Transcripts For CNBC Squawk On The Street 20240713

Be off the table stocks set to open lower. Underperforming, a status check on the now not so hot ipo market. And the nbas china headache, one managers tweet about hong kong sparking a business backlash and political firestorm. The dow and the s p now in the midst of a threeweek loss, despite a friday rally, which was the best one day performance since august were set for a lower open china reportedly looking for a limited trade agreement when talks begin with the u. S. Later this week. This bloomberg piece, guys, talking about how dont expect massive agreement this week, but who knows. Still early. Well, conflicting reports out of i felt the Administration Last week. On friday, larry kudlow, chief economic adviser, said, there could be some good things. But if you look at the agenda of what the president wants, it is the exact opposite of what the chinese said to bloomberg. President s hoping to see an end to the deal, intellectual property, hoping to see the end of the technology transfers, hoping to see the end of the fentanyl deluge, hoping no more of our businesses are targeted, hoping there is no more subsidized, and cybertheft if the chinese dont agree to that framework, that means they default to buying something. That is not good enough for the president. This is why were now hearing about what theyre calling sequencing, right . Stage one, you buy some ag stage two, you commit to some ip and then finally the final sequence would be a rollback of tariffs. Right i know that, say, peter navarro, that is antithetical to everything he believes in, that the notion that the chinese should get anything from buying ag is just foolhardy theyll buy pork when they dont want pork that has swine flu what they want is a rollback of the 2025 plan of domination. And thats not what the chinese want to do so i think it is status quo, when you get ready for the next round of tariffs. When does the president make his move as so many expect to just get something done because it will be beneficial to the reelection effort well in terms of reinvigorating the economy and low rates as well and conceivably that could present a real tailwind. I think that conceivably, what you would do if youre a strategist and didnt care about anything other than the cynical nature of winning, okay, cynical, but that you would say, listen, Elizabeth Warren doesnt believe in talks we could get something done. Remember, precondition to sitting down with the chinese, shes demanding that they go for the paris accords. She has an interesting point about religious freedom of speech well, you know what, on the one hand, we have the general manager of the Houston Rockets, religious freedom of speech, right . Hong kong . And the other hand we have general corporate religious sacrifice on the notion of the dollar thats the difference between president warren and maybe a President Trump. Funny how you talk about that starting to get a lot of circulation. Im reading an rbc this morning, four thoughts on the implications for the u. S. Equity market if Elizabeth Warren wins the white house in 2020. Warming up to it wont be quite as bad as everybody thinks ive been warming up to that ive been saying this for weeks, you know you got to look at her. Growing popularity of esgs, investment approach, utilities and reits might be in favor. Maybe better off than shes not in favor of small caps. Not necessarily but initial assessment, small caps may have less direct policy risk than large caps thats very true. And then also they point out, of course, that over time, stock markets go up. I wrote that piece. I wrote that piece just watch mad money. This guy watches mad money. Hes paid for watching mad money. The best historical returns when democrats control the white house and one of the chambers of congress. There you go. What can i say thats more reason to buy the market theyre buying the nasdaq off that who is that strategist let me find that for you. Top flight. And the election, rbc capital markets, lori, it is lori. On all the time correctly very good yes cautious on the market. Very good le wit lwell, look, i think i dont Start Talking about the dichotomy of warren versus trump, were not helping the biden in South Carolina and wisconsin. All right, well, well stay on that. Biden is for status quo. Apparently look, lets say biden is for what obama was for then i think that you could have a market which says there will be a deal. Right . Fight, obama, chinese. So the answer to the question of whether trump at some point will make any deal, because it will help i dont think its true no i think there is thats a fairly im going to give you a shocker, i think that there are principles involved. Dont you make that face it is a podcast. What face did i make . You made that nonpodcast face david, i have to keep emphasizing there is a podcast okay look, i think no kidding around, i do not think that the president is if the chinese had said everything is on the table, i would say, you know what, it is possible something could happen they came out this weekend and said not what are you going to do basically saying, listen, this stuff is not on the table. How can there be a comprehensive trade agreement . And now hong kong just awful weekend in hong kong and now there is talk about what options may go to next, whether it is curfews, forced detentions, not a good situation at all no. And commercial saw this, commercial Property Market had the worst month since it was handed over back to china as a british colony in 97. We talk about how we meaning the Mainstream Media talk a lot about how the chinese would be losing face if they cave to President Trump. Dont they lose face every sunday look at we have this video of the police lobbing tear gas and then a video of people picking up the tear gas and throwing it back at the police is that loss of face or is that, like, business as usual . Thats face loss thats loss of face. Okay. It may be. May be . Chinese military has yet to move in. What would that look like reports say the pla raised a warning flag for the first time. Yes, a yellow flag of some kind. Pla looks like chumps wow. Theyre going to revoke your contract to tour the country listen, was going to be a nets season Ticket Holder. I love the nets. I like the nets. I got the nets i like the nets i hope jo tsai will let me i used to be a season Ticket Holder will he let me come back as a fair weather fan, though. You know joe tsai cant you get him on the show . Ill try. Sure, ill try i think you have a better shot than anyone else in the media. I probably will fail, but ill try, thank you. Im telling my wife to get season tickets and then hell come on. The intersection of china and basketball is a big story. Ipo is another big story Many Companies have seen their stocks slide after their debuts. Overall, companies that have gone public are trading about 5 above their ipo price. Thats according to dl logic the s p by comparison is up 18 this year. Jim, that did not stop at least four analysts from initiating smile direct buyer outperform. How painful is that what do they do if the stock is well under water they have to come out with an underweight. There is a mal inclusion market, thats jpmorgans comment. And citi ups uber to a buy. 45, but see a positive shift in sentiment. I think that there is a moment in the costco quarter where costco, this is bear with me mr. Galante, the cfo, talks about how freight prices have come down year over year, but expects them to go lower thats uber freight at work. Uber freight is flooded with new drivers. There had been a Driver Shortage uber freight is allowing new people to come in. This is what happens with uber cabs there is uber cabs everywhere, lowers the price uber is doing the right thing. That writeup says it wont be this quarter, but next quarter i thought it is important because the stock is down a lot. You have to just say no to ipo thats my thats your new thing just say no to ipo. Just say no to ipo. Period. We cant handle we being the market, cant handle another ipo. In order to buy an ipo, you have to sell an ipo most money is indexed. Remember they got rid of individual stock pickers because they always underperform. I remember when that happened. When you only if you bring a deal if you bring airbnb, dont you have to sell your slack to get airbnb how is peloton doing were not talking about large amounts of money still what can we agree on . What could be good the jets suck, you can say suck because Elizabeth Warren said it and Mark Zuckerberg said it. I cant disagree with that statement. Jets suck. Some other guy youre allowed to senator warren who said it is okay there is a guy named faulk who had nine sacks hes in concussion protocol from a psychiatric perspective. Given ubers performance, drama around wework. Now masa son gives an interview saying the results have a long way to go and that makes me embarrassed and impatient. I used to envy the scale of the markets, but now you see red hot Growth Companies coming out of small markets like Southeast Asia there is no excuse for entrepreneurs in japan, myself included embarrassed and frustrated. He falls in love with founders when you talk to him and or people around him, he loves the vision, the passion. The question now will be, okay, but do you build enough guardrails around some of them, given how much capital youre actually giving them and the case of wework is a perfect example of that. Mr. Newman, a charismatic individual with a real vision and certainly he did sway masa, his side, very big significant way. The question is could there have been a way to sort of help mr. Neumann position the Company Properly for a Public Offering for things that might not have been maybe put a woman on the board of directors, i can think of a lot of other ones Voting Rights maybe dont be 201 in your Voting Rights. Billion naaires are under a l attack here. Im worried about the billionaire cohort, under siege. Does it take sleep away from you. David tepper continues to have business. Am i worried about the billionaires like lenin was with the 3 1 2 hours to 2 hours, an hour and a half will be spent worrying between the wealth tax and people favor an even modest wealth tax i think it is going to be this is an interesting moment, tsai is a billionaire. Under attack masa son joe tsai. Billionaires under attack. This is the part of the show why we try sarcasm, i assume is that what were doing here . Were a podcast. It doesnt come across this well. Youre right. There is billions. There is billionaires. I dont think any group is suffering as much as the billionaire. Mark zuckerberg said, im giving away all my stock to distinguish about how the billionaires, maybe the billionaires have too much we have a decade of Central Banks inflating assets at the expense of labor so capital has one out over labor. Thats what Elizabeth Warren is trying to reverse i think thats it is a 30year, 40year plan. The question is how do you do it is it tax wouldnt there be trials . Raise Capital Gains taxes i think Capital Gains, it is a lot easier equivalent between passive income and actual worth. Someone who gained a lot in Capital Gains, i can tell you i didnt have to do anything versus ordinary income where i have to work hard. It is antithetical i know larry kudlow preached low Capital Gains. Theyre in charge, david low Capital Gains people are in charge now when we come back, well get cramers mad dash. A lot to get to this week as we count down to the opening bell ge and additional calls on etrade, nvidia, carnival, nds d re dont go away. 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. That could allow hackers devices into your home. Ys and like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Always great to get the first mad dash of the week under way. Alterex, why this is really important. This is key to this market this has been one of the companies, a way to be able to do melding Data Analytics without using excel spreadsheets older people, like me, would use excel spreadsheet. Alteryx eliminates that and does it faster. This is one of the Fastest Growing companies, they have what is called a land and expand strategy, something that all the remember, growth at scale, land and expand, you know all these these are called buzzwords. Yes. This has a primo buzzword that best of all is sass it is a sass company, software and service, thats the original model and will carry through if you want to get rid of all of your excel and do it much cheaper and faster, you bring in alteryx. Is this just the reason i brought it up, every single one of these looks like it could be twilio, could be talking about service now. Workday, david we would be talking about any one of these sales force, we would be talking about. You get me sales force has been more just like that well, but, you know, well, im not going to disagree with that workday is like that surface now certainly has been only one that really avoided that is coukupa if this turns, youll see a turn in what i call the cloud kings including vm ware and the biggest of all, adobe. Which has been stalled here. Adobe has been stalled. Such a good company i like adobe, right here, right now. Right here, right now alteryx it is not alteryx. It is alteryx. Like alteryx. It is actually the axis, yx. Remember the axis when you were alteryx. So much to learn here. I try it throw a lot at you. Opening bell in a few minutes. Dont go anywhere. Ah come on lets hide in the attic. No. In the basement. Why cant we just get in the running car . Are you crazy . Lets hide behind the chainsaws. Smart. Yeah. Ok. If youre in a horror movie, you make poor decisions. Its what you do. This was a good idea. Shhhh. Im being quiet. Youre breathing on me if you want to save fifteen percent or more on car insurance, you switch to geico. Its what you do. Lets go to the cemetery but shouldnt somebody this is be listening . Pression. So. Lets talk. Were built for hearing whats important to you, one to one. Edward jones. Its time for investing to feel individual. Big week on tap. A bunch of fed speak well get plenty of data first trickle of q3 earnings will come in for now, future down 74 on the dow. Were back in a minute obvious. Sometimes, they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in five minutes on this monday as we kick off a busy week, of course, on friday, jim, filled that gap from wednesday. Right. An interesting week Morgan Stanley today, reiterates this is an environment that is not satisfying the bulls or the bears. True, how far are we through the correction we dont know. The nasdaq was up. Nasdaq is separating itself from the rest of the market in part because apple has been so strong and some of the sectors have been so strong i have to tell you that i think that last week one of the seminole moments we dont talk about is the brokerage houses cut the commissions. And i dont think it is going to mean anything to the individual investor the individual investor continues to leave the building. No matter what, even with no commish. No one seems to care i am just in shock how little interest there is in this market ubs takes etrade up to buy, even though they did cut Td Ameritrade the stock has come way down. Loss of market cap was astounding would not have anticipated i dont know on one day, wow that was amazing. One headline, one day ive seen a lot of advertising around it. We forced this, there is a lot more coming from us. I feel that this market is about disruption still it is still about whether it be alteryx, disruption of the excel market, robin hood, we dont talk about enough, disruption of what were three companies that were doing quite well, commission, we have got drupgs, disruption, i dont know if youve been following what pay pal has been doing disrupting the model im seeing for credit cards, disrupting plastic. Just rolling disruption. Uber disrupting i dont think we can this isnt a year where we look back and say Silicon Valley disrupted so Many Industries others argue it is a mixed record this year, vaping, bitcoin. Even autonomous, right will take a lot longer than autonomous, now talking 2025. I think that one accident, terrible accident did occur, autonomous in arizona, really set back autonomous very big almost everything has to be modeled. It is interesting what were willing to accept from human error, not willing to accept from machine error. Good point. Were willing to accept that it is no one is in favor of drunk driving. But if you can switch the car to automatic what about the texting and driving, that is, by the way, an absolute epidemic. All of us drive, how often do you pass somebody, the whole time. The car should be shut down they have the ability to do that dan hesse, former head of sprint, they had the coalition of cell phones had this ability to shut a car if youre going to text but that didnt happen the data from around the world continues to be rough in Europe Germany factory orders, year on year, down 67. Domestic orders down 26 month on month. They say this is no longer about international trade. How can merkel not do something to expand the economy. They have a bunch of surplus how is it possible you can have a Major Company not trying to expand its own economy how is that possible negative rates too. I dont know by the way, piece out today on how lenders are starting to bring Retail Investors into the negative charge them, right . Yes deposit over a certain number over 100,000, i think youll start paying can you imagine that no. You might need to who knows how long, we have 3 cds out five years, a few months really great it ebbs and flows. People presume, they take a trend line, presume it will go negative thats what they did at gold, with gold, a many ago, trend line going higher. Germany generates surplus they clearly could induce deficitspending to try to induce the economy what do you do there you can build things. You can build a new set of auto bons they got a pretty nice one. Maybe come over here and build ours we need an infrastructure maybe have the germans come here and build we have a lot of demand we could easily do it. Our company could easily do it. We have room we do a 500 billion make America Great buy. I think it is infrastructure week. Is it you make that up there is two meteor showers this week what does that have to do with infrastructure . Nothing at all. Lets get the opening bell here on this monday. S p 500 at the bottom of the screen at the big board, the Golden State Warriors. Get out. Jpmorgan chase, celebrating the opening of chase center, the new home of the warriors in San Francisco. Well talk with rick, the coo and president of the team the next hour. At the nasdaq, a provider of financials to middle market companies. Front row, i paid full price, thats the best Customer Service ive ever seen the warriors. It is an amazing outfit. Marc benioff has front row seats under the basket. I paid for my tickets in, then i got tickets, the whole went to the eagles, thilltopper game this weekend where we killed the hill toppers. Oh, that was the jets. Keep making jets jokes. How about the Solar Companies with the ruling against china . The government has got a lot of things behind the scenes that are happening. Like the deregulation, energy business, which is making it so that we just cant seem to make any progress in energy, there is just too much. The government is so pro everything but conoco was able to raise the dividend, which i thought was surprising thats true nvidia, going to lead the s p at the get go rbc, target to 217. Gaming, remember this is a big position on my if you go back over what jensen huang said to me would happen, hes saying, look, we have data center, hiccup, data center is back. Gaming, needs ive seen his game ad. Couldnt tell whether it was real or whether it was gaming. Thats how good these drawings are. If youre disney, you have no choice but to use nvidia chips if youre take 2 interactive, their developers use nvidia chips. Look, i think lisa does a great job. She competes you got to use nvidia. That stock is going higher nvidia. I see it right there. It is going higher it is a true statement up 2. 5 . And you keep talking about that mellanox deal. That deal is at the crossroads of the whole chinese mellanox is the outside the edge computing. It fits directly with what nvidia wants to do jensen huang says that deal will get done by years end i think it is all up to the trade talks. The wholistic trade talks that are no more. Are you saying no more . You cant get the president wants a comprehensive deal, david. The chinese came out this weekend and said they dont want a comprehensive deal how can you get a deal i have no ability to predict any of this stuff. And i dont know you do either warren is so anticorporate versus the president , and the president remember, multinationals thats who both of them are focused on seems to me they talk to president s people kind of a lot of similarities there in terms of what they do interesting point a aramark, raising money to take a very large stake in aramark. For a while, ive been hearing he was trying to do more than just take a 9. 8 stake and had potentially some other investors with him that didnt come to fruition but he does own hes the largest shareholder and now hes he replaced the board. Replaced the board. The board has been reconstituted. Effective immediately. I thought the board of directors is now susan cameron, karen king, art winkleback joined the board immediately, greg creed. And halal himself will become vice chairman. Very big company. They provide food service for many stadiums. They provide food service for us yes one of philadelphias biggest companies. I remember when it was formed. This just kind of happened it wasnt took over the company. Yeah. He got what he wanted to a certain extent in terms of at least gaining a lot of control with 9. 8 stake. Not actually buying the entire company. Well see what they choose to do in terms of a plan here. Im so glad you brought it up well keep an eye on activism on the weeks ahead we mentioned two other big fights or potential fights, marathon petroleum, elliott, john pike leading that fight for them, and what the company will choose to do. We heard from mr. Henninger we havent heard from mr. Henninger. Emerson came out with their plan to jump ahead of db shaw, pushing them to do a number of Different Things both of those in process well be following both closely. Aramark already took place. Marathon is doing okay. Emerson is linked to china, i dont know how much more people think they could do. Aramark is sudden. They sent me the release this morning, like, holy cow, this is a i dont want to call it a well run philadelphia company. And then, boom, just wow. Right there. New ceo. Remember what wasnt like they tossed glad you brought that up. Thats a big deal. Two big stories in gm where the uaw says talks took a turn for the worse. Stocks down 1 still talking, day 22 of the strike ge, jim, as they try to announce plans to reduce their pension liability by up to 8 billion. Just to be candid about this, when you get the ge it is like tusas note last week about aircraft, it is very hard. I spent i got the note around 6 00 a. M you spent like half an hour analyzing what theyre doing with the pension plan. You realize what theyre basically doing is what other companies are doing, making it so there will not be more contributions. It does cut down the pension risk, but it is remember, people want they want revenue and earnings growth. It is nice that theyre doing this ge for shareholders, not that nice for workers. Larry culp does recognize this is not the year that anything is going to happen. Next year may not be the year either longterm turn arounds, long being the operative word. The damage that was done here was just inconceivable how much damage along every he has to check off every box. Whether it be pension, longterm care, turbines not turbans, it is turbines. Youre selling a lot of stuff into china too. And boeing. And the market, sort of boeing. Gm news is important because as gm drags on, 45 more than 40,000 employees who are making basically 200 a week, and then you have boeing not being able to generate any real return. These are the two you try to figure out bulk employers in this country, boeing, gm are about as big as they get going to slow down gdp. Because the strike, which were only making 200 bucks a year and thats what the union is giving them now and boeing, not as many people because of the the max. The max problems. I just continue to think that this is market where there is very few winners, but there is just a lot of companies doing nothing. Stock is doing nothing we see walmart and not amazon even walmart, target, costco, home depot. Speaking of walmart, announcing today an exclusive deal with roku to create a sound bar and wireless subwoofer, exclusive to walmart, both products on the shelves in the coming weeks for 129 each. Roku up 2 is that against amazon . Amazon fire stick . Roku and amazon, remember, there is a world coming down between walmart and amazon walmart does not use Amazon Web Services no, they are key competitors. We should do a piece about disney is not going to take netflix. Theyre competitors. But we havent done enough real thought about that. We havent . No, it is like adobe versus sales force. Adobe is lined up with microsoft. Satya is lined up with there are really big schisms even two years ago, no one thought about these things people willing to fund the enemy by using Amazon Web Services, it is so cheap. No longer. No longer got to pick your appropriate partner, so to speak these are the biggest stories out there. Theyre not talking necessarily about look, everyone is talking about warren and whether she would break up companies thats the biggest fear for a lot of people out there. Shes not allayed that fear, from what i can tell. We refer to it as though the president would be in a position to do that well, last i still like to believe is there are actual laws, you have to make a case. You have to win in order to do that president cant just decree, even this one. I can play your game. Two can play your game speaking of see what it is like. It is frustrating. Todays first monday in october. U. S. Supreme Court Declines to hear cases involving dominos, amazon, a wage dispute, apple, turning away university of wisconsin appeal on a patent lawsuit. And dominos is that Company Reports tomorrow. Yeah, as we one of the few q3 numbers we get this week with levis and delta. Levis, delta i expect a weak quarter. Dominos is important because of third party there is another disruption the door dash plays with wampan is the term we used to use by the way, wendys got a downgrade, wendys today by c cow cowan, ahead of an important Analyst Meeting on friday. Thats hear sy. Not first one that centered on worries of breakfast plans in 2020 the second one ive seen. Breakfast and brexit. Two things underrated. How about Carnival Cruise to hold and go from 68 to 43 on bookings for next year stock is almost at a fiveyear low. Weather hasnt really cooperated we used to think we thought millennials like cruises i think millennials are the brain of a may fly, they like cruises for three quarters because of instagram. You think it is a demographic story . Yes, i do Royal Caribbean has done well and norwegian the cruise business and the rv business have been something the millennials liked for and then just kind of moved on. Millennials think they just theyre another disruptive force. They like you and then hate you. Reuters story saying theyre not getting traction on the new bike no sign that the demographics are going to reverse on that appeal of the motorcycle this day. It has gone down. How do millennials feel about netflix these days i think theyre not in favor as they used to be too many offerings. People track global downloads and apparently there has been a slowdown of global downloads at a similar level that we saw through the end of september which was a slowdown from the mid to high teens growth in both july and august. Thats got some analysts saying, maybe the Fourth Quarter is not going to be you go you guys go on your i dont know how many how many different offerings, there is hulu and amazon prime and amazon video and netflix a ton. Espn there is eight there is directv on we. Yes, direct to consumer. Direct to consumer on we. There is too many things im watching line of duty, a british offering i get it on amazon they charge me every month every week get charged. I dont care youre paying additionally for it. Yes via the amazon. Yes, im paying additional. I think why do i feel like im getting an apple bill every 30 seconds now delete, delete, delete, delete 2. 99, just nick at you they got 3. 99, 5. 99. They have to add up eventually, right . It does it does. At least joker demonstrates were still going to the movies. I couldnt believe it. Biggest october opening ever at 93. 5 million. Only costs 60 to make. I was thinking that could help at ts debt load. What do you think . No. No i think it helps, but doesnt help. You dont think 30 million i dont think so. A lot of money. They do they do. Interest rates are low and theyre still generating a decent amount of i like the stock. I think the stock represents value. At t. Yes elliott believes that too. Thank you may have differences on approach with current management. I think we have move on with my last word that at t is good at being the last word. All right with that, were down 123 to start this week. Lets get to bob pisani. Not a great start 3 to 1, declining to advancing stocks, a lot of this is trade related, the more cyclical names are weaker here. Semiconductors, still continuing to be flat, they started on the up side. Metals, mining, transports, transports had a terrible week last week. Dropped below 200 Day Moving Average there, not good for them industrials weak, energy, these are cyclical names were seeing on the weak side on terms of Market Trends and what is going on, dow and s p, down three straight weeks now. Thats a bit of an issue for them were also seeing the transports, financials, had a tough week last week worst week since august for both of those we saw rates drop. That didnt help we have been talking about the ipo market, thats down 15 off of its recent highs here in terms of where we are again, trade discussions going on, thats the most important thing. This weekend story, china might not agree to a complete big comprehensive trade deal has everybody talking. The 80 deal, a lot of traders have been calling it for months now. Here you have no industrial reform here, no agreement to stop subsidies to state owned firms. China buy agricultural products. You get some commitments, store a little vague on intellectual Property Rights and the most important thing for the markets, the belief the minimum be no additional tariffs or that they would roll back the tariffs. That, of course, either side of that would move the market positive or flattish thats going to be the key thing. Were still unresolved on where all of that might go trade is the dominant mover of the market this year you see this in the dispersion of the sector returns that we have seen. Look at the way i look at it, off the 52 week highs, not year to date, where they are from the 52 week highs. All defensive Stocks Holding up the consumer staples, utility, technology, thank heavens, Semiconductor Business on Growth Prospects continue to hold up. Thats the movers on the market. Look at whats furthest off of their 52 week highs, they all tend to be on the defensive side on the cyclical side materials, banks down 12 , energy down 27 . Keep a big eye on energy youll see a lot of tax laws selling around some of these energy stocks. Can talk about that a little bit later on and see whats going on with that here is what else is going on here important thing now is were going to see a lot of discussions about the ipo market and i know it seems like a little quiet now, we have too many ipos, we have some big ones coming up. Just today, we had announcement of bell ring brands will price in the next week this is a post cereal big active nutrition spinoff theyre going to go public in the next two weeks. 30 million shares, 16 this is not a nothing ipo. This is more than 500 million raise here so this is sort of the next big one coming up. And probably as i mentioned, sometimes next week, ipo, etf, we talked about this, it moved right in line with the top of the market, so here it was, in july, this top line is the ipo etf. You see this whole outperformance gap we have seen, and now you see how that, the last month, narrowed considerably were in line with the performance of the s p 500 for ipos and up to here, we were up 30 . So that market is definitely come down, and did coincide with the top of the market right at the end of july. Finally, big special guest coming up, halftime report, Charles Schwab, the man himself, new book out, book called invested, talks about his history, the developing Charles Schwab into an investment powerhouse, but were going to be talking about, of course, the zero commission move the company made recently, well talk about ipo, about whether investors are getting a better deal now than 40 years ago when he helped founded that very big company. Guys, back to you. Thanks, bob pisani. The nba and Houston Rockets trying to mend ties with china and the Business Community after the teams general manager tweeted support for protesters in hong kong the nba called that tweet regrettable. Joe tsai wrote in a Facebook Post that fans and the rest of chinas 1. 4 billion citizens viewed territorial integrity and sovereignty as nonnegotiable issues he everybody has an opinion on what the nba should do now. 500 Million People watch the games over there, they had just for game six they had 21 million chinese fans this is considered to be the home team, by very many, because of yao ming, important in basketball there at the same time, it is really amazing some people feel that they have sold out the people of hong kong on the altar of big money. Well, the nba has encouraged its players perhaps more than any other Sports League to speak openly we have seen a number of prominent nba stars talking about issues of the day here in the United States. So it is not that uncommon to expect that you could express your opinion, but in this case, the chinese, one tweet, the chinese come back hard what was morey tweeting about . Tweeting about free speech yes no support democracy, support protests how can everyone be so quick to denigrate a pro democracy speech who speaks so quickly to denigrate it nba well, chinese the owner of the team owner of the nets. Tilman fertitta is didnt he take it back. He said that morey does not speak for the rockets. Our country is founded upon the idea of free speech. And freedom. Or was it founded on the altar of big money in china . Which was it founded on . On the idea that we have a lot of fans in basketball in china i dont remember that being in the constitution. There is no amendment the First Amendment is pretty active. It is and typically we do as a National Government along with our executive speak out in favor of protest for democracy. Stand with hong kong, since when that is controversial well, how about when theres big money on the line . When youre doing a lot of business in china. Thats just great isnt that what this whole thing is about what are they supposed to do . Wrap it up maybe forego some revenue maybe say that its okay to take a hit . Maybe make less . Or do whatever youre a man massacre aiding as a dollar sign and youre saying that . Im 64. If i cant come out now, when can i ever come back when we come back, well get some troffrom golden state warrs ceo. Dont go away. Masquera val,n. Im off to college and im not gonna be around. Im worried about my parents retirement. Oh, dont worry. Voya helps them to and through retirement. Dealing with todays expenses. Like college. While helping plan, invest and protect for the future. So theyll be okay. Without me . Um. And when we knock out this wall imagine the closet space . Yes oh hey, son. Yeah, i think theyll be fine. Voya. Helping you to and through retirement. 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. So servicenow put your workflows immhm. Cloud, huh . Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Dow down about 100 points. Sapp back to 2,940 ahead of a very busy week more squawk on the street continues after a break. Can i find an Investment Firm that has a truly longterm view . It begins by being privately owned. With more than 85 years of experience over multiple market cycles. 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Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Jim, whats on mad tonight a big deal the other day and vlad is just killing it. Look at that going weve got him tonight. I cant believe it. See you tonight, jim. Were back in a moment good monday morning. Welcome to squawk on the street. Im carl here with morgan and david. Starting off with a little bit of selling dow is down 115 as we get set for a bunch of fedspeak. A little earnings. Obviously some china trade talks with the u. S. Thats exactly where our road map starts today china trade talks back on, but is a broad deal off the table . What investors should expect after a rough start to october. The nbas china controversy. Were going to talk with Golden State Warriors president rick weltz on the latest. And ge is cutting Pension Plans for 20,000 u. S. Workers. Well give you the details next. Big week ahead on the heels of the trade talks the dow and s p in the midst of a three week losing streak Steve Leishman joins us with whats going to be important. While markets seem to think bad news was good news when it came to jobs because it meant more fed rate cuts, wall street economists suggesting bad news, well, it may really be bad news. Hfb writes the data remain stint with an economy that has slowed significantly but not to the point of recession barclays over the weekend said slow down in employmentis likely to cause Household Spending to moderate optimists point to a high savings rate among consumers, consent wage growth overall to support their view that consumers will keep on spending and that will keep the u. S. From going into recession weve got a fabulous consumer so we havent seen any issuing with the consumer. The consumer is spending its probably going to be up i think 4 for christmas which will be a damn healthy number. Not so fast pessimists point to declining forecasts for growth which brings together all parts of the economy, not just the consumer our cnbc rapid update for the just completed Third Quarter just 1. 5 which i think is the low for our tracking on this the forecast for the q4 is a little stronger but still below two at 1. 9 a lot of speeches and date that this week that could impact the out look and economy tuesday we have the ppi and we have a speech by powell that well be monitoring and Charlie Evans from chicago, fed minutes on wednesday will give us an idea where the committee is. Cpi on thursday. Critical inflation number, now a new critical inflation number along with two fedspeakers suggest some strong divisions on that committee and well see if the data this week moves officials choser to the markets upbeat view or the pessimism of economists. Any color on repo or a Balance Sheet . All of that is prpt we ha weve had a lot of Public Comments and weve had a bunch of fed officials talk about it and we seem to be unclear is this some kind of systemic thing where most believe its more of a specific thing to trading in the market i think the minutes are more important for looking at how divided the committee is and how welling theyre going to be. We have a 71 , 72 probability of a fed rate cut for october. But im sorry, december is now below 40 at about 38 . Steve, great setup for the week ahead Steve Leishman our next guest describes this economic slowing as a, quote, semi recession chief u. S. Equity strategist good to see you. You say recession but your dashboard is pretty tame, right, in terms of recessionary signals. What do we have an inverted yield curve, ism below 50, but the employment picture, i mean, youre really parsing it to say we have an employment problem the firings continue to get lower. The hirings continue to be over 100,000. So its kind of worse than it was, but nowhere near enough to cause a broad base recession. So its contained you think. Its absolutely contained the problem with the industrial economy when it weakens, its impossible for us to visualize when does it stop. Is it simply going to soften more or do we kind of overextrapolate and assume well get a recession. I think investors sit on the sidelines with respect to the market ive been super bullish for the last five, six years i think investors hate deceleration this is going to feel a lot like 2015 when we were in this Global Industrial downturn. The market didnt like it. The second it ended, it took off. Speaking of being bullish for the last five or six years, i dont think your patience is not being tested, is it . No, it isnt. The problem with the industrial economy relative to the consumer economy is consumers are going to spend money regardless and the Industrial Companies never spent the money they received in the tax breaks i think thats the key component. They sat on their hands during last years move in terms of earnings and all the cash they should have spent. They used it on buybacks and increasing their dividends i think thats a key feature that i dont think enough people are talking about. Youve got almost 45 basis point spread between where 10 year treasuries are yielding and where the market is yielding i still dont think investors are focussed on Equity Income growth were still bullish longer term. Were not being bullish to be stubborn we still think that dollar denominated assets are the place to be in rotation back in the u. S. Stocks regardless of what happens over the course the next quarter lets face it, the majority of investors need a consensus theyve already priced industrial earnings recession. Theyve already priced in a democrat winning the next election people are already bearish i dont think people are poised for an upside surprise. Let me jump on something brian said we were never spending these breaks if you look at the slowdown in corporate spending on infrastructure, that happened way before Donald Trump Took Office the assumption that we have was everything was fine until we had this trade war and now the wheels are coming off. But if you look at the trend, this kind of looks like what was in place before. So is this an incremental head wind maybe. But i think that were way overplaying this as a risk to the market. Brian, id pushback on this notion of industrials not putting those tax cut dollars to work i mean, transportation companies, fedex, ups started plowing more money into their infrastructure i saw a similar thing happen with aerospace and definite companies. Does this feel like 2016 in terms of the industrial economy and if so what does that mean for how investors should be positioned in the market ill pushback on your comment because if you look at ups and fedex, their capex was all about the consumer what i said earlier was this economy seems to be all about the consumer in terms of spending money with respect to arrow face and defense, they always increase c capex. Guaranteed revenue from the United States government, 25 years of increasing dividends. Youve got to be careful on that i would say this is it a replay of 2015, 2016 i think the way the market is playing it per jonathans comment, yeah, weve already pretty much decided weve not seen spending ill take it even further we havent seen a capex cycle in our country since the late 90s Industrial Companies have been sitting on their hands and firing people. Theyve been playing defense for way longer than President Trumps been president of the United States. So the culture of being so afraid to be wrong you dont want to be right in terms of any kind of growth needs to change the only way that can change is if we have clarity in terms of the trade thing. This is all right now on a near term basis about trade we are one tweet away from being at 5 o . This is a market that is almost impossible a near term basis to predict and thats why you have to stick longer term. Now brian, the two of us have been in agreement. We have something to disagree about. The second you put on these tax incentives a couple years ago, the market was assuming that 2019 to 2020 would have weaker gdp for one simple reason. This stuff was going to grandfather off and we knew exactly what were going to get. The fact that the Fourth Quarter gdp is supposed to come in at 1. 9, the market has been predicting were going to slow not towards a recession but back towards a weaker trend heres the most important story which is longer term were in a weaker growth environment thats not bad for the single reason that brian said which was companies in that environment are returning a ton of capital and doing a great job of that. What makes me more bearish in the near term is that during the period of going from above trend growth back to trend, that deceleration is not investment friendly and i think the markets going to have a hard time in this tran session period. All right so if were just banging out 1 to 2 and the rest of the world is in worse global slowdown, how long does the s p remain a defensive asset . I think youre going to see this low vol defensive trade play out for way longer than we all think it is. You dont think people will take a gamble on europe or em or anything else . They have been and when we talk to investors who are asset allocate ors, they see europe as being incredibly cheap they keep predicting there will be a fiscal story there and there will be monetary easing, and yet the u. S. Continues to pummel it and it looks more expensive than europe and it keeps getting that spread keeps widening out i think this u. S. High quality low vol story, were going to be talking about how much further can it go in three years from now. Brian, do you agree i would agree with this, that everybody wants to buy europe because its cheap we dont buy assets because theyre cheap. We buy assets because theyre working. I think europe is the next japan. Theyve got a lot of fundamental problems and thats why i believe the u. S. Is the quality trade in the less volatile trade and i think investors are going to want to pay for stability and that stability from a fundamental perspective are u. S. Stocks. Could president warren interrupt that calculus, brian well, anytime you have a regime change, when you go from one party to the next, the market tends to have some additional volatility, but remember, for the senate to go democrat, you need to see a lot of math go the opposite way. Even if warren wins, which everybody seems to think thats going to be the key factor now is that you still have a split government and gridlock quote unquote is good. Youve seen the financials especially in health care have been the areas that had been hit but you have to worry about industrials as well. The jury is way, way out on that its way too early. Ive got to start writing more about politics. Its the number one question were getting from institutional clients. If you look historically, president ial cycles matter way less than we all give them credit for and brian said the most important thing unless you have a Democratic House and senate with a real majority youre probably going to get less of a Sweeping Change than we all think. Good stuff, guys. Way to start the hour. Thank you. I should point out as well that as pointed out in this rbc note this morning when the democrats control the white house and one of the chambers of commerce at least is controlled by the republicans, guess what the market has its best performance. Still to come, nbas china backlash were going to speak with Golden State Warriors rick welts on the china controversy. The new arena they have. Ge freezing Pension Plans for 20,000 employees well give you those detail next when squawk on the street continues. The talent. Employees need more than just a paycheck. You definitely want to take advantage of all the benefits you can get. 2 3 of employees said that the workplace is an important source for personal savings and protection solutions. The workplace should be a source of financial security. Keeping your people happy is what keeps your people. Thats Financial Wellness. Put your employees on a path to Financial Wellness with prudential. Welcome back to squawk on the street. It is time now for our etf spotlight. Handing it off to our own mike santoli who is looking at small caps. On the whole its been a run with small caps where theyre been in the worry column or not. If youre toting up the virtues and vices of this market heres a two year chart of the iwm. Thats the russell 2000 etf. Eight times this has bounced off of a level between 145 and 150 over the last two years. Obviously last Fourth Quarter is when it plunged below that we just came off that again around 147, 148. If it was the only glimpse you had of the overall market, you could say we havent been able to get out of our own way. The good news is large caps look healthier. They look better theyre obviously not also have a lot of momentum behind them, but theyre only 2 1 2 from their high the good news is theres not a lot of reason to extrapolate weakness to some broad comment on the markets its about 7 of total market cap, but its not a great thing that these companies cant really thrive in this environment. Why is it that the large caps have the benefit of buybacks its a combination. Buybacks are a product also of good Balance Sheets, access easy access to the debt markets and more stable Profit Margins in business. The Smaller Companies obviously there are a lot of financials in there, not enough taxes, the sector issue as well its part of the cycle not able to capitalize on what works for their stocks. Which is more indicative reflected of the broad economy of the broad economy, i guess its probably a blen of td of te two. Theyre not laying people off, but in terms of being slow growth job growth is Small Business driven. Yes but in general, the average market cap is a billion dollars for russell 2000, almost a billion dollars. Its not tiny mainstream companies. I do think its reflective of a late cycle slowed growth environment. Knee jerk i think headline reaction to the small caps is you would think theyre most exposed to the u. S. Economy and u. S. Growth and probably least exposed to trade and yet theyve under performed. How much is the financials piece of this story here its a big one. Its obviously the biggest sector theres much bigger waiting than large caps i also think the idea theyre domestically focused while true theyre also suppliers to the big exporters. They dont have a lot of leverage within the economy to dictate terms. I think thats a bigger piece than it is domestic or international. Good stuff, mike. When we come back, do not miss a first on cnbc interview with Golden State Warriors president rick welts breaking down the nbas china controversy. Their new arena and a lot more were down 84 points this monday morning. Dont go away. But when i started seeing things, i didnt know what was happening. So i kept it in. He started believing things that werent true. I knew something was wrong. But i didnt say a word. During the course of their disease around 50 of people with parkinsons may experience hallucinations or delusions. But now, doctors are prescribing nuplazid. The only fda approved medicine. Proven to significantly reduce hallucinations and delusions related to parkinsons. Dont take nuplazid if you are allergic to its ingredients. Nuplazid can increase the risk of death in elderly people with dementiarelated psychosis and is not for treating symptoms unrelated to parkinsons disease. Nuplazid can cause changes in heart rhythm and should not be taken if you have certain abnormal heart rhythms or take other drugs that are known to cause changes in heart rhythm. Tell your doctor about any changes in medicines youre taking. The most common side effects are swelling of the arms and legs and confusion. We spoke up and it made all the difference. Ask your parkinsons specialist about nuplazid. A headache for the nba the Houston Rockets trying to mend with china after tweeting support with protesters and hong kong the nba calling the tweet, quote, regrettable maury has removed it and replaced it with an apology. Joining us is the warriors ceo rick welts theyve just opened a new arena, 1. 4 billion it is the first sports arena to be privately financed. Mr. Welts, always nice to have you. Congrats on the new arena. Thank you very much. Great timing for us im not sure about you we need to dive into this. The nba has been notable for allowing its players perhaps more than any other league to speak freely, certainly about issues of importance to those players here in the United States here you have a general manager voicing support for democracy protests ive got a lot of people this morning saying why are there two standards here is it because youre going to have a lot of money at stake in china . I dont think there are two standards. Commissioner silver addressed this earlier today and acknowledged that one of the things we think make the nba special is that we do encourage individuals to have the opportunity, not just players, whether its players, management, anybody else, to have personal opinions they are personal opinions adam acknowledged in this case there is some economic repercussions for that what i can tell you for sure is its not going to erase the decades of work that myself and everyone else in the nba has put in in building a Tremendous Base for basketball in china. I think this will pass i do think our future in china is probably pretty remarkable. Do you worry, though, about future for example, steve kerr, your great coach, very outspoken as well often times on issue of importance to him hes a worldly fellow growing up in i think beirut, lebanon his father was a diplomat. What if he were to come out and similarly Say Something like that does the leak to have put a m muzzle on people who want to speak about the democracy protests its not going to happen. Its not what our leadership is about. I think its one of the things that dwinistinguished the nba i terms of having a voice. These are really smart young people that know more than how to play the game of basketball a learned opinion, steve kerr is a great example. Who has greater standing than to talk about gun control than someone who suffered the loss of a parent with a gun. Steve has great standing to talk about that no one in the nba has discouraged people to have those opinion. Then why say its regrettable . Wauz we habecause we have wo hard in china going back into the 70s, we took the then bullets to china in the 70s weve taken the golden state wars twi warriors twice ive been there twice on my own. Its been a place where we can have conversations because its a Common Ground for people who otherwise dont have anything else in common except their love for sport. I think historically this is the role that sports always play. Maybe the big surprise was the reaction from the chinese, right . I mean, i was surprised having done stories about how much the chinese love basketball. And the Houston Rockets in particular im hurting for them today, too, because miyow and the reason it been so big and the rockets have done more to promote the game of basketball. Lets put numbers to it in terms of the business in chi china, how big is it for the warriors and the league in general . Its the only place in the world other than the United States we have a separately incorporated business, so nba china has literally hundreds of employees in china today who are promoting the game of basketball and promoting the sport and its business on television and consumer products. We have teams going over there i believe were going to have a team over there next week. So i think when we put this in perspective six months from now its not going to look as big as its looking today. You dont see a long term risk here then i think the Positive Side of it is overwhelming when taken in proportion to what happened yesterday. Because you do have chinese population thats getting state run media that sees these protesters as violent riotous which obviously may not very well be the case as we all know. Theyre reacting to this sort of tweet in the sense youre attacking us, but you think this all dies down . I would think so. Im an optimist. I think, again, on balance what the nba has done in china is quite remarkable, especially over the last 20 years i think at the end of the day thats really what will carry our story. You had 500 Million People i think, 490 Million People watching at least some form of the game of the nba last year. Yeah. And certainly when the playoffs come around, so a lot of them watching golden state given your history. Exactly. Do you expect that will continue to grow youre already talking about a market thats larger than the u. S. I do. Im very optimistic about the future of basketball internationally and i think the nba is uniquely positioned to really be a torchbearer in that and i think our business over time will continue to grow in china. So optimistic internationally. Meantime youve got 1. 4 billion chase center you just started playing games there over the weekend talk to us a little bit about what went into financing and building the stadium and how this positions the warriors above and beyond just a basketball team. Well, thats exactly what this is all about. Weve tried to create a foundation for our success and competing for championships for decades going forward. The finance story is relevant because this is the first 100 privately financed arena in decades in the nba its a bad formula, i will tell you that dont try it anywhere else than San Francisco with this team, with whats going on in the bay area economy right now without that combination of events, it would have been literally impossible to do this completely. What was the combination that allowed it to occur in your opinion favorably . Well, a team thats gone to the nba finals five consecutive years, won three championships, and a bay area economy right now which is roaring probably the greatest economy in the world right now. So put those things together and create the right facility. Its the first time San Francisco in its history has ever had a world class sports and entertainment. Its crazy, right . Theres no city half San Franciscos size that hasnt always had one of these. And its not just basketball its concerts. Is the strategy to basically build out a west coast style msg enterprise we actually hope that Madison Square garden becomes known as the chase center of the east actually. Youre talking to a bunch of new yorkers here i lived here for 17 years, so i spent a lot of time in Madison Square garden. I do think the other economic story here is what it takes to build one of these this is not just an arena. This is an 11 acre development, 580,000 square feet of office space that uber will occupy. 29 retail locations, mostly restaurants. Theres a lot of other elements. Those have to be there to be able to finance the type of arenas were building today in the United States. What do you think about the distribution of your product, the video . We talked about 10 cent in china and the streaming right there. Here weve got Regional Sports network, traditional Cable Companies still carrying many of those and the big Cable Networks that have contracts with the nba. Do you see that relationship changing at all and new entrants coming in . I see it completely changing. Youre touching on for all of sports whats going to be the biggest story i think over the next decade is how will we consume live sports broadcasts the old model is dying and there will need to be a new model. What will that be . Thats where i think the nba has a great advantage is adam made a very long term deal. So we have steadily increasing revenues over the next five years from disney, espn, abc, and turner and we have that time to experiment and see exactly whos going to step in who is it going to be . Is it going to be facebook, apple, google . I dont know the answer thats why you guys are here. Amazon as well. Amazon could be a player. But live content still is king its the only thing we still watch, other than you, the only thing that we still watch live and thats powerful. Im always struck by the nba, the major Sports Leagues was the most forward thinking in social media. Theyve experimented the most in vr, right . Do you see other technologies changing the way we see the game other than just the streaming distribution for sure. Certainly. 5g is going to make a difference in how we consume video. Were the first nba arena verizon has wired for 5g were prepared for that. Will people continue to watch two hour games or more and more were seeing people consume parts of those games how do we deliver what people want on the device they want when they want it. And then how do we mon tiez it its the story to watch on how that evolve. How does Sports Betting fill into that . What is the potential that can be unlocked . Again, we have tried to take the lead, we the nba, and believing that Sports Betting is going to be a big part of our future every else in the world it already is and adam silver, again, from the early times has been talking about how the integrity of the game is enhanced by the more visibility we can have in Sports Betting. Today out of sight is more dangerous than full transparency about everything thats happening. So how it evolves state by state is really complicated puzzle right now, but were headed in that direction inevtaeitably whe were all going to be involved in Sports Betting. Finally the team itself durant is gone Klay Thompson is out with an injury how are you feeling about your season were the only team that is starting the season with four all stars. Draymond green, steph curry, Klay Thompson will be back and Dangelo Russell came back in the deal where k. D. Went to the nets were not healthy right now and Klay Thompson has got to be healthy, but if we can hang in there the first half of the season, i think we can make noise when playoff time comes around. We appreciate you taking time with us. Good luck on the upcoming season. Appreciate it lets get over to sue herera for a news update. Good morning, everyone. Heres whats happening at this hour a federal judge has rejected President Trumps challenge to the release of his tax returns to a new york state criminal probe ruling that he must turnover eight years of his personal and corporate returns to prosecutors trumps lawyers argued he is immune from any criminal probe as long as he is president Turkish Backed syrian fighters are training in Northern Syria in preparation for an expected turkish incursion into syria President Trump said on sunday that u. S. Forces in northeast syria will move aside for an expected assault Senate Lindsey Graham called that decision a disaster north koreas chief Nuclear Negotiator says its up to the u. S. To determine if there will be further Nuclear Talks between the two countries. He made the remarks while at the airport in beijing on his way back to north korea after a bre breakdown in talks in stockholm over the weekend. The nobel prize for medicine was given to three this for their discoveries of how cells sense and adapt to oxygen availability which has paved the way for advances in fighting a number of diseases like anemia and cancer you are up to date thats the news update this hour morgan, ill send it back downtown to you. Fascinating research. When we come back, what should investors expect from this weeks china trade talks . Well tell you how to play the market volatility next when squawk on the street returns welcome back china reluctant to a agree to a trade deal with talks set to resume on thursday joining me on both at post nine welcome. Hi. Libby, ill start with you. What do you expect from these talks this week, especially given the reports that maybe china is going to come with a paired back . Im not sure thats really news here we are in the 13th round of negotiations this has been happening for a year and a half. We know china has been reluctant to macon sessions on issues related to the industrial policy clearly that stance hasnt changed. Maybe theyre being vocal about that i think what were telling clients is best case here maybe you get a reprieve in the escalation, maybe you dont get the tariff increase on october 15th from 25 to 30 , but thats the best case, right the worst case and probably equal chances is you do see escalation on october 15th do you see the next round of tariffs implemented on december 15th this is probably the last best hope for the administration to get a significant trade deal before the election next november and the leader of the chinese delegation has gone out of his way to dump cold water on expectations hes signaled he wants to take Structural Reforms off the agenda entirely. Heez proposing a much narrower deal that is the Trump Administration would roll back all the tariffs it has imposed in return for which china will buy agriculture on energy goods which it needs which it would buy in its own interest. If this was all it it wwas ry about, it would have happened over a year ago. Here is a key question we focus a lot on Elizabeth Warren gaining in the polls, but shes just as hawkish on china if not more so what could that mean to trade talks . She has indicated shes not as much of a believer as trump is any democratic nominee, whether Elizabeth Warren or joe biden or anyone else, and we would say to our clients very early days anyway, is going to use a more Multi Lateral approach what i think you would see a democrat do is revisit the tpp framework. And some ways that could be worse for china. I also think a roll back of tariffs if we have them come the election 2020, its going to be very difficult for a democratic president to roll these back politically, because presumably they would have won on the backs of organized labor and organized labor is not going to support an easi easier stance on china. How do you think what happens these coming weeks affects our strategy on europe were still waiting on a decision on auto we know the wto is going to make good on the boeing air bus. My expectation is that the administration will really try to extract every possible political benefit out of the wto decision allowing the United States to impose punitive tariffs on europe and will make it clear to the europeans simultaneously that they are going to do this legally we can play. One way for a domestic audienc where were expanding the trade war in a positive way against the europeans, but we can simultaneously say to the europeans, look, really this isnt an expansion were just sticking within the Multi Lateral framework. Thats actually, i completely agree. Now, the autos, which you referred to, carl, that deadline is coming up in mid november, so lets see where that goes. I think the administration will be reluctant to pursue a trade war with both, you know thats not a section by the wto. What i do think may be more optimistic, i think youll see the administration and you see peter do a little this morning in an interview pivot to the usmca. Talk about how important that ratification is. I think Speaker Pelosi has more to get that ratified because she needs those democrats to actually declare some sort of victory in addition to potential impeachment. I think youll see the administration really pivoting away from china and the u. S. And pivot to nafta 2. 0. Is she going to trade usmc avotes for impeachment support im not kidding. No, i dont think look, shes very good about sort of separating those lanes shes been reluctant to pursue impeachment. The political reality is 31 of the 235 democrats are in districts that President Trump won. They need something for their constituents to say yes, we can impeach the president but we can also deliver a victory with the president. That raises such a key question, whether were talking about usmca or some of the other policies that are stagnating right now. Were in gritlock i am a little less optimistic on the usmc affront i dont think thats going to be central to the concern of the right leaning democrats because they still have to deal with union opsig. So pelosi is clearly going to demand labor friendly reforms to usmca before it comes up for approval. All right thanks for joining us. I have a feeling well have another whirlwind week here, libby and ben. Major manufactures including caterpillar and deere hoping for progress in the trade talks. Uncertainty continues to take a toll on both Companies Sales Frank Holland is live in illinois hes got more on the story frank. Reporter good morning. Farm Equipment Sales are 22 billion so far this year big number but still an 18 decline from 2014. Major manufacturers like john deere are feeling the impact deere saying its Agriculture Division is down 6 . Its also laying off workers where it makes that farm equipment. Caterpillar saying sales of tractors and combines, those sales are down for the first half of the year random flooding in the midwest delaying the harvest as well as the ongoing trade war reducing crop exports have farmers like phil, who is a soy bean farmer and who also owns 20 pieces of deere Equipment Holding off on buying anything new this season. Im just trying to take a wait and see attitude. Maintain the old equipment and then if times improve well roll into this smusome newer tractorr combines. Deere is the lead are employer here providing about 4 of jobs. Locals say any downturns or layoffs are concerning but theyre not sure it has a big a. Impact on the overall area. I believe the farming industry runs in cycles. I think that we have layoffs and shutdowns for a while, but they always call people back. If their sales are good, people are buying products, then yeah, it helps everybody the willingness of farmers to make Capital Investments in new equipment has plummeted over the last three months according to the agriculture economy barometer. Well get a new reading on Farmer Confidence on thursday when the september numbers for farm Equipment Sales are released thats the same day the u. S. china trade talks resume, another thing that can or cannot give these farmers confidence. Back over to you. Frank, we talked so much about the trade talks and the dynamics around exports to china of our farm goods. Theres also this swine flu that has decimated the hog population in that country. I wonder how much that has affected the demand for some of these feeds like soy or some of the agricultural com mmodities grow as well. Thats what these farmers were talking about a lot are talking about the trade war but another big factor for them is african swine fever in china two big exports are soy bobeansn corn thats down because of african swine fever. They say an out look for next year would give them a lot more confidence. Whether its the flu, whether its just been a tough year for ag in general. As we go to take, look at shares of gm today. Talks between the automaker and the uaw have cooled as the strike now enters day 23 gm down double digits from a month ago. 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[graduate] i love you too. One stop strategist sees more economic weakness ahead, but its not reason to run scared find out why on tradingnation. Cnbc. Com more squawk on the street coming up. Because schwab makes planning for things like this easier. Yeah, with schwab we get automated investing and integrated planning help. For a low Monthly Subscription price. Why would schwab do that . They help you plan for the things that matter. Subscription pricing. Schwab introducing subscription pricing with oneonone guidance. Schwab intelligent portfolios premium, a modern approach to wealth management. High protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein bars. Try lemon cake. Welcome back General Electric is taking steps to shore up its pension plan, the company cutting the deficit by up to 8 billion and net deb by up to 6 billion. Ge will freeze the plan for current employees and offer a lump sum for retirees who havent started to collect those who have started to collect are unaffected were talking about freezing a pension plan for about 20,000 employees, another 700 more who became executives in 2011. Youll see thefrozen, and buyour 100,000 former employees and really speaks to this broader move by the ceo and chairman who has been at the helm just over a year to pay down debts and shore up the Balance Sheet in terms of traditional Pension Plans, underfunded by 27 billion at the end of 2018. One of the companys biggest liabilities, and again, it speaks that 2019 is a reset year this is one more move, i imagine a difficult move to try and focus on cleaning up the financials here. Of course, you remember this is an old line company with pension funds, you dont see new companies have benefits along those lines any longer, but quantifying the liability, thats the key to the extent you can do that for investors, whatever it may be, give them at least a little more confidence i mean, theyre saying theyll record noncash charge here i think at the end of the month when we get ge earnings, there will be a number of things to focus on, including the charge which is expected to be upwards of 8 billion for q3 for baker hughes as it sells down and raises cash and cedes control. You have the annual Liability Insurance reserve review which were expecting details on as well, but i think in some ways it begs the question, as the Company Continues to raise cash, tech included, restructuring that stake, pending sale of bio pharma, where else, what are the other levers ge can pull to raise cash. Thats a question, and then the overall turnaround of the underlying business which is key, how quickly power can get back to being something other than a dream plus you have the 737 max, boeing situation they make the engines for that, and this bigger discussion that were having about slowing global growth, what it means for the industrial sector overall. Speaking of which, white house adviser larry kudlow saying he doesnt want to predict outcome of trade talks with china, which of course start later in the week. He does add were concerned about the slowdown weve seen in manufacturing, were looking at that carefully, and does say speaking of all this, the gm strike and halt of the max manufacturing at boeing was not helpful to the u. S. Economy. Watch and see how thats absorbed by the algos. The algos lets send it to jon fortt. He has a look whats coming up on squawk alley. Speaking of the u. S. Economy, democratic president ial candidate tom steyer is out with his economic plan today. He is going to join us got some questions for him about some ideas hes got, kind of controversial. Thats coming up on squawk alley. R the talent. Employees need more than just a paycheck. You definitely want to take advantage of all the benefits you can get. 2 3 of employees said that the workplace is an important source for personal savings and protection solutions. The workplace should be a source of financial security. Keeping your people happy is what keeps your people. Thats Financial Wellness. Put your employees on a path to Financial Wellness with prudential. That could allow hackers devices into your home. Ys and like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Welcome back to squawk on the street. Discretionary stocks trade lower at this hour, notable weakness in cruise operators after hsbc downgraded shares of carnival from hold to buy, citing weak bookings in 2020, disruptions from the hurricane it comes after ubs downgraded the stock last week. Look at the performance of cruise stocks, youll see carnival is fairing the worst, down 17 compared to norwegian up 14 so far this year. I will send it back to you guys. Thanks. When we come back, recodes kara swish swisher joins us to talk about the turbulent ipo market market improving a bit on kudlow headlines, down 43 dont go away. Whether your beauty routine is 3 steps. Or 57, make natures bounty hair skin and nails step one. 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