Transcripts For CNBC Squawk Box 20240713

With more. Thank you, andrew the Commerce Ministry said negotiators agreed to canceling tariffs in stretches the additional tariffs or some of them had to go. Also the Ministry Said from beijings perspective, the tariffs needed to be lifted at the same time by the same amount, how much could be negotiated the time and place of the deal signing has yet to be decided. Since then, the state media has been really focused on the point that if the u. S. Wants to have a trade deal, there has to be a removal of tariffs the state meeting says these have to be removed together saying this shows them as equals separately today, the authorities here sentenced nine people to joail including one with a suspended death sentence for smuggling fentanyl into the United States. As a sign that there was some calculated move behind this decision, the commission had said after the sentencing that the decision was made in accordance with the consensus reached between president s xi and President Trump. Suggesting that President Trump had influence in the final decision about these people. Thank you for that report well keep our eyes on how the markets relate to all of this. The china trade comments du jour yesterday, the comment was, we wont be ready for brazil or wherever they were thinking. Nothing until december. We were up 80 and go to zero. It can flip around quick. Today it is up but not a percent. Close to a record high. We are maintaining that neighborhood in corporate news, the Justice Department has charged two twitter employees for spying saying they used the platform for information and gave it to kingdom officials. One of the men charged is an associate of the soaudi prince. The Parent Company of Google Alphabet has formed an independent committee to look into issues of Sexual Harassment the move came after several share holder groups sued the company in january alleging the board breached investigations including andy rubin he was let go and paid a 90 million severance package after reports say Sexual Assault charges were found as credible and reviewing the behavior of chief legal officer David Drummond who is accused of having relationships with employees including one who says they had a child together while he was still married drummond made 47 million last year google has been holding discussion about changing its political ad policy saying it would ban political ads, facebook said it would keep them google is discussing the plan across all of their platforms. There is facebook and twitter. Google could break the dead lock and what to do about it do you think facebook gets pressured . Probably. Im hoping they dont. We differ on this. Im a big boy. If i see crazy stuff, i usually know it is crazy ill check to see what date i need to be at the polls. Unfortunately i know. The same ones who dont know who pence is i know. The issue is maybe about microtargeting the idea that they can show you one ad because they have a view about how you are thinking about something. If i gave off any indication of how i feel. Because you hold that so close to your chest. They can guess. California investigating facebook over privacy practices. The state attorney general announced a lawsuit. California prosecutors began probing in 2018 after saying that data on as many as 87 million users had been improperly shared with cambridge analytical you get in right before the show starts, so i did not get to talk to you enough about yesterday. What was the lead. What happened yesterday . Well talk about it we are going to have some sound later. I will say, it felt magical. If you can say so yourself. It was tremendous i saw you walking by that sign of you. You were walking by it was an electronic screen it changes im starting to realize who im dealing with here. Between muilenburgs comments and air bnb sits down and breaks the news as we are sitting there, he is changing the whole companys policy Kim Kardashian and kris jenner show up and kanye is with them then i think i should ask kanye a question i give him a mic and he starts answering. And Reed Hastings made some comments this turned into one of the biggest things the cnbc deal book conference. Can we take credit for it . We are all having fun together i take some satisfaction, some pride in my colleague thats so nice. Heart warming. Im taking these tapes. So much surprise. Such crap. Right kyle kyle on the camera. Coming up, get ready for the trading day. We have a run down of the earnings and the data that could move the markets in todays session. Squawk box coming right back announcer todays big number, 75 . Thats how many s p 500 companies have topped earnings expectations so far this earnings season. Better than the longterm average of 65 geico makes it easy to get help when i need it. With licensed agents available 247, its not just easy. Its havingjeromebettis onyourflagfootballteam easy. Go get em, bus ohhhh [laughing] cmon bus, cmon hey, wait, wait, wait hey man, i got your flag i got your flag, man i got your flag its geico easy. With licensed agents available 24 7. 49 nothing woo robinwithout the Commission Fees. So, you can start investing today wherever you are even hanging with your dog. So, what are you waiting for . Download now and get your first stock on us. Robinhood. Welcome back time for the squawk planner. An interesting decision for the bank of england due around 7 00 a. M. Eastern well get weekly jobless rates that come out weekly they are weekly disney is the Biggest Company to watch that report is due after the closing bell some others too. Gopro. Drop box and Bookings Holdings i always like to say todays trade talk du jour it is like exact same, single best record high fresh record high we could go on and on stairs of roku are tumbling revenue of 261 million was higher than expected it spent more to attract sub describers the company raising guidance in line with wall street estimates. Andrew we have some news just out literally moments ago, neilson the company is spinning off to a separate globally traded company. Joining us now with that news is Neilson Holdings ceo lets talk about this. It is literally just happening explain what is happening. I got here 11 months ago. Most of that time has been spent looking at two multimillion dollar business. One is connecting the numbers of what people spend in the Consumer Retail world. The other is the Media Business that rates everything that people watch on every screen, which is the source of truth two great franchises but have little to do with each other in the end, we believe, i believe our share olders will get the most value being able to trade both separately. Once these companies are separated, if you are looking at these two, you are going to start to think what kind of multiple can i put on each how are they going to look separate is what are the comps . How have you thought about that . Ultimately because these are sources are truth, they dont tend to have direct competitors. In the media market, youll look at the growth of the Media Industry at large because almost everything is rated by neilson the margins are in the 40s and put that multiple. The other will grow the rate of the package. Margins are more in the teens. It costs more to collect all that data. It is just different when you say you are going to implement that multiple. I would imagine bankers and lawyers sat at a table with you and told you the numbers im not going to share what we discussed in our board room ultimately, the market is going to decide today. Back in 2016, your stock was 56. Now it is 20. Presumably, the desire to divide these businesses is going to unlock a value what should the stock be worth based on that . Our board took a very deep look at the business to put an exact number doesnt make sense here. Because we trade, well know in a little bit of time how it trades we do believe the value is higher over time as they trade separately we do believe this unleashes value. Folks are excited to be on their own. I think media is growing because they are changing. Where is the faster medgrowth in the Media Business and you are staying it will take 9 to 12 months to separate. When we separate, i have already accepted the position as ceo of the media company. We are looking for a ceo for the business connect company we have some great internal candidates do you actually think there is a again win operational distinction. They are completely different. They shouldnt have been together to begin with there was a logic years ago they were separated. If you measure everything people watch and buy, it could correlate. The measure of what people buy is Package Goods i know you want to do this as a tax efficient spin off is there any chance, have you explored, has anyone come to you with an acquirer for either or both of these . We had a lot of options we looked all of those and compared those to this plan which is going faster on the plan we are on we concluded this was the very best plan for our Share Holders. There is nobody who is going to jump out of the business and say we want to buy the connector the Media Business by and large we are focused on the deals review and not discussions. Is that a tax efficient way to deliver value absolutely. Thank you good to see you. Coming up, senator Elizabeth Warrens wealth tax gaining attention from billionaires like bill gates when you say 100 million, i start to do the math about what do i have left over. How did senator warren respond, well be right back new york state is taking business to the next level. Supporting Innovative Companies that will shape tomorrow and Building Workforce development and tuitionfree College Programs to generate the talent companies need. With a 150 billion investment in state of the art, modern infrastructure, and a nationleading commitment to lowcost clean energy, new york is doing more than any other state to build for the future of your business. New york state, the state of the future. Learn more at esd. Ny. Gov. Whether your beauty routine the statis 3or 57,. Re. 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. 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. There are zero reasons to invest anywhere else. So servicenow put your workflows immhm. Cloud, huh . Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Well welcome back to squawk box this morning. Bill gates drawing the attention of senator Elizabeth Warren after a comment he made yesterday with me at the dealbook conference. Ive paid over 10 billion in taxes. Ive paid more than anyone in taxes. Im glad to have if i had to pay 20 billion, it is fine. When you say i should pay 100 billion then im starting to do a little math about what i have left over. Sorry. Im just kidding you really want the incentive system to be there you can go a long ways without threatening that have you ever talked with Elizabeth Warren about that . No, i have not. Would you want to im not sure how open minded she is or if shed be willing to sit down with somebody who has a large amount of ney. Senatorren tweeted, im wayspy tet with people if ave different vis. Bill gates, loveexpln exactly muchd pnder my wealth billion. It is no 100 say ould be anone e ta diti 6 ion. Includihe cal gns he ma payotal 12 iundse he may already give or take a couplllio here or ther at i interesting he does he is a advocate progssive tax systembut that 6 level, he habit different viewi t think it is o effoo saome ney. I think it is a philosophical vi m not even close to ionaire. I knowis ack to you. Have spent a lot of sort of defen thasiti rentlythe y tht isportrayed on on comedy, they are jo abo it i get th shou i defend that when all yoare going to be is t et of a class warfar ment so forget abt ithes my problem,d nt to look at gates ny of these pe as gative to soci n you create wealth and do really great things in your life i think bill gates i look at that 10 billion and think that is really, really great that this man in his life is in a position to pay 10 billion in taxes i dont think he stole 10 billion that you would diffy it up between all the people unable to have it because he has it thats the mentality that drives me crazy that is not even including fiote things employees and taxes that they pay, Share Holders that pay taxes. Maybe not enough then the giving pledge Lee Cooperman signed now the object of all the derision that hes crying. It is totally skewed lets get them all im with you lets storm the gates. You are not with me bill gates to me is the most consequential individual of the entire era both in the private and public sector. Any of these guys that do all of this incredible stuff in addition to paying huge tax bills. One of the things i will say, this is true with what bill was saying, there are all sorts of other low hanging fruit. I think pushing back for as long as i think with a push back over time against raising Capital Gains, carried interest, against all these other things along the way has created this time and moment. I think from a fairness perspective, had some of these other things that seemed so out of whack we dealt with, we had been dealing with. You mean if we had been taxing all along there is never enough no, no. Can we talk about what we are going to spend it on look, im why do we spend so much time talking about spending when we dont know what to do with it when we get it im not going to disagree with that. But the side that Elizabeth Warren had did you see the piece by neil erwin in the times. He described the wealth tax as like a cigarette tax the goal of the tax is for it to be less of it. That is a new way of framing the issue. And he was in support of that no. He was trying to describe the new way. At the New York Times. Might start reading it. It makes you think about what the goal of the tax is usually it is to raise revenue this is to do Something Else they will go elsewhere. All these guys will go elsewhere. We blow it now a lot of it. That goes to the heart of a lot of these guys. Why should i give my money to these guys when i can selfdirect it on my own bill is doing, godi think, gs work with his wealth a lot being used by others for lobbying efforts and things. I think he would like to clean that up too. Part of the problem is there hasnt been an effort to clean up enough of the lowhanging fruit. Or use their money period no. Thats not a good way. I dont like that cause. I would suggest to you certain 503 c 3 s are mass masquarading thats why im opposed to the Clinton Foundation except the cause of squawk box. We have to get some advertising dollars now. We are going to take a quick break. Travel stocks under pressure well run you through the numbers next a look at yesterdays s p 500 winners and losers through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Will it feel like the wheend of a journey . P working, or the beginning of something even better . When you prepare for retirement with pacific life, you can create a lifelong income. So you have the freedom to keep doing whatever is most meaningful to you. A reliable income that lets you retire, without retiring from life. Thats the power of pacific. Ask your financial professional about pacific life today. Live from the nasdaq marketsite in times square futures are jumping after chinas Commerce Ministry says u. S. And china have agreed to phase out the tariffs that came from the trade war the response is triple digits. Some of this is either, you know, we are waiting for other things to be said that maybe throw a wrench in the works or the reason we are at new highs is because we had hopes wed get to this day. Some other news to bring you this morning the stock of the real real, the largest on line luxury consignment has dropped since a cnbc investigation story aired a few days ago revealing how copyrighters under strict cotas are authenticating items after the ceo says there are no fakes being sold and that items are being looked at by experts. They aired a statement saying, quote, we strive for perfection but cannot be perfect every time sa and said there is no other company doing as much work to fight against counterfeits it got to the point where their volume just got to be too much hard to authenticate. Right there are those trained and then the copywriters who are those tasked with writing the blurbs describing each thing. There is someone with an exchange for sneakers. They would look add the shoe, smell the shoe not the easiest to figure out. Not at all. There are some very good fakes down at canal street, there are a lot of good fakes. Does it really matter you know how you can tell the really good fakes. The number of stitches does it really make that much difference are you going to pay the same amount im not going to get the luxury im not going to get either. I dont know what a 3,000 bottle of wine tastes like do you no. Im good with the two buck chuck. Thats what i meant ive seen you out there with the md 2020. Little zima thunder bird. I used to say that i dont look at the vintage, i look at the alcohol content for the wine or the beer thats one way to go. People send in, i thought there was something wrong with you. 3 45, it ishard to be a real drinking problem my problem is that im half asleep hard to have a drinking problem when you get up at 3 45. Thats true i drink a lot of pelegrino water. I miss a lot of late night tv just dont want to be in any of them moving on to softbank they reported their first quarterly loss the market had a chance to react. Stock falling more than 2 saying they would not call wework a rescue. Allowing the company to reduce the average share price it paid. He said it was an exception. They will make no investment for the purpose of a rescue. Companies must be selffinancing exceedia sharpedia shares han also cut its full year guidance. Shares of trip advisor are under pressure 58 cents a share when wall street was looking for 69 cents. Announced a joint venture with trip. Com and booking Holdings Reports tonight. That will be interesting coming up, the latest on the xerox bid. Our next guest has been watching the case and the cofounder of post mates will be here to talk about the bid to take the Company Public stay tuned you are watching cnbc. When you look at the world, what do you see . Where others see chaos, we see patterns. Connections. Relationships. When you use location technology, you can see where things happen, before they happen. With esri location technology, you can see what others cant. The xerox offer to take over hp has been on our raid odar. With us don wilson we shouldnt be surprised that hes involved in the whole fuji maneuver right we think hes already on the other side at hp my business is about providing people intel into what could happen one of the places we look for signs of activist is the filing of investment banks that put people into swaps. They were the biggest hp buyer in q 2 31 million shares. That doesnt just happen we started thinking why would somebody be at hp . There is not really a good activist playbook there. There is a few things you could do here and there with pivoting. Theres not a good operational move other than what was announced yesterday. We started banging away with this on october 2. We do not have confirmation that icon is there. That would make the most sense he would be in a position to push from both sides are a lot of these orders coming from florida . You had to switch where you watch for carl, i guess. For anyone doing Something Like this, once they move right eventually, somebody else has to be on the line and put you on one of these swaps whether credit suisse, ubs they have an obligation to report it. It closes a loophole andrew loves him. Do you have this guys card . I do follow him but dont know each other. We have to get to know each other. This sounds like blue horseshoe. Do you follow private plans after we stocked out the proxy thing, they shut off our service. We lost our service. Getting back to the hp deal, is this not part of carl icahns playbook not necessarily they are known for disclosure. Water marked for some reason, the sec has allowed him to operate that way. He has found a way to skew the system so he doesnt have to report someone else may have reported for him. Does it make it more likely this deal gets done if it is icahn . Most likely yes and i think it would be a good deal it is not a situation where you are looking for a Natural Health where one stock will go down a lot and the other will go up i think there is an opportunity for both stocks to go up sir lawrence wilde. Why are you laughing what else do you got . Talk about a deal where you are slinking around and looking into things. You realize people pay for him that information all gone legally. Im not dumpster diving never never have you . Is. No, never thanks for playing along. It is kind of neat just the cloak and daggar aspect of this stuff. Coming up, when we return, uber, lyft, peloton. Some of the worst performing what is going on with the public versus private ventures. Well discuss that with our next guest. Announcer dont forget to subscribe to our podcast youll get entinterviews and ben the scenes broadcasts. Subscribe to squawk box today. Val, vern. Im off to college and im not gonna be around. Im worried about my parents retirement. Oh, dont worry. Voya helps them to and through retirement. Dealing with todays expenses. Like college. While helping plan, invest and protect for the future. So theyll be okay. Without me . Um. And when we knock out this wall imagine the closet space . Yes oh hey, son. Yeah, i think theyll be fine. Voya. Helping you to and through retirement. Rowithout the Commission Fees and account minimums. So, you can start investing today, wherever you are even on the bus. Ooh, like this guy. Yeah, i bet hes investing right now. Hes taking charge. Hes grabbing the bull by the horns and he just missed his stop, yeah. Its time to do money, so what are you waiting for. Download now and get your first stock on us. Robinhood. Are all nongmo, sundown vitamins made with naturally sourced colors and flavors and are gluten dairy free. Theyre all clean all the time. Even if sometimes were not. Sundown vitamins. All clean. All the time. Maybe there is a continuum of Tech Companies. Theres really high margin Tech Companies that have low marginal cost as they produce more things, and there are companies that are use technology, but they have lower marginal costs and i think what youre seeing is that in this world where software is eating the world, we cant treat Altec Companies the same i think that is the revaluation that investors are doing are investors at this point believe that the discipline that we need to get to profitability in 2021, is the right thing to do for the company and but, at the same time, they dont want us to make the fundamental tradeoffs you dont want to hit 2021 and not grow any more. And i think the plan that we have in place is a plan that absolutely hits our profit targets, but leaves the highgrowth nature of this business intact. Public and private valuation was a very hot topic at the conference yesterday here to continue that conversation, former chair and c. E. O. At this very institution were sitting at, the nasdaq of course, hes also a cnbc contributor which is highest title, of course he has a book out. Market mover, lessons from a decade of change glad to be here thank you help us understand what you think has happened in terms of what feels like a complete valuation shift, which is now forcing companies to ultimately change their own strategy in terms of growth . Im going to tie into one of the commentators said. Every company is a technology company. You have those who exist in the Virtual World where the marginal cost can drop 100 to the bottom line, then you have those that exist in the physical world where there always be a cost of goods associated with getting the marginal revenue you have to think of those terms. You cant just think technologies how are they operating in that sense. With respect to your question, private market valuations are different than Public Market valuations private market is you and i do a deal one of us could be horrifically wrong. When you talk about a Public Market, its every investor contributing its also bringing discipline to the private markets whats that its bringing discipline to the private markets because the private markets are having to revalue a line in the sand has changed the psychology in the market it has burst the concept of lets spend everything just for unlimited growth so we see a post wework world we live in. Why is it wework . It feels like i remember being out in l. A. The day of the lyft ipo actually. You saw it with lyft, and you saw it with uber, now weve seen it with peloton. They can blow through expectations and the stock still goes down. Well, its a question what are the expectations ill say this. It was building towards that, but weve never had a situation before where the company went from 47 billion to 7 in that kind of period of time thats breath taking joe is laughing about that thats very true so youre right, private market can have very accurate valuations if you and i do a deal and we both have a, you know, rational view of it whats the phrase that softbank was smoking its own supply, this idea that part of the problem was that you had, you sort of ratchet up and up in terms of valuation, but it really was never it was a fake valuation they were the only ones in that round only ones in it you only have one or two investors credentializing each round. What you can say with this last round, it seems to me like youre throwing good money after bad. And to the extent wework would go into bankruptcy, then you could buy assets out of bankruptcy but now you had, again, two players, j. P. Morgan and softd bank coming in is that valuation right for wework i dont know 17 trillion negative yielding debt, why should we be surprised there are bubbles in different parts and different Asset Classes . It has to show up it could be as simple as that private equity, they had a place to hide not private equity, but these private companies, its a place to hide theres no way to value those things the game can go on for a while until it doesnt be go on any more and its not now i think there are ways to value these companies and you have to just get back to fundamentals, right. What is the market share whats your expected share of that market . Whats your relevant advantage, right . What value are you delivering to customers . What are they willing to pay revenue versus profits, something changed. Something did change. We have to run to your point about Technology Companies versus companies in the real world, what youre seeing is with airbnb, these asset Like Companies changed their policy yesterday now they have to have people manning phones those are costs those are costs. All of these services that used to have the trust of crowd sourcing for free are going to be come political indicated. No doubt about it Technology Companies may not be getting into the physical world. If you can stay exclusively in the Virtual World, youll do quite well bob, thank you for coming my pleasure futures are in the green after breaking news overnight that the trade war tariffs are going to be phased out well dig into the Market Reaction triple digits on the dow the post c. E. O. Will join us, the food delivery wars, road to the ipo. Stay tuned squawk box on cnbc is coming right back ormance. 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. High protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein. The best combination for every fitness routine. I can shine. Imma do what im made to do. Built for excellence. You start from the foundation up. The excellence is reaching dreams and chasing them at the same time. The excellence is r vo ing dreams and the flock blindly flying south for the winter. They never stray from their predetermined path. But this season, a more thrilling journey is calling. Defy the laws of human nature. At the season of audi sales event. A trade talk breakthrough. Futures jump on talks china has agreed no principle to lifting tariffs. The Justice Department charging two former twitter employees of spying for saudi arabia details straight ahead and Elizabeth Warren offering to meet with bill gates over her wealth tax plan. Reaction from the Pulitzer Prize winning author tom freidman as the second hour of squawk box begins right now good morning. Welcome back to squawk box this morning right here on cnbc. Im andrew ross correspond sin with joe kernen and melissa lee. Becky quick is off today futures look like they will be opening up this morning, the dow looks like it would opill open 8 points higher. The two largest economies agreed to remove existing tariffs. Eunice joins us now with more on the story. Uniisz thanks so much, melissa the commerce said the past two weeks they have been discussing lifting the tariffs in trenches. The Ministry Said and stressed that for a agreement to happen some of the additional tariffs need to go from beijings perspective. The ministry also said the timing and the place of a deal signing has yet to be decided, but that those tariffs need to be lifted at the same time by the same amount, though how much is still being negotiated. Now, the state media, after the Commerce Ministrys remarks, were laser focused on the point that if a trade deal if the tariffs are not removed, there wont be a trade deal. This has been a core demand of beijing for quite sometime and the papers have also been saying that the tariffs needed to be lifted simultaneously, and that would be an indication to beijing that china and the u. S. Are considered equals. So perhaps as a way to make things a little bit easier for the Trump Administration to meet chinas demands, separately the chinese courts have sentenced nine people to jail, including one suspended death sentence as part of a smuggling case this is the opioid the authorities here have been highlighting the fact that this is the first time when a Narcotics Commission has been working in collaboration with u. S. Law enforcement on such a case and is maybe an indication as well that this could be a calculated move because of the trade talks. The commission after the sentencing had said that this was made in accordance with the consensus reached between president s xi and President Trump. So giving some credit to the pressure that President Trump had put on president xi about a year ago regarding the Opioid Crisis and the perceived manufacture of fentanyl in china by the United States guys eunice, thank you eunice in beijing for us take a look at the s p 500 it looks like were going to open up by 12 points this would be a record high for the s p 500. So were watching that very closely today. Joining us for more on the markets is the chief investment strategist at bull tick Capital Markets and andrew, senior Portfolio Manager at Morgan Stanley investment management. Good morning to you both andrew, ill start off with you. Do you think the markets pricing in everything good and nothing bad here we are going to open at record highs if we keep these gains in the futures. Yeah, i do. But i think the markets going higher into yearend because there is too much defensive positioning and you get strong markets through october. The market tends to be even higher by yearend so i think weve got another 3 to 5 up side between now and yearend although the market short term, very short term is getting overbought katherine, how do you feel about the markets now, as late we have confirmation from the bond market. Weve seen tenyear yields go to threemonth highs. 1. 87 or so on the tenyear yield. This is the meltup scenario. So no more u. S. Recession. Thats certainly now consensus it wasnt 6 to 12 months ago conen consensus for u. S. Recession thats been my view for the past year you have the fed cutting and you have a trade deal. So those three things are what took down the markets, december of last year now we have the meltup scenario those are the three factors that needed to happen on a positive bend to get markets higher markets are going higher concur through year end i think, however, 2020 is going to present a lot of potential downside that is why i continue even at these levels and with the claps of the vixx, volatility index, there is complacency in the markets and inhesht risk in the next few years whats a lot of downside, katherine . Look, i think if you get an Elizabeth Warren nomination, this is something ive been talking about for a long time in march, when you can get a big slide in the markets 15, 20 . I think its not priced in at, what are we at, 3,000, almost 100. An Elizabeth Warren nomination and potential presidency is not priced in right now. 49 of the s p 500 is comprised of financials, big tech, and health care. Those are the three sectors she most hard hit. That is not priced in. The other thing thats not priced in is the potential for an economic acceleration eventually bringing about inflation, which means a less dovish fed and less dovish ecb and a risk to Central Banks having to undo heretofore massively expansionary policy, which has caused a buildup in negative yielding debt to 18 trillion globally. Andrew, you are also worried about the political cycle of the impact on the markets in 2020. Yet you like financials. Do you see this in a limited window where you can see the financials in the up side before the political winds start hitting that sector . Look, i dont agree with a 15, 20 downside the reality of the election is if the economy is doing well, we reelect the sitting president regardless of what party hes from i think the fed cutting rates, the china trade deal, we will have a stronger economy next year and the market will reward that for a while however, my job is to get ahead of it. I was on in september. I said the market was going to break out in the fourth quarter. I think the next speed bump as your other guest said is you have to understand the sequencing of the primaries. The early primaries are going to go towards the more left leaning candidates the market is going to like. And super tuesday is not for a good month later so i think thats a speed bump, but i think the markets will be higher next year because the economy will be stronger whether this chase in the yearend thats what i think it is i dont think people are going to bayou tilts, reits and Consumer Staples they are going to buy financials because they lagged. Now theyre getting a little overbought and i think theyre going to come back into technology which recently half sold off i think it is the stocks that have more upside versus the defenses that you buy if you think the markets going down. I think, yes, financials, but technology, consumer discretionary, which havent done as well recently. I think theyll play a little catch up here. So, katherine go ahead sorry if andrew takes that view and i tend to agree with him, then he might agree with my position, which is protecting your s p positions, protecting financials have already run up quite a bit. Ten year treasuries have gone from 140 to 109 now. Weve seen the gain in financials if you think that Elizabeth Warren is a risk, as i do, in the iowa caucus and the New Hampshire primary, first two weeks of febl, she wins both of those. Thats the potential im not saying its going to happen its a very big risk she will run the table and be the nominee. If you think thats a risk, then you want to buy today put options for march expiry in the fed meetings if the fed sounds more hawkish, it gets you through iowa and New Hampshire and super tuesday. If you think there is downside, i think its actually 15 to 20 . I dont think at 3100 Elizabeth Warren is baked into the numbers. And i also dont think that even with i agree, Economic Growth is good for an incumbent president , but this is an unprecedented scenario where we are going to get the house impeaching the president so i think theres a lot of volatility that is currently not priced into markets that we have to protect our positions for well, look, bill clinton was impeached, the market went up because the economy was doing well i agree theres downside the big downside comes in economic recessions and i dont see that happening now, im not willing to commit to downside protectionhere because i think the market is going to rally in the yearend the calendar just because the calendar year just because the calendar year changes, doesnt mean the market doesnt continue so i think this market is going to continue higher and then its going to take, at some point in january, start to think about this im not convinced thats going to be the candidate. Im just saying when we get into january theres a there will be a lot more enthusiasm, and then thats the speed bump so im not willing to commit here because i think ive got to stay offensively into next year first. All right but im a Portfolio Manager i cant i have to, i have to decide when the timing in september the market was going to break the up side, it has. Im looking at the next move its too early to get defensive. Good discussion, guys thank you, katherine and andrew. Heres what else is making headlines this hour. The bank of england just out with its latest policy statement deciding to leave key Interest Rates unchanged. Two Committee Members did vote for an Interest Rate cut u. S. And european regulators want boeing to revise its documentation of the proposed software fix for its 737max jet. Boeing had submitted documentation as part of the process to return the jet to service, but regulators have flagged a number of issues that could result in a delay to the jets return mcdonalds c. E. O. Chris has purchased 500,000 worth of Company Shares that is according to an sec filing he had not owned any of mcdonalds shares prior to being named c. E. O. This past weekend and he bought 2580 shares at 194 a share needs to buy 7 1 2 Million Dollars worth of stock a leg into the position, i guess. We couldnt be c. E. O. , then when they asked me, can you can you buy pony up six times your salary if they ask me to be c. E. O. Thats interesting, by the way. Do you think that c. E. O. S ever actually go out and take loans obviously you have people must be others who have done that in order to buy their own their own stock in a more traditional way . I was kidding they disclose the loans this plays into the whole all of these guys must be overpaid just to take the job you have to have 8 million, right . Im not saying i agree with that, but its Pretty Amazing that just to get the job youve got to be a multimultimultimillionaire. Not defending any of these guys any more forget t. Youre done why should i defend something philosophically you and Elizabeth Warren oh, my because youre a man of principle, joe who told you that . Now im going to be on the opposite side. Youre going to have to go to the opposite side. You have a little bit. I am a little bit you do. I want to be i do not want to be woke. The world is topsyturvy right now. Woke to the woke to the woke which is just woke. That might be just woke anyway, the food delivery wars are hotter than ever you know what i saw yesterday . A grub hub bicyclist those guys are nuts. They dont wait for lights its dangerous an already crowded field is looking to come to the Public Market i use the service constantly. Get sweet cream. Announcer still to come, Pulitzer Prize winning columnist tom freidman on the race for the white house. The state of economy what investors need to watch on the geopolitical front later, noah black stein on Dynamic Funds tells us if hes still llh buison health care and tech thats coming up right here on squawk box. Woman what does the word partner really mean . Someone i can trust. impact, click who is with me for the longterm. Who understands im dealing with lives, not only livelihoods. That in order to help people, i need more than products, i need Quality Support and insights. Can i find someone who partners with me to achieve peoples longterm success . With capital group, i can. Talk to your advisor or consultant for investment risks and information. Talk to your advisor or consultant here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Welcome back to squawk box. The delivery wars, they are heating up postmates filing in february, posting an additional 225 million raise in september which brings the valuation up to 2. 4 billion joining us now in a squawk exclusive, the cofounder and c. E. O. Of postmates and we are thrilled to have you here this morning. How are you . Im doing great how about you . Im very good i want to talk about the business and where its headed, but i also want to talk a little about the private markets versus Public Markets and the way people are feeling about valuations for a lot of these businesses, in large part, because weve seen the valuations obviously for an uber and lyft that have come public, come down frankly. And so many of them, uber specifically, are now in your business and losing a ton of money trying to youre trying to eat their lunch and theyre trying to eat your lunch how do we get to the business component now . Specifically having a high valuation was never one of the problems that i had to deal with our valuation, i think, increased very slowly over the years. I was never in a situation to receive a billion dollar in funding from softbank, so maybe that has to do with it maybe thats part of it. But we feel very confident where our valuation is now in terms of i dont know, can you speak about when this ipo may or may not come . Look, sometimes good things take awhile. We had a window earlier in the year, but, you will know, after somewhat lukewarm reception of Tech Companies, specifically after wework and their losses, i think were ready to go when we feel that the Market Conditions are right. We dont need access to capital right now, so we have the time to figure out when we want to go out. When you say you have access to capital right now, how long given, given both the growth but also the costs that are involved right now, how long can you go without raising any new capital . Oh, to profitability. To profitability . Meaning you dont think you ever have to raise Additional Capital . We will, and i dont think that is, that is the least intelligent thing to do, but we can operate and would operate the company to get to profitability if we decide to. So thats the other question, though some of these Companies Including uber have actually dialed back really their growth plans, in large part because the market is forcing them to in terms of the costs and taking on losses are you changing your strategy i think, i think its slightly different im not sure if the market is forcing uber or uber eats to do so i think you saw in 2019 a year where a lot of players spent against customers. There are times in a market when the Market Dynamics are there that you want to acquire customers. Door dash, other companies that grew the fastest in 2019 others grew a little bit slower. But there are times for spending and there are times when you rein in spending i use post mates. I was telling him i tried to get a kale cesar kale ceasar dressing on the side you get it on post mates. Hold the crew tons. And i do hold the croutons. The kale ceasar comes with parmesan chips any protein theres chicken in there. Its chicken you need some protein theres a little Carbon Footprint with that. My question is how many of these do you think can really exist in the eco system, given the Network Effects . A couple of things. Of course there will be consolidation at some point in the space. I believe the right way to think about the space is not a winner take all market. I like to think of it like the media streaming world. You will have different brands in the space that appeal to very different customer bases based on the meredith schants thchant access to. In l. A. Were the undisputed leader in market share over 20 of orders come from exclusive. These are not pure as ours were focused on local favorites you would switch the app for think about the equivalent in the media streaming world. Thats how i like to think about the space. So you are curating who is on your platform. You think that is your competitive advantage . Curation. Taco bell its misguided if they do one or two players grub hub is talking about if you do any exclusive, that would be one id suggest ill bring it back to the team do you feel any difference after grub hub reported and it was received so poorly on the street and then there was this narrative that came about from that warning that people are not theyre not loyal to the platform theyre loyal to the restaurants. And so to the extent that you said 22 of your restaurants are exclusive, that the rest of it is not exclusive, those are all customers that can come and go look, a couple things i think grub hub sent a shareholder letter, they should have sent one one or two years ago. The writing was on the wall when we started post mates eight, nine years ago a new breed entered the field. If you read the shareholder letter and you see what grub hub is talking about, theyre saying they see no leverage in the business barns noble didnt see leverage in logistics. Talk to block buster weve been there before. The idea bad management equals bad market doesnt fit the new breed of companies this is a grub hub problem. Yes you said ultimately there should be consolidation in the space. How do you think about that now in terms of your own future as an independent Company Versus a consolida consolidator or consolidatee we hope to be focused on the world. Great to see you. Well order some food maybe. Get some breakfast ill get the kale ceasar, ill get you something from taco bell i think grub hub handles taco bell do you know who handles taco bell i wouldnt know you wouldnt know fair enough. We can find out you can stone wall well find out lets get to the bottom of it all right thank you coming up china says it has agreed to cancel existing tariffs in phases. Well get tom freidmans reaction to the breaking news. Plus his take on Elizabeth Warrens offer to meet with bill gates over her wealth tax. Squawk box will be right back. Announcer time now for aflacs trivia question. Nasa launched the mars global surveyor on this day in what year the answer when cnbcs squawk box continues Program Different from Health Insurance . Well aflac gives you money directly, for things Health Insurance doesnt cover. Aflac we put together a little highlight reel for you. Heres aflac helping you with your deductible. Copays. Out of pocket costs. You look good paying bills. Get to know us at aflac. Com each day our planet awakens 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. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start Trading Commission free today. With a nationleading 150 billion commitment to infrastructure, were creating state of the art, 21st century transportation hubs, constructing new bridges, bringing highspeed internet to every corner of the state, and committing to lowcost clean energy. With infrastructure built for the future, the companies of tomorrow can thrive here today. See your future at esd. Ny. Gov. Announcer now the answer to todays aflac trivia question. Nasa launched the mars global surveyor on this day in what year the answer, 1996 welcome back to squawk box. The Justice Department has charged two former twitter employees with spying for saudi arabia the doj says the two accessed the information on dissidents on the platform and gave it to kingdom officials. In related news, evercore downgrading twitter to under perform saying street margin expectations are too high. The new price target, 25. That is down from 42. The stock is down by 1 and a third percent. Okay. Still to come right here on squawk box, the New York Times Foreign Affairs columnist and author tom freidman is going to join us in just a couple minutes. Later, gearing up for the streaming wars were going to discuss the winners and losers in the sector and later Elizabeth Warrens medicare for all plan includes a provision that may have investors thinking twice were going to tell you what it is and debate that plan when squawk returns right after this when you retire will you or will you just be you, without the constraints of a full time job . You can grow your Retirement Savings with pacific life and create the future thats most meaningful to you. Which means you can retire, without retiring from life. Having the flexibility to retire on your terms. Thats the power of pacific. Ask your financial professional about pacific life today. Welcome back to squawk box. Im joe kernen along with Andrew Ross Sorkin and melissa lee. The futures are up 114 points, the dow triple digits. The s p indicated up 12. Nasdaq indicated up 44 a lot of this is based on the late late latest ruminations the china trade. Dom chu, the really youthful face dom chu i saw him yesterday. Any makeup, its superfluous am i right about him melissa gets to see me every day. We sit next to each other. Im very jealous. Im very jealous i dont get to hang out with you and see you in the office. Joe, to your point, lets talk about the movers Teva Pharmaceuticals its up 4 things have changed around so quickly. About 300,000 shares premarket volume its a bit of a mixed report for teva we have earnings missing projections. Revenues did top estimates, but it did raise its full year outlook slightly it was helped along by product launches in key markets in north america. Well watch the shares, jumpy premarket. Profits and revenues here, both Beat Estimates for the drug distributor after adjusting for costs related to the opioid lawsuit settlements. They were one of the companies that decided to settle the Opioid Settlement litigation well see if the stock moves on the up side. Seaworld is down 3 . Roughly 1200 shares premarket volume profits and sales both missed estimates. They blame among other things, bad weather at park locations in florida. Sergio rivera will be named the permanent c. E. O. Effective next month. Melissa, those stocks two green, one red. Ill send it back over to you. Thank you see you later. Moving markets, china bringing in principal to bring existing tariffs well talk saudi arabia and twitter. Lots to cover when we return announcer dont forget to subscribe to our podcast youll get interviews, original content, and behind the scenes access look for us on Apple Podcast or on your favorite podcast app and subscribe to squawk pod today. When it comes to your customers expectations, theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. High protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein. The best combination for every fitness routine. Were on tv now tom freidman is here. He said i look thin i like this guy. U. S. Futures jumping after chinas commerce i have to breathe, though. The u. S. And china have agreed to phase out the tariffs that were imposed during the trade war. Lets welcome our special guest. Tom freidman can we dress like this i think this is a great look hes got we could pull this hes the New York Times Foreign Affairs columnist. Author of thank you for being late. Maybe thats why he gets the license to dress like that we still need to try a little harder you have to switch it up. Tom, weve always known that there was an election coming and weve always worried that political expediency would perhaps allow us to to not, once we decided to pursue this track, as long as weve gotten this far, shouldnt we get some substantive things what were seeing now, are we giving up the possibility of really getting some real action just because we need to do it as november approaches . Are you talking about warrens health plan or not at all. Were going to talk about that later. China. Didnt we have a we were referencing when you were on with steve benton, you were amazingly of the same mind in terms of something needs to be done because its a real threat. Yeah. That china is a real threat are we doing something now just accepting half measures to get something done or is it possible that we get something on i. P. And some of the things, egregious things we want to accomplish i havent seen the deal yet, so its hard to know exactly it was never all going to be done in one fell swoop the problems were too big and chinas too powerful you know, i still want to see the details, joe, but something weve talked about before. I was part of a dialogue on this whole issue. Im a hardliner on this. I believe we did have to take this on, and for three reasons basically. China got went from poverty to middle income i think using a three silo strategy. First silo was hard work, Smart Investments in infrastructure, Smart Investments in education, delayed gratification. Stealing others intellectual property, nonresip coe row cal trade arngsmentes, w. T. O. Rules. Silo three was the pacific fleet. Our fleet reassured them we could dominate them economically but not geo politically. Which was important for their economic expansion if we let them use that same three silo strategy to go from middle income to 5g, wed be crazy. Someone had to call the game, and its good that trump did it. The question now is how much can you get from them . And i go back to this dialogue i was in there a couple years ago where a senior chinese official when i was pushing this hardline said, joe, mr. Freidman, youre too late. Were too big. So you got that mood is there. And what trump did was because he went so far, unlike any previous president , he got their attention. Theres no question. But sitting back there is still a huge amount of sense that we dont have to give too much, you know so i think both sides need this first stage of the deal, joe but i was just in china two months ago and what i heard there was there is a real worry there if they do stages two and three which would require real domestic reform by xi jinping where hed have to take some meat out of the state on industries, theyre worried trump is so unstable as a political character that if he got close to the election and he needed to juice his base, he could turnover the whole table thats really the tension there between the short term and long term in your view i tried to figure this out what was trumps initial motivation for taking on such a difficult thing . When i think of most conventional politicians as being risk averse selfinterest something thats going to benefit their political fortunates fortunes. I cant connect the dots to where this would be helping maybe it does. Is that why he did it originally, it would play with nationalist, populist sentiment and all the job loss it cut across on the one hand it would play with some standing up for america in a way previous democrat and republican president s have not done so aggressively, but it hurt his base in rural america. Why is he doing it . As ive listened to him and studied him, hes had a long history of this, feeling this about japan and about china. And on this issue, i have to give him credit that he basically said, no one else would have done this but me. And i think its true. See, thats why i wonder, all just to be thrown away at the end because he has to do it. Right im worried. I want to see the deal and i havent seen it yet. So im going to be on the more generous side something had to be done he oversold what you could get right away, i think. Its a much harder process but lets see what the final numbers are. Im talking to Business People a lot of people are worried. Particularly, joe, in the Telecom Industry whats going to happen to huawei are we going to basically give huawei a pass . A big concern about that that will have to be part of this for china its a huge its the ultimate pawn in the trade war. For me there have always been two issues here. Theres been the broader trade question, soybeans and boeing. What huawei represents is for 30 years, we sold china what i call deep goods software, computers, stuff that went deep into a business or household. They sold us shallow goods clothes we wore on our back, shoes we put on our feet, solar panels we put on our homes china is now approaching our technological per. They want to sell us stuff that goes into our homes, our bedrooms we dont have enough trust to buy your deep goods. Huawei is the tip of an iceberg that is still going to be there no matter what happens we were talking to bill gates yesterday. He actually has a different view ive argued with him about this you know about his view yes his view is effectively boeing also has software in their engines. If were going to sell them planes, we should be willing to accept it on the other side. A Software Code can be corrupted both ways. There is some truth to that in this sense, andrew. When i was over in china a couple months ago, i actually googled huawei and cyber you know from china . I dont know where i was. You know what the first thing that comes up . Edward snowdens testimony that the nsc had hacked huawei, built a back door into huaweis systems so they could do two things one, penetrate all the countries huawei had installed their technology in like pakistan, and at the same time discover whether huawei was, in fact, backed by the pla, the Peoples Liberation army in china thats the first thing that comes up i think bill is onto something, and that is we are going to be so penetrating each other, you can drive yourself crazy around this or you can just accept that privacy is over. Were going to get a break in we have a lot to talk about, all the tech stuff do you think your buddy should have gone to the desert, the saudi thing this year . Do you hold it against people that did go . I can only speak for myself, joe. You dont think it was i didnt go i know you didnt i know you wanted me to go. Not yet is the answer but not forever necessarily either you know youre going to go eventually heres how i think of the saudi thing right now, joe, which is m. B. S. , the effective ruler of saudi arabia, muhammad ben salamon, the khashoggi situation was so outrageous and so over the top. Murdering someone who is really worse than the uighurs . Worse than the internment camps, worse than modern day . Its up there you cant compare a Million People absolutely, let me just finish this point all right at the same time, you know, what ive said to them is if dong chow ping he lived his obit in the New York Times leads him to be the greatest economic reformer in the last century. What i would say to the saudis, what you did what mbs did is unforgivable but you can at least balance the books by reforming your way forward. And thats all i can tell you. But its going to be a balance its never going to go away. But at least do yourself a favor. Do your friends a favor, joe, who believe that the future and fate of saudi arabia is hugely important whatever you think of are you going next year ill look at it you talk to me next year. Thinking about it, arent you . We have to take a break its a longer conversation. Tom will stick around coming up we have much more with tom freidman including his take on the warren wealth tax plan. The dow looking to open up by 120 points the s p at a rorecd high up 12 now. Stay tuned youre watching squawk box. Ive paid more than 10 billion in taxes ive paid more than anyone in taxes. [ laughter ] im glad to have paid if i had to pay 20 billion, thats fine [ laughter ] but, you know, when you say i should pay 100 billion, then im starting to do a little math about what i have left over. Sorry. Im just kidding [ laughter ] so you really want the incentive system to be there and you can go a long ways without threatening that have you ever talked to Elizabeth Warren about any of this before . I have not. Would you would you want to . He im not sure how open minded she is [ laughter ] or that shed even be willing to sit down with somebody, you know, who has large amounts of money. That was bill gates yesterday at the conference. After that comment, Elizabeth Warren got on twitter and she said, i am always happy to meet with people, even if we have different views. Bill gates, if we get the chance, id love to explain exactly how much youd pay under my wealth tax. I promise its not 100 billion. Some others have done the math looks like its closer to 12 billion. About 6 billion more than hes paying currently i want to discuss this and so much more with Pulitzer Prize winning columnist and best selling author tom freidman. So what do you think of this wealth tax im not an expert on health care, whatever ive been trying to read as many analyses as i had. The one that made the most sense was by larry somers in the washington post, a democrat predisposed to this. Larry made the point the whole plan relies on the most optimistic scenarios of where the economy will go the next ten years, the money in terms of the taxes raised . And also the costs exactly on the medicare for all plan. On both ends of it. Larry also pointed out that, you know, the new deal and the great society, were all actually based on middle class paying for all these expansions of new programs so my position, andrew, i actually liked obamacare i thought it was in the right direction. Expanding obamacare by adding a public option, a Health Entity that could drive down costs because it would have far fewer costs than private insurance companies. Going back to taxing young people to make sure everyone is in the program so you have a balanced pool, why didnt we just junk that whole program that democrats fought for and leap to this without saying, why dont we fix and improve that . If you watch the election in kentucky, if you draw any conclusion from beshears apparent victory, people want to move forward incrementally they dont want some radical transformation of the economy in ways we have no idea you travel a lot, though. Do you feel like within the Democratic Party that this is going to Elizabeth Warren is going to win the game here andrew, i think the overwhelming political effect in America Today is that more than half of americans feel they dont have a candidate theyre skpi excited about to vote for in the next election. Moderate republicans, independents, suburban women pro business democrats like myself i think theres just a lot of people feel unrepresented and i dont think thats sustainable somebody is going to fill that vacuum who if you believe that a public option would actually save money and spend less my point is it seems like kind of an obvious narrative, earn a profit, you dont have all these other things advertising but then the whole reason that the private sector seems more efficient in allocating capital is because there has to be more oversight. You have to watch your ps and qs right if you believe the public option would be cheaper, then go for it, go for the whole thing that way if you really believe that, dont go piecemeal and i think weve had some, some tests of the public option whether its va or whatever, even the frog we still see perpetrated in medicare. I think the private sector insurance would win over i dont think you would see the public option as a better its a legitimate question i think, joe and i wouldnt start with a Massive Public i think we need to iterate try it one more time, see if we can get it right this time. The dmv of health care maybe lets just see i think its worth experimenting. There are a lot of experiments in obamacare around cost controls also that were not implemented. Tom, i want to go back to you said you thought someone would fill this void, this middle ground and im just sitting around looking around going, who . Who is that person unless you think Elizabeth Warren is going to pivot when she clinches the nomination. Or be unable to do anything she wants to do. Right so Many Democrats she wont be able to Hillary Clinton said that to me last night. She can get in there and say hey, ive heard you, i heard the criticism. Its just not going to happen because its not practical Valerie Jarrett said the same kind of thing. Like the wall who is paying for the wall let me give you what may seem like a strange analogy so, i watched the Israeli Palestinian conflict very closely i found over time it is to the wider trends in civilization what off broadway is to broadway whats playing on broadway suicide bombing being, scale, a lot of things start there and go to broadway. Whats just been playing off broadway they just had two elections in about six months and the last one was very revelatory, i believe. Netanyahu ran an openly racist Divisive Campaign against israeli arabs. In the second election, oh, you talking to me . And they went out and voted in record numbers and created the Third Largest party. Number two, netanyahu was everywhere on twitter, on facebook he was there all the time his opponent, benny gantz, people were putting a mirror under his nose, bennie, are you breathing . Hes eating you alive on facebook and twitter turned out israelis got sick of it 250,000 israelis changed their vote between the first election and the second third thing happened, netanyahu ran benny gantz im not going to offer you the peace process. Not some radical plan. I just want to pull the country together i find it as a distant mirror very interesting whats been playing offbroadway therefore, i think someone comes with a very simple message, i want to pull the country together i want to improve health care. I want to work on obamacare. And i want to focus on education. A little bit what beshear was doing in kentucky. I think that person could do very well. Pop out a name. Buttigieg you think buttigieg yeah. I like the way he talks, andrew, in this way. I like the way he talks about faith. I like the way he talks about his faith. I like the way he talks about abortion there is a sensitivity to him that and an intelligence that i find i dont know him never met him. But i find very compelling theres a lot of america that says grace every evening and i think we should remember that and sometimes liberals forget that and i think hes someone who, in time, i think could catch on hes young. Youre saying in time thats the thing i dont know. Top of the ticket i dont know. We just had an africanamerican president , then donald trump hes got far fewer we broke all the molds as far as im concerned the one and only tom freidman, thank you. Great to be with you guys great to be with you. Coming up who is going to win the streaming war . Were going to discuss the sector after the break and talk new serve skices and offers. China says it agreed to roll back tariffs, not a big percentage, triple digits. Well talk markets and your money. Squawk box is coming right back one of the products i helped develop was a softer, more secure diaper closure. As a mom, i knew it had to work. There were babies involved. And they werent saying much. I envisioned what its like for babies to have diapers around them. Thats what we do at 3m, we listen to people, even those who dont have a voice. At the end of the day, we are people helping people. To take care of yourself. But natures bounty has innovative ways to help you maintain balance and help keep you active and wellrested. Because hey, tomorrows coming up fast. Natures bounty. Because youre better off healthy. Standing down, china says its agreed with the u. S. To roll back tariffs and futures are jumping on the news. The senator and the billionaire. Elizabeth warren offers to sit down with bill gates after the tech titan sounds off on warrens wealth tax. And the board of google, parent alphabet is investigating inappropriate relationships. Talk to the reporter who broke that story the final hour of squawk box begins right now good morning and welcome back to squawk box here on cnbc live from the nasdaq markets site in times square, as in the New York Times. We did have some good contributions today from a relationship we have tom was so great. Wasnt that a great conversation the New York Times, the New York Times deal book, were going to talk about again in a second im going to give it another chance, i think, maybe, the New York Times. Im joe kernen along with Andrew Ross Sorkin. Will you give the wall street journal another chance, editorial page i love no, no, i actually i think its one of the best editorial pages in the country. Its very thoughtful its really do you read kimberly strassmann yes, totally. Melissa lee is here becky is off today i dont agree with it all, but it makes you think really . Stop the presses anyway, treasury yield, news flash. Treasury yields are almost 1. 84. I saw 1. 85 earlier the futures are all up this morning on this. 1. 88, almost 1. 9, which is not far from 2. 0 about a threemonth high. Nobody likes when rates go up everybody feel a little uncomfortable down in the low 1s that was scary. We were seeing sell offs there like were in some uncharted economic territory our top story this morning, chinas Commerce Ministry says beijing has agreed with the u. S. To roll back some existing trade tariffs. Kayla joins us now with more on this hey, kayla melissa, the comments were made overnight in a regularly scheduled briefing by chinese Commerce Ministry where the spokesman said the trade war started with tariffs and should he end with the cancellation of tariffs. Theyre not saying what timetable has been agreed or which tariffs have been rolled back there are quite a few tranches currently in place which of these tariffs are under discussion weve been reporting for months that the u. S. Is open to rolling back that 112 billion tranche of tariffs from september 1st and cancelling the scheduled 156 billion tranche for this december but theyre not ready to go below 250 billion in tariffed goods until china agrees to some sort of phase two deal that gets at the tougher issues that the administration has been targeting all along. And if there is an agreement, then the question is where does this get signed and when there is some expectation that there could be a signing either next week or perhaps after thanksgiving the white house says it is still targeting next week when the apex summit would have happened. A Senior Administration official acknowledges that could be pushed back. If it is, then europe is under discussion President Trump is expected to attend the nato summit in lone december 3rd and fourth. And im told that a potential meeting between the president s trump and xi could book end that meeting over in europe the two sides have been at odds over a potential venue because neither wants to do it on the other countrys soil for obvious political optical reasons. So well see exactly what they decide and where the signing actually takes place we know that principals were meeting with President Trump to discuss this yesterday we havent had an official announcement yet andrew kayla, thank you for that report we want to switch gears right now for a moment and talk about the streaming wars apple tv plus launching just last week, disney plus launching next week. Yesterday i had the chance to sit down with netflix c. E. O. At the deal book conference heres what he had to say about the growing competition in the streaming space. People subscribe to a Couple Services the way they subscribe to a couple news services. But then in terms of time, thats 9 real competition. The tricky thing in this streaming war is apple and disney is not going to break out revenue for the service. Here are some subscriber numbers. You can bundle things in so thats not going to be that relevant the real measurement will be time how do consumers vote with their evenings and do they end up watching what mix of all the services so starting q1 youll start to see a breakout for that from nielsen and others joining us now to talk streaming competition, larry jones the c. E. O. Of black thorn and former president of tv land. Michael haney is joining us lead analyst at rbc Capital Markets curious about your take on reids take on how to really measure the success of these services is it really going to be time . Is that the best way to estimate how were going to look at these things, mark i guess so, but were not going to get that kind of disclosure from the company. Right the street is going to look at subs as it has for netflix historically, its going to listen for the sub numbers all three of these companies, the estimates are out there. Theyre going to get to roughly 100 million in five years. Thats up apple plus, disney plus, time warner, disney, max, hbo max. Thats going to require good execution in the u. S. , particularly execution in the International Markets. What were learning from netflix is 90 of the subgrowth comes from outside the u. S. So you have to have content for those markets. Thats going to be a tough row to hoe for some of these companies. Thats what i was going to ask you, larry in terms of netflix and their Growth Prospects in this competitive landscape, is the focus should the focus only be international or do you think theyre going to have to hold what theyve got in the u. S. , but then it all has to be International Gain i think you have to make hits and i think thats what their number one agenda is you make hits in the United States and then you export them around the world that is basically what their plan has been. Buildup that library and have a lot of great content that people want to watch all around the world. Clearly theyll be making projects for specific markets around the world, but i think its going to be predominantly exported american hits you say hits. This is an interesting issue it seems like bob iger and some of the other services, especially apple which obviously has a lot fewer shows, is playing a very curated hitdriven strategy to the extent they can be right and well see whether they have those hits versus netflix which is trying to do hits, but is also a little bit of a volume game i would definitely agree netflix is a huge volume game. But theyre the first movers theyve been in there for, what is it, eight or ten years already. Everybody else is trying to do catch up either with their preexisting ip or creating new ip netflix is in a position where they can have a lot of volume, but, you know, everybody wants everybody in town wants their game of thrones. Everybody wants their handmaids tale. Are we in a bubble . Does content spin have to come down or slow in a material way and he seemed to suggest not does that make sense to you . Yes, it does. I think netflixs strategy is going to be to continue to spend more theyre going to bum up up their content spin by one to 2 billion a year they do that because they think they can add 25 million to 30 million subs a year. That translates to 3 billion in incremental revenue. They can put half of that into new content. Nets netflixs strategy whether it works or not is to bury people in content. The key thing here, the growth the race is really in International Markets. Netflix in 2020 is going to roll out 130 original series that are internationally sourced, internationally produced theyre going to be theres going to be japanese, south korean, turkish, french shows. Its not going to be taking u. S. Content and exporting it its going to be creating it in the International Markets. We go back to the question, the valuation of the traditional guys, does it go up, does it go up and try to match and netflix come down . How does that work thats one of the toughest things to figure out here. Its going to depend on whether the Free Cash Flow dynamics start to improve netflix has shown you can spend money and build out a huge subbase. What netflix has yet to prove is if you can do it profitably in terms of cash flow if netflix cant do it, whats going to be 200 million subs, its going to be pretty clear almost nobody can do it. Netflix is going to be Free Cash Flow bellwether for this sector. I think they can do it if thats the case, youre going to see other companies that can reach the 100 in scale the issue will be in three to five years were going to find out there are maybe two companies, maybe, that can get to that kind of level. Netflix and disney thats probably it from an investor standpoint, the larger question mark is what is the right multiple to put on netflix now with the increased competition thats out there also youre basically telling me netflix is going to keep spending presumably its going to have limited ability to raise price because of all the competition out there. To make up for that spin, you know, its got to bank on that volume out there and so its a different business than what netflix had a couple years ago even yeah, netflix theres no question that the biggest overhang theres two overhangs. All the competition what it does to sub and pricing power, whether they can turn the needle on Free Cash Flow. This is supposed to be the year of Free Cash Flow losses we think there is enough leverage they can prove Free Cash Flow the next year. If they cant, we think the stock can work we have seen leverage, by the way. You can look at content cost in the u. S. Theyve shown about ten points of leverage over of the last five years so there is leverage in this business hey, guys, before we let you go i want to ask mark this because i know you cover twitter. I wanted to ask you about the news of the department of justice charged two former twitter employees with spying on those users on behalf of saudi arabia what do you think the impact is going to be on the company this looks like just another overhang i think the bigger issue for investors fundamentally is this company has too many bugs in its ads infrastructure and you cant have that. There are two major ad platforms that give you all the reach and targeting you need thats google and facebook if youre not flawless in your execution of your ad products for advertisers and youre one of those number three, four or five players, then you just impaired yourself. So this just adds to the chalds that twitter faces mark, thank you for that. Hey, larry, thank you. Always good to see you thank you, andrew thanks. Coming up, finding winning stocks in a season of record highs. How can you grow your portfolio as markets zoom higher plus dont forget to subscribe to our podcast squawk pod. Youll get behind the scenes interviews stay tuned squawk box is coming right back sundown vitamins are all nongmo, made with naturally sourced colors and flavors and are gluten dairy free. Theyre all clean all the time. Even if sometimes were not. Sundown vitamins. All clean. All the time. 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Dow looks like its opening up higher, 20 points higher nasdaq 45 points higher and the s p looking to open 11 points higher right now New York Knicks owner jim dolan is reportedly being encouraged to sell stakes woo i have not heard that, ever this is good news i know were not supposed to editorialize have you ever heard andrew howl like that never its been devastating devastating. I was a Patrick Ewing knicks fan. This has been just a treacherous like decade. Decades plural because of mike brown in cincinnati owning the bengals. So, anyway, as well as the new york rangers so you think both could benefit from possibly. The rangers are dogo kay the knicks got rid of them New York Post says nick robbins trying to get Madison Square c. E. O. Dolan to buy minority buyers for the team in advance of the separation of msg Sports Properties from other assets robbins reportedly said the knicks and rangers could be worth more than 7 billion instead of a valuation that forbes has which pegged it at about 5. 5 billion weve had cliff on weve had cliff, of course. I dont know if this is doable is the real issue. Cliff has always been a activist investor, but, you know, what do they say, nice activist. Friendly. Friendly activist i dont know how far he can push this the dole abc neans obviously coh company. Why does it matter . Why does it matter . Have you not seen the knicks in the last two decades to run a team, it might not include winning theres no winning. I understand theres no winning. Like Musical Chairs theyre not hiring the right coaches and all that theyre moving the deck chairs around the titanic. Its a weird combination of spending enough money, but knowing how to spend the money in the right way, get the right people not only the players, but also so this could be good for msg the stock. Could be good for the stock could be good for the city could be good for the nba. By the way, the other owners in the nba have for so long wantled the knicks to do well because it would help everything. How long its been a while for you. How far back does it go . What year are we in now its 2019 . 2019. Youve got to go before the turn before 2000 almost 25 years ago yeah Patrick Ewing Patrick Ewing, yeah yeah and even then it was even then, yeah yeah anyway all right fascinating news. You woo am i supposed to root for an activist im excited can i get you on draft kings with me he plays alabama true, its like a big game. I think its alabama. Yep i think so, too. Well see i may go to the game tonight after watching the chargers just man handle the packers last week you want me to show you how to do it . During the next commercial break . Giving any points tonight, theyre barely giving points to the raiders. Lets do markets now. I do it here, you cant bet they know where i am follow me around that privacy thing i dont like. Lets talk about the markets. Hitting new highs almost daily may be harder to find those sleeper picks. To that end our next guest is highlighting three different companies. Home builder, mall operator, drugstore. Joining us is tony sheerer at Smead Capital Management great to have you. Lets talk about walgreens since its in the news, private equity wanting to take it private you dont think that could happen, though you like the stock for other reasons. Well, yeah. You know, if it happens, maybe that would be nice, kind of sugar on top scenario. Thats not part of our investment thesis. Weve owned it for quite a long time at this point i might say kind of unfortunately the last few years it hasnt worked well. But, look, its a ben grant type multiple 9 1 2 times forward price earnings ratio incredibly cheap even with all the head winds theyve been facing with generic drug deflation that theyve been facing, they lowered priced on the entirety of the front end of their store at the beginning of this year. These things are going to anniversary themselves here pretty soon in the next couple quarters, but even as theyve been fighting that stuff, theyve had 5 billion in Free Cash Flow they own a valuable asset, about 5 billion worth of Amerisource Bergen its a Good Business its a highquality business its been left for dead because of a lot of various reasons. We consider it very cheap and very attractive for a highquality company now a intellectually, tony, i understand the anniversarying those problems some of these issues, the scrutiny pbms are facing which is part of the business, competition on the front end of the store from the likes of amazon or walmart, all these online digital players, thats ongoing. These are things that are ongoing issues how do you discount that into the stock, which, by the way, is down 13 for the year . Well, i think the markets done a pretty good job of discounting that into the stock. Stefano, the c. E. O. Chairman, hes not happy with the Public Markets right now. Thats why this conversation is going on well see where it goes. It might be very difficult it seems like everyone across the street is handicapping this probability to be maybe not quite zero, but very unlikely it would be the largest leveraged buyout if it happened if did did happen again, well see how that goes but in the meantime youre getting 3. 1 dividend yield. The hatred and the distrust of the stock, you know, in our opinion, is pretty well discounted in when youre trading at less than ten times forward earnings in a market where the forward on the s p is 18 1 2 right now or thereabouts, we think thats a pretty good margin of safety right here lets talk malls. Malls broadly arent doing well. This is a highend mall, reid. Do you think its i am snun another contrarian idea we gravitate to things that are contentious. Thats where you get the best prices anything in retail and certainly malls has been greatly discounted macerich trades at 11 dividend yield. Thats higher than the ten year treasury yield for those doing the math on it look, they own some of the highestquality malls out there. They have 52 products. Theyre a, aplus, aplusplus type malls look, that hasnt been the place to have been i mean, youve been hurt by bean m. Mall, thats why youre trading that yield theyre at 95 occupancy theyve been able to raise their rents from 40 some odd dollars per square foot about a decade ago to 61 right now. Their average sales per square foot on their average tenant right now is 800 plus dollars per square foot. One of the highest in mall reit land their net operating income, theyve grown about 4. 1, 4. 2 per year over the last four. Almost double that of gdp, and about three times that of the average mall peer out there. Theyre very good operators and we think it warrants some attention. You have to be a longterm believer in these stocks you said an 11 dividend yield, the stock is down 35 year to date, your time horizon has to be more to be worth it for both main search as well as wbba. Correct maid search is a new name for us it hit the valuation screen with other quality screens we look for. But from here forward we think its got a great margin of safety here. All right, tony and your last pick is nvr. Thanks for joining us. We do appreciate it. Tony sheer coming up in just a moment, bill gates talking wealth taxes and Elizabeth Warren and the massachusetts senator responded. Were going to bring you the back and forth and debate the right level for billionaires to pay. Join us for that debate right after this break right here on squawk. Whether your beauty routine is 3 steps. Or 57, 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. Man can i find an Investment Firm that has a truly longterm view . It begins by being privately owned. With more than 85 years of experience over multiple market cycles. With Portfolio Managers who are encouraged to do whats right over whats popular. Focused on helping me achieve my investors unique goals. Can i find an Investment Firm that gets long term the way i do . With capital group, i can. Talk to your advisor or consultant for investment risks and information. Welcome back to squawk. Uber c. E. O. Says he thinks the appetite for high risks in the public mark has now decreased over the past few months i spoke with him yesterday at the deal book conference and this is what he had to say i do think that youre seeing the same kind of reckoning in the Public Markets is happening in the private markets and from my standpoint, i think a couple things. Thank god we went public when we did. Really . Absolutely. You think youd be wework otherwise . Were very, very, very different from wework, okay. Of course, ubers stock has had a tough time since it went public in may. Its down now about 40 this year coming up, breaking Economic News the latest read on jobless claims and the Market Reaction straight ahead stay tuned youre watching squawk box on cnbc datadog has become the modern monitoring and Analytics Platform in the cloud age. When we started datadog nine years ago, our mission was to break down silos and bring teams together. Nearly 9,000 of the worlds most Innovative Companies rely on our platform daily to run their business and delight their own customers. We see a massive opportunity in the years to come, and as we celebrate todays milestone, we are even more excited about the future. Congratulations datadog. Welcome back to squawk. Weekly jobless claims are on deck well get a higher open on the s p by 13 points, ten year yield is 1. 88 Rick Santelli standing by at cme in chicago with the numbers. Rick yes, our current week for initial jobless claims, well, it moved from 219 down to 211,000 lets call it drop of 8,000. And thats from a slight revision, that 219 originally released last week was 218,000 continuing claims moved from 1. 692 million to 1. 689 million so down a bit there. The ongoing news continues to be Interest Rates moving higher as a matter of fact, today is the 30 year bond auction the last of 30 year supply the bond seems to have a life of its own today, getting closer and closer to 240. Keep in mind 190 is the high yield close going back to september that many traders are focusing on as resistance. Seems as though ten years always peel back from the mid 180s not today. Andrew, back to you. Thank you, rick appreciate that. Turning now to taxes, yesterday i had the opportunity to speak with bill gates at the deal book conference we talked about senator Elizabeth Warrens wealth tax plan this is what bill gates had to say. You know, ive paid over 10 billion in taxes ive paid more than anyone in taxes. [ laughter ] but i, im glad to have you know, if i had to pay 20 billion, thats fine [ laughter ] but, you know, when you say i should pay 100 billion, then im starting to do a little math about what i have left over. Sorry. Im just kidding have you ever talked to Elizabeth Warren about it before i have not. Would you want to im not sure how open minded she is [ laughter ] or that shed even be willing to sit down with somebody, you know, who has large amounts of money. Well, senator warren may be willing to she responded to bill gates in her tweet saying, im always happy to meet with people even if we have different views bill gates, if we get the chance, id love to explain exactly how much youd pay under my wealth tax. Parentheses, i promise its not 100 billion probably closer to an additional 6 billion on an annualized basis over ten years and you can see we were talking about one of the variationsrobert franks talking about warrens tax bill, resident fellow making lennon is a fellow can we talk about the idea of mark to market taxes on assets, like Capital Gains and actually, because michael makes the point and i dont know whether you disagree with this, alex, preferential treatment of capital has never been an effective way to get what we want in terms of investment. Do you buy that, that it doesnt really help to have preferential rates for capital versus income . I disagree. You do . Weve actually always had a preferential rate for Capital Gains. That itself doesnt make it the right answer but the reason behind that is because i think policy makers have recognized that investors are making decisions based on their expected aftertax returns. The other thing to remember is this is the second time that corporate earnings would be taxed. They are taxed obviously at the corporate level. Theyre taxed against at the shareholder level. We have this dual system, this double track system where tax is applied twice on corporate proffer its. Thats another reason weve tried to keep that tax rate relatively low relative to ordinary income tax rates. Michael, get this alex does not miss out of hand the notion of taxing things, marking them to market you think that when people just hold onto things forever, that actually gums up the system because that taxable event never comes. You actually think there is some merit to that idea, alex yes a. E. I. . Well, the mark to market idea is separate from the tax rate. Obviously theyre related. Right one of the problems with the Capital Gains tax structure is it encourages investors to hold onto assets that they would otherwise dispose of and we call it the lockin effect the higher the tax rate, the stronger the lockin effect. So mark to market in theory on paper says, look, it doesnt matter youre going to pay the tax whether you sell it or not there is an efficiency in that but trying to figure out how to implement that, obviously how to implement that on assets that are difficult to value, thats almost impossible. Now were creating a distortion between traded assets and other assets and then we should also remember what happens when the stock market goes down because sometimes it does. All of a sudden the government starts to write checks they certainly arent as valuable as the original youre not going to recoup your stock doubles and then goes down 90 , youre never getting anyway, michael, if you figure its not preferential anyway to treat capital differently, then thats kind of a moot point whether you mark to market mark to market or not. Thats right. The idea that capital that preferential tax for capital is going to help us grow the economy and make things better for regular people, its an idea i understand its appeal. I understand its appeal for people who are wealthy who want to be the hero in their own economic story the real reality, empirical reality, there is no real relationship its the same basic argument that led us to cutting a trillion dollars in Corporate Taxes over the last two years ago. Here we are two years later. No appreciable difference in business investment, no increase in wages, no increase in jobs. We can try this over and over again. Lets cut taxes on capital, cut taxes on capital but, you know, at some point weve got to look at the actual facts and realize thats not where the Corporate Tax cuts have not found their way into the economy whatsoever theres no real evidence that they have. Look, the argument is, look, well cut taxes on capital it will increase investment, that will help trickle down into productivity which will eventually go to higher wages. None of those links in the chain actually work. The first, very first link in the chain is broken. If you want to focus on productivity, if you want to get worker productivity, you have to invest in workers. You have to make sure theyre protected, that they have real power, education, health care, and you have to have stable demand you have to have good broad based stable demand. Income inequality in this country has gotten so bad all the Product Innovation is heading to people at the top of the income spectrum which means inflation is rising faster for people at the middle and bottom than it is at the top. Thats a distortion coming from income inequality itself thats another good reason why it makes sense to increase taxes on capital thats where all the money is. If then i guess democrats can just run on how crappy the economy is we both know thats not going to be the case. And the biggest concern for democrats is going to be tough in this economy. And a lot of times an incumbent gets reelected when you have 3. 5 unemployment rising income in the middle, thats not happening job growth is actually down. Overall Economic Growth 1. 9 how bad the economy is, thats going to be it . I think it will be a real debate how good the ee kwon am i is new highs, am i wrong about that most americans do not own eastern even a single share of stock 401 k s there are some positive things happening, arent there, alex there are but theyre mostly for rich people that is a part of the economy, but thats not the economy the economy is regular people, everyday people trying to make ends meet. For those people its not going so great alex, do you see the 3 gains were seeing in wages. Anything good happening with the lower income or middle income people michael is right on a couple things hes right education is important. Hes right we want the economy to be good for everybody not just for people at the top i disagree with him with pretty much Everything Else that he said because, in fact, we do see that wages are rising faster for nonsupervisory workers than they are for managers and executives we do see almost everybody, basically everybody has a job. And we do see that the economy is growing and we did see a surge in investment after the tax cuts before the trade war really hit. Right so we do think i do think the Corporate Tax reduction had the right effect in promoting investment in the u. S. Economy i think our trade policy is undoing some of that, a lot of that thats a separate issue from taxes but an important one for our macro economy. I do see the economy is moving forward across a lot of industries, across a lot of states and across a lot of stakeholders its going to be interesting because everybody well see whether that resonates with people that, in fact, you know, the economy were in right now is really bad. I dont know i think youre going to see people run on how strong it is and people not necessarily on democratic side run on the economy. I think if you ask regular people, theyll tell you that define for me whats a regular person that doesnt have 401 k that doesnt have stocks . A person that isnt able to switch jobs because suddenly theres more available ill tell you, a regular person is somebody who gets up every day and goes to work and tries to put food on their table for their family me, me. Not someone who owns stock. They have a piece of 401 k retirement plans the facts are these even including 401 k s and retirement accounts, half of americans dont own a single dollar in financial markets. What about the Unemployment Rate in this country, what about the Unemployment Rate for minorities in this country there have been black Unemployment Rate is twice that of the overall average. Its at historic lows is it not at historic lows . We have to get the facts here. Ill be happy about the Unemployment Rate when the gap between the black and white Unemployment Rate is zero. Thats what wed be happy about. I agree with you 100 its hard to look at the math and not think that the Economy Today look, you can even say this i would have actually, if i were you, i would argue the economy is artificial, were spending too much money. There are things you can do, but that argument doesnt fly. Michael, when you lose andrew, i dont know where youre coming from on this sitting from new york from where you are i can see why you think the economy is good. There are a lot of good arguments. Theyre different argument this is amazon day. We have to go we have to go. Thank you come coming up an investigation at google Parent Company alphabet cnbc broke this story. Well talk to the articles author when we come back stay tuned youre watching squawk box on cnbc 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. Dont get mad. Get e trade, dawg. 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. Welcome back to squawk box this morning the board of google parent alphabet investigating Company Executives over inappropriate relationships. Joining us is the reporter who broke that story cnbc. Com Technology Reporter Jennifer Ellis is here good morning good morning. Tell us about it. Whats going on . So, alphabets board is having an investigation, basically, into the companys Sexual Misconduct and how the executives handled that. So theyve hired a law firm and are quietly trying to investigate. You say quietly because you broke the story. They didnt want this out. What has been the reaction now the reaction has been, has been people are wondering what took so long now that its public at least people within google and sources of mine. I think, you know, the reaction from the company has been kind of trying to downplay it a little bit and saying, you know, yeah, we kind of alluded to this in earlier documents that we had publicly public documents but they never specified the nature of what the investigation could be about and now we know its around Sexual Harassment. So as you look at this, though, impact i hate to say impact on the stock because this is a human story impact on the company, impact on what employees could or could not do, walkouts over the years. This could have a big impact it could, yeah. If there are consequence that actually come from this, thats something that employees have been kind of looking for this has been an open secret among among the company and what sources tell me so i think, you know, a shoe could drop here that we havent seen before. When you say shoe could drop, give me the big shoe i mean, we could see executives who have been there for a long time leaving. Leaving and more information come out about them why is the board conducting this investigation when its the board being sued by shareholders for breaching their fiduciary duty for cover this all up in the first place . It seems like there should be an outside investigator if they really want to put this issue to bed. Yeah, thats a good question. I think we still dont know why. Some people are a little skeptical of the motive of what they could be doing if its more to defend google as opposed to really looking out for the best interest of potential investigation. Jennifer, its fascinating story. Keep our eyes on it. Thank you. Great to see you thank you now to the opening bell on wall street, dom chu is joining us with the top stock movers hey, dom melissa, lets start things off with shares of ralph lauren. Theyre up big, 9 premarket roughly 110,000 shares of volume the highend Apparel Accessories and lifestyle Product Company top forecasted sales growth at established store locations that was better than expected growth in International Markets and Digital Sales help offset some weakness in north american markets. Those shares up 9 next up we have shares of sarks oetis, Health Sciences company up 4 , 10,000 shares premarket volume it posted earnings beat slightly better than forecast driven in part by stronger rev phaneuf growth in north america, especially in treatments for pets which helped offset some weakness in Livestock Products and then were going to end on shares of dish network, which are surging as well. Higher by around 6 , roughly 50,000 shares of volume premarket. The satellite tv operator reported profits and sales both topped estimates helped by stronger additions to paid tv and streaming video subscribers for sling tv service. Joe, three green ones across the board doing hefty damage premarket. Back to you. Lets talk markets ahead of the trading day. Dow currently on pace for its fifth positive week in a row the First Time Since march joining us is noah blackstein, senior Portfolio Manager at Dynamic Funds. Youre here. Im here. Youre here in the great United States. Did you come down from when did you get down here . Yesterday yesterday, from toronto from toronto. On an airplane. Im sure you did. It wasnt an electric one either, so you have a lot to answer for, my friend. Anyway, you get to watch from afar. What do you make of whats happening in the stock market down here . Youre close enough to where were all the same i think the market can continue to go higher. I think in august with the yield curve inversion, you had a number of stocks out there that were basically priced for bankruptcy some of the deep cyclicals, some of the banks, some of the retailers. You saw a massive rotation into these value beaten down names in september that sort of continued here i kind of feel like this cyclical rally may have a little further to go, but its pricing around tariff cuts i think there is a lot of secular growth names that sold off during the last few months those names will pick up the baton from here. At the end of the day, those secular trends are still intact. Unlikely to be derailed. Some of the stocks are down 10, 15, 20 off their highs. I would also say i think for the more aggressive investor, doing a lot of work on the busted ipos of this year, this has been the worst year for ipo performance in 25 years. Some down 60 from their ipo price, wildly over valued by private equity they deserve to be down. Now is an interesting point in time to do some work in those areas. What do you like in that area what do you say the multiple well get to that. What do you say the multiple is on next years earnings . I just heard someone say 19. Is it 19 are they low balling are they on the low end of what the s p is going to earn in 2020 yeah, i mean, i dont look at the aggregate number for the s p 500. I kind of look at the companies that i own and i think you can still find are we expensive here i dont think were expensive. Certainly not going into a recession were not expensive. There are pockets of really expensive stuff. If youre willing to pay 26, 27 times earnings for Electricity Utility Companies that dont grow and have this back door have this black swan type of event that youve seen in california where their equipment burns down half the state, you might have issues in some of those stocks that have been deemed defensive those are very expensive for companies that can grow, no. I think be for some of them that are growing very fast, they sold off the last 60 days, 90 days. Those are pockets of opportunity. All right you said you like some of these ipos i dont know if you call them busted ip os. What do you like babies with bath ater in the old days you never buy the next rounds. Some of the guys were buying the next round look, when facebook went public, i think it fell 30 in the first week and by the first i think in the First Six Months t was down 50 from its ipo price. Pin tryst pinterest is interesting to me you have avenues for monetization shopping, shop, selfservic ads and a whole bunch of other stuff. Not everything is terrible in that space. If you look at uber or lyft you feel differently no, i dont i dont its kind of basically dispatch model at the end of the day, software and dispatch and stuff i dont know what the Business Model is i said before, theyre not the next amazon for sure you want to buy peleton bikes . Im trying to go through the list you can call the trainer. I get the pinterest story i understand that. There is stuff in technology, for example, theres companies i dont own like data dog. Its a devopps company, 8 million mark cap story in the wall street journal cisco bid for them 7 billion. So hutch more are you paying pre ipo . These are uncovered, unfollowed stocks i know you talk a lot about well maybe investors, the companies should get more of the ipo pop i disagree with you on that price. But now i think with all at least lockups coming off, weymouth for all these lockup, there is tremendous pressure a lot of this stuff is down a lot. Eighth gait area to work. Where are you on Energy Materials . Weve seen a bounce recently but down for the year . Listen, i think the august for all those groups is a terrible month there is tremendous so they deserve to bounce, but you know im looking for much more secular growth over the next level. I really never spent a lot of time in those areas. Are you buying them to essentially sell them. Im looking for much more growth secular opportunities. What do you have going on do you have clients or stuff come down to just see us i have clients. Thats a good thing if are you in the investment business. I dont know, if, hopefully, theyre still clients once the wealth conference. Yeah. Oh, you want to go into that lets talk about that a little if you want to. Its a huge concern i think thats a huge risk to the markets. You go . Elizabeth warren, yes. And are you not a billionaire in you think its not in the markets right now . Its a risk to markets, the tax, itself, in that people would have to sell in order to pay that Capital Gains tax or . If i want to break up Big Technology i want to ban trafficing i want to eliminate private healthcare insurance so its the warren and a lot can be done by executive order. It doesnt have to go through congress so whether it happens or not, i dont know does it weigh on the stockmarket in 2021 . How could it not how could you get confidence let me ask you, why is it not in the market right now . She hasnt been elected yet so thats the question, though im saying its weighing on the Healthcare Insurance Companies and she slipped in the polls and sort of bounced back i can see, listen, its a great slogan it allows you to punp up what done you have that they have if canada or we have in sweden what dont have you . You want to pay for healthcare, what dont you have . Its not what i dont have. Its what your country doesnt have you dont have a National Sales tax. We have a National Sales tax in canada we have a 25 national tax if you want to raise the money for healthcare, have a National Sales tax. You cant get elected on it. The most money you can raise is National Sales tax you cant get elected promising that. A pretty good perspective thats why i immediately asked you are down from where you can look at us from up there from a different perspective. I love canada, but there are things that you would not want you would recommend we dont do certain things that canada has done if you do pass it, i think the best job opportunity for your kids is as an appraiser or an accountant. Appraisers, for sure. Good to see you. Lets get down to the new york stock exchange, our good friend jim cramer is there this morning. I dont know if you want to weigh in to the bill gates, Elizabeth Warren, teteatete there, jim, or we can talk about some stocks this morning as well i thought, no, shes not elected yet. April 29th i will be in toronto for the commitment to cures gala, which is important to me this is about people who are trying to solve illnesses and im excited about it i hope to see you there, its me and amelia clark there you go. One table down and by the way, ralph lauren, great, roku not great. And i think qualcomm may be best if show because of 5g. Andrew, congratulations, i thought that the panel you had with obama, okay, and trump was amazing. I dont know why you didnt get the pope were working on it were working on it, jim thats an easy why cant you get that done . If i get you, i got you, if i get you and the pope nobody should do another conference, conferences are done after that conference. Its over . Thats very kind you say it was up believable. Unbelievable. Very kind you gay how come you are not as good as andrew . I said, okay, okaying im working on it. Let me ask you real quick, we had mr. Kenny on earlier from nielsen. You saw that company is splitting. Yeah, thank heavens for elliot. What do you do there . If elliots there, you want to buy it. There is elliot is so good this year. They are so host they are improving every company they touch. They are you know the one mistake that i think singer made . Whats that i didnt see him at your conference, or did he get back. Its true its true. He isnt a head leaner enough hes spoken at the conference a couple years ago, mr. Singer okay. I guess he didnt make the cut this year. We got to get him back. The only thing, you didnt go to the 13th or the Empire State Building to get jfk, i dont know why you didnt do it. Im working on it. Remember thats where tlush is located let me finally ask you. You were talking about ralph lauren lauren, what do you think . Hes shrinking to grow as my colleague david faber said, he se getting out of mall stores. He is incredibly nimble. This is a new ralph lauren People Better start realizing it i am so impressed. They use a lot of instrument, theyre very social media oriented thats what it takes to sell clothing timeless, too. Timeless there you go, too cramer. At poll you and me for lunch. They dont do lunch at the polo club. No, they dont. Lets do dinner dont miss an exclusive interview with roku ceo antony wood thats later this afternoon on squawk alley but in my mind im still 25. Thats why i take osteo biflex, to keep me moving the way i was made to. It nourishes and strengthens my joints for the long term. Osteo biflex now in triple strength plus magnesium. Im happy to give you the tour, i lohey jay. It. Jay . Charlotte oh hi. Squawk alley. Oh, hes terrific. Excellent tennis player. Byebye. I recognize that voice. Annie . Yeah she helped me find the right bonds for my income strategy. Youre very popular around here. Theres a birthday going on. Karl he took care of my 401k rollover. Wow, you call a lot. Yeah, well its my money were talking about here. Joining us for karaoke later . Ah, id love to, but people get really emotional when i sing. Help from a team that will exceed your expe. I can shine. Imma do what im made to do. Built for excellence. You start from the foundation up. 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