Transcripts For CNBC Squawk Box 20240713

Decline. Biggest drop since 2009. A real freeze that has hit the manufacturing economy. Thats right. The lowest ism reading this is a kind of this 340 versus last month survey sometimes market moves are inscrutable. Yesterday, markets were up clearly just challenged this idea that the u. S. Economy was resilient enough we are constandly talking about increasing recession fears. Suddenly this data point comes along. The consumer, in 2019, are we dependent on manufacturing to the extent we used to be no. Not even close it is a great swing factor it doesnt go down that much but it also accelerates that much. You take a look at treasury yields yesterday as soon as this number hit 0 years at 2. 089 . We were above 1. 7 on the 10year yesterday. That shows you the market is saying, okay, the fed is likely to give another cut in october not a sure thing probability right now. The october adp report will be released at 8 15 eastern. Reportedly added 120,000 private sector jobs last month johnson and johnson has agreed to settling. They are the fourth drug maker to settle ahead of a federal opioid trial j j said it would allow them to avoid the demands of a trial and brokerage now charging no fee for trading. After that news, shares got slammed but trying to recover. Heresy to a former stock broker most of it, rat fees. They sell the order flow to Market Makers and they make a little money on that draft kings needs to lower their fees you should see i bet 20 you win like 16 something is a miss. Have you looked at this . I need to call ubs that poor guy is starving. You are paying higher fees to draft kings than ubs we are not trading any stocks i dont know how they make any money. Ubs is the old overfrom Everything Else in General Electric fortunate enough to hold all our ge stock to china, the country celebrated national day yesterday now we are hearing beijing could take a harder line against hong kong eunice yoon joins us it seems protesters are taking it to another level. Thats right in hong kong overall this week, the government offices are closed, you mention for National Day Holidays the state media has been in full force. Theyve been praising beijings strength as well as the latest piece of military kit which is an intercontinental military missile. The longest range missile china has ever had said to be capable of reaching americas shores within 30 minutes. On social media, a lot of people saying, this shows china can defend itself. Now china wont be bullied by the United States. Even the state run peoples daily, one of the voices here has been fanning more with 10 cent on a patriotic game a free app one of the most downloaded now the idea is that users can build cities like sim cities by with chinese places the way they level up is learning more about policies in hong kong, people are feeling less than loyal to beijing today, students staged a sit in because of a shooting of a teenaged protester by the police with a live bullet this has been something many people have been condemning. Office workers were out on the streets today, denouncing the move police say the officer acted in selfdefense activists and others are not buying that story. One of the lead activists has said hong kong is now clearly a pleased state. The teenager now is in Critical Condition. The fear is the situation could escalate and worsen even further. Especially if that teenager does pass away and in some way becomes a marter to their cause. I was going to ask you about his condition. It is not the way to look at it, to put life in those terms but it could worsen things quite a bit as you say at this point, Critical Condition. Hes hanging in there, right is. He is what is also interesting is that beijing has not owe fshlfficial responded. Of course the offices are closed but in the state press, there has been very little said about this teenager. Theyve only said that hes in Critical Condition so far what they are doing is quoting the Hong Kong Government saying that they condemn the violence of the protesters supposedly, there was some type of lead instrument being swung at the policeman is that not true how do you decide, it is tough i see how they would say no, there was no deadly force. I dont know, it is tough. You have people on top of each other for this long it is part of a new conversation people are having unlike in the u. S. Where there is so much police video that comes out. In china and hong kong, this doesnt happen because there is not a lot of guns. You do see a Police Officer moving in on this young protester. It appears hes shooting at a very close range and there is a flash of light that video is going around it doesnt look like hes acting in selfdefense. It is hard to tell well check back with you hopefully things turn out in a favorable way to everyone involved we spend a lot of time talking about the u. S. china trade war but today it is the eu talking about tariffs on the United States. Willem, whats the latest . We know the wto will issue a ruling involving european subsidies going back decades a part of a longrunning threat between u. S. And eu. We know the u. S. Intends to respond quickly by announcing products that will face tariffs. Shes only got a few weeks last in office, she talked publicly about what they might do they have their own list they might target the possibility they look at previous wto rulings against the u. S. They are not recently acted on saying we will not wait for these rulings to take action to try and gain leverage of talks between the two sides. Some of those older rulings, do you know what thae might be you wonder if some of those existing issues might still be here the amount of money involved is significant the u. S. Asked for 11 billion on products from the eu. Looking back as much as a decade also worth a billion this is not helpful timing because of those ongoing trade discussions between the white house and European Trade Commission the timing couldnt really be worse. Willem, thank you well be watching. Appreciate your time coming up this morning, stocks to watch including a company that wants to outfit your wardrobe. Also draft kicks as we head to break, we look at the biggest and loosers in the dow. Things you can do with schwab you can earn more when you invest your cash. You can get a satisfaction guarantee. You can also wonder why our competitors dont offer that. Schwab, a modern approach to wealth management. Welcome back. Check out shares of stitch fix shares are down on a lower quarter forecast personalized Clothing Service that has been cutting marketing costs. That stock is now down by about 8 Flutter Entertainment formerly known as patty power bet fair will create the Worlds Largest on line bet company. Flutter entertainment up and stars group up as well managing directly it is october 2. October is thought of as a bad month and not necessarily always a bad month. September was pretty quiet what does that mean for october . Thats right, joe good morning thanks for having me back. Go back in history september was one of the least volatile months in history we think there will be more volatility october has had more 1 moves up or down than any other month october is actually the third strongest month. All these different factors. We are in the Fourth Quarter historically up 15 for the year like we are now. But you tend to have more volatility in the month of october. Tomorrow might be a brighter day. Look at that number, yes, it was very poor. Global ism numbers production has been higher we dont see the impending recession, still pockets of good things the consumer still makes up twothirds the reds passed the baton off to the bangles now lets dont go there, joe it is just a cruel month youve got yesterday and today we are down another 200. We are not starting off great. We are looking at a catalyst now. The negative has spilled over to the u. S. The consumer really still is booing the u. S. Economy. Well have september Employment Data but i agree, we are not tipping into recession here given the relative strength of the consumer and how much that dominates. It is troubling for us, the confidence that is seen. That may be fed or global slow down our real gdp will falwel well below that gdp level if we are not vesting in business, that is a real problem going forward. I think we are right on the cusp of Earnings Seasons have i got that right . Yes next week, well start getting them calendar year. Thats it, yes. Do either of you gentleman think that will bolster or will we see more of the same . Tough comps but historically what happens, lowered expectations, we do beat that bar. Fourth quarter earnings are supposed to accelerate emerging markets will be about 13 . U. S. Earnings, about 10 next year even europe. Their numbers are supposed to be 9 that is a global acceleration. We see all the concerns about manufacturing. We see manufacturing go below 50 many times there are periods you can have that confidence comes back and it is all about u. S. china trade we think well get some type of resolution it is an election year, you need that good news we cant ignore that ryan, thats james. James, thats ryan you have no idea who you are on with meet look over at each other. James camp ryan detrick i do. That would make the comment, the issue there, we had massive policy responses at the ready. I think policy responses are net negative now because of trade. I think Central Banks are diminishing largely. I do think will be more difficult in the capital markets. More modest returns are in the cards going forward. You cant really do lunch we are in the tampa, st. Pete area you do realize they are sitting in a closet stairirring into a hole. They cant see eamsay monitor le we do. Are you expecting some type of break in the markets or do you think youd add to positions here joe, i think the question becomes which market is right. No inflation Global Growth is rolling over. Moving higher, we are going to sit out the Fourth Quarter we are yielding 2 away. Ryan, i know you should buy dips i do. Last year is the last year since 1969 stocks were lower maybe next year. Help them out james can look to the left and ryan look to the right but you have to look at me. Thank you, both. There was a moment there it was nice. Good morning, guys. Thank you. Im exhausted from the world right now. It is nice you can come together a little bit ill take it. Coming up, saying he knows what President Trump might have up his sleeve next. He might be ifnching towards bigger moves with china. A look back at this day in history. You should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Welcome back. Manhattan Real Estate Sales plunged 14 . The average sales price dropped to 1. 7 million. 25 of condos built in 2013 remain unsold. Ray dalio said Trump Administration may be inching towards bigger moves with china. The possibilities could include cutting off capital flows to china and using sanctions to stop nonamerican transactions could freeze emerging powers in japan like in the 1940s. Last week, the story was about delisting the company. I guess i dont have 20 million. So mine dont matter as much correct that doesnt seem that profound you think about delisting. Then things may be getting ramped up. What i dont see here, what you do as a result last time, we rushed this about a recession call he changed the time frame on it more than anything. It went from 35 to 28 . It was looking at a different time frame come up from that submarine a little slower. I dont disagree with anything hes saying hes not saying anything. Coming up, lenar posting quarterly numbers. Well talk about Elizabeth Warren and the zuck. He used to be really woke. Dont forget to sub describe to our new podcast. Special behind the scenes content and the latest headlines. Apple podcasts on your favorite podcast app. Do you have a reference . I do it on the apple. I should do that. Can you show me how . It is really good well edited. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. But were also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. Announcer welcome back, you are watching squawk box live from the Nasdaq Marketsite in times square good morning. Welcome back, everybody. U. S. Equity futures are down after big losses we racked up yesterday after the ism showed weaker than expected manufacturing. This morning, dow futures are indicated down another 180 points yesterday, the dow was enough to give back all of its gains this morning, s down check out shares of home builder lenar. Beating the estimate and what wall street wassing expecting. The dollar value of those new orders were up about 3 . Still stock is up about 3 twitter is back after a global outage. Twitter didnt give any details on what did cause that outage that i didnt know about you didnt notice i saw it. It wouldnt let you on i noticed it was a little slower i didnt have anything for 24 minutes. I said tweedeck what is this . Tweet deck is another platform you can spy on others thats why andrew always knows what everybody is doing. What does he do i dont understand it yet what info does it get hes able to sigh more, a lot more quickly when we come back, well speak to an investor about sentiment in the area in asia. Thats next. 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 . For farmers here, this is our lifes work. But when a recall happens, perfectly good food goes to waste. Now, weve got away around that. Looks good. Were on target. Blockchain on the ibm cloud helps pinpoint a problem anywhere from farm to shelf. Its used by some of the biggest retailers everywhere. A nice wedge. So more food ends up on your table, is that daddys lettuce . Yeah. And less food goes to waste. Welcome back. Protests in hong kong escalating chery is with us live from the area what can you tell us good morning. That shooting incident from yesterday driving a lot of questions. Police have just wrapped up over twohour long briefing from yesterday on that shooting the preliminary findings, police say the shooting was lawful and reasonable because the Police Officer felt his life was threatened here. They have no shoot to kill or assault to kill order at the moment n is after more tlan than 100 were injured that 18yearold protester is now in stable condition. This is getting a lot of reaction across hong kong. Hundreds taking to the streets in solidarity with the protester. In the meantime, hong kong malls are taking a hit august retail sales are down 23 on year in value that is the worst on record. Now back to you. Joining us now, 30 billion in asset an management. His best selling book came out this year. You heard the latest update on the protests and economic effects. What is this doing to the investment environment in hong kong and the questions of governing there . We are a foreign investor has many investors facing hong kong. Typically Foreign Investors dont vest in hong kong. We are a private Equity Investor we dont vest in hong kong in the past almost 20 years our investments are in area, japan, china, australia. What is happening there does not affect us. To the effect of the unrest, that does affect us. Why have you not vested there over the years hong kong is a very small market 25 years ago, hong kongs gdp is about 25 of chinas. Today, it is about 2 . The business is mostly dominated by profits and retail. It is a small market we vest hundreds of billions, it is difficult to find large buyout opportunities in hong kong the hang seng index is down more than 10 . It seems to be weighing on regional sentiment how do you fit into the broader environment being stressed by this trade war i think the effect of the unrest on hong kong on the rest of asia will be quite limited and largely confined to hong kong itself. To speak more broadly about the u. S. china negotiations and people trying to gauge impact on local economies all over, how do you incorporate that into your view trade war much course hurts everybody, both warring parties as well as the Global Economy. From the macropoint of view, all are affected affecting the businesses in private industry and Different Countries in asia. There for, we are not directly impacted the Economic Growth in china and the rest of asia is affected by the trade war, we are indirectly affected do you not believe that growth has been very affected by the trade war . No. Not so much. You look at the realty fact even by china, that is limited. That will drop about 8 last year 2018 the chinese brought to the United States rose about 7 mercedes or 34 billion. American trade deficit with china widened by 12 last year the first eight months of this year, chinas exports to the United States dropped by less than 4 . American exports to china dropped by about 24 the trade deficit widened. The real effect is rather limited. Psychological effect is quite noticeable where this trade war is headed, they would like to get this behind them if possible. Thank you very much appreciate your time coming up, Elizabeth Warren faces ceokfabo that is next welcome back to squawk box, everyone reports today on cracks in the Coalition Facebook assembled to build the global based Digital Payments network reporting visa, master card and other members who signed on are now reconsidering their involvement. This follows backlash from the United States and european watchdogs. Executives of some of libras backers have declined requests to publicly support the project. Mark zuckerberg speaking candidly about critics, rivals. Like Elizabeth Warren who thinks the right answer is to break up the company if she gets elected president then i would bet that we would have a legal challenge and i would bet that we would win the legal challenge. So its so basically so does that still suck for us . Yeah i mean, i dont want to have to have a major lawsuit against our own government i mean, thats not like the position you want to be in when youre i mean, its like we care about our country, want to work with our government to do good things. But, look, at the end of the day if someones going to try to threaten something that existential you go to the mat and fight. That was Mark Zuckerberg speaking to 3,000 employees in house taking questions and answers speaking candidly. Senator warren responding in a tweet saying what would really suck is if we dont fix a corrupt system that lets giant Companies Like facebook engage in illegal anticompetitive practices, stomp on Consumer Privacy rights and repeatedly fumble their responsibility to protect our democracy. Joining us are two guests. Gays, i have to say, i read through everything that weve seen in reporting on this. I thought, fantastic, Mark Zuckerberg he was speaking candidly, answering questions that his employees imposed on him as far as i was concerned, good. Speak out. Be forthright. What did you think, eli . Our reporter has been on the facebook beat for over a year. He writes every single day called the interface we got the audio from a source hes been, working on. Other sources within the company corroborated it. What i thought was Mark Zuckerberg runs a network until this. This is the most transparent weve ever heard him be. He probably should have an opinion about Elizabeth Warren wanting to break up facebook that raises questions about their role in the upcoming election if she ends up being the candidate. Can he be neutral running a Media Distribution service of that size if one of the candidates wants to break up the company this is so much fun you just dont know for some of us when you started reading that, the first thing you said there was a crack developing, i thought you were going to say between the Silicon Valley and the democratic party. There are a lot of people in silicon vamly who like this because theyre smaller competitors. You mean google and facebook arent going to get this we have our own little pact going on come on. So whoa and hes in the real world. Wow. Maybe every time a republican criticizes Facebook Zuckerberg starts saying, no, were not that bad were fine were doing it Elizabeth Warren says, hey, i think your company is a threat to democracy i think youre too big he says, im going to go to the mat and fight you. The actual words and actions when hes criticized by one side versus the other are very different. Threats. Comes into the real world and sees that you dont think josh hawley wants to break up facebook i think there are other republicans who might want to do it are there republicans running i think josh hawley is going to run for president do you think hes going to win . I know what his ambitions are. Being woke is a great principle until you actually see what some of the effects would be. There is a lot of bipartisan sentiment to take on facebook. For different reasons. For different reasons. But theyre such an easy target theres something a little bit disingenuous about what zuckerberg is talking about in this town hall people are concerned they think were so big and powerful. They are so big and powerful that is a big part of the reason why. Thats why theyre the target of disinformation campaigns theyve got the most reach for one thing. I think he does recognize that i think hes sort of underestimating the concern from whether its Elizabeth Warren, hawley, others on the left or the right why they need to go after it i agree with eli its really, really interesting that the company that prides itself on being transparent and being open, we want to connect people heres the thing. Hes opening up. Hes talking to 3,000 employees. Hes not thinking this is a closed room conversation and hes getting attacked in that. He knew. Its not like a group of five people having a conversation. You knew is it wrong to think that this particular story works for everybody on every side . Zuckerberg is standing up for his company. Were not going to let them break it up. Warren gets a foil and will, by the way. Got their place they collect more money and nothing really happens to the business yet let me try to come at it a different way. I dont think anybody is happy with facebook on the right or the left. I dont either. I think theyre a big punching bag. This is great news for all the Smaller Companies saying, finally our day. Theyre saying were going to donate more to this because weve been dealing with this big competitor that we cant fight against and who thwarts everything we ever try to do theyre thrilled with this, too. Silicon valley is no longer one monolithic voice in terms of what they want to see happening. Small companies their entire Investment Strategy has been hoping theyll go by. We had Alexis Ohanian on yesterday say hes thrilled to see the smaller guys he invest in could have a chance i dont know that Silicon Valley is going to speak with one monolithic voice on this. What facebook is saying is, come on, regulate us were inevitable were national champion. I agree with that. Why dont you just go ahead and regulate us. Cement our position on the social networking. I agree with that. I dont know if thats great. Were going to ban auto scroll and auto play videos were going to change the behavior of the apps at the feature level. That is a tight amount of regulation warren is saying, maybe we should be two Different Companies. Were at the end of the hour thank you. Appreciate it. Coming up, the ceo of adidas joins us live. The Retail Sector struggles and much more. A u. S. Manufacturing shocker. The markets in the red again this morning after yesterdays disappointing numbers. Could new data on tap today spell more trouble. Juul sales go up in smoke. Pressure mounts from regulators. Real estate prices tumble. Whats causing the biggest drop since the financial crisis well find out the second hour of squawk box begins right now live from the beating heart of business, new york. This is squawk box. Good morning, everybody. Welcome back to squawk box on cnbc im becky quick along with joe kernen and mike santoli. U. S. Markets are down. All the major averages down by more than 1 yesterday the s p 500, dow, nasdaq all the gains they made for the entire Third Quarter in one session and this morning youre looking at them down. Nasdaq off by 59, s p futures down by 21 heres whats making headlines at this hour we are a little more than an hour on a key report, the adp report theyre looking for 125,000 private sector jobs for the month. Troubles condition for wework fitch cut its rating by two notches pushing it deeper into junk territory that comes short sli after it abandoned its public offering. Fanduel is merging with pokerstars it will create the largest betting and Gaming Company worth more than 11 billion. The market loves it. See the stocks up 43 and 18 respectively a drop in the ism manufacturing report putting pressure on the markets to the start of the Fourth Quarter. Steve liesman went behind the numbers. Good morning. This is igniting fears of recession in the broader economy. Were not there yet. Take a look. It was the second month in a row that this wildly followed index dropped below 50 that indicates contraction only in the manufacturing sector. We have two months in a row below 50 before most recently late 2015 and 2016 and that did not lead to a broader recession in the economy heres the averages. Three months before recessions ism averages around 52 very healthy its growing currently its around 48 after this second drop it averages around 44. On average its 43 not there but, again, moving in the wrong direction. Question is money. Most economists blame the trade war and slow and Global Growth and trade. The weak manufacturing report prompted markets to price in a fed rate cut in october being the odds on bet from december for another 1 4 point cut. Attention now turns to the consumer, jobs and services. The economy can avoid recession if the factors remain strong we have the adp jobs report today. Ism tomorrow at 10 cnbc went down to 1. 9 yesterday after construction that is subject to change if this weakness from manufacturing spreads. It didnt used to be the biggest report part of that was a discussion you had earlier about how important manufacturing is to the economy. Goods and services. One reason people like the ism report, it goes way back, 1947, 48. Services index began around 1997 we dont have it through all the cycles yeah, its very important that it be up there, that it not really show that weakness. The other thing i thought was interesting yesterday, did you watch the dollar on this ism report it weakened not substantially. It weakened. There you go see that then it came back. Even while we priced in more rate cuts so if the dollar is one of the things bugging the manufacturing sector, it becomes a question how can we even weaken the dollar if we always remain, what are those country metaphors that you use, the best horse in the barn, the best horse in the glue factory . The dollar will always be relatively stronger. Only with a concerted effort with our allies can we bring down the dollar i think no matter what the fed does. You have this effect its the markets are fleeing risk and part of the there they go. The risk trade is into the dollar. If thats the case, that means we can never actually relatively weaken the dollar to get and its a problem. Unpredictable. Somebody just recently came forward with a big speech that said we need to get away from the dollar being that, the global currency because we can never relieve the pressure right to me it jacks it up. Best house in a bad neighborhood. Youve probably got a lot of them. I have a lot of them. The worst opossum in the road kill im just making stuff up jim would know some of that stuff. Hey, jim. I like the topic i have to say that i like the whole look. Im staying with it looks like you have an interview. Im staying with the light suits. Im not giving up. Its good it probably is . It is or isnt . The idea of giving me clothes is a completely lost benefit i dont really care. For more on trade and how the you care. Spend some time with that. Jeb hensarling, former congressman, chair of the House Financial Services committee you always knew a lot. Ubs, you have your finger on the pulse for the entire Global Economy. And robert spalding, author of stealth war. There is some worry that the trade war is responsible for what were seeing in manufacturing and in the global slow down. You wrote a book with a very loaded title did we need to do this when its all said and done will it be worth it if we get some concessions from china i think one of the challenges right now is the tariffs are looked at as temporary if we really want to get investment in the United States to bring back manufacturing, they need to be made permanent china is not an open market number one number two, we have through the defense production act and title 3 a lot of authorities in the Defense Department to use some of the 800 billion we spend a year on reindustrializing the United States. Part of the National Security strategy is really about, you know, fostering manufacturing growth in the United States. We havent started to do that. Long term gains, 2020, november is coming up. I dont know if the president has looked at the calendar is this the great time to be doing this, jeb . Well, if the president isnt running on a great economy, hes going to have a real challenge so i think a lot of people give the president credit with the tax cut, jobs act, what we were able to do to take off some of the rough edges of doddfrank. We got near 3 gdp growth. Then you had the big red blanket of a trade war put on top of this the question is, number one, are the tariffs ultimately an end or a means . City a high risk, high reward strategy that the president has engaged upon we still dont know how its going tocome out as of yet i would say particularly now with the impeachment charges the president can probably believes he cannot afford to look weak whatsoever my guess is that in the short term the winner is senator warren in some respects. Both biden and the president have been soiled by this so the chinese have to be looking and senator warren saying, youre going to get a better deal here than were going to get with President Trump . If so, maybe they do want to come to the table. My own personal prediction is were going to see more of this roller coaster were still too far out for them to come to some resolution. Can we ever regain the lost ground we absolutely can one of the problems is you have hundreds of billions of dollars, especially with msc world index going to 20 and chinese equities you have 400 billion going into china. That money could actually be going into the United States where productivity is higher, resource allocation is done on a market basis, not on a state controlled government basis. And i think if we do that, we do those things, we start focusing on rebuilding manufacturing in the United States, we lost over 70,000 factories and 13 million jobs when china entered the wto. We have to invest in america sending, by the way, federal thrift savings board, the board that handled my 401k when i was on active duty next year is going to send 20 of their assets to china. Military members are going to be funding the companies to build the weapons that they may face within day this is a big challenge. We ought to think about it more than just on a shortterm trade war. When youre at ubs you go to meetings and stuff about strategies and what their view on the Global Economy is jeb, can you bring us some insight into what youve the short answer is you dont the honest answer is for four months ive cordoned myself in my office to study for securities licensing exams so in many respects are we on the cusp of a significant slowdown globally . Not even globally, are we on the cusp of a significant that is not the ubs house view at the moment so we still see positive Economic Growth we do not believe that well, we believe there probably is about a 50 chance that the threatened tariffs that will take place on october 15th will happen, maybe a 30 chance they get worse, maybe a 20 chance that they actually get better. But i think the house view is that we still see very strong Consumer Spending at the moment and personally just speaking for myself, you know, when we have a trade war taking place, i wasnt surprised by the manufacturing number the market is particularly good when you look at the size of manufacturing they are incurring. Itll be interesting to see if markets will end up is usmca getting done this year i dont believe so. They wont do t. You know how the house operates you know speaker well, impeachment has unleashed something that nobody knows where its headed. But i do know this, whatever it is, it sucks all the oxygen out of the room. So my best guess is watch the polling data if the polling data says that this is something that nancy pelosi and the democrats ought to vote on in the house, theyll vote on it if the vulnerable democrats in the red districts need to show they are Something Else besides a perceived impeachment congress, then you could potentially get that vote. I would say before this latest ukrainian incident hit that you probably had the votes in congress to do it had the speaker decided to go forward with it. Theres always that limit. Do you give the president the win or do you help your vulnerables in the red districts. When you say watch the polls, do you mean watch National Polls or local polls more so the local polls having served with i guess its four different speakers in the house, their number one job is to preserve that preserve the house. Preserve the house. Robert, you heard from you can call me jeb or jim. I called you jeb on purpose do you think the chinese are watching the impeachment oh, of course absolutely. What would they like to have happen they would love to have biden in place. He loves china. I forgot about that. Yeah, youre right theyll have a better job after no. I didnt mean that are you going to meanwhile, are you going to cut all your commissions at ubs like t. D. Ameritrade it is above my pay grade. Below your pay grade. Jeb, i want to give you some data from our poll yesterday about impeachment and our pollsters i think this is the most important piece of data to watch about impeachment. Democratic controlled districts are proimpeachment 5139. Republican controlled districts are against impeachment 3556. Either one of those changes, that would be the absolute change that would happen to congressmen and representatives on the impeachment question. Youve got to ramp up their efforts, steve, if youre going to get this done, you know what i mean i saw 60 minutes. Theyre putting it up in high gear did you know the Mueller Report was inconclusive thats scott pelly did you know that . Why are you asking me this . I just wondered i just wondered if you saw it. Because i just think you can actually sway Public Opinion one way or the other get ramped up. I think Public Opinion matters for impeachment. And you watch you look around and see the media landscape, right do you notice anything you dont notice anything not directly screaming at me for me not to robert, thanks. Do you see anything happening . You might. Lets talk off camera. Thank you both. Lets go check on the futures right now. Youre going to see that they are still under some extreme pressure today after well, down by 172 points for the futures for the dow. S p futures off by 20, nasdaq off by 57. Squawk box will be right back. When we return, the ceo of adidas on the highly competitive at leisure wear segment, the state of the consumer and the ongoing trade war. And later manhattan real estate having its worst Third Quarter in a decade. Whats driving the market lower . A special report is coming up right here on squawk box. 300 miles an hour, thats where i feel normal. Having an annuity tells me my retirement is protected. Learn more at retire your risk dot org. Welcome back to squawk box. Ray dalio said the Trump Administration may be in his words inching towards bigger moves against china. They say the possibilities could include cutting off capital to china and using sanctions to block nonamerican financial transactions. When we come back, adidas upping its game in the at leisure segment and cleaning up theocean while doing it. The ceo will join us. Ecigarette companies under pressure as the death toll rises to 16. Juuls sales growth has fallen dramatically over the last month. Well take a look at the big players and what is next in the industry time now for todays aflac trivia question. When mcdonalds debuted its menu in 1940, what was the total cost of a cheeseburger, french fries and milk shake meal . The answer when cnbcs squawk box continues coach saban we have Health Insurance. Did Health Insurance pay for everything . No, we still have bills. Aflac gives you money directly to help with those. Aflac and your deductibles, knee brace, whatever you choose. Aflac sounds like a winner. Umhum. Umhum. We try. Get help with expenses Health Insurance doesnt cover. Get to know us at. Duck aflac dot com you should be mad at airports. Excuse me, where is gate 87 . You should be mad at nonseasoned travelers. And they took my toothpaste away. And you should be mad at people who take unnecessary risks. How dare you, hes my emotional support snake. But youre not mad, because you have e trade, whose tech helps you understand the risk and reward potential on an options trade its a paste. Its not liquid or a gel. And even explore whatif scenarios. Wheres gate 87 . Dont get mad. Get e trade and start trading today. For farmers here, this is our lifes work. But when a recall happens, perfectly good food goes to waste. Now, weve got away around that. Looks good. Were on target. Blockchain on the ibm cloud helps pinpoint a problem anywhere from farm to shelf. Its used by some of the biggest retailers everywhere. A nice wedge. So more food ends up on your table, is that daddys lettuce . Yeah. And less food goes to waste. And less food goes to waste. 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. Now the answer to todays aflac trivia question. When mcdonalds debuted its menu in 1940, what was the total cost of a cheeseburger, french fries and milk shake meal . The answer, 49 cents all right adidas on track to sell 11 million shoes made from plastic Water Bottles this year and they are just Getting Started the german athletic company, which is the worlds second biggest maker of athletic shoes, is planning to use only recycled plastic instead of polyester in all of its shoes and clothing in 2024 joining us from london is Kasper Rorsted great to see you. Good morning. We have talked in the past about this effort youre making. I know its trickier than it seems. It sounds great to go ahead and do this. Why did you start doing this and what are some of the struggles youve found along the way as youve moved down this path . So in 2015 we had the idea of making a shoe out of Ocean Plastic. The first shoe we made was very clumsy not very wellfunctioning shoe first we needed to get the performance elements right around the shoe. That took us a couple of years second was putting a supply chain in place where we can get it to the factories. If you start an industry, that is an industry prone with child labor. We actually didnt engage in an industry so were in a position where we have 11 million shoes being sold out of Ocean Plastic we have parl, training, suits, jumpers, outdoor jackets or even swim wear. I was Mountain Biking in the austrian mountains with a fully outfitted outfit in Ocean Plastic. When you realized how difficult there is, child labor and by the way the fact that the first stuff wasnt all that great, what did you think . Did you ever regret making this move and think, what have i gotten ourselves into . We actually didnt. Were not convinced about the scaleability of it we knew it was a very good thing to do. It was great for our brand, but i think only later on did we realize how commercialized it was. This is the latest shoe we have. Using a 3d printer and Ocean Plastic. We have some of the most innovative shoes it took us a while to understand the real commercial value out of it right now we are completely convinced about it if you see the Global Movement coming around sustainability, about removing plastic from the ocean, from the environment. We know that we really made a home run for the products we have youre not doing this overnight because its expensive. What do you charge what are your margins on this . Again, do you think its something thats scaleable because youve figured out a way to make it profitable . Yeah, in the beginning we were making very little money. Even on this particular shoe today, it has diluted the margins. A couple of years ago we did a million, this year 11 million. This is going to be hundreds of millions of products in the next three to four years. Right now we know the more we scale the better the margins are. Its so imperative to what were trying to do in the company. It was investment so far now we started making money. With 11 million shoes this will be one of the contributors to our margin line this year. Kasper, how are you seeing things around the globe in terms of the economy nike came out and said it had seen a reacceleration in sales in china and other places. What are you experiencing . I think we need to separate whats happening for Different Companies and the economy. There is no doubt the Global Economy is seeing a slowdown europe has been flat or slightly growing for the last couple of years. The trade war between north america and china is not helping the Global Economy weve seen a slowdown in the u. S. And definitely a slowdown in china, but it can only come on the Second Quarter. We saw very strong Second Quarter growth in china. You only make 25 of your shoes in china you have other places where you make them. What does the trade war mean for you . So the trade war has very little impact when it comes to import duties. The much more serious one is if the American Consumer has less money to spend, he or she will spend less money on all products including ours so thats the more worrying one. Of course, the devaluation in chinese currency, then that has an impact. Thats what were seeing were not seeing a slowdown in the manufacturing of our products whether its this one or maybe if i may the newest, you know, prototype we have which is a fully recyclable shoe. We now have 250 models out 250 products out testing it for the next two years. In 21 we will launch it in volume weve developed a shoe in material that we can recycle all components of this product and build a complete new shoe. A lot of the stuff were doing here, the innovation, its taking place in the west manufacturing is going to take place in the east. How do you decide where to build plants especially with some of the new materials that youre using we basically go where the confidence is. Theres no doubt whether its china, vietnam, indonesia, the shoe wear industry has taken its center out of those countries in the past three years the confidence to build this shoe or this shoe. The 3d print shoe is done with the cooperation of an american based company out in california. A lot of the development is taken in the west and the manufacturing is in the east. Kasper, you have grown market share at a greater rate than nike has when you look around the globe and figure out what to do next, do you look at this as a zero sum game do you look at this as a game that both Major Players can win . How do you handle the competition . How do you look at what your next initiative should be . The Sporting Goods market will continue to grow. Fight against obesity. Having people move more and i think its a mistake if you only look upon two companies. We look upon it in a much greater context and look at which companies are coming up on asia, europe, the u. S. Figure out which market sector do we want to occupy one of the market sections we occupy is around being leader and sustainability and bringing the best, most Innovative Products out across the range. Were the clear differentiator thats where we have one competitor, we have many competitors in this space. Kasper, i want to thank you for your time. Coming up, juul, the Market Leader in the ecigarette segment seeing a big drop in sales since warnings and deaths due to vaping well take a cselor look at the ecigarette market in a bit squawk box coming right back at synchrony, were changing whats possible every single day. But what does changing whats possible mean anyway . Well. If you run a business, it means a lot. For starters, we provide you with Financing Options for your customers. That way, you can help them buy the things they love instantly and pay over time. And that turns them into serious fans. Hang on, theres more. Want Customer Insights . Weve got those, too. We use data to show you what your shoppers have already bought so we can tell you what they might consider buying next. And you can offer them the perfect products. That ceo gets it. From adding unique capabilities to your companys apps to bringing you loyalty programs, our technology and Financial Solutions are changing whats possible in all sorts of ways. So, how can we change whats possible for you . So, how can we change tell him were flexible. Dont worry. My dutch is ok. Just ok . Tell him we need this merger. Its happening. just ok is not ok. Especially when it comes to your network. At t is americas best Wireless Network according to americas biggest test. Now with 5g evolution. The first step to 5g. More for your thing. Thats our thing. Still to come on squawk box. The latest concerns on vaping and what it means for jewel and the others in that space and then the big apple seeing red when it comes to manhattan real estate well bring the numbers and speak to a top realtor on the state of housing in new york plus, we are on high alert this morning as the futures point to a lower open the adp private payroll numbers will bring that data and Market Reaction squawk box will be right back. 119 growth over the last year consumers are increasingly turning to juuls competitors. Boost vibe sold by British American tobacco has 2 of the market seen sales growth of 31,000 over the past month. Competitors are similar vaping products njoy, 5 of the market is seeing sales increase by more than 1200 in the past four weeks however, my blue, which has 2. 5 of the market seeing its growth slowing down to 25 over the last month compared to 250 for the year Parent Company with the fiscal 2020 guidance because of u. S. Vaping concerns saying growth would fall to zero from a projected 8 also another option thats growing in popularity. Spitless tobacco used orally, seen 45 growth. Snooze has the majority of that category its in a pouch. Its also had its own Health Concerns its ban in a majority of europe probably the biggest u. S. Threat to juul could be coming with heated tobacco, iqos the fda approved it in april saying it has less toxins than traditional cigarettes sold in more than 40 countries and has not had the same Health Concerns as vaping so far. All right thanks, frank. Have you ever tried it never tried it. Ive never tried vaping or cigarettes. In my day cigarettes didnt have quite the stigma. College and stuff. Still a cigarette. Its not something i ever never smoked but theyre still very popular we were talking about off air nobody smokes. I cant believe they still have growth given the headlines. People are picking it up 15 you know whats fun maybe europe cracks me up youre walking down the street thats what i say when i get back from europe, i started smoking again. I picked up smoking in europe. Really . Not really. Just breathing the air. Oh, really . Breathing over there you take up smoking. I thought one of the biggest shocks that oral tobacco, chewing tobacco and snooze stuff is bigger than vaping. 9 of americans use chewing tobacco or some other form of oral tobacco 6 vape. Its got its own group, list of issues, too, the chewing tobacco. Its gross. I want to take a firm stand on that. You did good job for more on vaping and the ecigarette industry lets bring in our guest joining us, dr. Sattel shes an addiction psychiatrist and yale school of medicine lecturer she is an american scholar we had all kinds of discussions earlier, doctor, about just instilling a need for something that you dont that you dont have at the beginning. It just seems its a bad idea and thats why i look back at the way juul was introduced. It was introduced to help people but when it instills a nicotine addiction from scratch, seems like we should have thought that through before we marketed it to kids. Well, it was never marketed to kids, although really . It is true that some of their ads were could certainly appeal to that age group and they have cut those ads out. No, Vaping Vaping nicotine, not vaping thc, which is whats illicit thc which is whats causing those horrible vapingrelated deaths and illnesses, but vaping nicotine for smokers, and that is the intended audience, thats certainly the population for whom ecigarettes were developed back in around 2007, its actually the holy grail of Public Health for smoking in that it supplies nicotine, which in and of itself is relatively harmless, but it supplies the nicotine without the smoke the smoke is what comes from burning tobacco in cigarettes and thats what has the tar, the carbon monoxide. Thats what carries the carcinogens and whats harmful for hearts and the cardiovascular system in general. So it is no ones saying ecigarettes are safe but they are much safer than smoking. Doctor, can i just go back on one point about the juul marketing for teenagers. This is why theres been such an outrage over this. Juul was targeting kids in its advertising. It visited High School Kids and said they were totally safe. Juul has since ended that campaign they were marketing to kids and werent marketing to teenagers. Im not defending juul. Im not here if they were, thats unacceptable, clearly yes, kids should unless theyre smoking teens and in fact the data show i mean, one of the big concerns about teen vaping, and i can appreciate that theres a concern, is that it will lead kids to smoking. That was called a gateway effect, but actually teens smoking is the lowest its ever been so even though more kids are vaping, thats not good and those data came out about three weeks ago, right around the time that the deaths from vaping contaminated thc started rising, and that was like a perfect storm to really turn up the heat on these devices but the concern that even though more kids are vaping, one out of four will vape at least once a month and 11 approximately maybe using 20 out of 30 days a month. Thats completely unacceptable, but its not leading to an increase in smoking. So thats a good result. But theres no question that teens are vaping, unless theyre originally smokers, and i happen to know that juul has a 30 million effort to age verification they are really trying to crack down they have 11 point guideline for age verification, how to prevent straw purchases. They support tobacco 21 which means it would be illegal. It would be nationally illegal to sell vaping products or cigarettes to anyone under 21 and those are all good proposals high schools. The idea is keep them away from kids but make them more available to smokers. I wonder what the actual number i wish we knew the actual numbers for people that are using it therapeutically to get off of smoking versus people that have taken up a new habit. Oh, its about its about 11 8 to 11 million that have adults who have started vaping. How many have switched. Helped stop smoking . Oh, well those are all about half of them have completely stopped and about half still use cigarettes a bit. Theyre transitioning, hopefully. I just heard the claim that you really are therapeutically helping people stop smoking is exaggerated and the number nicotine you say is fairly harmless longterm studies show any deleterious effects of nicotine addiction . No. Actually, in adults, no. In children we dont have any evidence but im not saying no im just saying the evidence that has been put forth to underscore the alleged allegation that nicotine causes brain damage in teens is unsupported. Now i cant say that one day there may be some data that will give us some insight, but whats put forth as data for that is completely unsupported from Animal Studies i mean, nicotine patches, gums, theyve been available for years. No physical harms from that. Now if you if you have just had a heart attack, youre not going to your doctor is going to warn you against using any kind of stimulant, and nicotine is a mild stimulant and so is caffeine if you have a heart attack, stroke, vaj guile cardiovascular system, your doctor will tell you not to use any kind of mild stimulant of any kind. Generally its quite benign. No nicotine for women. Doctor, circling back to the band do you think that flavored nicotine makes it more likely for teens to smoke any data on that actually, what kids prioritize as the reason they smoke is that they think excuse me, vape is that they think its kind of cool. Certainly they enjoy some of the flavors, theres no question about that, but the adults do as well so, again, we cant we have to be concerned about the children and the access at the same time figure out a way to make these devices more available to smokers because theyre so much less harmful. Dr. Satel, thank you. I think youve got the aei perspective. I have the data perspective. Data perspective. But no relationships to juul at all in any way, consultant or anything no, we appreciate it. Thank you thank you. New york city feeling the pinch when it comes to the Real Estate Market. A receipt by street easy 25 of condos in new york city still unsold dow indicated down 157 s p down 18 and the nasdaq off 50 points. Quk xilbeig bk. Sawbo wl rhtac as a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. Welcome back, everybody. The manhattan Real Estate Market suffering the worst Third Quarter in a decade. Robert frank joins us. Manhattan real estate sees the first twoyear decline sales falling 14 . The average price of a manhattan apartment also falling 14 that is the biggest drop the average apartment in new york selling for 1. 7 million that is the lowest in four years. Now the declines are driven by lots of things, lack of foreign buyers, the new tax rules on salt deductions and an oversupply of apartments, especially at the high end this is important. It was the First Quarter for new yorks new mansion tax which adds 1 4 of a percent to 3 on purchases over 3 million. The number of luxury listings is at the highest level since data started being recorded over 15 years ago. There was one bright spot. Low Mortgage Rates typically manhattan is an all cash quamarket this quarter the most expensive was by sting 220 central park stings place was a mere 66 million. Sting. Gordon sumner probably. Thats his name. He doesnt put sting . And trudy style ler. Does flea put flea . Probably theres an llc that theyve created to buy the home. The 220 llc the english man in new york llc. Thats probably what he calls it. For more on new york citys Luxury Real Estate lets bring in steven james. Good to see you. We have a litany of forces that are giving this market some trouble. How much longer do you think this is going to be, this kind of painful adjustment . How does the market look going ahead . Those numbers can take your breath away after a considerable amount of time where the market really did really well this is eye opening, but i think if you look at it more closely youll see that a lot of it, the second and Third Quarter sales, the mansion tax had a big bearing on it. All of those sales that would have occurred in the Third Quarter closed in the Second Quarter to beat the july 1st deadline to save money everybody wanted to save money. Still do have the supply overhang; that not the case . It is inventory is going up. Its up about 6. 2 its going to continue 6. 2 is not a huge number but its inching up. I think it goes to the point that this is clearly a buyers market a buyer has an advantage in this market this whole market adjustment started probably in the Second Quarter of 2018. Its slowly gone up the line. The thing is i have heard since last year, this is the bottom, this is the quarter. This is the bottom where is the bottom . Its not today and its not tomorrow if i how many months how many years actually, i think probably about 18 months. I think were progressing to that probably time frame. What has to happen, do sellers finally have to just adjust and say the price that i thought my place was worth in 20141 not realistic . Yes. What has to happen . The whole message of this market for the last two years is trying to get the seller convinced. You cannot get your price anymore. If you want to sell, if you want to sell, you cant get your price. If you dont want to sell, dont sell and a lot of people took their properties off the market during that period, certainly 2018. Now theyre coming back. Now theyre coming back actually, there are sales but not at the level thats going to say to the seller, hey, youre going to get your price. Were there big miscalculations by developers . Are certain types of properties not working . Too much of one kind, not enough of another maybe but, you know, a developer is just like any other seller just any other homeowner, its just they have a lot of them i think the reality is that they want to hold out they have a huge investment. They put in many cases all of their money in these Development Projects and they want to get as much as they can. But the question is how long can they hold out . Is there a point where they just thats the question thats the question. Robert listed a long list of all of the problems, all the reasons that this is happening that comes from federal tax laws, but it also comes from local tax laws what do you think the biggest problem is i think its very costly living in new york city. I think its very costly living in new york state but, you know, raising the mansion tax probably didnt help the luxury market at all, but it got offset by lower Interest Rates theyre down a percent year over year thats incredible. I think the statistic about traditionally all cash transactions are 88 is that people being optimistic about the lower rates . Yes. Is there not that much money available . Theyre being optimistic. I dont blame them. The other issue is the stronger dollar. A lot of buyers look at that cost now for them, especially from developing countries, is markedly higher. What do you see as the influence of the foreign buyer situation right now . In 2014, 2015 at their peak they may not have been a big percentage of the market but they were buying a lot of the new, most expensive product. Do you see them coming back . Which countries are still buying are the chinese gone from this market right now the chinese buyer is still there, but at a much lower level. You know, its difficult to get the money to close and theyre frightened also. Theres a lot of attention on them so that do i think that buyer is coming back not immediately. The russians are gone. The russians are gone. Saudis are gone brazilians were huge buyers. Sell to a few canadians maybe thats whats going to save us. They haend signed unesca. Swiss frank is really strong. Good to have you thank you. Lets check on the futures before we head to break. Down 149 a little bit worse at different points in the morning on the dow, s p down 17 nasdaq indicated down 46 after a rough session yesterday. October, squawk box will be right back coming up, the latest private Payroll Survey from adp. The data and Market Reaction happens at 8 15 eastern time squawk box will beig bk. Rhtac session fears hit wall street futures sharply lower this morning after the first day of the Fourth Quarter wipes out all of the dows Third Quarter gains. Have we witnessed the death of wall street commissions what the withdrawals mean for the brokerage Business Model. Jobs in america. Adps look at private sector payroll is out in a few minutes. 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 welcome back to squawk box here on cnbc live from the market site at times Square Andrew is off today. The futures for their part are lower on the session after that selloff that we witnessed yesterday on the first day of october. Doesnt necessarily mean its requesting to going to be one of those october. Nasdaq down 45 s p down 16. Santoli said that october is a pretty good month usually. We think of it as a bad month. Yeah. Even when you think of it as a bad month, the really bad october you made lows, right thats right. Thats the most dramatic pattern. Is that its been this kind of quarter of your market value. Reversals after you had some pain in the last 20 years its been positive. Been a positive month. Last year, none of this mattered because it violated every single seasonal tendency in the Fourth Quarter. All right you saw what happened with treasuries the yields dropped pretty precipitously on what was perceived as i dont know why it was such a surprise the second straight month of declining of below 50. Lets get you caught up on some of the other stories investors are going to be talking about. Shares of home builder lennar Beat Estimates on both the top and the bottom line. Lennar said its new order volume rose 9 from a year ago. The dollar value of those ne orders was up by just 3 still, that stock is up by 2. 6 this morning t. D. Ameritrade said it will eliminate commission for stocks and etfs effective tomorrow. That follows a similar move by Charles Schwab yesterday etrade financial dropped 6 and t. D. Was down by more than 25 that was the worst day since 1999 well talk much more about this later in the hour. Facebook is seeing partners in its plan to libra Payment Network leave. Check out shares of the social network. Facebook down by about. 7 of a percent. Visa and master card among the Companies Said to be rethinking their commitment to libra. Get back to the markets after yesterdays drop and premarket today. Wiped out nearly all of the Third Quarter gains from the dow and the s p 500. Joining us for that is Richard Bernstein, ceo of Richard Bernstein advisors siran seppi. Sirat is also a contributor. Bernstein, last time you were on you got uncharacteristically negative i want to say more negative than recently. Are you still there . Yeah. I think, joe, we are just coming down its kind of weird because we started our firm in 2009 because we thought we were entering a major bull market. Now its calming down. Not the polar opposite i think if you look at profits, profits are decelerating look at the yield curve. The yield curve is more decelerated. Thats not a time to get more bullish. Were just calming down. What does that mean you would tell clients in terms of their what they do . Just raise cash . Get out of everything . Well, we are what were doing in our portfolios is calming down going to more defensive sectors. Were doing if i knew we were going down 15 i would sell everything. Are you telling people to sell everything no. Are we going down 15 you know im the worst person to ask about shortterm market. Why do you have a business in the investment world you are the absolute worst to ask that youve got to be better than some people. Im sure there must be some yutz out there shortterm market timing i cant go to sirat okay, sirat is here. I cant do that. This is not connected. Are you as negative as he is . In the short term, yes. What do you mean short term how long is that in. In the next couple of months. As we get through the earnings season, get more data in i share your thoughts in this because i am also getting calls from clients saying, look, i want to get out. We dont want to be in i cant call when the bottom is. Just like in december we went down 20 we are getting defensive i dont know what the slowdown is going to be and what its going to look like if rates do pop and you go the wrong way, you could be defensive and get hurt im cutting back the allocation to where clients are comfortable sitting on some cash and looking at opportunities i do think going into this quarter right now we dont know how the gm issue is going to get resolved we dont know how the trade issue is going to get resolved we dont know where Interest Rates are going to go. We have interest season. You will get opportunities in good Quality Companies that we always do. Youll get some resolution to some of this uncertainty and that will give us opportunity. The bond market some people saying what did they say the bonds had bottomed i think they meant yields. The yields have bottomed. I dont know. Were not particularly bullish on the long end of the curve i think its extraordinarily overvalued relative to the short end. That being said, if Growth Continues to weaken youll see the long end rally bonds rally. I just think that were in a period where growth is slowing just about everything you look at, with the exception of maybe the Home Builders which you mentioned a couple of minutes ago, the front end of the economy is showing a little bit of life. If employment starts weakening well get a data point on that. So, sarat, if theres a difference between low yields that are because of low inflation right. And low yields that are because of slowing growth . Absolutely. So you needed to adjust how you feel about the stock market based on why you think yields are low . I think part of it right now is its so defensive for investors to go in if you have longdated bonds, theyve done really well theyve done better than the equity market in the last 18 months if youre going to cut back exposure, people dont think about this, take some exposure off your high yield market you made 20 owning a 20 year bond that you thought was going to be defensive. Bring that back in because there will be other the key is, there is no alternative. It doesnt work if yields are low because of slow growth. Because earnings you think earnings are going to for some sectors, absolutely i think they are i think there are other sectors if our consumer does hold up, some of the Home Building stocks, product stocks, consumer stables, reets will do well. If multiples stay relatively rich because of low Interest Rates and there is nothing else, there is no alternative, if you dont see slowing in earnings, theres no reason to panic. No, im not suggesting that at all. Are you saying that growth slows or that we go to negative . I profits grow i think the probability of a profits recession in early that is defined as what that earnings actually drop or that the thats exactly right. On an absolute level earnings start dropping the yeartoyear turns negative. The probability is riding. Thats not priced in. No, its not. While the consensus right now for s p earnings for the first couple of quarters, next years high Single Digits its an important point, michael, what you just brought up analysts have never forecasted a recession. Why do you say he brought it up i brought it up. Well, im sorry, joe, you raise an interesting point. Thank you, thank you. You know what we live for, when someone says thats a really good question you know, i go home and i say, someone told me that. Means theyre buying time. Exactly what it means say it again. Theyve never forecasted a profits recession. The fact that analysts now are reasonably bullish and not forecasting a proper reception, they will get caught by surprise. Part of that is because nobody knows where the character is going to go, right . Right. A lot of the uncertainty of the profit recession comes off the other side is, you know, all is money thats now not going into ipos, i think investors are being a lot more careful because youre already saying i want company with real earnings you have a pull back there you have scarcity of capitol going into the markets all of this, by the way, if you look at the other side and things actually do get better because theres a lot of negativity built in, you could see a pop in the market. I dont want to get completely out of the market because there are things that can move the market up but overall right now its better just to kind of wait and see. What was interesting yesterday is to swhee actually didnt go down obviously its one day people had a little bit of a panic being so apple, visa, these big familiar growth. If you look at among the Biggest Technology stocks, the growth rates are going. And theyve held up so well. Yeah. Technologys always been incredibly cyclical sector people deny the cyclicality. They think theyre high beta it works on the way up, not on the way down i think theres a fair amount of risk in that sector. That goes along with the venture capital. You are starting to see the canaries die in the mine shaft. Where do you go traditional defensive stuff staples, Health Care Health care could be a risk too. It could. Political issues financials. Tech, youre looking at 24, 25 times earnings. Its a stock picking say where do i want to be defensively. Things can change if you get better growth than rates move. Do you want to argue with him . Im not going to hes worse than you are youre the worse in shortterm market timing i could be are you worse than him . Im not good at it. Who is the worst . I think the other side is trying to find the person whos really good at it. Have you noticed that i dont care are we in a secular bull market secular bull market yes, but i think peoples expectations are getting too high. Are we in a secular bull market i think it does continue but with the rapid corrections i am bullish for the long term because i do think things will get better. Youre both contributors, right . Yeah. This was an expensive segment. How bad are you can you be a contributor how about you, sarat if youre real bad they make you an anchor. A whole different level yeah, right exactly. Coming up, breaking jobs data the adp private sector payroll report is due out in minutes we will have the number and the stinant analysis when squawk box comes right back. Welcome back to squawk box. The futures with the dow set to open at 129. That is firmed up from earlier lows, about 175. S p down 15. Nasdaq off by 43 points. We are just a few seconds away from the adp private payroll report getting the big jobs number on friday well see what this tells us about it Steve Liesman has the number 135,000. Adp the private Payroll Company that uses its data and other stuff to tell us what the dls might report on. The whole country says job growth in the private sector grew by 135,000. They revised down the august number by 38,000 they were kind of out of sorts where the government was on that month. 257,000. Good sector, 8,000 Service Sector, 127,000. I look at why job growth has slowed i cant put my finger on goods or services. Theyve both come down a bit theres the nonfarm payroll. 145,000. Nothing is out of line the estimates not out of line with where wall street was and the estimate for friday is not really out of line lets take a little more granular look at all of this Small Business up 30,000 medium up 39, large up 67,000. Again, no particular trend of where the source in the slowing in payrolls has come theyre all sort of down just a bit. Looking at sectors, Education Health services, perennial job gainer, up 42,000. Trade and transport 28 Leisure Hospitality 18 construction, 9,000. Manufacturing up 2,000 it had been down a bit it was stronger last year and were watching that to see how much weakness there is right there in the numbers, becky. I dont know is wall street getting used to this idea that we were saying, its going to slow down, this is an okay number relative to the job growth or the demographic growth of those people who are it shouldnt be i dont know if people see it as a sign of weakness i think if we can settle down in this 100,000 plus area, its still a pretty good number that should keep down the Unemployment Rate. Lets bring in mark zandi hes the chief economist at moodys analytics. Mark, whats your biggest take away from these numbers . Growth is slowing job growth now is consistent with stable unemployment i will point out an interesting point, the payrolls we process towards the end of the month were meaningfully weaker than those that we processed towards the start of the month so things appear to be slowing and the rate of decline is continues. Theres no indication yet that were going to settle in at 130 or 135 feels like were going to throttle back even more than that well see that in subsequent months its slowing slowing is broad sorry do you put this in the camp of the number we got yesterday from the ism manufacturing number or do you put this in the camp of, look, were slowing down because its harder and harder to find people who want or need jobs at this point its a little bit of both i think the most significant aspect of the recent slowing is the broader slowing in the economy. Demand for labor is beginning to weaken hiring is weakening across the board. Thats the point i was going to make broadbased weakening is less hiring pretty much everywhere. We are seeing more weakness in manufacturing. I do think in the coming months we will see manufacturing turn negative thats the message weve been getting in the most recent data. So i think, yes, some industries are having trouble filling open positions. Thats slowing job growth. Even more importantly, demand is slowing in many sectors and that i dont see any stabilization in that. Thats going to continue. Mark, we have a debate earlier this morning, i dont know if it was a debate, we were talking about the ism nonmanufacturing number were going to get today how important is that . Do you think that youll see weakness in that. Tomorrow. Tomorrow. I made the same mistake. Youll see weakness in that number, again, based on what youre seeing in manufacturing i guess thats because were more of a Services Economy now trying to figure out what this is going to mean for the broader economy. What signals should we be paying the most attention to . I think nonman is important if agriculture, transportation, sectors on the front line of the trade war and getting creamed by the trade war, if that is beginning to bleed out into the rest of the economy, starting to slow hiring into the service side of the economy, then of course this becomes a much bigger problem this becomes fodder for economic downturn in the recession. It will give us a window into whether thats happening or not f. It does, job growth will continue to slow unemployment will continue to rise and recession will become very significant. Mark, what about this argument that manufacturing is just a small part of the economy . I have to imagine that with each subsequent down turn that manufacturing plays less of a role im wondering, you know, even people might freak out, but if the Unemployment Rate were to drift up to 4 , which would still be at or near alltime lows, of course you might have a confidence effect, but lots of people would still have jobs and if jobs if wage growth remained relatively strong, you could have the consumer and the Service Sector powering us through even while manufacturing went through a correction. Well, if you add up manufacturing, agriculture broadly defined because thats also in recession because of the trade war, and the transportation sector because whatever the manufacturers and farmers produce, theyve got to ship it, thats in recession, thats now 20 of the gross product of the economy yeah, by itself, you know, thats not going to push the overall economy into recession certainly means were not going to go anywhere fast. If thats the end of the story, yeah, no recession but i do think there are there is growing evidence that it is starting to affect other parts of the economy and i disagree with you, steve if unemployment rises even from a low level, by the way that happens every single time when we go into recession coming off a very low level, that spooks people they immediately sense that. I get that. They sense the slower job growth they sense the pure job openings they sense the pay increases arent as big. They become more cautious. Businesses see that. They become more cautious in the hiring you can see how we get into the selfreinforcing vicious cycle thats a recession if we go from 3. 7 to 4, we do that in the next two, three, four months, that would be a strong signal even though its a low Unemployment Rate. Right now, mark, our wrap it update which you helped us compile, thank you very much, which is a collection of estimates on the street, were running 1. 9 on Third Quarter gdp. What does the Third Quarter look like what does 2020 look like by your best guess well, i think if the trade war is put on hold relatively soon and it doesnt escalate, theres no scenario where we deescalate the war, but if we dont escalate it, i think confidence should be Strong Enough businesses should hold in well enough that we continue to get grow somewhere between 1. 5 to 2 which is a norb just below. Not high enough fast enough to push us into recession if the trade war escalates if the tariffs that are threatening to take place either take place, then i think recession is likely. Mark, thanks for joining us today. Its good to see you sure thing. Steve, thank you. Coming up, some big retail news out this morning that could prove to be a roadmap for other sectors in the economy tell you about a new partnership between mall giant simon and ecommerce giant rue grew make fitness routine with pure protein. High protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein. Find our coupons in sundays paper. Pure protein. I cowe can do theyour screening at her house. Hi. This is the man thats going to check your eyes grandma. Cognizant ai solutions are helping Healthcare Companies advance diagnostics and prevent blindness in patients with diabetes. Everything looks good. You have beautiful eyes. Welcome back to squawk box. Futures set to open lower this morning. Down 131 points after a weak session yesterday. The nasdaq indicated down 45 and change s p indicated down 15. Piper jaff f jer jar jaffre. They do not plan to subscribe. Joining us on the squawk news line, mike olson, Senior Research analyst at piper jaffrey. Interesting result i assume this was netflix u. S. Based subscribers yeah, exactly weve been getting a lot more questions about increasingly intense competitive environment that could unfold here over the next six weeks with both disney and Apple Streaming Services by mid november it was domestic subscribers. 3,000 subscribers in two separate services. We found 75 of netflix folks are not expecting to subscribe to either disney or apple. Importantly for those who do expect to subscribe, most of them said theyll subscribe to both netflix and the new competing services, not one or the other. I would say the conclusion is the competing services do cast a cloud of uncertainty over the stock in the near term we arent seeing any evidence that theyll have a material negative impact on actual netflix market share. I guess you could flip it around and say 1 4 of people, which is 60 million subscribers, netflix in the u. S. , are saying they are probably going to subscribe to apple, disney or both. Yeah, i think that kind of speaks to the idea that were going to see more and more subscribers that are using both netflix and an Additional Service as consumers spend more on streaming options in place of traditional tv it makes sense well see more of those subscribers adding on and layering on Additional Services. Now if you gain some comfort here that many people are not planning or really hard to find a lot of people who do say they plan to cancel netflix, i wonder if that really does kind of take away a lot of the overhang thats been on the stock right now simply because part of the argument is they are a higher priced service then just the idea that netflix no longer has the exclusivity. Its not the only stock you can buy to play video streaming anymore. I think the way were looking at it from a stock action perspective, we do like netflix long term and we continue to expect, as i said, minimal kind of competitive impact but there is no question that some investors are going to take a bit of a wait and see approach to the impact of this competition and, you know, the potential for market share loss. That could keep some people on the sidelines until at least netflix reports q4 results early next year. At that point wed have any clarity on any real potential impact on the competitive offerings. Hopefully that would result in less concern around potential market share impact. Do you hear any concern on the return on investment on the content spend . They spent a lot of money on the irishman. That could be great for netflix in terms of Public Relations at the same time they spent half a billion dollars on seinfeld after they said it was no big deal they lost the office and friends. Do you wonder if people wonder what bank theyre getting for their buck thats a question weve had increasing costs of content. We expect well continue to see them spending more on content. Thats how the netflix flywheel is meant to work is that they add new subscribers and theyre able to Fund Additional new content. At some point youre at a maintenance level of spend you have enough to attract and retain most of your subscribers. To the extent additional competing services are coming out there will be increased content spend. At the very least you can say no one has a better idea than netflix. Appreciate your time. Thank you. When we come back, did we just witness the death of wall street commissions we will talk about online brokerages race to zero with aynk analyst mike mayo st tuned, you are watching squawk box on cnbc 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. [upbeat action music] pilot were going to be on the tarmac for another 45 minutes or so. Welcome back to squawk box on cnbc live from the Nasdaq Market site in times square. Heres some stories investors will be talking about. Mortgage applications jumped 8. 1 last week according to new figures. The increase was led by a surge in refinancing activity as the average 30year Mortgage Rate dipped to 3. 99 . Google is releasing its updated privacy tools for its youtube and google map services. The new tools will let youtube users set their search and viewing histories to automatically dleet after a certain period of time google maps will add an incognito mode movements wont be recorded while it is engaged. Trying to figure out why i definitely need that what would be the reason i wasnt listening to what you said. Nothing new wont be the first and last time. It says that your google map history would be deleted. Well, if youre going places you dont want people to know youre going and you dont want them tracking you. Patterns. Somebody could sort of privacy right try to sell you something. Figure out your habits. Obviously you dont care. No. No, i dont. I can tell you as a journalist, people sometimes say you dont want your places tracked because people will figure out who your sources are. Thats one of the complaints lodged against google tracking things. If google maps said i travel 60 miles in 32 minutes. Thats my concern clearly youre driving above the speed limit. Right amazon is advancing plans for a new chain of Grocery Stores according to the wall street journal. Amazon, as you know, already owns whole foods it plans to open up in los angeles, chicago, and philadelphia reuben you know, secret to a good marriage progressive loss of hearing exactly thats why we work well together big announcement in the world of retail this morning, rue gilt groupe are teaming up on a new venture. It could provide a roadmap as the industry continues to change joining us with the news and an exclusive interview is Michael Reuben executive chairman of rue gilt groupe thank you for coming. Thanks for having us. This catches a lot of attention. What you are doing is new and unique i was surprised to see what happened what led you to this point if you look at our outlet business, were the leader in the physical world our yet lets, we have around 90 in the world they do about 25 billion of gross merchandise value in terms of sales, so we always felt like the there is the next evolution of having our Online Business as well as our physical world kind of integrate. We started in beta in march, which is allowing our brands and our consumers to tap into the physical world and our retail. And i thought michael would be a good partner in moving that along. So its like brands like saks fifth avenue, off fifth. Exactly if you look at woodbury common in upstate new york, that does a billion dollars in volume. And our shoppers cant necessarily go there every week or every month so we created essentially an ecommerce platform to allow them to visit our site during, you know, times when they cant make that travel actually, we have an identical Business Plan to launch an Online Outdoor marketplace. We acquired gilt and we put it on hold. When david and i got together and david told me his vision, i told him our vision, they were identical. Then you look and say and take the leader in outlet malls with 20 plus billion in gmv, spending 100 million plus in advertising and 2 billion plus in shop visits and take the leader in online marketing, putting them together was the best strategy. We think this is a multibillion, maybe 10 billion plus opportunity to build really the best Online Outlet marketplace for consumers thats a brand right experience we thought doing it together would give us the best chance to build why do brands want to go through you . They want to go direct to consumer. We look at this as direct to consumer we look at them as the best channel and if they can list their excess market price, theres Nothing Better than this we want to have a brand right experience think of whats happening in amazon and ebay but in the most brand right experience and then do it on a scale basis where you can drive them a significant portion of their volume. Thats something that they really want. The biggest thing were hearing from brands is make this as big as possible in a brand right way. Yeah. If you look at the successful retailers, they have the bricks and mortar and they have the online and they create the omni channel. Where were the largest real estate landowner in the world. For us to have the physical presence, do the same kind of Commerce Online and integrate is is kind of what were replicating. Our brands trust us. I mean, were essentially the largest landlord for most of the best brands in the world our Consumers Trust us with our Premium Outlet portfolio and, you know,together i think we can explode this and michaels team at rue and gilt, you know, we thought a Great Partnership in terms of really exponentially growing that as opposed to us building on our own and they have a profit ablg company, which is unique in the ecommerce world. Thats what we do day to day. We have 700,000 employees who wake up and go to bed obsessed with how to deliver for employees. We are adding this rue business. Its a large opportunity its a 200 billion industry of offpriced online apparel a small share of thats pretty meaningful. This comes at a time when the retail part of the business, bricks and mortar part of the business is struggling we just heard about forever 21, seventh largest tenant going into bankruptcy. What are you doing were trying to help our retailers kind of weather the storm and go through the various restructuring. Forever 21 actually is an unbelievable story immigrant started this business from nothing and grew it to be very successful and i think they got side tracked through a lot of their international growth. I think if they go back to the basics theres a role there that they can play with respect to the consumer you know, but the reality is if you look as an example, when we went public in 1993, ive been the ceo for 25 years, one of the few that, you know, have seen all sorts of storms, our top ten tenants that existed in 93 are no longer here if its Good Real Estate and a Good Management team that has the capital to reinvest in your product, you can you can weather the storm. Now it is a little there is a little bit of rain be and wind coming, but weve seen it before and our company has the capacity financially to continue to prosper. As an example, since weve been public weve paid 30 billion worth of dividends out to our shareholders we are a cash flow machine were inventing reinventing our business, mixed use properties, entertainment, health and wellness and i think with michaels help and his teams help were creating our fifth platform direct to consumer. On the forever 21, does that bankruptcy let other tenants in the malls renegotiate their deals . Is that true or not . No. No i might get a phone call or two but but its not out there. You get those with or without that its always all our fault. When you support the retailers i look at this initiative as a great example. This is going to help the retailers have more successful businesses the more demand we can send, the more profitable they will be if we can build a multibillion dollar business, thats the best thing we can do. Whats been proven and everyone knows this, a customer that shops online and offline are your best customers. We have 3578 Million Construction to use the database its only going to support the merchants. How much is the nfl business up its been great. 25 more. We were up 33 yesterday. Woke up at 6 00, looked at the numbers. They have been terrific. Nfl has been strong, fanatics is strong. Congratulations thank you for joining us. Thanks for having us. What tech is going in. A report says bottom line things are looking up if youre an investor. Stay tuned youre watching squawk box on cnbc under an hour now until the owning hour of wall street dom chu joins us my favorite part of every show is this dom chu thing. I dont know why, dom. Are you just telling me that to make kneel bme feel that or i want to make sure i do it for all you guys you, beckbecky, andrew, mike. Thank you very much some analysts are viewing the race to zero commissions as a negative and to that effect well start with shares of Charles Schwab down 2. 5 it kicked off a broker dealer beatdown and it gets cut to under weight from over weight. The target price goes to 34 from 48 next up we have shares of Td Ameritrade which is down another 3. 5 over half a million shares premarket. Following up on the 26 perts percent decline. It was a prior over weight and to round out the big three, etrade financial it follows yesterdays 16 drop. Is that an under wait from an overwait it goes from 31 from 56. The reason for the downgrades, all the same impact from zero commissions and the industry and potential for earnings mutt at this pointle that gets downgraded there was a positive from Credit Suisse it lowered from 49 to 55 they prefer schwab and lpl financial. Back over to you guys. Dom, thank you very much. New predictions on the outsides impact joining us is mike mayo. Managing director and Large Cap Bank analyst just to start off though in terms of the retail, does it have an effect or reflective on how its tougher to charge for what you used to charge for . Theres no way to sugar coat the impact of zero commissions on the ebrokers. Having said that, when you look at the banking space, its not material and its not the way banks are doing business thats kind of a 20th century Business Model the 21 t 1st century business ml for all banks is to have a relationship, have a Financial Plan and have products and charge fees. It highlights the declining Revenue Growth and financial industry as a whole. Youre reducing the frictional cost of finance. Thats a good thing for consumers. What it means for the Banking Industry, revenues this decade should grow the slowest in 80 years, 80 years if youre having slower Revenue Growth, what do you need to do you need to control expenses the way you do that is with technology were about to enter the growing sector of bank and technology. Banks have no choice banks are spending 150 billion a year on technology so they better get already in there trying to transform them. But they better get the results. Last 25 years has not really worged. Yeah. Scale has not been better scale now is better and the biggest banks. Youre now seeing that goliath is winning when you look ahead, i mean, right now you see the biggest decline in branches in history biggest decline in employees in history. Looking ahead this decade we think there will be a reduction of 200,000 jobs in the Banking Industry and the you look at it, we worked six months on this project, we dealt with nine senior tech analysts at Wells Fargo Securities in the Research Department we went to the brain trust and we dug deep. And you said, how much are you going to save in technology . And data centers and telecom and software you know where the biggest savings are, due to tech, nontech. Employees, employee costs are half of bank expenses. The main lever that banks have is to control costs and do that with zbleth technology. Is it a cost thing. Pay pal, square, stripe, talk about the nonbank lending that goes on, it seems like the market is suggesting they have been sidelined, the big banks, is that true how can tech fix that . Wait a minute the banks are not sidelined. Look at bank america, Bank Americas retention of their preferred customers is 99 retention of customers in the Banking Industry is at the lowest level since at least the early part of last decade. What youre seeing now, here is a concept, this is different than those Online Brokers that youre talking about, the idea of im going to go to this financial institution, because they charge me the lowest rate on one trade, no, were talking about, you know, lifetime customers, customers for life, and the way the largest banks can do that, you get them young, you have Digital Banking relationships, you have branches, you have advice, and youre seeing that in the numbers today. So you might not see it in the topline and absolute terms, but youre seeing it because you retain those customers and thats why even without much Revenue Growth, you still can see returns go higher, due to improving efficiency, thats enabled by technology. This is fantastic. It is not easy this is the biggest capital for labor swap in the history of u. S. Banking so all those you have been around couple of decades ago, late 90s, tech bubble, and that was going to transform banking, it didnt in the ways that everybody expected efficiency did not improve because of bureaucracy but now technology is helping us to serve customers and banks run their operations from an investors perspective, what is the takeaway is that, look, i see pfizer stock go up almost every day and thats a seller of Technology Services to financial institutions, but in terms of banks themselves, you say, take comfort in the fact that margins are going to get better and forge digital relationships with customers . How does it work this is the time to buy bank stocks century to date, bank stocks have underperformed by 70 percentage points. And, by the way, they underperformed more this decade than last decade during the financial crisis but now looking ahead, banks should have record efficiency, the best pretax margin in 50 years, the highest returns since precrisis and thats driven by efficiency banks are trading as if it is, like, going to be a recession tomorrow so if there is a recession, youre pretty much pricing that in, meanwhile, you have this powerful structural change taking place with technology and banks. If youre a bank investor, you have to be, you know, a tech investor, bank analyst, you also have to be, you know, a tech analyst, which im calling myself now a tech analyst. So anointing yourself a tech there you go. Dont i wanted to come with like a steel analyst or im not sure about a bank analyst. You should switch. Im still bank analyst. By the way, since youre here, joe, im going to induct myself into the world of technology analyst. Are you ready for my induction ceremony that tie is no great loss go ahead were going to go ahead and will you help him do that i am now leaving the world watch the microphone wires. This is the end of my days as just a bank analyst, this is not as easy as it looks. But we will get this done. Mike, you got to help. There we go we got it. This is goodbye to solely bank analyst, i am now a part time tech analyst, im joining the ranks of the Silicon Valley. Because if youre a banker, you must be at least a part Time Technology manager those shirts are too good, you got to you didnt want it . I asked my wife what is the ugliest tie in my closet and sh picked this. She did yeah. There you go. Congratulation on your induction. There you go. Down to the New York Stock Exchange jim cramer joins us now. The manufacturing data, remember all the data points that you were looking at and talking to people about hes worried about his tie. Talking about things that maybe the fed didnt see, do you think this is one of the things that maybe they missed or is this some people would like to blame the trade wars. Other people like the president is ready to blame powell for being too tight and dollar being too strong a bit of both, i guess. I think thats definitely true i think that the gm strike not helping. The fact that our biggest exporter boeing is basically halted its number one seller look, there is a is there a slowdown in world commerce, absolutely have we hurt the chinese definitely is hurt the chinese hurt the economy around the world absolutely i think that it would be ridiculous to think you could have a trade war, not hurt the chinese, and expect that things would be okay. But i continue to believe look, we had you had that Simon Properties and you had rubin on Michael Rubin. Rubins numbers, hes up 30 , that is a very big company that he has thats domestic sales. And we tend to overlook a guy comes on, Simon Properties, supposed to be a bad group, hes talking pretty bullish so the domestic, i think, is more a reflect of what Michael Rubin might be thinking than u. S. Steel or alcoa. Yeah. We cant just have a guy on like that with a very big company and say, you know what, the heck with him, im very worried about what is happening with coal and steel. Think rubin represents the American Economy now. More so than that the guy is no longer, like, small time guy are things better than they were when you were really worried about rates being too high, jim . Well, i think that look, i do think that when you when we listen to what phil lebeau will be talking about, autos have taken a big step down, but there is no doubt about it that the rates have helped housing. Lennar is the biggest and the numbers are really good. But i also think, joe, if you have something good right now, nobody cares and when you see that kind of negativity, you got to start thinking about what to buy, not what to sell people just hate they turn on the market big time. And iny th think you got to way look, dont hate, like okay. But not juul i liked all your tweets. Juul im more in favor of jewel than juul. All right youre up so early, tweeting thanks well see you in a couple of minutes. Stay tuned squawk box will be right back. Turn on my tv and boom, its got all my favorite shows right there. I wish my Trading Platform worked like that. Well have you tried thinkorswim . This is totally customizable, so you focus only on what you want. Okay, its got screeners and watchlists. And you can even see how your predictions might affect the value of the stocks youre interested in. Now this is what im talking about. Yeah, itll free up more time for your. Uh, true crime shows . British baking competitions. Hm. Didnt peg you for a crumpet guy. Focus on what matters to you with thinkorswim. [upbeat action music] pilot were going to be on the tarmac for another 45 minutes or so. Final check on the markets before we hand things off to squawk on the street. Futures weaker all morning long. Dow stuck down 180 through most of the session s p futures are down by about 20 points the nasdaq is off by 61. Dont know what the big change is going to be but we get ism nonmanufacturing tomorrow mike, thanks for being here. Well see you back here tomorrow right now it is time for squawk on the street. Ill send an sos to the world ill send an sos to the world i hope someone gets my i hope someone gets my good wednesday morning welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber. Europe and asia followed suit overnight, bonds testing resistance once again, ten year 163, adp in line at 135,000. Road map begins with the manufacturing slump, adding to