Transcripts For CNBC Squawk On The Street 20240713

Pressures for boeing, downgrades at Credit Suisse and ubs renewed congressional scrutiny, shares tumbling 10 on the past week. Opioids on trial in ohio for Drug Companies reaching a last minute settlement ahead of a landmark First Federal opioid case. And Mark Zuckerberg speaking out, why the facebook ceo tells nbc news it is more important to be understood than it is to be liked. Shares of boeing under pressure, having its worst day in more than 2 1 2 years, losing almost 7 friday. As we said, Credit Suisse and ubs cut the stock to neutral from buy today boeing under scrutiny following the revelations of the emails from 2016, which called into question the safety of the 737 max jets Flight Control system. The board met over the weekend, expressed regret over the message, continuing to investigate. Dennis muilenburg is scheduled to testify at house transportation next week reuters suggested this Board Meeting in texas may consider things like job cuts and some other kinds of trimmings to spending but worse day on friday than any day since the max was an issue to begin with. Wall street thinks muilenburg bag of the narrative had been be very specific about this the narrative had been the reason why you could not not have a chance to put was because the government wouldnt let them if the government had would not hamstring them, we would find out the truth, which is that boeing had very little to do with this and the faa, little more emphasis on them, and that boeing wasnt pressured, boeing did everything right and when the truth came out an emails came out, everything came out, we would feel that way. Well, there we go. It all came out, and i was wondering why did they fight this why did they break this so early . And i think this is what wall street felt. The answer is because sometimes you just get had, carl wall street got had. So this is what happens when wall street got had. They come out hard against because they felt that they felt look i did, that when you see all the emails, you see it was all about safety it was the wrong way. Im confused. Youre saying the pilots in these im saying that it turns out when we looked at the internal messages, people who were very concerned. That there were people who felt, you know what, this is being were not doing this right, there was that very critical message of what the New York Times said the guy said he lied. He didnt. What the message really was, like, now that i know that the truth, i guess i lied. You know, you could have said i guess i was ill informed, but this is the most this is the reason why wall street is so negative has much to do with once we found out the truth and boeing wasnt hamstrung, we would know boeing was a good actor. And i think that wall street is stunned because it turns out that you can argue with this, but that boeing wasnt a good actor once we saw the emails the idea was once boeing is free to tell its story, its story was a good one that i think is no longer true i think that once boeing was free to tell the story, turns out the story wasnt that good so is any of this penalty because of a are they predicting a even further delay of return to service it is important this boeing take action, which is listen, all that is in the past. Remember you know what is interesting . We have not heard a word about how they got triple redundancy, not had a word about how the plaintiff is safer than ever, or maybe that the pilot should to simulation, but the now were trapped into what the heck happened beforehand. It is so important for boeing to get ahead of this story. Boeing has been behind in this story from day one now is the time to say, you know what, we made mistakes, the new plan is good were ready to ride it you can decide we have done everything wrong beforehand, but the new plane is safe and the focus should be on the new plane. But no, now the focus is on the old situation. Well, that is really incredible. Were going to get southwest on thursday. American also reports this week. It matters what they think too. I think, look, gary kelly said from day one as someone who came right here and said, you know what, im going to take it up privately with boeing boeing is a Great American company being run badly. A Great American company that has some faults about the way things were done ahead of this, they can no longer deny that this is one of those things where if youre sitting back and saying, objectively, i believe in boeing no matter what, like me, like i did i was wrong. I believed no matter what. But i got that wrong by the way, all the analysts are in the same boat i was. When it comes down to their ability to service the market that is still growing, certainly in certain areas, and the fact that there is a duopoly, and that chief competitor probably cant make any more claims than they already have committed to deliver, will any of this matter well, thats the right now, boeing is so ill advised in their strategy boeing has a chance now to be able to say this is what muilenburg says now, okay, look, we screwed up. But then you have there is liability and dont want to say that, thats again, classic stupidity. You have to say we screwed up. Thats the whole lesson of america. Whole lesson of the way america treats you you admit youre wrong, you apologize. And then you say, we have to focus on Going Forward and Going Forward our planes, the safest in the air. Why they cant do that, i dont know. Maybe because the lawyers, the lawyers who gives a you open yourself up to this risk that risk. Thats typically when there is an inability to Say Something that we all think is obvious, it is because the lawyers are telling them if you want to run it by the lawyers, you might as well shut down thats what a lot of companies it is stupid. Look, we you correct use of the word, by the way, reluctant to speak lawyers are told never to speak. Lets think about when the lawyers have been right. Exactly. Not. This is a Great American company, being run wrong were being run by lawyers, being run by people saying, listen, lets think about the past, lets deal with the past every single email, and just be a Great American company they are. Does the board have to do more than take away the chairmanship it sounds look you want to see muilenburg go. I dont really care ive been had. So has every firm that downgraded it today. We all got the same memo, which was there is nothing in the emails, and when you when that comes out, you say it was messages, wasnt Text Messages let me be specific. Maybe with snapchat hey, maybe it was wechat maybe it was zuckerchat. We all have been had all those analysts are about being had. They all got the same memo they did you think i was any different . You think my work produced anything different from Credit Suisse no bank of america, downgrade ubs, downgrade Credit Suisse you know why this is . We all got told dont worry dont worry now they have to boeing, listen to me, not that you would, but you ought to, this is the time to make a clean break with the past, screw the lawyer s, you got fiber again there, and tell people the truth, your new plane is safer than anyone but, no, you lost control of the narrative, the day that the second crash occurred. Were going to see muilenburg on the hill as congress is part of the Dynamic Speaking of liabilities, four Drug Companies reached a last minute settlement to avoid a trial over the Opioid Crisis walgreen is the only one that did not reach that deal. Meg tirrell has more from cleveland. Reporter the jury had been selected, the courtroom is packed and in less than ten minutes this trial here in cleveland, it is over. These four defendants reached a settlement with just these two count gliz owies in ohio there was walgreens who was the fifth defendant hadnt reached a settlement however, they are being severed from this trial and theyre going move on to what comes next here no trial today this is just a settlement with these two counties it is not a broader settlement in the thousands of opioid cases brought against industry, seeking to hold them accountable for the opioid epidemic. They have been consolidated centered here in cleveland we are hearing that the potentially may benews coming later today from state attorneys general, which could speak to a potential broader settlement numbers were seeing this morning pertain to these counties it is about 260 million, 250 million in cash from the three big distributors, mckesson, amerisource, bergen and Cardinal Health about 20 million in cash from teva another 25 million the Washington Post reports in antiaddiction medications, they will contribute here were waiting to see the exact details that well get and bring them to you, no trial happening here today there are a lot lined up potentially later, no dates yet set for what well see next federal case in this litigation. Back over to you. Meg, it is david. A couple of quick questions. Walgreens doesnt settle, but they dont have to go to court as of now as the only defendant in this current litigation, correct . Reporter thats right, david. Walgreens, of course, is a pharmacy and they were sort of considered the most ancillary defendant here to the countys municipalities cases the cases really centered around Drug Companies and then distributors so having walgreens as the soul defendant didnt seem to make sense here. I see and then again the global settlement we heard might be close as much as 48 billion including a lot more companies than the ones were looking at youre hearing thats still a possibility . Reporter we dont know yet what well hear from the state attorneys general later today. Were expecting to hear something. We heard last week that settlement from the three distributors as well as teva and Johnson Johnson was totalling up to 48 billion. That included 22 billion in cash from the distributors, and j j, and teva contributing all drugs and Services Worth about 29 billion. But analysts i spoke to said they were a little iffy on the valuation of those drugs and services from teva so well have to see what we hear from the states later today. Meg, thanks very much complicated situation. Industry tries to get a hold on what is a wave of potential litigation yeah. One thing i follow j j closely, they chose not to set until a previous case, obviously wrong strategy, they lost, they have to pay a lot j j, still trying to get my arms around talc, cant saw you tweeting about it this weekend. I was going through what was said on mad money about there is just no asbestos in talc. I dont want to conflate the two stories. The plaintiffs on opioid have United States on their side. You want to settle wherever you can settle because otherwise there isnt a jury in the world that doesnt want to take you to the cleaners i dont care how good you think your defense is. And whether you think you can win. This whole strategy of losing in the lower court and winning, that makes you a law firm, not a drug company it is the kind of thing these companies were correct to settle once you settle, look, 3m has the same problem once you settle one place, you got to settle everywhere you have to recognize, whether it is 3m and just boiled water, these companies and 400,000 dead, whether it is talc and actually is a level of a level of asbestos which the who says any level is no good, these are all really bad set of facts. And all these firms refuse to recognize it is a bad set of facts. Dont worry, the law is in our favor. You dont want americas had it with these guys you may think that there is an impartial jury, but im wondering whether there is an impartial appellate court. Meaning meaning they read the papers too. They read the papers too by the way, if we had a president Elizabeth Warren i was going to mention. We havent gotten to warren yet. I dont think it would stop at juries. It would be show trials. You disagree not necessarily, no. Shes talking about show trials for the drug banks. I dont think people have to start recognizing what is going on in this country and how there is a surge of populism not only what is going on in chi chile, in spain. Youre not excusing the practices that led us to this point on talc potentially or opioids or your complaints with the legal system, not with the companies. I think the legal system is not in favor of capitalism right now. And you may think that there is a i keep thinking about if youre bad enough, that can be prosecuted. Should be held accountable for 400,000 people in this country are you seen the numbers in some of these counties im saying the legal system is saying, listen, i dont care about your defense youre losers. So you might as well settle and pay. Thats what im saying. Sometimes thats because theyre guilty no, no. You settle when youre guilty. You see, they dont sue them unless they can win. Because they i understand the plan and a lot of no, im saying im saying they are guilty. I dont really care it was the doctors that pushed it i dont care that there were there was purdue that pushed it, like the books say you know what, you should have stopped. Yeah. Yeah. Guilty. If you were ethical how about if youre trying to mack make a profit, david profit does not kill people. Youre trying to make the quarter and youre talking about something david, these Companies Miss the quarter youre fine with that . We need the sarcasm font on the bottom of the screen cramers mad dash, countdown to the opening bell lots of calls today. Havent gotten to a ibm downgrade, new high target on apple, ton of initiations on peloton. Dont go away. 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. Whether your beauty routine in cis 3or 57,. Kyo. Make natures bounty hair skin and nails step one. Its the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. Natures bounty, because youre better off healthy. First mad dash of the week openine New York Stock Exchange amazing how many people watch this show. It is true. What do we got as a mad dash. When you bring in Equity Offering and it breaks the price very quickly, breaks the print, well, that usually means that it is was priced wrong, the deal is overvalued well, the peloton, which was one of the worst of the ipos, very important in terms of the unraveling of the whole Going Forward, this morning almost every firm comes every firm comes out and says buy popup shop at malls, it says we expect strong growth ahead of the companys unique convenient in home connected fitness model. They continue to say the bulls continue to say it is an ecosystem. And the market doesnt regard it as that. Maybe today everybody feels better about peloton but all it is all on board, david, a series of lockups are expiring by the way, the first right near the beginning of november, the uber, thats about thats a big a big one leslie picker has done good work on that. Absolutely. Coming up upcoming you never know with those. I feel like you cant necessarily in retrospect, can always look back and say, look, of course. That stock went down people are short ahead. Maybe peloton is the one to watch because the all the underwriters need something good to be able to dump more crummy merchandise on us because that seems to be the role the unicorns are in charge there is so much involved for the brokers. You go over the previous quarters, they need unicorns to be able to off load on lets say suspecting clients and so lets watch peloton go up peloton goes up, they can reload, really crummy deals and dump them on our heads people feel wework was a a sea change. I think it may have been. That was the end of being able to dump it on us. What about the ipos they can wreck any market. Speaking of the market, opening bell coming up a few minutes from now stay with us on squawk on the street. Most people think of verizon as a reliable phone company. woman but to businesses, were a reliable partner. We Keep Companies ready for whats next. man we weave security into their business. Virtualize their operations. woman and build ai Customer Experiences. We also keep them ready for the next big opportunity. Like 5g. Almost all the fortune 500 partner with us. woman when it comes to digital transformation. Verizon keeps business ready. Ahead of a busy week of earnings, the bullish talk on trade regarding china over the weekend has futures up 65 points opening bell in seven minutes. The lexus es. Every curve, every innovation, every feeling. A product of mastery. Lease the 2019 es 350 for 379 month for 36 months. Experience amazing at your lexus dealer. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. Busy monday as you can probably guess, given the headlines over the weekend regarding brexit and that vote in parliament. Boris johnson now faces having to ask the eu for an additional extension. Good commentary from the chinese premier, substantial progress on phase one. Yes i think thats i was very surprised. That would seem to indicate that a lot of people larry kudlow came on our show, said exactly what this man says, we believe the premier more than kudlow thats a sad state of affairs. I believe kudlow over the chinese. I think larry kudlow represents america. And that america is telling the truth. And larry, who, yes, is an old friend, what, am i supposed to lie . He got it right. It is interesting we believe, oh, the chaeinese, now we know. The scarcity theory they commented the chinese numbers have been the by the way, everyone says they got that thousand year plan theyre about to go from 60 to 5 it does feel like when i talk to a lot of companies, it is the weakest part of their book all i can say is it seems to make a lot of sense. Theyre buying brazilian soybeans hand over fist. It would make sense to throw a couple of buys our way or at least make an approval of say nvidia, mellanox, but the chinese, they are big talkers. They have big hat, im waiting. Kudlow did say there is a chance the december 15 tariffs could come off thats a big if. But goldman with comments over the weekend saying even if they dont come off, as long as we dont see any additional tariffs, they do not think the trade war results in a recession. The president really kind of stuck his neck out and said, i expect big buys. This is what he said after argentina. I think that the big buys should be, lets say the next couple of days youre kidding. No. You believe that . Yeah. Is that bad just wondering. They said there would be. Oh. Youre skeptical . Only because i have reason to be well, it is what carl did ask me, a lot of people felt after the show, jim, the reason why you dont trust kudlow, as carl said, you heard it a thousand times. I would just like to see a buy of something just a buy of, i dont know, a couple of tractors i dont know something. I think we can all agree it is in a better place than it was a month ago. Thank you thats my point. So well just take it from there. Where that leads, who knows. At least a little better. Yeah. Seems it lost that kind of acrimony we havent talked about the doral yet. Doral i stayed at doral i think it is a shame it is owned by it was a great place to stay. That was turned out to be ill advised. It was the best place of all thats the problem. I stayed in every one of them. In florida, in june. That place has best golf courses. I totally understand the airport. Yes i understand that he was thinking, hey, listen, i think he should have i dont know you have to suspect there was a thats for sure lets get the opening bell and the s p, at the cnbc real time exchange. At the big board, the recent listing of two etf funds at the nasdaq, siffy technologies and information and Communications Technology company in india we didnt get to the ibm downgrade. Out of ubs they go to neutral on doubts that midsingle digit Revenue Growth can be sustained. Yeah. Look, in the end, the old is overwhelming, the new i think we always figured the new, which is obviously augmented by red hat would somehow at this point cross over and make it so that you wouldnt see about the old, but the old that youre in rapidly, and there is no sign that it is going to stop and thats why i think that people are giving up on ibm. Theyre just giving up. Thats a big statement, giving up. You cant giving up, it can be the dividend, the cash flow is good but look, i mean, you have red hat growing, not as fast as legacy and so people are starting to realize, wow, if that legacy declines faster in the same base, next quarter, then red hat still cant be enough. Red hat is 19 , i think. Thats why. I think look, i think red hat is fantastic, growing at 20 not large enough to offset. No, it is ot. I think it is a shame. Because i think it was a very good acquisition and the cash flow wasnt hurt at all. It is just that the gts, this global the service is like accenture. Just not it has got to be better managed i dont know what to say if they can get the decline in that one to slow, then you see the greatness of red hat red hat was really good acquisition. Just more broadly, Morgan Stanley out again today with the warning on software. Igv had its worst week last week since august workday close to the lows for the year argument is if Corporate America is so nervous, maybe they dont trim head count, not doing that yet, maybe they do back on software spending. Ive gone over every one of those. Interesting, marc benioff had this thing last week, the core of sales force is still doing well i dont know whether workday is representative i know there was a downgrade a couple of weeks ago by heather belini of crowd strike, so critical in terms of in terms of timing, yeah, that group has been the worst group it at last reported a great number last week, profitable, symbol team. Thats the one to watch if you think there could be a turn. Because that would be the antiworkday im still trying to get a line about how negative he was, the ceo of workday he immediately said, business as usual, marc benioff had good numbers everywhere that was now pretty far along. The group is still under pressure and not going to be, you know, whether it be okta, whether it be z scaler, z scaler, zendesk. Yes okta. Okta under 100 now. It is doing poorly as a stock. I think it is doing well. As a company. Yes wanted to hit netflix this morning. It is funny, the stock, not funny, the stock performed fairly well the day after the Company Reported earnings. But then it sunk on friday and it has sunk as well today a little bit on news that theyre going to raise another 2 billion in an offering of senior notes. It is going to be for general corporate purposes which may include may was my wording, which may include content acquisitions, production and development, capital expenditures, investment, working capital, potential acquisitions and strategic transactions is that more than both euro denominated and u. S. We dont know the terms as yet but netflix going back to the capital market. Is that boiler plate . Yes. The last three fundraisers have said pretty much the same okay the stock, i think back to where it was if not below where it was before they reported. Yeah. That was a short squeeze v i kn everybody i know is waiting to hear the disney plus numbers the only place they are now is the netherlands, they have been testing it. I think it has gone pretty well. The dutch like davy doesnt scrooge mcduff . He was my character. You know that. I patterned my life after scrooge bugs bunny and donald duck is warner, a week from tomorrow when we get the rollout of the warner streaming service that is actually where the next moment for netflix could also be and or disney and so many others by the way, apple has a big premiere in new york on monday, a week from tonight. Right. New i think record high this morning street high 280. Yes, i think apple, to own not trade, has really delivered on the 11. I think the people are surprised at how good the 11 is. It is harder to get one week back quarter, a note out today about one week back quarter. I just think this is Credit Suisse apple constrained greater than one week to get the 11 if you go to buy the 11 in new york, you end up with a lower meg. I went i went at 9 30, i went at 8 00, got my phone at 9 30. What did you get . An 11 three cameras you take pictures of your dog at middle of the night. Look at that. Threecameras three cameras. Since steve jobs, no origination. There is a camera you can take i need four cameras. Four . I need four cameras cody, why not . Dave cody honeywell. He doesnt run honeywell anymore. Darius got rid of the two low multiple situations. He did. He did im talking about cody the beauty company, has become more focused on fragrance, cosmetics and skin care. Why . They are now announcing this morning a strategic alternative or exploration of options relating to the sale of wellia, clairol. Bought it from p g in 2016 not that long ago. At least for me. Three years to me is like yesterday. For the may fly now theyre putting them back on the market to try and sell them they say they expect the proceeds from any transactional to pay down debt, return excess cash to shareholders, and they align with cotys previously announced turn around plan focused on improving execution, better leveraging its assets, and delivering significant financial improvements and after a author yesthorough arent you cynical . Not as cynical as you are today. No. No one will be thats because i got had. They reached the conclusion that even with the strong current performance, the future Growth Opportunities are increasingly outside the companys the professional beauty business line, outside the companys poor strategic focus. So thats why theyre getting rid of clairol thats interesting. There is so many exchanges of these businesses going on behind the scenes procter gamble, interesting what happens. Right were you get a day where we got beyond meat news. Dunkin is accelerating the rollout of their beyond meat sandwich november 6th. Accelerating the lockup i remember a day where this headline would have sent this stock soaring. A lot of 2 today. A lot of stock there to be had. This is still an overvalued stock. Company is doing really well i think these are they got conflated during that period of greatness for the ipos and now it is turning out that there was just a sliver of stock offered there are many kept saying while it went up and up and up. What was the market cap . 13 bills they did that really terrific they did the secondary at 150 and it went up. But beyond meat is very complicated story because impossible is out there, tyson is doing well. Just a lot of different burgers. Were going to get mcdonalds tomorrow and there has been some cautionary calls ahead of the print on stores. I wonder what you make of that whether it is wendys, breakfast on the way or i think wendys, when they announced their breakfast was hit unnecessarily and when i had todd on, i thought the story was fantastic. The market has embraced it, almost at its high the word is over and over again that this is not a good quarter domestically for easter book i have seen no evidence thats the case i when i want to go long in it, it is such a Great Company buy some before, maybe buy some after. It is a Great Company. We talk about beyond being cut roughly in half since the highs. Cannabis also broadly speaking has been just hammered over the last number of weeks yeah. We hit it here and there. It is interesting how the potx has been just a magnificent place for people to short. One thing that is really killed this is that the lack of leadership at canopy theyre still waiting has it gotten rolled into the vaping crisis too at all yes but they see the potx has gotten everything caught up in the vaping crisis, and anyone who has like Kronos Kronos has vaping. Vaping we havent talked about juul lately, how much thats worth it is worth 90, down from 300 this summer. Wework is worth 138 wework . Sorry funny, wework is a little quiet. It is quiet. Thought we might see a deal there. One thing, no one disputed the size of the market of cannabis there is so many players, and i think lord jones is the best brand, kronos, but the fact is that even gw pharma is caught up an thats one of the large et pie pieces i expect that when canopy announces that they cgc has an actual ceo that is going to help them. Right now 6. 9, half the market cap is cash. Wow. Wow. Overall, strong market right now. The s p up more than half a percent. We knew facebook dont want to Pay Attention to because boeing is up over 4 . Yeah. It is going to diverge from the s p. I think j j is trying toini make a little stand here ive been waiting for reuters, the journalist who won the prize for the sign of tremendous credibility, shes the one who did the stories about talc, shes not been heard from. I would hesitate to buy the stock until she does her redux on talc. Interesting finally, the journal saying the uaw may have trouble selling this tentative agreement to the rank and file. Gm not doing too badly today thats a nice thing to put off the burner. You got gm and boeing theyre probably two of the biggest engines the u. S. Economy and they both stalled out. Things still hold up well. Thats the maybe thats the great story line everything seems to be holding up well without the two most perhaps most important job producers in the country theyre incredible i think this is a market that likes anything that can they have positive news on a Breast Cancer drug. Stock goes up 10 market likes to a s ts to have f positive news, right got that right. Celebrates positive news. Were holding on s p, 3k and thats dow up 31 with 100 point drag from boeing to seema mody. Good morning, carl. The earnings going to be the big focus here, s p 500 companies have reported thus far about 2 above consensus the question is whether that will continue into this week we have 122 s p components, 12 dow components reporting earnings this week industrials with everything happening around the world from trade twoorz twars to the slowd china, thats the focus. Estimates have come down from 6 in july to about a 1 here well have to see what happens when united tech, cat pill,e ca lot of the names report this week a lot of the names have beat street consensus the question is whether well get the same story from some of the Global Industrial names like caterpillar and 3m that have underperformed the market over the past six months. 3m shares down nearly 25 in the past six months. Take a look at shares of alibaba, the company saying it expects more than 500 million shoppers to participate in singles day on november 11th thats 100 million more, guys, than last year so the Chinese Ecommerce Company trying to quiet down those fears of a slowdown in china and a slowdown in the chinese consumer, shares up 2 and a tale of two ip os pinterest, peloton upgraded by jpmorgan and both stocks higher in early trade look at a longer term chart that tells you the story. Pinterest, 33 above its ipo price by peloton is down 19 from when it went public on the 25th of september. But despite this mixed performance that we have seen in the ipo space, we have eight companies expected to go public this week including progeny, a fertility startup. We have an insurance provider and a chinese education startup. This as casper is reportedly planning to go public as early as this year, hiring bankers back to you. Seema, thanks. More movers over at the nasdaq with bertha coombs. Apple once again moving higher here today. Ahead of its earnings next week, Raymond James up in its price target to 280, maintaining it at an outperform you have as you mentioned seen a lot of these analysts get a lot more positive. Talking mois on ing microsoft on ale now with much more of a lead as microsoft has fallen back with the rest of the Software Group over the last couple of weeks in terms of its performance. Microsoft will report earnings this week. Well see if it gets any moment of off of that chips last week hitting an all time high. Just shy of that now but continued to be a force this morning. They are the biggest gainers among the leaders there, including amd, micron, and nvidia well start hearing from more of the chipmakers the chip equipment makers have been on fire lam research, a lot hitting new highs consistently so as they move forward, and the chips continue to move forward, and our fears of the impact of chinese tariffs seem to be waning, we are seeing that sector in the lead once again. Back over to you bertha, thanks. Well see you in a bit it is a big week from Mark Zuckerberg hes set to testify on wednesday on capitol hill. In an exclusive interview with lester holt, he defended the platforms policies and addressed the Public Perceptions of the company i get a lot of people are angry at us. Part of growing up for me has just been realizing that it is more important to be understood than it is to be liked and i believe it very strongly and i do think that people can make up their own minds about me or the work that were doing, but this is who i am meantime, he goes to House Financial Services this week to talk about libra, which jamie dimon last week said a neat idea that will never happen. I never go against jamie dimon. I think the idea had some merit, but there is some Big Companies that pulled away jamie is jamie dimon is the king of the industry, and jamie dimon says it is not going to work, it is very hard to make it work because now the i think washington is going to take the cue from jamie, not from zuckerberg i think zuckerberg has done a lot of things to make himself different from marc benioff. Just give up . Thats it . It is jamie just said it. You can go ahead and just stop. No, you got to finish it out. A lot of the companies have withdrawn support. I thought it was a good idea dont you think jamie says no and so, you know, you get castigated in front of congress. It is never fun. Right . Just take your beating and come back another day maybe i dont know. Identify it as a cryptocurrency, just like many others. Say it is the Facebook Cryptocurrency or cryptocurrency with yeah that has jamie didnt seem to have much time for that. Here is a cryptocurrency that has more transparency and dont by book chain, if you dont like it, it will be more caponelike. Thats the narrative doesnt cost me doesnt cost him anything to use the correct narrative i just gave him. Giving people free stuff all morning. Well learn a lot more later in the week. When we come back, boeing under pressure and keeping the dow from even further gains, down almost 5 . Well talk to the former ceo of northwest to discuss the 737 max. Meantime, look at the movement in treasuries, ten year tries to get up to 1. 8. 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Good quarter taking share of intel and saying that maybe they have the remarkable position of being able to have not spend more money and be competitive both nvidia and intel next year i think a really positive note a fantastic job. Stock holds up well in this period. Jim, whats tonight i have stock x. I dont know if you know this. This is the most probably the single most exciting thing going on out there which is the exchanges, private exchanges you know what do i want to exchange on them you want to do clothes, sneakers, you can do anything. Okay. Do you know that dan gilbert, i wish him the best of luck. Wish i could see him because hes behind a lot of these. Is he help rebuild detroit yes. Jim, well see you tonight. Yes. 6 00 p. M. Eteasrn dow up 15. Squawk on the street is back after this each day our planet awakens with signs of opportunity. But with opportunity comes risk. And to manage this risk, the world turns to cme group. We help farmers lock in future prices, banks manage Interest Rate changes and airlines hedge fuel costs. All so they can manage their risks and move forward. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. Is that pgim, we see alpha emerging in the trendsete . Driving specific sectors of outperformance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Every day, our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. Good monday morning. Welcome back were live at post nine of the New York Stock Exchange. Obviously big earnings week on tap. But boeings drag is hard to escape dows up 9. Yeah. Thats where we start, too the road map is starting with boeings mounting pressure the stock lower again and coming off the worst day in three years. Where does the company go from here as we said, the busiest period of earnings kicks off today. How investors should play the week ahead. Avoiding the nations First Federal trial over the Opioid Crisis well bring you the latest. We start with boeing shares under pressure again today. Down 10 in the past week. Having the worst month since 2016 phil lebeau has the latest coming off the head loins on friday. We are hearing from analysts and most of them are worried about the increased risk for boeing shareholders. Well show you some comments of annualests starts with ubs downgrading boeing saying a push out of the return to service, talking about the 737 max, could increase the likelihood of a pause on the 737 max production system. Credit suisse saying we can no longer defend the shares in light of the discovers to encrease the risk profile for investors and bank of america is lowering the price target for boeing saying in our view there is increased uncertainty with return to service time line. The culture, brand and Corporate Governance more questions mounting about Dennis Muilenburg and whether or not his future is in question at the company or the future of the head of Boeing Commercial Airplanes Kevin Mcallister ginn the revelations of last week look at the end of this chart, guys this stock is down more than 13 and maybe even more now. The worst month since january of 2016 thats what its on pace for right now. Guys phil lebeau, thank you for bringing us the latest is the return of the 737 max in jeopardy joining us is doug steland the return to service time line, would you expect given the Additional Details on a daily basis, expect to push out . If so, what does that mean for production at boeing i think we have to, you know, look to the faa which is the Safety Organization thats overseeing this. And theyre the ones that are going to make the decision as to when the max returns to service. Im not sure we can predict when that will be i think we can have confidence in the faa in that their new administrator is an experienced, seasoned veteran who was a 737 pilot himself, who oversaw, you know, safety and operations at delta, oversaw crew training and i think the faa is doing a very, you know, diligent and detailed, you know, review of the plane, particularly the Software System and at the appropriate time when theyre ready theyll find the airplane to be safe and return it to service. Doug, theres been a lot of focus on the time line i guess, the extended timeline for some of the details and information were getting including the instant messages released late last week, the idea of why did it take so long to get to the faa and become public in general. I wonder what you think about that gip tven the fact that you have the criminal and civil invest going on and regulators around the globe involved. Does it make sense to you to see these sort of delayed drips of information here look. Its an imperative that boeing be transparent with the regulators, with the congressional oversight committees i think lets wait until the facts come out as to why this particular set of emails came out when they did. Im not sure we know enough yet to draw conclusions. I think at the top of boeing is to be transparent and it is to be forthcoming and, you know, in these kind of circumstances you dont always get the full version of the facts when things break and we should be patient and just allow the regulators and the like to interview this pilot, check pilot, find out why the emails came out when they did and take those facts once they know them into account in their Decision Making process. Doug, lets try to spin it ahead to after return to service is actually whenever that is, how much harder did it just get to convince consumers this plane will be safe to fly . And how would you try to market it once it got back into rotation well, when the max returns, one thing consumers take comfort in it, it will be the most heavily inspected, you know, airline, you know, ever. And i think theyll have been no stone left unturned by the faa and consumers should take comfort in that and not lose sight of the perspective that overall aviation today remains the safest form of transportation the two instances where there were crashes with the max i think were unique. They as we have gotten more into the details, they involved pilots and crew that clearly had less experience than say what a u. S. Airline would clearly have. And i think consumers can take comfort in that. You know i leave it to boeing how best to market the airplane Going Forward. It will have an Airline Customer base that will want to take delivery of the airplane demand continues to be robust. This disruption has had a negative impact in terms of the amount of capacity that can be offered to meet that demand. Once the airplane gets cleared and it will. I think its a matter of time. Airlines will clearly want to then receive the deliveries that they have ordered and that have been holding them back in terms of the capacity that they can offer to meet the demand thats outstanding. Even beyond boeing and the 737 max aircraft specifically, do you think that the certification process at the faa is now going to change well, i think that is a fair i think theres two points here. One, its always appropriate when you have instances like this to reexamine the process and to see if it can be improved, see if it can be made better part of the challenge will be were there to be changes to be made and more authority placed in the faa it will then need to be in a position to significantly increase its Staffing Levels and be in a position to hire World Class Air nautical engineers and part of the arrangement today is a reflection of challenges that the faa faces in that regard. Doug, theres so many go ahead. I was going to say i think a second issue is historically the rest of the world has looked to the faas certification of a boeing airplane as basically being sufficient for that organization then to accept that certification. It would be ump if we had a value canization of the certification process where you had sort of many voices involved that perhaps could be discordant and have different opinions and how you create a single aircraft in that process i think is something that both boeing and airbus are concerned about developing a new airplane which is in everybodys interest is hard enough today. Its almost a bet the company type of decision and we dont want to make it so it becomes so difficult that the two large aircraft manufacturers become more reluctant to invest their capital and take the risks that bringing on Brand New Technology and a brand new airplane involves. Yeah. Theres so many ripple effects to this, doug. On the supply side, Spirit Aerosystems with a downgrade today. A major supplier for the 737 max. Ge who comakes the engines is seeming impacts. Quite a number of sup ploys. Certainly we have seen the impact to service for some of the passenger airlines, as well. As someone that ran an airline company, how would you be navigating the uncertainty of return to service . Well, demand on the passenger side has not abated. So the impact of the max is acy metrical spending on whos ordered it and who hasnt. Thats a near term impact. Itll take a while once the max is allowed back into service for the production aircraft to be to get Service Ready and to get back in. However, i would view this as you need to distinguish between short term and long term impacts an the extent of the short term stocks are trading downward, i almost look at that as an opportunity because longterm i think the signs for this industry are very robust you know effectively you have revenues growing at 1 1 2 times gdp and you have 2 global aircraft manufacturers in essence and while there may be some dips over the long term those two companies and the entities that supply them are in good shape. And i would view this almost as a buying opportunity that you would then hold and keep for the long term just given the dynamic of the business. Doug, its always great to get your thoughts. Thank you for joining us today. Thank you very much. When we come back, it is the busiest period of earnings with names like mcdonalds, microsoft, cat, amazon all getting set to report this week. How do you play the big week ahead . Later on, four Drug Companies reach a lastminute settlement to avoid the nations First Federal trial over the Opioid Crisis. Well get the latest on that does your broker offer more than just free trades . Fidelity has zero commissions for online u. S. Equity trades and etfs, plus zero minimums to open a brokerage account. With value like this, there are zero reasons to invest anywhere else. Fidelity. Stocks are up to start the week as all eyes are on earnings s p nearing some record highs. Investors wonder if the momentum can continue Christine Lagarde gave her thoughts on that take a listen. I was brought up as it is in the obvious world. The risk i see is that the United States is losing leadership and that would be just a terrible development. Because because its been a force for good and for those principles that i respect highly. The rule of law, democracy, free market and consideration for the individual and respect joining us this morning is mark vitner, good to see you both lagardes answering Big Questions there but it doesnt sound like you think that this shortterm rising rate picture can last well into next year. Yeah. Were at the moment where theres a reasonable amount of seasonal optimism thats priced into the market. Well see rates rise maybe we get 2 , maybe 2. 25 10s but theres going to be a day of reckoning where we see the realities of the Economic Situation play out and the market treasuries space ends up being reasonably well bid we near a range and only going lower once we peak. What are the realities to face theres a very reasonable assumption that we are going to have a technical recession in 2020 im definitely on page with that. Technical means two straight quarters of only modest. Okay. It is not a 2008, 2009 event. It is something much more subtle and if we look historically those are the type of recessions we typically get. Mark, are you in that camp . The majority of economists are not. Were not in that camp. We have the economy continuing to grow not only in 2020 but 2021, as well. Thes no doubt theres a slowdown we have five of six quarters between 1. 5 and 2 gdp growth and i think folks looked at the recent environment, a slowdown in Global Manufacturing and some of that is related to trade, some of it is also that we had too much inventory for an economy that was shifting from 3 growth to 2 so i think that that part largely is corrected were likely to see a bounce in the next couple of months. Ian, do you think the 10year treasury yield has bottomed at least for 2019 for 2019 it has but not for 2020. Going back to the point you just made . Yeah. Well see a selloff into the end of the year but ultimately the realities, the fact is we are in a world where there is zero if not negative term premium and the fed is done hiking theyre now cutting. Probably going another 25 at the end of the month and we should see a significant amount of buying interest any time 10year yields get above 2 . Mark, do you think its a foregone conclusion, the market suggests it could be of a cut at the end of the month but if we get a trade truce or stand still on paper ahead of that could that change things it could but i think the feds pretty much set in the ways and will cut another quarter point. Its certainly better than 50 50. Probably closer to 70 that theyll cut w. A trade truce, the benefit to the Global Economy would not be immediate and i think the fed is warranted an enif they overdid it a little bit to the downside thats not the worst possible outcome given that inflation is running so low. The job market, you make the point its lagging indicator when does it go sub 100 lets say . Im very concerned that the damage that has been done to the sentiment in terms of manufacturing globally is eventually going to flow through to the labor market and whether thats this month or next month still rehmans to be seen but when it happens it happens very, very quickly. So youre bracing for really sort of extreme print to the downside yes i think theres significant Downside Risk to nfp in between now and the end of the year. Mark, i mean easy to find opposing calls. We are not seeing that at all. In fact, were located some of the most manufacturing intensive parts of country and billboards out looking for workers. Finding workers is still a bigger problem than selling product for most manufacturers we seen manufacturing employment slow but we havent seen it dip. Yeah. Well, the next couple of weeks give us fed, maybe brexit outcome, definitely a jobs number ian, mark, thank you. Thank you. Good to be with you. When we come back, retailers hitting record highs last week but a tale of two markets. Should investors fear a retail wreck . Well hear from former toys r us kroe ceo. I look at this piece and i say to myself, there is going to theres like a mall armageddon going to happen if youre on medicare, remember, the annual Enrollment Period is here. The time to choose your medicare coverage. Begins october 15th and ends december 7th. So call unitedhealthcare and take advantage of a wide range of plans with a variety of benefits. Including an aarp Medicare Advantage plan from unitedhealthcare. It can combine medicare parts a and b, which is your hospital and doctor coverage. With part d Prescription Drug coverage, and more, all in one simple plan. For a low monthly premium or in some areas, no plan premium at all. Take advantage of primary care doctor visits. Preventive dental care and an eye exam. All for a 0 copay. 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Start taking advantage of all the benefits. Of the only Medicare Advantage plans with the aarp name. We make it easy to enroll, too. So call unitedhealthcare or go online today. [sfx mnemonic] time now for etf spotlight taking a look at the Retail Sector xrt up over 5 this year target, dollar tree, ross stores, tjx near alltime highs at least on friday one question, of course, can the momentum for the names continue . Joining us now to discuss, ceo and former chairman of toys r us, good to have you even not on set. Before we get to broader retail, love your take this morning because you used to run hudson bay. Im sure you have seen it, special committee, agreed to a deal to go private does that make sense to you . Look. Hudson bay runs Department Stores principally and take a look at even the most recent data of september retail sales you saw Department Stores as a group down 6 year over year in sales. Big decline. Unadjusted data down 7 . It is a difficult sector customers are moving away from Department Stores and i think a lot of people believe, the Nordstrom Family believes the same thing, take some companies private they have a chance to shape the future and make the investments you need without so much concern over quarterly results. Do you believe that do you think, you know, that thats a real possibility . You are taking on moredebt going private, as well, which increases the pressure are there things to do in the private markets with these retailers that are facing such significant issues that you cant do publicly . Department stores are difficult space. I think luxury is better because you have more exclusivity in the products but its troubled now ive run private companies, Public Companies and i can tell you you can have a longer time horizon running a private company and dont worry about the next earnings call. What do you think make the likes then of a macys, for example, which is in the current dialogue, not the momentum way we were just talking about when i introduced you but obviously concern of the place in the mall and the continued concerns overall about mall traffic i mean, is that something, as well that tell me. I dont care how good you are and i think macys is a fine Management Team and nordstrom. I think hudson bay is. I dont care how good you are right now. Department stores in a very tough place. Customers are moving away from the mall on to the internet. Moving to discount chains. Theres hand wringing with the results last week for september sale looking at month to month adjusted Sales Numbers i dont Pay Attention because they bounce around all over the place and upgraded the august numbers. I look at the year over year numbers and looking at year over year retail sales, september is one of the strongest in a long time up over 4 and unadjusted numbers it was a similar up 4 and thats where it reports. Unadjusted year over year numbers, comp store sales, strongest sign of health in the economy. But having said that, there are winners and losers you will see great numbers out of the discount chains tj maxx, home depot, dollar general. Value player look at the ecommerce numbers they were up 12. 9 adjusted year over year for september f. You look at the unadjusted number, really real dollars, 15. 7 month over month of all the trends just accelerating the internet is growing faster than ever. The value players are doing great. Department stores, mall based apparel, are in a load of trouble. I want your thoughts. We have these looming proposed december tar iiffs that are seto go into place and potential rate increases that could still happen before the year is out. I wonder what you think it means in terms of inventory. Are we seeing a pull forward in inventory by the retailers and it could have big implications not just for the companies themselves but the Macro Economic data. Yeah. I think there might be a little bit of that. I think most retailers are smarter than that and they buy the trend. You have to. I believe no one can say tariffs are a good thing but i believe and the impact overstated when you take a look. Look Retail Prices actually are showing no inflation at all to speak of Producer Price show no inflation at all to speak and the amount of goods subject to the tariffs is 3 of Consumer Spending and taking 10 or 15 or 3 , disappears in the overall consumer economy theres companys that are highly affected by this and do everything they can to mitigate it theyre going to negotiate with suppliers, bring some goods forward and not be that stupid to bring in inventory to turn bad fast thats the biggest mistake to make so i hope they dont do too much of that but theyll do everything, whatever they can do, to mitigate this i dont believe its a giant macro factor you hear about. The uncertain tty a big factor whats done so far, its looking at the numbers. Good to have you. Thank you. My pleasure. When we return, shares of boeing continuing the slide as the max crisis deepens down about 4 . Where should boeings management go from here well discuss next welcome back, everyone im sue herera u. S. Troops crossed into irk early today part of the withdrawal from northeast syria ordered by President Trump more than 100 vehicles crossed the border where turkey agreed to pause its offensive for five days under a deal with the u. S. But that truce expires late tomorrow. Defense secretary mark esper said u. S. Troops will stay during the u. S. Pullout to take weeks. He spoke at a News Conference in afghanistan. This withdrawal will take weeks, not days. Until this time, our forces will remain in the towns that are located near the oil fields. The purpose of those forces, a purpose of those forces working with the sdf is to deny access to those oil fields by isis. Afghans president met yesterday with House Speaker nancy pelosi and a group of american lawmakers who were on an unannounced visit to that country. Pelosi says the visit touched on security, governance and Economic Development you are up to date thats the news update this hour back downtown to you. Sue, thank you. Management in crisis, boeing and Johnson Johnson resuming the slides after scandal last week joining us is johnsonen feld and bill george. Good morning to you both jeff, ill start with you. From a management and leadership stand point, dennis ceo stripped of the chairmanship last week but has it been enough yeah. I think the board has done the right thing. Theres no time to celebrate with 350 deaths of civilians horrible situation the public was looking for more public commentary and the leadership was held back pending the safety review by the international authorities. They with respeerent allowed t out and theres a department of justice investigation taking place and couldnt comment on in terms of this odd communication from a test pilot coming out on friday threw a wrench into the markets. Bill, we had the survey of a couple of years ago showing that there seems to have been a push or a third of employees surveyed seem to have felt pushed to produce and maybe potentially put some of those safety steps into question. Im going to put the same question to you. Do you think the board is doing enough i think they have stepped up in recent months and i think whats most important is Safety Committee that the admiral is going to chair they have an outstanding board this is where a board has to step up. I faced similar things in my career at goldman and we deal with them and the board has to step up but the most important thing now is ensuring the safety of boeing aircraft and thats going to require a complete top to bottom review by the management overseen by the board. Very similar to what we have done at other companies and getting the max approved for flying, working with the faa to get it approved for flying and until that happens theres lots of questions coming up and always pressure on companies but it can never sacrifice safety or quality. Theres pressure to do a good job and never sacrifice it boeing has to be known as producing the safest aircrafts made ever and they have to do that and thats going to require top to bottom review of all their procedures and make sure theyre right. Jeffrey, a boards role certainly one of the most important ones is also to be ready to have a successor and think about whether or not the tenure of the current ceo is deserving of continuation. Shouldnt be the board be considering here shouldnt they be delving into whos responsible for within of the worst missteps this company has ever seen . Its one of the most unfortunate periods in the history of the company but there have been periods in the history of the company of misconduct Richard Sears day and thats not whats happening this in case theres no evidence of misconduct but certainly its not a happy moment i hate to agree with bill george my harvard friend but he is right on this one again. The board put together a Safety Committee and centralize engineering instead of dilluted out to the company. Doesnt somebody may be misconduct but a screwup of pretty significant proportions. You have 900 vendors and there is something that Rockwell Collins did thats not trance parent to anybody. You dont hold somebody responsible in boeing with combining indicators and one on the Instrument Panel and never would have been unless youre military aircraft. They didnt know thats combined and putt on and wouldnt have prevented the disaster and Little Things like that and they have learned a lot about the mcast system, what they didnt anticipate, frankly, this is controversial to say and not blaming the victim but newer, younger pilots, 23yearold pilots with a shortage around the world and not anticipated so they have with the buzzing and alarms going off, they have to anticipate that this mcast system which is the auto pilot system is that it reverts every 7 seconds not taking control from the pilot at frequently and the fixes make good sense and separating the roles. In an unhappy period in this building they had a separation of roles and had to regain confidence that way. David calhoun is the chairman and by the way i think bill george and i agree its not a panacea separation of roles but sometimes in times of crisis, to focus on the regulatory issues saw it well done at citigrou and raytheon they deal with regulatory issues and the ceo to run the company and been pretty effective. The other company that is continuing to be under pressure right now with the own issues is Johnson Johnson. You have the tiny trace amounts of asbestos in baby powder one sample i realize but after years of coming out citing studies and saying asbestos is not in the baby powder, how do they need to respond whats the brand impact . That seems like the longer term issue here j j is hit by a whole series of plaintiff attorney suits and no causeality demonstrated and an embarrassing moment and any trace indications of asbestos cause a great concern, one lot, 33,000 bottles have been recalled but they have to make absolutely certain that their production process is 100 pure. I dont think that indicates Everything Else in baby powder is unsafe but its a different situation. They have just made a major set lment in the opioids i think everyone there is hit and kind of forced to settlement situation. But, you know, theyre being hit from all sides and a serious situation. Again, the berdoards got to stp up to get the plaintiffs suits settled and behind them. The question here, its a same at boeing. Challenging the integrity of boeing, of j j science and boeing has got to stand behind that and say we are going to ensure that our science is perfect just like youre challenging the sbek integrity e safety well, you know, a legendary ceo as i knew you knew, bill, is of Johnson Johnson had once said that trust not even the science of Johnson Johnson the trust is the most Institutional Trust most valuable asset. Both companies treasure that and working hard to restore that theyre keeping the fingers together so i think they do a great job. They surfaced it and brought it to the attention of regulators and at Johnson Johnson and thorough and on the opioid side, they were dealing with Prescription Drugs. All right gentlemen thank you for breaking down both of these companies for us today. Thank you. As the stories continue to develop. We preeshappreciate it in this e versus harvard segment. Not versus. Not really. Four Drug Companies reached settlements to avoid the First Federal trial dealing with this crisis our meg terrell is in cleveland and expecting the trial to start this morning and instead she has news of the settlement for us. Meg . Talk about a 11th reprieve. In the minutes before scheduled to start this morning, we got news a settlement is reached to avoid the first trial in the federal opioid litigation and doesnt take care of the thousands of cases out there but the three major drug distributors have reached a settlement to pay 215 million in cash to 2 ohio counties that were the plaintiffs in this trial. Teva left as a defendant in the trial has agreed to pay 20 million in increments of 5 million over the next 18 or so months additional teva contributing antiaddicting medicines on top of settlements with the drug makers named in the trial. Altogether 300 million for 2 counties reached here. We got to hear after the ten minutes in the courthouse this morning from the Cuyahoga County executive and others explaining why the settlement made sense and why the talks on friday about a big erger, broader settlement didnt make sense. People are dying now. We have to deal with these issues now so the fact that we were able to get the money in a short time frame is very helpful and thats one of the motivations for settling this. Of course, discussions were going on late last week to try to reach whats being called a global settlement with both the counties and the cities involved this federal litigation as well as the states that have sued these companies. Numbers as big as almost 50 billion involving more companies but those did break down and we got a statement from the 4 states attorneys general leading the settlement discussions calling it an important step to move forward to finalize the global settlement frame work youre seeing the distributors lower. Teva higher. Folks on wall street saying thats essentially because teva is beaten down so much and the share is smaller, guys. Good clarity on a complicated story. Meg terrell today in ohio. Secretary of state pompeo defending free speech and u. S. Business interests in china in an interview with wilfred frost. Take a listen. Every companys got to make a set of decisions but what we have seen over the last few weeks now publicly and known for a long time is that the long arm of beijing is reaching out into the companies, stealing intellectual property, forcing technology transfer, making it difficult to make a profit in china for many, Many Companies from a Foreign Policy perspective, we think its xleetdly inappropriate for china to attack u. S. Businesses whose employees or customers exercise the freedoms here in the United States we think that makes no sense and wed encourage every company to make a take a good, close look ensuring that the kinds of things, the reciprocity that President Trump is demanding from china actually takes place. Do not miss the rest of the interview with the secretary later today 3 00 p. M. Eastern time more in monta me how are we doing . Fabulous. I wonder how the firms doing without its fearless leader. You sure you want to leave that all behind . Yeah. Stay restless, with the icon that does the same. The new rx crafted by lexus. Lease the 2020 rx 350 all wheel drive for 439 month for 36 months. Experience amazing at your lexus dealer. Robert shiller says a recession is years away and could be thanks to a trump bump. Find out more at tdirang nation. More squawk on the street is coming up. I am totally blind. And non24 can throw my days and nights out of sync, keeping me from the things i love to do. Talk to your doctor, and call 8442142424. Inspire brands announcing on friday the completion of the acquisition of jimmy johns adding to a portfolio of buffalo wild, arbys, sonic, of course joaning us here at post nine is ceo of inspire brands paul brown. Congratulations on the deal. Thank you. What does it bring to the party . Its a portfolio of distinct brands scaled with the opportunity to grow even further so jimmy johns has 2,800 rest rapts in the United States but is also the only concept to bring freshly prepared subs to the door in 15 to 20 minutes. Inhouse delivery, right . Yes. The strategy here. 34 of the business. Uber or grub . We closed on friday and looking at everything and we believe itss an advantage for jimmy johns. We make sure to deliver it fast, quality of the product and keep Efficient Network because of the small density of delivery zones. Sandwiches tend to travel fairly well. Unlike some other categories. A great delivery category and the fact to make it in 30 to 45 seconds, make sure that its freshly delivered to the door. Really fast restaurant reporter kate roberts pointed that every acquisition in the space is inspire brands r. You done . We have made three major acquisitions in about 20 months and not saying that we are done but achieved scale which was one of the first objectives there so allows us to sit back and be selective about what we do next. Are there shared deficiencies in the different names or all run as separate businesses looking for organic growth we are focusing on shared capabilities behind the scenes so supply chain, operational efficiencies and related to Data Analytics and personalization, bringing that capability across all of our brands, both to help improve the Customer Experience on the front end and back end. Are you driving that or one of the particular Restaurant Brands good at it and bringing it to the others each brought a different element to it which is nice of a portfolio. Buffalo wild wings brought a Robust Loyalty Program sonic 6 Online Transactions and only a year since being launched and then jimmy johns brings 34 delivery and so that channel as well is launching a loyalty program. Where are comps accelerating the most rightcomps accelerating at sonic. They have done a great job launching new products order ahead application has gone from 0 of sales to 6 of sales in 12 months has been helping. Have you been taking share from mcdonalds which reports p tomorrow it is a big industry. It is hard to see who is taking share from whom. It is hard to tell what do you think of the labor market we have seen increases in minimum wages in a number of states. It is a tight labor market. Also just near zero unemployment we are driving efficiencies. Making sure from the labor and scheduling standpoint and using analytics and having labor in the right place. What about automation automation in the restaurants is something that is talked about a lot. We think there is opportunity to automate more in the supply chan chain. We are operating to take costs out and usiindustrial engineeri we can call it a roll up. Providing a lot of equity. Is there an exit plan . Right now, we are focused on being a private company putting a great portfolio together and investing in the capabilities. It will take time. Were in no rush which is great thing about the situation. You mentioned and answered morgans question, you achieved scale. What represents scale . I think being the number four player in the United States now in system sales certainly suggests we have gotten to some scale. The fact we can make those investments and fixed costs across the portfolio and brands that are unique and different that bring Different Things to the party makes us feel comfortable we are in a good spot you mentioned employment. Widely considered the bed the industry rides as job growth moderated a little bit from last year, will we notice that in comps we have not seen it yet it is still early days we are still seeing strong industry there are haves and havenots in the industry those able to invest like we are and others have scale will see much stronger performance. Certainly innovation gets a bigger bang for your buck than recent decades thanks, congratulations. Thanks for having me. Lets go to john forte good morning. We have a couple of interesting upgrades on the bigger side apple. On the smaller side, pinterest we will look at tech which is trying to find its way all year. Thats coming up on squawk alley. With more than 85 years of experience over multiple market cycles. With Portfolio Managers who are encouraged to do whats right over whats popular. Focused on helping me achieve my investors unique goals. Can i find an Investment Firm that gets long term the way i do . With capital group, i can. Talk to your advisor or consultant for investment risks and information. Talk to your advisor or consultant 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. Welcome back to squawk on the street im dominic chu. Most sectors here in positive territory. Dow may be flat, but s p is up 1 2 percent you can see the Energy Sector up over 1 . That is moving the sector higher for the year oil slips for todays session. Among the names moving higher, nosh higher from 2 to 6 halliburton leading sector following the disappointing earnings this morning. Watch the Energy Sector. Carl, back downtown to you at the New York Stock Exchange. Thank you, dom. When we come back, we check in with kara swisher. Why she thinks facebook finally has a good idea as the iicndes are frozen in place. Dont go away. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From managing inventory. To detecting and preventing threats. To scaling up your production. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Pacifica ted goin oneighbor yes. Takin it off road Station Wagon . You know its an suv i know for fact your suv does not suck. Why is that . It aint got that vacuum in the back we got to go. Vacuum in the back, hallelujah good morning it is 8 00 at facebook headquarters 11 00 on wall street squawk alley is live good morning