Transcripts For CNBC Squawk Box 20240714

It is like a gulf. This is not separated in terms of politics. Actually, ill take this side. Im really not sure you may be closer to me than him this guy is a nut. Im going to need a lifeline. We could put Chris Christie in between us. Lets check on the markets this morning. You know what i didnt look at today, constitutional crisis concerns looking at the stock market, i cant see it there up 115 points on the dow jones the nasdaq up 41 treasury yields up 71. My mind is wandering the predicted volume and money is very small. I checked the odds of impeachment. They are up 60 cents odds that trump does not finish his first term or odds he does finish is 80 . At 4 00, there is a meeting. Maybe it is one of those situations you do it and hes not removed. How do you read that im no expert but saying this is a political decision. Impeachment is a political decision bringing charges is different than a case. They have an election in 2020, they may just want to wait for that i would think so. There is such fatigue over the fact that this guy may have won the election the stuff you were doing it for before was what . Dont look at me. We were ready to do it before, what was that one for . Questions about collusion but that was put to rest. You cant raise it and then not have the conversation. I do that all the time. As a trump supporter, are you troubled by what he did . I dont know what he did. Based on the reports, are you troubled by what he did. Ill have to be quite honest, i dont know what the reports are telling me with all due respect, a lot of news organizations, we are not sure what we are getting andrew i think it is part of the general fatigue. You have to read the wall street journal democrats are going to have trouble stradling and trying to impeach trump. We have biden on record saying, im withholding it thats already been done you and i have had conversations, joe and i have, about the clintons and their Foundation Joe thinks whatever biden may or may not have done troubling. I find it troubling that you and you can manage not to suggest you are concerned about the situation and the character of what it represents to the country, if it is true im not sure. Even if you were to take away we have to get to the business component of all of this, if you were to take away a true quid pro quo out of it. The idea that it is happening at all, someone of your character would be struggling with it. You cant do that you are virtuous im virtuous dont start that again at this point, peoples expectations of politics are so low. These are ethical lapses. They are troubling politics is really down and dirty. The democrats will have trouble removing someone from office when they have someone on tape doing the same thing the last thing, in terms of tying all of this, how do you think the chinese feel about all of this . Andrew, they have internment camps. If you are talking about ethical lapses im talking about the trade negotiation and the timing i will say this it would be a miscalculation on the part of the chinese whether you have a democratic or republican president it would make much of a difference. Ness one of the few places we have partisanship feelings breaking news the high court in uk says Boris Johnson was unlawful to suspend Parliament Brexit is set to take place october 31 the pound is up. 003. Lets talk back on the trade front. Unusual exchange between trump and trade secretary mnuchin caught on camera on friday, it broke that the planned tour in farming sector had been called off. Late yesterday, President Trump and mnuchin were asked about that canceled tour mnuchin jumped in and said it was canceled by the u. S. Something that caught President Trump by surprise. That was our request. We didnt want there to be confusion. They are going to reschedule that at a different time that was our request why was that our request, just out of curiosity . We didnt want confusion around the trading we want them to buy Farm Products this was no confusion they committed to buy agriculture. Reuters reporting that china bought close to 600,000 pounds of soybeans. One claim made that the chinese did not follow through i thought that was fairly interesting. Friday, thats why the market sold off it didnt seem like trump had talked to the treasury closely mnuchin said it was a timing issue. Are we still on with china my own opinion is that from the political principals will out weigh the economic at least for the next year. When you get past 2020, should President Trump be reelected, i would imagine more serious discussions with china in terms of that being up the past few weeks, calling for the bottom of the Global Economic growth moving on. Prosecutors in california are probing into juul. Unclear, juul has yet to comment. Fda probe cover marketing as well juul has said it never marketed to teenagers because we all know adults love cotton candy flavored cigarettes. Illinois is planning a ban, new jersey cnbc found these juul ads in the front page of the wall street journal reading this 18yearold it is so frightening so frightening. I dont understand what we are talking about. This vapingrelated lung illness. Do you know, the fda approved this but it wasnt approved as a cigarette substitute what was it approved for it clearly was marketed as a cigarette substitute it seems like there are some Serious Health considerations notwithstanding the fact that it was clearly marketed towards children in my opinion i do not know the answer. We should get scott back isnt it great hes a doctor too. A good idea. Right . For the head of the fda. We have an update now wework, a report saying this morning, companys cofounder and ceo has started talks of his future role and giving uptightle as chief investor. No certainty we should say he will do so at all. New york post goes into more detail with a different take saying neumann is facing option from three of the seven supervisors. Suggesting that this is his view he believes there are three people on the board ghens hi against him. Business insider reporting that neumann met with jp morgan ceo to talk about the delayed ipo. They are the lead underwriter in all of this. A major financing component to that ipo some tied to personal loans made to neumann if investors are not going to bite on the ipo and thats where we are at. We are not going to give you any additional plan, it is almost irrelevant whether there are three Board Members that support. I agreement if there is some sense getting rid of adam neuman would boost the numbers. It is hard to look at real time events i truly think wework will be seen at the peek there is a lot more skepticism in these companies their view is is, we are going to take adam out bring an outside experienced operator in. Go find a third party new money with the reputation for our plan buys us an additional 12 months for the new company. We are going to do the Main Business maybe thats not a 20 billion business but maybe it is a 10 billion business it may work no one is suggestings it zero. Theyve gone from a zero just suggesting there is a real issue here in my opinion, it doesnt get rid of the underlying problem. The model. It might buy you time. It might be a good strategic decision but im highly skeptical it will restore some of the value lost . The other piece is whether you think this is the bell tolling on this vintage. Once you get that high on the alphabet, series g, the chance of making money is slim. Fall being from grace how would you guess from that chart . Well reveal after the break orlando isnt just the theme park capital of the world, 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. My first job is to care for derek. Everything i do is for him. When i moved to this apartment after six months, we need to connect with the world. I use the internet to keep him in the language, because thats the way to connect to my familys traditions. He has to know where he comes from. We need internet essentials. Theres no excuse to not get connected. Welcome back to squawk box. A couple of stocks to watch. Netflix has given up awful their 2019 gain. Slipping into negative place since 2016 socalled faang stock up 46 at its peek before streaming competition began weighing in on that stock you could show disney here or comcast. You have a choice disney or comcast. You are showing you would not. You did disney for a reason. I believe the disney plus service is the reason for the true gains you are seeing in disney stock theres your point. Im not sure look at whats on the screen. Just keep talking about there is the screen i appreciate that all right you like disneyland more than universal . Do you like butter beer . I have not. It is on my schedule its like a milk shake. Comcast again you are mansplaining to me even though im not a woman. You are condescendingly explaining things to me again. Lets talk Lockheed Martin with a 4. 6 billion Nasa Moon Missions lockheed stocks are up 48 do you feel any shed for netflix . I try not to feel for any. Even for netflix. I know you. I want the real sorkin here. Cord cutting how much was that deal work . 50 or 60. Tens of millions enough to buy a place right very successful. In this case, we are not impugning anyones success for 18 million. Joining us now to talk Market Strategy if i wanted to be a bond investor, you give me nothing. I think you should go into equities and chief Investment Officer and our guest host returning to what i was saying there are no coupons anywhere. Is there anything to do in this space to minimize your equity exposure how do you diversify with fixed income now it is a really difficult position we are saying you need to be within equities. Looking at defensive stocks and look mainly on the caps. It is domestically focused and get around some of the trade sanction issues. Jason has a barbell approach. Im not as determine istic. To get out of this, until then, im not that different than you. We are overweight staples on one side and tech on the other which move towards value is a little premature it is hard to see that until after europe and other industrialized countries adopt or embrace the playbook. I dont let anyone say cautionly or optimistic ly because it is so cliche. I dont feel oddly in the consensus. Number one, we prefer cash to the fixed income because you are getting some what of a yield on cash cash is the preferred decision for straight up best defense options. Aside from that, maintain your equity decision. Wellbelow 50 still if you are going to be doing that, you have to find ways of being defensive. You dont want to blindly build that in. I would say Consumer Staples probably falls into that camp. If you look into that infrastructure, kind of an interesting space. Stable cash flows and earnings nice stable businesses we look at sharp ways to do that a little dip into small cap and value. Maybe weve seen the trough, bouncing off the bottom or have we started moving higher in terms of growth . I think the trough is still to come but approaching soon wi with regards to where you allocate as long as you dont see recession as your main scenario, you remain vested. Looking at higher qualities. If we think there is a trough coming, you need exposer to some we should outperform megacaps where youll get some of that domestic exposure. You are taking a risky bet that the environment will get worse sulgti sul suggesting for the u. S. Economy there is a trough approaching. So rates instead of fixed income or bonds . Yes we think there is still more traction due there jason two jasons. Sorry, you are the jason that is leaving. Nice to be on coming up, a sneak peek of jim cramers interview with bob iger so much more and even a potential merger with april ple coming up. Evolve taking place today in chicago. All of that coming up in the 8 00 hour. Returning after this thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. A new kind of credit card. Created by apple, not a bank. With a better way to track where you spend. A new level of privacy and security. Daily cash you get back every day. And no fees. Not even hidden ones. Oh, and if you happen to be somewhere that doesnt accept apple pay yet, theres this. Nice. 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. Time for the executive edge we have an interview for you disney ceo bob iger. Airing tonight we got a sneak peek. You got to see this. A candid conversation about steve jobs, b the purchase of pixar and the prospects of a disney app disney apple merger. We never talked about a merger he loved disney. He said liberal arts and technology, thats what pixar was. I mused from the book. Now steve is gone eight years. Had he lived, i think there is a good chance we would have talked about being one company. That interview airs tonight at 6 00 on mad money still a hand so many man there. Does not age. Those two like on top of a wedding cake he would be 68 now. 68 years young hes into a versa climber like cryogenics its like a rower meet weights. Hes on a minute and a half and i start crying more coming up next. 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. Announcer welcome back you are watching squawk box live from the Nasdaq Marketsite in times square. Good morning. Lets show you whats on the planner. A couple of big things happening. Addressing the United Nations General Assembly this morning. White house has not yet released specifics but the president is expected to discuss tensions with iran and the china trade war. If you happen to be on the east side of manhattan today, dont be separately, on the data front. Well get the latest read on home prices, Consumer Confidence numbers for september. That will happen at 10 00. A quick look at u. S. Equity fewers futures up s p up about 12 points now facebook looking at braincomputing startups that would allow humans to use their brains to control computers. That is down the road a bit. Pretty blunt force the amount of knowledge we have specifically the only question i have this morning, when chris hughes sees an acquisition on this, is everyone going to turn back and say, we shouldnt allow this this is such an early thing but by the way, when people thought instagram. No. Computing with your brain . I want to hook it up to dogs like, im hungry ive seen this Technology Live it is amazing. What can you do you could have your hand like this like a fix and think about moving your fingers and type you could play a video game by thinking about it. You can get a movie right on your iphone. You think of what your hand is supposed to do. You cant type, can you ive seen it done ive been to demonstrations. These guys we got a lot more on the show. Meet your match. Brands like okay cupid, plenty of fish and tinder pushing into the world market expanding the world of dating. And Chris Christie will join us to talk oil, trade and the economy. Stay tuned you are watching squawk box on cnbc 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 welcome back to squawk box. She is in charge of groups lima. Shares are up 150 since she took the helm. This stock is up big lets talk about international expansion. You think about what is happening now in the borld worlf dating in the u. S. , 40 of relationships come from dating apps and internationally, people are picking their own mates rather than parents choosing where does this look like u. S. And europe are similar about 40 of relationships are starting here. International markets in india, south korea, japan, indonesia. There is low usage and real opportunity to grow. Are there Companies Already in place . There are we bought a business a couple of years ago called pairs in japan. Tinder is the Fastest Growing app and highest generating in places like india. Our goal is to make sure we are ready to create products and when people are ready to turn to these apps, we are there how is it different really different. In asia, there is more of a new ans and alibi, you want to meet friends to go out and do things in common. Here, we tend to be more overt thinking about places like india. Im married to a south indian guy. We are the first in his family to not have an arranged marriage the next generation, will be completely their own choice. In japan, people like to date people dont know know so if it doesnt work out, it doesnt impact their friendships overt question to ask, are certain of your services set up to create relationships and others that might be described as dating or netflixs and chill . Just say it tinder was really created on College Campuses i dont really want my 20yearold daughter getting married tomorrow then other apps like hinge for those more serious about settling down. A lot of loneliness it is scarey there should be a way for people that are lonely to find each other. If you can accommodate or enable that but there is still a stigma there is. We have apps for people over 50 called our time in the u. S. And europe so really from 18 to 60 or more. You feel good about getting up and doing your job, i think i do. I get letters and invitations to weddings all the time saying i never would have met my spouse or the mother of my children if it werent for you all pretty neat i come close even if i dont know them, i start crying thank you for coming in i cry at car commercials. What if a car commercial of someone getting married. Nike reporting after the bell today. How will its China Business hold up and is lulu lemon getting more grab . Orlando isnt just the theme park capital of the world, 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. 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. Were changing whats possible. For instance, we know how your customers shop. And what theyve already purchased. Like this lamp. And we use those insights to show you what they might consider buying next. Midcentury modern, nice. That way, you can keep sending them offers for the perfect products. And that keeps them coming back. Hows that for changing whats possible . Nike reporting Quarterly Results after the bell today joining us for a preview, paul trussle and january kni jan knn i think you prefer talking about other stuff sometimes . I love talking about youll do either . Nike is like the biggest baddest boy on the block so i think that theyre way big for their valuation that theyve got, but if youre looking for somebody thats doing a great job in athletic, theyre the guys yeah. Paul, what do you expect tonight . Look, we think nike will put up very strong results including mid single digit growth in north america, 20 Revenue Growth in china. Theyll see gross margin expansion. They continue to really benefit from one of the best direct to Consumer Experiences in all of retail and for that reason we think the valuation is more than justified. They better get us 5 growth for him to be right with that statement. Is that right we expect 6 or better. The other day on squawk on the street, i dont know if you saw it, down on the big board could he b kobe was asked about nike. He said they dont even think about it they back ethics any decision that theyre making about what theyre doing, they first and foremost think of the ethics that makes total sense on the whole kaepernick controversy thats who they were backing and it worked out for them. I think they thrive on the controversy, actually. You do . They dont care if i get mad at them. If they are going to come down on someones side, theyre going to come down on the side they walked away from Antonio Brown like that. Right but the tough guys are still decked out. Ultimately it comes down to connecting with the customer and they doesnt that help with the athlete . They know who their customer is they know who their customer looks up to from an athletic standpoint they know that their customer wants to perform or at least feel like they can perform, feel like theyre dressed like their eye doll and influencers and thats what nike does. Pauls got that nailed. They dont care that i ran 125,000 miles in their shoes and arent running in them anymore. You did this . Yeah. What they do care what are you running in now pokas. What they do care about is the young guy on the street dieing to wear nikes. You stopped buying nikes because of yeah, i turned them down, threw all my stuff away. Thats not the point they dont care that i did they want that customer and theyre really, really good at it i love them as a Company Think theyve done a fabulous job. They do just what he said. They know who their customer is. They back athletes that that young man looks up to and it all works out for them theyre not a womens business, theyre not an old guys business we all wear nike but they know their real customer. Where does future we always talk future orders. Where does future growth really come from . What are they thinking two, three, four years from now international . So nikes already more than half their business comes from outside of north america but they are focused on growing their womens business we actually think one of the bumps they got this quarter was from the womens soccer win. They sold a ton of jerseys with the world cup. We also think that theres a big focus in doing things like performance, things like yoga which lululemon really corners that market right now. We also think that they continue to really be focused on asia like i said, china were modeling 20 growth and thats on top of over 20 growth last year. So those are really key focus areas for nike Going Forward yeah. They only need about 5 in north america. Outside the country is where theyre going to win this game the other thing theyre doing is their production facilities are going to work. The tariffs arent going to kill them and theyre really good at managing that process. All right paul. Theyre still expensive with the price. See, lululemon is not just yoga, though i think theyre getting all the growth from anchors and people on tv, right pants. Ive never done yoga. Mens abc pants is very thats what im talking about. I run in lulu every day. Not with nikes. Big two hours ahead hello neumann. The companys founder consider s future at the startup. That is straight ahead. Didnt you do it the way youre supposed to do it fun fact 1 in 4 of us millennials have debt we might die with. And most of that debt is actually from credit cards. Its just not right. But with sofi, you can get your credit cards right by consolidating your Credit Card Debt into one monthly payment. You can get your Interest Rate right by locking in a fixed low rate today. And you can get your money right. With sofi. Check your rate in 2 minutes or less. Get a nofee personal loan up to 100k. And now for their service to the community, we present limu emu doug with this key to the city. 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The catalyst straight ahead. President trump and secretary Steven Mnuchin apparently not on the same page over the latest round of trade talks. Our request just out of curiosity . We didnt want to run the trade. Yeah, but i want them to buy Farm Products. Special guest former new jersey governor joins us to discuss trade, taxes and much more. The wework saga just Getting Started as the companys founder and ceo weighs future details as the second hour of squawk box begins right now live from the beating heart of business, new york. This is squawk box. Good morning and welcome to squawk box right here on cnbc. Im Andrew Ross Sorkin along with joe kernen. Becky will be joining us in about an hour from the cnbc evolve conference taking place in chicago shell be bringing us some very special guests including United Airlines Ceo Oscar Munoz and greg brown i want to show you u. S. Equities dow up 115 points. Nasdaq looking to open about 42 points higher and the s p 500 looking to open about 14 points higher heres some of the things making headlines right now at this hour. The current and former ceos of volkswagen have been charged with market manipulation in connection with the 2015 diesel emissions scandal. German prosecutors say that ceo herbert bees and exchief herbert wintercorn informed markets too late about the costs the company would incur. Volkswagen said the allegations are unfounded. Anheuserbusch inbev plans to do a higher ipo they withdrew because of Market Conditions and the u. K. s top court has ruled that Prime Minister Boris Johnsons suspension of parliament was illegal. That opens up the possibility of new challenges to his Brexit Strategy which calls for leaving the e. U. On october 31st, trick or treat, regardless whether a brexit deal is in place. Want to get over to dom chu who has some of this mornings biggest Market Movers to tell us about. Dom. Andrew, as we talk about the way markets have been developing over the course of the past few weeks here, we did see that move off the lows back towards the highs that we saw back this summer if you take a look at the s p 500 versus the midcap 400 versus the russell 2000, you can see that large cap stocks are still outperforming generally speaking some of the other parts of the market cap spectrum including those small caps people looked at those small caps as possibly a leading indicator for the health of the overall market sometimes trade certainly playing there. If you take now a look at some of the digging in portions where we are seeing some of the activity where we are seeing some of that is in the hot sectors so far just on a yeartodate basis semiconductors have been a china trade proxy. Still up 38 over the course of the yeartodate period. Arri aero defense, building also right near high levels on an elevated basis these are the big winners so far this yeartodate period stock wise, the faang stocks how have they been performing in the course of this little run up here that weve seen facebook, amazon, apple, netflix and google this is on a oneyear basis. The s p 500 is up around 2 . Youll notice that facebook is the only real outperformer there and google slight outperformer amazon, apple, netflix were all negative on that year basis, 12 months mind you, and one last check on a yeartodate basis oen a macro trade, at one point this year, longterm government bonds, gold, large cap stocks were all performing very much the same over the course of the past couple of weeks its shifted somewhat here though large cap stocks back in a leadership position ever so slightly those bonds pulled back a bit. Thats the current state of play, joe, from the market side of things. Send it back to you. Dom, thanks for that. Joining us, aksana aranoff and our guest host Jason Trennert is also with us do you read the notes . I did, not all of them. I mean, ill admit it, i read the first couple of pages. Theyre scary. Shes really were there just too many or no, trying to understand everything. Youre in a very niche youre part of the the markets is just very technical and fairly complex and i hope i have it right. It made me a little bit nervous, and that is that fixed income is so rich right now. Depends on liquidity and you think thats somewhat tenuous, which scares me. Im wondering whether youre eluding to what happened in the last couple of meeks with the re repo market or is that some type of read flag taking a step and broadly looking at it. It has become a commoditized asset class. Warren buffets quote comes to mind commodities depend on what someone else will be willing to pay for them six months from now. Thecommodity is not going to d anything for you fixed income here in the u. S. Is starting to approach that. In much of the world its already there. Theres no coupon and your return experience will depend entirely on where you buy it and youre buying it at above par, youre not earning anything and in europe youre actually losing on the coupon. So it is essentially turned into a fixed loss investment proposition thats riding on this greater theory that ill be able to flip it back to the ecb later on but the problem is that you have a market that is riding on tenuous liquidity at best, meaning just to give you an idea, 20 of all the negative yielding debt in the world is owned by mutual funds and etfs this is not a cohort of investors that likes to sit on losses for long periods of time. They will be looking to get out pretty quickly if you have any kind of turn to the central bank supported environment and, again, to give you an idea, the top five Corporate Bond etfs currently have double the inventory of all the corporates held on the street. Theres about 15 trillion i believe in negative yield. Down from 17 . Down from 17 but its doubled i think over the last year how much can the lets say trade were resolved as an issue tomorrow and expectations for Global Growth were to bother the pickup how much could u. S. Yields really diverge from the rest of the world, meaning do you have a target for the lets say the ten year treasury yield . Is it possible for it to go back up towards the old pies which are well between 2 and 3 . This is what we consider high, between 2 and 3 , yes. Its certainly not impossible. If you look at the period between 1970 and 2007, for example, gdp accounted for 10 of the ten year treasury level today if you put those two together you get 40, 50 at best so obviously the clouding effects of Central Banks have been really dramatic if you were to have a resolution of some of these, you know, bricks in the wall of worry, certainly we can see rates move up were also thats where the repo situation comes into play, were i think seeing the limits of Central Bank Power to continue delivering this rally because even if you look back before the repo situation a couple weeks ago when the ecb delivered really the kitchen sink, meaning lowered the deposit rate, decreased their asset purchase you saw european rates move up in the aftermath of that. German bunds went from minus 8 to minus 50. Theyre back down now but youre seeing the limits of Central Bank Power and i think this means investors have to really redefine what safe havens mean in this part of the cycle in this market and safe havens right now particularly in the u. S. Mean cash is not trash. When the curve looks the way it does, when you have this inversion or at least the flatness, you are paid at the very front end of the curve. You have no sense to extend out. Youre not paid enough to take the risk in lower rated parts of the market with double ds in the 200s, with bbbs happening over them at three times the size of the double d market. If you start to see any kinds of downgrades, thats a lot of issuance to contend with there are a lot that are potentially building that can create recessionary pricing without an actual recession. Oksana, just to end on something, what is your gut telling you about whether theres something looming or and i dont mean some wonderful thing, i mean something that something looming ahead of us, some type of day of reckoning . Can we handle this can we unwind it in a way that it doesnt cause a lot of dislocation . Look, were not generally in the business of predicting kind of where the ten year is going to be by year end and markets have gotten this wrong consistently over time thats really not part of our process. We try to go elsewhere in the market and extract terms that are not so beholding. Does anything end badly if you think about where we are in the bond market, yes, we are in the bond bubble no question about it the question is how long does it last and how does it unwind . We dont really see how it can unwind painlessly because the market is very rich. Its very highly correlated and it is riding on a very tenuous liquidity cushion. The consumer still looks okay. Thats something were watching very closely because a lot of the strength of the u. S. Economy continues to ride on that. So in terms of actual positioning and portfolios, we think thats a good place to align yourself with an ample allocation to kind of that liquidity cushion. Also, answer the question of best ideas in fixed income, not just from a long only standpoint but a short only standpoint. I would say the most shocking thing ive heard from oksana here is whos holding the negative debt. Yes. Because i would not have guessed that thats what i mean. It was bonds and atfs. The ownership has changed dramatically in the post crisis era. Thats something that has to be realized the liquidity buyers are the buy side the buy side is not well equipped to be that liquidity buyer. The decisionmaking processes take a lot longer, et cetera thats why this is no time to be hero you are not compensated for a rate or credit risk here and really keep some part of the drive and plenty of volatility. I think you should get her card im not kidding. Dont you think you should call her . Yeah. Ive got to find out if you manage money we manage some money but were really a research shop. Research. Hire her. Absolutely. Oksana, thank you when we come back, were going to be talking to former new jersey governor Chris Christie hell be our very special guest this morning were going to talk trade, taxes and bipartisanship in washington thats not an oxymoron were going to try to make it work lawmakers in illinois are trying to consider a ban on flavored ecigarettes chairman of the House Committee holding that hearing is our special guest as well. Stay tuned, youre watching squawk right here on cnbc. This is apple card. A new kind of credit card. Created by apple, not a bank. With a better way to track where you spend. A new level of privacy and security. Daily cash you get back every day. And no fees. Not even hidden ones. Oh, and if you happen to be somewhere that doesnt accept apple pay yet, theres this. Nice. Go where my baby lives b[ growl ]olle s good boy. Hey. Hey. You must be stevens phone. Know whos on your network and control who shouldnt be with xfinity xfi. Simple. Easy. Awesome. Welcome back to squawk box. Apple is keeping production of the mac pro computer in texas reversing an earlier plan to shift assembly to china thats after the white house granted some exceptions for some components imported from china i thought about this and wondered did you think about that he talks to trump, trump talks to him what do you think went into this decision do you think there are two major components one is the exemption the second piece is do i really want to make this in china and what is that going to mean for me long term, right . The real question i have is if tim cook was with us right now id say, do you think long term about your supply chain . Do you want to stay for the most part in china . Yes. Thats a fundamental question and is it the sort of America First policy that trump has administration has put in place right. Going to bring this business back to the United States is he going to move it to other countries . When he thinks about supply chains where does he think about getting these components when you read that, did you did that make you happy did it make you skeptical . Did it make you question it . For me, i read that and i was like, i was happy. I just was happy it made me happy did it make you happy . Made me happy. Made me happy. Youre totally detached it didnt you dont feel one way or another no, no, no, for the American Worker dont qualify it. Were you happy, ambivalent or not one way or the other i was i was middling to happy. All right good anyway, coming up. My exs are good. Am i going to pay more for my macbook. Thats what it comes down to. What about me . What if you pay ten cents more. A little bit extra. How much . Thats what i want to know. I want to know that makes sense. Decision by weworks board on the fate of adam neumann could boil down to just one board member were going to discuss his future and how the companys valuation has been crushed luioof the private market vaatn. Squawk box will be right back. Woman what gives me confidence about Investment Decisions . Rigorous fundamental research. With Portfolio Managers focused on the long term. Who look beyond the spreadsheets to understand companies, from breakroom to boardroom. Who know the only way to get a 360 view is to go around the world to get it. Can i rely on deep research to help make quality Investment Decisions . With capital group, i can. Talk to your advisor or consultant for investment risks and information. Talk to your advisor or consultant plants capture co2. What if other kinds of plants captured it too . If these industrial plants had technology that captured carbon like trees we could help lower emissions. Carbon capture is Important Technology and experts agree. Thats why were working on ways to improve it. So plants. Can be a little more. Like plants. Welcome back to squawk box. Big story this morning wework ceo adam neumann continues to be under pressure the startup once valued at 47 million, now facing questions over his leadership style, use of corporate money and control joining us is nell minnow. Its great to see you this morning to help us through this. Clearly there is a group of investors who no longer have confidence in him, want him ousted, say they will not put new money into this. He seems to be from all reports and my own reporting defending himself and his turf and given his voting control of the company can do so. What should happen this is a complete and total mess and the only good news is that this is exactly how markets are supposed to work the market has taken a look at his fishy numbers and his even fishier Corporate Governance and said, we dont want any part of this unfortunately board of directors which didnt read the fine print when they agreed to become directors has discovered, surprise, they cant actually fire him he has voting control. So their options are to do exactly what theyre doing now, which is a Whisper Campaign and try to pressure him out or they can quit thats pretty much it. And legally though yeah. To the extent that investors have any recourse, you know, theres a Whisper Campaign to suggest that one of the ways they may try to pressure him out is to bring a case against him personally to suggest perhaps that some of the selfdealing thats been described in the s1, you know, was not identified to them earlier. Yeah. Is that a winning case . Well, you know, everybodys shocked to find gambling going on in casablanca what were they thinking . Yeah, he has not necessarily been completely honest with them, but the very fact that he maintained such a shocking level of control in the early structure of the deal should have been a great big red flag they should have asked a lot of questions back then. So i think there is no legal way they can push him out. There are commercial ways they can push him out they can call in some of the loans, they can refuse to put any money in the people im blaming after the board of directors are the wall street people who thought this complete disaster was ready to take public. Ms. Minnow, i was wondering if you could speak more directly about Corporate Governance in general. On the one hand you have Business Roundtable thats talking about the stakeholder model doing a lot to try to, i would say, signal their own virtue on the other hand, you are seeing Companies Like juul, wework, youre seeing a lot of i would say questionable behavior on the part of corporations that probably is fuelled in large part by free money if you were to assess, is Corporate Governance Getting Better in your view generally speaking or is it really or is there just cover, a smoke screen thats put up to do what is usually done . Yeah. I would think of the best of times, worst of times view about it certainly boards of directors are more active, more independent, invested psychologically. When i first got into this business o. J. Simpson was on a board and hes on an audit committee. That stuff is out the window now. Thats not happening on the othernd had a, i dont believe for one second the statement from the Business Roundtable about stakeholders. I think theyve looked at the numbers and they dont think that theyre going to be able to be buying back stock to prop up stock price. Theyre trying to tie their pay to Something Else. So and, you know, jeff bezos was a signer of that and the next thing he does is cut the insurance at whole foods and he hasnt done very much, according to his employees, on the environmental stuff. So i think weve got a long way to go to figure out what role corporations are going to be playing. In terms of this duel class stock, this sort of major voting control thats been given to adam but adam neumann but so many other companies, we talked yesterday about whether this was the bell tolling for ipos. Is this going to be a bell tolling for other ipos especially in the valley and elsewhere . Gosh, i hope so i have no problem putting duel class stock out into the market. You can sell whatever you want, but sometimes the market is going to say, no, thats a very bad deal to my mind this is exactly what markets are supposed to do they looked at the numbers they looked at the Corporate Governance structure and said this is not something that is valued at the level that you think its valued at i think thats worked out very well yes, ipos like this should not happen in the future and i hope that that signal has been as clear as can be. No, i just want i think we were all listening closely did you hear that about the brt . Thats such a great take and such a cynical take on the whole thing. Its so great, fell in thank you. So theyre figuring out its going to be tough to keep buying back stock. Right. My kpcompensation is tied toy stock going up let me say we dont care about the stock and its not all about profits because im going to tie my compensation to Something Else thats great its so selfserving and brings it home. It does i wrote a piece about that i walk you through that. Youre taking you took it from i mean, the virtue signaling that i saw, youre taking it to where it is self serving. Thats so good. Isnt it fell in, we havent seen that component. I mean thats so good. It all makes sense to me now. We have not seen companies tie their not yet theyre just starting. You believe this is the beginning of that. Have you had conversations with executives that so great. These guys are so virtuous thats so good tell jeff. Well, i love jeff hes one of my favorite people. Naive. I love his optimism. Right. Youll see we will know how serious they are and what theyre serious about by what they tie their pay to. I have a very sneaky feeling this is your basic throw the dart at the wall, draw the target around it pay wow fell in, we love seeing you here. Me, too. She holds her tongue the whole time. She said it thats right. She said exactly what she thinks. You were not you were going to let that go right by. No, i wasnt. I mean, but you looked at me i did you gave me a look like, wow. I love that thank you great to see you. Thank you where are you going i dont know. I just i do what im told we want to thank Jason Trennert for being here this morning. Youre leaving. Thank you, my friend. Youre out of here. Thats great former new jersey governor chris Chris Christie, he s goig to be our guest. He has bigtime network connections. 20ll join us, slumming, the 20 election, the president s handling and much more squawk box will be right back. 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. Here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Welcome back to squawk box this morning a couple of pieces of news to bring you. Amazon expected to debut fitness tracking wireless ear buds, joe. Are you going to get some of this at its annual hardware show tomorrow the ear buds will be able to monitor distance, calories burned and pace of running but would still require a smartphone for use. Theyre expected to be priced below 100 making them cheaper their wireless ear buds from samsung. Joe, we love our air buds though we do. I do like them now. What happened what happened . I wear them in the opposite ears. You wear them in the opposite ears i do, and they stay. And they stay in your ears . Yes someone thats the beauty of twitter and its hard to find something beautiful about twitter, but someone wrote in, try switching them they dont fit everyone. One size fits all. Not everybodys ears are the same you walk over a grate out there and theyre barely staying in there. Its very unsettling, right . Do you walk over grate i try not to walk over grates. Its dangerous. But with those things, they need to stay in. Especially if youre jogging or something. Right. I switched them and it works. Really does. Anyway news you can use. Yeah. When we return, the man of the hour to my right is going to be joining us in just a moment former new jersey governor Chris Christie is going to join us at the table to discuss the economy. To your right and much, much more we will be right back right tethafr is principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. Hour 36 in the stakeout. Ptech students around the world. 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. Welcome back to squawk box this morning President Trump will deliver his u. N. Speech later this morning want to get to eamon javers who is there he joins us with a preview of what you can expect, what you can hear and maybe how the traffic is on the east side, eamon. Hows it going. Reporter im not going to do the traffic but the president is expected to be in Alliance Building mode and decide what to do if anything respect to the attacks on saudi arabia. The president expected to speak here at the United Nations 10 15 east coast time. He has a host of bilateral meetings take a look at the highlights of some of the World Leaders the president will be meeting with, including Boris Johnson of the u. K. Who has gotten himself in a little bit of political hot water. Prime minister modi of india, shinzo abe of japan and the president of ukraine later on today. That will be an interesting one and a high stakes meeting for this president because the scandal surrounding ukraine continues to expand in washington, d. C. We saw some reporting overnight from both the Washington Post and the New York Times suggesting that the president authorized his staff to withhold military aid to the ukraine before he held that phone call with the president of ukraine back on july 25th. So that new reporting fueling this scandal today democrats are planning to meet to discuss the president and impeachment at 4 p. M. This afternoon. At issue is whether or not the president withheld that aid in exchange for the ukrainians continuing to investigate joe biden, the president s political rival. We dont know what the facts were there, but democrats are going to be meeting on it at 4 00 today, guys so high stakes here in new york and in washington. Certainly, eamon. I saw you earlier and that was fun. That was good to see you. Yeah. Youre right up the street. Good to see you in person. Do you have breakfast plans are you working all day . Whats happening be . Reporter im going to have to work all day. I already had breakfast. Were going to be standing here on the Street Corner it looks like a glamorous live shot but were standing in a crosswalk. Maybe ill bring you an egg mcmuffin and hang out. That would work. And hot coffee. And hes ordering from me now. You offered thats right. For more on President Trumps geopolitical challenges at the u. N. This week, lets welcome Chris Christie who served as attorney general and governor of new jersey this week hes launching the Christie Institute for Public Policy in partnership with Seton Hall University school of law. Governor, thanks for joining us. You do have a relationship with one of the networks and i figure that prepared you for pretending you and cuomo could possibly get along on anything . I will tell you youll see it this week. In seven years with andrew cuomo not only didnt we have a fight, we never had a cross word. Its possible. Now we disagree on a ton of stuff, but we knew that our relationship was about building more infrastructure in new york and new jersey and when you look at all of the projects going on, its all a product of that relationship the new laguardia airport. The path train from downtown to Newark Airport the new gothos bridge. The new bayonne bridge all of those things were things that would not have been done without cuomo and i working with each other, agreeing to work with each other. You compartmentalized. You have to thats what people expect you to do thats what drives me crazy about the current political scene and why we started this institute. You can disagree on philosophical issues and governance issues but you still have an obligation to get things done for the people who elect you. Whats going on in washington and in many state capitols now, even in state capitols like mine where theres one party rule they cant get along with each other. So its about reminding people, by bringing people who have done it into this institute every dwau quarter to speak about it. You can get things done. We have an obligation. Whats going on in washington and state capitols. You see we do a threehour show do we not get it done . Thats right. You totally get it done. Eamon wouldnt give the traffic report ill give it it sucks the traffic sucks. This week you dont really no, dont come in here. Listen, if you want to, come at christmas rather than come during u. N. Week its better. Hang out around the tree. Its much better than u. N. Week u. N. Week is brutal. Where were you on the whole china trade thing all through this do you think this was a worthy fight . Yeah, i do think its a worthy fight to take on. For two reasons, one, thats who he is. If you look at Donald Trumps philosophy over 30 years, theres not a ton of consistency but one area where hes been consistent for 30 years is on trade. And, listen, we kind of acknowledged that chinas done all of these things. We acknowledge they steal i. P. We acknowledge they take unfair advantage of the trade situation. But when they get better, they get bigger, theyll be better. They havent been. They continued the same course so someone needed to stand up to them. Governor, the question that i would ask is i think almost everybody agrees that its worthy to take on the chinese and try to deal with these issues i think the question is how do you deal with it and whether this approach is the right one. Well, weve tried almost every other approach, andrew, and it hasnt worked, right . Now hes trying the confrontational approach quite frankly, its the right time to take this approach and try it because our economy domestically is so strong. If we werent as strong domestically we couldnt afford this fight. How do you think this is playing throughout the country and specifically in the real swing states that matter to him the most i think its playing well for him. I think its one of his real political advantages people do feel like the chinese have treated us unfairly they want someone whos willing to stand up for that and to fight for them i think most of those folks feel like hes fighting for them on this issue. Right. There are a lot of other issues where its harder for him without the country and you see some of that in some of the polling that you see on this issue its good. What do you think from a timing perspective has to happen ahead of the election on this issue and how do you think the chinese on the other end are trying to play it . The chinese are going to try to wait it out if you are the chinese, why wouldnt you try to wait it out . Decemboes the chinese need ad want a deal ahead of the election i think hes willing to forego a deal. Donald trump has been in a whole bunch of different spots in politics over 30 years, but this one place he has been there whether it was with japan in the 80s or with mexico then in the 90s and now with china in the 2000s. Hes been in the same spot i dont think he can afford to back off now hes got to ride this out. How do you think the democrats play this . One of the things thats so interesting is watching Elizabeth Warren almost move right of him on china. Theyre cornered. This is why its a good political issue for him because the democrats cannot provide contrast they cant say wed go easier on china. Their private sector Union Supporters would go crazy over that you know that. They cant afford to go anywhere to the left of trump on this so thats why its both a good political issue for him and i believe the right issue from a trade perspective to do. We have to come to an agreement at some point. I dont think the president should give this away. I think people believe hes fighting for the right cause they believe on this issue hes not just fighting to fight, hes fighting for something thats more important you know, we are loathe to discuss your politics obviously, but when i woke up this morning i checked the futures based on the whistleblower events and based on the latest Washington Post revelation that the aid was put on hold. The futures do not indicate a constitutional crisis as of yet. Does Vice President biden emerge from this brouhaha for biden its a shortterm win in a longterm problem in the short term any time you get a bunch of democrats in a contested democratic primary who have to stand up for the frontrunner and say this is awful what trump is doing to biden, thats good for biden because it helps to bring some more people to him and to the extent he can look victimized to this, this is helpful to him. Can any democrats say, wow, what were you doing . Not yet. Not yet later later they can. Heres the problem. The problem long term is this will be an issue thats going to be discussed in 2020 whether its discussed in february of 2020, in iowa and New Hampshire or whether its not discussed until july or august the truth is it should be discussed about President Trump and it should be discussed about biden. Well, it already is being discussed about trump. Listen, i mean, all youve heard about so far really is about trumps conduct, trumps actions on withholding aid potentially. Although i have seen that biden sound bite of him sitting on the panel. He loves to talk joe. Bragging that they said you cant withhold a billion and a half because youre Vice President. He goes, really . You watch me because ive got the president and the president s got my back on this. If we dont get if that guy is not fired in six hours they got him on tape saying that now. And, listen, part of what makes me laugh here is the idea that this isnt done politically and hasnt been done for a long time that the United States hasnt withheld aid to try to push them to do something in another country domestically that we think is in our countrys interests, right so trumps position is going to be, i can tell you right now, that corruption. Im sending all of this aid to ukraine theres tons of corruption there. Its not getting to the people and to the causes its supposed to so with this new president i was telling him, im not sending this aid over unless you in fact clean up your corruption thats going to be his position. By the way, bidens position is going to be the same thing. Right. How is he going to there are others that wanted that prosecutor gone too not about hunter biden. Thats an internal ukraine issue but were saying if you want a billion half, trump says 4 and a half million. Given all of the conversation we had for 2 1 2 years about russia collusion and everything else, that talking about instigating something against a for political gain. For political gain in the United States should be considered be a lot better if the other thing were true for you. Im just saying, look if that had worked out you know whats amazing in the same way i thought the Clinton Foundation was terrible. If you think that stuff is terrible, then you also have to think this is terrible. This all happened after the testimony. Trumps like, hey, im in the clear. Listen, what it tells you again and again is that the president , this president is going to do whatever he feels like he wants to do without worrying about what folks like you or joe or anybody else is going to say about it. And congress has shown themselves to be completely ineffectual in doing anything to rein that in even when they have a majority in the house. It sounds like from a character perspective you would try to rein it in if you could. Ive said this to the president a number of times. You dont need to swing at every pitch. I think his biggest weakness as a political candidate is he swings at every pitch and the one at your head, the one in the dirt, the one four feet outside and it just doesnt make sense in my mind to do that. Now, you know, in the end were going to see what this is all about. I think hes going to release part or all of that transcript and then people are going to see what was really said between the two of them. Do you think he wins a second term i think hes the favorite to win right now. Is there a spot for you in the second term . Who knows hes offered me a number of spots. What would you take im not going to negotiate with you, joe, for gosh sakes. Just asking you if theres one thats more the president knows exactly what i would be willing or not willing to do and i want to turn it i always will be available to try to help the country, but i also have obligations as a husband and a father and after 15 years of Public Service being in the private sector for a little while is not a bad idea for me by that comment that was for my wife whos watching as she does every morning. She does . Yeah. Shes a fan. She even likes andrew. Seriously yeah. Hey there she likes him for as a person as a person she doesnt always agree with him. As a person she thinks hes a nice guy. Thats how we all feel. Thats part of what the whole institute stuff is about you can get along with each other personally and get some stuff done even if you fundamentally disagree philosophically. This six foot space, this means nothing. Theres no reason were doing it. Why is that because becky is in chicago youre respecting the becky space, is that what this is . Yeah. Yeah its good. Thats very, very refr recommendational for both of you. Otherwise we one of us would have to move and neither one of us is going to move off of our position. Hes staying there, im staying there. As youre looking at it from tv, andrew is to the left and joe is to the right. We can move in. Come on over. If youre both willing to move halfway logic. See the Christie Institute already having an impact. Already happening. Thank you, governor good to see you. He has to chip the cameras differently. You didnt move. Im trying to line up with the camera here. Coming up, federal prosecutors from california and kentucky, a criminal probe into juul it comes into heightened scrutiny and there is a big hearing. Were going to hear from the chairman of that committee and well do it right after the break when squawk returns. Oh, wow. You two are going to have such a great trip. Thanks to you, we will. This is why voya helps reach todays goals. All while helping you to and through retirement. Can you help with these . Were more of the plan, invest and protect kind of help. Voya. Helping you to and through retirement. Servicenow put our this changes everything. Youre right sir. Everything. No not everything, i mean youre still blatantly sucking up to me gary. Brilliantly observed, sir. Always three steps ahead. Six steps ahead. Sixteen. So many steps. You done . A million steps ahead. Servicenow. Works for you. Here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Welcome back to squawk box. A house subcommittee will hold a hearing this morning looking into whats causing a rash of lung illnesses associated with using ecigarettes. We have the chairman of the committee. Were thrilled to have you here. Thank you. Try to understand what most of us dont, which is weve all read the headlines but so many of us, including myself, dont understand what has really happened even though these last several weeks here, what do you know and what are you looking to find out well, thank you so much for your a techks ttention to this e today were having a hearing where officials from the centers for Disease Control are coming in to talk about what is causing these 530 mystery res sper tori illnesses and deaths one is that the average age of these victims is 19. Right now we have a National Vaping epidemic among youth. 28 of High Schoolers are vaping and 5 of middle schoolers are vaping as a parent of both a high schooler and a middle schooler, its personally distressing. How bipartisan do you think this issue is, meaning do you think were going to see real regulation as a function of whats happening here . Yes im heartened that the Trump Administration in citing our investigation issued a couple of new regulations. The first is cracking down on marketing of ecigarettes and then secondly proposing to ban all flavored ecigarettes. Right. Second azar said that theyre going to put out the regulations expeditiously. Im very glad about that thats a positive step in the right direction. Should that include menthol i absolutely think it should include mint and menthol thank you for bringing that up the secretary said theyre going to make one exception for tobacco flavored vapes mint is one of the most, you know, popular flavors for children theres a reason why mint is in our childrens toothpaste. Its very appealing to children. So if we have this conversation two years from now, what do you think the ecigarette market will look like . How regulated will it be how different will it be well, im wearing a Purple Ribbon today this is a bipartisan effort to shine a light on Substance Use disorders and recovery we dont want in two years to say that ecigarettes was the next Substance Use disorder for millions of children so in two years what we need to do or what we need to see is we need to see regulations banning flavored ecigarettes and maybe laws doing the same. We need to regulate the nicotine levels in these ecigarettes. One thing you should know is that one juul pod contains more nicotine than in one pack of combustible cigarettes a juul pod can be smoked in 20 minutes. This is very serious we need a Public Health campaign to educate youth and families and parents to prevent people from taking up vaping as youth. Congressman, we have to leave the conversation there we wish you luck with the hearing today. Thank you, sir. We hope to have you back to hear whats next. Yes, sir. Thank you thats a bad fact there, isnt it yes. Coming up, we head to chicago and cnbcs evolve summit becky is there and will be bringing us a couple of great interviews becky, we were just talking. We saved this spot. We did. We wont move i see you guys are keeping your distance i appreciate i know thats totally out of respect for me, not because neither of you is refusing to move from your seat. Its all for you. I know. Guys, i miss you but its good to finally see you and be on camera with you. Guys, coming up in the next hour, were going to be joined by some very special guests. We have Motorola Solutions chairman and ceo will join us and also later United Airlines Ceo Oscar Munoz will be here its a big hour of squawk box. We are live from the cnbc evolve Conference Live here in chicago. Squawk box will be right back. [beep] you should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. But youre not mad, because you have e trade which isnt complicated. Their tools make trading quicker and simpler. So you can take on the markets with confidence. Dont get mad. Get e trade and start trading today. Classical Music playing throughout lower carbs. Lower calories. Higher expectations. The light beer youve been waiting for has arrived. Corona premier. Stocks are near alltime highs. Were going to talk about the catalyst that could push the bulls over the top. Tech under fire, only this time its a worldwide onslaught. Marsha blackburn talks to us ahead of a key hearing today how business innovates. Oscar munoz and greg brown join us live as 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 Andrew Ross Sorkin and becky quick is in chicago at todays cnbc evolve summit. Becky, youve got some special guests coming up who are they big mystery guest but let me tell you first of all what evolve is all about, guys. Evolve takes a look at companies that have to go through very severe transitions, maybe its because changing demographics that are out there maybe its because the customer is looking for more than they used to be looking for and maybe its just because of how fast the change of pace is really happening these days, especially when it comes to technology. So we have a couple of very special guests joining us to talk through how they have evolved their companies and come out the other side both of these are wellknown stories, but its not often that you get the chance to talk to the ceos about how they make change on the fly while theyre continuing to serve their customers. First up weve got greg brown. Hes the chairman and ceo of Motorola Solutions back in 2008 he was faced with a huge issue you know we all used to have the flip phone, the razor. That used to be the most popular phone out there. Back in 2008 he was looking at that part of the business that was getting decimated by the creation of the iphone and how popular that was he took a look at the company that we knew, the flip phones, the razor phones and he actually amputated at that arm of the business split the company in two and he stuck with the rest of the company, Motorola Solutions, which is really the emergency products that were being sold to police stations, to ems, all of those Real Time Communications and Delivery Systems that we dont know as well because we as the consumer arent buying them. Thats turned out to be an incredibly successful move the company has outperformed the market and well talk about how he made those changes, how difficult it is to make a decision like that 2008 there were other things going wrong with the market too. Tough days that brought him to that decision and it turned out to be the right one. Were also going to be sitting down with United Airlines Ceo Oscar Munoz. Hes been dealing with issues since he took over the company in 2015 he suffered a heart attack, had to have heart transplant surgery he was dealing with a company that was dealing with many issues with the Employee Base. Lots of problems because of the United Continental merger, an Employee Base that wasnt happy. So he set to work trying to fix that in 2017 you remember david dow, the doctor forcibly dragged off the flight his team was the worst possible response ever. And then when the video was released lots of people saw what happened to david dao. There was outrage from customers. He has had to pivot and step back from that at the time he was not given the chairmans position title for the company because the board really cracked down on things. Here we are a couple of years later and United Airlines has also seen its stock do incredibly well over this period of time. I think hes calmed a lot of concerns that had been out there, particularly with customers. Dealing with all of those issues and trying to figure out how to get up to speed. Were going to talk to them about the changes in their company here at evolve and well talk to them about the issues of the days guys, ill send it back over to you. Becky, well be waiting for that sounds good. Lets check the futures that are up on some trade optimism being rekindled. Up 115 points on the dow 112, s p indicated 13 and some change just under 40 points on the premarket session look at treasuries indicated im sorry, trading at 1. 7 on the ten year okay. Couple other stories that investors are going to be watching today the united kingdoms top court has ruled unanimously that Prime Minister borisons suspension of parliament is illegal. His Brexit Strategy calls for leaving the e. U. On october 31st regardless whether a brexit deal is voted for or not. Imbev had floond do a larger ipo of that unit earlier but withdrew it because of Market Conditions facebook has announced the acquisition of startup control labs for an undisclosed amount its somewhere between half a billion and a billion dollars. Control labs explores ways for people to communicate using brain signals. Remarkable technology. Ive now seen it in action myself you think. What you think your hand is supposed to do, theres a wrist band that effectively goes around your wrist. You think what your hand is going to do and the computer actually 2k07b9 have to move anything. Theres something on the wrist . Reading those nerves. Reading those. That makes more sense. Elon musk is working on something that goes into your brain. Its all about what you think and how it can output. That i can understand a little bit better, if its feeling the nerve impulses, much simpler than going to the brain center. Ultimately youd have something as small as a watch but the band would be able to read all of this i feel a little of this on cats in college. I apologize to the cats but thats the problem with brain research, its very difficult to do because to do on humans i imagine it will get used in the oculus product if you had the hands and you didnt have to control that, you could just think about it and watch, thats pretty cool. At this point it sounds like were getting ahead of ourselves. Its early. What were capable. Youre testing the nerve impulses. Right. Big tech is under fire from coast to coast today as well as across the pond. Ylan mui joins us. Good morning. Reporter good morning, joe lets start in europe where the e. U. s highest court ruled today in favor of google the court found that google does not have to apply the right to be forgotten to search results worldwide. E. U. Users can only request that personal information be removed from search results that occur in the e. U in a statement google said that its worked hard to implement the right to be forgotten in europe and strike a sensible balance between the right to access information and the right to privacy this is important because it basically serves as a reality check to regulators. There is a risk of over reach. Here in the u. S. California will be the first state to implement a european style privacy law next year. A new state Analysis Finds it could cost businesses as much as 16 billion to comply and that could all help shape the debate on capitol hill over whether to move forward with a National Privacy bill at the same time, lawmakers are also getting worried about possible monopoly power in tech. This afternoon the senate will hold a hearing on whether Big Companies are snuffing out their smaller competitors. Guys, the spotlight on big tech is still shining very bright back over to you all right, ylan thanks joining us to talk about todays tech hearing in congress is senator Marcia Blackburn she chairs the committees bipartisan tech force. Whats your overall sort of view of big tech right now, senator, seeing as how were talking potential antitrust concerns. Do you think that theres where theres smoke that theres definitely some fire here . Todays hearing is going to focus on competition and the need to keep that virtual space competitive. You were just discussing some of the work thats being done at control lab and what we do know is that with google youve got 50 different states attorney general who are looking and investigating them youve got eight that are working together tennessee included in an investigation to facebook. You put d. O. J. And ftc this and the health of the virtual space. We know it is important to exercise some preemptions so you are not looking at 50 different standards but you have a basic privacy standard same thing with breach notification and making certain that this is going to remain a competitive and innovative space. For me its a little unfortunate. I have a lot of love and respect and hope for the Technology Industry in the United States. Yes. Its leading the world and id hate for anything to you know, to throw a wrench in the works. Right. This is one of the few places where its bipartisan. Both republicans and democrats dont like big tech all of a sudden right well and i just you know, you dont want to its the golden egg from the i always call it the golden goose i dont think we need to get to a euro viewpoint of where you actually start worrying about harming competitors instead of harming consumers. That makes no sense to me. Business is war. Thats your objective a lot of times is to put competitors out of business. Right heres the thing we know that the gdpr went too far and we dont want to go too far. We know the California Law goes too far and we dont want to do that when you look at what has happened with investment and innovation in the e. U. , you know that the gdpr went too far so you have to come back and say, how do you do something that is light touch . At the same time you have the ftc investigating facebook they levy a 5 billion fine. At the other on the other hand, what theyre doing is allowing facebook to expand. Now facebook is looking at libra. When you talk about facebook moving into the financial areas, then you have to look at theres a different set of privacy standards there with graham leach biley. If google goes into google health, then you have hipaa standards that apply there what we are saying is, look, we need to clean this up. We need to make certain there is a basic privacy standard, a basic Data Security standard we need to make certain that this virtual space is competitive, that innovation continues. This is why you do not want to do a privacy overreach why is big tech now saying, come on, regulate us. Well help you set the guidelines on this and were saying, no, we want to do this light touch. One set of rules for the entire internet ecosystem one regulator. That regulator should be the ftc and it is why whether it is at Judiciary Committee or in the tech task force which functions under the Judiciary Committee that were being thoughtful, were talking to privacy directors, we are talking to leadership in these Different Companies and say, how do we strike this right balance . Because the decisions that are made here affect every industrial sector that we have they lead to productivity. They encourage interaction americans have moved so much of their transactional life online they want the assurance that they are on a safe platform just as they are when they conduct those transactions in the physical space senator blackburn, good luck today. Thank you we are like i said, were finally bipartisan going after big tech lets pick some other things. Yes i agree. Thank you. When we come back were going to take you live to the cnbc evolve summit taking place today in chicago where our own becky quick is standing by with a ceo you dont want to miss becky, what do you have coming up actually, its who i have coming up. Its greg brown. Chairman and ceo of Motorola Solutions. Hes going to talk to us about how he has changed the company hes dealing with government and not fickle consumers he was one of the First Companies to go into china and one of the first to leave. Well talk to him in just a moment well be right back from chicago with squawk box. I dont know whats going on. Ive done all sorts of research, read earnings reports, looked at chart patterns. Ive even built my own historic trading model. And youre still not sure if you want to make the trade . Exactly. Sounds like a case of analysis paralysis. Is there a cure . Td ameritrades trade desk. They can help gut check your strategies and answer all your toughest questions. Sounds perfect. See, your stress level was here and i got you down to here, ive done my job. Call for a strategy gut check with td ameritrade. Plants capture co2. What if other kinds of plants captured it too . If these industrial plants had technology that captured carbon like trees we could help lower emissions. Carbon capture is Important Technology and experts agree. Thats why were working on ways to improve it. So plants. Can be a little more. Like plants. Welcome back to squawk box. The futures right now have pulled back a little bit less than 100. Up 98 points on the dow. S p indicated up 12 and nasdaq up 36. Todays cnbc evolve summit taking place in chicago. Focuses on how companies that have been mainstays in the world of business are innovating to meet todays marketplaces demands. Now were going to head over to the summit in chicago by our own becky quick and shes joined by a special guest. Andrew, its good to see you guys we have some special ceos here today. These are leaders that have made extreme changes and extreme evolutions to deal with extreme times. Greg brown is here, the chairman and ceo of Motorola Solutions. Thanks for having me. Were all about evolve. If you look at Motorola Solutions say where you were 2008, this is a very different company. We thought about consumer razor phones. Right. To somebody who is selling to governments. These are Mission Critical components how different is the company how did you kind of get here its amazing. If you think 10 or 12 years ago, think of motorola of a big multibusiness conglomerate, consumer centric, cellular centric, selling cell phones in the wireless cellular infrastructure business. We cleared the news. So today think of us more of a pure play around Mission Critical communications and intelligence we do Mission Critical networks. Theres 13,000 Public Safety networks around the world that provide First Responders that immediate stuff like dispatch, stuff like body cameras for police officers. We do three we do the communications, we do the 911 command Center Software and we do video security and analytics. So those walkietalkies, radios for police, fire, military, 6,000911 command centers when people call 911, how do you take the call, process, dispatch, how do you enter information into Records Management and more recently video security, both fixed, dash cam and body worn. Totally different company. Three platforms. Software and services that wrap around it and its going well. The street likes you a lot better today because youre not selling to consumers, youre selling to governments its a more stable form of revenue and its a recurrent form of revenue. The reports ive been reading say they like you much better. Its really paid off if you are looking at the stock price or over the life of the time that youve been at the company too i know its been massively outperforming the market if you look at that stock. When you are dealing with governments today, i guess part of the issue is governments seem to have some money theyre flush times. What happens if theres an economic downturn . Heres the night thing. Given what we sell, its a need to have not a nice to have so when times are good, obviously we ride that wave of bh budget availability and backlog. Even when the economy slows, because were at the higher end of the food chain and you have to have this equipment, you want to protect the communities you want to secure the citizens. You have to have Emergency Communications they have to be encrypted. They have to be spectrally efficient and modernized the growth will vary, but were pretty steady and more of our revenue to your point, becky, is annuity recurring. Roughly 1 3 of the companys revenue is software and services thats effectively a proxy for recurring revenue. So were able to shock absorb the economic variabilities in terms of what your Growth Potential is, one of the reports said youre only at 2 3 of the Public Safety answering points and only 25 of your customers have got two or more applications so where are you . Where do you think you can expand yeah, i think were in the early innings. If our overall revenue is 8 billion. The Addressable Market for the markets we serve is just under 40 billion so we can use the incumbency we have in Mission Critical communications the lower penetration we have in 911 command Center Software and on video security and analytics, if you take Worldwide Market share were single digit if you take americas, were number four. Theres room to run and theres room to grow you were one of the very First Companies that made its way into china, 1986. Yes. Was that the smart phones yeah. Way back when the Galvin Family made the decision to get into china in 86 it was a good decision at the peak of being in china, maybe 17 or 18 years ago, motorola had 15,000 people 3. 5 billion of revenue today we have 130 people and about 130 million of revenue you were one of the first to get in and one of the first to get out . Effectively, yes. We dont do manufacturing. We dont do software development. We dont do product development. I think chinas obviously a huge market with 1. 4 billion people however, for what we do, for security, for Mission Critical Public Safety, for technology protection, ipr, technology transfer, its not a market thats good for us to be in overall. Meaning, what, you cant serve u. S. Public Law Enforcement and china or because youre a u. S. Company theyre not going to be using you . No. I would say we sued huawei we had issues with huawei, resolved that. Because they stole your i. P. Well, we resolved that. Because they stole your i. P. I cant get into the details. What i could say now, becky, were suing another company, high terra, a chinese provider, patent infringement, source code theft and theyve had a multiyear system egregious campaign to steal from motorola. Theres a jury trial november 1st here in chicago and i look forward to that trial. So you think the administration is doing the right thing by cracking down on china right now . I do. I think the administration taking a stand against china is absolutely the right thing and long overdue. But youve kind of said, forget it. Youve washed your hands of it a long time ago because of these practices. I just thought the risk was too great. It didnt have the commensurate return i like what the administration is doing all of the individual tactics and so on are the tariffs do provide somewhat of a headwind for us theyre negligible. We could absorb it in 2019 overall the country is taking a hard stand its the right thing to do long overdue. You have a lot of good things going for the company. If theres one thing to worry about, what would it be . Complacency you talked about stocks up this year stocks up over the last three years. In my 12year tenure weve outperformed the market transformation theres a whole laundry list of things to talk about thats good in a way i dont like that our success has been we stay on the balls of our feet. We have an edge thats constructive we keep our ear to the ground for our customers. We like to compete and win so while im happy about the success, i want to compartmentalize it and put it in the rearview mirror. Its all about moving forward. We have the right team by the way, half of our employees, over half of the entire company are new in the last four years. So the culture change. Greg, its good to see you thank you for joining us. Again, greg brown who is the chairman and ceo of Motorola Solutions. Joe, ill send it back to you. Thanks, bec. Joe says hi and andrew. Hey there coming up, squawk box exclusive interview with oscar munoz. Were going to hear the latest on customer demand, fuel prices and how the company is dealing with the continued grounding of the 737 max. The boeing jet ayst tuned youre watching squawk box on cnbc ou 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. 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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. Welcome back to squawk box right here on cnbc were live at the Nasdaq Market site in times square a couple of stories investors are going to be talking about. Auto retailer carmax is one of the biggest gainers. Take a look at whats happening. Carmax earned 1. 40 beating by 7 cents. Beating street forecast. That stock is up 4 right now. Were going to be getting some Housing Market data in about 30 minutes. The s p kay schiller report expected to show a 2. 1 increase in july home prices compared to a year ago dow component nike will be out with the Quarterly Earnings after the closing bell theyre expected to report profit of 70 Cents Per Share revenue is expected a little over 10. 4 billion cnbcs evolve summit taking place in chicago its all about how Legacy Companies are adapting and innovating in todays marketplace. Right now we want to go back out to chicago and our own becky quick. Shes joined by another special guest. Hey, joe. Thank you guys joining us now is oscar munoz. He is the ceo of United Airlines oscar, you are somebody who has evolved this company i think three or four different times in five years youve been running it how do you do that how do you keep handling this stuff . How do you keep coming up with it where is it . I appreciate being special as a guest like all of us you know, this is a labor of love we have 95,000 employees worldwide and one of the things that i think weve all felt for a long period of time is the pride and professionalism in serving you as a customer. We havent been able to unlock it with tools, with culture, with involvement or engagement and listening to them. And i think thats been a huge factor in the things that we have done. Its not me, its hard work. I fly united often. You guys are my hub. Youre my home i remember when you came in not particularly liking flying on united because it seemed to me that the employees were always grouchy and grumpy i know that was the first constituency head you listened to then dr. David dao, that made you listen to customers. We accelerated the program is what it ended up doing people ask me about that event and were hoping it goes into the distance i hope it doesnt to some degree because it reminds us constantly every day of how important and how critical our everyday treatment. We have a saying every customer every day on every flight which is a really tall task. We fly 160 plus million folks. The majority, the vast majority of those flights are on time without incident even a small percentage of that large number has an issue and of course we do live in a world where everything is very visible and transparent. People will communicate via their own devices and stuff. Thats an aspect just like our Business Model things happen all the time in our business and we can stand around and say, oops, oops, oops wed prefer to deliver on the promises we make to our customers. Lets talk about the issues youre facing on a daily basis, a lot of issues the street is facing too first off, whats happening with the 737 max. We just had the new head of the faa. Hes not going to certify this until he flies it and hes satisfied with it. Hes a pilot so he knows what hes talking about whats the latest youve heard we were just with them the other day. I think its exactly as you said i think the process has to happen all the people in the world have to be assured and made can have debt that this is an aircraft thats safe. Weve said i would fly on united but more important the safety and security of our employees and customers is paramount we wont move until the faa has certified certainly. We hope other people around the International Space also do it very closely knit because i think that will be helpful other than that, i think the work has to be done. What does that mean in terms of when youre planning on putting it back in your schedule how far off have you said . Theres a lot made up of you z this date, somebody else did two weeks later, two weeks before nobody knows exactly we have changeover periods in our schedule that are just internal to us so we will for instance, we have it in the middle of december, december 19th others happen a few weeks later. Theres nothing important. We dont know anything more than anyone else, its just an appropriate schedule aspect for us if that turns out not to be the date, well move the date. I guess the reason people are so eager to try and figure out when its going to happen because it does matter to the bottom line. Whats the impact if it gets moved back another two or four weeks . It sounds like this, you know, ceo talk about the safety and security of planes and customers. It is all about the safety and security of customers, period. The commercial aspect, operational aspect weve been dealing with you havent seen guidance. We are towards the end of the year canceling about 100 flights per day. Wow. Our team has done an amazing job of using different aircraft, adjusting our schedules. We can actually take care of as many customers as possible as opposed to canceling yeah, its not optimal but, again, safety and security are paramount. Have you talked to boeing about any potential make goods, potential discounts . Yeah, i think those conversations are going on across the industry. Nothing of any specificity other than the fact that we like to get the aircraft back safely and soon. Lets talk about whats happening around the globe in terms of what you see be where do we start . Really. It seems like were in a pretty good economy here in the United States but you are traveling internationally, taking people for business, consumers. Where have you seen pockets of strength and weakness . Lets go around the world central and south america, argentina not so good. Brazil pretty good overall latin strong outbound to europe is strong weak coming in brexit is affecting folks. Political winds do affect the economy and customers desire to travel the far east, overall east is hanging in there china has been a bit softer. Hong kong in the last quarter was awful. Its as simple as that for obvious reasons. We takema make adjustments our schedule weve done so to argentina and hong kong and will continue to do that. Hard data is strong. Our bookings are strong. Our yields are strong. Our operational basis and our plan is solid. We try to use the r word a lot its a big conversation. We often say lets not talk ourselves into it. Recession. This is like voldemort. Lets not talk ourselves into it we watch the data. Its so critical to watch. If we dont get it right and adjust our schedules, our bottom line gets impacted. You probably can see out for months based on bookings and consumers. You seem to be a leading indicator. I used to be in a Railroad Business that was a leading indicator much more than ours. We have a lot of close end bookings, folks like you, bankers, lawyers theyre often told i need you in london friday. So that close in booking is a big part of our business we have a very segmented airline but at the same time we live in the largest business markets so thats a big portion to us we dont have as much insight. We watch all of this closely were watching a few weeks out we have all of these wonderful charts that indicate strength or weakness or trends again, most of that data continues to suggest a strong thing. We just reaffirmed our guidance for both the quarter and the full year despite full prices. You want to talk about fuel i suspect. We do. Were in a good place. Lets talk about fuel because we did see Oil Prices Spike pretty significantly at the beginning of last week just based on what we saw with saudi arabia how are you dealing with it . Prices didnt stay as elevated as some people expected. No. No how do you handle it a couple of things. The geopolitical tensions are really important and really serious and we hope most of that gets worked out. With regards to ill talk about our industry as a whole, weve become infinitely more resilient. That would have historically hit ourselves and over the last couple of spikes in oil that weve seen, the stocks tend to drop we dropped about 3 which wasnt too bad. Theyll rebound. Fuel prices didnt move as much. They also rebounded. I think folks did a nice job of recovering their capacity and managing the crisis and the issue. Right now, weve reaffirmed our guidance after we saw the fuel prices spike. When you say that you did a better job in the industry of managing, does that mean youre hedging it part of it is the United States is producing more. I think its a concept of what we do in the marketplace. By and large weve learned to accept that fuel has volatility. Hedging, some people do and most people do not. Over the long run that has mixed records ill say so, no, its running a business with a commitment. We have weather. We have to get better at managing weather one of the new initiatives is how were sort of wanting to try to revolutionize how do we deal with weather telling you theres bad weather, you cant fly, you dont like it, youre upset its like, listen, we can tell you ahead of time. Whatever we need to do to not make you as uncomfortable as weather currently does for people. Whats the biggest complaint with the stuff you cant control right now . The stuff we cant control, you cant control. We all wish Mother Nature was on our payroll. I just think about some of the things at the faa, air traffic control, some of those issues those are out of your hands or tsa, trying to get people through lines faster. This is an industry and a business and a job where there is very few areas that dont affect you we cant walk around, and we educate, educate, educate. Very transparent about everything i will stand up i was diverted recently and i stood up you were . Yes happens to everybody which is the great part. No, this cant happen. Where were you going . Tell me this i was coming to chicago we went to grand rapids. It was one of those days in chicago where it was difficult. Thats hilarious. You feel our pain. Im sitting in the back it was a great event i got up and talked to folks and we explained questions somebody wanted to get off the plane on a live tarmac and get an uber because it was closer to where they were going. Yeah, were not going to do that and heres the reason why. Its a live runway. You might get run over. People want to get off. Its better to stay on the aircraft, wait it out, get in line to get back its all these kind of questions come up. People shared food they brought out bags of taffy it was a wonderful event you can make difficult issues easier. You were in the back of the plane, did i hear that right well, 24 or something. You were . Short flight. Did anybody know who you were when you got on the plane . In our business and i think all my peers would say the same thing. The more to the front of the cabin you are the more people know you and recognize you towards the back there are a High Percentage of people that dont fly very often thats part of the issue things have changed on bag size, a host of things so thats some of the frustration which is why we say every customer every flight every day. We have to make sure people who dont fly often are communicated to in a way thats practical, reasonable, logical. Youre like under cover boss. Oscar, thank you we really appreciate your time oscar munoz is the ceo of united. Thanks for your time. Thank you. Thank you, becky. Please say our hellos and give our best to oscar. When we come back, stocks making the biggest moves ahead of the opening bell and were going to talk with jim cramer about his big interview with disney ceo bob iger about apple and what might have been. I mused in the book and now steve is gone eight years, had he lived, i think theres a good chance we would have certainly talked about being one company more all rahtstig ahead when squawk returns in just a moment each day our planet awakens with signs of opportunity. But with opportunity comes risk. And to manage this risk, the world turns to cme group. We help farmers lock in future prices, banks manage Interest Rate changes and airlines hedge fuel costs. All so they can manage their risks and move forward. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. Theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. Under an hour now until the opening bell on wall street. Dom chu rejoins us with a look at some of todays top stocks. Hey, dom. Good morning, joe again to you. Lets take a look at what weve got with the media theme for our morning movers well start with shares of netflix down half a percent. Roughly 30,000 shares of premarket volume the streaming market giant had it cut to 350 from a prior 515. They kept their buy rating they say among other things they expect rising cost pressures on content and advertising as competition really heats up among other new streaming video offerings. Speaking of those streaming video competitors out there, disney about to launch its own video streaming service. Shares are up 1 premarket. 24,000 shares of volume. The media conglomerate has an outperform and a 173 price target they call it their topic in media. They cited things like brand positioning and strong direct to consumer including optimism over disney plus streaming coming up. Then were going to end things with media of the social variety. Snap chat Parent Company snap inc. Up 240,000 shares premarket volume getting upgraded to a buy by analysts at guggenheim they have 22 a share. They cited things like stronger usage trends, industry leading access to 18 to 34yearolds and more advertising demand due to platform improvements. Andrew, those shares moving as well back over to you guys. Dom, thank you for that. Want to broaden out the market conversation right now. Joining us is dan suzuki and mike santoli is in the house. Cnbc senior markets commentator joining us now what are you doing are you as negative as you like the last couple months youve been negative, negative. Couple of decades. Yeah, ive been more on the cautious side. If you look at the market, i mean, mike was talking on tv yesterday about how the markets working hard to stand still. If you look at the market over the last 20 months its gone nowhere. If you look at the performance, its been all dominated by gold, bonds, the more defensive sector look at yesterday with the market doing actually decently well what are the stocks and what are the sectors that are making alltime highs Consumer Staples, utilities, real estate, procter gamble, Dollar General these are not signs of a really healthy economy or healthy market and i think thats the i shall issue. Therefore you recommend investors do what . Investors need to be taking their foot off the gas peddle, taking risk off the table and continuing to focus on the more defensive sectors now. When we tell people that they should buy defensive, the first thing that they say are defensives are expensive i think thats a little bit of a misnomer there are three reasons why defensive sectors are looking a bit expensive. One, theyre more correlated with rates rates are near alltime lows thats a drag. Relative to rates, the utilities look on the healthier side secondly, look at the fundamentals if you look at the cyclical sectors, theyre the ones that are posting negative Earnings Growth earnings contracted growth relative to last year. Thats reflective of that. Lastly, you cant really compare defenses versus cyclicals cyclik cheap when the earnings are peaking. Want to be any more optimistic i think that there is a way to look at it as i said yesterday, okay, the market has been treading water here and maybe will get fatigued in that process. It is hard to look at specific things that say that the market is in deep jeopardy as a whole you have things like microsoft and jpmorgan touching an all time high last week. The market breadth has been okay what is interesting to your style and sector point is everyone got very excited about this idea that we had this cyclical and value revival it is kind of paused or stalled and now you had the big Growth Stocks holding up okay too nothing really changed in terms of the uptrend in growth all that together means the market is kind of quietly coiled itself up pretty tight right here last weeks low during jay powells press conference, really just about 1 below where we are, and we havent touched it since i think right now, you can argue to give the market the benefit of the doubt for the moment in terms of being well supported and i think only because the credit markets are so flush, and you have Investment Grade Corporate Bond yields right now are 3 , they were above 4 a yar ago and stock market is the same valuation. To me, it doesnt things are hard to fall apart when thats the case. I think mike is making a lot of great points. I dont see anything that says the market will fall off the cliff tomorrow my best case is we make more highs between now and the end of the year well have 5 , 10 correction between now and the thats the type of volatility people need to be aware of in that type of environment i think the defensive sectors will do well buying off the bounce you say 5 to 10 . 5 to 10 correction. Depends what the data is there are companies that are reporting healthier earnings, we had fedex, right fedex has Company Specific issues, amazon, tnt, all the specific issues, but if you look what theyre telling you, Global Growth is slowing, uncertainty is increasing, and the costs are going up thats the type of thing that youre seeing more broadly mike, yesterday, was talking about this Chicago National activity index what is interesting is that did balance, but if you look at three of the four components, drivers were negative, really all held up by industrial production, that part of the survey, and industrial production, if you look at that series alone, it is at like a threeyear low or Something Like that i think the data is still clearly moving to the downside we got a nice pmi number, if that continues, ill get more optimistic in the shortterm i think that the preponderance of the data is coming in more negative i dont know why you play a hope strategy hope is not a strategy. Thank you, guys. Sure. Appreciate it there is a special treat coming up for you tonight on mad money, a conversation between disney ceo bob iger and our own jim cramer and here is iger talking about his friend apple cofounder steve jobs and about the idea of disney and apple merging. We never talked about being one company, but he loved disney a lot. And obviously he loved pixar he loved storytelling and he loved the combination of storytelling and technology. He called liberal arts and technology i think he said at one point that made his heart sing the combination offer at and technology thats what pixar was, by the way. I mused in the book, now steve is gone, eight years, had he lived, and i think there is a good chance he would have certainly talked about being one company, whether we would have done it or not, i dont know now down to the New York Stock Exchange jim cramer joins us. You know how we do these things, jim. You never give your best stuff to, you know, to promo a segment, the best stuff is right . What else have you got maybe dont tell we talked a lot about twitter, the New York Times had a little bit about the twitter potential acquisition. I thought bob was very honest by just saying, they had a bad brand, he had a good brand, bring down a good brand. I do believe that the the notion of apple, we talked about who would be a better steward for apple. Would bob iger or with tim cook. Bob just left the board of apple. He said tim cook has done a miraculous job i talked to him about how often wall street thinks tim cook is not up to snuff for what jobs was doing. He disagreed with that said tim cook is doing a remarkable job and anybody who thinks hes doing a not great job doesnt know what theyre doing. It was nice referendum for tim cook, but, yeah, i mean, i think he did want to merge and thats clear if you listen to the rest of the interview would have thought of a great combination. The whole founder, cant run the company, there is some merit to that from time to time. But, remember, jobs left once and we saw the successors had no idea, he almost had to come back and refound and found apple again, which is what steve does. But then i do think it needed a guy like tim cook, right and he has taken it to the next level. Right and i think that were discussing innovation in tim cook and how good hes been. Again, contrasted by what wall street thinks, hes just soso and i think it was really important that bob said that tim cook has done a miraculous job just because the stock has gone up incredibly. And analysts are really very hohum about apple because it is almost like tim cook is edsel you think running a trillion Dollar Tech Company in this day and age with targets on the back is easy, tim has maneuvered through the minefields as deftly as anybody could have done it, i think. Absolutely. He has to he speaks for the president. They get the exemption for the mac pro in texas that is something that happened because he went to the president. He did not just say, listen, i dont like the president just the opposite. The president of the United States, you got to go there and i really love what bob had to say also, just about acquisition and how important keeping disneys brand has been the book was great he wrote the book. I think he wrote the book for he told me this in agreement, after he thought he was going to be retired, so there is a lot of very live stuff about people who are very live. Did you find a flaw with iger has a cavity or something . Is there anything wrong with him that you can give me to maybe feel better about myself give me a couple of years and i think yes, hes a green bay fan. Theyll lose all right thats it. Nice interview, jim there is something. Thats great well be watching, jim. That was the old days hes got to get live right im worried about you thursday, but youll be okay dont miss that big interview tonight with disney ceo hes go looking, iger, that comes your way on mad money at he has a cavity. I dont know i can shine, i can shine, i can shine. Imma do what im made to do. Built for excellence. You start from the foundation up. The excellence is reaching dreams and chasing them at the same time. Make sure you join us tomorrow before we do that, we should say goodbye to becky. Well see her hopefully tomorrow have a fabulous day in chicago, becky quick. Thanks, guys. Well be doing this live all day, hearing from oscar munoz and from greg brown about the darkest days you can follow us on social media. Awesome well see you tomorrow squawk on the street begins right now. Good tuesday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the New York Stock Exchange. Futures up this morning, reflecting some optimism about a delayed brexit perhaps u. S. china trade, busy day with the president speaking at the u. N. In the next hour. Europe largely unchanged ten year 17. S p caseshiller home prices up 32 from a year earlier