Transcripts For CNBC Squawk On The Street 20240714

The dow eyeing eight Straight Days of gains on growing optimism around u. S. china trade. Weworks rocky road to an initial Public Offering. And the democratic faceoff, warren, biden, sanders dominating the debate stage. Just what their plans could mean for your portfolio stocks are chasing history this morning the dow and the s p each within 1 of hitting record intraday highs. The blue chips in the midst of a sevenday win streak for First Time Since may of last year. You have signs of a health y consumer, Government Data shows retail sales up. 4 in august, double expectations. Core unchanged, looking for. 1 but july even after that upside surprise revised higher. Is this ever putting the pressure on jay . I think jay powell is uniquely faced with a difficult decision. You posted some stuff the other day about you raised rates and the economy is not being hurt so why should we just want to cut them i continue to say he raised rates too much and i want i want to go for the full on 3 on employment, get those people who have davis always talked about, not part of the workforce in the workforce this is going to make it very hard for jay powell not to be more of a bone head than you got cpi had a two handle for 18 months. Highest now in a decade. Were waiting for core pce to ratify thats the thing people are saying as long as core pce remains more tepid, maybe hes got a box in which he can fit a rate cut. Retail sales are strong. What he has to do, the situation is say, all right, if this you can keep using the trade war. Keep blaming it on trump at this trade war continues, things the friction gets bad, this will we got to cut because of what the president is doing. That would be an thats what i would advise him if he were here right now lets say he were a guest now. We had john legend who are other guys many. Spencer rascroft. Wow spencer moved on hes still here. Stock has been a tough one i would say, jay, look, giving you a chance to lower because the trade war has not let up i dont think that were really that close to any sort of deal. You raise a group, u. S. China headed to a mini deal. Mini deal that report yesterday of the interim deal, quickly swatted down. I dont think there is a deal i think that is an opportunity for jay to blame the president not directly. And say, hey, listen, we have to do this preemptively oh, my this is i would it is probably gut wrenching hes watching the show now and thinking, do i really take the president on, do i say that. I want to remain independent he called me a bone head i really i dont think hes used to being called a bone head i had no idea i wonder sometimes whether hes, like, why did i take this job . You wonder sometimes . Yeah, sometimes. Sometimes at night i wake up, i think, geez in switzerland, said no regrets. No regrets. I dont think theyll come out and say i love being called a bone head. I dont care. It is a very difficult position forgetting even the constant pressure from the president. It would be difficult anyway. It is tough the other guy draghi yesterday, wants to take rates, china, he wants to take them all the way down meantime, nothing happens because they just want to sell bmws and volkswagens to china. China is the worlds trading partner. We let that happen, right . And then last night we have a debate and the debate, people bashing china, nobody likes china. Nobody likes china. Nobody likes china. China syndrome is not china syndrome. Michael douglas i think lemon might have been in that too. So great. So underrated. If they do get 25 basis points next week, were going to report highs yes, bingo. Period, right i. I hope we come in a little bit. Trimmed the price target. Double down hes talking about an accounting issue that doesnt really affect the company, but im taking my price tag see where the price target is . I dont know if it is in the hundreds. From 187 to 165. Thats great. Where is the stock 187 . No look at it it is 220. This guy disqualifies himself. Hes been skeptical for a long time. Yeah. Had him on yesterday, or the day before. Even wilf would say acceptable i find it unnewsworthy i checked in with apple. I know that david is very, very skeptical of apple tv. Disney gets big credit bob iger with the checked shirt, he gets big credit they dont talk about how much money he has to spend. The stock went up 35 points. Yes theyre so different. What . Well, i mean, the amount of apple programming that theyre going to have on the service could fit into one little tiny part of disney plus. They could buy they could buy they could buy viacom and cbs. They could. Without a doubt they get the nfl. They have not shown an interest in doing that, certainly not at the tim cook level. I can remember when i was hearing they were interested in time warner. There were bewkes went it a dinner with tim cook thinking years ago, thinking cook would come to the table and they would talk about him buying warner no interest. What is the thats very difficult thats at apple, at apple. Thats like, isnt that didnt the president call his is that tim apples brother . Not johnny. Whatever, well get to his name. He thought that it might have interest, but there has never been interest among by your friend tim cook. Your friend rod hall, rod hall, wasnt he a hockey player . I got to tell you, hes your guy. Dont worry about it you dont have to worry about it he agrees with you you dont have to worry. Nothing to do with that. Hes killing apple stock. Youre thinking of thank you head of he might have had that wasnt that hard to figure out brought bewkes and cook together and what do you think of bewkes great american. Thank you. Youre welcome. So is adam newman lets talk about the ipo market. Yesterday, that fail on smile direct was fairly significant. Not just for investors who bought into the ipo there and watched it decline markedly. This is a growth company, smile direct, not a lot of rounds of outside capital were raised, three large investors. So you didnt have anybody out there hedging it and creating a short in the name. The way we saw with lyft that occurred and happened in some other names. And yet it still went down priced not that much above the public comps still, collapsed in its public debut. Why . Maybe in part because growth managers as we have been discussing, sort of underlying movement we have been seeing in the market of late into value away from growth and momentum stocks, maybe the growth managers said they would be there for a lot of allocation, but really werent or afraid to, dont have the capacity to so this is set a tone in the ipo market to which the company is going to come. We have some important governance changes from the company overnight. We know that the company will be listing on the nasdaq. The government changes, theyre going to appoint an independent director the voting power of the high vote stock will sunset automatically and decrease to one vote per share in the event that adam newman becomes incapacitated, they went on and on take a look, pages 13 to 14 in the amended s1 filed last night if youre interested all of this designed to deal with concerns among the Investor Base that said, it is still going to be very interesting to see where when this thing gets priced, where there is demand. Initially we thought perhaps as low as 20. Then 18. Now im hearing 15 or below. Priceline. This thing could come by the way, they still would at 10 to 12 billion. Thats going to be so interesting if they get down to a level like that when you consider that softbank has invested 10. 5 billion in this company and could have a market value that is not that much above it once it goes public they need to raise 3 billion in some fashion in equity, in the Public Markets or if mass a want to write them a check again. All of the interrelated relationships. Ubs, jpmorgan and Credit Suisse have all underwriters here, of course, have provided a line of credit up to half a billion dollars to mr. Newman. 380 million of that was outstanding as of the end of july hes also borrowed 97. 5 million from Jpmorgan Bank mortgages and the like and jpmorgan and Goldman Sachs put a lot of clients in earlier rounds in this thing so there is so much going around on the wework ipo that is fascinating. So interesting to see where they finally come but they still remain determined despite what was a terrible performance yesterday for smile direct, which also may have impact on peloton and others. Smile direct was one of the worst deals in a decade. Maybe the worst in a decade. The pricing was completely wrong. There was no demand. How much money is out there for the yields if wework we have seen the last time i go in here 13 times over subscribe and it is going to be forget that conversation doesnt ever mean anything. What about pricing above the range. Does that mean anything anymore . No. I was aghast i said yesterday, i didnt like smile direct i didnt understand the pricing. I follow a line. Invisalign not doing well. The stock has been terrible a lost competition coming around 3m trying to get in that everything i hear about wework is unless this deal is priced through the floor, it is going to hurt the stock market you know what, some are also saying it is a good reflection on the stock market there has been such resistance to a company with the governance they once had, though they are changing it. And to the vote and to all the different thins that have been a part of versus snap. Now people talking to me about maybe 10 to 12 billion. Thats unbelievable periodically goldman High Net Worth person has to take a loss. I think they will come, even if it is that number, and theyll be happy to get public and then theyll hopefully feel like they priced it correctly and mr. Newman will be able to let me ask you, david i always felt the one thing that never happens is the desk says this could be bad for a lot of stocks we got to price this right they try to please newman. I think at this point if they get that thing public, theyll be pleased they need to raise the three to get the six, need the capital. I struggle to recall it ends up being a game of chicken with massa, all right, we need 3 billion, are you going to write us another check or were going. It is a Rebel Without a cause situation. Ipo without a cause. The market doesnt want it the market says i dont want that deal. Yeah. From the s1 on it has been nothing but drama in the last several weeks. Well Pay Attention to that story. Check out our podcast, now can listen to us, the opening bell hour of squawk on the street at cnbc. Com podcasts or wherever you catch podcasts when we come back, cramers mad dash, were going for eight straight up on the dow for the first time in more than a year back in a moment what do you look for when you trade . I want free access to research. Yep, td ameritrades got that. Free access to every platform. Yeah, that too. I dont want any trade minimums. Yeah, i totally agree, they dont have any of those. I want to know what im paying upfront. Yes, absolutely. Do you just say yes to everything . Hm. Well i say no to kale. Mm. Yeah, they say if you blanch it its better, but that seems like a lot of work. No hidden fees. No platform fees. No trade minimums. And yes, its all at one low price. Td ameritrade. Classical Music playing throughout mad dash this morning, focus on broadcom. Not particularly sanguine on the macro economy. Exactly. But at the same time saying things exactly thats hawk tan, regarded as being a very smart guy when it comes to the cycle you have to parse his words. What he was saying versus say the last time i heard is that, look, were closer to a bottom if not at the bottom now, this stock, by the way, had a good run and we also know, david, they have been moving into diversifying. Bought ca. They said buy. I said buy. I believe in hawk tan. I think theyll turn around symantec a lot of guys in the crowd strike end of the world, z scaler, they dont know what to do you can cut costs. But i like the call to buy i like the call to buy because if we are really bottoming, and hawk tan doesnt do this, this is an inexpensive stock that generates a huge amount of cash flow short conference call. People want to take a listen. Apple is very important customer still it is huge. They never mentioned it. Those are the rules. It is like fight club. You know apple and fight club, and, by the way, tim cook understands entertainment. Apple and fight club and i look at that, david we did a it is not a head and shoulders. It isnt . No. I have Procter Gamble next week. Well done delivering alpha. Delivering alpha, yes. A lot they turned that company around i just think this is one take the time out, understand that after a few lets say even hours this could turn around okay. All right. Hawk tan is so good they buy a lot of Companies Cut a lot of costs. Hes a humble man. I would love him to come back on he has not come back on since that appearance. Since the fight, since the fight. Hes a good man well keep an eye on shares of broadcom. Another company dumping into the Public Markets today, cloud fare, were going to bring you the first trade. Well talk with the cofounders of that company. Here is another look at futures, of course. We get started with trading, last trading day of the week, it is friday, ten minutes from now. You see we are looking for a slightly higher open we think you would really shine in the aflac program. Aflac coach saban we have Health Insurance. Did Health Insurance pay for everything . No, we still have bills. Aflac gives you money directly to help with those. Aflac and your deductibles, knee brace, whatever you choose. Aflac sounds like a winner. Umhum. Umhum. We try. Get help with expenses Health Insurance doesnt cover. Get to know us at. Duck aflac dot com [upbeat action music] pilot were going to be on the tarmac for another 45 minutes or so. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. When i lost my sight, my biggest fear was losing my independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. After retail sales come in strong, were once again on all time high watch. Dow needs about 177 points for an all time closing high and futures agreeing were back in a minute great riches will find you when Liberty Mutual customizes your car insurance, so you only pay for what you need. Wow. Thanks, zoltar. How can i ever repay you . Maybe you could free zoltar . Thanks, lady. Taxi only pay for what you need. Liberty. Liberty. Liberty. Liberty. When didwhen i needed ton . Jumpstart sales. Build attendance for an event. Help people find their way. Fastsigns designed new directional signage. And got them back on track. Get started at fastsigns. Com. Youre watching squawk on the street live from the Financial Capital of the world the opening bell in five minutes. A lot of orange vests today as clo cloudflare comes to the market here we had a big discussion about new issues is the pressure on for some of these that are just now getting here im not sure where this will go these guys are not a commodity i think this is an Interesting Company that a lot of tech guys will like. Very different from smile direct, which turned out to be the company that people are they were hyped on something that is really a very competitive area this is this is a fractured market, not traditional cybersecurity, where we got symantec going against crowd strike, which is going against vm ware. So maybe this one works and we forget about what happened yesterday. Do you think it was a oneoff yesterday . Not if they bring not if they bring newman. What about peloton . That cant be easy. That will be difficult. You get this whole worry about others who are they claim theyre a sass company. Everyone is sassy. Only real sassy guy is jassy hes a hitter. Yeah. Last night, if you missed it, third democratic debate, also in focus today. Ten candidates squaring off in the race for the white house healthcare was one of the dominant topics last night senator warren in a push for universal healthcare took aim at Insurance Companies. Take a listen. Insurance Companies Last year sucked 23 billion in profits out of the system. How did they make that money every one of those 23 billion was made by an Insurance Company saying no to your healthcare coverage. So we talked about warren this week, jim. One of the reasons i like United Health and cvs, they sucked 23 billion once again, she has the numbers right. The number seems low to me. If you add unh maybe she didnt use centene managed Care Companies you have United Health, the centene, anthem. I dont know if she counted all of them. I think they sucked more out of the system i think theyre not nearly as bad as she does. It is very true that she, i felt, met her match on this. With president obama, with Vice President biden who is very articulate about obama care. And just that the republicans were willing to work to get a little tinkering than work centene on medicaid. Areas where there is incentives to write where they arent right now. I thought that Vice President biden was very expelling on the idea we dont need we need better Health Insurance, not one not single payer. So watch the Health Insurance companies go up because of how well biden did last night. Google had data overnight healthcare over guns, over trade, over trillion dollar deficits now healthcare number one. Speaker pelosi would like to not make this the centerpiece. And Speaker Pelosi behind the scenes is as powerful as ever. I think that people have to accept the fact that these candidates may want to bring it up but the house doesnt. They can avoid it. Healthcare. Dont want to deal with it. They want to tinker with obama care. Right having the debate about yes, scrap everything they know how hard it is and they know the republicans will never go for it. Why not go incrementally and try to fix it. Youre going to close down the Health Insurers . Unh from 217 billion to what to nothing zero. Business goes away . Well, i mean, it is kind of a wework situation. Maybe ten years, wind down. United health, we had United Health here, we tell you how much they saved system as look, it is absolutely true. Biden is right the consensus in congress is to try to fix obama care, not shut it down. And i think that we need Speaker Pelosi, who would then confirm, i believe, biden and not senator warren thats my thinking opening bell. And the s p 500 at the cnbc real time exchange. Here is cloudflare celebrating the ipo. Talk to the cofounders later this morning on squawk alley. At the nasdaq, 10x genomics. Cloudflare is doing quite well 10 of the fortune 1,000 use them it is a fraction market. They got very good Revenue Growth and talk about increase of 59 and 43 respectively. It is a real company that could change the narrative of what smile direct did and if wework, there is always a price for all merchandise. We know that of course there is. It is a high growth company. If they price it at a level where they have actual demand, this whole issue will go away. Well be back talking about bone head what do you make of some of the reports that old line Legacy Real Estate companies are saying, hey, we can do this too. Not too late for us. They can. Absolutely ive seen it be done in a competitive way when i looked. And you know what, weworks clientele is largely s p 500 theyre looking to be the International Provider so wherever you go around the globe, theyre going to be able to service your needs. There arent that many Real Estate Companies that can do that look, david, before we found out all these different issues about governance, i was excited about it it is a great concept. It was the governance stuff that freaked everybody out. Theyre addressing the governance. About time. They are addressing thats why the more they address it the more likely this deal comes. Were focused on that top 100 and we can basically take care of this in the same way that amazon takes care of your Cloud Service now. Well take care of all of your needs around the globe, for your employees, well make it more efficient for you. Well save you money as a result thats the there is competition. Thats part of the model. There are going to be real estate owners and developers who do the same thing in some of their space. Can they offer, you know, an ibm or you name any big company that has offices around the world, that same no recession, that would be good the governance im worried about. We fit the governance they fix the governance ill change my mind. Fixing the governance, i mean, from what i understand, hell still be able to vote out and rehire directors who would be friendly to him hes got to change that hes still going to have thats going to change. They will be doing certain things, hes not going to be selling as much with stock as well no more than 10 of the Share Holdings in selling all the time. We mention this 47 billion number to be fair to them, that was a softbank did that deal to acquire another four or so billion worth of stock that was a consolation prize they wanted to take controlling stake, they were unable to do that they sort of had to come back. Almost a breakup fee provision kind of thing that, well, then, youre buying at this level. So thats not where anybody had this thing marked. Talk to people who own the stock, they had it mashed more like 25, 30 billion. At 12 or 15 even, will be well below. Not used to people losing money on deals because thats not the way it works but it is working that way. By the way, talking about companies that are private, juul coming down sharply. I think that we all sit there and think, hold it, the arbiter, altria, paid x, the arbiter is in the fight for its own life existential crisis there it is ive been talking to people in the this is not the public market, this is the private market, things dont trade in any way, so you got a wide value discrepancy. But Philip Morris brought into 250 a share, so to speak. Stock traded as high as 300 this summer on the secondary market and now it is around 225, 230. Sold to the man to the left of me. As you might expect, given everything going on, juuls value is down in the secondary market. Think about the Prescription Drug it could be 35 billion. It could be nicorette they might argue, yeah, were facing policy risk in the u. S. But europe, israel, india, china, are still huge potential Growth Markets always been an international story. Thats where smoking rates never came down. International story your piece about the uk, embracing it, thats where the action is. So i agree but i think that there has been a backlash that has gotten even to the president who he could tweet this thing back. Right is United Health being up 2 a proxy for biden looked very statesmanlike last night. Made the case for universal healthcare insurance for all not universal healthcare for all. I think thats where unh will have a run here. Biden looked real good as opposed to your friend, david, rod hall, who has decided, im going to ruin all the greatness of apple he got up and said, im sick of that stock going up. This piece is fatuous. About accounting not about that they dont have great tv content that, i can understand the man to my left thinks that tim cook and Company Wants to run reruns i would love to watch that. Good show got to have the rockford files too. Rockford files, very good a lot of a lot of irony underneath that. Like bugs bunny. This apple thing is god bless you. This apple thing is i got to tell you, this guy has it in apple tv, a material negative impact on material. Material this guy has been his point is asp is on hardware, will look soft, theyre going to use this free trial as a accounting on services it will be made up later, i guess, on Better Service revenue. Fatuous logic they got to spend for this isnt there too much focus on the streaming thing to begin with shouldnt it be more about the phone, where the pricing was on the phone . No. Thats the hardware side the watch, yes the watch, 199, thats the price point. I thought this was the kind of piece that would make people trade apple instead of own apple. Which has been my mantra since it was at 5. My daughter demanded a second ipod because the first one was blue and she wanted a pink one i realized they were fashion accessories. August 3 month sales north america lowest in two years, up 6. That was disappointing. Good downgrade from wells fargo. If we get any sort of trade deal and want to be in it, i reiterate that i dont think were close to anything meaningful until and unless the chinese do something and when they said two tracks, the white house is very disturbed. The white house is very disturbed because they dont want two tracks. They dont want two tracks they want intellectual property, they want the seven deadly sins that navarro is talking about. Fentanyl fentanyl yeah. Fentanyl number seven. Right they want those addressed. Not just the soybeans. Cyber espionage all the things you introduced in your documentary. You introduced juul and i hated it ever since your documentary and you realize you told me you wouldnt use your phone in china, because you were worried. Just gotten worse. The cybersecurity guys i put on, always china china and west africa. It is a big problem when i did that, it was because it was just getting to the board level. This is serve or eigven or eighs ago. It is a board level issue that is dealt with frequently u. S. Companies are not doing their board meetings in china, Lloyd Blankfein with Goldman Sachs one year lloyd good to be back, lloyd jim, we got a couple of upgrades today etsy at web bush and southwest macquarie to outperform. I think that gary is always going to get this thing right. Southwest air. Fantastic. I thought etsy had come down way too much i like to talk about Free Shipping i thought it is a changed company to the positive. I think it found a level now im waiting for square to find a level these are the ones that have been hit very hard, square and etsy southwest, amazing theyre the one most connected to the max. Once the max comes back, theyll use this upgraded Revenue Management system, be more seamless, reintroduction to service. Well see. Gary is handling this like everything else, hes handling it well. Keeps it private he doesnt come out and blast boeing does private negotiations. I think everyone knows hes just an outstanding executive and it was only a matter of time why would people even resumer that Warren Buffett wanted to buy southwest. The other thing is the russell. Which struggled here around 157157 1575 three or four times this year. If it could get past this, to could mean big things for the overall market. Ive watching the transports. Look at union pacific. The stock was at 170, they preannounced a bad number. It is back it is back look at Goldman Sachs, have you seen that go up . I hadnt noticed. You hadnt noticed. Goldman had a decent year. Okta is down, tommy went on squawk and not my show think about that that i abo think about that. The banks are having a good morning. Goldman sleeft is the least of m back to the debates. Look, im going to reiterate that last night was a really important night for the stock market joe biden held his own it looked pretty bad when people are attacking him. They were attacking obama. Ive been waiting for that to happen suddenly hes frontrunner he feels frontrunnerish hes frontrunnerish. He is that means that we dont want to destroy the banks were not going to have show trials for wealthy people. Perhaps were not going to have a new group of taxes on people who make assets 50 million im talking about a the threat that we there are twoe market senator warren is the person that the Bank Executives want stopped. The bankers. And she didnt do as well as biden, i believe and so youll see managed care go up. Youll see the banks go up we forget how important the groups are to what the democrats attack i thought that was a significant debate i really stand by the idea that biden looked very president ial and thats why unh keeps going higher and you have to own Goldman Sachs. The other story today, bailout with their flows second biggest Government Bond redemptions ever in the past week as we have seen this bond rally completely melt down as the ten year has gone back to 183. We want that. We want the fed to cut rates at the same time as ten year goes up, we want a 50 year bond that secretary mnuchin was talking about. All these inverted yield curve got to sale people are going to be wearing the no clothes. They will be emperors without clothes. They will be ambassadors without portfolios im talking about real portfolios what are you looking at . Pg e. I was talking about the sometimes i need to focus on other things other than what youre saying. When im talking . Even when youre talking. You werent doing fantasy football. I always try to listen to you. My hearing is starting to go in this ear theyre getting close to settlements with a number of claimants at pg e. Can you explain that to people give people one of the airlines, which one, American Airlines wasnt it . Big equity recovery value there as well. I dont want people to get suckered in. They will be here the progress theyre making with various claimants, it is important, so you do have some headlines about plans to incorporate terms of settlement, subrogation claims and the like. Thats why that stock is up. All right oil is all up people know that senator warren is antioil. Just incredible. Making decisions. Yeah. Silly season maybe. More than all of the dows gain is unh and boeing. To bob pisani. 21 advancing to declining stocks nice start to the morning. Want to remind everybody where we are, record high watch here, s p here but you see sectors, back to cyclicals that are moving nicely here the banks, retailers, transports and energy this moved us forward the last six trading sessions it is that deep cyclical group the s p, remember, 3027, old intraday high. Were 11 points away well have more if we get anywhere near that what you want to look at here now is the cyclicals this week, thats what moved everything banks up 8 . Retailers up 8 . Transports up 5 energy is up 3. 5 . You get the point here this is clearly a cyclical rally. One thing interesting, were unwinding the crowded trade we have been talking about. That was long defensive names like Consumer Staples and going short sectors like the cyclical groups one thing that hasnt been unwound is going long bond trade that is out. There were inflows in the bond funds this week. I keep waiting for this to collapse it just doesnt. I dont follow these weekly numbers that much. Equity had inflows, taxable bond funds. 7. 3, it is still inflows that are going on remarkable considering as carl noted, it has been a terrible month for bonds. Look at the bonds in general, we see declines here, 20 plus treasuries, prices down 5 , 10 to 20. Corporates are down 2 high yield holds it in there generally you think the bond bubble is starting to burst and people are giving up the ghost i dont see outflows yet i keep waiting for it to happen. The ipo business, cloudflare very important, on the other side here, big Website Security company, 35 million. I like pointing out where the original prices were 10 to 12, then to 12 to 14 and pricing at 15. This is important because this is a software company. A lot of scrutiny on the Software Companies remember what happened when the slack disappointed last week they had earnings out, a little disappointment slack down, a lot of the Software Companies were weak look this week, crowd strike, slack, zoom video, all down this week people were watching this as indication of software and how it is going to go. Early indications fine the concerns about valuations out there, thii think wework and smile direct were specific stock stories. Misprice on the smile direct two specific companies here. I think the concept of what is going on with cloud fair is more important to watch thats software in general and thats a space that is getting a lot of scrutiny. Right now, up 65 points in the dow. Back to you. Thank you, bob. To Bertha Coombs at the nasdaq, a lot of action today. A lot of action Small Companies are on pace for their best week. The russell 2000, in about three years. Thats been the real gain. But in terms of getting us back toward new highs, two sector s very close the chip sector, 1 away about a point away from its closing high earlier this year little bit of pressure this morning after broadcoms results. Pretty much in line, but the company pretty much saying with the situation in china, they just dont see a rebound still too uncertain looking ahead as they start thinking about 2020 they were downgraded this morning. Communications is the other sector a standout also just a fraction away in terms of a point from its all time closing high continues to be mixed today. Among the best performers here that have gotten us back to those highs, include activision blizzard, take two, the gamers, and comcast up 11 smile direct club bouncing a little bit still below what had been their anticipated range here at 17 bucks. And it is for these big brand marquis names, unicorn, such a mixed result here on the nasdaq. The ones that have been the losers among smile direct include lyft and real, below the ipo prices beyond meat, it has come down, still 525 back to you. Bertha, thank you very much. When we come back, were on ipo watch, youre awaiting cloudflares first trade well bring that to you and talk with the companys cofounders later on this morning. Dow settling up 38 points at the open i can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group believes have the power to improve lives. And that, for over 85 years, have inspired us to help people achieve their financial goals. Talk to your advisor or consultant for investment risks and information. Talk to your advisor or consultant so servicenow put your workflows immhm. Cloud, huh . Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Classical Music playing throughout dow gainers this week reflect a lot of optimism on the economy and trade. Look at dow, cat, goldman and jp morgan trace well start trading with jim again in a moment. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Should always be working harder. Thats why your cash automatically goes into a Money Market Fund when you open a new account. Just another reminder of the value youll find at fidelity. Open an account today. Lets get to jim. A misconception about whats driving apple down its not that apple has bad content. Hes using a 165 price target is how its accounted for it is its one way to account for it i can account another way. Just be aware, its not they have no content. Its what the way of accounting will do to the earnings. Those are two very different things, so the people on twitter keep saying i told you they have none you have to read the piece the accounting is very difficult for when you have people paying 5 a month its going to be a real debate. Thats coming from the firm that has a card with apple. Yes, it does. Thats a very important read. Jim, whats on tonight . Im a little nervous just because the market is so overbought i do not think there will be a trade deal imminent. I think the biggest thing is bonehead is paypal and what do you do . How do you cut when you get those numbers itted . Are you acceding to the wishes of the president who has addressed you as bonehead and hasnt figured out how he became the fed chief. He appointed him. Yes fly eagles fly . Sunday night. By the way, fantasy players, i had godwin he went off last night carolina, right and tampa bay, yeah. Jim,well see you tonight well keep our eye on cloud flares public debut followed by an interview with the mpycoans cofounder good friday morning. Welcome back ill carl with david, sara eisen has the morning off. We inch closer and closer to morning highs. Dow is up almost 60 as we await data. The road map does start with stocks as carl just mentioned. How should investors be playing the market momentum. Democratic candidates taking on taxes and Insurance Companies in last nights debate. And the house antitrust panel ramping up its investigation on big tech. We have those details. Markets up as trade tensions ease the president says he is open to considering an interim trade deal with china. The democratic president ial candidates weighed in on trump and trade in last nights debate heres what they said. Were losing billions right now because of trumps policy. We want fair trade, but we must work with the rest of the world and he has made a mockery of focus trade policy. I remember President Trumps scoffed and said hed like to see me making a deal with xi jinping. Id like to see him making a deal with xi jinping is it just me or was that supposed to happen in april . Our trade policy in america has been broken for decades and it has been broken because it works for multinational corporations and not for much of anyone else. If we dont set the rules, we, in fact, are going to find ourselves with china setting the rules. Joining us this morning, andrew slemon, keith lerner. Happy friday good to see you both nice to see you. Happy friday. Keith, better trade headlines this week. Macros been at least less worse. I see this coming in at 92 do you think we get over the line and get fresh highs this has been along the line back in july we thought it was going to be a bumpy period we got that low. What was very interesting was how negative sentiment got in august and people braced for a lot of bad news. We had the most hedging in the Options Market and as weve seen some deescalation on the trade side, weve seen stocks move forward whats really important, what happened on monday, we had something called a breast thrust which is really intense buying when we look back in history, its happened about 25 times 24 times a year later the stocks were up. Thats a good risk reward in our view for the market. We still think the path of least resistance over the next 12 months is higher, but we will see the ongoing concerns and the periodic pull backs. How much is dependent on powell delivering next week . You know, i think by now the bond markets helped him out a bit by resetting, so i think the Market Expectations are baking in 25 basis points i think thats going to happen i think the market wants to know they will be vigilant, but i think the bond market and the yield moving back up has helped the fed out as the cut is likely off the table. All right your thoughts as well . So look, the market is vulnerable to some type of disappointing move maybe with the fed next week. I think market is overbought, but i dont think theres a lot of down side in the market august was a very interested month. We had three really bad days and the market came rebounding back up i just think its a story of theres too much cash thats been liquid out of equity, too much cash sitting in money market the down side is relatively limited. I agree with jim cramer, the market is overbought short term. I dont think bad news is going to lead to much down side. Your other guest is right. The market ultimately will break to the upside. When you have a market thats been in a trading range for a year and a half, theres two outcomes number two, the market breaks the upside i think its a question of when, not if and iswith so much cash n the sideline, i dont see a lot of down side short term the market is overbought. If you dont see down side and you see a lot of cash on the sidelines and somebody is looking to get in, where can they still find value . The problem is theyre not getting the pullback that people want to get in and thats evidenced we had a lot of bad news throughout the market in august and not much pullback i think ultimately were having a rally in the value stocks, but i think the leadership going into the Fourth Quarter is going to go back to the growth stock and i think those will be the leaders until year end so value bounds, but i doint think its a question of growth or value what has been year bought is the defensive stocks and bull markets never end with people paying through the nose for stocks they think will do well in a recession bull markets end with people chasing the growth stock and i think thats going to be a resumption of the leadership in the Fourth Quarter keith, a lots been said about the last couple of weeks being largely technical. Hedge funds unwinding. Bearish positioning. If its not met with more than that in terms of the Business Cycle and profits that we could top out here once again. Whats the danger in that . Our best case is the ongoing recession, the market starts to bake in some of those expectations as long as the economy just grinds forward and earners continue to move forward, i think that will be fine for the market in fact, the s p forward earning estimates quietly just made a new high last week even with all those out, we havent seen much come back in were getting closer to the end of the year. There will be fear of missing out and trying to catch up the other part is theres all risk in different parts of the market, but the 10year u. S. Treasury, we had the strongest or widest deviation from its trend in several years in fact, you go back the last 25 years. We were about 40 below the 200 Day Moving Average for the 10year moving treasury. We think the value trade has more legs and bullish on financials another one thats doing well even though rates are moving higher is Home Builders. I think thats a sign that were growing confidence and well side step a recession. Semiconductors are doing well and thats not consistent with the economy rolling over. To your point, keith, alltime highs today or i should say 52week highs at least, lenar, in terms of sectors do you have favorites i like the Home Builders a lot. I think its a value of some growth, some value you want to fade the staples and these defensive stocks that i think are overvalued i dont have a problem owing financials i think its a problem between growth and values. The last thing i will say, carl, is ive heard a lot of people come on and say earnings estimates are too high, theyre going to come down my comment that i would love for you to ask the people to say that is well, how come the market is up close to 20 on the year when weve had flattering growth on the year the point is the market is anticipating that next year were going to have positive Earnings Growth because were coming off a flat base this is why the markets rallying this year next year were going to have to worry about 2021 and thats the story of this year by the time its obvious, the market will be on to whats going to come next and that i think is going to be more bearish. 2019 clearly turning into a multiple story well deal with what comes next later on keith, andrew, have a good weekend. Thanks, guys. You too a lot of people continue to be focused on the initial Public Offering market, not to mention of course our invests here for the debut of cloud flare yesterday the debut publicly of smile direct did not go well to put it mildly. In fact, it has created a tone in the Public Offering market that other Companies Planning ongoing public certainly have to take note of, whether it be peloton or what weve talked a great deal about the we companyings, otherwise known as wework overnight wework continued its move towards something ive been reporting on all week which is mainly the plan to begin a road early next week with potential to list the following week on the nasdaq, but what we also got last night is continued changes in the governance of the company trying to meet some of the needs of the Investor Base in terms of what theyre willing to actually put up with in terms of levels of control by its founder and ceo adam newman. And so they will appoint a lead director by the end of the year. Their stock will decrease. The voting power of the stock will decrease to one vote per share in the event that mr. Newman were to no longer be with the company or be permanently incapacitated. They go on to make a number of other significant changes in terms of directors being the majority of the board and the fact that mr. Newman as well has entered into lockup agreements for one year with the underwriter, so he wont be selling stock. Hell only be selling 10 of his stock in the second and third years following the offering all of this is designed to entice investors who as weve been reporting have been somewhat unwilling to consider valuations anywhere near what the company was hoping for and it its 31 underwriters were hoping for. Im now hearing talk in the marketplace that perhaps a value below 15 billion and perhaps between 10 and 12 could be something that wework would be willing to go with in the hope it would create a lot of demand and there would be a Successful Offering its got 6 million in debt. And needs to raise 3 million in equity it could go to soft bank which is the largest single investor other than mr. Newman himself in the company and ask for more money with the prospect being hey, youve invested 10. 5 billion, we may come public with as little as 5 billion, dont you want to invest another 3 and prevent us from doing that. Well see how this all plays out. Underwriters led by jp morgan have loaned mr. Newman its an intricate, interesting story and it will play out over the next week or two. It feels like every day you get new advances on this story from soft bank cringing with the valuations are now to concessions newmans going to make to try to get this done. All right when we come back, health care dividing the Democratic Candidates for president well bring you highlights from last nights debate once again as we head to break, a look at the Top Performing stocks, unh leading the charge were up 43. Attract new customers. Thats when fastsigns recommended fleet graphics. Yeah, and now business is rolling in. Get started at fastsigns. Com. By the way, shes the it wasnext mozart. G day. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. Trade and health care dividing Democratic Candidates last night senator Elizabeth Warren criticizing u. S. Trade policies calling them broken. Our trade policies in america has been broken for decades. It has been broken because it works for giant multinational corporations and not for much of anyone else. These are giant corporations that, shoot, if they can safe a nickle by moving a job to a foreign country, theyll do it in a heartbeat and yet for decades now, whos been whispering in the ears of our trade negotiators . Who has shaped our trade policy . Its been the giant corporations its been their lobbyist and their executives senator Bernie Sanders also weighed in were losing billions right now because of trumps policy. A trade policy which understands that if a company shuts down in america and goes abroad, they think theyre going to get online to get a lucrative federal contract on the Bernie Sanders, theyve got another guess coming joining us for more, kayla and john in houston this morning. Nice to see you both today how difficult is this tap dance for democrats who take, for instance, Bernie Sanders for many years railed against the dangers of free trade agreements when it came to protecting american jobs. John i think its a very difficult tap dance in particular because of the way the Democratic Party has changed. In reality the Democratic Party at its roots has become more of a pro free trade policy than republicans. However, these candidates are sort of scared to come out and say it democrats represent the more upscale metropolitan trade dependent parts of the economy in congress and in the United States senate, but theyre continuing to defer to sort of a yesterdays vision of what Labor Union Opposition and environmental opposition to trade policy they criticize President Trump for the way he has gone after china, but because theyre concerned about their political elements of their political base, they wont embrace things like the Transpacific Partnership which was in fact the alternative to what donald trump is doing right now. So that is a very, very awkward position for this field to be in. You know, kay larla, it stris me the crowd was generally able to skate past anything but criticism of the way trump is handling trade joe biden coming out and saying look f we dont set the trade policy, china legal was about the close toest to being an aggressive thought on trade. In the coming weeks, do you anticipate these Democratic Candidates are going to be pressed on how do you resolve the trade issue . It depends on what happens with the trade issue if the white house chooses to resolve it in its own way. I think that President Trump not being an ideological president on trade specifically and even to some degree on health care has made it really difficult for the democratic field to define exactly what hes doing wrong and what they would do right instead. They say, for instance, that tariffs are bad, but they also wouldnt remove them Elizabeth Warren, you just heard her say trade policy benefits big corporations she wants agriculture and labor at the table this administration has been criticized for having labor so involved in the negotiations theyve been criticized by their own party. The u. S. Representative his advisory committees from ag and labor that i weighing in its hard to see what they would do differently and what President Trump is doing wrong although they will all say and they all did last night that he is doing it wrong, that his trade strategy is not working. And health care was really driving the discussions last night and the debate i want to play that exchange between Julian Castro and former Vice President joe biden Barack Obamas vision was not to leave 10 Million People uncovered. He wanted every Single Person in this country covered my plan would do that. Your plan would not. They do not have to buy in. You just said that two minutes ago. You just said two minutes ago they would have to buy in you said they would have to buy in. They do not have to buy in. Are you forgetting what you said two minutes ago are you forgetting already what you said just two minutes ago . I cant believe that you said two minutes ago that they had to buy in and now youre saying they dont have to buy in. Youre forgetting that. You heard the reaction from the crowd there when castro brought up this forgetfulness in joe biden. Health care to be a driving issue. I thought it was interesting you saw this back and forth between Bernie Sanders, Elizabeth Warren and biden who says this idea you have of universal health care, of medicare for all is going to just be too crazy, too expensive. Kayla, it was really a Sharp Division it was an extremely Sharp Division and biden has been trying to own this center here as he very clearly did it last night. We heard from advisers in the leadup to last night that he was planning to attack the candidates for the fact that it would be so difficult to pay for them and thats exactly what he did. In some case, Elizabeth Warren specifically had a difficult time answering that. She was asked by the moderators whether middle class taxes would go up and she did not answer that question. You also saw five candidates try to associate themselves with the care act, but if that halo effect in fact works for voters this time around, its the Vice President whos going to be able to benefit the most from that. John, what do you make of this pendulum swinging in the Democratic Party youve got a group of candidates who are very far to the left and trying to pull the party off to the left when you have another group of candidates who are, like, lets just win back the middle and anyone but trump, try to beat trump in this next election how does this whole debate play into what happens in the next couple months for the democrats . I think the biggest thing that came out of this debate was that those moderates led by joe biden were backed up by Amy Klobuchar and Pete Buttigieg and brou they stood up and were making the argument that they had more practical ways to move on this issue as barack obama did when he was president. On previous debates the democrats who are considered moderate were a little bit more on their back foot and kind of deflecting now joe biden, because he felt the need to be forceful and vigorous led that fight and i think that will redefine the debate a little bit. As for Julian Castro, that was just a bad look for him, especially because he was not accurate in what he said about joe biden. That was an extremely personal line of attack that is not going to help him at all. John harwood, kayla, a lot of fodder on health and wealth today coming out of that debate. Thank you so much. Meanwhile sticking with the debate, meg terrell joins us with the look at health care and pharma with unh up more than 2. 5 good morning, meg. Good morning. Pharma is an extremely target among candidates on both sides and its not surprising that according to a recent gallop poll the drug industry is now the least popular sector in the entire country unseeding the federal government what Health Care Investors are really watching is the spread between Vice President biden and other more progressive candidates thats because investors see biden as sticking more to the status quo, returning and building on obamacare. Elizabeth warren and Bernie Sanders are a bigger threat to Health Care Current Business Models they have actually tracked this and the effect on health stocks. This compares the spread between joe biden and Elizabeth Warren using data charted against Health Care Stocks relative to the sep. The health care etf includes not just pharma stock but also insurers like unitedhealth and Device Companies what it shows over time is that as warren gains against biden, Health Care Stocks generally perform less well. Its not surprising given investor concerns over bigger changes like medicare for all and drug price controls proposed by a candidate like warren we dont yet have new numbers for this morning the strategist tells me there is some perception biden did well last night accordingly it is up a bit more than the s p this morning probably driven by the gain in unitedhealth. Thats been interesting to watch this morning i havent seen that stock do that in a bit. Meg, thank you still to come, big tech is under fire again weve got a house ending trust panel ramping up its investigation. Well fill you in next when squawk on the street returns looked at chart patterns. Ive even built my own historic trading model. And youre still not sure if you want to make the trade . Exactly. Sounds like a case of analysis paralysis. Is there a cure . Td ameritrades trade desk. They can help gut check your strategies and answer all your toughest questions. Sounds perfect. See, your stress level was here and i got you down to here, ive done my job. Call for a strategy gut check with td ameritrade. But when i started seeing things, i didnt know what was happening. So i kept it in. He started believing things that werent true. I knew something was wrong. But i didnt say a word. During the course of their disease around 50 of people with parkinsons may experience hallucinations or delusions. But now, doctors are prescribing nuplazid. The only fda approved medicine. Proven to significantly reduce hallucinations and delusions related to parkinsons. Dont take nuplazid if you are allergic to its ingredients. Nuplazid can increase the risk of death in elderly people with dementiarelated psychosis and is not for treating symptoms unrelated to parkinsons disease. Nuplazid can cause changes in heart rhythm and should not be taken if you have certain abnormal heart rhythms or take other drugs that are known to cause changes in heart rhythm. Tell your doctor about any changes in medicines youre taking. The most common side effects are swelling of the arms and legs and confusion. We spoke up and it made all the difference. Ask your parkinsons specialist about nuplazid. Thats where i feel normal. Having an annuity tells me my retirement is protected. Learn more at retire your risk dot org. As a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. Liberty mutual customizes your car insurance, pso you only pay for arounwhat you need. I wish i could shake your hand. Granted. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Time now for etf spotlight weve got to check on which sectors are leading us in the direction of new record highs. Yes not all groups have done as much work as others to get us here. First take a look at consumer d discretionary. This is a rare group where its actually trading slightly above where it was the date the overall s p 500 topped, july 26th of this year. Still about half a percent below its own record high. Amazon in here along with all the other standard consumer discretionary. Consumer staplesreally have no given much back. This is another area, just the consumer broad leaf speaking always remember it includes things like walmart, costco. It is not just about toothpaste and soap and food essentially. Then on the flip side, s p bank index, obviously a big lagger. You have jp morgan interestingly nosing up against an alltime high the bullish way to look at this is weve gotten to the cusp of a new high and the banks have been participating. I did want to look at the equal weighed in version of the s p. Sometimes it lags badly, but its very close to its own alltime record high essentially if you own all 500 stocks in equal measure as opposed to market cap, were still ago dodoing okay right now it doesnt tell you if youre going there to kiss the highs or back off as we get to a fed meeting next week. Anything were seeing in terms of etf movement with this underlying trend, momentum out, value in. Huge saws in performance obviously so the momentum funds and all the rest of it flows i dont think we know just yet you can bet that when etfs move, those under are going to chase i dont think its been driven by flows, but if you look at the small caps or even the pure value etf i always look at, which is the cheapest stocks in the s p, it basically went straight up as momentum went straight down. So its been a very mechanical move i think it peaked on tuesday. Does it feel to you now like august was a refresh, like a drew back up the truck moment . I dont know about back up the truck, but it feels like the moment when you kind of dodged a bullet the market kind of bent but didnt break people got way more negative and cautiously positioned than you would expect for a 6 pullback in the s p i do think we did kind of front load a lot of fear now were feeding off it to get back to the old highs. Mike, thank you lets get over to hq now and sue herera for a cnbc news update. Good morning, everyone. Heres whats happening. California utility pg and e to resolve claims from the Northern California wildfiresand the 2018 deadly campfire the European Commission says eu president will meet with british Prime Minister johnson in monday for facetoface brexit talks. Johnson saying today there was rough shape of a brexit deal to be done and he was cautiously optimistic an agreement could be reached to smooth britains exit from the european union. New zealandsgovernment planning further restrictions to gun ownership. A bill introduced into Parliament Today would create a register to track all guns in the country and require gun owners to renew their gun licenses every five years instead of ten we absolutely recognize there is legitimate and a need in our community to be able to access guns, particularly our rural community. What it does is recognize a real responsibility that comes with gun ownership. You are up to date. Thats the news update this hour i will send it back downtown to you. All right, sue. Thank you. When we return, is Apple Streaming Service becoming an antitrust issue jim stewart will give us his answer to that question when squawk on the see rurtrtetns through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Markets nearing record highs with the dow aiming for its eighth straight day of gains looking at some of the moves and some of the hunt for yields. With Interest Rates bouncing off the lows weve seen over the course of the past couple weeks, we are highlighting some of the themes that have been developing as investors who look for income, whether its bond interest or Dividend Payments start to heat up a reminder that the s p 500 currently yields just shy of 2 . The 10year treasury yield is at 1. 85 high yield etfs near 5. 5 and Certain Senior bank loans yielding 5. 5 as well. One other place were watching is Master Limited partnerships those geared around Energy Pipelines and other infrastructure that in essence charge tolls to move product some of those are high yielding as well and this particular et f1 of those ones attracts them. It is one were watching as well also watching whats happening with certain parts of the market with the s p 500 if you take a look at some of the stocks that are close to their 52week highs and yield at least 4 , we wield it down to a few names. Even Tech Companies on the memory chip and hard drive side of things, 4. 5 yield and at t investor in that stock, a 5. 3 yield. There are numerous places within the atmosphere for investors where they continue to hunt it the question is whether or not some of those assets have become so irishrichly valued. Definitely a topic viewers want to hear more about. Thats good stuff. Meantime, the house antitrust panel is ramping up their investigation into big tech. Elon joins us with the latest. The House Judiciary Committee is now requesting a slew of detail detailed documents from big Tech Companies. This is all part of its ongoing antitrust investigation. On cnbc earlier today the ranking republican on the committee, doug collins, said that lawmakers have a very long list of questions about a broad set of issues. You cannot have a conversation concerning the competitive nature or the size dominance of an alphabet or google through the Parent Company google or a facebook or apple or amazon without having also the same concerns because of the amount of information that they store and not actually keep now, the committee did send letters to facebook, apple, amazon and google and the requests were really very specific in the case of facebook, lawmakers want information on the acquisitions of instagram, whats up, len ovo and others. Theyre going all the way back to the acquisition of whole foods. On google the purchases of double click and youtube are of interest and for apple lawmakers are focused on why certain apps were removed from the app store. Guys, they are also asking for any documents the companies have turned over to the doj and the ftc as part of those antitrust investigations and the deadline to submit everything is october 14th back over to you thank you next our guest says apple could face new antitrust scrutiny as it pushes into screening. Looking to lure viewers into apple tv and making it free for viewers of apple hardware. Does that give it an unfair advantage . Joining us here, winning New York Times columnist jim stewart. You buy an ipad, you get apple plus for free. Is that unfair yeah, doesnt that sound great . Everybody is happy when somebody gives you something for free until it leads to some kind of market dominance and then obviously apple isnt there yet, but i found this giving it away free card is clearly following the amazon model which gave amazon prime free, quote unquote to anyone who is an amazon prime member. What does streaming have to do with free delivery all of a sudden, there it was on my screen and i started watching it i think it is a huge advantage the market hasnt really appreciated this yet, that if you can get the streaming embedded on your screen, whatever it takes, you get a huge advantage over people who are going to make you pay for it i dont care what you pay. 2. 95, 6. 95, if you have to sign up for an account with a credit card charge, thats an entry. If its there free, youre going to try it out. Even if its an introductory thing. I dont think you get it free forever. Its one year. Its one year, but apple could obviously tweet this they could extend it to all apple product users. They could make it longer than one year they have a lot of flexibility this is where theyre starting theyre obviously testing this theyd like to maximize profits. They do have a disadvantage in that the good existing content has pretty much all been snapped up theyre not going to be able to do reruns of leave it to beaver or something theyre creating new material, kind of the hbo model which could be very successful the problem from an antitrust perspective and this is true of apple and will be true of amazon, if they achieve a level of dominance in streaming theyre not going to achieve a level of dominance in streaming. Id say were a long way from there, but if they do, it looks like a tying arrangement you give something away free if you have another product its like microsoft putting its browser embedded on the machine. Exactly the same problem so if they really succeed here, which i agree at the moment is a long shot, theyre going to get some scrutiny from them. I think its also important, looking at those yields you just showed, theres a lot of market depth about at t you put an at t under this strategy at t has a lot of customers. If you start letting them sample things or letting them try hbo, well give you hbo free for a while, i think theres a lot of maneuvering. The problem for the legacy media companies, they dont have any other products to tie the entertainment to even disney, i think disney has a powerful brand it has the content it will do it. You start moving down beyond disney, what do they tie it to theyve got to make money, too. They need to make money also they cant be giving hbo away for free. Hollywood reporter has a piece that j. J. Abrams turned down a ton of money from apple to go to warner. Its not like theyre going to have the lion share of talent, but maybe thats not your exact point. Everybody has a price apple is clearly going to be feeling their way through this i think, look, the streaming wars is one of the big, fascinating long term stories of our day. Who knows how it will turnout. Everybody is feeling their way and a lot could change but again, its great right now for talent im sure j. J. Abrams got a good deal with warner, but at some price hed go to apple so the possibilities are out there. It depends on who has the deepest pockets and how far down in those pockets theyre willing to go. Its interesting, you were really pointing out, too, what a warning sign it is that tim cook turned around and sold the shares of apple that he had just gotten from the company and what your takeaway is on that what do you read into that l i think its hard to know he still has a big ownership stake. I dont know what hes doing with his money i dont know what hes going to do with it i dont read a whole lot into that i think its true of all these Tech Companies right now theyre at an Inflection Point how can apple grow at a double digit rate given how large it already is there may be more promising opportunities to put your money and i could see why he might want to entersidiversify a litt when i heard they were lowering the price of the iphone, i thought maybe it would make more people interested if you put a price point that seems more modest than what it was, oh, its a bargain should we read into that differently that they think maybe the iphone is not going to be the big winner for them that it has been . I think anytime you see price being used as a competitive weapon, its a little bit of a warning sign its not the ideal strategy. You want desirability, prestige, superior quality you want to be that thats what you really want to drive the purchase the minute you start having a price war, its kind of conceding that well, we cant really compete on anything else. So i dont see it as a great sign on the other hand, its maturing industry like this, how much more radical improvement can there be in the iphone i think once you reach that Inflection Point, you want to see how can i maximize my profits, how can i broaden market share and obviously price cutting is a last resort. I share your interest in the streaming wars weve spent a lot of time on it. Well continue to. There is a key to first mover advantage. Netflix has it, Amazon Disney plus many expect will be a success given the plethora of its content. Hard to imagine, though, that many other entrants at this point really making a great deal of well, getting a lot of currency in this market given the overall build to the consumer is starting to mount the more services you take on. I agree with that ive been wondering all along how many of these streaming services do you want to see on your tv . I dont want to see a hundred. I dont want to go back to the cable world, which was utterly confusing. Even now im trying to remember whether something was on netflix or amazon prime and half the time i have trouble remembering. Maybe thats just me no, youre not alone in that. Im starting to think maybe not as many as i thought you can bill your time with amazon and netflix at a pretty robust programming add some sports and youre not looking around for something to watch. So i think it has to be some pretty compelling content to get you to add it on the screen, which is why i think apple is smart to make it easy, make it cheap. I mean, really make it free. It just is there as a bonus if you buy these things. Jim, thanks as always. Have a great weekend. You too. Jim stewart the results of cnbcs Third Quarter cfo survey on trade tensions are out lets go to frank holland. What are you learning . We take billions of dollars of u. S. And chinese goods and trade tensions were escalating a week before labor day. The survey got the most responses from cfos it ever has. Nearly 2 3 said the u. S. Trade policy is having a negative impact on their business more than a third see it as the single biggest external threat 16 say china is the biggest the dispute between the two largest economies in the world has financial Decision Makers worried about more than their industry they have downgraded the comment Economic Situation of prooicimp to stable. The eurozone in the uk also seen as declining 25 of cfos say they have made plans in case the trade war worsens. More than a quarter say theyve had to increase their prices to offset those tariff costs. Back over to you. A lot of information in this one. Thanks, frank. As we go to break, take a look at the markets. Dow is up 48 awfully close to record highs. S p has been flirting with the flat le. In up only three points were back in a moment theres just such an opportunity at a young age to get your money to work for you keep disciplined with you what put away monthly start it youll be happy you did. Payment stocks are bringing up gains, but one stock is ndtting out the rally. Fi out which more skbaquauks onsquawk on ts coming up. Our 18yearold was in an accident. When i called usaa, it was that voice asking me, is your daughter ok . Thats where i felt relief. Were the rivera family and we plan to be with usaa for life. See how much you can save with usaa insurance. Our investor karl is moving his Family Office to miami not a big surprise robert, this is a story i was aware of they have about 50 to 60 employees in new york i think iep. My understands is about half will be going down there i actually meant to call you because of course so much of this also has to do not just with him getting older hes 83. He83, likes the warm weather but taxes. Yeah, yeah. And in his letter to employees he says it wasnt taxes but lets talk about why taxes probably played a role he is new yorks fourth richest person, net worth of 18 billion. Now carl icahn will likely be the richest man in florida, he is taking wealth and tax dollars to florida in the spring he is moving for warmer weather, slower pace, taxes probably played a role as well. New tax rules capping state and local Tax Deductions to 10,000, created new incentive for high earners to head to florida who has no income or estate taxes. More than 70 Financial Services firms moved to Palm Beach County alone in the past three years, and even before the latest tax changes, billionaire hedge funders all packed up from the northeast and headed south in 2017, 64,000 people moved from new york to florida thats roughly in keeping with the historical averages, but tax experts say the pace probably accelerated last year, could accelerate further in 2019 he converted his hedge fund into a Family Office in 2013, he has about 50 employees, half of whom are expected to also move. He has a home in indian creek village, an island, he bought that house in 1997 for 7. 5 million the island has about 34 homes with private police force and neighbors, new neighbors include julio iglesias, former dolphins coach don chul a, and eddie lamb pert it is unclear whether he will sell two penthouses that he owns in museum tower in midtown but guys, clearly for a guy like that with his net worth and estate tax planning being important, florida is a wise tax choice back to you. Hes not as worried about salt, for the employees it is more a factor, it is about tax rates in new york state. Absolutely. As we talked about, you cant just move to florida and declare yourself a florida resident, it takes a couple years for new york state tax authorities to release you and thats a long and detailed process, so i think he is 83 obviously hes healthy but wants to plan ahead, given the tax authorities give you trouble for several years in order to grant you that exclusion from estate tax. Thats the golden prize for older new yorkers, move to florida, to get rid of the estate tax yeah. One queens guy to another, that being carl, sorry to see him go. Robert, thank you. Thank you, guys. Lets get to jon fortt with a look at whats coming up on squawk alley. Hey, contessa it has been an active end of the week for ipos, we had smile week for ipos, we had smile direct yesterday, 10 x ain we will talk to the ceo coming up on squawk alley. I can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group believes have the power to improve lives. And that, for over 85 years, have inspired us to help people achieve their financial goals. Talk to your advisor or consultant for investment risks and information. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. When didwhen i needed ton . Jumpstart sales. Build attendance for an event. Help people find their way. Fastsigns designed new directional signage. And got them back on track. Get started at fastsigns. Com. Welcome back to squawk on the street. I am dominic chu markets in striking distance of record high levels, key level to watch is 3027 in the s p, inter day record high hit july 26th. Seven sectors are within 2 of their own record highs todays laggard is technology and staples, and financials and materials are leading. Now, among the stocks that are lifting the Financial Sector this morning, youve got sbv financial and lincoln and prudential a key focus with those financials back to you guys at the New York Stock Exchange dom, thanks for that. When we come back, youll see a lot of orange vests today. Well talk to the cofounders of cloud flare. Squawk alley starts in a moment 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. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. At cdw, we get yofor whatevers next. Thats why we built a portal into the future. Good luck brad and brads in the future. Uh, with Vmware Cloud Foundation, cdw can deploy a flexible hybrid Cloud Solution that can scale with your needs. Today and in the future, so you dont need this. Wow. That sounds great. So, what happens . Jerry has been stealing our lunches no for hybrid Cloud Solutions, you need Vmware Cloud Foundation and it orchestration by cdw. People who get it. When i lost my sight, my biggest fear was losing my independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. When i needed to create a better ivisitor experience. Improve our workflow. Attract new customers. Thats when fastsigns recommended fleet graphics. Yeah, and now business is rolling in. Get started at fastsigns. Com. Liberty mutual customizes your car insurance, so you only pay for what you need. I wish i could shake your hand. Granted. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Good morning, it is 8 00 a. M. At cloud flare headquarters, 11 00 a. M. On wall street squawk alley is live good friday morning. Welcome to squawk alley. I am Carl Quintanilla with Morgan Brennan and jon fortt at post nine of the New York Stock Exchange were about 100 points shy of an alltime high closin