Transcripts For CNBC Squawk On The Street 20240713

Streaming service. Lets look at futures this morning. Some Economic Data better than expected today thats the picture on fed day. Dow opens higher by 34 s p by 2. 5 nasdaq by 17 road map this morning starts with right there, the futures, pointing to higher open after that stronger than forecast Economic Data. Investors staying cautious ahead of the fed record highs within striking distance again plus, shares of General Electric popping after an earnings beat the company raising its 2019 cash flow forecast and streaming wars at t set to challenge netflix, apple and disney, unveiling details for its upcoming hcupcome upcoming hbo max Service David talks with warner media Ceo John Stankey and thats coming up in the next hour as we said, looking forward to that big interview the markets, the fed, fed day. The data was better than expected this morning. Still confirms were slowing, so the fed will be cutting, right the fed raised too much it is just a fact. Jay powell overdid it. The economy couldnt take it there are a lot of people who come on air and say it didnt matter you look at the mortgage purchase numbers this morning, clearly does matter. Internationally, scott, were lucky that the stocks are doing far better than the economy. People arent hiring international, theyre hiring domestic i think we need to cut how many quarters can you have where numbers are bad because of the strong dollar . So, look, jay didnt do it right. And thats okay. It is okay people make mistakes all the time we accept mistakes in other than for the new England Patriots and sports. We accept mistakes in school, we accept mistakes in science why cant we just accept mistakes in fed policy hes been trying to make up for it if anything maybe this will be the third cut. What if it is a cut and pause. Is that a mistake . There is an algorithm that says cut, pause, cut, pause. Theyll act immediately. People should wait for the cut pause. The greatest thing jay could do is say, you know what, im going to take written questions and because last time he had people, like, hi, hi, im from the springfield from what is that, Woodrow Wilson high, what is that School Springfield the high school in washington, d. C. That everybody likes. In bethesda. Woodward. Ill from woodward, im the editor in chief of the woodward paper, what do you think about going green . Did you see that fiasco of a press conference what did he do invite people from junior high he has got to tighten up his game he has got to say, you know what, im going to pause and take a couple of questions, not a lot of questions, i have other things to do i dont care what else he has to do stop acting like he plays for the hilltoppers and start he plays for the hilltoppers. It is killing me, killing me, killing me he is playing for the hilltoppers which play, of course, thats the summit team i coached a game, we beat vo voorhees it is amateur hour he has to be more professional he has to say, listen, i may pause, data dependent, data dependent, we cant take it anymore and turn on some prebaseball stuff david, you got, you know, gdp coming in at 1. 9 you got earnings coming in better than expected, expectations were low. And there are those who are saying, why do we need a cut the market expects it and were likely to get it. Yeah. I mean, you spent a lot of time, we spent a great deal of time discussing this on your show, scott, and on our show as well and jim made these points many times that, you know, maybe there is one more or a couple more because we went too far i dont know the industrial economy perhaps not as strong as we would like strong dollar, of course, a part of that. You know, jim, you look at ge earnings today, and you have to wonder, again, is that a reflection of things getting a bit better no, thats just literally, david, im not kidding thats larry culp rationalizing the company. And, by the way, if the 737 max doesnt fly, those numbers wont matter but i happen to think that larry is larry culp is getting getting his arms around what was an impossible situation. I am not going to say that better Free Cash Flow is related to the idea the economy is better thats related to the idea that larry culp has finally undone a lot of mistakes. Even allison looks like you cant find it, so i dont want to scribe that ch robinson, a company that does freight forwarding, miserable numbers. I just find, david, international is bad, my hat is off to larry culp, he has gotten control of power, david. Hes in power. Yeah, well, i mean, right, that has been the key from the very beginning as you know, jim, getting their arms around power and in terms of at least putting it on a much steadier or stabilizing it, i guess, is the right thing to say thats a big statement you just made if they really are sort of and have stabilized power, and can at least have a sense where the business is going from here, thats a big deal. Because culp has told us, i mean, you know, a year ago, we sat down for his first interview, he certainly indicated at that time, thats why the stock sunk if you recall wasnt power wasnt done. If in terms of at least the bleeding and so if thats the case, jim, thats a significant moment for the company. Thats why, jim, people like stephanie link bought the stock, have added to the stock, on the very belief of what david was just talking about, and what you said, culp, hes gotten control of power, which was the breaking point. So is the stock not a buy then if hes gotten control of what was one of the worst areas of the company . Look, what happens if the 737 max is grounded in the First Quarter . Okay i dont think it will be, but the numbers are too high that said, longterm care, i regard it as being under control, no adjustments this time other than for having to do with interest rates. Wind is turning out to be as good if not better as nat gas. Aerospace services really good im going to say you buy half. You buy half i dont like the thing remember, well have some hearings, we have muilenburgs, the 737 max. Im interested in hearing, david, until stephen tusa comes out, i guess and gives his take he gave us a little he made me feel two weeks ago, a 5 price target jim is furiously looking for his tusa was saying it was boring it was boring. Hes got a lot of room. I got it. Get out of my area, jim, all right . Man, stay out of my zone. Out of sight, out of mind youre out of here he can do whatever he wants. I got youre not going anywhere anybody who tells you Southern California is not freezing in the morning is lying to you it is like 27 degrees. Lose the vest just lose the vest i cant stand it tell us what tusa had to say. Heres what he says the quarter was in line and there is not much controversy here there is some need for clarity on a few items that actually sounds like a real company. It sounds like a real company now. I think tusa is saying, listen, this is a real company and i can start putting in actual multiple audit, david it is very important, mr. Cashmere it is going to be like that. What did i say . Left him speechless. Were still talking ten bucks. It hasnt it has hung around that level for a long time now, jim. Well, what, what do you mean . Still lost 9. 5 billion in the quarter. They had an 8 billion charge, nine cash, baker hughes, this company did so many stupid things it is almost as it is like grubhub. You said to the for davids first question, are things Getting Better you said no. No, he said the economy is the economy Getting Better can you read through did you read the economy the answer is no you can read through ge is Getting Better. Free cash flow, hes rationalizing the company. We never have been able to put a multiple on this company because it became cats and dogs. We have to move on in my ear someone says we have to move on in re aality, i dont want to mv on this is not in our basement, it is a show. We have to move on it is not waynes world. At t is unveiling hbo max streaming service. David has those details if you copt tell couldnt tell by now why he is in Southern California with the beautiful backdrop and the vest. It is a sweater i think it might be cashmere, im not sure and i need it. As i said, it is really cold here were waiting for the sun to come up. Were waiting to be joined by john stankey, the president and ceo of at t, also running warner media, were going to talk to him about the presentation yesterday, 3 00 p. M. Local time here, so 6 00. A lot of people digesting all of the news that came out, almost overnight if you will, from 6 00 to 9 00 yesterday as they presented the plan for hbo max, 14. 99 being a key price point here, very similar to what hbo is priced at with 34 million subscribers. The question is how many will simply move to hbo max given there is no price differential given what youre paying most of your cable distributors for that a lot of focus on all of the content and particularly they kept coming back to the idea of breadth and depth. And of trying to Service Areas and demographics perhaps that hbo currently doesnt hit as hard women, for example, young adults being another one, millennials, gen z, talking about the top 100 titles on these Services Drive 50 of usage in general at the svods. Interface that is in my opinion certainly seems far superior to what you get now with hbo. If you use that digitally. And may rival if not exceed some of the ones already on the market not just using algorithms, but actual human recommendations in terms of what you might like dont forget the humans. The key question here is going to be will it resonate in the marketplace at that price point . Certainly with current hbo subscribers yes. Will you get the additional 16 million incremental subscribers they will add over the next five years by 2025, thats a question there is a lot of content there, 10,000 hours of library, 35 new shows, right off the bat for hbo max itself and all that hbo content as well but it will be interesting given where the price point is not that it was a surprise it may have been lower than some anticipated that it would be a lot to talk to stankey about around the top of the next hour. David, part of the commentary i saw this morning from the likes of rich green field say that to be successful in the streaming business, you need premiere content, check, you need a tech platform, check. And you need marketing and distribution capability like they have, check so they enter at a point of offense where a lot of the others in the streaming business or the fledgling competitors here dont necessarily have all of those attributes. You believe that yeah, listen, you the question, of course, is how many streaming services is the average home going to want is it three, four . You have to consider this is going to be in the mix no doubt about it. If you consider a netflix, amazon already coming into your home, if youre a prime subscriber, disney plus, if you have children. But given the breadth and the depth of content that theyre going to have available here, beyond hbo itself, what is the premium and what they maintain will still be the premium offerings out there had it comes to videos, scott, you have to consider that this will be something that people will consider but, you know, you do wonder i do wonder about the price point. Hbo has been in the marketplace for a long time. It has 34 million domestic subscribers. Netflix has more than that and that is a key reason so because it is fairly expensive. So you do wonder how much it is going to resonate with people who perhaps are on a budget or a younger people, who somewhat are somewhat unwilling to pay for these kinds of services. And those are some of the questions as well. The investment will be fairly significant, they are saying it is going to be profitable by 2025 jim . David, let me give you a just a happen let me say a theory when you and i used to speak to mr. Buchus, a Great American, the idea that hbo was worth a huge amount of money, underle have youed within the mix, was something talked about all the time do you think in order to raise money, that at t could spin off some of hbo . You know, no. I dont. They are all in here it is central to their strategy, certainly at warner. I cant tell you how many times the various people who took the stage said were all in. That was stankey everything starts with hbo that was greenblatt. They talk about d. C. And say, you know, were in all there too. And it is hard to imagine given the focus they have on this particular product and the importance theyre placing on it for driving warner overall, and obviously being a defense against the trends we all know are so pervasive right now in terms of cord cutting, that they would ever consider doing that i dont anticipate that or think that would be a possibility. David, theyre going to spend from what i see 4 billion on playing the music. You know what, well come back to you well come back to you we got the music. Either in the ear we got to go or the music which tells you we got to go without the stuff in the ear up next, cramers mad dash, we count down to the opening ell. Futures, we were poised to open higher on better than expected Economic Data. Pretty much in a Holding Pattern there. Dow would open higher by more than 30, s p by 3. More squawk on the street from the New York Stock Exchange is straight ahead driverless cars, or trips to mars. No commission. Delivery drones, or the latest phones. No commission. No matter what you trade, at fidelity youll pay no commission for online u. S. Equity trades. At fidelity youll pay no commission by the way, shes the it wasnext mozart. G day. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. All right, were back, about 11 minutes before the opening bell time for cramers mad dash ahead of the open. We have amd scott, you and i like sports we make no secret. Fair comment. We often talk about how important coaching is. Probably the most important. How teams win. Well, look at the coach, lisa sue, takes over a company that people have given up on. Bad balance sheet, no road map for growth, over here, look what shes done i think this is the greatest turn around story of our lifetime and this quarter was excellent. Even people like citi, by the way, citi, very funny, shows you where people were, advanced micro, another miss, not meaningful, has an 8 price target i think the train left the station for this man this quarter had a road map for growth there will be sellers. She did not say it is the greatest thing ever, it is not lisa sues way. Didnt they have a weaker revenue guide . You know, ive gone over i went over every line of every single one it is all systems go with the data center. All systems go with gaming i think that anyone who thinks there is a weaker are revenue line, youre missing orders in the second half and first half of next year it is a winner people have been itching to take profits. If they take profits, you got to own it. Despite lisa belichicks performance, what is the overall read, you got amd, texan, a disappointment and then texan was internet of things. They have too much auto, trying to diverse away from cell phone. Intel telling everything is fantastic in their market. The reason im not worried about the revenue, she is taking share from intel and intel had a great quarter. She has the great data center chips. Her whole road map is perfect. She is so good and youre right, the only thing that shes going to do wrong, shes going to come to philadelphia and lose to the eagles we should talk to her as being belichick. Belichick doesnt have enough fingers for the rings. Remember where you got that from. I steal things all the time from you. We have many movers to get to this morning stick around for more squawk on the street. Were going to count down to the opening bell next. As your life grows, so do your needs. And with bank of america and merrill, the benefits you get can grow, too. As a preferred rewards member, you can enjoy Priority Service and exclusive discounts. So your growing life can be more rewarding, too. What would you like the power to do . Welcome back six minutes from the bell. Stocks will open high, opening bell is just minutes away. Danafarber Cancer Institute discovered the pdl1 pathway. Pdl1. They changed how the world fights cancer. Blocking the pdl1 protein, lets the immune system attack, attack, attack cancer. Pdl1 transformed, revolutionized, immunotherapy. Pdl1 saved my life. Saved my life. Saved my life. What we do here at danafaber, changes lives everywhere. Everywhere. Everywhere. Everywhere. Everywhere. Youre watching cnbcs squawk on the street. Live from the Financial Capital of the world the opening bell set to ring in just about three minutes time lets go back to ge. A big winner off the open and as we said, the notes are starting to come through. I mentioned stephanie link to you. She sends to me, i never heard culp this confident and in command of the Company Since he started. I think the Free Cash Flow inflexion should have folks taking notice, not just for a day. I think shes right i think that what youre getting here with ge is the it is the turn it is the turn we got longterm care in a box im not as concerned about it. I was before i wanted to see Free Cash Flow go up. We got that. 365 million from industrial, industrial company, again, the pension plan, weunderstood that, took a hit that one solved. Wind is making not a lot of money, but the prerhee newables doing well turbines, issues with nat gas but under control. The max has to get back. Everyone, everyone when i look at whats going on with this situation, with ge, with honeywell, with united technologies, david, this max is everything it really is otherwise you want to own all the stocks what are you hearing i only listen to what phil lebeau tells me. Right . Dont you . I dont know how much longer is muilenburg going to be the ceo of boeing. Thats where people are focused as much as they are when the plane returns to service, jim. It has become the ultimate guessing game. So the aforementioned tusa is out with commentary as well. No, quote, smoking gun here, as always the followup in details will be key for forward estimates, for which we remain well below consensus you know, look, he can keep talking about that i dont think it is about consensus. I think it is about credibility, which a year ago there was none. I think it is about the idea that there is no cash strain to the point we should be worried about the common stock i think it is about 20 20. Culp always said that. David, when steve tusa says those comments, the way i read it is, hey, listen, i am not excited about the stock. But i no longer think it is a situation that is dire dont you think that yeah. I tend to think that i mean, jim, are we do we feel like were safe when it comes to longterm care. Are they done . Is this it there are questions. Dont forget harry and his entire indictment would be a accounting of the company as well that seems to have come and gone without too much well, look, im still waiting for the gigantic decline in the debt position. We dont have that thats what the Free Cash Flow can do i think that the damage here turned out to be not irreparable, lets put it that way. I read what tusa is saying, i think hes saying, look, if you talk to tusa, i havent changed my view one bit. Thats what you take from his i listen to larry culp, i think how can you not change your view one bit . If you have stephanie link at this point, i will in a claymation death match between stephanie link and steve tusa, im going with the linkster. What do you think we can get for that on payperview i dont know. It is up to david on what he says about stankey it should be the ultimate fight club it is the linkster versus tusa and my inclination is that the linkster has a combo, a 12 combo that will put tusa right on the canvas. Tusa on the canvas versus linkster. Some dudes on my show found out the hard way, right . Take on the linkster linkster. End up on the canvas. 355, shes on the treadmill, doing ten miles starting at 4 00 do you think tusa does that . Im all in stephanie link, tusa, step aside, two enter, one leaves, it is stephanie. In the octagon. Speaking of, a big match this weekend at msg at the big board, the bells, the regional board regional management, and up the at nasdaq, scholastic, publisher and distributor of childrens books and educational media. You know what stock i wanted to hit . I wanted to follow up on grubhub from yesterday slub hub it is down again 40 yesterday. I think that if you look at the sub text of his call, he took it from buy to sell he did. Hes got to be careful, you got to you write the conference calls, you have to be in the light of day, no offense. But there is a great goldman piece and it starts out with we got it wrong dont you love that . We got it wrong. David, you know, i got to tell you, remember when you used to have the penguins with the analysts yes this is this is a break a penguin breakout a jail break of penguins worst ive ever seen. Yes worst ive ever seen. Used to have them running off the iceberg. We looked for lemmings, couldnt find a video, went with the penguins and for years on the old squawk box we would use them to indicate the worthlessness of analysts in a case where they were reacting to the news itself and no actual help because none of them actually forecasted what might have happened. Now forecast promiscutitpromi dont know. Can i go out to dinner in another restaurant besides the longshoreman there is nothing to distinguish these companies. This is the ultimate commodity except for one of them plays with Venture Capital money and, david, Venture Capital money is like going against Nuclear Weapons and your conventional and i even though this guy gave up a lot to be able to get all these big cap restaurant chains, this thing is a disaster, david. It is a disaster second day, we have full like radiation. Second day downgrades. Yeah. It is an interesting point you raise, though, about all that capital that rushes into these Business Models that arent necessarily able to prove even profitability. But have the effect of overall depressing prices for the Public Entrance think about, for example, uber, which is up against didi in some markets. Both funded by softbank money. Youre talking as well i think about door dash, correct funded by softbank money yeah postmates. David, if you have softbank money, do they give it to you and say, listen, youre allowsed to lose every penny and more adam neumann seemed to do that door dash, theyre saying, hey, this restaurant, the longshoreman, one day i go to the website and it says that door dash is exclusive distributor. Theyre not. They werent and then they go and they buy caviar and now they are. Theyre buying business, they are making very little money, if anything, you know, theyre not making money at all. Theyre not making money at all. You think these things cannot stand alone as individual companies. I think dan nathan made a point last night saying they need to be part of a larger entity that can sustain some of the losses and lack of profitability, at least in the near term i dont know how do you compete . It is a bunch of guys on bicycles taking food to somebodys house that is not a great business. We have developing news as well boeing ceo Dennis Muilenburg arriving on capitol hill for a second day of hearings, taking questions from phil lebeau lets listen in. Well take it back here thats phil lebeau walking with the boeing ceo, day two of testimony. Phils with us now phil, you described his performance yesterday. I think it was average at best, is how you said. Oh, yeah. Yeah and really the second half of yesterday, it was not good look, didnt have a chance to answer many questions manly because a number of the senators said flat out this company is a mess and there are a number of problems, specifically with the max, with the faa certification, senator Tammy Duckworth from illinois, she called him a liar, she said you lied, your company lied to us, thats what i asked him about in the hallway he essentially dodged the question and said, look, we have never been lying to anyone we have been forth right much the same message we heard from him time and again. As bad as those questions were yesterday for Dennis Muilenburg, it may be rougher with some of the representatives talking today. Peter davalio, they have been doing an investigation, his committee has been doing an investigation, they are loaded to bear. And theyre going to come at him hard and i think hes not the only one i think there will be more specific questions about what he knew, when he knew it, and specifically with the chief technical pilot and the instant messages and the emails that he exchanged with another boeing employee where he suggested that he misled regulators yesterday, Dennis Muilenburg said yes, i was aware of those emails and instant messages since before the second 737 max crash in march of last year. That was one of those moments where everybody kind of looked around and said, okay, did you read the message, did you know that, what specifically did you know about those messages and why wasnt that brought up immediately in terms of discussions with the faa, et cetera guys, back to you. Phil, i got to tell you, felt like had tim sloan ceo of wells fargo went to washington and it really wasnt sloans fault, he was cleaning up john stumps mess, he was hurting the franchise. And he told me, if he was hurting the wells fargo franchise, he would resign im not i thought that dennis was contrite, but i think that if the board says that hes hurting the franchise, well, phil, doesnt he have to do what tim sloan did . Which brings up the question, if you buy that, and im not saying thats a wrong theory, but, jim, if you buy that, is it better it replace your ceo now when youve got a ton of things that are up in the air and a ton of uncertainty regarding the max and getting it back in service, or are you better served by saying, okay, we dont think hes the right person, but lets get through this crucial period, then we address this once the faa recertified the plane, whether that happens by the end of the year, or shortly after the new year thats really what the it has to be the latter you cannot do it right now it has to be up to the board and dennis dealing with the board, but, yes, you cant do it right now. But i hear you, phil and im rooting for dennis and rooting for boeing, because it is a Great American company. But i understand that there are people in washington who are basically saying if you want this company in 2020 to be in the mix of defense contractors, in the mix of whats blessed, were going to need a change and i thought that was harsh, i thought dennis was contrite, but, wow, phil, those two options you offer, im taking the second. One quick note, jim, when this all started, i specifically brought this question to several boeing executives and their pr people, i said, why dont you bring in an outside investigator much like General Motors did with the ignition switch failure recall, and you bring in that outside investigator and say, have at it find what you need to find, you come to us at a certain point, and tell us where the problem is, who did what, well take action from there. The response that i got time and again from boeing executives was everybody said time and again they said, we dont need that. The board is going to look into this were going to look into this. We can handle this ourselves what happened since then, jim, drip upon drip upon drip of new revelations that have come out. This creates the appearance which we heard yesterday from the senators of youre not being straight with us you lied to us according to senator Tammy Duckworth and thats the problem with them not bringing in somebody with the stellar reputation, who can investigate this from the getgo. They should have brought in ted wells, from paul wise. We dont talk about fox being a corrupt or crooked company ted wells said how we see youre right, phil ted would have been the guy beyond reproach, tough, think about the nfl, they went in the nfl, they decide, you know, the nfl, some argue is the most powerful organization in the country, and paul wise said heres the way we see it you are so right, phil they should have brought in someone like paul wise who cannot be bought phil, we will leave it there for now. Im sure we will see you often throughout the day thats phil lebeau with his hearing starts at 10 00 all right we appreciate it thank you. Why didnt they listen to phil why didnt they . Is there anyone who knows more im not kidding boeing thought of everything, maybe. They should have listened to phil phil covers the story. He understood. Lets pivot to another company in the cross hairs thats j j, johnson and johnson rising this morning, the company says it is testing found no asbestos in the baby powder that testing included a single bottle that the fda said contained trace amounts of asbestos, prompting j j to recall a lot of 33,000 bottles earlier this month back in december, ceo alex gorsky defended the product when talking to jim on mad money. Believe that our talc, our baby powder does not contain asbestos thats demonstrated in thousands of studies, studies not only conducted by johnson johnson, but studies conducted by this happened authorities, well respected authorities, where we work closely with regulators who are overlooking the methodology and throughout this process, we also not only use the best testing methodologies available, but we continue to improve them through the years. Okay. So thats gorsky with you. Beyond reproach this man is beyond reproach. Stuff really drives me crazy i know the reporters are covering it are very, very good. I absolutely the reuters reporter who won the award, shes fantastic. But this test is look, conclusi conclusive they did it is independent, they did much more work than the fda. Much more strenuous much more rigorous. Much more rigorous but the key is walmart, cvs and rite aid, do they bring it back . Do they bring it back . I put baby this stuff on every day. I admit, i stopped i stopped. Because the fda. Im back i trust alex gorsky far more than the fda hes more rigorous, he is he is a man who is taking his whole reputation on this on these tasks. Will customers will mothers trust gorsky over the fda . The fda has to back down. The fda is unlikely. You trust the government versus gorsky, i know. I go with gorsky gorsky, who is a ranger in the army, gorsky, who sued every day by plaintiffs and never loses his cool gorsky who i would vote for president if he ran for president , our country would be much better off. Thats how i feel about him. Thats quite a statement. That stock is up 2. 5 . Bob pisani, among the big movers this morning here on the big board. Good morning, scott, good morning, everybody happy wednesday. 3039, our old closing high shy of that. Indeterminant open this morning. Our leadership, for the month, healthcare, utilities have lagged tech has done pretty well, semis for the month here banks are done exceptionally well, a market leader. Yield curve helping that Consumer Staples down. This is an indeterminant trading. Keep your eye on the big picture, the trend first thing about october, no blowups. Look at our month for october here basically a slow meltup, despite the fact we had a little bit of chaos here around trade issues, tariffs. A slow, slow meltup here were just off the historic highs. The other thing that is important, were getting rotation and thats why the market is holding up so well thats whats kept us generally in the green all throughout the year take a look. Banks, the fed helped here we got a higher yield and a generally steeper yield curve for the month. Thats helping the banks healthcare, which is a defensive group up techs, semiconductors, defensive and as well as cyclical sector that are up here and the old leadership groups, defensive stocks, Consumer Staples and utilities down this month. Were getting a little rotation that is really helping the market i think thats extremely healthy for what has been going on here. So if you take a look here, what am i worried about, complacency . I have been complaining for weeks about the volumes. It is terrible etf volumes are below normal general equity volumes are below normal even options below normal trading. Nobody is out doing a lot, committing a lot were moving up on lack of selling, not enthusiastic buying thats an important mind set difference the vix is at 13 that may be an obvious reason. Put call ratios, generally low, that means traders are not going out and trying to buy protection for the market, not terribly worried. This is classic complacency. The market is like a coiled spring it can be sensitive to anything that would move it to the downside like the fed coming out and trying to imply were done for the year, were not going to do anything else. There is a little bit of risk to the market the Federal Reserve helped, they have been buying shortterm treasuries again, helping the yield curve. We want to know what the direction is, what are they doing . Thats what well hear about today. The old fed statement and what their last Committee Statement was, the commit contemplates the future path of the target range. It will continue to monitor the implications for the Economic Outlook and will act as appropriate. Well see if they change that. Were looking for any indication that this is three and done at this point and how market might react to that. The coiled spring idea, the complacency is very, very high right now. The market is vulnerable to some shortterm shocks and it could come from the Federal Reserve. Scott, back to you. We appreciate that very much, thats bob pisani. To the bond picks, Rick Santelli at the cme group in chicago. Good morning to you, rick. Good morning, scott a fascinating day, not only do we get an important bit of data in the first look at Third Quarter gdp, also awaiting the fed and its decision the reason thats interesting is because yields, not only u. S. , global yields most likely leading have been rising all the way through october into this meeting. After we had the good data points on gdp, everything reversed in the u. S. And in europe look at 24 hour chart of two ey year note yields that was up 1. Now down 2 if you look at 10s, up a couple of basis points as well. Now down three basis points. 1. 80 the breakout on monday. Really this is a key level and shouldnt surprise anyone that the treasury complex goes in on an important Technical Area into a fed meeting, that happens many times. Look at one week chart of those 10s. You can see not only did we have the breakout, but were starting to slip back the bund, one week chart, it also slipped back a bit. Do keep in mind that tenyear bunds three month yield high in the neighborhood of a reversed a bit, the twoyear, the shots in europe, fivemonth high. The dollar index, it benefited also from the data points, but it has in the benefitted from the easing cycle it is now back down on the day you go on to watch 98 in the dollar index after the fed decision scott and jim, back to you. Thank you coming up, hbo max and the streaming wars, david has that exclusive with at t coo and warner media Ceo John Stankey top of the hour. Squawk on the street is back right after this is the monolithic view of emerging markets obsolete . At pgim, we see alpha in the trends 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. As a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. By the way, shes the it wasnext mozart. G day. Ptech students around the world. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. Lets take another look at at t that stock is up 35 so far this year this morning getting another bump by about 1. 5 stay tuned for davids exclusive with at t president and warner media Ceo John Stankey on the launch of the hbo max streaming nt,seic upex though, it is stock trading with jim if you have medicare, listen up. The medicare enrollment deadline is only weeks away. 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You have to have every one be good with the stock where it is right now. I was going to ask you that is it overextended these all have to be good its a lot its a lot its a big steeplechase. And china and the narrative and that its a steeplechase did they buy back stock . I got to tell you, i want to hear shortages air. I love the air buds. The new ones . No, i havent got them yet. I need Noise Cancellation but crying babies, Everybody Loves babies but i have gone from first class to coach if theres a crying baby. These apparently are the answer. Youve gone back behind the curtain, not in front of it . Absolutely. Crying baby, ill take any seat i can get. But not anymore. Now im going to get these i know theres some shortages and theres issues whether theres real shortages tim has to be on his game because of all this nonsense about people dont like their programming. One program . If the guy wanted to buy cbs and viacom if he wanted to buy the nfl he could do it. Honest to god this is ridiculous yes, david is out there with hbo and they got a lot i think millennials dont even know theyre paying for the bill i got my apple bill yesterday. Its email. By the way, my credit card, they told me i was past due i was mortified. Your my fico score dropped by like 300 points they told me i was past due. Didnt know how to link it to my chase account. I couldnt buy a bungalow now after that fico change whats coming up on mad tonight . I got trex. You cant even tell its not wood wing span had the best of any. Restaurants. I tried to get a wing span franchise, i said how do i get one . He said get four burger king franchises and maybe ill speak to you he gave me the heisman coming up, john stankey keep it right here good wednesday morning welcome back to squawk on the street. Im back with leslie picker carl will be back later for squawk alley. In a few moments, well be sitting down with warnermedia Ceo John Stankey lets take a look at the markets. The dow is a little bit lower. Were lower across the board, l albeit slightly. Dow is down a fraction, about 9 points, s p down 3 and the nasdaq down 12. 5 well tell you how the play the market ahead of a key fed decision later on today. And ge is soaring but is there more room to run for that stock . And who will win the media wars well hear from job stankey on the new service in a few minutes. First, lets get down to steve. Reporter two big econ data points the adp came in at 125,000, stronger thanes the estimate fo fridays payroll gdp coming in. 3 stronger at 1. 9 the strength was offset which a second quarterly decline in business spending, which was just awful in the words of one economist, writing could have been worse about q3, q4 probably will be. The engines of growth are tiring late in the Business Cycle the data does not change what the markets expect the fed to do today, cut rates by a quarter point and signal a shift in policy that will make the next move by jay powell automatic a cut falls to 22 for another cut in december. The market providing that flexibility that the fed has wanted and then the next cut is priced in for april, but theres a lot of time between then and now. Barkleys writes we think that chair jay powell will emphasize the committees moving away from easing, towards Data Independence the markets are prepared to provide that kind of flexibility to the fed but listen closely to powell when he says we might cut, we night not cut, were just not going to definitely cut. Carl its scott, steve i have a question for you. Oh, scott we look at gdp this morning, 1. 9, better than expected and they also look at it and say its confirmation that were sloei slowing, especially in the manufacturing and Business Space so they have to view that within the prism of their overall thought of where we are and most importantly where they think were going. I think thats right, scott theyll say, we expected a slowing, we know theres a drag from the economic weakness and trade war. Theres actually ammunition for the hawks in this. However, you do know that federal spending was a little bit more helpful or Government Spending and the question is whether or not the consumer ahead of the tariffs this summer, scott, we debated this on another show brought forward some purchases and the big question, the big thing to watch in the Fourth Quarter is going to be Consumer Spending and the Christmas Holiday season to see how strong it is thats going to be the big swing factor for Fourth Quarter growth all right, steve, well look forward to it later this afternoon. Now lets get out to burbank, california where our david faber is sitting down with a very special guest. Take it away, david. Thanks, scott we are on the Warner Brothers lot. I am joined by john stankey, th president and ceo of at t and runs warnermedia, as well as the companys ceo. Thanks for joining us this morning. We appreciate you coming and joining us for the announcement money. I was there for all of it we want to start there given thats the news of the morning, hbo max being introduced, youll introduce the service itself in may of next year how important is it to the future of warner media its extremely important not just to warner media but to at t theres no question if youre going to produce general entertainment content, you need a new way of getting it to customers, which is on demand and on these platforms with the at t connections, having content, something emotional and stick oy to attac to those products is important for the health to continue to support an ad model. A lot of participants yesterday, including you when you took the stage initially were all in. A lot of people kept saying sort of that same theme, were all in what does that actually mean i think the team is incredibly committed to what were doing here its a hard pivot. Weve restructured this business and asked people to work in a different way and asked people to work beyond what used to be their typical divisional silos so we could bring the strength of all the Warner Companies together it requires divisional change and that people get past their own domain and Work Together and people said they believe this is necessary for the future of their business and what theyre responsible for. Have you managed to get that level of cooperation is that the way we should look at yesterdays announcement . And what is the bringing together of all this content under the hbo max umbrella when youve succeeded in getting these silos to Work Together we succeeded when we get customers that want to buy a great product, thats where success comes in i think the team understands that any time you do an m a transacti transaction, theres a certain period of disruption that follow it you go through a cycle of recalifornia brating and resetting the business weve made great progress. Its been moments of disruption and displacement and anxiety that have occurred, but were in a much better place right now than we were at the date of the transaction close. It was a challenging situation given the delay, getting this thing approved you know, human nature is that folks dont like uncertainty, creates anxiety and so while youre going through a court case and waiting, anxiety rises but were in such a much better place right now, i think you saw that by the team im read proud of the hbo max team and what theyve done but weve still got more to do to get this place in the right position and get our culture reset and do ul a the things a good, Healthy Business does. You got them to wrap the water tower in hbo max its not insignificant, is it . Its not insignificant. It might be the first time hbo have adorned the Warner Brothers lot. This is hollywood theres always disruption in any business that does a large m a transaction. Youve been for parade by some who have left the country as being the bad guy, coming in and knocking heads and not listening necessarily. Is it a long road to sort of get that cooperation and do you risk something on the creative side in terms of breaking down these solos . First of a silos the creative side of this business is still 100 in fact from the day we closed this transaction. We qua we walk you through an incredible amount of creative people who have been here and are still here i think weve done a really good job of ensuring those folks have had free rein to do what they want to do and increased investment levels and give them an opportunity to do Something Like hbo max you saw yesterday not just the creatives that work for Warner Media Company but our partners, jj abrams, and a variety of others that come through the session yesterday say this is a good place for us to work, were excited about the future and the options available in this business i want to get to the product itself, specific to the price. That was something that many in the Investment Community were waiting for yesterday. 14. 99. There are 34 million subscribers right now at hbo who are more or less paying a similar price to their cable distributor. What gives you the confidence at that price level youre going to be able to attract the 16 million incremental subscribers you think you will twice the content for the same price, ive had much more difficult marketing prop sessions to sell on the market than that. I this i this is an incredible value pup saw yesterday theres some really good product in there and as you saw bob walk through and he did a remarkable job showing how the team is thinking about expanding the traditional hbo demo and we focused a lot of incremental investment to make sure we broaden that app tur of the market we can address. Theres probably people who will say theres enough in there for me where i want to get into that, plus where i maybe wasnt interested in 15 for hbo before, there are some things that i think i might with with it we talk to a lot of customers every day and the distribution engine is incredibly strong. And the question for the offer down the road is to get people to sample. You mention avot, add supported video on demand. As we shared yesterday, some of this is coming out in time and this is our road map and where were going. The teams had a lot of work to do we got clearance from the court in march of this year, and that allowed us to start doing some of the things structurally to execute on hbomax so the team has been incredibly focused to get the domestic product out there and do it quickly and effectively and were doing second iterations on release two and three. The avod product is going through the Development Phase and the specking of it so when were ready and comfortable that we have the right price and the right structure of it, well communicate it i think weve been a little criticized over the course of the last year as weve gone through those iterations and Development Cycles people dont think weve been really crisp in our messaging. I dont think i want to make that mistake again back to price, 34, why you think it can resonate in the marketplace. At the same time, hbo has been around for a long time its a premium product that many enjoy, i know at my household we do thank you incrementally while it will be acontent, why you feel there are more people willing to pay, disney is 6. 99 netflix is a bit list. First of all, theyre not the same product the kind of content it provides, its not the same product. We can go in with a muff broader dem oaf and slate of content i think you saw pretty impressive and unique content in there. Would i tell you secondly, as we go forward on this, people arent going to just buy content for content sake theyre going to buy content because it associated with other products and services. Whether its amazon, who chooses to offer marketplace incentives to have video, or its at t that chooses to put great value with pay tv or connectivity or broadband with it. Thats are other reasons for people to come into the product as well. I have no yes this Creative Team can put the right content out there and hit the right ap tur hes a profl in that regard. I think hes going to lead the team with kevin and sarah and others to do a great job does actually offering video on your platform in some way lower churn in the wireless business unequivocally we already know what weve done in time, hbo, our best wireless subscribers, it drives up engagement and lowers the churn aspect for those customers weve offered it to. I think this product is even better because right now with the size of the content offering of hbo, its limited in terms of the number of minutes a day by broadening and governing the contenting well increase the time of engagement the more time somebody spends with it on a daly basis, the burt that will be. The importance you seem to be placing on this not just for warner but for at t would seem to go to that metric as much as any other. Looking out to 2025, youre going to be profitable but youre talking maybe 1 billion on ebidta and a country that generates 16 balance in free cash i mean, the up in dont seem to be that great given all the emphasis on the product itself think thats the dynamic this Company Driving about 100 million in our wireless business, theres a huge incentive to use it in the right way. We think its going to help that business to generate such a massive amount of the cash for the at t company you started the presentation, john, by saying you should have in speaking to the investing audience, you should have great confidence in your Management Team it struck me because there are a lot of investors who dont have great confidence in the Management Team or at least look at the recent history and say were not so sure, including eliot, which is now supportive but as little as six weeks ago was certainly fairly critical. Why should investors have great confidence in your management . I think if you look back at the history, not only of at t but of time warner and warner immedia warnermedia, these businesses have been through a lot of transitions. Thinking of the Media Company to move away from theatrical and get deep into television, you think about how significant thats been. When i started in this country and worked for at t, we thought call waiting was a pretty enough and innovative and important feature what was going to come out. This is a business who understands how to get through these transitions and manage subscriber bases through these transitions i believe at the end of the dave these plays that you run have a lot of repetition and similarity and i believe will do very well in that regard despite what many people have been a misstep in directv, given the sub losses when you aquid pro quo it for 67 million we probably have some things we would like to have seen differently. I think the erosion in the pay tv bundle has opinion a little bit fasters than we expected we said we werent buying it because we loved the satellite business, we loved the Customer Base pulled a lot of cash out of that business in the time that weve had it and thats the most important part in terms of what we needed to do. We always said this was going to be a transition from satellite subscribers to software subscribers. Hbo max and what were doing with at ttv, the enough software product, is part of that transition. Im ale will des popted were not weve been a little bit slow in that transition but i think this is going to pick up and youve probably seen the peak of losses in the last quarter and were going to incrementally get better moving forwa forward. Why do you feel like this is the peak of losses at directv and sublosses . Were ready to move out with a different product. Back when i left the directv business in the middle of 2017, one of the things i thought was very important to stain that base so that they could stay on a platform and not have to go is a great pairing with us now. We can within the stamly but offer a pleas for our best and most pro and hits the broad app tur of the demographics that you and i just discussed and i think that gives the pay tv product more life as well. Directv is now at t now, the ott product. How should we be viewing that in light of hbo max or paired with it you should think about them as two coming together over time well start with synthetic bundling where can buy both products at an attractive price. Our if youre a great hbo practice, you and well get a platform that allows the customer to do more integrated search and discovery where it doesnt feel like theyre working through two separate environments and, third, i believe these platforms that are being built right now are the new distribution platforms theyre the replacement of what started out as the big product networks, moved to cable infrastructure thatting ing aggd and in most case it aggregates and gets sent out to a customer. We want hbomax to be one of those platforms. Live will come into it over time you said that yesterday as well thats a number of years out i assume live, news, sports, what that means with live. Thats the reality of whats going to what and it will become the new distribution for the next ten years off more, one would expect. And it been great. Its been incredibly profitabprofitable its been incredibly good for you, aint it . Not so lucky. You have a few more years ahead of you here. How do you view that . What is your expectation of the average household in terms of how many of these products they were going to be willing to subscribe to i think were in such a state of change in the industry, i dont think anyone of us can say that sen of investment will and it product is not that different either, is it . I think scale is different. It was more profitable to service 25 of the market in the hold days. Now if youre a disor, you might serve 125 million subscribers instead of 25 million subscribe subscribers. How do you think about your whats ahead of you moving forward, you know, randal stevenson, the companys ceo has been quoted as saying you got to be successful as running this play, meaning stankeys got to be if you want to become the ceo. Do you want to become the ceo and do you feel the pressure to actually perform over this next period of period of time in terms of what were talking about here in order to potentially ascend to that job you know ive been working for 34 years and i think in virtually every job that ive taken ive always felt a pressure to perform and actually add value back to the business i dont think that changes or i feel any different about that. Ive got a lot in front of me to do right now this introduction to this product is incredibly important. Every job ive come into, its always been what needs to change, whats something that can add value to the business and how do you focus on doing it well thats what im going to do right now and thats all im concerned about right now. What comes from it comes from it the beauty i are is i have ths i work because i want to work not because i have to work and thats a blessing. I want to do whats in front of me right now does it hit hard when you see an elliott letter and part of it its on you saying we not sheer we want stankey to unare the company or anonymous comments of previous or current employees who take shots at you. Do you care . Of course i care. I care about my reputation i think at the end of the day i get paid a lot of money to put up with a lot of Different Things what i dont like about it is sometimes its distracting to the people around me, people were gee pending on to bring its not that it bothers me that theyre saying things about me, its that i want the organization to perform well and be focused. Is there a lot of pos tilt out there . Do you sense it amongst the people around us here in this incredibly creative spot, or do you feel like you really do have the level of cooperation youre going to need to achieve what are significant goals . You know, ive been through a lot in my career ive had a lot of great opportunities and been through a lot of interesting moments, probably eight major m a ingt actions in my career putting businesses together isnt the easiest thing in the world. Often you buy a company, you pay a preium and you cant run it the same as a Pivotal Moment as you have said it is for the busine business and this is an example right now and theres been many before styles and sometimes when you change the direction of a business after you acquire it, there are people who dont agree with your perspective. Im sure theres a fairly long trail of individuals that fall into that category over the course of my career that maybe dont have the greatest things to say about me. I try to work with the people i work with every day who are committed to the new direction were setting, include them and work with them in an instructive packsbut im not perfect and we all can do better from time to time i do want to come back and my final question just to the product itself because a number of reports were positive this morning. You sound surprised no, im not surprised i was there. Its an impressive breadth, depth, youre focused in terms of the demographics hbo doesnt hit, the interface, all those things but there was one thing coming up i would love to get an answer to up are going after sort of a younger demographic to a certain extent that and theres a concern theyre never going to pay for it how can you be confident given that focus that youre going to be able to get the incremental subscribers and the targeting around the world on their willingness to pay i think their willingness to pay is directly correlated to their discretionary and disposable income i think they get ib krcred and belief is these businesses run through their life cycle and earn money if you put something of value in front of them, they will pay something. Maybe on a college campus, they might be a little more aggressive about finding something without having to pay for it i think our job is to give them ways to be upon part of the and how a family moves through a life cycle eventually, you may graduate from your parents wireless account vaund your own as your life circumstances changes. Thats natural favorite hbo show right now no question, its got to be succession. You and i agree on that john stankey is president , coo and ceo of warner media, president and ceo of at t. Thanks for coming down sure thing. We appreciate you bringing that interview to us we want to go the white house. What can you tell us that apec summit is off chile that was going to host it said they will not be able to pull it off. There have been intense protests and riots in chile, some unrest in the streets there and now the president of chile saying that investigation is that means for the china trade deal a lot of expectation centering around President Trump and xi jinping meeting in chile in order to sign the phase one trade deal now the question is is there going to be an apex summit at all . And, secondly, will there be a meeting between President Trump and xi jinping at some other location those questions are unanswered at the moment. A spokesman said at that point they didnt even know the chilean government was cancelling it. Theyre trying to figure out if theres a backup location. And when we have deal dee tails, well bring them to you, scott thank you scrambling going on now. A lot of questions out there. We appreciate that report, though thank you so much. When we return, boeing ceo is back on the hill for his second day of questioning well fill you in on the latest. Plus ge shares spiking, up more than 10 a share tupo 10 a share on that earnings beat. Dont go away. Servicenow put our workflows in the cloud. This changes everything. Youre right sir. Everything. No not everything, i mean youre still blatantly sucking up to me gary. Brilliantly observed, sir. Always three steps ahead. Six steps ahead. Sixteen. So many steps. You done . A million steps ahead. Servicenow. Works for you. [spokesman] if youve tried colleg group cheering shed, snhu lets you transfer up to 90 credits toward you bachelors degree. [woman] it doesnt matter how old you are, you can do it, you can finish. [spokesman] finish your degree at snhu. Edu annoepidemic fueled by juul use with their kidfriendly flavors. San francisco voters stopped the sale of flavored ecigarettes. But then juul, backed by big tobacco, wrote prop c to weaken ecigarette protections. The San Francisco chronicle reports prop c is an audacious overreach, threatening to overturn the ban on flavored products approved by voters. Prop c means more kids vaping. Thats a dangerous idea. Vote no on juul. No on big tobacco. No on prop c. It is time now for our etf spotlight. Lets look at the nasdaq biotech ticker you have amgen pull being back despite beating earnings and raising fullyear guidance the ibb and ticker ihf are up more than 7 mondth to date health care the Top Performing sector and on trend to break a threemonth losing streak. Good morning, everybody iran and russia criticizing washingtons plans to protect oil deposits in syria, accusing the u. S. Of illegal actions. We believe that the territory of syria should be controlled by the government and military and armed forces of syria and they should be responsible for providing security to syria and to the neighbors of syria. Russian forces patrolling long the syrian Turkish Border in northeastern syria, russia has deployed troops in that area as part of a deal reached with turkey to ensure the removal of kurdish fighters from the bored are area and more than 500 items of actress and singer Olivia Newton john go up for auction scott, ill send it back downtown to you. Boeing ceo Dennis Mullenberg back on the hill for a second day of questioning phil lebeau caught up with him moments before going into the hearing room that hearing has just begun he has not yet addressed the house committee. I did have a few moments to catch up with him. Senator duckworth was straight forward in saying you lied to her, you and your company lied to her. Whats your action i have a great deal respect for senator duckworth, veteran, ive known her for a very long time did you lie to her . We took her feedback and well make sure shoe she has all the information shes looking for. Reporter when they say have you not been forth right, what do you say to them weve done our best to bring forward the data, be very transpare transparent. There are more than a few senators and today representatives who think they have not done new. Theyre coming out guns ablazing there th is representative peter defazio. I talked to a lot of pissed off pilots we are the backup system how do they think we can be backup when we dont know something is going to take over our plane . Again, this hearing for the House Transportation Committee is just beginning. We have yet to hear from Dennis Mullenbergthe guys will be here not only getting comments from the representatives but also let you know what Dennis Mullenberg has to say because hes no doubt going to get greld by this guys. The as we take a quick break, lets take a look at the markets this morning the is specific looking for its Third Straight day of i tra day record highs were lower fractionally across the board. We did have the news just moments ago of that apex summit next month being called off, calls into question whether that phase one of the trade deal between President Trump and president xi of china would be signed thats your market picture at this moment. More squawk on the street when we come back by the way, shes the it wasnext mozart. G day. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. The amount of Student Loan Debt i have, im embarrassed to even say. We just decided we didnt want debt any longer. I didnt realize how easy investing could be. Im Picking Companies that i believe in. I think sofi money is amazing. Thank you sofi. Sofi thank you, we love you. Stocks and treasury yields falling ahead of todays fed decision investors now would you know der if t wonder if the third time will be the charm. How much is riding on what happens this afternoon well, i think that if the fed was to surprise and not cut, there could be quite a bit riding on that but as you say, this cut is probably priced in and then we always need to see what the press conference and the language afterwards, you know, does the fed have a clear, consistent message that theyre data dependent or they see more cuts ahead cut and pause, if thats what happens today or if the market is led to believe thats whats going to happen, is the market okay with that i think that were going to need to see more cuts in the future as the u. S. Economy slows, and so really if its, you know, pause and data dependent, i think the market could be okay with that. But i would point out there are many other factors going on here, and we think that we are closer to the tom ofp of a tradg range thank a bottom all of this, the fed discussion, earnings, all these suggestions come back even more so to what happens with the trade picture we just got news a few moments ago that maybe youre not going to get this phase one signing because of the apec cancellation is that a problem . Does the market care about that happening next month i mean, stop and maybe as a finalization to that story yeah, i think the market has anticipated that something will happen based on a lot of good noise. And i dont know, you know, i dont know if they will meet the president xi and President Trump or, you know, where that will take place but one thing we are pretty confident about, president xi is not going to show up with one those checks that says 40 billion for u. S. Soy beans and thats some of the numbers that are out there. So the most that china as a whole, private and Stateowned Enterprises that were bought in 26 billion, so maybe they could do some of these points are unclear and we still have more tear i was going were going to need a lot more clarity on this deal for the market to break out. All right mark, stay with us we want to get over to jane wells because massive wildfires continuing to ravage the state of california jane is in moore park with the latest jane hey, yes. We have the first of the fires that have started in this new red flag warning situation with these gusts that have started. Gusts are expected to hit as high as 80 miles an hour today behind me well, the fire is coming this way. Can you see the smoke here weve lost the sun the reagan library, where the president and nancy are buried and have all their archives is on the hill behind me. The fire could be endangering that facility right now. There have been some mandatory evacuations and over here you can see the smoke is stretching all this way this broke out about 6 a. M. Local so 9 a. M. East coast time and we knew there were going to be fires because of this red flag warning situation, but there are mandatory evacuations they have started to get air sport in here but this wind is just amazing the sun is starting to peek out there. I live about four miles away and i got my warning fromison that is probably going to go out shortly. Theyre saying we could see winds here that we havent seen since october 2007, so were talking 12 years ago so all hands on deck there could be more power outages. So far as far as we know, there have been no structures lost but there are mandatory evacuations going on right now this is what the santa ana winds are like, folks. Thats just a little taste of it on what is just the beginning of this day. Stay safe and hope all the good folks out there do the same lets bring back in mark on the markets as we count down to the fed decision you think the equity back drop is positive . Its hard to tell a bad story. Industrials new high, financials new pi some of the better areas of the are the we havent. We certainly prefer u. S. Equities to european equities. We think that u. S. Earnings decelerating but well come in this quarter around expectations whereas, say, europe is likely to surprise a bit to the down side but overall, again, i think that a lot of that strength has been around trade so and a lot of that is priced in now. Now we have to get something look a deal on the table that is signed and even if we do, you know, one of the things that weve also seen besides the slower earnings is one of the causes for that has been less investment by companies and we see this with our own clients who improprietary surveys we do of them show urs theyre slightly less willing to invest given the uncertainty around and that could weigh on future profits and Economic Growth Going Forward as well. So, mark, given that uncertainty that coincides with some of the trade wa are deliberations, can the fed cut rates enough that would circumvent some of those businesses are having as it relates to the trade war or is it dependent on some kind of deal being signed in earnest well, i think our message would be no recession but not enough stimulus, either fiscal or monetary, to launch risk assets significantly higher here the fed does still have ammunition, unlike some Central Banks around the world, above the zero bound, and they can use that to help keep the u. S. Economy going and hopefully produce some growth, albeit sluggish growth. All right, mark, thank you so much i think the big question here is how low ed thank you so much for joining us as we go to break, take a look at shares of matel, surging on its earnings beat the toy maker is reporting that auditors have are come his post after a transition period of more squawk on the street when we return through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. 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. Could stocks be on the verge of a pullback as the fed prepares to cut rates . Nor squawk on the street coming up. 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. Now lets get to the cme group in chicago Rick Santelli with the santelli exchange. Id like to welcome Vincent Reinhart thanks for joining me. Lets get right into it. I liked when jay powell came in and overtime morphed to the notion well make our decision as time and conditions necessitate. Were using the model of three eases and a pause. In the mid 90s, no ecb, no negative interest rates, no euro the ecb didnt come into existence until june of 98 watching truman show and armageddon. Is this the right way to proceed . I would pity jay powell because his office is in a Building Full of economists and their message is just sinking in to him and were getting a little less of the plainspoken chair we thought wed get at the beginning. Youre exactly right they havent gotten the memo that the United States is part our trading partners than to us, but its still important to us, and that matters for the efficacy of Federal Reserve policy. Now, lets take this a step farther. The liquidity issues that seem to be at least for the time being under control really are a function of what we did after the crisis with doddfrank but maybe more importantly were finally getting a feedback loop through debt all this issuance of tbills with the structure and plumbing smaller is going to be an ongoing issue, dont you think yeah, i think there are two separate issues. The one is sort of a climate and the climate is if youve got 16 trillion of negative sovereign debt abroad, thats pulling down u. S. Yields you cant explain a 10year treasury at 1. 80 based on the current condition of the u. S. Economy. The second part is about the resilience of Financial Markets in an environment in which intermediation is shrinking, in which the big banks hold reserves, they dont use them, and its just tougher for the fed to get their liquidity pumped through the whole plumbing of the Financial System you know, vincent, i continue to look towards europe and to some extent japan. The bank of japan of course has their announcement tonight tomorrow but in the final analysis, weve seen quite an interesting rise in rates in europe, and i do believe that if they are reversing their policies, that will definitely be more of a tsunami in the global Financial Markets than this third ease maybe the fed should consider keeping it in their pocket i think they are too far over the board not to jump into the pool right now when 95 pricing of policy ease is there, it becomes selffulfilling. I think youre right, though, if the Global Economy changes and the european economy looks better, then that will be consequential everywhere and that goes back to the point. Trade matters more to our trading partners than to us. The trade deal is more important for europe and japan than it is for us and finally, the last issue i want to bring up is this morning gdp. Listen, 1. 9 isnt terrific, but it is terrific considering all the negativity and all the pushback around the globe regarding the policies and strategies of straight and ongoing issues with regard to the u. S. Economy your thoughts on todays number. The important thing about todays number, 1. 9 may not sound terrific but its sustainable. We couldnt be growing at 3 like we were last year in an environment in which our population isnt going up much and were not generating productivity 2 in the neighborhood, thats sustainable. We can thank you, vin secent well have to leave it there talk to you after the meeting ends potentially and well discuss what the statement says. Scott, back to you. All right, rick, thank you. Ge shares highest level today since july after its earnings beat. Our seema mody joins us fresh off a call with larry culp. I just spoke with General Electrics ceo, larry culp, and he said hes more optimistic today than a year ago and 2019 is a reset year. There are still a lot of cleanup to do and its going to take time to drive the changes that hes been articulating since becoming ceo one year ago. Within aviation, culp says despite the grounding of the boe boeing 737 max plane, the company is seeing healthy demand from airbus. Its growing military business, its after market business but at the same time it is working with boeing for a safe return to service. While ge did raise its industrialFree Cash Flow outlook, its Power Division continues to struggle. Quarterly revenue falling 14 year over year, but culp says power is in the midst of a multiyear transformation and he sees a lot of opportunity in Renewable Energy and onshore wind turbines. So well have to see how ge continues to turn around power he does remain focused in general raising cash to pay down debt its in the process of selling down its stake in baker hughes and continuing that sale of biopharma for 21 billion. That is really what the market wants to see take a look at the stock, its trading at 10 and change. Highest level since july, as you were pointing out, scott, and i should add its moving on heavy volume. Just off the highs of the day as well, 12 gainer is General Electric seema, thanks. Thank you now lets send it over to jon fortt with a look at whats coming up on squawk alley today. Sean radd is the cofounder and former ceo of tinder hes going to join us and well talk about the 2 billion lawsuit he has pending and a philanthropic venture hes got might want to do a little role reversal, tease my show and toss it back to scott wapner. Good stuff, jon, thanks. Its been a volatile start overall but weve seen a little chill after chile called off a key summit where President Trump and chinese president xi jinping were expected to discuss phase 1 of a possible trade deal we are seeing weakness in material stocks as you can see behind me here, so stocks still relatively in a Holding Pattern. The worst performing sector so far is the energy side of things after data showed a surprise building of u. S. Crude stw inventories. Youve got hess adding to losses after posting a miss on revenues and lowering its Capital Expenditures outlook the rest of the year so the energy in focus and its a fed day, well keep financials in focus as well i will sent it back downtown to you guys at the New York Stock Exchange all right, good stuff, dom, thank you. When we come back, well take a look at the market real quick. Were treading water, at least on the dow, ahead of the fed decision heard dom talking about some of the movers in the financial space. Industrials have been at a 52week high of late were in waitandsee mode we have big earnings after the bell were counting down to as apple and facebook are getting set to report. Well tell you wt eechatoxpt because squawk alley is up next dont go away. It was sophies big day. By the way, shes the next mozart. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. As your life grows, so do your needs. And with bank of america and merrill, the benefits you get can grow, too. As a preferred rewards member, you can enjoy Priority Service and exclusive discounts. So your growing life can be more rewarding, too. What would you like the power to do . 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. Good morning it is 8 00 a. M. At lime headquarters in San Francisco, its 11 00 a. M. On wall street and squawk alley is live good wednesday morning, welcome to squawk alley. Interesting day on this fed day as markets holding its cards close to the vest. Well start with the busiest