Transcripts For CNBC Squawk Box 20240714

Treasury market, youll see the ten year right now is yielding all the way up at 1. 829 30year back at 2. 3 so some much higher levels of yields than weve been used to in recent month. Our top story, a series after attacks that took place over the Weekend Energy prices are soaring. Wti crude at 59. 55 brent at 65. 60 Big Questions for the future of the aramco ipo airline prices, all sorts of things Brian Sullivan is covering the huge moves in the oil prices in houston. But we want to start this morning with hadley gamble in riyadh, saudi arabia good morning, hadley. Good morning, guys. We are now over 48 hours from the largest ever terror attack on saudi arabias Oil Production facilities and still very muted response from not just the government itself but aramco were told in the next few hours we could see more information coming out of the company just about how this happened information about output, at the moments all we really got go on is the reemphasis time and time again on the statement that they released several hours ago and that was of course to say 5. 7 Million Barrels are lost the largest single outage in market history. That knocked out half of their Production Capacity and essentially that was 5 of Global Oil Supplies. Right now thats all we know from the government itself, but this has raised a host of international gio political questions as you know, lots of questions about whether or not plane bisHouthi Rebels that they were able to take on this attack with drones are actually accurate and a lot of that noise has been coming from the United States President Trump, mike pompeo essentially squarely putting the blame on iran over the last 24 hours. And calling on saudi arabia to make a statement and really to come out and decide how theyre going to move forward on this because this is a very, very hairy situation for the saudis remember, the last several months over the summer tanker attacks again and again in the persian gulf and really a failure on the part of the United States to take much action i think that that came as quite a surprise to a lot of gulf governments including saudi arabia and the uae they learned that the United States at least so far may have a lot of words but not too much action and certain tla is weighing on whatever decision they make in the coming hours as to how theyre going to respond to the possibility that this is an attack that came directly from iran and possibly be an iraq and also in the competing narrative if you look at the u. S. Satellite images of the attacks on these two facilities, 17 flash points, highly coordinate and one that required a great deal of input of the mechanics of getting done. A lots of questions whether this was missiles plus drones or missiles alone a lot of rumors and frankly not much news from the dpoft we are expected to hear more information about this initial investigation by aramco but also hoping to hear something from the Saudi Foreign ministry and the government itself and certainly that is something that the United States is looking for as well. Guys hadley a couple questions obviously theres the big geopolitical question which is what happens next in terms of what it means to be locked and loaded visavis what President Trump has said and what iran may or may not do, but the question i had just specifically related to oil right now s p has a report out this morning saying that saudi aramco has only 35 to 40 days worth of supply it sounds like aramco thought they could get a third of that back online as early as this week do you have any more details about how quickly any of this can really happen . And is that a good estimate or is that that 35 Wishful Thinking that 35 to 40 number is one we verified ourselves and i think that when we talk about whats going to happen next, ive had many conversations quietly with the aramco folks waiting to see what kind of information and how theyre going to roll out that information today whether it be a press conference or interviews hopefully or a situation where they would even just issue a statement as to whats been happening. There was also the prospect raised internally about potentially having a statement before the market opened around 2 00 a. M. Local time they decided to kick the can further down the road and decided not to go with that and telling me we want to be as accurate as possible and worried about putting out any misinformation that could hurt the narrative and that all has to do with the fact that this is coming against a backdrop of not just all the geopolitical unrest and uncertainty but also has to do with youll remember just a week ago the ousting of the longserving energy of saudi arabia, also leading opec and that opec plus agreement with russia so hes out the door and just a week later we have a new Energy Minister at the helm saudi aramco chaired by the head of the Public Investment fund all eyes focussed on really pushing forward with that ipo. This timing is quite interesting, isnt it . Also of course against the vee owe political backdrop of the u. N. General assembly and President Trump could decide to ease sanctions on teheran. Hadley, thank you for that report. We want to swing over to houston right now where brooiia sullivan is. Brian . Yeah, andrew. Listen, i think the key now is going to watch what happens to the equity market as well. Becky was talking that the dow futures are down 120 points but if you just plucked out exxon and chevron they look pretty good the one thing about this attack that stands out is that u. S. Oil looks pretty good right now. We talk about the vulnerability to Global Oil Supplies the one thing we dont have to worry about is the United States and so expect everybody expects a violent snapback in u. S. Stocks. Not just the big caps. I think exxon is up 3 of the premarket, chevron about the same, but if you look at some of these high indebted, heavily shorted oil stocks, stocks that have been down andrew 50, 60 in 12 months, theyre going to violently snap back, but everybody i talked to sauz dont buy into that longterm. This is likely a one, two, threeday phenomena because everybody who is short has got it covered there are also Second Derivative play we talk about the Defense Industry a loft questions this morning as well hadley talked about it where were the defenses . Why didnt the iron dome, the missiles work to down either whatever it was drones or cruise missiles watch the airline and travel industry as well egasoline and jet fuel prices are going to spike airlines they tend to go down cruise lines go down when oil prices go up watch the vix from a market perspective volatility, what this does is expose the vulnerability of one of the crucial supply lines in the world. Dont just watch the Energy Stocks watch oil. Watch travel watch cruise lines and also watch volatility the vicks guys perhaps could also spike as well whatever ends up occurring here, whatever we end up finding out, one thing we do know this is the single biggest daily disruption, in Oil Production ever in the history of modern humanity, 5. 7 Million Barrels and it shows that whatever the attack wherever it came from the world saudi arabia is vulnerable okay. Brian, thank you for that report well check in with you in the next hour. For more on the escalating conflict, lets bring in retired army cornell jacobs. Good morning. You see the president tweeting we are locked and loaded, what does that mean . Do you think were headed to war . No, it doesnt mean anything. We are always locked and loaded. We have an entire fleet in the mediterranean. We have a fleet just off the gulf we have satellite imagery. We have a great deal of capability in the region and can launch an attack on anybody from there at any time, but were not doing it and this administration has been reluctant to counter any moves by adversaries and one of the reasons that you dont see john bolton in the white house anymore is because he advocated a strenuous response against iran and the white house is not very much interested in doing it. We just heard from hadley gamble, reporting the saudi perspective that the u. S. Is all talk and no action do you think thats the case or does this push us yeah. No, no we like to talk a lot but were not acting, certainly not in a military way i think the administration would like to resolve things because wooe moving into an Election Year going to war is disadvantageous to both of those ojtd ibjective. We have been trying to use economic means and still havent used the entire pan plea of methods we can use economically. We havent squeezed iran to the extent economically. Although economically iran is suffering, which is probably why you see them acting out in more ways. Theres no doubt about it because if we really wanted to push them into a corner we could. We havent squeezed any of the nation states including our allies who go around the restrictions on iran and deal with them in any case. Theres lots more that can be done, but i dont think the administration wants to do any of that. I think the administration does not want to get involved in a shooting war by the way, i think there are going to be some incidents in the gulf to be sure, but i dont think the administration wants to use the military instrument of power. Jack, just speaking about the drones, you think of drones and think of those little tiny things you can swat away were talking about a very different scenario here. Yeah. Drones come in all different shapes and sizes and capabilities and dont just include the hobby drones not necessarily the reaper size drones, there are lots of them they can be acquired just about anywhere indeed, the houthis already demonstrated the capability of putting their own together this is not really complicated technology what is interesting here is the coordinated nature of the attack and launches from a wide variety of places, not all of them none of them in yemen, some of them undoubtedly from syria and possibly iran. So, the technology itself is not very sophisticated but the coordination of the attack is very much sophisticated. Do you agree with mike pompeos assessment that iran is behind this . Theres very little doubt about it the houthis dont do anything but by themselves and on their own. They are a proxy for iran in the continuing proxy war in the middle east between iran and saudi arabia for control of hearts and minds and economies no, no iran is almost undoubtedly behind it all. Thank you for your time. Youre very welcome coming up, two other big stories breaking over night, Purdue Pharma filed for bankruptcy and the United Auto Workers are on strike against General Motors look at the biggest premarket winners and losers in the dow as we head to break oh, wow. You two are going to have such a great trip. Yeah, have fun thanks to you, we will. Aw, stop. This is why voya helps reach todays rement. Um, you guys are just going for a week, right . Yeah thats right. Can you help with these . Oh. Um, were more of the plan, invest and protect kind of help. Sorry, little paws, so. But have fun send a postcard voya. Helping you to and through retirement. 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. Breaking overnight, the uaw on strike at General Motors with about 48,000 hourly workers heading to the picket lines. This is the First National strike at General Motors since 2007 that strike was estimated to have cost the auto maker more than 300 million a day. Contract talks are set to resume at 10 00 a. M. Eastern. On twitter, President Trump urging the two sides to get together and make a deal well talk more about the cost of the strike and the sticking points in negotiations, phil lebeau will join us at 6 30. Also new this morning, Purdue Pharma filed for chapter 11 bankruptcy protection, collapses under the pressure of thousands of lawsuits. They reached a tentative deal to settle 2,000 cases that were set to go to trial next month. Although, some states rejected that deal, and now pursue pharmas chairman steve miller will join squawk on the street. Busy week for the markets. Fed kicks off a two day policy meeting tomorrow with stocks near new highs david, well start with you. You have counted how many cycles of tariffs, easing of tariffs, market goes down on the tariffs, slowly rebound actually it doesnt rebound immediately, sort of stabilizes then rebounds after we think some positive things are happening were vulnerable to it. This one does sort of feel like its possible that we might actually get some kind of more lasting temporary resolution in that paradox is on purpose this time the political implications are much more severe go back to the first couple times this happened, the president still had a lot of time to work through it and so forth, but i think this time maintaining the Strong Economy narrative into an election is very vulnerable. Hes seems determined to get it done the difference is china. China seems less concerned about their vulnerability, but their vulnerability is not in doubt. James, on the fixed income side, youre still not sure what goes on in terms of fed and Everything Else, but just take a step back and just go into the twoyear and just wait at this point, is that the best move yeah, i think one of the things you look at in the Capital Market space is sort of been a year where everything worked the income side from the Equity Income side has worked the bond market has worked and so when those corallations move sort of positively together, we like to take a little risk off the table. The two highest yielding assets on planet earth are 30 year italian debt so parking money in the short end of the Treasury Curve and let this play out a little bit makes a lot of sense right now. Quite a backup in rates after the events of the weekend, too it had already bottomed and the ten year started moving. Where do you think the next resistance level is . Do you think we get back above 2 near term joe, i think this is a complete redo of the two other periods we have seen 150 on 10s. Weve had these sort of call the mini pauses, mini recessions in this expansion the 150 was the level for us it held. You can see a 2 level i think thats exactly where the fed is going to go theyre going to ease tomorrow or on wednesday. Maybe one more in october and then you see positive slope to the yield curve and a lot of those sort of technical things that concern people about economic slow downs go away. So i would expect a twoyear, tenyear and 175 funds rate. That matter to you, david oh, it does in terms of the liquidity they were taking out of the market in Fourth Quarter last year, that doesnt seem to be a play right now. Plenty liquidity in the market that is there for risk assets, but as far as the shape of the yield curve, the thing im not sure i agree it can hold when the fed brings it down. Thats what i was going its not just the fed. The bank of japan, bank of england everybody is moving this week youll hear more from them soon. Thats right. I think those amount of assets pouring into the long end of our curve is going to continue to hold that yield down i dont see that changing any time soon. So your strategy at this point is do you care about growth do you care about value . Do you buy the dips, go for yield stocks yeah. Were not yield stock people were growth of yield stock people we want Dividend Companies raising the dividend over time you look at the events of this morning, chevron and exxon, we would never buy something because we think it would be a shock to oil supply. Chevron and exxon, 5 , 4 yields these companies have grown the dividend through far worse economic periods than were going through right now. I think its sustainable Dividend Growth from two really Good Companies you get an added benefit that they seem to be defensive. You would have bought them before this snechb. We had been buying heavily throughout august, absolutely. James, if you had to park money in fixed income, when do you think the next buying opportunity would be for Something Like a ten year or even longer than that . Where do you think were headed . Are we permanently at these low levels well, were going to move is global gdp moves my only shortterm trade where i think rates could back up a bit is inflation has come off the mat domestically i think we were overbaug at the 150. I think the fed gives us a pause. Global economy sort of stabilize and we get some sort of fiscal activity out of germany which i think we will, and you start to see these Inflation Numbers certainly not problematic, but with the oil events over the weekend, youre going to see pressure on those numbers. So i think the dramatically overbought levels are behind us. And i wouldnt be surprised if you had a 2 but being agnostic, i completely agree with david you want to have a balanced portfolio of growing dividend stocks, noncorrelated bonds. If yo do that in this environment, youll have a competitive and growing income stream sort of regardless of where absolute yields move you have to be flexible in what parts of capital structure you pick 2 would be a buy. I dont know that well get there, but that certainly the level were looking for right now. Do you watch high yield especially in the Energy Sector . Can you tell me whats happening there . This probably help if rates or if oil prices were to go up, at least 5, 10 from where they were a lot of debt from those with those players, right yeah. I would argue that a lot of the debt that went into the mlp space and certainly couple years ago was overleveraged. I think you had a lot of people that were buying yield for yield sake if you have good, high quality integrated oil on the debt side or on the equity side youll do just fine. If youre doing speculative oil trades based on Commodity Prices i think its a fools trade and i would be very red sent to do that oil dynamics are the dynamics of our youth. We do not have the same sort of shock in oil prices. This will be a very short term phenomena just because of the massive capacity thats been built both domestically and other players. Look, this brings into the idea that these resources are much more vulnerable than i think any of us had anticipated before we dont know what happens next. The debt aspect but theyre more globally dispersed, becky when you have the u. S. As a net exporter, we werent there bax in the 70s or during the gulf war. Its a different dynamic in terms of the supply chain. I think back to the debt issue, Energy Sector debt was 38 of the debt in the s p four years ago, its 20 in the s p now. Theres been significant deleveraging i just want to point out, this is a huge story. Oil is where it was july 10th where it was may 24th. 59 is not exactly what you think of as a world panic around oil prices so i dont think that we can anticipate any inflationary lasting concern out of this. Gentlemen, david, thank you james, thanks. Appreciate it. A lot more coming up on squawk box. Protests turning violent in Hong Kong Well bring you the latest next. Plus, new york state announcing a big crackdown on e cigarettes and we have details on that straight ahead squawk returns in just a moment this is the family who wanted to connect. And find i in new places. Leading them to discover were woven together by the moments we share. Everything you need, all in one place. Expedia. It also has the highest growth in manufacturing jobs in the us. 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By automating claims with Machine Learning and analytics, cognizant is helping Insurance Companies advance how they serve even hard to reach customers. Cool Classical Music playing throughout welcome back to squawk box. We have an update right now on the developing story in hong kong where protests again turning violent over the weekend. Police fired a water cannon and tear gas at protesters who lobbed molotov cocktails outside of the Hong Kong Government complex. The protesters then started fires at subway station. The violence coming aphthouses of prodemocracy demonstrators marched into downtown in defiance of a police ban so the violence there continuing the questions continue about whats going to happen next there. Also, some new developments in the crackdown on vaping yesterday, new York Governor Andrew Cuomo announced a ban on all flavored e cigarettes other than tobacco and menthol the governor said he was concerned that fruit and candy flavored e cigarettes were leading to getting people hooked on nicotine. The cdc says nearly 400 people around the country have been stricken with a lung disease potentially coming from vaping six have died. I dont know if you saw over the weekend sometimes in some of these vaping situations where its supposed to be thc, they found it was synthetic marijuana and that people were getting high as a result of some of these things too those were bought in Retail Locations in some stores. Yeah. I mean, the reporting of this whole thing now is did you see the latest one, i just read mom takes one puff and shes in a coma or something. So i dont know at this point. You know, theres a big take out over the weekend sometimes its 4,000 for a kilo of marijuana they cut it. But the stuff they cut it with is the problem whether its the vitamin e or other things that theyre putting it into, but its really incredibly hazardous and theyre trying to increase their Profit Margins on some of these things and it can wind up in Retail Locations at time. I saw there was an oped and dont want to get into it because the procan any bas people are very procannabis, he or she was questioning whether we should rush headlong into legalizing something thats 50 times more powerful than it was when we think back in the 70s and is that really something that we just want to legalize completely scott got loeb, the former head of the fda, they have legalized but havent taken on the oversight and regulatory thats the problem you see with this patch work approach right. Things slip through cracks. Kind of do except that for years now its been readily available. Regulate it. Except in the states where it is regulated, its not clear its working. Because i dont think theyre regulating it properly. Thats the second order of event question. When we come back, some news breaking overnight, lots of news breaking overnight, here is one piece of it, auto workers striking after contract talks with gm broke down phil lebeau is covering that story from detroit phil what do you have coming up for us reporter becky the auto workers for General Motors are walking the picket line outside the Assembly Plant how far apart is the union and lharel motors wel ve fsh reporting well give you the details when squawk box returns 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. Liberty mutual customizes your Car Insurance, hmm. Exactly. So you only pay for what you need. Nice. But, uh. Whats up with your. Partner . Not again. Limu thats your reflection. Only pay for what you need. Liberty, liberty, liberty, liberty some of the following has spoiling this is us for the few who havent seen it. Season 4 of this is us is almost here. To catch every past episode, just say this is us into your xfinity voice remote. Like the one where i. [ buzzer ] or the one where we show. [ buzzer ] when he was a. [ buzzer ] plus you can watch this is us anywhere with Xfinity Stream app. Especially the. [ buzzer ] episode. Awww, that ones my favorite. Catch every episode of this is us with xfinity. There were tsunamis fourtin the world. And once they happened, we were in a major hurry to get to those regions to provide aid and support. It was very humbling to be able to help out all those people. Its my dream now to go into clean energy and whatever the next new fuel source is, thats where i want to be. I want to be on the front lines of implementation. Good morning, everybody. Welcome back after all the news breaking over the weekend about the attacks on the saudi oil industry, take a look at whats happening with the futures this morning dow futures down by about 132 points this comes after eight days in a row of gains for the markets or for the dow, i should say. S p and the dow both less than 1 away from alltime highs but again red arrows across the board this morning s p is down by 15 points and the nasdaq off by 64 of course, were watching crude Oil Prices Also after those series of attacks on the worlds two largest Oil Processing in facilities in saudi arabia prices jumped up by over 11 over night brent is up by 8. 5 . The saudis say they plan to restore at least a third of their lost output early this week we shall see because the declines do amount to about 5 of world production. Rebels in yemen claimed responsibility for the attack, but the Trump Administration says that iran is to blame iran has denied responsibility President Trump taking to twitter on the matter saying there is reason to believe that we know the culprit, are locked and loaded depending on verification but are waiting to hear from the kingdom as to who they believe is the cause of this attack around under what terms we would proceed well be getting a live report from saudi arabia at the top of the hour and more breaking news overnight, auto workers striking against General Motors phil lebeau joins us live from detroit. Did you cover the last strike, phil reporter yes, the one in 2007 yes. Joe, i wouldnt call that a strike i was here in fact, i was right at this plant when they walked off the job they were smirking they were like, were on strike. Everybody knew it was a twoday strike that was more for show than anything else this is far different. In fact, we have some fresh reporting on just how far apart the uaw and General Motors are sources who i talked with who are familiar with the negotiations from the uaw side of things says they would like to see greater guarantees in terms of jobs for their workers. They also are worried about the use of temporary workers they dont believe that general motor has made enough of commitment from gms perspective, General Motors has apparently put on the table putting an electric pickup truck manufactured here at the plant. This is one of the plants scheduled to be shut down by the company or at least idled by the end of this year and also talked about putting an electric vehicle battery plant somewhere in the lords town, ohio area. So there are areas where the two sides believe that theyre making an effort but theyre still far apart. Another issue Health Care Costs. Look at the difference in terms of how much a uaw worker is responsible for compared to the average American Worker. They pay just 3 of their Health Care Costs the average for the American Worker is about 28 . In terms of inventory for General Motors and how much this might be costing the company, from a dealer perspective, gm has 11 weeks worth of inventory, so its fine youre not going to see a drop offer in the number of pickup trucks or suvs in showrooms any time soon. Thats likely not going to be noticed for four or five weeks thats when you may see a slow down in the number of vehicles there. How much this costs General Motors its estimated that theyll lose anywhere between 7,500 and 8,000 vehicles of production per day which works out to 50 million as far as an ip pact. The two sides go back to the negotiating tables at 10 00 a. M. Back to you. I understand why the employees have a huge incentive to strike if theyre targed to be shut down any way, they have nothing to lose to go to this. Right. What percentage of the Union Members are in plants that have been slated to close down and do you get the feeling that the Union Members are equally concerned and are just as willing to go to bat yes, they are, becky. Its not just this plant or these guys are striking. Its a nationwide strike at all the uaw plants their chief complaint is this, General Motors has right sized its production into words of gms executives bringing down too much capacity here in the United States at the same time, becky, the number of vehicles built by General Motors and imported from gm plants in mexico continues to grow and from the uaw perspective, they dont understand it they dont understand why a plant is being idled here in the u. S. While production continues to grow in mexico. Thats at the crux of the whats going on between the union and General Motors. Wow phil, thank you. We will check in with you later this morning as well when we come back, though, is the window for a trade deal closing. Kevin rud will join us to talk about some weak data that came out over night and whether or not an agreentan sme ctill be made thats next right here on squawk box. Features as the rx, the new. The lexus rx has met its match. If theyre talking about you. 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Ahead of that data, chinese premier told reporters that it will be very difficult for china maintain an Economic Growth rate of 6 or more because of the complicated International Backdrop and raise in protectionism. Our next guest says a critical window doe is about to close on the u. S. China trade talks lets welcome to kevin rudd the former australian Prime Minister and now is president of the asia Financial Policy Institute thank you for being here. Good to be here. Whats the critical window and why do we need to be concerned about this i was just in beijing last week and the mood actually is similar to that in washington. You have a bunch of people who want to double down and basically say go to hell and lets just have a full blown economic war and you got a bunch of people in both capitals, washington and beijing saying isnt it better given the success in china and the United States to strike a deal now, but the time frame for doing this really is between now and the end of the year. Why well, the political timetable in beijing is critical going into the events of 2020 because xi jinping has two scripts either to reboot the growth in the economy, which is already soft, and assuage those critics who think hes mismanaged the economy. And if he doesnt, he faces a political liability. President trump as a not dissimilar problem in terms of his own reelect in 2020 if he compounds softness in American Growth going into his reElection Year. So it essentially comes down to the decisions of two men, xi jinping and donald trump which voice, which camp, do you think is louder in each of those leaderss head as i look at washington, its actually divided you see the background briefings in the last week comes out of d. C. About whether those favoring striking a deal now can prevail over those who want to hold out for the perfect in china, i have to say kpi gyp pings relationship is virtuely urging him to do a deal. But at end of the day, there are hardliners saying, look, we have an alternative script and remember the chinese have much more head room Interest Rates are about 4. 25 there. They can bring them down they have more fiscal room to move and they can therefore supplement domestic. This is tom freedman who also got back from china write the New York Times he feels that president xi jinping is less likely to sign on to broad concessions and thinks that xi would get too much push back do you agree with that you seem more optimistic. I am on balance theres a constituency the economic hard heads that understand if you pull a trade out of the growth ekwigs in china, you really do collapse growth already growth is down by perhaps 1, some say as much as 3. Then how long can you supplement in the reverse zrdirection . I think theres a threshold for the decision coming up. Does the situation in saudi arabia withiran have any impac on any of this from a geopolitical risk point of view, one of the two big ones hanging out there whats just happened in the gulf over the weekend and taking out effectively 5 of Global Oil Supplies and this, unresolved question. So, remember with the china trade war, part of the impact on Global Economy is real, the real flow through to traded goods sector and the large part is just the Economic Uncertainty it creates. Put it all together, these two sets create new head winds. We have plenty of oil here in the United States, but asia is importing a lot of oil from saudi arabia thats true right through to northeast asharks youre right in fact, of course, china has become the largest market for saudi crude, replacing the United States i think some years ago. So as a result, this is a flowthrough directly into their economy. So beneath all the political news and tu multiof which theres a lot in both capitals, all im saying is theres an opportunity for a deal here and what i see in the last four days is a few signals in both directions, the chinese a few days ago basically relieved action on a number of tariffs on u. S. Imports they also have acted in a number of other areas as well and the americans have postponed tariffs due for 1 october and pushed it for later in the month i think playing ftse at the moment, trying to create a positive atmosphere but can they land it, that ultimately is one mans judgment President Trumps and the other guy, his counterpart in beijing. Kevin rudd the former Prime Minister of australia. Thank you for time. Good to be here. When we return, iger just left apples board as disney and apple prepare to face off over new streaming services we have that story next. Welcome back to squawk box bob iger resigns from the board of apple ed lee is here both cnbc contributors i thought that everybody was on the same page. My question for you is does bob iger getting off this board by the way, we had Reed Hastings getting off the facebook board. Yes. Is there a real conflict . Do you think youre going to start seeing fights between the two companies . Oh, 100 but were already starting to see it you mentioned Reed Hastings already got off the facebook board. Right. Then Sheryl Sandberg a year ago got off the disney board. Right. And so did jack dorsey from twitter. So this bob iger thing is just the latest in what we will see is an accelerating war as these you know, what used to be sort of very synergistic companies, the content and the Tech Companies, are now bitter rivals. Its the streaming. How much of this is going to be the battle over where dismy plus lives on, for example, Apple Tv Apple tv. Bingo i used to have a little mickey mouse face that you could use on your apple watch the mickey mouse face is going to stay. Its going to be there disney plus will have a nice placement on apple tv. The bigger, more immediate fight, i agree with joanne, is going to be over the actual content itself for all the talk about the golden falling of tv, which there is, the infrastructure around the content being built, the producers, the stars, the script writers, et cetera, that hasnt really budged so everyones fighting for the same small slice of talent thats out there i think thats where the immediate fight is going happen. The comingling of these boards started really with steve jobs. Right. When he sold pixar to disney and got the board seat. Thats a big part of how steve jobs became let me ask you a separate question that relates to this. Slightly different topic tomorrow morning Randall Stevenson will be speaking at the Goldman Sachs conference obviously hes now under attack from Elliott Management. Right. What do we think hes going to say what does he have to do . I think hes going to say what theyve been saying in statements look, a lot of this weve been undergoing these suggestions that elliotts made, weve already been there theyre going to hold fast on their management makeup. Theyre going to this is our guy, john stanke. Youve written a lot about the pricing issue. Right. When they bought time warner the whole idea was they were going to raise prices. They were going to create a whole new service. Now its not even that theyre going to have basically flat margins, its a negative margin business theyll not be able to charge more for it. Why did you buy it then is the question which is what elliott is asking, right . Right even when they bought it the stated aim was, look, we can do the targeted advertising, you can sell higher rate ads because you can have the data and service, content around it streaming which is therefore streaming hbo service, max, thats a big part of it. Heres the thing they still have to sell the same thing to everybody so maybe it helps to sell more at t wireless subscriptions if you can get hbo for free its a marketing ploy. It doesnt move the needle. Verizon stock has done better verizon has held up as the model that at t should have pursued. Its unclear whether do we not think of yahoo and aol . Those were the two stupidest acquisitions verizon they were much smaller but smaller but huge at the time of course. And what have they been written down to . Yeah. So ones the content things that verizon bought wireless isnt going to get you there. But if you go back to hbo max and streaming, theyre looking at 15 a month i mean, at this point the apple tv is plus is going to be 5 a month. That was stunning, by the way. Disney is huge. Theyre trying to are those subsidized. 7 a month with that massive amount of content. Right so all the other streaming services, i mean, basically disney is trying to be a category killer. Now apple comes in and says were going to undercut you. Its really everybody does anybody want to bet on the idea that hbo plus or max can turn into the next netflix thats fundamentally the question here. I think the bigger question, actually, is will netflix remain the next netflix because what youre seeing here is disney plus is basically trying to displace Netflix Apple now is coming in trying to undercut disney. Thats where your war is coming in. I also think that at the same time its going to be theres going to be three or four of these guys, right . Theyre all fighting to be the top three or four. Prices are going up over time, dont you think . 4. 99. Theyll all go up over time. Entry level. The entrylevel price, the idea is to come in. Joanne and ed, thank you for great conversation. Thanks. Coming up, continuing to cover this mornings two big stories. Latest live from saudi arabia. Monitoring the impact on General Motors of the uaws first strike since 1997 its a big week, again, for jay powell boneheads at the fed kidding. Well talk ptfioorol strategy straight ahead when we return. At synchrony, were changing whats possible every single day. With technology that helps you offer shoppers a better experience. Take your companys app. We can add in all sorts of capabilities, which help your customers manage rewards, offers, and payments on the fly. And now, applying for credit can happen in a flash. That way, more people can start shopping with you on the spot, wherever they are. Hows that for changing whats possible . 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. And now for their service to the community, it is already working in cities like tokyo. We present limu emu doug with this key to the city. [ applause ] its an honor to tell you that Liberty Mutual customizes your Car Insurance so you only pay for what you need. And now we need to get back to work. [ applause and band playing ] only pay for what you need. Liberty. Liberty. Liberty. Liberty. Good morning, Everyone Welcome back to squawk box on cnbc im becky quick along with joe kernen and Andrew Ross Sorkin. Dow futures right now down by about 111 points s p do you know by 14. Oil prices skyrocketing. Lets tell you whats making headlines. A couple of things taking place. Wti up by 8 . Crude prices up by 8. 7 . When the markets first opened wti was up by 11 . That was the first check overnight. You can see this is holding fairly steady. Also, if youve been looking at shares of chevron or exxon, take a look at any of the oilrelated stocks, youre going to see that those stocks are all higher as well if you were looking at just exxon and chevron, youd see that the gains there, theyre both dow components, are adding 40 points to the dow the dow down 140 points. Of course there are Big Questions about geopolitical questions as well as questions about saudi arabia and saudi aramco, that ipo which had been planned. Whats going to happen to that yeah. Aramco of course saying i believe that or weve been reporting that they believe theyre going to be able to get 1 3 of that oil back on track this week. We will see. Want to get over to hadley gamble who is in riyadh this morning with more on this developing story hadley reporter hey, good morning, andrew guys, this is very much continuing to be a developing story. Were over 48 hours since these terror attacks took place. Weve only heard directly from aramco once in that time quoting that 5. 7 million barrel number talking about taking out half of their capacity in terms of the production talking a little bit more about how an internal investigation is expected today, on monday, midway through the afternoon its midway through the afternoon here i want to mention briefly a report coming out of reuters that is reporting two sources that are familiar with this matter that saudi aramco, quote, may take months to resolve this. Given the fact that weve already heard a report in the last 24 hours they were going to announce today that they were back to 1 3 of that capacity now this report coming out of reuters saying that normal output volumes wont be back in play for months. I do want to mention that this no doubt has a major impact on the saudi side we saw a new oil minister and a new chairman of saudi aramco both of whom were supposed to be the big cheerleaders moving it forward at a much faster pace and the timing of this terror attack according to those who ive been speaking to here in riyadh is really pretty interesting given that we have all things happening with the Energy Minister, a member of the royal family plus the fact that President Trump suggesting last week that we could potentially see an easing of sanctions on tehran and even a meeting with Hasan Rouhani this week. All of that speaking to the fact that saudi arabias Foreign Ministry has been completely mute we have been asking for an interview. This is a ministry who have been incredibly hawkish in interviews particularly on tehran, actions in the region, extension of the geo crescent across the middle east it seems to speak to not only the feelings of vulnerability that the saudi government must have knowing how easily this terror attack did take place and the billions of dollars they spent on european weapons were not enough to keep this from happening but also, of course, whether or not the u. S. Is going to come to their aid ive been covering from fujera most of the time, the tanker attacks, tanker attacks that the United States has again and again pinned on tehran i had a chance to head out to the middle of the arabian peninsula, straight of who astr hormuz what are you doing out here . The president hasnt asked you to move forward in any way, shape or form. 4 1 2 acres. Im the 911 force. If something happens in this region, i can respond like that, get to it quickly. Thats what were supposed to be doing here the question for those in the gcc is whether or not were going to see the United States use more than words, whether there will be actual action in terms of taking on tehran. At the moment those satellite images that weve seen released over the last several hours seem to show 17 flash points and although the houti rebels have been talking about the drones, this was a highly sophisticated and coordinated attack and there is a question. Also reporting coming from u. S. Sources talking about the fact that this might not have been drones alone, this could have been missiles as well. Frankly Iraqi Government coming out very, very quickly to say, hey, this wasnt us, had nothing to do with us. Certainly saudi arabia seeming to be taking a step back here and assessing the situation because if they dont think the United States is necessarily going to have their back all the way, it wont do them any good to come out and squarely blame tehran on this one certainly the geopolitical implications are just as significant of whats going to happen with saudi aramco and the potential ipo, guys. Thats the other angle, too, hadley lets get to Brian Sullivan in houston. Hes looking at some of the sectors of the economy that could be impacted by this attack you know, brian, who knows, iran, houti rebels before it was tankers, theres a bit of a pattern or a method to the madness, isnt there, disrupting the oil supply . It sort of seems like it could be part of a pattern because thats what weve seen in terms of the mischief, whatever you want to call it, from iran i dont know yeah. Joe, i think mischief is a good word heres the bottom line this is the single biggest daily disruption in Oil Production in modern Human History 5. 7 Million Barrels a day. And as youve heard hadley talk about, saudi arabia can say theyre going to come back on line, although it may take months opec can say it is well supplied we can talk about how saudi arabia has 188 Million Barrels in storage and china has 712 Million Barrels in storage we can talk about all of this, joe, but the market is clearly concerned. Its not just about direct supply remember that. It is about the new risk premium being put on oil now you look at say a schlumberge and halliburton. Becky talked about exxon and halley bert ton. Thats not going to last theres going to be a violent snap back in some of these stocks which as you know, joe, has been beaten up in the last couple of years, especially the heavily indebted, heavily shorted stocks theyre probably going to violently snap back. Theres a few big picture themes here number one, obviously oil on the rise number two, gasoline most of our viewers, they dont buy oil but they probably buy gas. Look for a 15 to 25 cent per ga gallon jump in gasoline. Not a killer were in houston this makes u. S. Oil look more attractive weve had democratic i dont want to turn it political. Weve had Democratic Candidates talking about ending fracking or ending the oil and gas industry altogether if we see this kind of fragilit in global supplies, what does it mean volatility, the vix, your favorite topic, is probably going to rise. Oil stocks, violent snap back, travel and cruise probably on the down side. The reason im here, joe, is not for this story tonight im going to be sitting down, not televised, at a dinner on stage with president and first lady laura bush. Ill be on stage for an hour with the president and laura bush tonight from houston so tomorrow morning come on and relay some of the things that we talk about obviously this this attack is something that i will ask the president about, what does he think . What would be the appropriate response as well he is obviously a president who is well aware of geopolitical risks. Yeah. Talk is cheap, brian about fossil free energy and things, and thats why its kind of ironic were going to get a look at what happens when you disrupt, you know, the free flow of oil and fossil fuels. I mean, at least at this point, i mean, its fine to talk about an economy of the future, but thats theres going to be we have to do a lot of restructuring to get somewhere like that and have the Global Commerce and economy that were used to. I dont know yeah. You know . Joe, youre exactly right i mean, listen, heres the thing. When we talk about renewables versus fossil fuels, everybody paints it as red versus blue, us versus them, right thats not the case. The reality is with population growth and the say the growth of electric cars and growth of cell phone cell phone uses a huge amount of power when it comes to all the back end data centers. Were going to need all the power we can get, yes, but what this does do in the near term, when i mean near term, joe, i mean near term in terms of oil which is ten years this is a slow, slow sort of life cycle for the evolution of the energy industry, what this does do is cast this massive risk premium on fossil fuel assets it exposes their vulnerability, whether it came from a drone from the Houthi Rebels in yemen, whether it came from iran inside of iraq cruise missiles. That is irrelevant in the near term the near term is the price reaction, oil is going to snap back, the stocks are going to snap up. Gasoline prices, they are going to go up a bit, a bit, not a lot. By the way, if our viewers see a dollar jump at the gas pump, thats called gouging. Please dont let the gas owners do that. Were going to see this snap up. Well have renewed attention to security joe, to your point at the top, this is not about mining a ship in the strait of hormuz, this is about shutting down effectively a 7 million barrel a day facility let me just close it with this the equivalent would effectively be if the 20 biggest refineries in the United States were all attacked at once and shut down, thats the equivalent size of this attack. Take the 20 biggest refineries in houston here, wherever they are, louisiana, shut 20 down at the same time and thats the equivalent that we have now in saudi arabia. Okay. Brian, stick around. Were going to continue this conversation. Joining us right now is Kevin Book Clear View Energy Partners managing director. Good morning to you, kevin. Good morning. Help us try to make sense of where we are, what this means to oil in the short term, what it means in the long term s p out saying that this effectively takes out any extra supply, any of the give in the system right now how do you estimate where we really are yeah, thats exactly the point. Thanks for having me the Spare Capacity in the world that comes from opec producers mostly resides in saudi arabia when the saudis cant come to the rescue, it leaves a Million Barrels per day with everyone including russia thats a very narrow cushion against a supply shock in addition to the supply shock weve got. Then you have to look on top of that, Strategic Reserves theres a lot of capability with getting that capability onto the water when most of the crude in the u. S. Is bottlenecked because frankly were exporting so much its hard to get more out. It is going to have to happen elsewhere in the world other countries arent as excited about drawing down crude. What you have is a relatively narrow cushion saudi arabia is a big part of Global Supply security. Heres the question aramco has between 35 to 40 days worth of supply. Theres an estimate that 1 3 of that capacity will be back on line early this week i dont know if you believe that do you believe in the next 30 to 45 days all of this is fixable so i think we have to think about it two ways. First, do they have capacity that they can bring it back quickly . They might there were two sites attacked. The kourase field could come back sooner. What happens in a benign refinery fire . Think about what happens in our country when its not a bomb attack but something that caught fire and exploded. Weeks to get online. Were talking about incredibly sophisticated processing infrastructure i think were talking weeks to months its perfectly rational to learn what we learn when we know it, but i think probably the calming bias that you get right now with the idea of two or three days may be a bit overly optimistic. What about the sort of larger concern that this really demonstrates the fragility of the system is it actually more fragile today or actually i could argue maybe its less fragile given actually the resources we now have in the United States, for example . Yeah, absolutely. The molecules are still coming to america in a way that they would not have a decade ago when our import dependence could have jeopardized it price still comes home weve been writing for months about how this risk has not been priced into the market its important to remember what pushing iran out of the market does it means iran doesnt have to care nearly as much when its not an oil seller to the world it opens up a world of risks, not just from iran but also from its nonstate and affiliated proxies. Thats what were looking at here were looking at world where knock on risk becomes possible that narrow supply cushion that i talked about, that meanings opportunistic actors, state actors or states, that want to interfere with supply dont have to do much a big force multiplier to a small disruption. Hey, kevin, this is Brian Sullivan. Hey, brain. Hey, andrew thanks very much kevin, how are you listen we dont import that much from saudi arabia we used to import 2. 2 barrels a day. Now its 600,000 barrels a day basically one ship we have our own oil. China, they import 1 Million Barrels a day. This trade war they have this tariff on imported u. S. Oil. Do you think theres any chance, kevin, that china because they need saudi oil, saudi oil may be offline, that they eliminate the tariff in the short term on u. S. Imported oil because they dont have the supply from anywhere else brian, ill see you that and ill raise you i think its a time for a lot of pragmatic flexibility on both sides of that divide and others. Not only do you have to want to source crude anywhere you can get it the saudis were standing in for a lot of the iranian crude that had been forced off the market some of the importers that have been forced to stop buying iranian and venezuelan crude might want to stop buying it the u. S. Government might tacitly accept it if prices begin to climb back up what were looking at is incredibly import dependent asian countries. 96 in japan, 91 in korea, 75 in china. These countries cant do without imported crude theyre going to get it anywhere they can thats going to focus a lot of pragmatism hey, kevin. The other thing that i have been trying to understand is when you think about the price of crude given the we are basically at this price just a couple of months ago right you know, is this really a demonstration actually that maybe there really isnt that big of a shock here and that maybe there wont be you know, ive got a couple of colleagues who worked as National Security advisors on this issue in different administrations and they spent their careers fearing this moment this was the biggest thing that could happen in crude and here we are looking, as you say, at a price that was recently in the Rearview Mirror theres nothing that better illustrates the twin effects and also the weak demand environment in which we find ourselves lets not kid around here. The second half of the year is cyclically stronger. Even if the worst recession or headwinds are in our face, were seeing more crude demand coming up. Real quick before you go though play out sort of worstcase permutations in this when the president said hes locked and loaded given the trade battle between the u. S. And china, what you think this means to china. Sort of just give us a macro view of all of this as well. Well, im so glad you asked we just put out a note on this the use of the word terrorists on the saudi press agencys communiques and the houthis and iran is a way to say we dont want a sovereign conflict and we dont want to draw in with our fingerprints on it the u. S. Essentially executing, the saudis pulling the trigger on the u. S. Gun that takes us into something new, out of the economic pressure and hot wars. 1980s vintage, country on country. That could be a very different world. So its possible that we may see attacks outside of iranian territory. That might be a way of providing a standdown from a direct escalation as far as china, the long term is supply security has always been the first concern whats Energy Security in america . Low prices whats Energy Security in china . Enough energy. Theyll be focused on that. Thank you for your perspective. Thanks for having me. U. A. W. Workers walking out on americas biggest automaker the latest on the nationwide strike against General Motors is straight ahead. Later, with stocks near alltime highs, will the latest developments on the geopolitical front derail the stock market . Stay tuned, you are watching squk xn bcawbo ocn some of ths been omitted to avoid spoiling this is us for the few who havent seen it. Season 4 of this is us is almost here. To catch every past episode, just say this is us into your xfinity voice remote. Like the one where i. [ buzzer ] or the one where we show. [ buzzer ] when he was a. [ buzzer ] plus you can watch this is us anywhere with Xfinity Stream app. Especially the. [ buzzer ] episode. Awww, that ones my favorite. Catch every episode of this is us with xfinity. Whats the impact with General Motors the estimate from the analysts at credit suisse, the production 7500 to 8,000 vehicles a day that are not being built they do have plenty of inventory, but that production over time, those costs will increase the president , he weighed in on this last night with a tweet saying, here we go again the United Auto Workers and General Motors, get together and make a deal. General motors for its part says that it has offered to add at least 5400 jobs, more than 7 billion of investment in facilities for the uaw the uaw counters that it would like to see a reduction in the number of temporary workers. Guys, they get back to the negotiating table later this morning. Dont be surprised if this is the type of strike that could stretch out maybe for a couple of weeks, two or three weeks that would not be a surprise given how far apart the two sides are right now. Back to you. Phil, thank you very much. We got a very busy morning right here on squawk. Were going to run you the big corporate headlines after the break. Later, the fed is going to be kicking off a twoday meeting tomorrow well discuss whats on the table when it comes to Interest Rates. Squawk returns in just a moment are we supposed to dance . Boy bands without dancing are just ok. Get a better than just ok unlimited plan with spotify premium included on americas best network. Only from at t more for your thing. Thats our thing. They give us excellent customer otservice, every time. E. Our 18 year old was in an accident. Usaa took care of her car rental, and getting her car towed. All i had to take care of was making sure that my daughter was ok. If i met another veteran, and they were with another Insurance Company, i would tell them, you need to join usaa because they have better rates, and better service. Were the gomez family. Were the rivera family. Were the kirby family, and we are usaa members for life. Get your Auto Insurance quote today. Welcome back, everybody. Heres whats making headlines at this hour oxycontin maker Purdue Pharma has filed for chapter 11 bankruptcy protection. That filing will temporarily halt the numerous filings over the Opioid Crisis. Purdue has tried to reach a comprehensive settlement but has only persuaded half of the local states and governments we will be hearing from steve miller in an exclusive interview in squawk on the street coming up at 9 a. M. Eastern time. New york state planning to issue emergency rules that would ban the sale of flavored ecigarettes. Governor andrew cuomo saying the move is an attempt to stop the rapid rise in vaping new york state would be the second state now to implement such a ban michigan did so earlier this month. Also endeavor group has set a price range for its planned initial public offering. The sec filing is planning to sell more than 19 million shares of 30 to 32 a share at the high end that would raise more than 619 million endeavor is the parent of the William Morris Talent Agency coming up, just days after apple announced its new streaming service, disney ceo bob iger departed the company board. Take a look at u. S. Equity futures. Were down but not out down about 110 on the dow. Well be right back. I wanna keep doing what i love, thats the retirement plan. With my annuity, i know there is a guarantee. Its for my family, its for my self, its for my future. Annuities can provide protected income for life. Learn more at retire your risk dot org. Still to come on squawk box this morning, we have a series of attacks on the worlds two largest Oil Processing facilities we have oil prices soaring with brent coming off the biggest single interday. Well hear from dan jurgen at the top of the hour when we return then well talk to dom chu as well hell talk about this mornings top movers squawk returns right after this [ slow dance music plays ] sfx record scratch music plays throughout [ watch me walk by Spencer Ludwig ] yo dj, can i put in a request . Dont have no sass about this im on my way im on my way cant take no class about this im on my way im on my like this this is a moment you plan for. To start your investment plan, find an advisor at massmutual. Com sfx [ mnemonic ] were changing whats possible 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 so, how can we change whats possible for you . Have you lost weight . So, how can we change of course i have ever since i started renting from national. Because national lets me lose the wait at the counter. And choose any car in the aisle. And i dont wait when i return, thanks to drop go. At national, i can lose the wait. And keep it off. Looking good, patrick. I know. vo go national. Go like a pro. All right. Welcome back to squawk box. Lets get you up to speed son some of the stock and etf movers coming on the back of the massive, massive attack on Saudi Oil Infrastructure if you take a look at some of the etfs that attack it, spdr ticker is up 43. The oil and Gas Exploration Production Companies are getting some of the more disproportionate benefit on rising oil prices. Theyre tending to benefit more. Up almost 9. 5 for the Gas Exploration. Ticker xop oil Services Also up 9 pers percent as well. This has been a huge trade oil services etf up 22 over the course of the past few weeks now you take a look at some of the other moves here with regard to stocks. Marathon oil, devon energy, conchio resources and noble energy are some of the names beyond exxon and chevron that are doing well in this trade as well taking a look now at some of the other places remember, to put things in overall context, the Energy Sector spdr has seen a nice move higher its been a pretty pronounced down turn over the course of the last 12 months if youre looking at another part of the market to pay close attention to, transportation stocks, andrew, especially with whats happening with the Airlines American airlines, delta, carnival, royal caribbean, feeling the effects of the higher Energy Prices some trades on travel and tourism to watch in the premarket. Back over to you. Thank you for that, dom appreciate it. Joining us to talk more about this weeks big fed meeting, jill myers, head of u. S. Economics. Nathan sheets, chief economist at pgim fixed income let me ask you both, given what took place over the weekend, is that going to weigh at all on what we think the fed is going to be thinking im sure its going to be discussion around the table. I dont think its going to influence the statement or communication. Im sure the fed chair will be asked about it at the conference he will likely talk about it as one more risk for the fed to monitor. Obviously the u. S. Consumer is vulnerable and sensitive to higher gasoline prices if we were to see Oil Prices Spike and gasoline prices to go up, that can create some challenges its another factor that can be a concern for the health of the Global Economy. Thats what i was going to ask you, if theres a change in dynamics versus what you think is going to happen with the u. S. And china. Does it give china some pause. Maybe we have a better chance of getting a deal how much do you start doing that math and that equation nathan so i think the bottom line on this is we dont know how long it will last and what the full dimensions will be, et cetera, et cetera, but it amps up further uncertainty in the Global Economy that quite frankly is the last thing we need right now. I think it will at least on the margin shift the calculus for President Trump and president xi as theyre thinking about incentives to negotiate. It will be on the margin, if its a sustained shock to the oil sector, on the margin might make a deal a little bit more likely. Im not sure if youre jay powell sitting there on a sunday yesterday, thinking now what, whats the new is there has this changed anything i dont think it changes anything for this meeting. Right but certainly it creates additional uncertainty and risks, right theres on the down side there are more things that can go wrong to the Global Economy than can go right at this moment and this is just one more factor for them to monitor. Doesnt mean they should change their forecasts but it does mean they should continue to remain sensitive and in tune to challenges. You think theres a lot more down side than up side so the center in the economy or by the way the markets too . The center of strength in the u. S. Economy has been the consumer, and Higher Oil Prices are a headwind for the consumer. Now the consumers proven to be extraordinarily resilient today and maybe well continue to see that happen, but as michelles saying, its another risk, and its a risk to really a core part of where the expansion continues. And think about what the fed is trying to do. Its insurance cuts, right theyre trying to get ahead of these risks, so theyre very carefully thinking about what these risks will look like. Were going to leave the conversation there michelle nathan, thank you. Appreciate it. One of the big corporate stories, uaw workers going on strike former gm vice chair, bob lutz is a cnbc contributor. Bob, good to see you you were Gm Management with that in mind, we may temper some of your comments, but in your view management was offering the workers a pretty good deal and it was you dont think it was justified that the workers didnt like this deal and maybe theres some other things at play as well for Union Management well, yeah. I mean, General Motors offered over 5,000 new jobs, 7 billion in investment, either increases in wages or Lump Sum Payments everyone of the four contract years. When you look at what gm put on the table, its amazing that it was turned down. But as you know, the uaw is in a state of turmoil right now so their reaction is somewhat unpredictable. The top aide to the president of the uaw has been indicte rumorse current and former president of the union are also about to be indicted so this is all racketeering, embezzleme embezzlement, spending of funds that didnt belong to them and so forth so in that environment its very difficult to expect the rank and file to behave rationally. It could be an attempt to divert attention from the legal problems that the uaw is now having at any rate although you cant imagine that the rank and file would just decide to try to enable the true. Distraction. Rank and file probably have their own reasons in terms of, you know, just wanting to be heard on some of these issues, right, but it ends up playing into the it ends up playing into the Union Management. Well, wait. The leadership the leadership negotiates and then they make a recommendation to the rank and file on whether to strike or not. So, you know, they have a degree of control at any rate, itll be interesting to see where this ends up. If its a relatively short strike, it wont have much of an economic effect because the supply can be fed out of inventory and then later replenished, but if its a long strike, you know, it could be very damaging and it would be a shame because i believe the offer that General Motors put on the table is a very good one. Do you think were at the beginning of what could be at least less positive days for General Motors right now i mean, we were at probably peak auto are we headed down the other side of that thats a tough time for the company to deal with this, isnt it no, i dont think so. You dont think so. I think demand is still fairly strong. Trucks and suvs are still in high demand. General motors is about to launch a whole series of new product, et cetera, et cetera. No, i think theyre in good shape, but theres no question that a prolonged strike by the uaw could really dent profitability for the year do you youve seen the recent negotiations and discussions between the president and mary barr. Where do you think gm is now in terms of President Trumps own how hes feeling about the company right now . Well, i dont know. I wasnt at the discussions and, you know, neither President Trump nor mary barra shared the context with me so but on a purely pure speculation i think President Trump probably told her i dont appreciate General Motors having all these factories in china and mary barra probably then turned around and explained to the president that General Motors has had these factories in china since the early 90s or even before and that chinese production is not doesnt get exported to the United States, its for the chinese market. At that point i hope, you know, mary barra probably understood better where the president s frustration is coming from and the president probably understood, i hope, that he was mistaken about gms intentions on production in china hey, bob, do you have a twitter account . No, i dont i do emails. You do email. Yeah. And text. I was just wondering. Last time you were on you always have some interesting things to say about tesla. Reonse you would have gotten on twitter as an aside, a lot has happened with tesla, elon musk, Everything Else since the last time you were on you werent that complementary last time you were on. Have you changed your view on the prospects for tesla . No. I think it seems to have stabilized well see how their profitability is this quarter and they have managed to quiet down the ceo so thats always good somebodys actually running the business instead of talking. Right not good for us. We like it when we like it when he says something so youre back to the strike, how do you handicap it how long in your view do you think it goes on or do you have no idea . I obviously have no idea, but since the gm offer was good and since there is really no economic reason for the rank and file to strike, im guessing, you know, ten days to two weeks, but thats just a wild guess. All right and you havent written a book yet on the eternal youth, isnt it cigars . And scotch what was it . Two cigars and one tanquery martini per day. Okay. Im going to start i dont know about the cigars. Maybe ill try the tanquery. Thank you. Thank you when we return, whats coming up . Tech and media. Tech. Tech and media collide. Well talk about apples new streaming service. Loud and proud. Competition with disney and others get a chance to say Something Like that, i think youve got to really give it a to do plus bob igers resignation from apples board. At the top of the hour, the latest on this weekends attack on saudi big oil facilities. Whos involved, who do we think, what are the suspects d atanwh are the market ramifications squawk box will be right back. Limu emu doug hour 36 in the stakeout. As soon as the homeowners arrive, well inform them that Liberty Mutual customizes home insurance, so theyll only pay for what they need. Your turn to keep watch, limu. Wake me up if you see anything. [ snoring ] [ loud squawking and siren blaring ] only pay for what you need. Liberty. Liberty. Liberty. Liberty. Hey. You must be stevens phone. Now you can know whos on your network and control who shouldnt be, only with xfinity xfi. Simple. Easy. Awesome. Im the kind of guy who likes t. Like change my own lightbulbs. I do my own laundry. I even make my own jam. So, when my doctor told me he nd to check my prostate i said, ill do it myself. Can i get the jam back . Dont diy your health. Early screening by a doctor can save your life. To learn more go to pcf. Org welcome back, everybody. Days after they announced apple tv, disneys ceo bob iger said he is leaving the board of apple. Rich greenfield is here. Congratulations thank you were really excited. Big, new firm. What do you think about iger stepping aside was this destined to happen, it was just a question of when . You know, bob has done an amazing job transitioning disney from sort of a Legacy Media Company and giving people the belief, they havent really shown it yet, that they can execute in streaming thats the companys number one priority if you look at the company, i think it very much sets up bobs successor in kevin mayer who is now running all of the streaming services for disney. As you look at kind of where disney sits in the ecosystem, disneys coming into streaming just as apple is basically coming out and saying, look, we need to move from a tech company. We need to have Incremental Services were number two in music to spotify. We need to be a big player in video. I think it makes sense that these two companies cant sit on each others boards. Theres growing tension and competition. Theyre not direct competitors i mean, disney needs to be on apple devices. Theres definitely benefits to apple from having a disney app on an apple tv, but theres that underlying tension and war for time and wallet that makes you go, that makes sense that he shouldnt be on the board. You dont want somebody in a related field listening in to all of your strategic plans. Absolutely. Im sure theyve learned from each other in both ways, seeing how disneymakes great content, how apple focuses on making great Consumer Devices but it just feels like that competition is getting a little too close for comfort from a board position do you think i dont want to start any guessing games. You remember there was speculation a long time ago that apple might try to buy disney. Sure. You know, the reality is think of what netflix, apple, amazon are all showing you the way to break into video content is to spend a lot of money. You know, you think about the shows that are being created amazon is creating one of the most expensive shows ever made the morning show with jennifer annise son it aniston you dont need to buy a studio what you need to do is spend a lot of money on talent like you guys are tv talent. Which means maybe you dont have to buy another company. You dont i think the problem with buying a company, take the example of disney and fox, right . Disney buys fox. They cant actually access the fox movies for disney plus or for hulu foryears because theyre headed to hbo. No ones buying disney. That would be 250 billion. That would be the biggest acquisition in almost i think apples biggest acquisition is 3 billion which is beats, right . Were talking about a whole different size and scale. Youd have to play guys as mu to pay twice as much. Our Parent Company tried to our company was a lot smaller, too i think at the end of the day you can enter this space by spending lots of money and really building a platform to watch content. Are you a believer that apple is going to succeed . I am, actually. I think the market is so skeptical of apple the reality is, think about it you wont be paying for this probably all four of us are buying apple devices every year, whether for you or for someone in your family that means youre getting this for free. Just because they succeed and i think apple will too, it doesnt mean others wont. Right. I look at apple in an entirely separate arena than the rest of these because, like you said, im getting it for free anyway its not part of my decision im making. Has amazon crushed it in video to date . No theyve been okay. Youre not paying for it so the bar for success is lower. Do you think from a regulatory perspective its going to get complicated for the apples and amazons explain what do you mean by that if you saw last week there was an article in the New York Times that looked at the app store on apple and demonstrated that over the years apple advanced advantaged its own apps over everybody elses and theres a question mark in a similar way that, by the way, there was an argument 20, 30 years ago that microsoft was advantaging its explorer over netscape, right . Whether you think that and whether you think take apple out of it. Even in amazon is going to be advantaging its services and whether thats going to make it difficult for actually hardware or tech players in one realm to get into some of these other players or not that they cant be in these places but to actually be able to leverage and take advantage of them the way you historically want them to. I guess the answer could be maybe if you were really focused on a pure garden the only way to get apple is on apple devices. Maybe you would believe that apple is opening up. Whats so revolutionary about apple, its an Apple Service you can watch on a samsung, roku, anywhere you go you can watch this service that Walled Garden of where they have complete control over you as a customer doesnt look the same as it used to plus, think about the world you live in. Comcast puts their content first and foremost the video you subscribe to takes preference over other content you could get. Kind of what i would say, i dont want to say Walled Garden, but control over who comes first and populates isnt so much a new thing inside the prodder media space. Really quickly. We said measures of success are different depending on the player you look at tell me who succeeds and who fails. I think a reality is a lot of these are. Disney will obviously be successful apple i think is going to be successful the question is honestly going to be as all of these Services Come out and give the consumer so much more choice at much lower price points and great price value, i think the real question we need to ask is what happens to the legacy. What happens to time warner, at t, Randall Stevenson will be speaking at Goldman Sachs conference tomorrow. What do you think . Management going after them right now. Look, i think they need to lay out exactly what the strategy is. I think were still a little bit in the dark of how all of the pieces between directv, at t, tv now which is the old directv now, hbo go, hbo now versus hbo max, we still need to understand how that all fits together. Can you see a path where all of these assets make sense together sell some and pay down some debt. My partner, he would look at it and go they bought these assets to support the dividend, not because they want to be netflix. Right. Almost to beckys question, the way you analyze and look at success is very different. At t is trying to support a longterm dividend payment, not to be the most rapid growth company. Disney is saying, look, streaming is the future of our company. Why shouldnt i be excited about all the new content . You should be all the content you want to watch is on these new platforms. I want to ask you the genius that you are, what show am i missing that you cant believe have you seen this fouda. Im on season two it is hard to go to sleep afterwards its so kind of what else got that from our the guy that runs this place ive got that. What else . Watch flea bag on amazon . You need to get through the first couple. What else keep it coming i personally love mrs. Maizel on amazon. Well do suggestions. You have a little like the joe list. We have to go we have to go. We finally get big hour ahead. Coming up, President Trump calling on the fed to make a big Interest Rate drop were going to discuss the fed and markets plus dan yergin is going to join us from ihs ihs markit squawk returns it was sophies big day. By the way, shes the next mozart. 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. The amount of Student Loan Debt i have im embarrassed to even say i felt like i was going to spend my whole adult life paying this off thanks to sofi, i can see the light at the end of the tunnel as of 12pm today, i am debt free not owing anyone anything is the best feeling in the world, i cannot stop smiling about it Energy Markets on edge Oil Prices Spike and President Trump says the u. S. Is ready to retaliate after this weekends attack on saudi arabia. On strike. Who are we . Uaw. Cant hear you. Uaw. Auto workers are out on the picket lines in the First National strike against gm in more than ten years. And a battle for streaming supremacy. Apple loses disney ceo bob iger from its board as the two Companies Get set to battle it out for their share of viewers the final hour of squawk box begins right now live from the most powerful city in the world, new york. This is squawk box. Good morning and welcome back to squawk box here on cnbc live from the Nasdaq Market site in times square. Im joe kernen along with becky quick and Andrew Ross Sorkin they have pared their losses down the s p indicated down about 11 and the treasury arena, i saw 2. 30 im ready to go out and buy some of that. Not really 2. 30 is a far cry from when we were threatening to go under 2. So is 1. 843. Thats quite a ways, too. And, you know, nothing really is inverted at this point so i dont know what any of that means. Its fed decision week President Trump is tweeting on the topic. Producer prices in china shrank the most in three years due to chinas big devaluation of the currency coupled with monetary stimulus, Federal Reserve not watching will fed ever get into the game. Dollars the strongest ever really bad forex ports no inflation highest Interest Rates jay powell and the fed dont have a clue. Covering the reaction effects in saudi arabia. Phil lebeau is on the picket line in washington for the latest on. The president signaled in some tweets. They might be ready. The u. S. Not officially making the president tweeting out. We have energy over the past few years. The middle eastern oil and gas we do know that Key Administration we have a lot here with the president of the United States iran has now launched. There is no evidence the attacks came see what the president has to say. No response here. Eamon, we will stay tuned who knows. The news cycles pretty quick, eamon, does it not did you have a weekend or did this impinge upon you . Probably a little bit of both . Yeah. Had to monitor this a little bit over the weekend but i got out to the soccer field. Thanks, eamon joining us for all of the oilrelated implications, ihs market vice chairman dan yergin. Can i say im glad we started developing some of our own domestic resources, dan . Is that thats a good thing, is it not . Well, yeah, it certainly changed were the Worlds Largest oil producer if we had been where we were ten years ago this would have been a much more panicky situation than it is today. Still, of course, its the biggest hit, the biggest disruption to world oil supplies thats ever occurred. In one fell swoop, i guess. What about china and the effect it could have on chinas economy . China imports much more oil than we do we import less than 15 . They import 75 and 80 of Saudi Oil Exports actually go to the major asian countries. So theyre the ones that are really going to have to scramble to replace supplies right now. We import about half a Million Barrels a day of saudi oil they import like 1. 5 Million Barrels a day of oil i have seen you, yergin, when there are ceos at the white house. Suddenly you pop up there. So you have some connections what do you know about what we know about whos responsible anything thats not being reported well, i think that the comments by secretary pompeo probably reflect chaes thought here i mean, you hear this term north by northwest in other words, these didnt come from yemen. It would be a very Long Distance from yemen there had been a thought it had come from iraq but now secretary pompeo seems to be saying that they came from iran. If thats the case, it makes it a bad situation even worse because theres the question whats going to be the response . I think the oil market is actually theres a lot of supply there the statements that theyve made about the Strategic Petroleum reserve have been very helpful, but theres a question, what comes next. So, dan, so youre willing what do you think, how sure are you its iran . Well, i dont you dont want to say im not privy to intelligence. Lets say it was iran there have been other incidents with tankers all these things are disrupting you know, theyre all aimed at sort of a similar thing, right yeah. Well, this of course i mean, its one thing to go after a tanker. I know. Here its basically 1 3 of the entire volume that passes through the strait of hormuz. What do they want thats the question. What is the end game for iran that is a very good question. Was this an effort to disrupt the possibility of President Trump and president Rouhani Meeting next week in new york . Thats a possibility, but on the other hand, Something Like this wouldnt have been done without the highest authority. I mean, if they are behind it, doesnt it point to just the idea that they are feeling more and more cornered by the economic sanctions to this point . Thats right. They have said why should saudi arabia take our market share it leaves us now that the only Spare Capacity in the world is actually iranian oil if you need large volumes. I should say, however, the world is pretty well supplied with oil to handle this situation. I guess that also begs the question to what depth should the United States even get involved in this why i understand we have our own issues with iran does this demand that we retaliate or not well, i think the president has indicated in some way and this sort of goes to the heart of one of his whole things about iran but i think the saudis have to decide also where this came from if it is iran, the question its hard to believe theres not going to be some kind of response i think the oil market will it will adjust to the fact that probably supplies are okay, the system the markets flexible but the question that will hover over it, too, how long does it take to repair the facility and what happens next . And we we need to choose a side, i guess, too its harder for us to choose saudi arabia now we just went through september 11th memorials and right. You have khashoggi it seems like were making some sort of were trying to approach iran to try toy we were late friday afternoon and Early Saturday Morning both sides wanted to get out of it this transforms the situation. Never been anything like this before. Is this going to by the way, is this going to bind us closer to saudi arabia i think it will you know, it is despite all the problems, it is one of our two major allies in the region so, you know, well there will be a lot of defense cooperation. Theyre a big buyer of our arms but now the question is how do you maintain security . And were in a i think were in a new era where theres a risk premium on oil because the demonstration of this kind of vulnerability. The middle east just in itself, last week the president also tweeting about how theyre considering this idea of a an agreement with israel to attack anybody that attacks israel. Theres so much happening in the middle east right now that this obviously yeah. And on top of that, theres been this kind of lowlevel war already taking place between israel and iran, syria, iraq, lebanon. This is theres a level of tension that of course has not been reflected in oil prices until this happened and this now pulls up those oil prices. Dan dan yergin from ihs, thanks. Thank you. Still to come, will we or wont we the latest on weworks latest march towards an ipo could this be the week we get clarification on the valuation and see if plans take shape. Stay tuned u e tcngsqwkoxon cnbc 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. Whai tell clients, etfs can follow an index, but which ones target your goals . Its not about quantity. Its about quality. No trendy stuff. I want etfs backed by research. Is it built for the longterm . My reputation depends on it. Flexshares etfs are designed and managed around investor objectives. So you can advise with confidence. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Welcome back to squawk box. Take a look at futures and see how theyre setting themselves up dow jones looks like it would open down 84 points. Nasdaq off by 47 points. S p 500 off 10 points. Of course, some dow components though looking the opposite direction but in the meantime, joe, weve got some other news. More drama . More drama. More drama. Lots of drama. Surrounding the ipo or lack thereof of the Company Behind wework when are we going to start calling it we . We are not going to start calling it we. The problem calling it we we is going public or we is not going public. Sounds like you have all sorts of nerdy grammar excitement thats why we call weworks Parent Company so the parent doesnt wake up and think weve totally lost it. Weworks Parent Company still looking to go public it seems like the longer they wait the lower the valuation becomes. Sources saying the company is still vartargeting a road show launch this week its not happening this week there was a meeting with wework and its advisors but it sounds like no set plans have been made yet. There are a lot of moving pieces to finalize still. The price range is a big one what that implies about the valuation theyre seeking from wall street. Also soft banks role and how much the ipos Japanese Firm would purchase soft bank is the biggest investor having put in 10 billion. The question now though is whether the valuation, which looks like it could be 1 3 of the 47 billion level wework was valued privately by soft bank is enough to bring investors in the door the Company Needs to raise 3 billion at least to tap a 6 billion Credit Facility. The lower the valuation, the more the Company Needs to float to the Public Market to get to the 3 billion figure. Thats what makes softbanks approach such a critical piece of the wework or the we company puzzle, guys. Leslie. Thank you. Stay here. For more on this were going to bring in two guests that have been watching weworks progress. Jeff lewis is the founder of bedrock capitol. Jeff, lets start with you youre very bullish if it comes in at a valuation of 10 to 15 billion. 47 to 10 billion, youre okay with a 10 billion. Big if. I like the haircut i will caveat that i think its a big if of whether that even happens but one of the things thats interesting here is theres a huge delta between Investor Sentiment around the company now and actual customer sentiment. So the tenants that we work, the customers quite like the product. Uber customers and lyft customers. Fair enough but there is an argument to be made that the Investor Sentiment is sort of dramatically more negative here for a range of valid reasons but that does mean there could be potential value in the ipo if it ever happens. Leslie, let me ask you. A 10 billion valuation. If that were to come out, what would that mean for soft bank . Would that be disastrous or not . I think it would. There was a note by bernstein to look at what the implications were for softbank. I dont think they went as low as 10 billion in that note but they did go as low as 15 billion and showed a significant writedown. If you recall softbank has been inbe vesting in various levels of the valuation they say the blended valuation of softbank is 24 billion anything lower than that you could see a significant writedown in, you know, the value of their stake in wework. Jeff, would you like it at 24 billion . No. Okay. Zach, you probably know this Company Better than any of us. You invest in a lot of Real Estate Companies, three of which have been acquired by wework whats your take my take is that wework does a lot of things that are really interesting, potentially unique in our industry and then they do a lot of things that may be a little funky as it relates to Corporate Governance they acquired a bunch of companies, a bunch of Real Technology to enable this excellent Tenant Experience that jeff was mentioning. Theyve been able to compress the time in which they deliver space to market far faster than anyone else in the Real Estate Industry if youre going competing against a public like Boston Properties or Real Estate Company in the Public Market like cbre, they do things technologically more where should it trade . Like costar or real page or should it trade like a Real Estate Company like cbre. You look at the multiples and you try to do a comp what do you say it should be is it in the middle . Tech company here, Real Estate Company here and pick there is a current dislocation in my market, in the prop tech market, where theres a lot of companies that traditional real estate people would view more like Real Estate Companies that are being valued like Tech Companies, like slack. And then so i dont know where slack seems like a Clear Software i agree i dont know where on the spectrum it should trade should it trade closer to costar or cbre . I would say to be conservative closer to cbre it should trade at a premium because of all the technology it has. You sold three companies to wework. Yes. Were you offered the option of getting a stake in wework instead of cash . I was not i was told you are going to be selling and you should be very happy with what youre going to get. Would you have taken it it depends on a number of different factors. We were very happy with each of those three companies when they exited on the terms they did we were very happy that they exited to wework i have a lot of friends who worked at wework who stayed through the acquisition. Theres a lot about the culture, a lot that you read in the press about the culture that is kind of nutty but theres a lot about the culture, the power of we as we were saying that is actually special within the industry. Not clear the culture will be there after the ipo. A lot of the employees would be underwater thats a really good point. Jeff, when you look at it, you do bring up the idea that there are some innovations here, that this is very different, not to mention the fact that we work has taken on a huge chunk of the market in the big urban areas that it serves what does it have going for it from that perspective . I think the thing it has going for it is theyve managed to mask the core innovation, which is squeezing down the square foot per employee dramatically versus Traditional Office space i think they average 75 square foot per employee. Thats half. They mask that with all of these things like kombucha, distressed wooden desks and all of these things like that when in fact its sort of aye value lowering cost play and i think thats quite a powerful innovation. If they can get the 3 billion longterm innovation . The reason i ask is i think theres a lot of people in the office space world who would say this opening plan system is actually not working very well in terms of effectiveness of their employees. I think thats very fair. I think theres a wide swath of people and employees, independent contractors who were fine with this they offer the private offices i only think its a longterm defensible innovation if they can raise the money. They desperately need this 3 billion. They will probably fail if they dont get it. Do you think the ipo eventually comes i hope so i think it would be a great buy if it does. What about you . I think it will go out. I think it really rests with the banks underwriting the Credit Facility more so than the equity holders in determining what actually happens i think there might have to be additional concessions as it relates to the Corporate Governance. Like what super even lower super majority voting shares, for example, potentially. Right. Even further restructuring of the board and the succession plan. Making this more complicated that adam took out 7 million already and if you bring this down to 700 i mean, under 10 billion plus you get rid of these other things yeah. Well, we dont know how much equity is left because i dont actually know the terms, the rachets, the liquidation preferences that softbank has on the equity if this ipos at 15 billion and the banks are pushing it in, then theres no equity left for the manage management. Then they have to do a carve out. All of these things are moving in tandem over the next couple of weeks it will be a fun ride. Zach, jeff, want to thank you both leslie, well see you called it what . Fun ride. I dont know. If you are working at wework, i dont think this is fun at all. Coming up when we return though, its a fun story shatenford in the world. Youre in the media try to embrace it. Im trying not to oil prices rising. Saudi officials considering delaying the aramco ipo. That should probably come as no surprise monitoring this throughout the morning. Apple disney drama about to become direct competitors in the streaming sector what does it mean for their relationship, respective business models, shareholders. The mickey mouse face on my plwah,ape tc all of those things and more when squawk returns welcome back to squawk box. Take a look at futures lets tell you where things stand. Were an hour away and the dow would open down 91 points. Nasdaq off about 50 points s p 500 off 10 points. All of this as folks are trying to really estimate the damage from the attacks on the Saudi Oil Fields news flash, we should say from the wall street journal in the past couple of minutes that the aramco ipo may be delayed, or at least thats under consideration. Probably is no surprise given whats happened. They think they can get 1 3 p their supply back online this week but who knows how long its going to take to get the rest of it. You said news flash, and that was actually a news flash. You know how people use it, they say, news flash. News flash. That was an actual news flash. You didnt mean news flash, sorkin, right . Right we live in new york news flash you meant news flash. What happens if something crossed the tape does something cross the tape anymore . There is no tape. Thats what im saying. All right discussing news flash. We digress. Yeah, we digress. United auto workers out on strike against gm. Phil lebeau joins us now again with more from detroit out on like out on the street, phil, near the picket line. We are literally. Well, were outside the plant. Were outside the plant, one of four plants that General Motors says it plans to idol by the end of this year let me give you some perspective on where the two sides stand in this strike against the uaw against General Motors they would like more job guarantees it believes General Motors has not done enough in terms of commitments for future contract. For its part according to sources who are familiar with gms negotiations and their offer, General Motors has said that it will commit toadding jobs, some product to some of the idol plants including this plant here but at this point thats not enough to make a guarantee that the uaw will agree to take a look at this in terms of the number of uaw workers for the big three, and this is what bothers the uaw. General motors four years ago had more uaw workers than Fiat Chrysler and ford but as they have right sized their capacity in the United States while ford and Fiat Chrysler have expanded producti production, General Motors has the fewest number of workers in terms of the impact on gm shares, were not seeing much of a movement in extended hours trading for General Motors and thats because the impact, guys, is likely to be limited if this is a strike that only goes ten days or two weeks. Its about 50 million a day is the impact on General Motors now if it extends, if youre talking three, four, maybe five weeks, thats when you would start to see an impact on General Motors for its fullyear earnings Third Quarter probably not going to be impacted much but full year could be impacted by an extended strike. Guys, back to you. Phil, anything else that youre hearing we heard the crowd behind you earlier this morning and it did sound like they were reporter yeah. Pretty set but what else are you hearing from the union rank and file that youve spoken with reporter for the most part the union rank and file look at General Motors making, what, 35 billion in north america over the last four years. Thats just north american profit they look at that and say we want a bigger slice of that. We should be getting more. General motors response is you have the biggest Profit Sharing checks compared to ford and Fiat Chrysler this was negotiated. We gave you pay raises last time around you have extremely Generous Health benefits which is costing the company a lot of money so thats the gap thats there you hear that from the rank and file they hear the 35 billion profit in north america and they say, most of that is coming from us we should be building more vehicles here. We should not be importing as much or gm should not be importing as many vehicles as it is from plants in mexico. Phil, thank you very much phil lebeau. When we come back, the budding frenemy relationship between apple and disney the two Companies Plan to go to war in the streaming sector. We will talk about what the competition means for investors in each company when squawk box returns the world is built for you. So why isnt it all about you when it comes to your money . So. Whats on your mind . We are a 97yearold firm built for right now. Edward jones. Its time for investing to feel individual. Welcome back to squawk box on cnbc live from the Nasdaq Market site in times square. Here are some of the stories investors are going to be talking about today. Oxycontin maker Purdue Pharma filing for chapter 11 bankruptcy protection collapsing under thousands of lawsuits alleging they helped fuel the Opioid Crisis they reached a potential deal. Two dozen cases set to go through next month steve miller will join squawk on the street at 9 a. M. Eastern in an exclusive interview. It was another volatile weekend in Hong Kong Police fired a water cannon and tear gas protesters who lobbed molotov cocktails outside of it. They started fires at a subway station. The violence came after thousands of pro democracy supporters marched through downtown in defines of a police ban. Industrial output from chinese factories fell to a 17 year low in august and missed estimates retail sales grew by 7. 5 . That missed forecasts as well. Ahead of the data, chinas premiere told reporters that it will be very difficult for china to maintain an Economic Growth rate because of the complicated International Back drop in the rise of protectionism. Little bit of sports news for you. Michael jordan is selling a portion of his nba Charlotte Hornets to two new york based Hedge Fund Investors the former nba star will remain the majority owner jordan first became a minority owner of the team back in 2006 when it was the bobcats and bought the team from b. E. T. Cofounder and friend of this show, bob johnson, in 2010. We learned on friday that disney ceo bob iger has stepped down from apples board of directors. Iger resigned last tuesday thats the day that apple announced the price and release date for the upcoming streaming service. Key moment of the growing battle between the tech and media giants Julia Boorstin joins us with more julia, good morning. Reporter thats right, becky. Bob igers departure from apples board is a key sign that tech and media giants are officially at war. Apple tv plus is launching november 1st for 5 a month ahead of disney launched for 7 a month. This direct competition of the Largest Companies in media and technology competing for both subscribers and content deals is a departure after years of partnership. Apple selling and taking a cut of disneys movies and tv shows and more recently espn plus and hulu, soon it will be doing the same with disney plus alongside its own Subscription Service now this convergence comes as tech giants turn to media to differentiate the services and lock in customers while media turns to tech to establish a direct relationship with consumers and reduced reliance on the shrinking Subscriber Base for a hefty tv bundle. Now disney and apples new frenemy relationship is echoed in recent moves in a number of companies in the tech media space. At t buying time warner to differentiate its mobile service plus amazon, facebook and twitter all investing in original content deals plus sports rights. Facebooks Sheryl Sandberg and jack dorsey both left disneys board last year in january and netflix ceo Reed Hastings departing facebooks board earlier this year. Andrew thank you, julia. Now i want to take a deeper look at what all of this means for disney, apple and the rest of big media streamers. Gene muenster is the founder and managing partner at luup ventur ventures i said this was going to happen at some point. No yeah, it does i think whats core, whats important to keep an eye on here is the big picture ultimately is core to disneys future is streaming. This is a nascent business for apple. Its a perception of conflict and iger did the right thing by stepping aside reminiscent of 2009 when eric schmidt who is on googles board had to step aside because as android was starting to ramp. This is competitively a much different dynamic than ten years ago. Obviously android and iphone are a big part of apples business i want to emphasize this one piece. By definition there is a conflict here because apple is in the video streaming business, too. But this is a big deal for what disneys doing disney has these iconic ip, whether its everything from the princesses to marvell to star wars, they have an opportunity essentially to fundamentally change their business by creating new story lines that ultimately feed the theater. Thats very different than what apples business is, which is 40 unique series. Just one quick final point, andrew i want to try to put some sense about the size of the numbers relative to each of their businesses if disneys successful at replicating what netflix did, which is 150 million subs, that would add 20 to disneys business and the opportunity to create new catalogs and really fuel what theyre doing. If apple is successful, similar 150 million, if it adds 3 to apples business so this really at the end of the day is more negative for netflix than it is some commentary on apple. Let me ask you about apple then you think the opportunity for apple is similar thats surprising. I was just illustrating that if they had the same number of subs as netflix, they got 60 a year versus disney would get 84 a year, kept similar pricing, just given the size and numbers that apple is relative to disneys 60 billion business, p apple is 270 billion business, numbers, this is a much bigger deal for disney than it is for apple. On apples front, we were talking about this in the last hour around amazon as well, given all of the regulatory pressures, i know we talk virtually every other day with you about big tech in washington, how hard do you think its going to be for apple in terms of as they roll this product out given all of the questions that washington has about Tech Companies advantaging their own services over others well, its going to be this will be the topic i think that is where apple i think they are low on the risk profile, but you are getting to what the edge beat, the regulators will address. Simply put, their base, 1. 4 billion devices, gives apple an opportunity to preload, for example, the apple tv app on there that may have some prompting for subscription entering apple tv plus or, for example, what theyre doing around device sales and giving away year subscription tv plus with any device sale theyre going to get a massive amount of users. Think about this, if they sell roughly call it 150 million iphones, those alone, theyre going to have more than 2. 5 million subs this will surpass netflix in 200 million subs, how many do you think will be active meaning people will have the phone and actually watch the programming . I think a lot will. I mean, its not going to be i dont know how many hours per month, but at the content i think of apples quality, i think its going to get i predict in the next five years apple will win an Academy Award with some of the content i think this is premiere content that theyre putting together, incredible production value. Great story lines. Im not a movie critic by any measure, but i think this will people will watch it i think it does beg the question of a year from now will people continue to sign up . The answer is yes. I think that they will for 60 a year, a lot of people will stay. I dont want to turn the conversation its easy to pick on the frontrunner, netflix in this case, but i just want to try to angle it towards something tha the issue here is that netflix has raised their price since 2014 eight times for collectively a 62 increase. Thats been a big power. I dont think people are going to be shutting down their netflix account because of disney or apple but i do think that pricing leverage essentially evaporated with this new environment. Right julia, youre still in l. A you want to join in . Reporter it will just be interesting to hear, andrew, what all of this means for the rest of the services that are going to be entering the game after the launch of disney plus and apple tv plus in november. Remember, we also have hbo max launching and then Nbc Universal is launching a streaming service focusing on ad content were going a different direction away from the subscription models that dont have ads included. So this is worth noting its not just about the players, it will be an incredibly crowded space with different products that are going to be appealing to different consumer bases but also there is a question of how many people will be willing to sign up for and arguably the lower than expected price for apple, 5 a month means it conditionican be more of an add on. Geep, jne, jump on this she mentioned time warner and hbo max. Randall stevens will be talking about this Goldman Sachs tomorrow talk about tying things together we have yet really to see at t take advantage, if you will, of hbo in terms of promoting it using all of its channels. What do you expect there, especially given the new pressure from Elliott Management on that company . I think what youre going to see with at t is this greater focus on retail and i think pushing products to the retail, whether its online be or in store. So i think this hbo bundle, i think were going to see more combinations of bundle, more advertising around that and ultimately it plays back to this general theme. People are going to have a lot of these services, whether they get them through their carrier or device purchase or just outright i think it is changing the pricing expectation for consumers, which has long stood at 13 a month i think that that is going to decline. Its going to decline where are you going to get you think youre going to make it up in terms of just volume . Well, i think some people arent going to make it up i think netflix is not going to make it up but i think other people will make it up you look at disney again, this is not just about taking their existing assets and putting them through a streaming service, its about building story lines that they can ultimately leverage into physical toys to new theaters. I mean, im just begging for something a series on wookies. Fascinated by chewbacca. Something like that, theres opportunities around sk. Fair enough gene, we appreciate your time. Thank you. Thank julia in l. A. As well. Still to come, your biggest premarket movers as we make our way to the opening bell on wall street and well hear some about the strongest technical signals that the markets sending right now and what they might mean for your money dow futures right now down by about 96 points. S p futures down by 11 the nasdaq down by 52. Squawbo wl rhtack xilbeig bk. In the aflac program. E 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 you should be mad they gave this guy a promotion. You should be mad at forced camaraderie. 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Less than an hour to go before the opening bell dom chu is standing by he has a look at the biggest stock movers this morning. Im guessing, are they mostly in the oil patch . I mean, youre guessing right and for good reason. Exxon, chevron, some of these larger cap energy names are performing really well on the heels of Higher Oil Prices due to whats happening in saudi arabia over the weekend. One of the places is an oil and Gas Exploration companies and the reason why is many of these companies are levered more towards the oil and natural gases. As you can see, weve been down pretty markedly over the past year although during some of that sector retags weve seen, weve seen these stocks move higher to the tune of 15 to 20 higher overall at least in terms of etf if you look at the premarket trade, there is massive moves higher in the smaller and midcap Oil Production Chesapeake Energy for one is up 17 . Southwestern energy 12 up side. Whiting petroleum, 25 gain and range resources, 11 the reason why i want to highlight these four is not because of the moves weve seen but because these are four of the most highly shorted names in the overall spdr s p explorati n exploration. It means they do not hold medium to longer term Chesapeake Energy, 19 are short. Range resources has 26 to 29 of its shares outstanding sold short as well. Watch that one place were going to watch as well, the transportation etf. Many of these transportation stocks will be lower this particular etf attracts the dow transportation index has been running into the top end of a range weve seen over the course of the past couple of months this particular etf is already up, guys, 12 just since the end of august. Keep an eye on the transportation stocks. Perhaps a bit of slowing momentum, joe, on that side of things. Dom chu, thanks lets get a closer look at markets as we head to the opening bell joining us is jason hunter with jpmorgan and mike santoli, wow, you just look really healthy and wellrested. You think so . Whats on i got up at the same time no demand for me sorry. Wow hes phishing. No, you just look really well yeah. Okay. What did we have we had how many days in a row . Eight . On the dow. Yeah, i think the dow squeezed out eight we were down on friday so that would have been eight by thursday. I think the significant thing is up 6 in three weeks from the low in mid august. 6 or 7 . It brought you to within a whisper of the alltime high what i really was focused on is all these things that got to extremes in august and have partially reversed, right . Yields got very low. Equity valuations relative to bonds got very low Investor Sentiment they have all partially reversed from extremes. Not to the point where theyre too high where you would worry about them over shooting thats where we were going into the weekend. And i think that todays market response to what happened over the week end and to the Oil Price Spike is pretty mild and you kind of could have had a pull back of 1 3 of 1 for almost no reason let alone a big one like we got. Jason, since you cover our technicals in equities, this comment on where you think we are in terms of support, resistance and momentum for equities, then we can we can ta on the Global Fixed Income side. Its weird the way things start moving in one direction, and then you get this event over the weekend, you know, and it just seems to it almost the market didnt know whomever, i dont want the say iran didnt know the Saudi Oil Fields were going to be attacked, but good reason for rates to head higher. Adding on to whats already been said, a lot of its been energy this gives it a bit of a firther tailwind in terms of the rotation that said, our view all summer, its been getting a by more cashheavy, and our revau has been its going to be a move to a better move with trade, less cyclicals. Thats largely the value basket, cyclicals that im sorry did you say get more into cash in may thats right. In august we published basically looking for the Silver Linings and the sky filled the storm clouds and we said watch these indices. You simply stop yourself into risk into long exposure. Thats the area where you want to be invested if youre going to get a late cycle push, thats where you want it to perform as long as its working and the market aggregate is participating that were going to see something along the lines of a deal or at least a truce, were happy to look at the risk. In yields you think the lows are in so if that story plays out, yes, thats the case weve seen some of the most overbought conditions in history, particularly the long end of the curb. The markets now turning from that so by the same token, were looking at risk markets for validation that yields will continue to go higher into next year, and as long as we see those positive signals, well see a stairstep pattern, but we like the stay on the bear side. So were not going negative. Not right now it seems lately, but that can change quickly with the headline. Weve seen that twice this year. Even the global yields. Were at 15 trillion in negative sovereign now instead of 7 it ee something. Its something. The time to worry is when everyone doesnt know the amount of growth. To your point about august, we all got fixated on this idea that somehow were extrapolating to zero. We still have a long way to zero in our own yield, so thats kind of where we are. The one thing i would point out with the fed this week, without the weekend event, the market pushed to a new record high. The fed moved more ahead you know, not saying its going to happen. If anything, people are talking about it a lot, so maybe it wont happen this time. All right, jason. So overall, give me this a support level and a resistance level because youre a sec nichian for the s p. Next resistance, the couple of trend lines that held the rally, 30 40 to 30 60. We think the trend lines will continue. Thank you mike meantime i want to get down to the New York Stock Exchange where jim cramer joins us now. Im curious where you land on these issues relative to what took place over the weekend and how you think its really going to impact markets today. Well, i think this is a moment where weve got to reflect on the fact that the permian is a more important swing factor if we just get the ability to have these very large crude containers go in on more of our infrastructure, i think that oil would not even be up that much i mean this is rather incredible those who remember other oil shocks, if you took out 5 Million Barrels a day, i thought oil would be up 15 . It shows the valley of pipelines coming out of the permian. Its a great opportunity for the permian producers to refinance its also interesting. If oil goes up, the economy is strong i bet they dont know what to do when its something that has to be with supplies interrupted its brave new world out there i think its the midtermian thats showing. Is there anything you buy as a result of all this i think you can buy some of the defense stoxx. I think raytheon i think thats long lasting. You have to have radar at every single important facility, and if you ever got drones that are solarpowered, which i certainly think is a possibility, you have to have radar on anything thats significant. Not just saudi arabia, but here. I think the Radar Companies are big winners. Jim, last nates gaights ga, thats on me i took the eagles. So that is you dont want him rooting for you. Thats on me. That was a harfought game. That was on me. Before i went to bed, i thought im 0 for 5 with college and football im going to win one. Then stay away from us, please it was a dwrt game i think it was a great game for the network. I think the network did well i was watching it going back and forth with chuck roberts, ceo of cisco it was a good game but so many gotnfl has a problem with a lo of injuries. Im new at this stuff when you get a lot of points, theres no way new mexico is going to lose to notre dame. Then you get to where youre rooting for new mexico you watch what they do you see it and think, i cant believe my fate is resting on this team. Do not do that take the favorite. So im switching im switching. I remember some game where Savannah State was playing Florida State and you had to give savannah 77 they lost by 78. Its worth it its because theyre good. The other teams are bad. Dont take the bad team. Thank god i only do 20 at a time. Thanks. You dont want to miss this exclusive interview coming up at the top of the horde with Purdue Pharma chairman steve miller and the pending bankruptcy stay tuned squawk on the street returns in a moment. 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. All right, everybody it looks like the dow futures is down by 105 points the tenyear yield all the way up at 1. 5 still a lot to come before the opening bell, which is just about a half hour away make sure you join us back tomorrow right now its time for squawk on the street. Good monday morning. Its time for squawk on the street. Theres one stock to watch after the attack on the saudi facilities and whats the impact on the Global Economy futures are weak, but chevron will add 50 points to the dow at the open coming up later o