Equity futures at this hour bouncing this morning about to the tune of about 250 points lets see 250 plus 100 plus 300 is about 750, right . It was down by 400 before this 257 so if it were to gain another 140 points from here, it would have made up all the ground we lost last week. Okay. And the nasdaq is strong, up 75 the s p up 28. Yeah the yields, it wasnt just our guests that were talking, cramer was saying earlier futures are up a lot he gets uncomfortable with that. He says he wonders whether yields need to hold up, which is weird to say yields need to rise but the environment were in right now. Its a big move between the 10 and the 2s right now. Thats nice beautiful. Not even close to being i mean, we got ten bases points to play with. Were golden. 5s and 2s are invertsed. Universal comedy good boys requestboys taking in 21 million in ticket sales. The first rrated comedy to debut at number one in three years. Universal hobbs shaw came in second fast and furious spinoff brought in 13 million time now for the executive edge want to tell you we teased this right before the break, traders in europe might be in for a bit of a shorter weekday, bank lobby group in the uk Investment Association are now leading talks to negotiate shorter trading hours across europe. The plan would open equity markets an hour later and close them an hour earlier all this in an attempt to improve quality of life for traders. The London Stock Exchange opens at 8 00 a. M. , closes at 4 30 a. M. The Paris Exchange opens at 9 00 a. M. And closes at 5 30 p. M. The talks are still in the early stages and the decision rests with the exchange operators, but we could get a little closer to the u. S. Schedule of 9 30 until 4. So we will see whether they do it they are legitimately longer. Yeah. Life work balance how do you feel about that by the way, 24hour trading day with futures and Everything Else, maybe this is all irrelevant. When we come back, with uncertainty in markets across the world, where should you be putting your cash to work. Market watcher mark grant has some ideas and he will join us next we will talk to draftkings ceo jason robins about the latest trends in sports better stay tuned youre watching squawk box. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From managing inventory. To detecting and preventing threats. To scaling up your production. 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Use promo code get25 to save 25 off your first year and get a free shredder with annual membership. Call now to start your membership or visit lifelock. Com tv welcome back, everybody. U. S. Equity futures are indicated sharply higher this morning. Dow futures indicated up by about 262 points s p futures up by 28 the nasdaq up by 75. Big losses that we saw last wednesday where the dow was down by 800 points, you saw positive days on thursday and friday. If these were to hang on this morning, these gains were seeing, youre talking about the dow only down by 140 points from where we were before that 800 point loss joining us right now is a guest who has been sounding the alarm on cheap money for some time now, mark grant is the chief Market Strategist of fixed income at b. Riley fbr mark, i think youve probably been talking to us about your concerns and have stayed on message with that for longer than anybody i can think about last week we saw 17 trillion is now the number of negative Interest Rates, sovereign debt around the world that skyrocketed pretty quickly. Youre still pretty worried about what this means. Becky, the high previously was in 2016 it was 12. 2 trillion and it kind of flat lined. In the last three to four weeks it went to 13 trillion, 15 trillion, 16 trillion and now as of friday were at 17 trillion in negative yielding bonds while everybody focuses on china, because its a news event, in my opinion the far greater problem, far dwarves whats happening with china, is this negative yielding debt. Why is that well, it make it a great time for borrowers and its going to be a twostep process as Interest Rates go down, which i think theyre going to do regardless of what the fed does because you may recall famous comment that the oneeyed man and his king in the land of the blind, there is no other positive Interest Rates virtually across europe, in asia, japan. So were getting a steady stream of foreign money coming in to buy our bonds because were the last man standing with positive Interest Rates eventually, in my opinion, were going to get down to 1 ,. 5 of 1 then its going to be create a lot of difficulties especially for savers, retirees, pension funds, any person or institution that depends on fixed income, yields and cash flow to have a decent life. The equities futures that wooe looking at this morning are stronger its probably because it looks like Interest Rates are firming up this morning. You just dont think that thats a realistic situation that that can last becky, i this i that regardless of what the fed does, as i said, were going to have lower Interest Rates i do think the fed, which is the central bank of the United States its part of the u. S. Government, founded by the Federal Reserve act of 1913, has to lower rates so were competitive with the rest of the world, but this is creating a talk about never before for thousands of years we never had negative rates where the lender is paying the borrower for the privilege. Its just ridiculous. I dont know where this ends, but i do know if youre looking at where to put your money right now, equities look like a better place because youre not going to get any return if youre putting the money in bonds couldnt that help fuel the rally for equis . Yeah, i think youre spot on. Lower Interest Rates, mortgage rates, more refinancing, i think youre spot on at the first blush its going to help all the riskier assets such as real estate or the equity market. At the second blush, the second stage, when american Interest Rates get close to 0 like the rest of the world, then youre going to see reversal of that because lower rates at that point arent going to stimulate risk assets anymore. Youre going to reach a point where its going to flat line and then i think were going to see the opposite reaction . Right now with people and individuals, i deal mostly as you know big institutions, but ive had a program of corporate bonds, investment grade. I can still get carefully around 4 and then the other space i really like where you can get yield or closed in funds but theyre complicated. I mean complicated but you can get still double digit yields, so i put those two together and ended up with a nice return i think in a very conservative way and thats what ive been doing for the individuals that i do business with. Mark, i understand what youre saying in terms of that risk assets become harder to move the needle. Its like pushing on a string. Lets say you buy pfizer or at t with 5. 5, 6 yield, how does that suddenly become an investment where the stock goes down and it goes to 8 yield if the Economic Conditions become so bad that the stocks are sold or the dividends become more difficult to pay because Economic Conditions are so bad i just dont see if rates continue to go down how can blue chips with yields end up being a bad investment joe, theyre not a bad investment im saying at the moment in the first half its going to be positive. In the second stage, how do they become a bad invest snmt. They become a more difficult investment because Lower Borrowing costs arent going to drive equities or real estate or anything else as you approach zero yes, i think so, youre right, that stocks with good dividends that are solid companies will continue to have some value. Either the businesses go south, mark, and theyre not able to pay their dividends or their dividends are at risk or their businesses, they dont, their earnings go down or the yield is going up and youre back to saying whether i dont know it just seems if you got a Solid Company its going to be able to cover its dividend joe, i think thats one decent option. I think youre making a very good point decent option. I would buy that Glasses Company that you wear. Is therewear. I wore my glasses just for you, joe. Is there a dividend does that company pay a dividend . It must. Pays the dividend to the wearer of its products, thats for sure one hell of a dividend. I paid the dividend i sent you a pair of the same glasses. You have a big dividend. Im going to go open a casino in vegas like de niro, i think what was his name in that . Jack were going to talk about joes other favorite topic bitcoin. Breaking below 10,000. Bouncing back a little bit this morning. Were going to talk about the wild ride encrypto and use the bitcoin as a safe haven. Some say its safe some say its dangerous. Well debate it when we return you guys played your hearts out. You played your hearts out all season. Uh. Unfortunately weve gotten a bit of bad news. To whom it may concern, due to budget shortfalls, the panthers Baseball Program ballard softball vikings basketball we regret to inform you that due to budget shortfalls, the tigers basketball program. Is indefinitely suspended. Wait, whatre you saying . All the work that we put in . I wish it wasnt so to whom it may concern to whom it may concern to whom it may concern to whom it may concern to whom it may concern to whom it may concern to whom it may concern to whom it may concern every kid deserves a chance to play welcome back to squawk box, bitcoin dipping briefly, that happened friday its bounced back a bit. Now at 10,702. To discuss the crypto currency mark market, i think the big question mark about bitcoin broadly, and we use it as our base case we could talk so many about the other coins and tokens and other thing out there right now. Its the correlation between it and Everything Else. And the stock market and how correlated you think they are. We saw, obviously, bitcoin really jumped more, i think, on the news out of or at least the perception of the news out of hong kong with these protests, capital flight and somehow the money was moving there. What is your explanation for whats happened over the past two weeks . Yeah. I mean i think there are quite a few things going on. I think first, you know, clearly, you know, a nonsovereign Digital Asset like bitcoin to people who are interested in, you know, moving capital into a place where they can control it themselves, that underscores a lot of the interest thats been there overtime, digital gold thesis and both institutional accumulators of bitcoin, individuals and then very specifically individuals in jurisdictions or environments where, you know, the intense concern about capital controls are there. Thats like an underlying thesis and i think that has had an impact on it for the last, you know, eight years. On that thesis, jeremy, is it appropriate to think that actually money did move out of china into bitcoin or that bitcoin moved the price of bitcoin moved higher on the perception or speculation that this is an example of how it could, in the future, but maybe didnt in reality . Yeah. I think its likely a mixture of both and its obviously not something you can clearly measure at any given time but it does seem like a mixture of both. I think one other piece to note, though, and this gets to the correlation discussion, which is last week was a significant kind of riskoff week for equities and you saw, obviously, there are a lot of holders of Digital Assets, who im sure their broader portfolios are taking a hit. If they had gains bitcoin is up 100 , 200 over the last nine months or so thats a place to take some gains as well. So depending on the type of holder, so to speak, youre going to see slightly different behaviors. Gold at 1500, some people might have thought, you know, because thats a measure of fiat, and whether youre a believer there you would have thought maybe bitcoin would have done better but its been holding basically above 10,000 most people are talking about the g7, 24th through the 26th. Its on the docket, is it not . Yeah. Crypto as an agenda item is absolutely on the docket its becoming, obviously, a major topic. Not just because of the continued growth of things like bitcoin but also the growth in stable coins like u. S. Dollar coin. They could do something this week there could be a negative event or not it could be taken either way depending on whats discussed . Yeah. I mean, i dont know that well see specific policy but certainly well hear some perspective out of there. Jeremy, thank you nice to see you. Thank you. Appreciate it. Coming up, is global risk rising from hong kong and the middle east and recession fears at he . Om how those risks impact your money. Thats next. Pharmacistrecommended memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Market bounceback as markets try to recover from three straight weeks of losses. President trump and his advisers are pushing back on talk of a slowdown straight from them ahead and play ball. The start of the nfl season well huddle with the ceo of draftkings as the second hour of squa squawk box begins right now. Announcer live from the beating heart of business, new york, this is squawk box. Good morning. Welcome to squawk box here on cnbc im Andrew Ross Sorkin along with becky quick and joe nasdaq looking to open about 89 points higher and s p higher as well s p 500 up about 30 points treasury yields, as everybody always looks at the twoyear and tenyear note. 1. 611. Twoyear, by the way, 1. 517. All the major u. S. Indices on threeweek losing streaks. Biggest question from investors right now, is the economy at risk of recession . Here is what President Trump and some of his top economic advisers say. I dont think were having a recession. Were doing tremendously well. Our consumers are rich i gave a tremendous tax cut and theyre loaded up with money theyre buying i saw the walmart numbers. They were through the roof. I dont see a recession we had some blockbuster retail sales, consumer numbers toward the back end of last week. We have the strongest economy in the world money is coming herefor our stock market its also coming here to chase yield and our bond market. The economy, obviously, will be front and center this week. Annual jackson hole symposium kicks off thursday chairman powell set to speak there friday morning investors have been focusing on falling treasury yields, with the key yield inverting. Peter navarro disputed this, disputed calling it an inversion. Technically, we did not have a yield curve inversion. An inverted yield curve requires a big spread. This was a smaller one. Correct, all we had was a flat yield. Thats inverted for a little bit. Technically thats not an inversion. It was a flat curve, a weak signal of any possibility n this case, the flat curve is the result of any strong trump economy. Technically, the yield curve didnt close with an inversion, which is something that Rick Santelli pointed out in his reports last week. Here is what President Trump said last night. When you go in and analyze the curve, the curve always means that about two years later, maybe youll go thats a long time, two years. But i dont think so Interest Rates are low i think i could be helped out by the fed. But the fed doesnt like helping me too much. The mark grant segment, if you were watching, youre seeing what is it that a yield curve could see . It does seem pretty smart at times. It has been smart in the past and we were pausing whether theres a lot of ways that we could move into recession. Yes. Horrible things black swan things. It would be hard to imagine that the yield curve could forecast something that none of us know is going to happen the yield curve could do what mark if you believe we get to europe, pushing on a string or you believe that the days of easy money come back to haunt us, all the qe and all the staying low for too long and investment from low Interest Rates, thats one way the yield curve you wouldnt know in 18 months. Part of marks philosophy on this, but part of what he has written about, at that point, government also start spending a lot more money because its cheap to borrow and do much things and that eventually comes back to bite you the question is, how long does it take to get to that point between now and then youll see stocks go higher. I wish we could think of something that happened 18 months ago it is a long time. With this as quickly as and with trump as president and the news cycles, how long is 18 months think about that every day is a new news cycle. We have no idea what the world is going to look like in 18 months you have the longest expansion in history im raising my for the United States not for australia. Thats right. They got all those natural im raising my im going to be like dalio. Raise your what possibility of a recession in the next 18 months. Dalio said it could be 40 the next two years. Im going from 30 to 32 how is that . Well mark it down. 30 to 32. In the next two years or 15 months im not saying anything its just blabber. As opposed to i may go up next week we didnt have the underwear discussion with you. You know, we could do that, but lets try later. Are you going to think of some good answers . I told becky its easy if you number your underwear so every day you know right . You number your underwear. She said one to seven . I said no, mine are one to 12. Get it january, february. I didnt but now with the explanation, i get it. Lets say whats going on. Trade say huge part of the market story here is President Trump last night defending his strategy for dealing with china. If you look at china, china is doing very, very poorly they had, i just saw a report. Theyve had the worst year theyve had in 27 years because of what ive done. And they want to come to the negotiating table. You know, theyre having Companies Lose i mean, theyre leaving. The companies are leaving. And theyre laying off millions of people because they dont want to pay 25 . And thats why they want to come to the table i dont think theres another reason, other than president xi, im sure, likes me very much but theyre losing millions and millions of jobs in china. And were not paying for the tariffs. China is paying for the tariffs for the 100th time. China stocks are rising more than 2 overnight. Its their best session early july after China Central bank lowering borrowing costs for companies in support of its economy, which has been hit by a trade war. Eunice yun is in beijing, on the ground, and get her thoughts about whats happening in hong kong as well good morning. Good morning, andrew. Tonight, your time, watch for a quasi Interest Rate cut out of china. The central bank will be publishing what is described as the new loan prime rate at 9 30 p. M. Eastern standard time theyll hold a press conference at 10 00 and this new rate replaces the traditional benchmark lending rate as a Reference Point by which banks will be able to price their loans. So the whole point of the move is meant to try to get the policy rates the bank rates more in line with policy rates since the central bank has made it one of its stated goals to try to lower the borrowing costs here, most people here are expecting the central bank to put in sort of like a pseudo rate cut eventhough most analysts still dont agree as to how big that cut is going to be. Its something to watch for. Separately, people here are waiting to hear what comes out of the white house when it comes to the policy toward the chinese tech giant, huawei as you know, the u. S. Commerce department had black listed huawei and not allowing the company to work with u. S. Tech suppliers, but then it granted it a 90day reprieve from what the National Economic adviser larry kudlow says it looks as though commerce is going to grant another grace period of 90 days. So, people are waiting to see whether or not thats going to happen because the policy towards huawei has been very unclear out of the white house, ever since this black list was announced back in may. President trump himself at the g20 had said he believed that u. S. Companies should be able to work with huawei this is what he said on sunday. Im talking to my people. Ultimately, we dont want to do business with huawei for National Security reasons. Not even a temporary extension . Well see what happens. Im making a decision tomorrow it could be temporary. And maybe not. But well make a decision tomorro tomorrow. And the Foreign Ministry reacted to President Trumps comments just a couple of minutes ago, saying that we hope the u. S. Will do what it said at the g20 on huawei. I spoke with the company and they said right now its business as usual. They are still waiting to see what comes out of the white house, but in terms of the broader signal that its sending here in china, this comes after the delay, partial delay of the tariffs from september to december and in the state media, a lot of the rhetoric has been pointing out that perhaps this is just more evidence that the chinese should continue to wait things out and take their time with the trade deal so, for example, the global times, communist party paper said u. S. Maximum pressure tactics are losing their bite. Peoples daily acres state paper, said the u. S. Is feeling the composure of china in the face of extreme pressure so, theres been this feeling, when im talking to people here, that the chinese are gambling that over the next six to 12 months, they should continue to wait because President Trump would likely feel more heat because of the u. S. Economy and the impact of the trade war on u. S. Business. Guys eunice, thank you very much eunice yoon. Scott wren, senior Global Equity strategist atwells fargo and matt slaughter, dean and International Business professor at dartmouth scott, let me ask you today, since were looking at the futures up so sharply, are you feeling calmer about things, better or do you think this volatility will be here to stay . Becky, from our perspective it will be here to stay at least for the intermediate term. Clearly were susceptible to any trade headlines, upside or downside yearend target for the s p 500 say touch over 3,000 were not that far away from fair value what weve been trying to do is lighten up a little bit on st k stocks in march and april. Were looking for an opportunity here at the on the downside but we touched overnight that 200day moving average somewhere between 2740, the june low, 2790, 200day moving average approximately, thats probably a pretty good buy for right now i think if stocks run up, well probably lighten up a little bit. If they fall down, well put cash to work that we raised a couple of months ago. Matt, we could think we control our own destinies here your International Business focus and whats happening around the globe is determining whats happening here, not only with whats happening with economies there but Central Banks. Everybody kind of on this race to get the easiest, the fastest. China doing that today what kind of pressure does that put on our Federal Reserve it puts pressure to think about the impact of those policy moves in terms of prices in american output. The point to go back to First Principles on that important question the feds job is to try to maintain full employment and price stability in america what exactly that entails isnt exactly written down in the legislation. Our colleagues at the Federal Reserve today look at a 3. 7 unemployment rate, a lot of measures of a job market which are quite strong by historic standards. The biggest thing is that Price Inflation isnt as higher as people would have expected looking at what the ecb does, bank of china might do tonight, what the bank of england is going to do, as they think about brexit all those forces as the economy has become more global all those policy choices and economic developments in the rest of the world to have to factor in to what the fed does. Would you expect to see Interest Rates heading down . They firmed up a little bit today. Would you expect longer term that well continue to see pressure on our Interest Rates as a result of all of that low inflation in america tends to make the fed more likely to ease what weve seen in recent times with the speeches coming out from chairman jay powell and other key fed officials is theyre realizing the data are pretty mixed theyre realizing that the policy statements coming from leaders in the rest of the world are changing by the day. Theyre trying to process all that that feeds into what they think about forward changes in Interest Rates. Specifically in terms of the sectors youre watching, are there some that you think are discounts or bargains at these levels if you look at financials and others or do you think you would be steering clear and trying to stick to the consumer names that have done better to this point for us, Consumer Discretionary technology, we continue to like those what we dont want our clients doing, becky, is getting overly defensive. When youve seen some moves, back in december or what youve seen in the last couple of weeks, Retail Investors get very nervous and they sit on their hands. Really, they tend to not sell, not buy. When the market trades lower, these more cyclical sectors like tech and consumer discretion are going to lead their way down, no doubt about it that looks like an opportunity to us. We dont think this expansion is over the risks have certainly increased over the last couple of weeks but we think were going to be okay and 12 months from now were looking for the s p 500 to be a bit higher than where it is now. Matt, whats your biggest concern . What do you think is the most likely boogie man, if youre looking for any of these things . What concerns you the most about what could bring back to our economy and our markets . Yeah. I think its uncertainty over the trade war t continues to worsen as scott pointed out, sort of daytoday, theres different statements about what might happen with huawei what tariffs go up when. That leads into uncertainty for leaders and businesses, small and large in the United States, you look for confidence and outlook. Small businesses as well theyre less certain about whats going to happen in the future that tends to feed into more reluctance to hire if we look historically, think about what causes recessions what tends to drive recessions is downturn in Capital Investment its really what businesses do often times thats most volatile in terms of driving downturns in recessions when we think about the next 12, 18 months, its just not clear hopefully, negotiators in beijing and washington are getting back to First Principles to see where there are areas of agreement of changes that would happen in china that would benefit the chinese economy as well as the United States. Hopefully thats happening to resolve the trade war. I think thats the biggest concern. Matt, scott, thanks for your time today. Thank you. Softbank is lending its unr fodeand employees billions of dollars learned ao play second language applied to college applied for a loan started a business started a blog shared a picture shared a moment turn your wish list into a checklist. Learn more. Do more. Share more. At home, with internet essentials. That could allow hackers devices into your home. Ys and like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Welcome back to squawk box. Up 289 on the dow. Nasdaq indicated up almost 89 points s p 30 oil prices this morning are flat, at right around 55 a barrel. Couple of headlines. I dont know what to think of this softbank plans to lend up to 20 billion to its employees to let them buy stakes in its new Venture Capital fund wall street journal reporting the founder may get as much as 15 billion. Last month, softbank said it lined up 100 billion for its Second Vision Fund the firm could make up more than half the money raised and the journal notes this would be unusual for a fund sponsor good news is that the fund is going to effectively lend employees money to participate. The bad news is because they might otherwise need to participate. Right the bad news is creating a billion dollar fund. Because theyre running out of places to find the money. Yes. After the recent uber and lyft. And the idea that the market may be closing all of this is kind of wrapped up in this. They wont let us in, but no money down, 5 on the loan if it doesnt work out which means you think its going to make more than 5 if it doesnt work out your buddy, if it doesnt work out, his shares in his ownership of softbank could be used to cover the 15 billion they lend him. Margin calls and things like that its funny we look at the Big Companies that have underperformed thus far in that fund im told total returns because theres a whole other number of companies we rarely talk about. Right. Have done remarkably well the other piece is some of the stuff has been marked up over time but may not be a real return just yet. Theres a lot more math to be done in terms of where the current Softbank Fund stands. They have a lot of commitments that arent Firm Commitments apparently from different places as well. Its a lot of money. Based on artificial intelligence, too. The investments are going to be in the world of artificial intelligence. Exactly. And his idea has been if you can corner the market on everything, some of the things are going to fail and some will succeed and thats the idea. It puts the firm youre sort of doubly involved in the success of the venture. Now, thats what we just said was the cynical view on things. Right. The positive view. The optimistic view would be look, youre giving your employees a chance to participate. The journal definitely took if it doesnt work out, do the employees go broke because they owe their company all the money that theyre never going to have . Indentured servants. You dont see people doing this that often. I dont know i mean, but by the way, everything about softbank and this fund have been unusual from the getgo. Thats true and as an employee dont you want to have skin in the games why isnt it just part of your income . Granted to you . They could grant it to you. Like shares exactly interesting. When we come back, football season is about to kick off. That means big business for our next guest draftkings ceo Jason Robbins is making his way to the squawk playing field. Stay tuned more in just a moment. What about him . Lets do it. Come on. This summer, add a new member to the family. Hurry in and lease the glc 300 suv for just 419 a month with credit toward your first months payment at the mercedesbenz summer event. Going on now. Lower carbs. Lower calories. Higher expectations. The light beer youve been waiting for has arrived. Welcome back, everybody. The dow looks like it would open, the nasdaq up by 94. Part of this is bouncing back from last week a lot of it has to do with whats happening with treasuries this morning the tenyear is now yielding above 1. 61 . Its really pushed well above with the twoyear yielding at 1. 523 people are pointed at that for the reason you see the big gains today. Nfl regular season kicks off with packers versus the bears in about two weeks. 11 states 11 now feature fullscalelegalized betting. Here to discuss the latest in gambling trends is Jason Robbins, ceo and cofounder at draftkings those are regular season games in two weeks yeah. When was the super bowl february. With brady, right am i remembering that just happened, though, didnt it . It happens faster the older you get. Like it was yesterday. Your business right now, and i dont know, how did you know in 2012 . Is that when you launched this we started in 2012. You were in college or something, werent you i wish i were that young. You started developing things and ways to do this long ago, right . And then you launched it in 2012 you didnt know it was going to be legalized then, did you we had Fantasy Sports back th then, a pretty Good Business for us it will do about 2 billion in prizes across the country in business this year. What will you do now that and i asked you when you sat down can i just bet on college . I could bet on College Football games, live in new jersey. Can i put 10,000 on notre dame or something i dont know about 10,000. It depends on im saying, im wondering if people could really get in trouble. If you live in jersey or located in jersey. You dont have to be a resident. Im wondering if you can get into real trouble with this. Whats my limit . We have sophisticated algorithms and we wouldnt let you just come in and bet 10,000. I would have to go into the stock market to do that where they dont look at anything. Theres aml there is, but its just responsible gaming you dont have to show your Credit History or anything, do you . You dont have to show your Credit History but there are things we would want to ask you. Know your customer . Yeah. One thing we ought to be careful of, this is a fun activity and for a small number, small percentage of people, it can be too much and if we let that go unchecked, then i can see how it critical conditionk become not so fun really quickly. For most people its not an issue. The last thing we want at this exciting stage when everyone is talking about the great things happening is have negative experiences for people this is something we made a priority at the company. Responsible gaming is in our mission statement. Its something front and center for us. So, how much of the business is still explain how it works. I told you that i probably need to be a much bigger fan to be able to do your bread and butter and that is drafting different players. Do i do it every sunday or you can do it any day most people around the country draft kings faventcy sports is still a product they can access. Thursday to kick off the season, which is two weeks from last thursday, were going to have a Million Dollar top prize contest, 2. 5 million total, 10 to enter if you win you get 1 million. Sunday we have another one, 5 million total. 20 to enter. How do i win . Pick the team . Pick the right players. The statistics of those players in the games gets translated into Fantasy Points and you go up against other players, competitors. Whoever picks the best team gets first place, second best gets second you dont have to win first in that game on sunday. Second place is several hundred thousand dollars still. We looked at the last quarter. It wasnt a huge quarter compared to nfl or things like that, but you can bet on the british open or yeah. Golf is very popular for us, especially with tiger winning the masters. That caused a huge what would i do if you want to play fantasy, go anywhere. Pick my player. Pick your six golfer. Pick six . Just six, yeah. Pretty simple. You have a salary cap thats based on the players salaries are based on how likely we think they are to do well. You assemble a team. If youre in jersey and soon to be other states you can bet who you think will win, what you think the first round score for somebody will be there are a number of thing. Sorkin, solar panels on your roof, unlimited betting on sports if you move to jersey what the hell are you waiting the chinese food down on the corner chinese food in new york city. The met your dinners, your business dinners . Its a beautiful city look at all the things you can do. New jersey is the loosest when it comes to betting on these things jersey is the first theyre strict in how they regulate in a good way its tightly regulated there they were the first. Theyve had Online Casino games for many years now they just started Sports Betting a little over a year ago. I think a lot of that some people in new jersey, you know, some good fellows may not be so happy all of this is happening, right . You know, i think that over time be careful. Youre going to see the black market get disrupted what most people dont realize is that the black market has mostly moved offshore. Really . Yeah. In the caymans. Its in different islands you have websites, mobile sites. Its hard to get your money on and off. People are running money back and forth. Theres a whole operation on t its mostly online, mostly on the islands now. 11 states by the time were at 50 states, youre going to be retired. I dont know about that weve got a long way to go, but its definitely exciting new jersey is a huge percentage of our revenue now. What gets bet in new jersey now . Almost a third of our revenue now. A third of the population of the country. Can you believe that theres lots of different sports year round theres march madness, obviously football is the big one for us. Vegas is okay, though Atlantic City is even better because the borgata can do all kinds of stuff now, right . Everybody has been growing. At some point there will be a fight for share. Right now as you said, the black market is getting disrupted. Theres a lot of transfer happening from the black market into the legal market. We should be happy that this device is legal now and growing gangbusters. Its really transferring from the black market, you can tax it. Sounds like fun. Its a win for everybody. The same people doing it dont have to break the law anymore, feel like theyre not going to be able to get their money off places that are located offshore its just a much safer activity. Guess some day all vices will be legal. Or well all live in the islands. Jason robins, thank you and congrats on 2012 youre a genius. Thank you. Coming up when we return, a very big week for retail results, estee lauder among the first to report. Well bring you those and Market Reaction first take a look at u. S. Equity futures at this hour, up triple digits with the dow looking to open 312, 13, 14, 15 points higher its all moving as we speak. Back in a minute down 27 lyft, before that could this mean a flood of selling . Well talk about that. First, though, the number of the day, 2,672 . Thats how much alphabet then known simply as google has returned since its public debut in 2004. The search giant celebrating its 15th ip ocho anniversary today. Stay tuned youre watching squawk box on cnbc you should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Welcome back, everybody. Lyfts ipo expires today how these stocks have performed so far and start us out. What do you see . Becky, so far what we see, throughout the course of this year to date period, the labd esca landscape has been really positive look at the renaissance ipo that tracks index of recent ipos, thats up about 32 . The s p 500 meanwhile is up about 17 . A pretty big 15 difference in terms of performance between recent ipos and the overall s p 500. Now if you take a look at the star performers this year, look at names like, of course, beyond meat 479 to the upside since its ipo price. Not everybody got that price we measure on that basis crowd strike up 183 zoom up near the notables at 157 and pinterest 70 . Block of expirations coming up soon here as well. Two ones we want to watch are today. Lyft, big ipo expiration lockup today. Uber gets theirs in early november theyre down 27 and 22 two of the more high profile ipos this year andrew, if you want to take a look at other ones to watch coming up, pinterest and zoom media have ipos coming up in mid november beyond meat has their in late october. Beyond meat has theirs the later part of october and uber in early november those lockups will be ones to watch as investors have more concern about shares coming to market, perhaps depressing prices well watch those. Thank you we want to bring in wallace, ceo of you know what i want to say . I want to see trinitron. The old sony tv. Ill take that. Mike santoli is here as well. When these lockups come off whats really going to happen . When the lockup comes off is Something Else when it comes to lyft tiny piece of carveout language that lets them go early when it conflicts with the blackout period we have a 150day lockup. Lyft has 500 billion privately invested money into it well see if that has more conviction than the Public Market investors that bought it at 72 and now, 53, 54 bucks. The high end of that is 47 on the private side the low end is 23 cents. Theres a huge amount of independentup gains lets see if they come looking for liquidity. What is your take, broadly speaking we were talking about we work last week and this ipo coming. Monday morning. Lets keep it positive. Well try to keep it positive but the appetite among investors, given the ipo line e lineage, lets say, or vintage, where does we work fit into that clear bifurcation lyft was the first of the weird ones that didnt confirm uber went right there. A bucket that has lyft and uber in it and we work goes into that bucket its been ovunderfunded, over valued over valued dont you think you dont really know if its on a path to sustainably be very profitable i think all those things. We work is a little bit like the ridesharing companies, you can focus on the growth or profitability. If you focus on the growth you might relax. If you focus on the profitability, you might have a heart attack the longterm investment catalyst hasnt revealed itself for uber, which is why you dont know what the right price is for this. Given the volatile of the market broadly speaking, how ipos and others will come this september say we work out of that. You have postmates youve got peloton. The whole list. What happens the market has done a pretty decent job of being discerning about what seems to work, what businesses they want to own and reward anything that seems closer to Pure Software has worked well. Crowd sharing, even ptrchlt using software to do really hard realworld stuff like ride sharing, delivery, even the boxed consumer goods stuff hasnt necessarily worked that well. Because its so competitive. You might see the same separati separation were not clear that it really has those Network Effects and all the magic of Software Scaling that goes into a pure tech business. Youre probably going to see that same separation two concerns six months ago. One was its going to be a bubble everyone is going to go crazy. The market is going to fly to unsustainable levels also hasnt really happened though at the margins thats what were seeing. In tech land one thing thats interest, there have been 18 deals if you include slack everything has worked except nonu. S. Companies, Chinese Companies and ride share Everything Else basically works. Revolve even kinds of work traded below its ipo price in the recent selloff but in general, we work may do what uber didnt do, which is close the market but maybe not because you have the bifurcation. Close the market, meaning what this is the end . It wasnt clear as if the ipo window would stay as open. Making hay while the sun shines. Now you have we work on the one hand, which probably wont work, but at least you have a narrative for why that doesnt matter and cloud. We work wont work . Thats a good headline. Might not work. While we have you, the vision fund, employees getting loans to take stakes in this next vision fund, whats your take on that its a big fund you have to get money where you can. A reasonable thing to do, ridiculous thing to do, a high sign of the market i think people are used to seeing investors are used to seeing the gp have real skin in the game. Right. The guys doing the work now on these deals have real skin in the game one thing we joke about with we work, 400 pages of disclosure. You cant make head or tail of it its difficult to tell if the Company Makes sense based off that with more skin in the game it will get them focused on the downside when you borrow money as opposed to having paper upside, get your mind focused. Taking the positive view of that thank you. Early in the week. Mike stantoli thank you. When we come back, ge ceo is calling a short sellers report pure market manipulation is he right . Well talk to two former regulators next. Meantime take a look at the futures this morning already forgetting about what happened last week youll see some strong gains all the way across the board dow futures indicated up by 313 points, highest level weve seen this morning nasdaq up abylmost 100. Squawk box will be right back. And we have zero account fees for brokerage accounts. At fidelity those zeros really add up. Maybe ill win saved by zero futures up right now after a bombshell accusation from harry marcopoulos, defending the struggling company, calling it stockman ipgs as they start to look at the report, could this be a case of market manipulation or what if he was actually right . Dickinson wright partner, former securities and Exchange Commission and enforcement lawyer also ceo harvey pitt, former Exchange Commissions chairman. Gentlemen, welcome to both of you. What did you think at first blush about all of this . Harv harvey, well start with you. I think this is pretty much a grandstand play by marcopoulos he has gone public with very loaded allegations that were designed to have an impact on the market on the other hand, of course, there is a fundamental question about whether or not his allegations are correct. And until thats known, i think its hard to categorize him as having been a manipulator. Do you think to look not only into markopolos actions but the accounting underneath . Absolutely. I agree with harvey and to your poi point, becky with respect to ge, the impression is the s. E. C. Is looking at that already but also whether markopolos activities were, in fact, manipulative. Often the s. E. C. Will give i dont want to say a pass but may not look as seriously at people who have actually assisted the s. E. C. In the past here is a real opportunity there is an issue in the markets called short and distort, where people actually use materially false information in connection with shorting the stock. Weve not seen that many s. E. C. Enforcement cases in that area it is a problem. And this is an opportunity to pursue it. I was going to ask you about that you look at Something Like this. How is this different from what bill ackman has done or some of the guys at the conference have done, come out and give you their best short my position has always been theyve lined up their positions ahead of that. While you call it market manipulation, it may be a situation of them putting their money where their mouth is how is that different from somebody who is long in stock and saying this is a great buy you can have manipulation on both sides, long side and short side the short side we tend to not see the level of Enforcement Initiative that there probably should be. There are accurate shorts. I dont want in any way want to disparage the short market if markopolos really believed everything he was writing, why go public . Why not let the s. E. C. And doj do their jobs . Ill make the argument on his behalf look, i dont know which side i come down on they may be right on both of these. Last time he tried that when it came to madoff, nobody listened. It wasnt until he went public. But you didnt have an s. E. C. Whist whist Whistleblower Program thats as active as it is now. Looking at the corporation itself, in this case, ge, theres a tendency not to look as closely at the short side publicly d lly disseminating information that could affect the stock. Look at the price of the stock clearly was material the real question is, what was the intent behind, you know, issuing the information publicly and is he accurate he stepped up the risk to himself and to others by going public as opposed to letting the s. E. C. Run its process. Harvey this is a complicated one. Its going to take a while, i would guess, got s. E. C. To wade through both sides of this. The s. E. C. Has an important task ahead of it, which is first to find out if the market was deprived of necessary information. One of the way you can test his bona fides, however, is that the s. E. C. Has a whistleblower provision. If he had brought all of his information to the s. E. C. , he would reap up to 30 of the potential recovery that the s. E. C. Might obtain in connection with this case. Instead, what he did was go public, blast the Company Without giving the company a chance even to address his concerns those are factors that make this look suspicious. On the other hand, this is a company that is under investigation. And where there are serious questions, and until the s. E. C. And the doj unravel the fundamental question of whether general electrics accounting was appropriate, i think markopolos becomes, to some extent, the secondary issue. Right do either of you have a view on the merits of what he actually said meaning have you read the report and said to yourself, mmm, theres a problem here or mmm, theres not a problem here i have read the report. But i will first say ive read it cursorily there are impressive people on ges board its ceo and its board are relatively new were dealing with events that, in large measure, preceded their tenure one of the members of the board, leslie sideman, used to work for fasby, which you know sets the accounting standards these are not people ignorant of the critical facts and it strikes me that it will take some doing to suggest that they somehow either were not smart enough to figure out these problems that markopolos has said exist or that they were willingly blinded and refused to see the issues that they knew about. Leslie has only been on the board since last year. She did say they were in the process of the review of looking at all that. Wooem hear more on the Third Quarter. Gentlemen, thank you for your time we appreciate it. Coming up, when we return, the driving force behind the global rally, futures trading near the highs of the session. Dow looks like it will open up 319 points higher. Treasury yields. Tell you what to watch in the trading day ahead. President trump speaking out about the u. S. Economy. I dont think were having a recession. Were doing extremely well. What he said about fears of a coming slowdown. And google it search giant celebrates a big anniversary today. The final hour of squawk box begins right now. Good morning and welcome back to squawk box. Im joe kernan along with becky quick and Andrew Ross Sorkin continuing the rebound thursday and friday from last week after the route on wednesday, 306 now on the dow, 33 on the s p. Just under 100 on the nasdaq treasuries, part of the reason in this case, the yield backing up a little. More so earlier. 1. 60 now on the tenyear twoyear at 1. 51 good were showing all of them because that was what happened last week when we saw the twoyear yield rise above the tenyear by a couple of basis points and temporarily that caused all that consternation wednesday. President trump defending his trade negotiations strategy with china, returning to washington from his golf club last night, brushing off concerns of a recession and indicated that china is eager to negotiate with the United States. If you look at china, china is doing very, very poorly i just saw a report, theyve had the worst report theyve had in 27 years because of what ive done and they want to come to the negotiating table. You know, theyre having Companies Lose i mean, theyre leaving. The companies are leaving. And theyre laying off millions of people because they dont want to pay 25 . And thats why they want to come to the table i dont think theres another reason other than president xi, im sure, likes me very much but theyre losing millions and millions of jobs in china. And were not paying for the tariffs. China is paying for the tariffs, for the 100th time. On another hot topic in the trade war, the president also said he didnt want the u. S. To do business with Chinese Telecom giant huawei, citing National Security concerns for that stance wilbur ross confirmed earlier reports that the white house would temporarily extend a license that would allow huawei to continue buying supplies from u. S. Companies a bit of back and forth there. Federal officials are headed to jackson hole, wyoming, later this week, listening to any clues about the direction of Interest Rates more for what we can expect out west and on wall street after last weeks wild ride is pimcos executive Vice President , Portfolio Manager and Investment Committee and our very own Rick Santelli is here this morning, too. I want to start with you, to explain whats happening with Interest Rates right now, whats happening with those yields. Well, i think there was a lot of talk in consternation, as was pointed out earlier, about the inversion of the yield curve wednesday last week. I would like to point out, it was an intraday inversion we never closed negative we have a very flat curve. Now its moived out almost ten basis points if i had to pick one thing to make this easy it would be 30year bond yields. Prior to the action last week, the closing yield was around 2. 10 were now hovering there from a common sense standpoint, the route that happened in Interest Rates was largely a global event and should our 30year bond on its first attempt start to consolidate and trade above that level on a closing basis, i think that would almost rubber stamp the notion that at least for the moment some of those low yields we saw last week will probably be holding. Tony, what do you think the signals weve seen from the inversion and these low rates, flat rates were watching, is that signaling a recession or is this time really different because of whats happening around the globe the inversion hasnt been deep enough to suggest recession. Especially against forward rates. Its a little technical. Where the market thinks the fed is going, tenyear yields are above that the market is thinking the fed will put up a policy rate of 1 . If the markets thought there was going to be a recession, they would probably think the funds rate would move to zero. Pimcos forecast over the next five years is to keep its policy rate at zero or less the next five years or never get above that level at any time same for the bank of japan these two Central Banks are having major impact onrates here. What does that mean for snus can we stay at zero . Yes cost of Money Matters a lot. Primary deal as the intermediaries on wall street, having to hold their bonds at a certain cost, set by the Federal Reserve. Theyll do that if they think the cost of money will decline but only for a period of time. Money flows everywhere we know at pimco we have offices throughout the world in japan, for example, where we have 100 billion plus of assets invested with us, investors are looking for a place to go, trying to escape socalled financial recession. They sense, as we do, that the policy rate will stay at zero for a long time. This will push money outward, seeking better returns. I cant believe the two or the ten im sorry i cant believe the 30year yield isnt going down whats the german bund, s santelli its negative, right oh, absolutely. Thats amazing that its not going down to 1. 9. Theres a hedging cost. Theres a lot of reasons, joe. There must be. Consider this would you invest in would you lend uncle sam your money for 30 years . No. Or go into a t bill no. If i had to pick. Logic does prevail. Ov overseas markets have a lot of issues, currency issues they need to worry about. Forward rates, theres definitely a cost to owning u. S. Assets and that is the strong dollar, which seems to be the odd man out. I dont look for it to weaken. And also consider this many of the institutions in europe that continue to buy into negative yields, there are a lot of reasons one reason may not be often talked about is that youre going to get your money back minused whatever discounts you have for the negative rate versus other areas its almost a Self Insurance form. Knowing how things always, you know, seem to even out and knowing who is the best credit risk on the planet, its not germany. You have the best credit risk and 2 , 2. 25 spread. Money is flowing to the you stays. Obviously. Treasury department showed tens of billions of dollars flowed in one month alone. There is substantial money flowing into the United States. There has to be big countries are net sellers. Capital flows. Im not dismissing that investors arent coming here theres a lot of turnstiles that lead into. And most of them are counterintuitive to history. I was making the point as the devils advocate, that you cant believe every dime in the whole planet ought to be here. A Good Opportunity for the United States and other nations to invest in themselves. Because when we say nations are growing at a weak pace its because the fiscal authorities are failing, not monetary authorities. Here in new york we wish we had a second tunnel to link to penn station, socalled whats it called, gateway . For jersey . Yeah. Would that do it . 5 . Were trying to get andrew out there. Solar power on your roof what was the other thing we just oh, gambling legalized gambling. I hear theyre coming to new york, though. Thats not a big longterm investment, necessarily. We should consider, fiscal authorities should. Tony, one question. And it may be rick, would you be for an infrastructure bill if we just floated half a trillion dollars for infrastructure for these rates i would be a bad guy if i said no. My problem is that the only time we get these politicians to agree is to spend money, whether its a bloated budget or infrastructure i would like to see an actual process going on had money appropriated all along the road but it ends up in a general fund. Right thats right. Tony, a quick question. Dont you find it awfully weird that the curve inversions we should fear is what Central Banks create the dynamic that creates the inversion. This time theyre replacing the punch bowl with twice as big a size punch bowl. Isnt that alone something jay powell and company ought to try to communicate during these press conferences. In fact, they should describe why its happening the reason its happening particularly is not only the global stories investors these days say i dont need as much compensation for risks of inflation theyre not worried about inflation. Central banks have to start to shape things up. They dont worry about policymakers raising their Interest Rates in europe and japan. So they demand when was the last time we had a deflationary problem arent we fighting a boogie man . Are we not making inflation the linchpin across the globe where we imaginarily now all the Central Banks have picked 2 it seems crazy to waste all this ammunition on this enemy i dont see has shown its head or been a huge risk. I think its like cost of living increase for most of the globe. Right. Central banks dont welcome tariffs but they want to welcome inflation. Its all counter intuitive. Its because they know theyre battling fiscal authorities. Thats what ultimately produces growth and enables nations to get out of their debt problems i mean, lock at italy. It has a giant debt problem. So does japan. Inflation is the way out in the central bankers eyes. Are you back here now eight of the last ten years newport beach. Now its east coast what did you do with the boat . I cant swim. I have swimmers ear i can barely hear in this ear. What finally did it traffic out there is brutal. Family. Family did it im italian. Pizza is here. Are you back mostly new york, new jersey wherever it depends every day is a different place. Grass is greener in newport beach. Ill be there in a couple of weeks. I love newport beach, california. Or venice beach. I dont like that one. Well see a lot more of you, hopefully. Thank you. Thanks, rick. Special look at the American Consumer bigtime retail Sales Numbers showed strength but there is no denying the industry is in flux. What the changes are under way and what they mean for the future of shopping and the stocks in your portfolio well do it all when squawk returns right after this these folks, they dont have time to go to the post office they have businesses to grow customers to care for lives to get home to they use stamps. Com print discounted postage for any letter any package any time right from your computer all the Amazing Services of the post office only cheaper get our special tv offer a 4week trial plus postage and a digital scale go to stamps. Com tv and never go to the post office again that could allow hackers devices into your home. Ys and like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Welcome back to squawk box. Futures are sharply higher dow gain of 297. Nasdaq up by 94 in part because of what weve been seeing in the treasury complex 1. 6 yield right now. Whatever questions you have about the economy by most accounts, Consumer Spending is holding up throughout all of this, spending more than double expectations last month, accounts for twothirds of spending in the United States. All day today we are focused on the great American Consumer, the pillar of the economy thus far Courtney Reagan is kicking it off. Live in herald square. Good morning to you, courtney. Reporter hi. Good morning to you, andrew. Many signs that Economic Activity in the country may be slowing, the u. S. Consumer remains very strong. The most recent retail sales report posted the strongest fivemonth growth streak since 2005, 2006 the consumer may very well be holding up this economy. 70 of Economic Activity is tied to Consumer Spending but where we shop and what we buy, that has changed. More than a quarter of the countrys malls have closed since the peak and occupancy averages around 87 . Since 2006, 160 nonfood retailers have filed for bankruptcy with 65 liquidations. In less than three years, netting out openings, 9400 stores have closed, including 500 Department Stores just last year last year, spending at Department Stores was about 3. 5 of total retail sales. That was down from 5. 9 in 2010. Now, many store closings are due to overleveraged retailers filing for bankruptcy, but also more of a shift to online spending and consumers spending less on stuff and more on experiences. Put it all together and the u. S. Simply needs less retail space threequarters of all retail growth is coming onien and over half of everything bought online is bought on amazon. Com. Though as a category, specialty apparel has gained share online, moving from 15 in 2010 to about 40 in 2018. And when u. S. Consumers arent sitting at home, waiting for those online orders to be delivered, theyre spending on experiences. In the 1960s, less than half of our spending went to services, which means more than half went to goods now, twothirds of our consumption dollars are spent on services with the remaining onethird on physical goods. Back over to you. So, less retail space in the retail space, have i got that right . Seems very confusing. Right. We have to come up with a new word for that. Again, its been a problem thank you, courtney. For more on this big week for retail, lets Welcome National Retail Federation president and ceo matt shay. Matt, thanks for joining us. You got a little bit of a reprieve when it wasnt 300 billion. Some still left on it. You probably embrace that, but you wish it was no more additional tariffs at this point . Yeah, joe good morning i think thats right we certainly were pleased to see the administration decide not to go forward with the proposal to impose tariffs on that full range of that fourth launch of goods and delay some of those until december 15th. That was a plus. You saw the analysts and the market respond positively as well as retailers welcome it theres still a substantial number of goods impacted by the tariffs that go into effect in september, a little less than two weeks. 110 billion worth of goods in the electronics and apparel categories, among others were not out of the woods weve had this conversation off and on the last couple of years about the impact of tariffs generally. Up until now weve been able to minimize the impact on consumers. If the administration goes forward theres nowhere to put the tariffs really. Youre sure were there now youve been saying that for a while. Were at the point now then we got all those great numbers friday how do you know were at the point now . Arent you guys in retail willing to take one, you know, at least help the president deal with china, help the longterm plans for the country . Im sort of just taking that viewpoint for a second, that maybe we need to deal with this ip theft and some of the other inequities in our dealings with china. Can you hold on a little the farmers are still behind it for the most part. Youre not you just want everything good for retail and you dont care the torpedos if they take over by 2025 . You want them everywhere or dont want them anywhere most economists would agree it doesnt make sense and hasnt produced much of in the way of a bre breakthrough with china. We dont see themrunning to th table because were putting tariffs on their goods the bigger issue over the long term is how we address some of those issues we all agree that chinas trading practices need to be addressed in terms of i. T. Theft and transfer access to markets those are all good things to be talking to the chinese about we would rather not pursue it the goitalone approach lets get back to sitting down with our partners around the world and putting pressure on china. Oh, boy. We have a strong consumer right now, as courtney alluded to, and as you have been talking about this morning were pleased that through conversations like those our members have had you referenced tim cooks visit with the president. I think the administration recognizes the danger on Going Forward with these tariffs consumers are in a very good place. Pretty amazing that macys, 16 a share, had a scary forecast in terms of what people were expecting then you get walmart who just had a great day when it reported so the people that you try to help in terms of being a spokesperson for the natural Retail Federation, it certainly is not a monolith at this point. Some people its the best of times, worst of times. Yeah. I think thats very true courtney alluded to that in the piece, talking about how the way in which the American Consumer shops has evolved pretty dramatically over the last few years and the rapid rise of ecommerce walmart posted incredible numbers in terms of the growth on their ecommerce site i think youll see other retailers post interesting number this is week. Theres lots of activity on that side of the business the we we all shop as consumers is converged in the way that we dont make that same distinction anymore and the Companies Operating in certain segments with certain real estate and capital has to make that change very quickly and thats why were experiencing some of those changes out of the marketplace youre talking about the amount of retail space in the retail space, i think thats an issue that well continue to see play out over the next few years. I didnt know the nrf had an office up in nantucket do you have an office up there no. I wish we did. Is that where youre nice. Youre up there, sort of chilling the kids have to go back to school eventually. They insisted they get a little beach time. Andrew, thats a great place, nantucket. It is its a beautiful place. Beautiful place why not the vineyard, matt what causes one person to pick nantucket versus the vineyard . Good question we dont know that much about this part of the world we may check that out, take the ferry over. What about the sharks, becky, that you were worried about . Cape cod. See any great whites around, matt not yet. Good. I hope we dont. Keep it that way. Were going to try to avoid them. Good idea. Good plan. Matt shay, thank you. Nice to be with you. Youre welcome. Cnbcs special series focused on the great American Consumer continues on squasquan the street. One place were spending more than ever is personal care maybe not underwear. You go three a day sometimes. No. I wear one pair. After the gym i might get a second pair. You said youve gone as many as three i dont think we want to know what happened. He was being facetious. You were being facetious . I guess theres that certain situation that could be warranted. Not for those reasons. At least one . At least one. Weve been up for hours. Youre still on your first pair today so far. Tommy john, as you know im going to promote it. I think thats what started the whole thing. Thats what started the conversation. Started the whole conversation. Whats the other one . Theres a couple of Peter Mallard that feel like, im telling you, its like silk. Its like a party. Its like a party down there. Tmi tmi. Party in your pants . Party in the pants. And youre invited youre all invited. Oh, geez. Consumer runup thats the old joke anyway, runup to cnbcs fed coverage live from jackson hole thursday and friday, steve leasemleas liesman will give us was there a gag order on the other guys thats false. That is not true. Thank god we love having him on. We do. Goolg as a Public Company on the 15th anniversary of the search giants ipo, how the company has saved our lives and investments in the tech sector stay tuned youre watching squawk box on cnbc welcome back to squawk box. Dow looking like it will open 279 points higher. Nasdaq up about 90 points, s p 500, up about 30 point. Coming up, can google catch lightning in a bottle again . The search giant celebrates a big milestone. Well look at which of its acquisitions have provedru tly transform active a transformative and which could never happen again thanks to amped up announcer fidelity is redefining value with zero account fees for brokerage accounts. And zero minimums to open an account. At fidelity those zeros really add up. Maybe ill win saved by zero welcome back to squawk box on cnbc. We are live at the market set in times square air bnb 9. 4 billion in total bookings during the First Quarter according to a source who spoke to reuters and could attract investors as the Company Looks toward an eventual ipo. Pg e has won a key court victory. Two groups of creditors had sought to push their own chapter 11 exit plans. Pg e filed for bankruptcy as it faced an estimated 30 billion in damages from wildfires linked to its equipment. Estee lauder, 64 cents a share profit, 11 cents above expectations betterthanexpected fullyear forecast it did mention that the u. S. china trade tensions could be a potential source of risk. Estee lauder shares are up by about 6 this morning. Squawk box followup right now. 15 years ago a small Internet Company named google went public josh lipman joins us with more of this little startup that could. Priced at 85 a share, market cap of 25 billion. The stock has since surged more than 2600 , some of the companys growth has been fueled by its acquisitions like youtube, which the Company Bought for 1. 7 billion in 2006, generating an estimated 20 billion in ad rv new per year and double click, which it agreed to pay 3 billion for in 2007, helping to power googles ad business. Its biggest acquisition, 12. 5 billion for motorolo then it sold it to lenovo. But google got to keep a lot of motorolas valuable patent portfolio. 40 more than amazon on acquisiti acquisitions, 500 more than apple. Ceo has told me recently shes open to more acquisitions, specifically when it comes to her companys Cloud Business nutanix allows companies to run socalled private clouds, meaning keep their data inhouse, outsource other pieces to the cloud Patrick Moorhead said thats soughtafter technology, which he thinks could help google attract more cloud customers back to you. Thank you for that report lets talk about what the next 15 years could mean for google and big tech, New York Times reporter, cnbc contributor ed lee good morning to both of you. Lets sort of map this out 15 years from now, do you think we will be talking about google in the same breath that we are all these other companies, or is this going to be like ibm 15 years ago . Brent . I dont think it will be the same company weve seen but theyre on the right track with the different initiatives, even the Health Care Business theres a lot of promise in these emerge businesses, wemo adding 200 to 250 billion to the market over time as the technology is way above others in autonomous right now. Today those are lower margin businesses thats been dragging town the stock on these new initiatives weve got an air pocket, if you will the ad business is doing great the new tissinitiatives arent really ready investors are waiting for these new initiatives to go online it may take a couple of years. You look at the old Tech Companies, which we dont talk about. They arent the fangs anymore. Right theyre the established. Theyre not the upstarts anymore. By the way, google is now the establishment, too. They absolutely are the establishment. Whats interesting about google to answer your question, what they look like 15 years from now, google has this interesting dichotomy or skichizophrenischi. They started literally in a garage but their business is driven by advertising, something that eric schmidt put in place larry didnt know how to create a business until eric schmidt came along we sell advertising. How do you do that the double click acquisition was one of the best things they could have done as a business. Its a traditional business even though they figured out new models for it. Larry page, the ceo, he likes to tinker with whats the next big tech thing if its not going to be ibm in the future, yeah, they should keep that mentality going. Same time theyre really going to grow. Its like where are these big ad dollars going to come from in the next few years as the traditional ad sources are shrinking, theres an opportunity for them they dont get sort of all the big what about these other bets theyve made more bets than any other company out there. Drones, all these other things who knows what its going to be . Thats their play, too they dont know either they just think they need to be playing in that space and get as many people online to fuel their ad business. Thats their mentality. Whats the chance, though this is microsoft . Good new sthas microsoft today is remarkably Robust Company the bad news is that they went through what might be described as a very torturous period with the u. S. Government. They went through a decade of really stock doing nothing and really saved the Company Along with amy hood. We think google is going through the same situation theyre looking for the next thing. Investors are paying a higher multiple for walmart now than google and higher multiple for others we think theyre going through that right now and were going through this digestion period, if you will. Thats definitely been a hangover, stocks underperformed over the market in some of the peer group thats happening with other stories like amazon and facebook doing as well as they are, improving margins at amazon, investors focus is in other places right now. I want to switch gears for a second and talk apple right now. President trump telling reporters last night he recently spoke with apple ceo tim cook. The two discussed tariffs and competition that apple faces from samsung and cook made a good case that upcoming tariffs could hurt his Company Listen to this. Its tough for apple to pay tariffs if theyre competing with a very good company thats not. I said how good a competitor he said they are a very good competitor so, samsung is not paying tariffs, because theyre based in a different location, mostly south korea. But theyre based in south korea. And i thought he made a very compelling argument. So im thinking about it. How do you see this playing out . You hear that and does that mean that the president could try to create a carve out of some sort for apple and apple specifically then what does it do to all the other companies . I dont cover apple i dont think theres a carve out. You look at the demand i was in an apple store getting two new phones for my family members. Its packed. Theres no i dont think theres a big overhang in terms of the demand and what Consumers Want from our perspective. So, we think this is probably more noise personally. Ed, noise or reality . I think its more noise you get the sense that he wants to do a carve out, which is how he tends to negotiate these things you cant do that. You could he has done it before. But thats not in this realm. That creates more confusion in the marketplace ultimately. I dont think that helps other suppliers, other Tech Companies to understand how to manage your business for the next 90 days. If he doesnt, though, what if the true implication is come christmas, he doesnt want to hurt christmas remember that. Pushing back the tariffs on whatever the next trench of that is in terms of this whole trade imbalance thing, theres no more visibility. How much more expensive does the next iphone become i think it gets more expensive regardless whether or not its because of these tariffs or the question around that, who knows brent, ed, thank you guys appreciate it. Thank you. Key stocks making moves ahead of the opening bell. Well get you ready for the start of what could be another wild week on wall street futures pointing to a sharp open 300 points now on the dow. Stay tuned squawk box will be right back. E every single day. But what does changing whats possible mean anyway . Well. If you run a business, it means a lot. For starters, we provide you with Financing Options for your customers. That way, you can help them buy the things they love instantly and pay over time. And that turns them into serious fans. Hang on, theres more. Want Customer Insights . Weve got those, too. We use data to show you what your shoppers have already bought so we can tell you what they might consider buying next. And you can offer them the perfect products. That ceo gets it. From adding unique capabilities to your companys apps to bringing you loyalty programs, our technology and Financial Solutions are changing whats possible in all sorts of ways. So, how can we change whats possible for you . Welcome back to squawk box, everybody. The future this is morning, if you havent seen it already, have been up sharply this morning. Dow futures indicated up 312 points above fair value. S p futures are up 34. Nasdaq is up by 104. Okay. We are now in under an hour away from the opening bell on wall street dom chu joins us, with a look at the biggest movers this morning. Dom . A lot of them, andrew, have to do with the continuation of the surge from the lows of last week on china trade, economic concerns and whatnot well highlight, first of all, whats happening with shares of casino operator wynn resorts, up 3. 5 on 11, 12 shares premarket volume one of those with outside exposure to chien wna and the economy over there Semi Conductor trade key focus for investors, nvidia shares up about 3. 5 percent, 150,000 shares of premarket volume as well Semi Conductors, another indicator or battleground for that u. S. china trade relief there. Well finish with regions financial, among some of the banks in focus as the yield curve, that difference between longterm and shortterm rates expands more, moving out of that recession indicator zone those shares up 2. 5 on over 3,000 shares of premarket volume as well. And call your attention to whats happening on the other side as risk haven type assets start to come off in value were watching gold prices off about a percent or so. Yeartodate basis theyve still surged second straight day of declines for gold futures as folks start to take a look, a little bit, at these haven assets, treasuriy i falling in price yields rising, gold falls in price as well. Recession among the words. Cnbc markets commentator, mike santoli. Might as well get your latest forecast since you were one of the few people a year and a half, even longer than that, calling for sub2 yields. Are you calling for sub1 tenyear yields . Joe, yes i am i think were headed to 1 for the tenyear and lower when it starts to move, its going to move very fast. We went 2. 2, came to 1. 50 as you know very quickly. I think the same thing is going to happen going to the 1 mark it is just amazing how many people expected the yield to go the other way. I recall jamie dimon telling becky last december that he expected a full percent for the tenyear and i was on a few minutes later on cnbc to say that it was going to hit 2 before it hit 4 now, i think before it hits 2 again, i think well hit 1 . So, it is signifying a recession to me. I see the 30year, today at 2. 10 going to 1. 75. Whats happening is that worldwiworl worldwide the yields are going down tenyear german bund, i see that going down to minus 1 , a full 100 basis points, in which case the u. S. Treasury yield looks wonderful at these very high levels of 160. That is what is going to drag the yield down as well. Since youre forecast iing a recession, i assume that you dont think that this is a good thing, that global yields are as low as they are. So, you dont think that this disinflation that we have is actually a positive. Theres no way of looking at these low yields as a positive, sri. Is it because of policy mistakes all across europe . Whether the eu is, i dont know, a system that could last forever and a single currency with differing fiscal authorities what is it that causes the globe, outside the u. S. , to be growing so slowly . What is helping elsewhere, in europe in particular, joe, which is where most of the negative yields and the low and further expectation of easing is focused, the problem there is labor market inflexibility you have issues where fiscal issues completely closed just as we were in the United States, in the previous eight years of the Obama Administration with very little fiscal stimulus, everything focused on monetary and so you have the situation when Monetary Policy alone bears the brunt. And i have an expression, saying the ecb were to lower Interest Rates further, they cannot suddenly give a job to an unemployed italian and the plummer doesnt become a Nuclear Physicist because the monetary easing has taken place you need education you need training. You need structural changes. And that is what we learned from the german experience, starting in 2003. You need a work program. You cant do it just based on lowering Interest Rates. Mike, youre following this. Yeah. Sri, i dont know if you follow his calls. Sure. But hes been right about this. Without a doubt sri says once it starts, its going to start moving fast it has moved fast. The moves have been dramatic the acceleration in treasury yields, i think, has been breathtaking and arguably is over shot in the very short term, which is what youre seeing today by the way, sri talking about structural differences the whisper that germany might consider some kind of fiscal response, that they might not perhaps run a balanced budget, which is insanity at this point, got yields bouncing. In this zone for stocks, were still choppy within a range 7 pullback. We didnt get deeper than that at the lows or even the august 5th intraday lows, i dont think. Youre trying to adjust to this idea where low yields definitely support equity prices while also creating this sense that we have challenges to growth i think theres a lot of room between a 3 u. S. Growth economy that is over heating and you have this huge fiscal response and an outright recession. You can be in this 2 growth trend and it looks a lot like d the stock market had to kind of go sideways and readjust and chop lower for a while but it wasnt the end of anything. Mike, i would say that the big difference from 2016 to today is that you did not have the two to ten being so low, so flat we had it at over 100 basis points spread in june of 2016 which was the last time we had this kind of recession scare take place we also had positive Interest Rates, only germany, the negative yield, was very, very low, like about minus ten basis points now we are much worse. The way to prevent that, if you think, is for germany to have ten year bund at minus one or minus 2 yes, perhaps you can postpone recession by another three to six months, but youre talking about a much deeper recession, much worse than 2008 in that case. There is an idea that the United States is has such a strong domestic economy that we dont necessarily go the route of europe. Why do you think the United States is headed for a slowdown . Is it because were going to import recessions from europe or something about low Interest Rates here will cause business to slow . Joe, i think thats a very good question. I said on your program in the past that the reason i expect yields to go down is because the sugar fix that we got from the tax cut that year in 2017 was going to fade. And that has just faded. So you cannot keep repeating a fiscal deficit again and increasing it at a time when the deficit is running at 1 trillion a year. It is the deficit that is going to cause it because were not that worried, we have no trouble issuing debt and if you would think you would see higher yields if were having trouble financing the deficit. So im wondering what you see that with low Interest Rates and full employment and innovation and all these good things, why are we headed for a recession . It has been a long expansion, but is there anything inherently wrong with the u. S. Economy now that not withstanding that the sugar high wears off, but the basic economy seems to be pretty good, the consumer seems to be good unless we import a slowdown from the rest of the world. Lets count the ways, joe, if you look for a Strong Economy, yes, Consumer Spending was strong but last week we learned the Consumer Sentiment index had several weak points. That is one. Second, the labor market is set to be tight. But you havent had the Labor Force Participation rate go back to the pregrade recession highs, we still have low Labor Force Participation rate, which means we are leaving a good part of the labor force behind without giving them jobs third, in july, the number of people who are Holding Multiple Jobs was 8. 3 million, which san all time record for the United States youre Holding Multiple Jobs because no job gives you enough of an income for you to just keep one job the labor market is not tight. It actually is has lots of weaknesses on the other one, just to finish this off, joe, there was a great story in the wall street journal yesterday, which talked about how the real disposable Household Income in the United States today is at 1999 level. Go figure. And that doesnt say to me that it has been a Strong Economy i mean, you know, it seems, first of all, demographic effects have a lot to do with the Labor Force Participation. And honestly, again, a lot of it is consistent with a Slower Economy that were trying to figure out exactly how slow the u. S. Is basically a servicebased consumer economy and the edge has been taken off the growth from industrial, the industrial part of the economy, and i think we have to wait and see. The fed will cut rates again most likely. The market is pricing that in. It has a great effect necessarily in terms of stimulating activity, but can forestall the concerns that the yield curve is telling us some secret scary message all right, mike, thank you. Sri, well see you again thank you very much, joe. Next time well see you i guess will be i dont know, somewhere. I wont say. You might be right, you might be wrong. Sounds like billy joel. Always good to be with you, joe. Good to be with you, sri. I just might be a lunatic youre looking for jim cramer joins us now. You were tweeting earlier this morning you were concerned about the big pop in the futures this morning. Were looking at the dow up by 320 points if we open here what worries you about that bounceback i think that the idea that we uninverted the yield curve is something that lasts for, who knows, like an hour. Everything seems look a trap now. And it was a trap to sell off the inverted, now they got to go buyback on the uninverted. What happens if you get inverted again . I dont think the bond market is a bad place to be if youre in germany. And unless there really is stimulus over there. I know a lot of people think there is going to be this socalled black zero where theyre going to start really ratcheting up. But your previous guest was right, doesnt create a job for a plumber in italy i think a lot of problems over there are just because the euro is such a terrible thing we have we had a guest on earlier this morning who said hes worried about what happens to the market because he thinks expectations for earnings are just too high. I think he was mentioning that 11 is the Earnings Growth that is anticipated for the Third Quarter. He doesnt think well get there. Do you i think International Companies know any Company Involved with the dollar know. Domestic, yes. I just think domestic is still good i think we are day side programming of the consumer is going to reveal that the consumer is very robust, yes, the consumer could be last, yes, we know that unemployment that is this strong, these numbers just think about we had it in 2007, 1969, we went into recession. I understand why people would be suspicious i also just feel that, you know, things arent that bad and i listen all day and i do feel like things are worse when i listen to people talk in reality. Jim go ahead. Go ahead. I was going to ask about apple. I think were going to run out of time. A nice tease to hear what you have to say in the next show. We dont know what the president is going to say. We dont we know what he said ive been telling them over and over again, samsung, samsung, samsung. Today is the first day it seems to get through their heads that samsung is the winner. Thats not necessarily what we want anyone who is ive been saying that every night on the show they dont care. Now they care . Jim, thank you. Well see you in just a couple more minutes and hear more about it then. Okay. People know aflac. Aflac but not when to use it. Do i use aflac when the kids get slime in the plumbing . No. Thats home owners insurance. Slime in my motorcycle. No. Thats motorcycle insurance. Slime everywhere . Ughhh nooo, theres no insurance for that. Do they help when i have bills Health Insurance doesnt cover . Yeah thats it aflac gross guys. Get help with expenses Health Insurance doesnt cover. Get to know us at aflac. Com good final check on markets. Dow opens up 311 points higher right about now, a rally on its way. The nasdaq looking to open 300 points higher. Make sure you join us tomorrow squawk on the street begins right now. Three is the magic number good monday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber back at the new york stock exchange. Poised for the biggest opening bell bounce since july big week as we set the table for powells jackson hole speech on friday morning europe is green amid more reports of germany planning some fiscal stimulus measures ten year gets back to 162 and you see gold selling off today road map begins with the president sounding off on everything from the trade war to recession fears to his dinner