Transcripts For CNBC Squawk On The Street 20240714

The private equity giant 3g capital sold 20 million shares but there is a reason behind it. Stocks are set to open slightly lower well start off with that wework news, of course sort of trickling out yesterday, after the close. A delay in the planned Public Offering that has been so, well, such a focus over the last few weeks. As the price at least that wework thought it would get for its shares has rapidly declined over concerns about its Business Model, over concerns about governance, ever since they actually issued the s1, which mr. Cramer didnt take a fancy too, a lot of this goes back to mr. Adam newman, the man who founded the company and runs it. And this has been a chaotic process. Having reported on it now for a couple of weeks, i can sort of tell you ive never seen anything quite like this in terms of the disarray in preparing for a Public Offering. And i guess what was clear and perhaps funlly made clear to them was they werent ready. They were not ready to actually face potential shareholders at this point one wonders why, for example, they didnt clear up all the governance issues a long time ago prioring to fi ing tto fili dribbled them out with significant changes designed to enhance the offering they werent able to get there, not in the price they were willing to accept. I thought perhaps that some of this delay was due to increased tension between weworks largest shareholder, massa and mr. Neuman that doesnt appear to be the case i understand that softbank was willing to come in with a billion dollar private parallel private placement that they were going to go in for, at the ipo price, whatever that would have been, and then they would have had had their warrants, remember the warrants they received when they did that deal earlier this year, that valued this company at 47 billion, they got warrants, those would have been repriced masa would have gotten something for playing here even so, even at2 billion, apparently they were unable to at least find a deep enough market at a price they were willing to sell at so theyre going to wait the question becomes, is waiting really going to help is 30 days enough for them to get their act together for perhaps mr. Neumann to listen to the advice that was given, theyre going to report a quarter or update the s1 filing with new numbers from the Third Quarter, from what i hear. Those numbers are expected to be quite strong, perhaps able to get a narrative around that and the growth in the business, jim, but it has been one just a series of missteps here. Easy to say, of course where you are forced to delay Something Like this. But i have to say, in reporting on it, and talking to many people around it, everybody is throwing their hands up. Look. Youve got a situation where he gives a new name to the company, and it is worse than the name, takes money, takes stock, then has to break that and take it back you have the 700 million that was taken out in loans and stock sales. And all you can possibly think of is this is some private company where it is like a mom and pop company. Trying to bring it to 3 billion deal i think that the if there is such a thing as corporate governance, it certainly seems to eseparavade the thinking of. Neumann. Snap went public with terrible governance, no votes whatsoever investors seem to put those things aside had they feel like the Business Model makes sense and there an opportunity to make money. I think you have to twin it here with both the lack of governance, coupled with the concerns about the overall business. Look, you read the articles, i read the articles, i google every article there are many articles that say it is worthless. It is a highly unusual thing to read articles that say the company is worthless if it doesnt get the money. Thats amazing to me they burn through a lot of money. I think this is one that the market just rebelled against i was calling for that this deal has to be stopped that needs to change to get this to market, i dont know, in october or by the end of the year i think you have to see some increase in the margins. I think you have to see an acceleration of revenue growth, you have to believe there is a path in the next, what, eight weeks. Seems unlikely. Though, again, these Third Quarter numbers may be something they can hang on maybe they have that. Sometimes you do these deals, there is something in the pocket that makes it so you want to some of it may come down to just there are certain processes you go through to come to market with your company. And they didnt seem to really follow any traditional playbook or rules and everything i heard is that mr. Neumann was not taking advice from those in the position to give it that might have been worthwhile anybody that knows mr. Neu n neumann knows hes a blast, he does what he wants hes a free wheeler. Hes king. Hes the king hes the king. I have to tell you that the king in this case had no clothes. The market doesnt want it you may change, you can change the name of the dog food, put new and improved on it, but the dogs wont eat it, there is nothing you can do they dont know it is new and improved they see it and say this smells bad. Ive sean that happen. Stocks are set to add to losses from yesterday when crude jumped 14 in reaction to the saudi oil attacks. All this as the fed begins a twoday meeting with an Interest Rate decision due tomorrow bmo out on this repo squeeze establishes that funding markets are not functioning particularly well this is a one off or evidence of some more troubling developments is a crucial question in the coming days. Last i would say half hour, i got half a dozen people saying you got to talk about it every one of them i go back and say, tell me explain it to me. I tried to understand, i called somebody i spoke to, same thing, reached out to me, via text, had i dont hear from very often. And i said, explain it to me i want to know. Im all ears. Nobody seems to know exactly why and in is a question as to whether the fed will need to step in, in some fashion here. Something going on of significance. Yes, i feel terrible we said that, to have a story that we dont noknow the answer to maybe somebody will answer it. Bmo says you have a combination of Corporate Tax payments do, coupon settlements, but for the time being, they say were skeptical it is sufficient to warrant a reactionary fed response just yet. Bmos words. Tenyear high in the rate. And discussion about whether the fed is somehow losing control of this preferred band of funding everything gets lent out overnight, for leverage. For collateral does the fed very interesting the fed might have to step in. We need to do more reporting on this, this morning. Well try. We dont note answer. No. A developing story. Wow developing story. Developing story. Meantime, the saudis did have an official comment, the Saudi King Salman saying the country is capable of dealing with the attacks, calling on all governments to confront the perpetrators regardless of their origin and then the ceo of chevron had some comments on how the rest of the world may respond. In a shortterm there is not a lot of impact that youll see on u. S. Oil production because there is a lead time and even in shale, which has been a driving growth in the u. S. You cant just flip a switch and see more oil coming to the market there is months of lead time in standing up new rigs and actually bringing on additional production so in the very shortterm, there is not a lot that can happen in the medium term, there can be a fair amount. Jpm had a note out of the quantity desk, no negative impact until 80, 85. Rush brazil, the best oil expert in the country, does give me the forward curve, the forward curve out to 2021 is 5052 nothing changed. Mike, i love mike. Mike worth hes right you get a couple of pipe lines put in, you get you can accrue by rail we control the price of oil. We control it. Out four years, were just going to be pumping 17 Million Barrels. Remember, they dont he talks about flip a switch. It goes the other way too. The late aubrey mcclenen used to talk about look, we dont stop pumping because there is no demand we just pump access to a study supply of oil used to be a National Security concern it no longer is. So should we be necessarily responding militarily in the same way we might have 20, 30, 40 years ago when the oil supply is unchanged when the oil yeah, thats a it is no longer the case. It is a security issue. It was. But the president making it clear yesterday it is not. It went back. The led story in the journal, listen, he doesnt dont take me that seriously. But it depends on the tweet. Meantime, the speaker of the house, nancy pelosi, requested a briefing for house members on the aramco bombing and iran. Youre going to know nor about this soon because you talked to her. When you hear that, it is like you got your notes, about what youre going to ask her, now ask about the question in briefing speaker pelosi, very funny, i asked, please, send me tweets, majority of tweets, could you get it is that we the government does something . It is not so polarized can you get it, youre in a position, madam speaker, to be able to make it so that maybe things could get better in the country. I like that. She is someone who is viewed as someone who can still build a consensus. Theyre not many people left who can build a consensus. No. No. More so take to that. I dont i i did same thing to say about the repo im working on it i think you ought to build a developing story. Developing story. Sorry. And then we have one more Nbc Universal is announced new details on its upcoming streaming service. Moments ago, the ad supported direct to consumer platform will be called peacock and will officially launch in april 2020 with a lineup of more than 15,000 hours of content including some new reboots of classic shows like battlestar galacticia, saved by the bell, on the day where stevenson, your are heading over to cornucopia, sounding like an upfront presentation, more than a spectrum discussion today at at t yes, mr. Stevenson presenting this morning at the goldman cornucopia conference as you say. Top of mind is elliott, which only a little more than a week ago, revealed more than a 1 position first time we heard from mr. Stevenson since then he seemed to indicatein his comments that there were certain things that elliott said they could necessarily already are agreeing on and or at least moving on. But this is going to take some time i havent talked about it a bit. Not as though i havent been hearing from people involved and i think the nominating window is january 27th there isnt a sense in the at t side they have to move quickly here in responding but they will over time and well see if they get to some sort of happy medium or place with elliott in terms of whatever their demands were. Thats one of the key things here they didnt necessarily ask for they asked for better management, they clearly indicated mr. Sank stankey is choice got some data indicates, hes very comfortable with in fact john stankey being the man who takes over for him stankey will move into that coo rool role in a permanent way and find someone to run the warner ass assets, a deep and long track record in media. Well see who that person will be. The story is floating hes out. Hes done, hes retiring randall yeah. No. Why would the stories appear . I think the quote was the board hasnt told me im retiring so, yeah we can make up stuff all day. And then have other shows shoot it down and be breaking news there is an expectation given he has an anointed successor at this point which the board was fully involved with. Not as though randall said it will be stankey and the board the board had a list of people, the board has chosen mr. Stankey at this point. Elliott, not necessarily we have breaking news Industrial Production lets get to Rick Santelli rick yes, our august treat on Industrial Production is up much stronger than expected, up. 6. This is three times the expectation. We have a positive revision from what was originally released down. 2. Now standing at down. 1. And if we look at what is going on with regard to utilization rates, well, utilization rates are 77. 9 77. 9 that is also better than expected and follows 77. 5 so these arent bad numbers. And 77. 9 is best number going back to march. Now we will still have more information today, Treasury International capital flows, but as you have discussed today, what is going on in the repo market is going to be a big deal in front of a fed meeting, maybe interest on reserves and all the supply is coming home to roost carl, jim, david, back to you. Quick, is the repo squeeze here concerning to you or what well, i think it is concerning to me, but for maybe different reasons. Everybody is concerned they want it to stop in my opinion, we have done many things, we had many policies that are caused this small accident intersection that could get bigger and, of course, what is the answer to go down deeper into the rabbit hole, more qe, lower rates, i guess the issue isnt what is happening, the issue is why and do we have to do more of what we shouldnt have done to correct it. But, rick, can these things spiral is that a concern at all and does the fed need to be aware consider this, how many times have we and many guests on our show said that all the supply, all the debt, all the deficit and, look at what Interest Rates are doing. This is the disconnect that we have consider the most viable answer, lower rates and buying more long dated treasuries in a way, the distortion continues to mask all the supply that was masked by lower Interest Rates that were manipulated and not market driven. Someone has to fund someone is in trouble getting funding. Someone. Right dollar is popular these days. Rick, thanks well get cramers mad dash, count down to the opening bell when were back in a minute. 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, we got a mad dash jim told me what it is, and i have forgotten lets see. The speaker for tonights mad money. Speaker pelosi. Last night, something i think is going to happen for many companies, horning preannounced a short fall in it, the short fall is about a number of things, but early update on Third Quarter performance, the guide for display and optical. September 5th, they had a meeting, we see weakness in the carrier side cisco same weakness. Bit of weakness in building networks, carrier side what were seeing is thats a weakness the service companies. You know what are you thinking about beyond corning here, if im an investor and i want to take it i hesitate to say that sienna, i this i anythink anyth optical, oled will be down what i say is that, david, this is just this kind of general slowdown in spending and telco and a lot of it is china. 5g spending continues, the spending levels have not increased that markedly from what they always have been in recent terms of verizon and at t i do say, corning, some people say it is socalled there are different issues at corning. A lot of people, say, listen, tied in with a ed id in with ap. It is fight club you cant ever say the first rule of working with apple, you cant mention apples name it is just not good. It is where i think about it, this is the area of tech that you have to worry about. There will be other preannouncements this company is not alone. Okay. Well keep an eye on it when we get that opening bell, less than eight minutes from now still to come here this morning, bob bakish, the ceo, of course, of the combined viacom and cbs after the merger is complete well talk to him. And alex gorsky the ceo of j j here to do some honors as well. Live from post nine at the New York Stock Exchange. Experience the style, craftsmanship, and technology that have made the rx the leading luxury suv of all time. Lease the 2019 rx 350 for 399 a month for 36 months. Experience amazing at your lexus dealer. Should always be working harder. Thats why your cash automatically goes into a Money Market Fund when you open a new account. Just another reminder of the value youll find at fidelity. Open an account today. Of the value youll find at fidelity. So servicenow put your workflows immhm. Cloud, huh . Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Take a look at futures here as the dow looks to add a little bit to yesterdays losses. We continue to watch wework, goldman sachs, cornucopia, the fed, oil and a lot more. The opening bell in five minutes. Youre watching squawk on the street live from the financial cap talf tital of the. The opening bell in two minutes as we await the decision from the fed tomorrow, twoday meeting begins today a lot of notes guys about bmo. What is going on in repo markets as the new york fed says theyll have a repurchase operation in order to help maintain the federal funds rate within the target range. If you heard there were rumors that there was someone in trouble, worried about funding, i would take this off the table for now unless something happened in the last seven minutes. We have good production numbers. Gets lost in the shuffle but i didnt expect that same time trumps ratings are declining. What things are levered to many different the president , maybe it is too much tweeting, i dont know. A new fund manager survey, 38 say recession likely in 12 months, ten year high. But 38 think the china trade war is the new normal. 30 see it resolved before election day. A lot of people i know who always start the same thing, which theyll wait 200 year, 200 year perspective the party does not have a 200 year perspective they dont have elections. The party can throw someone out. Every single czar in russia and then every single leader in russia had a chance to be overthrown, so dont make it 200 year thing im not buying. I cant buy it no one has a 200 year perspective, even the founding fathers. No hamilton did not have a 200 year perspective. This is j j, by the way. There is the opening bell and the s p 500 at the cnbc real time exchange. It is j j celebrating the 75th listing anniversary. At the nasdaq, global x etf. J j under siege on the talc lawsuits, there is a perspective among those including my travel trust these are just unfair because you choose to fight you lose on a lower court. They have a aaa balance sheet, and the stock is undervalued when it comes to the pipeline. I think alex gorsky has done a remarkable job he also is the full forefront, a huge number of charities so he got it is not i was with someone, theyre adopting policies that sound good, this man has done so much, and the one i want to point out, i work with him on veterans day show, he is out there talking about suicide and soldiers and nobody really wants to talk about that except for him. There have been some Companies Leading the charge, comcast, anthony noto. Former army guy these guys, army is good looks good this year. Does it yes michigan game, geez that was crazy. Armys schedule is not an easy schedule. I havent focused on armys football schedule. Good team had been a little bit focused on kraft heinz this morning. Back to business now . This is a story we have spent a lot of time talking about from a fundamental perspective, deterioration for quite some time and a portfolio out of favor. This morning, the news that has the stock down is the fact that 3g, the largest holder with Berkshire Hathaway sold 25 million shares at 28. 44 a share. This is according to an s. E. C. Filing by the way, 3g still owns 245 million shares also, jorge paulo limon, founder of 3g but some kraft heinz personally most importantly, again, like the repo story, dont have the entire story here, aki batista, remember this name, billionaire ended up in jail, and was released about a month ago from jail apparently hes a large investor in 3g. And he needs money and so theyre selling these schauers s shares in part on behalf of mr. Batista. I want to make sure it is correct, but it very well is likely the case here that this is a sale in part being done because mr. Batista needs liquidity and is not necessarily a reflection one way or the other at this point of 3g getting out of kraft heinz only selling 10 of the overall thats important. I would point out there has been a renaissance in earnings and a lot of Consumer Product stocks, mondelez, General Mills about to report soon, really having come back a lot, the carbonated soft drink stocks are doing quite well procter gamble, im interviewing mr. Taylor and nelson peltz on thursday for delivering alpha this is the outlier now. It is not like this is now the outlioutlier it is the outlier do you ever eat tats cookies did you ever notice the circumference of a tate tates i based on before. They want to do reduce calories. Yeah. Not reduce i didnt count any more of them i happen to like eating a cookie. It is about trying to keep your waistline down. Well done, mondelez were still buying them. I took one out, this is the size of an oreo what happened to this cookie remember kathleen. I told her i had i got nowhere. I was at my reunion, i had an incredible crush on you in seventh grade, she said, no kidding. I have no idea what youre talking about. This tates, when they started, they were like this they were like this. Private equity, little smaller. And then, and then, and now theyre, like, yeah, i was agreeing with you, like oreos, the size of oreos. Well done, mondelez. It is a Great Success story speaking of food, guys, really quick, chipotle, introducing carnkara carne asada nationwide. I dont like that commercial. Doesnt look like real beef. Real beef does not look like real beef on tv, you watch Football Games there was chipotle is doing a big National Advertising i think the stock people will resent this, the stock goes higher shake shack, another one, they go much higher the fast Food Industry is quick serve is doing very well thats not supposed to happen when gasoline goes up. Cracker barrel, holy cow, what a big number 3. 8 if you think gasoline is going to go up you should sell that one, dont think so. I think the forward curve sells that were going to have gas leap, not that hi lean not that high and we should worry. You think the price of oil is not going to stay up, this is a shortterm move. That and funding are two issues that we could spend the next 25 minutes on and we may actually be wasting it i see. Versus talking about the shopify secondary. 1. 9 million shares talking about the fun coe shareholder, 4 million shares. There is a lot of stock coming out, insiders, thats a bad sign. This is back to 329, this is these are nonvoting class as, right . 400 stock a few weeks ago. Thats pretty interesting. By the way, horning, people read through xilinx. Read through to xilinx, with the okay. Short fall. This week, the corning guide cut and the new core guide cut are the two big ones of the week. I talked to john, who is retiring at year end and hes 66. Thats young new core is the only new cores last man standing, okay it is last man standing in the steel if you feel the economy will reaccelerate, buy it here, and i do think that their balance heat is great, dividend is safe, they have a tremendous reputation no losses, like the southwest air of the steel business and i like them. Fedex putting through price increases, nobody likes that i dont know, to me, price increases means you maybe the quarter. When they report after the bell. Expect fred smith to bash the tariffs. They spent year building up the Chinese Business so hard to do. And they have been one of the best at it. Guys, sony, we have been watching for some time, remember third point large owner there, has asked for certain things, we did get a long statement from sony this morning. This may be ahead of what i believe is their invite only Technology Show in japan tomorrow morning it is almost this is not cornucopia related this is what sony had to say the board make up most of it, a lot of different experiences, but the main thing here is theyre keeping the semiconductor business, best strategy for enhancing sonys corporate value over the longterm, based on the fact that the business a crucial growth driver for sony, expected to create more value Going Forward and talk about close collaboration with other businesses inside the sony group. That is something that third point asked for being potentially jetsoned theyre not going to do it no mention of the entertainment assets here. This is far from over. But the reason for the statement does appear to be this large conference or meeting theyre having tomorrow, not cornucopia related. Did you know that sonys purpose is to fill the world with emotion, higher creativity and technology really . Thats that it says fill the world with emotion. I like to build i like to sing a world a song. I thought thats very nice. Always good to know your purpose. And so they do have a long letter if youre a sony shareholder, may take a look at it the question is what if anything is third point going to say. Randall stephenson talking with bob bakish, the ceo of viacom, soon to be viacom cvs and Charlie Ergen is speaking from dish a lot of attention. Were looking forward to that, a lot of questions you might imagine from mr. Ergen in terms of will he be able to successfully set up the competitor is he going to have partners so many different not clear what hes going to say today. How about aria manual full disclosure, this is kind of the picks and shovels and pans for gold that theyre doing it for all this town. Yeah. Interesting this deal is coming public and not talked about enough in public filing yesterday could be an interesting i agree as youre talking, oil is down 250 as the reuters has a headline now, oil output will return to normal levels quicker than initially thought reuters citing two sources briefed on saudi oil. We have fake news then, earlier this morning it was going to be it is going to take longer the market is saying it is going to come in, should buy southwest air. I told you the curve says the curve continental is down oil related sto ed stocks wet significant. Talk about a we dont talk enough about destruction of capital. We got a number of calls we havent yet hit. Two upgrades, one at splunk, jpm, one is snap out of let me tell you, the splunk, that i had doug marigold on that company is great. It didnt have the best quarter. I think the whole quarter could be explained by accounting doug is terrific people should buy splunk one of my cloud kings. I can see through that whole quarter and see what they were doing in terms of subscription their business, which is obviously how to security and be able to cure rate things, see what is going on, dive through the data, theyre good at it when you use mlb. Com, it tells you it is working, they do a lot of sites checking of sites to be sure they work. What about okta. Okta hit pretty hard here. Thats the whole Momentum Shift or shift out of i think you buy out i think Todd Mckinnon is doing a fantastic job. I would buy okta here. New relic, you know how they came up with the name, it is the an gram for lou serna. You are filled with useless information. Completely useless, thank you. A show about nothing. This one or no. The one that netflix just paid a fortune for. Get the worldwide rights for our show we could all retire. Were in peacock. Were part of the peacock, right . You can get all seasons of squawk on the street going back ten years arent we a podcast thats a season three of us, that was a great season. I know. Cliffhanger. Priceless it was priceless bob was on that one. It was one of our best ulta was moving up the whole season the season about ulta. Two final things, home depot downgraded to neutral. That was just that was so ill advised. And reviews of the apple phone out today. Were going to talk to ed beg of usa today later on this morning. In general, positive, i would argue, maybe not glowing, maybe not they didnt reinvent the camera this year. I still think that everything that makes it so that you look better on instagram, selfies, people want. You can readjust the lighting so i think that i could look i could look like cary grant if i do this thing right. You could never look like cary grant see the cameras, three he cameras, cary grant has nothing on me. Except that he was the greatest movie star of all time. Youre john garfield. I am. Im john garfield. He died young, though. He was investigated those issues about politics. Yeah. Killed a lot of people. Yes, yes. So s p managed to go into the green. Lets get to bob pisani. Happy tuesday, everybody. We are flat essentially but the trend here is the big cyclical rally we saw, it is starting to look a little old and little long in the tooth. Lets look at the major sectors here china is impacting, the weak Industrial Production numbers still impacting, were down almost 2 in shanghai, so metals and mining have been weak. China shares are weak here in the u. S. , banks are weak, retails are a little on the weak side, energy has been down all throughout the morning, saw oil moving down on some of the recent headlines here. This was that big cyclical trade that was powerful in the last week and a half. See it slowing down a little bit. Moving markets, we have the fed meeting today, a real dilemma here, we had great Industrial Production numbers in the u. S. As opposed to china, which had disappointing Industrial Production numbers yesterday the fed is in a conundrum about how strong they want to be on keep cutting rates story chinas slowdown is continuing, thats out there thats a big issue retail sales were weak as well over there the big problem is were in this nothing area on earnings, are we at a global bottom in the Business Cycle or not . Nobody knows so it is youre not hearing a lot about earnings right now it not clear that direction were going in thats going to be a little bit of a problem see the malaise in the bank of americas monthly report, fund survey, i love watching this, it is fairly large, a good contrarian indicator look at the Merrill Lynch fund survey said right now, 38 , expected recession of next year, about 150 big global fund managers, thats high. 59 say no recession this is a good contrarian indicator, remember, fear level is very high what are they most afraid of, obviously the trade war, that has been the big issue, 40 cited as the number one fear this is interesting, many feel that Central Banks may not be effective anymore. I havent seen that before bond market bubble, china slowdown, thats been around for a while. What is the issue going on with the that would change things, the most bullish thing that could happen to make the market goes up, you think lets end the trade war, no, german fiscal stimulus, the number one thing that would move Global Markets now, thats interesting. Christine lagarde is very involved in trying to make that happen fed rate cuts, Infrastructure Spending what is going to have a big move on some of these markets, what will make a difference here, the biggest crowd of trade is long Treasury Bonds thats been out there for six months now thats the thing that could blow up the easiest, the biggest thing that could turn things around, Long Technology and long gold also two other most crowded trades out there finally deerks spi finally, despite the wework, the market moves on here, Big Software Company coming, data dog, big Software Analytics cop, they price in the next thursday, look at this here. They up their shares 24 to 26, prior talk, 19 to 22 cloudflare did very, very well they upped their numbers they priced at 15. Cloud fair is still trading above that, may be down today. 18 at the close yesterday finally, another big dental Company Despite what was going on with smile direct here. Invista pricing tomorrow, here at the New York Stock Exchange well keep an eye on that one as well carl, back to you. Bob, thank you very much. To the bond pits, Rick Santelli at the cme in chicago. Good morning again, rick. Good morning, carl. We had a bunch of options last week you have to pay for what you bought when you add into it that the intermediates to that process, primary deals have bloated balance sheets, tbills, theyre gushing now. If you look in the rear view mirror, we had extended periods with this much action. But never after an issue regarding the debt ceiling and the treasury trying to get as much back into the coffers as possible and all these influences are creating a bit of a shortage how can you explain it easily . As the options come up, you have to pull out your wallet. To pull out your wallet, you might have securities lent to somebody else who cant get the money to give it to you. Making a long story short, short term funding should have moderated after the options settled but they havent that big question mark has many answers the market is grappling with that hasnt affected treasuries in a big way. I think the runup in treasuries after the august route is all part of that whole issue and then add in the dollar which isnt actually higher yet, but it may quickly look at one week of 10s we elevated down a bit that 190 yield, if you open a chart up to july of 2019, you can see that we had the big drop and were coming back. All of that makes things a bit dicey. When you look at bunds, they lowered their rates, theyre bring quantitative easing back but our markets are in control again and as you see the spread widening lets look at year to date of the treasury vix, think the vix for stocks, it is elevated to the highs of the year. The dollar index, since january 1st, 2018, what you should realize is how far it has gone up open the chart up to 2014, the last time we were above or near 100 was early 2017 by all accounts, this funding issue will make more demand for dollars. Carl, jim, david, back to you. All right, thank you very much, Rick Santelli. Still to come, Continental Resources chairman and ceo harold hamm, well get his talk on the saudi oil attack and impact on Energy Markets dont miss jims interview with the speaker of the house, nancy pelosi, mad money, 6 00 p. M. Eastern time oil is back below 60 now reuters says output in saudi will be fully back online in two to three weeks were back in a minute e 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. Classical Music playing throughout it also has the highest growth in manufacturing jobs in the us. Its a competition for the talent. Employees need more than just a paycheck. You definitely want to take advantage of all the benefits you can get. 2 3 of employees said that the workplace is an important source for personal savings and protection solutions. The workplace should be a source of financial security. Keeping your people happy is what keeps your people. Thats Financial Wellness. Put your employees on a path to Financial Wellness with prudential. Theres a look at crude for the week look at this quick 4 drop as reuters says saudi oil will come online a lot sooner than expected dow down 65. Were back in a moment through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From managing inventory. To detecting and preventing threats. To scaling up your production. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Big show tonight, jim. Yes ive got the speaker nancy pelosi, and a lot of issues that involve, i would say, trying to unite the country. Im going to cover that but obviously theres plenty of drug pricing and the usmca. My lead story. Sure. David kathleens, thats the forerunner, thats why i brought it up, it was not idle. Thank you for explaining that. John garfield wow. We like to tie up all yeah. Loose ends. I cant wait to see the speaker and the speaker for at love people is a centrist figure after initially not being centrist boy have things got different in the country. Notice i didnt say out of control. Im a statesman. Well see you tonight big show mad money 6 00 p. M. Eastern time when when come back, harold hamm dont go away. Thats why we built a portal into the future. Good luck brad and brads in the future. Uh, with Vmware Cloud Foundation, cdw can deploy a flexible hybrid Cloud Solution that can scale with your needs. Today and in the future, so you dont need this. Wow. That sounds great. So, what happens . Jerry has been stealing our lunches no for hybrid Cloud Solutions, you need Vmware Cloud Foundation and it orchestration by cdw. People who get it. Tv aas many safety features powas the rx, the new. The lexus rx has met its match. If theyre talking about you. You must be doing something right. Experience the style, craftsmanship, and technology that have made the rx the leading luxury suv of all time. Lease the 2019 rx 350 for 399 a month for 36 months. Experience amazing at your lexus dealer. Welcome back to squawk on the street. Im diana olick in washington with breaking news from the National Association of Home Builders were just waiting on a sentiment number and here it is. Home builders sentiment rose one point to 68 in september on the National Association of Home Builders index and augusts read was revised 1 point higher that is well above expectations and the highest level of this year anything above 50 on the index is considered positive a sharp drop in Mortgage Rates in august was behind the number. The average rate on the 30year fixed fell about 50 basis points from mid july to september of the surveys three components current Sales Conditions increased 2. 75, buyer traffic a 50 and sales expectations in the next six months fell 1 point to 70 rates did shoot back up last week and another warning from the chief economist robert dietz, builders are expressing growing concerns regarding uncertain uncertainty stemming from the trade dispute from china and the slowing in the Manufacturing Sector is holding back some parts of the nation. Back to you guys. Thank you very much. Good Tuesday Morning welcome back to squawk on the street. Im Carl Quintanilla with sara eisen and david faber. Markets down 72 on the dow but pretty good numbers out of both the nahb and Industrial Production earlier this morning. Our road map for the hour starts with oil. Its sliding right now after its biggest jump yesterday in more than a decade. How to play the volatility with the fed kicking off its twoday meeting. Kraft heinz in a pickle whats sending the stock lower wework delays plans to go public well fill you in on the latest. Lets start with the crazy moves in oil, extending losses right now on headlines that saudi output will be fully back online in two to three weeks. This after oil posted its biggest gain in more than a decade on the saudi attacks. Brian sullivan joins us with the latest sara, good morning. Were at the gas tech conference in houston gains today, gone tomorrow good grief you are right. The only people winning at this are the volatility players some of the equities, heavily shorted stocks, rising 30, 40, 50 . Today as you noted at the top were seeing oil both here and brent crude come down. Theres two real reasons because you have a geo political thaw and some positive headlines about when this oil will be back optionmonster. Lets focus on the first iran says theyre not behind it. Trump says no reason for any kind of a military action now. Macron head of france saying he hopes this doesnt disrupt thaw in getting iran sanctions taken off the table. Geopolitically maybe for now it didnt heat up as much as some had thought. From a fundamental perspective, wires crossing that saudis hope to have about 70 of the lost production online in two to three weeks. 70 , thats 4 Million Barrels if my math is correct that should come back online. They hope to be fully back online in two to three weeks. You might have a short period where theres still half a million, million and a half barrels a day shortfall. Of course opec has Spare Capacity of 2 to 3 Million Barrels a day. The market obviously feels right now that its well supplied. I will just say this, and im not discounting what the saudis say because they know, its their facility, this is whats called a Gas Oil Separation plan thats what was attacked at abqaiq i had a chance to talk to guys im at an oil and gas conference that are technical experts. Its a complicated plant that does complicated things so i do wonder if once they get further in there, if that could be pushed up or pushed back its like when a tree falls on to your roof the contractor says i will have it done in a week, you hope theyre right but they might find other things. The markets are calming down a bit but what a 48 hours for the price of oil you said it, brian. Past 48 minutes for that matter. Brian sullivan always bringing clarity to the energy complex. Joining us to discuss the attacks and the whipsaw action this morning, is fellow oil man harold hamm. Chairman and ceo of Continental Resources. Welcome back good to talk to you again. You bet, carl good to be with you this morning. I dont know if youve seen these reuters headlines but they seem to be quoting sources saying that supply could come back on within two to three weeks. Do you believe it . You know, were in a very dynamic industry and a lot of speculation around timing and all that i think we just have to look to the long term. I hope theres not any counter attacks over there that would further disrupt the entire market but one thing about it, about 20 of the worlds oil examines o comes out of this recently and its a very volatile area. Weve known that for a long time the good thing about u. S. Energy independence is that we dont have to rely on it so much still yet, were in a commodity business and you take oil off anywhere in the world and it affects the rest of the world. I think that, you know, when we produce so much oil here, weve had it before an embedded premium risk measure price of, you know, maybe 10 to 15 a barrel, and that kind of vanished over the last two or three years. I would say that doesnt stay with the price Going Forward theres a lot of risk over there and its been an unstable region of the world so how do you think, harold, about the price movements right now . Did we get a big enough jump that it would spur some kind of extra cap x from your company and other Oil Companies we could see the u. S. Ramp up production . You know, weve been working with an oversupplied market for the last five years and the market has basically told operators in this country, you know, you need to stay with the capx, you dont need to outspend make sure you have cash flow, Free Cash Flow all those things that basically make up capital discipline certainly our company is going to do that, and i think other operators in this country will do the same. We want to meet demand, thats for sure, but, you know, these shortterm spikes are shortages in the market is not something that youre going to change. Everything you do on your budget within a year. Were going to stay where were at for the time being. Interesting harold, you think this risk premium sticks around because of the evolution of these weapons that the rebels are able to use or is it Something Else . Well, all those things. You know, this has always been an unstable region, you know, and for as long as i remember having been this business a very long time, and its going to continue yeah, for all those sophisticated weapons, certainly and youve got a lot of friction thats going on there going within with the iranian sanctions, a threat of a nuclear weapon, all those things, so this is going to remain a very unstable region for as long as i can perceive yes, i think that embedded premium that the analysts are projecting i think its a good possibility thats sticking. Harold, i believe youre still pretty close with the president. I know youre a big donor and had a Good Relationship with him. Have you had any conversations with President Trump about the events of this weekend and how hes thinking about responding with the Strategic Oil reserve or potential counterattack against iran theres been conversations with the white house, not directly with the president. The president , of course, has been very busy this weekend. The president has done great things with the Energy Industry in the u. S theres a lot more to do particularly with the infrastructure and things like that to make sure that we have a very strong industry here, but the response from the white house has been right on exactly. They havent overreacted because, you know, what we have here in the u. S. , commercial storage, all those things that basically work in a situation like this. Sounds like you dont think were going to need to tap the reserve here no, thats not necessary at all. Theres a lot of commercial storage in the world, some 4 billion barrels, a lot is in this country right here we have 39 Million Barrels, so a lot of storage can be pulled forward to take care of the supply situation. Really quickly, harold, i mean does it make you question the vulnerability of u. S. Oil facilities if saudis biggest facility was vulnerable to a drone strike like this you know, were safer here in america, thank goodness, so we dont sweat it too much. We do have a lot of storage in one place, curbing, oklahoma, its no secret, and the gulf coast facilities will equally become important we have a lot of export facilities, exporting up to about 5 Million Barrels a day to the International Market so yeah those things could be somewhat vulnerable, but thank goodness for the security we have in the United States. Harold, thats good guidance, especially on a day where people arent really sure what to believe. Thanks for that. Well see you soon harold hamm. Thank you while we work, the we company has decided to postpone its initial Public Offering. Late yesterday however, the company and its various advisors and potential underwriters backed off from that plan. There simply did not seem to be enough demand in the marketplace for what would have been 2 dlb worth of stock or as much as 3 billion, at least at the price that wework was hoping it might able to attain, even though that price is far below what even just a few weeks ago it had hoped to attain as an overall view for the company it has been a chaotic process to say the least, judging at least from the many conversations ive had with many people who are involved or have been involved a lot of different decisions made or not made that seems to have really made it very difficult for the company to meet the expectations of shareholders in terms of at least what they wanted to see for a Growth Profile for the company. The questions, of course, raised about its Business Model and governance as well, given those questions about the Business Model and coupled with what did not appear to be strong governance at all. One key aspect, of course, of this has been the relationship between wework, its founder and ceo adam neumann and masa son who had that fund invest as much as 10. 5 billion in wework im told that massa was ready to come in, in the form of a billion dollar private placement, to the ipo, if you want to call thats or at least to the fundraising so they would have go out public with 2 billion needed to be raised. He was going to have his warrants that had previously been received by softbank in the deal they did earlier this year reprised at the ipo price, so that was not the issue, even though many people thought that perhaps animosity or at least tension between mr. Newman and mr. Mass a may have been one reason why there was a delay not that, just really a lack of demand weve talked about it coming down from 20 billion to 18 to 15, to 12. The question is would they have been able to do it at a 12 billion overall valuation. Which gets into the next question which is will they ever be able to do it what will change in the delay . They can make more governance changes but you have questions to the path of profitability. Its a great question 30 days is not a lot it will give them an opportunity perhaps to just get it together. I know theres no other way to say it, but this has been a process that in some ways has been in disarray in terms of at least my conversations with people around it and their frustration with certain things. The only other thing that could help them is new numbers and they are going to have an opportunity to report or update their s1 with new Third Quarter numbers. Those conceivably will be strong and that perhaps is something they can start to build a narrative around his wife will no longer be picking the successor . No. That was out last week thats right that was an interesting twist. You get to pick my successor as governance here on squawk on the street. When we return kraft heinz getting squeezed later on halftime dont miss more big name interviews together on space. More squawk on the street coming up. E w dn thdoisow62 when i lost , 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. It is already working in cities like tokyo. What do you look for i want free access to research. Yep, td ameritrades got that. Free access to every platform. Yeah, that too. I dont want any trade minimums. Yeah, i totally agree, they dont have any of those. I want to know what im paying upfront. Yes, absolutely. Do you just say yes to everything . Hm. Well i say no to kale. Mm. Yeah, they say if you blanch it its better, but that seems like a lot of work. No hidden fees. No platform fees. No trade minimums. And yes, its all at one low price. Td ameritrade. Weve got new cnbc data this morning on the potential Federal Reserve rate cuts and President Trumps handing of the economy all ahead of the fed meeting decision tomorrow. Steve liesman joins us with the results. Good morning. Thanks very much. Expectations for tomorrow among our cnbc fed survey respondent, 43 fund managers, strategists and analysts as well 100 say 25 basis points cut coming at the meeting announced tomorrow 92 say that rate cut will come in december. Just 25 cut not a 50 and then 1. 6 the average for next year. Perhaps another one coming in 2020 at the same time theyve done this, theyve raised or ratcheted up the chance of recession. See now its nearly 32 , the second highest as weve been doing this survey. One, two, three, this is the fourth peak. Theres been no recession after it each one of these peaks, though, is associated with a change in Federal Reserve policy you can also see that last year it was below 20 its high. Now, recession is not the base case Slower Growth is the base case for the group. Take a look at the change. 2. 5 was the q4 number for 2018 1. 8 in 20 and towards trend, 2 in 2021 with a decline in the outlook for growth, a decline in the president s economic approval rating. This group you can see, generally supportive of the president s handling of the economy. Once, twice, now a third time dipped below 50 this is a 20point drop, the most precipitous weve seen. If you do the net, approval minus disapproval, only two points, the lowest of the president s tenure right now a big part of the reason they dont really approve of the trade policies and dont agree with the president criticizing the Federal Reserve. The ceo of Tripoint Global Equities says the tariffs are starting to have a detrimental effect on Small Business that will compound as time goes on and will have a material effect on the economy jim paulsen writing in chief investment strategist says i believe the degree of Economic Policy stimulus that has been unleashed by the private market has been greatly under appreciated. Well see which one wins out here the stimulus from the Federal Reserve and lower rates or the tariffs, the trade and the Global Economic weakness believed to be dragging growth down sara stay with us if you would we want to talk about the broader Global Economy, the outlook ahead of the fed meeting and some funny things happening in the bond market joining us former chair of the Economic Council of adviser austin goolsbee. In terms of the whole rate cut debate for tomorrow, we just got a pretty Strong Manufacturing number, Industrial Production rebounding in august the stock market is 1 off a record high. Does it still make sense for the fed to be cutting rates tomorrow i kind of think it probably still does make sense for the fed to cut rates it was good to get the Strong Manufacturing number because it follows a couple of months of fairly weak and surprisingly weak numbers, but as steve will tell you, as the fed was running up the rates i was pretty skeptical because it didnt seem like if you looked at conditions, that they that they were so much better that they would warrant tightening. I dont think that one or two small better than expected numbers ought to change it from that path. Thats a good point also just wanted to bring into the conversation what everybody is buzzing about right now in the bond market and beyond we got this cost of borrowing surging overnight in the repo market i mean its shortterm lending market, of course. Whenever that happens it makes people worry about lehman and credit tightening and dollar shortage im wondering how big of a deal you make of this and how you can explain why people are paying attention to it . Okay. Its a touch premature i do appreciate why youre asking the question. The markets are abuzz with whats going on. This is, folks, this is plumbing and plumbing creates leaks and leaks can create damage. Thats wait to think about it right now. Sara is right, the overnight rate for repo, which is to finance paper out there, blew out. The fed came in and did an operation i understand withdrew that operation and spiked back up and western waiting i think in the last ten minutes or so, the fed injected 75 billion of liquidity into this olympvernigt market the reasons im hearing have to do with perhaps Corporate Tax payments, perhaps end of the quarter stuff, and concern about the idea being i dont know if im going to be able to fund this paper so i go in and do it earlier and theres a huge demand it may be something that feds liquidity can work out the reason why theres such concern and i dont want to raise the level of concern, this is what happened in 08 and 09. It was a real sign of problems out there. Nobody ive talked to so far, sara, has gone that far and told me this is a big issue right now. Yet, theyre watching it and theyre concerned. It is a blowout. It may be that it can be solved quickly. Yeah. I mean really good explanation we havent seen anything comparable in libor and other indicators good point. How do you think, austin, about these kind of indicators of potential growing stress in the system and how vulnerable we are right now . Well, you know, our strongest part of our economy, which has still remained pretty strong, has to do with the job market and Consumer Confidence and Consumer Spending. The weaker parts have been capital investment, kind of got a little softer, you see some of these plumbing issues. I wouldnt be surprised if they looked back and the diagnosis had something to do with the weird movements in the price of oil coming about from the events in the middle east maybe somebodys heavy in that space and they got some problems i think the danger would be, though the Consumer Confidence and Consumer Spending has been the thing kind of putting us up, that can change if confidence flips around and it can change pretty rapidly when we have had recessions, every single recession postworld war ii since weve been keeping the data, began with a big drop in Consumer Confidence i would just highlight we all got to keep an eye on those consumers and if tariff wars escalating or gas prices going up or war in the middle east or any of those things were to flip that, then i think there would be some pretty serious danger ahead for regarding recession, not just slow down. Steve, finally, fed funds futures suggesting maybe a chance that there is no cut this week what do you make of it is it overstate sfds. Carl, remember i said that saras question was premature. The reason is because ive not had a chance to report how the blowout in the repo rate is affecting the fed funds future market i would suggest right now, that estimate is correct that you read, but i would take it with a grain of salt. It strikes me that the blowout in the repo market is affecting the calculations in the fed funds but i have not had a chance to run that by the guys who calculate these fed funds probabilities. I would go and i would i would go with osurvey i believe theres 100 chance theres going to be a rate cut i think thats the right way to think about it i think that that is probably what the futures should be showing, but im going to go and do the work on that now. Bank of america has a note saying that repo pulls the fed funds affected rate higher. Thats what i would have read before i came on, yes. I just have a final question, austin, maybe to tie everything together here with what you said its about the u. S. Consumer how do you think about this oil shock, double digit rise, one of the most historically big rallies weve seen in oil and whether the consumer in the u. S. In 2019 can handle that . Well, i think if its going to be this, the price is going to go way up one day and literally the next day is going to come way down, i dont think that will affect the consumers very much because where the rubber hits the road, if you want to call it that, is at the gas station and i dont think that gas stations get out and change the sign as frequently as that if this is a sign that were going to have massive uncertainty in the middle east and we might start seeing more Cruise Missile or drone attacks or saudi arabia is going to get in an extended conflict with iran, then i think for sure thats going to affect consumers because thats going to affect the price of oil it was good news to see oil going back to normal and them saying theyre going to be able to get this back online yeah. For now. Austin goolsbee, thank you steve liesman, thanks to you as well. Pleasure. Shares of kraft heinz are under pressure after 3g its largest owner disclosed it sold more than 25 million shares of the stock. 3g is the second largest after Berkshire Hathaway and owns about 245 million shares, roughly 20 of the Company Important to note here as well that jorge paolo lemann, one of the founding members and kraft board member increased his investment along with other 3g partners and acquired roughly 200 million of the shares, about 28 of the 25 million that were sold and 3g goes on to say that the shares sales are driven by periodic lickedty requests by investors in the 3g funds. Thats something i referenced earlier, however i am told that speculation that one of the potential sellers or people who needed liquidity was batista, well known, one of the richest men in brazil, in jail, recently released, is not true. So at least we can tell you that it does appear, sara, that the selling is on behalf of other investors in the 3g funds who need, as they said, periodic liquidity. Investors, though, saying hey, we still want to sell the stock. I mean, it comes on top of what do we go back to february when it had to write down 15 billion worth of its two iconic brands, cut its dividend, got a subpoena from the s. E. C. On accounting, had to delay financial filings, goes from bad to worse the gut instinct when you see a 3g sale is lack of confidence. You have to hear from warren buffet he is the biggest shareholder. The largest shareholder and if he were to start selling it would be a different story 3g still owns 20 and their insiders, so to speak, buying some of the stock being sold to create liquidity for the 3g investors at least they want the market to see as a positive as opposed to the negative its being taken as. Taken as a negative you have to put it up against any other food stock this year, look at the other story campbell soup, they are turning it around that was a tough business too, packaged soup. Theres the divergence and see the loss of confidence really did not come from today with the second largest shareholder selling whatever the reason is all right guys, still to come, not a must buy, why usa todays ed bage is not completely sold on apples new phone. For all the drama surrounding rates and oil, s p and 3 k proving to be sticky back in a minute n. Because they need the massive capacity of 5g with ultra wideband, so more screaming, streaming, posting fans. Can experience 5g all at once. This is happening in 13 stadiums all across the country. Now if verizon 5g can do this for the nfl. Imagine what it can do for you. Im sue herera heres your cnbc news update at this hour. Iranian leader aya toe la khamenei say there will be no diplomatic talks with the u. S. At any level the remarks meant to end speculation about a possible u. S. Iran meeting between the countries president s at the u. N. This month. 22 people were killed in a taliban suicide bombing near the u. S. Embassy in kabul. It came shortly after a bombing targeted a Campaign Rally by ashraf ghani that bombing killed at least26 people ghani was unhurt. Israeli Prime Minister netanyahu casting his vote in israels unprecedented repeat election he is seeking a fourth consecutive term in office and fifth overall. He is facing a stiff challenge from retired military chief benny gap benny gantz. California Police Arrested three teens after a threat against their Desert Hot Springs high school surfaced on social media. The threat discovered by a staff member Officials Say they confiscated two firearms and had enough evidence to charge two males and one female with makingterroris threats. You are up to date thats the news update carl, i will send it back downtown to you. Ill take it, sue. You got it, sara. All good. It is time for our etf spotlight. Taking a look at the u. S. Aerospace and defense etf ticker ite, pushing to extend its daily win streak to six, the sector on a steady climb up 33 , getting its recent boost from the geopolitical tensions in the middle east. A mixed picture for the ita components today heavyweight boeing is among the gainers nof trum grummans also pif. When we come back we are all over the volatility in oil down about 5 closer to 59 than 60 how investors should be playing these markets when sqwkn e re meback o through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. The whipsaw in the oil markets continuing this morning. Extending losses now on headlines that saudi output will fully be back online in two to three weeks. Wti crude down almost 6 it jumped 15 yesterday. Chevron chairman and ceo Michael Wirth joined closing bell yesterday and heres what he told us about the impact of the saudi attacks on Global Supply. 5 of Global Supply coming off unexpectedly has an impact on the fundamentals that derm prices and the question is how long is the supply off, what does this event suggest about a risk premium that perhaps has not been as evident in the market, and so, you know, the backdrop, the fundamental global Macro Economic backdrop hasnt change i think a lot of the supply fundamentals havent changed in the long term. Joining us now, jpmorgan head of oil research and strategy, abi, and Nasdaq Energy analyst tamar. Good of you both to be here. Everybody has their sources right now and trying to read reports and figure out whats going on with saudi production what are you hearing i think there has ban lot of kneejerk reaction over the weekend as weve seen already in the press. When we did our own analysis we put out a report early on monday and had three scenarios, one in which 50 is cut off one week, second in which 50 of oil from saudi arabia is cut off 30 days and the worst Case Scenario cut off 90 days. The base case was cut off one month in which the risk premium coming from poourl fundamentals was around 7 to 8 and in addition to that positioning base risk was 7 to 10 were looking at a 15 impact if oil was off for a month and that 15 would have been seen in october. In one of the lowest risk scenarios where we considered one week of cutoff and thats what you perhaps the markets seem to be reacting right now to, risk premium was around 6 wisconsin which is what i think markets are reacting on todays news this is the type of damage weve seen in saudi arabia over the weekend. That does take long to recover you do have wells shut down, especially in some of the fields in saudi arabia because of the impact and these wells should come online, especially if they are lets say more gas, just takes time to restart them, whereas if they were just purely oil they would restart immediately. We have to take it with a pinch of salt here and also try to read for the full assessment from saudi aramco in terms of what the full damage is, but based on what evidence we have i think its going to take a little bit longer than perhaps the kneejerk reaction now we are seeing again in the snooshgts market. Ta mar, what is your view i think that the satellite images show there were really extent Severe Damage and this is very sophisticated, customized equipment, so i dont think that get gsz replaced so quickly. Saudi inventory they have domestically and inventories they hold internationally can cover their export requirements for about 30 days, but if were talking about an outage beyond that, that should add at least a 10 premium to the price of oil. Tamar, we had harold hamm on a few moments ago and thinks the risk premium of 10 to 15 is embedded and not going away because the middle east is, yi dont know, is it getting more dangerous . Its been a hotbed for decades but is there something about these drones that is uncovering some Kind Strategic liability with these facilities . I think so. I dont think that market analysts had really been appreciating the degree to which these assets are vulnerable. We know that saudi arabia has been investing billions in defense of these assets and always know that abqaiq is the most important oils asset on the planet but thought it was well defended but not against these unconventional weapons we should have at least a 3 to 5 risk premium embedded into the price Going Forward, regardless of how long it takes to get the production fully operational and regardless of what the ultimate playout is here, whether its diplomatic or military because we now have assets that are exposed that the market wasnt appreciating until this weekend. How do you think about what the market is factoring in or betting on in terms of what the response from saudi arabia will be well, yes, in terms of the geopolitics, i mean when it comes to production itself, we are looking at the real Response Time of one week in terms and then one month today i think based on the news its coming out in the press from aramco they can return production quite substantially in two to three weeks. In terms of geopolitics response, if you were to say how does saudi arabia and the region respond to potentially what was a threat over the weekend from iran, i think thats something that this market definitely was to the pricing in earlier. There was only investor malace at that point because of Global Economy faltering and demand for oil being really weak. What this event has shown that geopolitical risk concerning saudi arabia and not just the strait of hormuz, actually within saudi arabia and related to the region, needs to be embedded for the time being in the term of 5 to 8. I dont believe that is embedded given that we have reacted to the saudi news in quick return of oil. Thank you both for joining us. Thank you meanwhile, the reviews are in, apples iphone 11 models have been tested by tech watchers weighing in before the phones ship to customers starting friday. The verdict from usa today, not a must by. Ed is here with the new iphone we always look forward to getting your take. Good morning. You brought a couple in i think your general take is that it is the best phone apple has ever engineered. Absolutely. Best phone you would expect that its got the newer processor, the a13 bionic, the cameras are really good. Battery life, which is the Precious Resource we all want appears to be a lot better where you notice that is not if you have last years phone or phone from a couple years ago, a lot of people are Still Holding older phones i think if you buy this one and maybe you have a 7 or older, thats where youre really going to see that difference you will see it in the camera. Is it enough to get people to pay up and upgrade well, thats the question my sense is where are you in your buying cycle . Obviously you always have to Pay Attention to your budget but if you have a budget the question comes down to where are you in your buying cycle and is there enough there last years camera was really good the camera the year before really good. Is this one better yeah features like a night mode where you can shoot in the dark and get a pretty good picture without a flash. Is that worth a few hundred bucks to you those are the questions that the consumer has to ask themselves. I like the new colors. You like the color. Yeah. Im kind of partial to the you got a boring one. Theres purposes and yellows all sorts of colors. Yeah. This is the iphone 11 which is kind of a purple look. Thats the midnight green of the 11 pro max, the biggest of the new phones. On this one here, on the max, how important is this . Three cameras looks a little like the heads of a razor. That was the joke at the event, yes. Yeah. What youre getting there is a third camera a telephoto, a wide, trawl wide which lets you capture more of a scene and a telephoto. Its a nice thing to have. The 11 does not have the third camera 300 premium for that third camera its a nice thing to have. Its probably not a deal breaker for everybody. Nice thing to have if youre doing what again, it gives you just more flexibility in the kind of scenes you can get more of that beautiful vista out there without really moving. Its very easy to switch the cameras all Work Together its really very easy to get, you know, different vantage points on a shot. What about the price and how does it stack up to the competition . Well, i think the price of the 11 is pretty good. For apple 699 for a new iphone is a pretty attractive price youre looking at 1,000 or more when you go to the pro these are still expensive phones you can find cheaper phones out there, but its not like samsung is, you know, down in the Bargain Basement theyre charging a lot for their phones i will be curious to see what google does when they come out with pixels. We expect that in the next few weeks. For apple the prices arent horrible they came down a little bit on the 11, which is interesting. People were wondering if that was i dont know some sort of admission they went too high. I think it is they may not come out and say that, but i think you have to look they still sell a gazillion iphones but fewer than in the past and they have to be mindful. Are you a believer samsung did get momentum with their own bells and whistles, sort of the failures excluded and an answer from apple to that well, i think apple would have come out with something similar to this anyway. Regardless . I think so. We saw the three cameras like weve seen that on the galaxy phones already apple is never first or rarely first to this stuff. To them its not a market until they decide it is one. Yeah. So theyre mindful of the competition, but i think they would have done it anyway. As far as some of the newer designs, samsung has had a very slow start, suffice it to say with their foldable phone. I suspect apple has something in the lab, but there doesnt seem to be a market there right now. Have you tried the watch yet . I am starting to play with the watch. The series 5. Series 5. It will be interesting to see. What they didnt offer which i hoped they would is baked in kind of sleep detection. I dont know that it would change my nights sleep. Battery life is an issue on that thing. When are you going to charge it if youre wearing it when youre sleeping. Everyone asks should get this one or wait until next year . Thats always the question. If you need one now, if your phone is three years or older, i would say get it now cracks all over your screen. Next year there may be something more interesting, 5g next year, too soon for it this year its a very nice phone i can tell you that. Theyre all nice phones. They are. And you have one of the best jobs in the world, ed. Thanks for coming in. Good to see you. As we go to break, take a look at shares of anheuserbusch the beer brewer relaunching an initial Public Offering for its asian business seeking to raise nearly 5 billion in a hong kong listing. The company abandoning an earlier attempt inulto jy do so the dow is down 29 called usaa, it was that voice asking me, is your daughter ok . Thats where i felt relief. Were the rivera family and we plan to be with usaa for life. See how much you can save with usaa insurance. See how much you can save stand up if you are first stand up if youre a mother. If you are actively deployed, a veteran, or youre in a military family, please stand. I will tell you this, Southern New Hampshire university can change the whole trajectory of your life. Could the crude oil surge come back to bite the consumer if one top strategist assesses the potential damage on tradingnation. Cnbc. Com more squawk on the street is coming up. So, every day, we put our latest technology and unrivaled network to work. The United States Postal Service makes more ecommerce deliveries to homes than anyone else in the country. All right, sara, whats tonight on cloclosing bell well peek to Mark Randolph of the growing competition and the streaming landscape. The name he calls for streaming service, well talk about everything thats going on in that business. On the earnings front. Chewy ceo will join us to talk well be busy starting at 3 00 p. M. Eastern. Well continue to monitor the crazy movement and this oil. Wow fumbles almost 4. Fedex will be interesting, jim was talking about it in the 9 00 a. M. As we maybe get some more clarity on what fred smith thinks about globaltrade policy, this rate increases for ground shipment and delivery it has an economic. What are they seeing in term of the trade disruptions and the Global Economy the u. S. Data has been some what encouraging. Industrial production rebounding fors the month of august, it is a good sign. The fed kicks off its twoday meeting with a lot to think about and debate we know a bunch of centers who think the market is in a good shape they got these weird things going on yeah, i know. The new york fed had an interesting morning as they tried to do their operation in ten years, suspended for some technical difficultiedifficultis we got it back online. It is a big story tonight. We keep our eyes on crude. Jim has had a busy morning as well tonight on mad money, interview with nancy pelosi. Hes here to tell us at least a clue of what we heard. Absolutely. I press the speaker about an agreement with mexico and canada and she was actually i felt quite positive it is going to get done why dont you take a listen to this if you agree. When the others are saying bring it to the floor, there is nothing to bring to the floor yet. But we hope we are on the path to yes most important issue at standing is not forciblety. The idea that we would give a victory to the president irrelevant is a victory for the american people. What she said is interesting on the washington post, will the speaker succeed to a party line and not let the president have a victory shes not thinking like that at all. I felt the importance when i spoke to her at length about this very positive. I think this was a breakthrough, i heard a speaker who wants to do a deal, not an idllogical her line is hope for the path to yes yes thats what i think is important. I dont think the president is against enforceability either. You got someone that leads the part true leadership of the party again saying it is practical and practical and wants to work with the president and get it done. This is different for people who are running for president who are not that anxious we are going to say no. Just the opposite the witness test for the speaker, will it help the working person she believes a new form of napa is not waiting for the working person, it is unfair this deal will be much better. Those believe shes not going to bring something to the floor it is nothing to bring right now are misguided and ill advised. If you want to put it in terms of the stock market. Trade is an issue where you can see democrats and President Trump may see eye to eye i wonder if she feels that way backing him as much on the china tactic she wants to stop the chinese from doing what they have been doing. Shes worried about stealing jobs wants to do it multi lateral, definitely recognizes it has to be done we have to address it. And the grave issues between them but she wants enforcement she feels that china gotten away too much that would be grave mistakeme misstatement she uses the word practical multiple times verses the people running in her party are not technically practical. Thats big, james the speaker we addressed amazon and facebook and everything because she got a view on everything thank you, jim. Be sure to watch mad money at 6 00 p. M well send it over to john ford with a look of the next hour meanwhile the market for Flexible Office stays continue to get more complicated. Ceo and cofounder of nortel is going to join us thats on squall alley. Lets get to dom chu here ca carl, traders continue to monitor the ongoing impact of this past weekend. Energy is the biggest lagger today is oil prices shaving off yesterdays big gains. More of those defensive sector catching a bid take a look at utility stocks and particular out performing and half a percent away. Nice source and excel energy and Edison International just to name a few i will send it back downtown for you guys at the stock ex changes. Dom, thank you so much. Well hear from bob backish viacom president and ceo squawk alley starts in three minutes. 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