Transcripts For CNBC Squawk On The Street 20240714

Q2 is at 10 the president says markets would crash if impeachment moves forward. Plus, vaping fallout Philip Morris joining us after calling off merger talks and shares of beyond meat soars, as mcdonalds begins testing, the plt, a tomato burger. The house impeachment inquiry remains in focus futures are pairing their gains as the house releases the whistleblower complaint. Joseph maguire is set to testify on the hill, before house intelligence well keep you apprised of headlines for that the president did retweet a comment this morning, suggesting that the markets would crash, if impeachment happens. The history of when clinton was impeached is one of the first day tech was down, 4. 5 . Nasdaq, after that, it was the greatest buyup effort. Im not going to buyin if the markets crash. I would buyin if he was convicted by the senate. You need twothirds of the senate i feel like where we are here is like, the whistleblower you know where were back to were back to one of the situation wheres theres people that hate trump so much, you see what this whistleblower said thats a lockdown. Whats lockdown . This is not the smoking gun that a lot of people were expecting, except for the people that hate trump so much that anything is a smoking gun. This is not a trial impeachment is a political process, not a judicial one. Right its up to the house. According to politico, they have the votes if they want i think that Speaker Pelosi is a great headcounter but a week ago, i know she didnt want this new evidence changed her mind. Its great to people change their mind i believe, even though the democrats assured me this would not happen, you read the stories and you dont know what happened other than the legendary ukraine funny man seems to be happy. Maybe he was the wrong guy to say that trump bullied h im. Again, you say, i dont know this is too hard forget about it. How did nike do . How this inquiry process impacts trade. Passage of usmca any spending deal. November 21st, youre facing a shutdown of the government not to mention gun control and drug pricing usmca is a big deal theres a lot of Great Companies in a need that i know that Speaker Pelosi wanted that to happen last week. Was worried about safeguards speaking with the president s people yesterday, it is harder to challenge thimagine that som trying to impeach you would sit down and make a big deal with you. That hurts u. P. S. , ksu, the companies i spoke to wanted this kantor is out there, saying transport is essential transport is hurt by that theres no two ways about it, thats just true you need nancy pelosi to say, this is not a risk the american person needs it thats a harder dialogue, a harder storyline from what she said yesterday its disparaging from the view of stocks. We want to pay less for stocks, because of the fight there are people that say, listen, jim, this is a constitutional crisis. We should sell all stocks. Every crisis, other than 2007, have buying opportunities. The fundamentals matter. Really, great read across the board for the technology k. B. Holmes, really amazing. Whistleblower, ukraine funny man. Hard to dovetail i pick up tthe new york times. And it says that trump has been found guilty oh, no not yet. Its so hard to understand im not saying democrat or republican im saying its hard to understand if were going to have a conversation about fundamentals, corporate profits are starting to get squeezed. Theres trade and incremental costs on trade but wages are um we get pce now i think wages should be up. Workers have been underpaid. And theyre catching up. In the k. B. Holmes call, the labor costs are going up theres a shortage of workers. We dont allow immigrants to come in as we used to. You just have more immigrants come in. Thats part of the price thats part of the Collateral Damage going for 2 unemployment this economy is still strong, except for the companies that are related to china those that relate this to china are missing the point. You go over to nike. This is a company by china and for china, of china. And nike was incredible. Starbucks in china china is the strongest part. If we had tim cook, he would say, china is really strong. It is steel. It is there are lots of certain lumber today the lumber companies that made a big bet with china thats strong. When i look at the retailers, like walmart, amazon, which is in the crosshairs of the government target and costco is doing so great home te depot, another report today. Its all about the consumer here and the wheels of commerce are continuing to turn, david faber. Whether its mma or a big ipo where you are. Well talk about pel peloton later. The talks between Philip Morris yesterday. Joining us in a cnbc exclusive, is the ceo of Philip Morris international, Andre Calantzopoulos they concluded without reaching an agreement, yesterday or the day prior. Why were you unable to reach an agreement . As you know, we already have a relationship with altria because of the license for distribution in the u. S. What we looked at is if theres a better way to get value for shareholders, in terms of additional revenue, and inner jis. In additi more focus on both sides. The environment taken into consideration. Shareholder sentiment. The effort required and the priorities on the market the best course of action is discussions on the merger. And focus, instead, on the forthcoming partnership. My understanding is there was a likelihood of a deal, until this vaping crisis, if we can call it that it began to become something of great significance do you think you would have reached an agreement, were it not for banning products in the u. S. And around the world. Yeah. It is an evolving environment, just now in the u. S. And i think what we see is first of all, to look at the bigger context, all tobaccocontaining product, including Nicotine Products are regulated by the fda we had an exception for a period of time for the vape category. If i remember the conversations, it was a Small Company and small procedu entrepreneurs and it was a process. It is an emotional issue, as you know it involves using by teenagers and vaping this should be the priority by everybody to address this is a serious issue. I think, over time, if we take a twoyear of threeyear horizon, we will be going through the application process, say end of 21, 22, we will see a highly regulated, in terms of product, marketing and other restrictions category but i do believe that at the end, strong brands and companies that have size and are doing the right things, will be the ones that will be the winners forecasting exactly how this is going to happen with High Precision is a bit difficult today. Is that why, given the lack of ability to forecast right now in this moment, to reach a deal with altria . No. I think thats not the case. We took everything in consideration. Including Investor Sentiment tell me about Investor Sentiment. Do you think they failed to understand the strategic rationale for the deal you werent able to talk about it exactly people were talking to me about the ability to bring together the two organizations, invest more in r d, using the window that is open now, as an opportunity. Did your Shareholder Base appreciate why you wanted to do it shareholders have their own opinion, we couldnt explain this is closed the discussions have ended for the foreseeable future we can only focus on getting the product that has authorization by fda on the market we have a corridor because there will be a lot of change in the vapor market thats where the companies are going to focus i think, arent you in some ways, not in line with your own Shareholder Base are they not understanding some of the weakness you see in the overall business or the need to move more aggressively or are you failing to understand their concerns in some fashion i think sometimes there is a little bit of confusion amongst shareholders in general, about all of the new categories. Thats understandable because the category is new. Theres discussion about decline of cigarettes. And obviously, as the new categories emerge, and consumers and smokers, move from cigarettes to this alternative, hopefully they will be proven to be better. We will have a decline in cigarettes if we take japan, for example. We have a 25 decline in the Cigarette Market because products hit like others, have convinced consumers to switch the product. This is good for Public Health this is what is going to happen. However, who is going to be the winner and the loser is what shareholders are worried about were positioned in this market and internationally. We have the portfolio of products for, you know, the new world. We have the first, as i said, that is approved, by the fda i think were wellpositioned to be the winners in the longer term, where we hope one day cigarettes will stop existing and better products will be used by people that will not otherwise switch thats how i see it. Now, i understand that anytime there is transition in industry, shareholders are worried but i think both companies are very wellpositioned for the future okay. I think also, you know, we see very good first steps. Announced yesterday, from juul, that has been at the center of the discussion yes, it has its not the only Vapor Company out there. But its the first very good step and i think that was the right decision from the board of directors. Also, with the experience from the regulated category, playing a role and playing going forward. We need to focus now, on getting the products through the process of the fda, because theres a lot of emotion and a lot of overreaction sometimes and address the youth use of nicotine and that requires quite a lot of action not only strict regulations of flavors but requires age limits, Access Control of retail, technology to do that, technology in the devices and education. Were told that children dont smoke. I want to stop there, if i can. My colleagues at the new york Stock Exchange, have a question. I have to question whether you think that both companies have a good future only thing that altria had a Renegade Company called juul you chose to go through the fda. Would you have advised juul to take the strategy they did or would it have been better had they gone through the fda, rather than fool people im sorry. Convince people over 21 im sorry, they used a lot of underaged people what im saying to you, is they did it the right way did you expect juul would do the back door . And did you think that was right . I think juul and any other product, has to go through the fda. We think a nicotine product must be regulated and the fda has the best process in the world and i encourage everywhere else to adopt similar processes it eliminates confusion and a level play field were in the process in the u. S. , as of may next year, everybody has to submit pmta these things take time and a lot of investment to do. The companies can do it. I think the thing will be better addressed. Premarket will be reviewed and postmarket, they will be followed by the fda. And i think, under this scenario, we will have a much better industry and the best players and the best brands will prevail. I encourage everybody to go there as fast as possible. Shouldnt juul just pull its product . Suspend it everywhere in this country and maybe the world, until we get the data we need . Why shouldnt juul say, full stop lets do this. Wouldnt that be the right thing . I have kids. I wish they would do that. Well, as i said, product is one thing and i think we need strict regulations of flavors. Im not mistaken juul is the only company thats removed flavors. I see states regulating the products and taking them out of the market we have to be careful not to have another exaggerated reaction we need to focus on kids not putting their hands on this product. But also, take into consideration the millions of americans today, that use a vapor product. You know, be careful that what is going to happen to these people, if we have a blanket elimination or ban of the product. I think we need some moderation here and longerterm thinking once the fda process has finished, things will become calmer and much more clear what does that mean for the u. S. Market for the time being and i mention that Imperial Brands slashed its growth expectations because of next Generation Products in the u. S. , namely vaping, for example, deteriorated over the last month or so. Given the concern. Is that tyour expectation is the market for new and replacement Tobacco Products going to be in flux, if not doing well for some time the companies do things right. We put them for a scientific assessment, clinical and preclinical. And then, we submit to the authorities, including dfa consumers get the assurance that they can trust the product and what we communicate as a manufacturer is truthful and not misleading should make it clear. The tobacco product, youre partnered with altria, here in the u. S. We should not be conflating vaping in general. I think when products go through the fda process, and they do the right assessment, well see that vapor products are better than cigarettes and more appropriate for Public Health. You believe that . They have to go through the process. You believe they will be better for health than tobacco yes, i do why they have much more toxicity and exposure to chemicals, vastly lower than cigarettes the thing is, they have to go through the process. Once this is done, i think the category will recover. But with the right restrictions, the right limitations, the right Access Controls, so we dont have, you know, kids using Nicotine Products. Right and then, adults have options to switch. And this category is the future. And i think we are very well positioned to succeed in the category because we are the leader in this category. You believe, your goal is to replace tobacco. Absolutely. Is that going to be hindered in part because of the concern, now, about vaping and, perhaps, even simply because people are concerned about the replacement products overall are they just going to stay with tobacco longer i think some of the comments made are confusing people who smoke today. Sometimes they dont know if the products are worse than secrets. 50 of americans believe that the vapor products are worse than secrets cigarettes i think thats wrong. We have people dying from vaping its deeply concerning that people die, irrespective of the reason from what i understand, the fda and the cdc, are investigating the Health Reasons for that. But my understanding is, this is not concerning traditional vaping products that contain nicotine it concerns other substances we should be careful not to create confusion among the millions that use vapor products this is not traditional vaping products with nicotine and actually, the products existed in the market. Right for so many years and we never had an issue i think we have to let the authorities conduct their investigation. Dont buy products from the black market thats where we have an issue. Before we end, lets get back to the deal itself youre not talking with altria any longer about this merger of equals do you think you would reenter those talks when the conditions are clearer in terms of the products that youre talking about . Well, the talks have ended. And for the foreseeable future, well focus on other things that we do together there are many ways to continue our collaboration. I think coming out of the discussions, were better aligned on many things why are you better aligned on many things . Were spending time much more closely. We are aligned obvio ee eed on. And we have enough ability, without the merger, to further both portfolio of companies and create shareholder value for both companies thats still a good collaboration. We look forward to checking in with you along the way. Appreciate you taking the time this morning thank you very much Andre Calantzopoulos back over to you peloton is going public today, after pricing the ipo on the high end of the range. Also ahead, capitalizing on 5g we have an exclusive with the ceos of verizon, qualcomm. Facebook, gm and a lot more en weomba ce ck. H 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. When i needed to create a better visitor experience. Improve our workflow. Attract new customers. Thats when fastsigns recommended fleet graphics. Yeah, and now business is rolling in. Get started at fastsigns. Com. David faber at the nasdaq today. My colleagues are down at the new york Stock Exchange. Were awaiting the open of peloton here at the nasdaq thats not why it was here but its always interesting to be at the same place where the ipo will open. Lets get to the mad dash. Jim, take it away. Yeah. Very exciting news if you own stock of beyond meat mcdonalds is testing a plantbased burger in canada i talked to the ceo this morning. This is a dream come true. He is confident that people will like it. Of course, its his. He is talking about mcdonalds being the moby dick. And hes gotten moby dick. I would not bet against this faux burger. I would not bet against this better Delivery System for grain for your body than going through a cow. I think this is going to succeed. I welcome mr. Eastbrook to come on he has always been shy this has the stock flying and i dont think its done. You dont no. Theres a lot of people who like it you know, look let me be careful here where they did the big secondary, not far from here, has been a lid but the stock is shorted theres a lot of excitement for it is it a flash in the pan no should the stock be as high as it is . No but people will be juiced by the fact theyre at mcdonalds weve been waiting and waiting maybe you have to go to southwestern ontario, which is also the cannabis capital of the world. Its only 28 restaurants. And its only 12 weeks how do we know its going to stick . I have never seen ethan brown be this excited. These a proth selytizer. People believe in the ethos, no cow no, methane. No cholesterol i would bet with nonmeat, not against it another big piece of news, is reports that disney will add plantbased recipes for its park menu at disney world and disneyland people have to recognize this is not an vegetarian issue its an ethos millennial thing ive had burgers with ethan. Ive had a lot of things with ethan. Steak, tacos i would like to add them to bar san miguel and i think its a wider issue they like the taste and they like the fact that its not beef and slaughtering cows. Theres a lot of people that care more about these things than my ygeneration we thought, we need to shove a bolt in his head and kill it a lot of people think thats bad. I dont blame them for thinking that way my daughter who feels that way, loves beyond meat. Someone was criticizing me earlier. Vape, youre upset because its your fatherinlaw im upset because theres 150,000 people who will die of lung cancer. A lot of people think this is heal healthier. Were going to watch it a big move in the premarket. Lets get the opening bell at the Stock Exchange celebrating 20 years at the nasdaq peloton, interactive fitness platform, celebrating the ipo today. Well have more on pton, high end of the range valuation over 8 billion, twice the last round yeah. Its a shame its doing this the good ones dont go the good ones dont work like this the good ones arent priced at the high they are hohum and they catch on the bad ones are priced at the high, open way too high. Suck a lot of people in. First day is real good and then goes down. I urge people to not buy at the opening. It would you might be able to make a few bucks but youll never get out in time. Interesting enough, that who is interested in peloton, mark bentioch i would like to put a stick mic in his face and be obnoxious, like i did with dara the net new subs are the true north. He said, we are prioritizing growth over profitability. The numbers are great there was a moment in time, when people were prioritizing growth or profitability, had the best stocks that came and went this is the opposite right now, were in a Terrible Market for that. Maybe today is the first day that people want that. I had toolio their stock is straight down their company is profitable. The market doesnt want that right now. I appreciate that peloton wants us to think that but people buying the stock have to recognize thats not what the stock market wants or wework would become product in pricing the deal, they said, we werent xwregreedy they left something on the table. Im sure youve taken a look at smile direct recently thats somethinothing short of disastrous, since its initial public offering, one that was touted of being strong at the open and has proven otherwise. What wework would have meant if it tried to come to the public markets. It would have been public, which would have been a key thing for it its a tough market right now. And im sure you saw endeavor, lowering the price range, and lowering the number of shares or the amount its going to offer the ufc, no doubt, is a popular growth property. But theres concerns about the rest of that business. I know you are both represented by them. We can talk about it a bit, right . Smile direct is the disaster of this era. Endeav endeav endeavor, i dont mind a stock where the range just kind of holds in there a stock where the range goes down, is usually a sign theres no Institutional Support whatsoever endeavor, they are, my agent im reluctant to talk about that im saying in general, you want a stock that comes at pretty much the range that we thought it has good demand, it isnt exciting and goes up high. And then, it goes up over time ali yeti, which i lot of people thought was going to be a dom. Its absolutely true pelotons redhot. But also true, is redhot stocks on an ipo, have not been great at one point yesterday, 75 of the ipos were down for the week thats the problem. I dont want people to lose money. Maybe this is the one, where you can make money but i have to tell you, that would be unusual all right i got some calls out this morning. Adding target to the number one slot target is fabulous. This is the same day and macys is going same day jeff gwinnett is talking about how important that is. Hes reinvented target unless youve been to one of the small format targets or targets where theres no other store, you probably dont understand why its going up. If youre next to a greatland target, the oldfashioned. The new targets are exciting and they are local they are all about the neighborhood i love that. Theres a lock at costco, home depot is that w. A. T. C. H. It spells w. A. T. C. H. I am looking for the etf to make money. And they blame me. Speaking of acronyms. F. A. N. G. D. O. J. Is following up on facebook and if you include ftc, state a. G. S and house judiciary. Im looking for the Defense Department going after facebook. Enough how many people can go after facebook if its bad, stop using it heres the amazing thing you can stop using instagram its allowed the government acts like were all stuck, handcuffed to facebook and were going to break the handcuffs. Its a voluntary thing, for heavens sake. Did they destroy everybody else . Antitrust law is not a popularity contest no. Theres two kinds of antitrust antitrust that says, we have to keep prices low. Which facebook does. And the old style antitrust, against standard oil were in an era, where were using the old style aenlt trust. Theyre too powerful i care about the products that drive other people out of business i think facebook has never they have not driven amazon, they havent driven google out of business. Theyre smart, snap, twitter, all in business. Look at twitter. Both mark bentioch say they bought twitter snap might argue differently. We had ideas that were stolen. What was priority about what snap did you dont think stories is a complete copy of snap . What did nelson pelt say when i was interviewing him last week well steal anything and its great. The public domain. Theyre smart. I use instagram. I use instagram. My daughter used it to build a business my wife uses it to look at what my daughter is up to everybody uses it for Different Things but the government has decided how many agencies four. Four. Okay i want to know right now, why isnt the secretary of the navy looking into this . Can we have one agency one agency lets amalgamate them. Overlap one agency. Thats all they have to do is investigate facebook why dont we amalgamate them why dont we have a czar speaking of all this, guys, amazon, a big Product Announcement using voice assist bezos spoke to reporters saying that needs facial recognition. Facial recognition, the time has come regulating the new facebook product, was a lot like carrie, when she was able to move things with teledenikinesitelekinesis. Are they listening to what im saying i dont want that. That would be bad. And a lot of people feel that because i downloaded whatsapp, theyre following me everywhere. If thats the case, i dont like that have an agency look into that. The two things the government look into, is a memo to ukraine funny man president. And theyre looking into facebook i think people are looking at me that might cause 150,000 deaths, which is tobacco i dont find these are enemies of the people. I think china i like that as something to look into but theyre not in congress. Were not in a 5g world yet, david, which youre going to talk more about this morning looking forward to around 11 00, on squawk alley. Im going to have a unique panel. Were going to talk about 5g in the way we havent before. Hans vesberg from verizon, and this is not going to be specifics about their companies, as were going to delve into the opportunity here, where we stand. We talk often about what it means for consumers, in terms of handsets and speeds. The internet of things and the applications for the factory floor and driving, for so many things is probably far greater than what it means for the fact youre going to be able to download a movie more quickly. Well focus on that. The opportunity and the threat for Companies Like ibm and where we stand rare to get three ceos of these companies together very much looking forward to what i hope will be an interesting discussion you know, last night on the conference call. Talking about 5g its going to be a savior for Tech Companies it will be a savior for dow chemical 5g keeps a lot of companies, not just american tower, doing, as a reason why you should own their stocks what do you think . Its possible, but were a ways away from the industrial revolution, that youre talking about, in terms of how things can be further automated with artificial intelligence, as well everything have a chip in it the lack of latencies, so you can connect to the edge of the network. Thats where the Computing Power will be. Will amazon move aws, there,as where it currently is. Theres going to be the potential for great efficiencies i want to talk to vestberg, and mollenkopf and rometty, when that will be here because thats uncertain. This is huawei in china theyre way ahead of us. And a lot of people, including the president of the united states, we may have to have sprint merge with tmobile, to stay in the race john ledger is not there but its the elephant in the room we need that deal to close david, is that deal going to close . I keep reading things about how theres roadblocks its hard to say, jim the states are lit gagt. Theyre going to potentially go to trial its unclear most people believe that the companies have a better than 50 chance of getting it done. There is a key question mark, if states are going to prevail. Despite the fact that the department of justice, has reached a deal with the parties involved, that they feel will retain and actually enhance competition in the requireless mark wireless market. Its a strange situation we lost our gains at the open mcdonalds is leading the dow for the moment lets get to bob sort of a flat opening. But a very typical pattern when theres less interest or followthrough on the china trade talks. You get cyclicals underperforming and defense sectors, outperforming theres your cyclicals metals, mining, bank stocks. Defense stocks, staples, utilities, sitting at historic highs. Lets talk about the hot ipo market and the market overall three of the four havent changed. Trade war issues, global and manufacturing slowdown and flat earnings, lhigh valuations its the same as the secoquarte. Down slightly. But its been flattish, the main story all year and the new xfactor here. The impeachment inquiry. A lot of questions about what that means for the markets we dont have answers. We dont have answers about the u. S. , mexico, canada trade agreeme agreement. And whether nancy pelosi is going to push that through or not. We dont have the answers to that drug pricing out there this is an added xfactor for the overall market weve been talking a lot about the ipo market and how its doing here were waiting for peloton to come here. They priced at the high end of the range. Thats good news its been an ugly month for ipos this happens when markets get jittery. Look at the ipo, etf, up 30 going into september, the big performers and were sitting at the lowest levels since february. This is a basket of the last 60 or so larger ipos. Its a good indication of pricing for recent ipos. What are the issues . What are the problems out there . Weve seen a big valuation pushback, particularly on things Like Software ipos, that are based on potential for future problems and future earnings out there. When the market gets jittery, they get pushed back on the valuations profitability issues come to the fore again and thats a major issue and i also think legitimately, the wework governance issues, the issues around there by wework, the multiclass structure, the family ties, thats become more important it had an effect on the valuation question on wework and has an effect on ipos in general. Thats still coming to the fore. Recent ipos this week. Lyft, this is a new low for lyft down 10 for the week. We see some of the other names pinterest, they went public in april. Thats a new low for slack and smile direct, thats not aty p typo 20 down were in a process of evaluating the ipos and how much you want to push back on the valuations and thats infecting the ipo market were waiting for endeavor group. They will be pricing tonight this is the old William Morris i havent seen any changes in their s. E. C. Filings 30 to 32 havent seen the price talks in the s. E. C. Filings that matters right now well keep an eye on that and let you know if anything happens. Lets get to the pits, as well Rick Santelli is at the cme group in chicago good morning. The data was fascinating no surprise on gdp some of the numbers moved a bit. For all practical purposes, as expected, some inventory builds. But if you look at a chart of the market, whats fascinating on the interday of tens, is the minute we tawalked in and opened the futures market from that bell, it started to drip away. It didnt pay much attention to the data that was as much exp t expected you look at the one week chart and you will see we gave back yesterdays rate gains. But the market has bitten a bit. Its grabbing. These are important levels between 165 and 173 in tens. Maybe the biggest news, how many weeks or months ago, the curve, everybody was biting their nails over it. Lets look at it since august 1st. Theres stabilization here its not very positive but then again, it was not very negative minus five on the bottom and yesterday, did a lot of work at plus 4 or 5 and the biggest news of the week, continues to be with regard to exchange look at the euro versus the dollar, yesterday was a 20month low against the greenback. And the dollar closed at the best level since 2017. As the twoday chart shows, we rallied up and were giving it back we lost the bid here were down about one cent. It seems many times the profile of the dollar index is, it goes sideways, spikes and retraces. We want to see where this takes us back to you. Thank you as we said earlier, shares of beyond meat are way up today. Mcdonalds will test the plt, plant, lettuce and tomato sandwich we talked to Steve Easterbrook in may when you look at the meat ideas, what will be interesting for us is see who is interested in that . Is it an existing customer that wants an alternative option . Is it bringing a new customer in were exploring it to understand it better. And customers acceptability of that particular type of product because if theres a buzz around it at the moment but its clearly prepared in a different way than a traditional beef patty is. Were keeping a close eye on it. Watch this space thats telling, jim, they didnt go anywhere gmos. If they can engineer this in the kitchen, wow i had a professional chef make a bunch of dishes when i ate with the ceo i think the gmo thing would be a big issue. As great as it tastes, is gmo. And the ethos of the people who are eating this, are antigmo. I love easterbrook i think he recognizes this is not about vegetarians. Its about another way to think about food thats why i think its going to have more popularity than just vegetarians. Were going to watch this test oh, my god. Im going to fly up there and eat 1,000 of them. When we come back, we will watch pelotons ipo. Stick around for the first trade, obviously the dow is down 15 and the s p is down 7. I get it all the time. Have you lost weight . Of course i have ever since i started renting from national. Because national lets me lose the wait at the counter. And choose any car in the aisle. And i dont wait when i return, thanks to drop go. At national, i can lose the wait. And keep it off. Looking good, patrick. I know. vo go national. Go like a pro. Weveryone, looknk isntat your phones. The design thinking, the digital engineering, security, blockchain, and we will be first to market yes. When we do we launch . Unfortunately, in 2 or 3, hours. Why the delay . Cognizant is helping banks use Digital Technologies at scale to advance speed to market. Man can i find an Investment Firm that has a truly longterm view . It begins by being privately owned. With more than 85 years of experience over multiple market cycles. With Portfolio Managers who are encouraged to do whats right over whats popular. Focused on helping me achieve my investors unique goals. Can i find an Investment Firm that gets long term the way i do . With capital group, i can. Talk to your advisor or consultant for investment risks and information. Still hanging on to the 49 level as we wait for earnings after the bell stocks up more than 50 so far for the year we will have an exclusive with the ceo tomorrow 9 00 a. M. Ene men time wh wco back, its stop trading with jim dows down 9 well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade iits not acceptable or nothing. And its definitely not close enough or nothing. Mercedesbenz suvs were engineered with only one mission in mind. To be the best. In the category, in the industry. In the world. Lease the gla 250 suv for just 329 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Liberty mutual customizes your car insurance, hmm. Exactly. So you only pay for what you need. Nice. But, uh. Whats up with your. Partner . Not again. Limu thats your reflection. Only pay for what you need. Liberty, liberty, liberty, liberty lets get to zwrjim and stop trade. Procter gamble has been a great leader take a look at the chart its up 35 since the year began. That was the one to buy. Not all this crazy growth. I have to hand it to those guys. When i interviewed david taylor and nelson last week, its pretty clear that this is not done it can go higher still. The thesis that the giants couldnt innovate their way out of a paper bag was i know. Although maybe peltz was the well, i think he would say they had a lot of good things in place. No slight to union labor, but they have become the big growth engine. How about tonight ive got Taylor Morrison on tonight. The conference call, housing punches. Housing is not needed with china, so its just terrific sheryl is a fantastic spokesperson for the industry. Some said jim, you care too much about juul i care about 250,000 who die from lung cancer one of the biggest stories in business as you say on twitter a few moments ago. Well see you tonight. Mad money 6 00 p. M. Eastern. When we come back, what a morning. Will peloton have an ueat pb public debut well wait for that first trade with the dow down 28 because they need the massive capacity of 5g with ultra wideband, so more screaming, streaming, posting fans. Can experience 5g all at once. This is happening in 13 stadiums all across the country. Now if verizon 5g can do this for the nfl. Imagine what it can do for you. Liberty mutual customizes your car insurance, so you only pay for what you need. I wish i could shake your hand. Granted. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Welcome back to squawk on the street. David favors on his way to the global citizens t2 summit. Hes going to join us in the next hour with the ceos of verizon, wall com and ibm. Early gains got lost quickly were down 22 as we watch the peloton ipo, house intelligence and a lot more. Including some Economic Data pending home sales lets get to diana with the news. Pending home sales increased 1. 6 in august for the month up 2. 5 annually this is right along with expectations pndi p pending home sales measure signed contracts to buy existing homes. The real news is in the west sales were up everywhere west but in the west they were up significantly, 3 for the month and a startling 8 year over year we had seen supplies very low in the west, especially for affordable homes, but were really seeing the action in this market on the higher end, the realtors saying clearly people are getting a boost from this big drop in Mortgage Rates that we saw over the summer we saw that in the new home Sales Numbers yesterday. Big beats on newly built home sales. Were seeing the reaction from the bayers, but mostly in the mid to the higher end of the market and realtors are watching closely to see where Mortgage Rates go to see if we can figure out the end of the year out strong a nice jump, 1. 6 for the month, 2. 5 for the year on pending home sales back to you guys. The latest in the string of good housing our road map for the hour starts with pelotons public debut. Well take you to the nasdaq as soon as it opens for trading. Plus what the ceos of Phillip Morris saying about the Health Concerns about vaping. And shares of beyond meat soaring as mcdonalds begins testing the plt. First up, though, peloton set to go public. Fitness Company Pricing at the high end of the expected range, 29 per share. Bert bert bertha coombs. Whats been a volatile week and month for ipos, it was something that did clear peloton investors to see the price at the top of the range become the fourth largest deal of the year raising 1. 1 billion selling 40 million shares giving it a valuation north of 8 billion. This morning on squawk box the ceo says what hed like investors to focus on is its growth certainly it is an addictive type of service that a lot of people sign on for they buy those expensive bikes and treadmills the companys growth in terms of top line doubled in the last fiscal year to nearly 1 billion in revenues. But its losses have extended it costs a lot to create the content. They lost north of 240 million. Nonetheless, with the pricing today, one of the things that ceos are hoping for is the stock does end higher. We want some momentum we think we generally left something on the table in pricing. My cfo said we dont want to be a dollar smart, so we hope it prices up. We saw a couple of weeks ago smile direct club went above range, really got a very huge deal, but then the stock did not perform well they are hoping not to see that today. Its going to take a while were right now theyre starting to open and take some bids jay kuler cullor is at the helm. Well be back to you when we start seeing indications. Keep us posted. Well check back with you in a bit. We also wanted to mention Nbc Universal is an investor in peloton. Turning to the markets, call it Political Risk for stocks, the impeachment inquiry or the continued trade war uncertainty, yesterday on closing bell we spoke with a voter heres what he had to say about how trade is impacting the outlook for the economy. I think trade is the biggest issue. I think the global trade war has expanded quite a bit compared to what people might have expected. I think its going to take quite a while to get to agreements i think the chinese might have incentive to wait out this administration and see what happens at the election. Thats slowing the global economy. That could come back to bite the u. S. Economy joining us now here at post 9 is the vice chairman of investments and ken se back, Asset Management and a cnbc contributor from florida kenny, welcome to you. How do you look at trade has been one of the key movers of the market does it change at all given the impeachment inquiry risks . No. I think its just that, its noise and short term risk. Political events dont really price stocks in the long term. They do create opportunity in the short term because of the nervousness and angst from the headlines. You saw it yesterday the minute the algoes get ahold of the he comes out and changes it completely and the market does a complete turnaround. I think the long term investors have to understand that youve got to eliminate that noise and although the risk is out there with the impeachment, in the end it doesnt go anywhere the house may vote to impeach him. The senate will never vote. Is there a link an between the trade strategy for the administration i think for china there is a big link maybe theyll find it better off to play hard ball and sit back and watch how it plays out on the other hand trump may be feeling pressure to get something done, so you maasai him start to wiggle a little bit, but my sense is hes too defiant. I dont think hes going to end up doing that. I think the strategy really falls the ball is in chinas court at the moment. How do you think investors play it . The most important thing about trade, after recognizing its the most important issue the markets, for the markets to go higher we dont need to resolve all the issues related to trade all we need is for things to get not meaningfully worse if we stick with tariffs, the slowdown in the economy have built in that expect taeation. These negotiations will go on for a long period of time. Looking for a resolution is probably waiting for it to go down i think markets can go higher because Economic Data is stabilizing and the financial easing is kicking in we are seeing that in the housing data in space. Do you believe that the pressure that comes with the n inquiry on the white house makes it less likely to go forward with tariffs, more tariffs i think from trumps reelection perspective, the one thing that he needs to see is for the economy to work. And i think its really that far mar than impeachment impeachment is not going to get through senate what matters is economy has to come back and we have slowed down to a level. He gets more dovish on trade. He has to be dovish on trade because hes a rational actor. Do you agree . Thats what i just said if this continues to go on, hes going to have to be hes put in a position to try to figure out how am i going to keep this going and should i become more cooperative and compliant to try to get something on the table, because every time we see a headline about trade, you see how the market reacts. I dont think its completely built in yet i think the market is yearning for something, even if theyre small pieces to keep it going along until we get to a point where the economy continues to not slow down. I think the data in the back half is going to strengthen enough to support the market the trade issue can take things away from that and if we dont have a resolution or if we continue to go down this path of exasser bag exass exasseration its the u. S. Consumer and now housing. Yesterday on closing bell we talked to the ce otha owns oreos and nabisco. Listen to what he says about the u. S. Consumer. We see basically a consumer that feels pretty good as you said, snacking is not necessarily going in line with all the economic twists and turns that you would see, but overall the snacking market, particularly the biscuit market in the u. S. Is growing more than it has in the last two or three years. We do not see any signs the consumer is sort of affected by all the news going around. What does that ultimately mean for the markets listen, ive been saying it for a while. I think our economy is strong. I think the consumer is strong by the way, oreos are great, let just say that. Finally something the country can all agree on so i dont see this problem which i keep asking why, especially now bullard hes so dovish on cut rates, cut rates, cut rates lets hold on there for a second the consumer part of the economy is doing fabulously well theres no doubt about that. Consumer income, unemployment, everything looks good. But the manufacturing side of the economy is not doing very well Capital Expenditures have dropped off because of trade issues i think that is really the driver at the margin its not the consumer. Consumer economy is strong for the manufacturing to go up, we need resolution on trade. Why do key weep hearing about nonmanufacturing margin compression because of higher wages . Is that not a worry . That is certainly a worry, but i think you have seen in the data enough productivity growth to kind of make up for that. Margincompression is happening primarily because the underliyig Growth Trends have deteriorated from last year with the easing of financial conditions, that is going to improve the back half of this year if not this year, in 2020 for sure. Bottom line, what it means for where you should be invested seeing a bid for bonds again today, that means utility, staples and real estate are leaving the market is that the place to be . Listen, i think its certainly those names have to be part of your portfolio, but im also a big believer in this shift from these my Growth Stocks more into the value, especially if youre concerned about the economy slowing down or about the trade war continue to be dragged into 2020 along with the impeachment, all that other noise around it, i think theres a real shot at picking up some value names. Whats value to you i like energy i dont think people deep value. I like deep value i think theres a huge opportunity in energy. We saw it come down after that spike yesterday. I think there is an oversupply in oil that being said, i think there is a huge opportunity in energy going forward. Whats your playbook . So i think for value to really come back in a big way rather than just make a dead cat bounce, you have to have two things happen. Interest rates going up meaningfully and likely and growth picking up substantially. Again, unlikely. Im sticking with the true and tried which is technology on the equity side, maybe e emerging market equity. The feds done enough already . Yes the fed has done enough. Theyll probably do one more this year, maybe two however, the data has stabilized things are looking much better relative to expectations but i will say when value names, there are value names in the tech sector. May not be, you know, facebook and twitter. It may be other names that are much more i think thats a fair point. Microsoft is valued within the tech factor. I think when you talk about tech, microsoft is a name that also is part of it. Everybody was catching kb, the banks. Can they recreate what housing has done in terms of the fed you know maybe i should have ended the interview. No. I struggle with that because if were going to continue down this road of pushing rates lower and lower and lower, i think the financials will have a tough time and i dont think we should continue down that road. I didnt think we should have the last time. But one way or the other, i think financials are going to struggle. I think financials have had a tough time they would probably continue to have a tough time. Its the ultimate value trap in all of the large sectors. So well end on an agreement point between the two of you thank you. When we come back, we are awaiting pelotons first trade over at the nasdaq were going to take you there live as soon as that happens pretty big deal in the ipo market plus what the future has in store for the cycling craze. One of the founders of spinning giant soul cycle and fly wheel is with us when squawk on the street comes back from managing inventory. To detecting and preventing threats. To scaling up your production. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. 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. As the nationwide death toll due to vaping related illnesses rises, Phillip Morris is expecting a tighter regulated market within the next few years. The ceo joined us the last hour. He didnt say whether the increased scrutiny led to the end of the merger talks. Instead, focused on shareholders take a listen. What we looked at is if there is a better way to maximize value for shareholders looking at this strategic rational in terms of revenue in addition more focused resources on both sides. At the same time, clearly, like in any merger you take into consideration the environment, shareholder sentiment, and i would say the effort required versus the priorities we have just now on the market we concluded that the best course of action is to end the discussions to the merger and focus instead on the forthcoming partnership going forward. He also commented on the current state of Health Concerns with vaping and regulating tobacco. All tobaccocontaining product including Nicotine Products are regulated by the fda. Okay we had an exception for a period of time for the vape categor r category it was a heavy process i think the process is ongoing it is a very emotional issue as we know, because it involves using use by teenagers and vaping and this should be the priority by everybody to address because this is a serious issue. One things for sure. For the first time were hearing that fda approval is whats going to give the products legitimacy ever since juul came around, its been a free for all. Which is why ul altria and Phillip Morris ongoing to vote on it. Theyll have to deal with this cloud. The fact that these illnesses are getting worse and now confirmed reports of 10 people have died. Its unclear whether theyre all linked with some lung disease, but the common denom nainator ad the common factor is that there was vaping involved. Talk about putting the cart before the horse, right . You would think in this country this research would have been done before it went on sale, but not this time. Now states are trying to catch up so is the federal government when we come back, shares surging. Well tell you why plus well hear from the new ce, ceo of blue apron. Dow down 63. 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. 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. C 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 sometimes, they just drop in. Obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. [upbeat action music] pilot were going to be on the tarmac for another 45 minutes or so. Time now for our etf spotlight with mike santoli. Obviously have the revised ged numbers. But look within the Consumer Discretionary sector what types of groups are working and not working. It has not been across the board. Xly is the Consumer Discretionary sector within it retail is kind of driving at the rth i should mention it has things like walmart in it which is technically Consumer Staples within the s p system, but it shows you that domestic retail spending has been strong of course, xhb, home related, Home Building and Home Improvements hd is i think the second largest stock in the xly, but carz is the auto etf obviously been a lagger. Gm and ford make up 4 of the xly. Media is also used to be Consumer Discretionary not really anymore youre kind of left with this grab bag of restaurants, retail, Holding Things up. Anything that seems more big picture, durable goods, autos, not as much unless its houses. We got gdp final, consumer up 46 weve seen some downgrades of costco, for example, who think people might get tired. Yes a little bit of fatigue. The sentiment numbers havent been great theyve come back. I do think that gives people pause. Things like costco, star bucks, they have these very full valuations right now and i think you the have student to say how much better can the story get. Interestingly enough, people talk about rotation. Theyre really talking about people spending at the mall. Theyre really talking about industrial sentiments. Im just looking at a chart of amazon. What is that chart it underperformed the s p normally, in fact, when you talk about it, you have to give that disclaimer and say this is mostly amazon. Its really not been so this year its been kind of struggling. 14. 5 off the highs is that a consumer story or an amazon story its an amazon, a fang story. All of them are below where they were topping out last year. Thanks, mike. When we come back, the future of the Fitness Industry and the ipo market, one of the cofounders of soul cycle and fly wheel is with us as we await pelotonpuics bl debut squawk on the street is back in a moment with the dow down 65 at fidelity, we believe your money 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. Liberty mutual customizes your car insurance, hmm. Exactly. So you only pay for what you need. Nice. But, uh. Whats up with your. Partner . Not again. Limu thats your reflection. Only pay for what you need. Liberty, liberty, liberty, liberty welcome back, everyone heres your cnbc news update at this hour. White house officials suit to lock down records of a phone call in which President Trump urged his ukrainian counter part to investigate democratic viriv joe biden. It was released ahead of scheduled testimony of the acting director of National Intelligence who was asked why he went to the white house asking for direction on what to do when i saw this report and complaint, immediately i knew that this was a serious matter it came to me and i just thought it would be prudent to ensure. Im asking if the conflict of interest concerned you. Sir, i have to work with what ive got. A russian spaceship carrying a crew of three including the first astronaut from the United Arab Emirates docking with the International Space station. He will spend eight days aboard the station. Jacque chirac a french twoterm president has died. He was the first leader to acknowledge frances role in the holocaust and oppose the invasion of iraq in 2003 his death was announced to lawmakers sitting in Frances National assembly. He was 86 years old. You are up to date thats the news update this hour sa sara, i will send it back downtown to you. We are awaiting pelotons first trade. Lets get back to ber stha for n update over there. They are still settling the book they just got an update here this morning right now indications look to be somewhere between 30 and 31. Peloton of course pricing last night at the top of the range at 29 a share. Its initial range had been somewhere between 26 and 29. It did raise the full 1. 1 billion well have a valuation of about north of 8 billion or so. The company not yet profitable one of those companies that is going public here, but it does have tremendous growth it did see its revenues and its memberships double and its last Fiscal Year Ended in june. It had revenues near 1 billion, but it did post a loss of about 240 million or so one of the issues is the fact that it costs a lot to create a lot of that. One of the things they like, if you follow me around, theyve got a big crowd. They like having energy. They like producing the live contact. They have to hire a lot of folks that keep them and theres the issue of music peloton, of course, revealed it has been sued over licensing of some of the music that it uses and a lot of users tell me that is a key issue, particularly with some of the instructors who like to use certain play lists that really get people revved up that is one of the issues they will have to resolve no word on when theyll be profitable and no timeline on when they might be open. Goldman sachs tends to take their time on opening these ipos and they are the lead banker this morning back over to you bertha, thats a big story. Well come back to you for more on the ipo and the billion dollar Fitness Industry were joined by the author of the book riding high how i kissed soul cycle goodbye, founded fly wheel and built the life i always wanted its great to have you people say peloton is a soul cycle killer, fly wheel killer how do you respond to that i think there will always be room for both, for the groups that miss experience as well as the at home. No doubt peloton has changed the landscape drastically. People can ride at their own convenience and have this experience in their home, but its changed in that the days of people taking spin classes in the studio six days a week, theyre over everyone is kind of doing what is most efficient for them which means at home and Group Fitness. I think theres room for both. The company got its start legend has it because it was too hard to get in classes were filled and they said lets make a bike so people dont have to rush monday at noon and try to get into that instructor we love so much. Thats exactly right and peloton built a great group of instructors. One of our greatest instructors at fly wheel went over there, alex tuscon who is a rock star. How do you take on the question about whether or not cycling, peloton, soul cycle, fly wheel are just fads, like so many fitness fads weve seen before the fly master is getting a lot of play as we write about this story. Potential investors would ask me that question, is it a fad. I never believed it was. The reason was first and foremost its a really safe w k workout. Its low impact. I have riders from age 18 to 75, so you can do it throughout your life its all about health and wellness and longevity and how we stay healthy and thats why ive always thought spinning was here to stay. One of the knocks on peloton i guess to some degree on soul is that its expensive its so niche because of the price point, maybe the geographic dispersion. To what degree do these Companies Need to start addressing the loweren, making things cheaper to a big degree and its already happening. Ive heard rumblings of companies starting up to offer spinning to a different demographic and i think its so important. Do you think it works outside of big urban centers absolutely, yes, i do. Who are your target customers . Right now average income, what can you tell us about them definitely people who end up in a higher price point demographic because theyre putting so much focus on health and wellness i mean, they can afford to that pretty much does make u the demographic, the one that youre talking about, but Everyone Wants to be healthy and well and grow old. So i think there is room for the market to expand to different demographics for sure. Do you need to pay 2,200 for a bike to get into your living room thats one of the questions facing investors from peloton. No. Again, theres room for a different bike that doesnt have to be that expensive with talented instructors, absolutely. What do you tell investors who wonder why soul hasnt come public hard for me to speak to that because ive been apart from the company for so long, but so much of the Group Fitness experience is not about a formula theres this one area of it which is so important that has to do with a certain spirituality and Human Connection sometimes thats not something you can chart or figure out in a formula way. They pulled the ipo last year, cited market conditions. Some of the analysts were speculating maybe it had gotten too crowded. There were so many spin studios, there was pressure on prices. Yes the industry has changed so of its so oversaturated. Boutique fitness is everywhere. One of the things people will watch today and the weeks to come is how peloton addresses concerns about streaming music rights how big a deal is that can you explain it to the people who have no idea what were talking about . Its a big deal back in the day when we started soulin 2006 or fly wheel in 2010, we werent that cognizant of it, that it would be a problem, but instructors are pulling music from all kinds of places, youtube, remixes, mash ups that artists are not profiting from so now that its so mainstream its become a problem. Its one thing if you play it in a room. Its another if youre streaming it on the internet. Exactly i do feel with peloton it drew so much more attention to the issue. Have you tied the 4,000 tra treadmill . I have not. Ive heard great things about it people say it could almost walk by itself, but i have not tried it personally. You sound fairly optimistic about a company thats a big competitor would you buy a piece of this ipo . Very good question. Im not sure i thought about it not sure john foley who started peloton has always been a friend and im happy for him. Hes worked very hard. He has. Finally, fly wheel and going public. Yes. Will there be a connection there one day . I dont know. I never say never. Does it depend on how this goes, maybe . I think that will be one factor. Certainly driving investor in into into the space. Thank you. Thank you for having me. Her book is out now came out last october. And is a good look at the industry. Absolutely. Thank you. When we come back, shares of beyond meat surging after an announcement from Mcdonalds Well tell you what it is. Speaking of food, blue apron mpy. Turnaround strategy for the coan squawk on the street will be right back dow is down 62 dont go away. 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. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Semis making a comeback and one technician says this key level could be flashing a buy signal find out more on cnbc. Com. More squawk on the street coming up. When did you see the sign . When i needed to jumpstart sales. Build attendance for an event. Help people find their way. Fastsigns designed new directional signage. And got them back on track. Get started at fastsigns. Com. Id like to welcome my guests Deutsch Bank Securities chief economist. This is 122nd month of this expansion which began in june of 09. Historic in size, not necessarily in terms of how much gdp weve created in that run, but you think maybe its run its course and you have several reasons that you can share with us so tell us what your reasons are on the expansion jay powell has talked about this as a mid cycle adjustment and the question were discussing all the time is is this mid cycle or other signs were getting late cycle one of the worst sign system were beginning to see some kinds of consumer rates going higher the biggest fear we have is that the consumer is strong still because the economy is strong, but if you look at the rates for autos have been going up, rates for credit cards have also been moving higher. Interest rates on auto loans you have seen that move i here generally speaking, there are some cracks beginning to appear underneath the u. S. Consumer that were worrying about. Another issue i really find fascinating is that we know that trade issues are impacting all the global economies are any of the reasons that youve just given us, can they be reversed or is one set in progress does history dictate we will get a recession before we get, for example, an expansion in profits as a share of gdp . Absolutely. I mean, the various indicators both peak and profit share have started to decline the rates for consumers have started to go up consumers are much more optimistic about today than they are about the future those three things combined basically are things that can be reversed think of this as how easy is credit and where we are in the cycle and at some point in the Business Cycle credit is very, very easy and the pendulum begins to swing back you begin to see more fears at the low end from payback their loans. Are their worries some of these things cannot continue forever and is some of this different between consumers also on the corporate side that makes us more worried that maybe this is not just a mid cycle adjustment. These are signs we could be getting to the point of being late cycle than mid psyche zblel wi cycle. This affects economies like germany and japan that are more into exports were a consumption economy. Is there going to be a differentiation on the recession as it affects the u. S. Versus potentially other developed economies . Your final thoughts. Absolutely, rick. You had talked about this also at great length. The very important debate here is is this going to spread from the Manufacturing Sector to the services sector. 10 of employment in the u. S you could say the trade war is just in manufacturing. This is not really a big deal. The problem is were beginning to see signs the Service Sector also beginning to slow were beginning to see signs of the workweek coming down in the services sector. Weve seen also overtime hours, particularly in manufacturing begin to slow. Were getting worried that this may there is a risk this may not only be an issue for the Manufacturing Sector which is a lot smaller in the u. S. Than germany and japan, but the fear we have is this could be spreading and there are some signs that this is indeed whats been happening more recently thank you for your thoughts were going to continue to talk to you as we get more data on the employment reports about some of the metrics you just outlined sara, back to you. Rick, thanks. Lets send it to john with a look at whats next. The ceos of ibm, qualcomm and verizon will be talking 5g rig renew york that is coming up in a few minute stay with us latform. Yeah, that too. I dont want any trade minimums. Yeah, i totally agree, they dont have any of those. I want to know what im paying upfront. Yes, absolutely. Do you just say yes to everything . Hm. Well i say no to kale. Mm. Yeah, they say if you blanch it its better, but that seems like a lot of work. No hidden fees. No platform fees. No trade minimums. And yes, its all at one low price. Td ameritrade. 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. Classical Music playing throughout shares of beyond me way up today, plus mcdonalds announcing it will test what is calling the plt, plant, lettuce and tomato sandwich. Its going to last 12 weeks. 28 restaurants in southwestern ontario. The burger will sell for 4. 90 plus tax were going to be watching to see how this does and whether or not they can roll it out farther. Its what the bulls have been waiting for on beyond me the mcd announcement. Holy grail. The analysts out this morning saying super bullish the only reason youre not seeing price targets its hard to see valuation trading so muc higher. Blue apron restructuring the company after struggling since its ipo. The company is down 94 since its debut. It is doubling down on its direct to consumer approach and adding popular names like beyond meat to the menu joining us is the companys new ceo leading the companys transformation now six months into her tenure, her first interview since coming on board welcome, linda. Thank you so much its great to be here. You were coo of etsy. Yes, i was. And then went on to take this task of turning around blue apron. How did you feel about it at the time when you came in in april i saw a lot of parallels. I tend to take positions they believe strongly in the product and i see a huge opportunity for growth thats untapped there is a lot of similarities between when i joined etsy and also joining blue apron. For me its about having an amazing quality product. Theres been a ton of work done on the foundation of the business so all of that is a really great platform to think about growth. What happened here . How did this go from a unicorn to a microcap . Well, honestly, i think a few of the things that we could have done a little bit better and that were actually now focused on the new strategy really revolve around the three key areas. How do we expand the audience and really atract more people that are going to be great customers for blue apron rather than going for broad really, really high expenditure growth which a lot of companies are doing this right now which is growth at all costs. Were moving away from that and focussing on our most efficient marketing. Were within 12 months of payback and everything is going really well on how we can scale back i think the second piece of it is really about the product itself theres a lot more we can do to evolve the product to todays needs. More healthy offerings more choice. We Just Launched our first pilot in california thats actually going to offer more Recipe Options across the healthy and indulgent menus which is what our customers have been asking for. Our final people is about how can we use partnerships and larger scale Marketing Efforts to get more customers that are going to be with us for a really long time. Its already paying off. Does the menu option need to get simpler . One of the complaints we heard was recipes are complex. I think its funny because t something weve already solved 50 of our recipes are below 30 minutes to prepare theyre simpler, we are testing with a variety of skilled cooks and more novice cooks to be sure theyre easy, accessible for us, how do you have fresh ingredients, give people easier ways to cook. And targets were thinking how can we set ourselves up said in 2018 that 2019 was a year of buckling down, see continued softening in Customer Base over that time while we prepared for going forward, were on track for growth in 2020 we announced it in q2 earnings and thats what were aiming for. The company struggled the last few years, how many customers have you lost and how do you turn it around . For us it was moving away from the concept of just throwing a lot of dollars at customers that werent necessarily going to retain. Talking about the growing restore in. No, if you look across the industry, theres roi marketing, and were focused now on how to create value for the best customers that stay with us a long time. When you think about the metrics and look at the tam we have set forward, we think we have 45 million in the u. S. Addressable market. Addressable market is really strong, and part of the reason we think this is strong, you look at meal kit purchases, they purchase 15 times a year with 58 average order value. Thats a strong business when you think of stalg thcaling it,d on those customers the questions are how to retain those customers and give them a product that keeps them around. Do people want to cook at home, i look at the restaurant stocks, theyre trading at record highs. Theres a few things youre seeing were seeing 82 of meal resource is up from a decade ago. Youre seeing changes in spending when it comes to in the home versus out of the home. Thats not because people were eating out more, it is more expensive than it used to be more of cooking at home than ever before. When you look at takeout, youre not getting flavor and quality, and it costs you with delivery fees and everything involved. On the margin, you think youre taking share from other meal kit services, restaurants, whats at the top of the list . We see a variety. What we hear from customers and what they love, it is the experience of cooking with loved ones, family. It is fun. It is fun were seeing some share taken from traditional cooking at home from the Grocery Store, some from takeout, some from eating out. They find it more of a relaxing evening to stay home youre seeing more people staying home. Have you had a tough time talking to investors, trying to get them to buy in after the big fall i think the reality is were in an interesting space. Were in the food space, we remove Decision Making of what am i having for dinner which is frankly more painful than going to the Grocery Store for people, it is decision fatigue we have so many things to think about. You also want it to be good. Our recipes and ingredients, culinary authority, Brand Recognition is by far still number one we feel confident when we talk to investors, they appreciate and understand that theres something here it is really just about getting execution right, making sure we capitalize. Kevin oleary was a big fan in the power lunch, chose you, thought you were getting bought because you were cheap, in a hot space. I wonder is it still that kind of environment in Meal Kit Delivery for us what were focused on, we think we have a long term sustainable business, just need to execute on it and thats where were focused. Thanks for coming onto talk about it theres plenty to watch in terms of sectors lets check with dom carl, i am feeling hungry after that segment stocks are lower, off worst levels of the session as the s p avoids a fourth day of losses in the last five. Energy and Communication Services are dragging the market as you can see to the down side. Lets focus on one of the other underperforming groups today, Consumer Discretionary that sector is trading 5 off recent highs for mid july. You have carnival, down 7 after slashing full year outlook, citing higher fuel prices and disruptions from Hurricane Dorian that weak outlook weighing on other cruise ship operators, watch that entire travel and leisure industry carl, i will send things back downtown to you guys at the new york Stock Exchange. All right get ready for lunch, only an hour away. We have a big show tonight on closing bell. We speak with the wife of carlos ghosn. This picture that youre looking at was taken last time they saw each other, carlos awaits trial in japan that was in april. She hasnt seen him since. Looking forward to an update from her on the charges and what she knows about her husband. Shares of carnival sinking, cutting guidance on weather and cuba policy. We speak with the ceo about his outlook and the stocks 8 decline. If that wasnt enough, micron earnings after the bell, see whether china trade tensions have impact, after the president mentioned micron in a high profile u. N. Speech. And speaking to micron tomorrow, we have the ceo on squawk on the street at 9 00 a. M had a crazy good week on closing bell. We are awaiting pell tons first trade. Well take you to the nasdaq when that happens. Dow is back, down 40 sanjay mehrotra. Whos dog is this . Its my special friend, antonio. His luxurious fur calms my nerves when im worried about moving into our new apartment. Why dont we just ask geico for help with renters insurance . I didnt know geico helps with renters insurance. Yeah, and we could save a bunch too. Antonio fetch computer antonio . Ill get it. Get to know geico and see how much you could save on renters insurance. It is 11 00 a. M. At peloton headquarters in new york city, 11 00 a. M. On wall street. Squawk alley is live snoelts good thursday morning. Welcome to squawk alley. I am Carl Quintanilla with Morgan Brennan and jon fortt a big show is ahead. Awaiting the open of peloton, set to go public at the nasdaq hopefully this hour. In a few moments, ceos of verizon, qualcomm sit down for a conversation about 5g. We begin with peloton. For that, bertha coombs, our eyes and ears today