Transcripts For CNBC Squawk Box 20160831

Strong, he says september. Is he over 200, it has to be or. I thought he said 185. So as long as you hit that. I believe so. Which is the whole thing is bizarre because the jobs number is readvisable by 100,000 jobs every time anyway. Details, brian. If you get anywhere between a d plus and aminus, im going to. Thanks appreciate that fed. Lets check out overnight this asia. At least in japan looked like the market was up 1 . Markets were mixed in china. Hang sang was down less th than. 20 . In europe in the early trading right now, at least at this point, things are mixed. The cac is the biggest gainer of the major averages. The ftse and dax are slightly lower. In italy stocks are up. Abex up. 80 . Crude oil prices. Crude oil is a little lower. Right now down only by about 14 cents to 46. 21. Among top corporate stories. Deutsche bank had considered a merger with commerzbank in the past. A deal would combine germanys two top lenders. Played down that report saying he doesnt think a merger is an option, but in prepared remarks, calling for more bank mergers in europe. Saying banks are less risky than before the financial crisis, but also far less profitable. Category life is full of tradeoffs. Former viacom chief has sold the rest of the shares amounts to 31 billion. Former ceo and soon to be nonchairman sold 28 million worth of shares. Also received an exit package worth 72 medicillion after he l the battle of controlling the company to redstone. Earnings news. Hr misses. Results were impacted by foreign currency. This is the one stock i heard donald trump call out saying his tax plan, everybody is going to love except for hr block. You just wonder if there is a simpler tax code no matter how it comes through. I think they absolutely fear an years tax. They love a complicated tax code. My mom works for them. You have a vested interest as well. Shes my high level source. She actually said that i did talk to her about taxes. I always do. Folks, call your mom. Just tell her you love her. And she said, no, listen business has been up because more people with obamacare. A lot more credits and questions. More confusion. I dont think were going to go to a flat fill in a post card rate any time soon. I have a hard time imagining that too. By the way, if you need your taxes done, go see my mom. Wonderful person. Two fed president s walk into a symposium. One says lower rates are here to stay. One makes the case for hiking rates. Chicago fed president saying he is increasingly convinced the American Economy has slowed. He said a spike in long run rates is unlikely even if the fed finds the need to raise rates faster than expected, but at the same event in beijing overnight. Boston fed president rosengren making the case to raise rates. Said the reserve will likely meet target in employment goal soon and quicker Interest Rates over that time could shield the economy from risks. Points to rising real estate prices as one of those risks. Were going to be a running Football Team this year. Were going to be a passing Football Team this year. Thats if the Federal Reserve poached football. Treasury lew will speak this morning in washington. Regulation to trade, and monetary policy. A programming note, we are just two weeks away from the sixth annual cnbc delivering alpha conference. Primitive investor summit produced by cnbc and secretary lew will be speaking hat that conference. As well as former secretary timothy geithner. Tickets are available at delivering alpha. Com. Becky, secure your seat now. Yes. As we mentioned on todays economic agenda, start over. We will be gettingen early indication of fridays job data. Get the adp report. Its out at 8 15 eastern time. Forecast are looking for 180,000 private sector jobs to be added in the last month. Compares closely to last month. Saw 179,000. At 9 45 a. M. Well also be getting august chicago pmi. Followed by july pending home sales at ten. Plus at 7 00 we get Mortgage Applications. In the meantime, lets focus on the markets and the economy as we count down to the jobs report. Joining us now is jack caffery. Covering the economic angle for us is michael gapen. Chief economist at barclays. Good morning to both of you. Thank you. Why dont we star with you. Where do you think the fed stands. We mentioned 6080 chance they raise in september. We never left september. Our view was september or never. If labor markets were rolling over moving to december department make sense because i felt youd never get there. If the april may data was a fluke, they would be right back looking at september hike. If you get a good number, we can debate on what good means. If you get a good number, i think theyll go. Charlie evans out there morning how he thinks the economy is likely to slow down and a bad time to be raising rates. How much does Something Like that matter in this debate. Theres certainly a core within the committee and charlie is one of them that would prefer to say lets wait. Make sure inflation is 2 . Gin up a little demand before we go. Thats a minority view. I think yellens comments were pretty clear. Labor markets will move on forecast of inflation. I think charlie is in the minority at this point. If we do see a rate hike in september, does the market reabout poorly, does the market take it in stride. Were in the camp of a december rate hike. Arguably we would be negatively surprised by a september move. Arguably. Does it matter that much . I think when we talk about having so much focus on Forward Guidance for so long, the fact what the fed has been certainly consciously trying to inject more uncertainty in terms of we want to move, but we dont know when were going to move, but were going to be data dependent. I think theyve been trying to enjekt a little bit more i need the market to tighten a bit on my behalf and start doing some of the heavy lifting for us. We dont want to be too predictable, i guess. Are you talking about the long end of the curve. In other words, the question even if they raise the very shortterm rate that they control, the long end moves almost independently because of the central banks. Other central banks, need for duration, need to try to immu immunize portfolios. Its been up grindingly higher. That has been indicating some pressure for some need for some normalization at some point sooner maybe not sooner rather than later, but need for normalization to come. Even if they raise rates, they have sounding this whole sort of call that youre not going to be seeing sharply higher rates for a long time. Its going to be lower Interest Rate environment for a long time to come. That makes sense for the higher shortterm. I mean, the tricky thing is you wind up with flatter. Right. And ultimately flatter doesnt necessarily help the Financial System and banks were certainly working yesterday. In a particularly weak day, but a flatter curve doesnt necessarily speak to a necessarily more profitable curve. We would like to see more loan demand to go within that. Everybody worries a flat curve is a precursor to an inverted curve which may signal a recession. Are you ward aboorried about th not yet. It would depend. One hike isnt going to get you there. Is the long end of the curve reflecting the demand you were saying for the hunt for yield. Is it actually reflecting growth concern. So the policy mistake outcome. The more you think its the later, then yes you would be concerned. Right now i would say no. I think we had our recession scare in q4, q1. I think were probably looking at 2018, 2019 for the next time that will come around. What you were just saying, jack, talking about the financials, does that mean you are not a buyer of the financials here or the conventional wisdom is wrong. Conventional wisdom is financials are a rate player or conventional really a loan demand play. I guess either one. I think ultimately. Two strikes against them at this point. We have higher cost to go with, you know, what more muted demand and a flatter curve. I think thats why youre seeing the financials very focused on how do they control their cost with what they can do. Certainly they have been very much at a favor and theyve been at a favor for a long period of time. So you do find people looking for what hasnt worked. What is cheap, where expectations are low and i have overweights to financials. Theyve been frustratingly overweight. Ive had them. You think loan demand is going to pick up faster than expected. I dont think faster than expected. I think its going to be steady. The challenge we have is growth is okay. The frakt growth is okay. We would rather it be good. The fact its okay the fed will keep talking about moving and at some point be moving to a more normal policy. If growth were great, it would be a different discussion. How quickly you take the punch bowl away to the extent we have had a long, but very muted recovery thus far, i think we have the groundwork for continued extended along, but still very muted recovery. Its hard to find where imbalances are being pushed into the economy that creates the next recession or downdraft in earnings. Jack, thank you. Michael thank you. Duty wionald trump will where the president of mexico today. Ahead of the major imdwrags speech tonight. Eamon jabbers joining us with more. I did not see this coming and neither did a lot of political pun dents. He is going to meet with mexican president today. This is a gamble for both politicians this meeting in mexico. Donald trump is hugely unpopular in the country of mexico with the rhetoric on the campaign trail about mexicans coming into the United States, being rapists and criminal. That all has not gone over well in mexico to say the least, but its also a real gamble here for the mexican president who is polling in one recent political poll at 23 approval. Donald trump is at 4 in that recent mexican poll so give you a sense that both politicians here will have something on the line today. A fairly dramatic event in mexico and then well see Donald Trumps immigration speech in arizona later today in the evening time. One of the questions here is which donald trump immigration plan are we going to see in this speech tonight . Aides have hinted about softening, changing the rhetoric. Trump has remained steadfast about building the wall on the mexican border. Where he lands on the core issue of his president ial campaign is still somewhat in doubt. Now, lets turn a little bit to some of these political results in the political primaries in florida and arizona last night. Starting with the state of florida here, look at john mccain, heres a guy who is 80 years old running in a primary against an opponent who has brought up the age issue. John mccain ultimately winning last night, 52 to 39 against kelly ward. Moving on to the other big florida results last night. You can talk about marco rubio at 72 . Beruff is a trump supporters. Republican leaders prevailed on rubio to run for senate. Gotten past the trump challenge. Now hes got the awkward position of running. Still not retracting his criticism of donald trump who will be at the top of the ticket going into the fall. And another interesting one in arizona im sorry. Back in florida again. Debbie Wasserman Shultz. This is a fascinating race on the democratic side. Debbie Wasserman Shultz caught up in dnc controversy. Bernie sanders supporters angry with her for supporting Hillary Clinton over Bernie Sanders and Bernie Sanders himself endorsed debbie Wasserman Shultz democratic opponent. Still debbie Wasserman Shultz ske squeaks by 57 to 43. President of mexico invited both candidates, right. Yes. He invited both. We havent heard from the Clinton Campaign yet whether shes going to accept that invitation or not. So much more attention on the Trump Campaign going down to mexico. What kind of reassumption will he get. What will he say to the mexican team. All of that is going to be fascinating political theater today. Whether or not Hillary Clinton decides its in her interest to accept the invitation given what donald trump does today. Eamon jabbers, thank you. Well see you all day long. Coming up, a hurricane watch in effect for parts of florida gulf coast. Hawaii. An update on the storms track and impact on tourism. Next. Welcome back. 18 minutes after the hour. Google is taking on uber with a new Ride Sharing Service. Google service will help San Francisco commuters join car pools. Company began a Pilot Program around california headquarters that may allow service to thousands of workers in the area. You have to use the app waze which is owned by google. An awesome app, by the way. Ive got a crown on waze. If you get the points. By submitting things like potholes. I drive so much. My commute is so long. Ive got a little crown. You submit that stuff while youre driving. No, when he gets home. No, never. Theres not a cop hidden behind that billboard. So unlike i do have a radar detector as well. I feel invincible. Today im going to get pulled over. Connects drivers who are heading in the same direction. Charges riders at most. 54 a mile. Less than uber and lyft rides. Right now google isnt take a fee. Its not like i have a uber drive, i have a lyft driver. It sounds like michelle is heading to work. I hit a button. You want the get money, pick me up, throw me out a mile later. Its kind of like hitchhiking. It does smell a lot like hitchhiking. But traceable to its fine. You no what theyre calling it . Guber. Cant imagine why. Going to the general store. Floridas gulf coast now under a hurricane watch. Two major storms bearing down on hawaii this week as well. Weather channel jen carfagno joins us now. Good morning. Interesting things in the gulf of mexico. We havent had a hurk catch in florida in about three or four years. Its been a while. There are watches up. We have what is now a tropical depression and wondering how do we go from tropical depression to hurk. It can happen pretty quickly. Let me show you what i have. Increasing in terms of the amount of thunderstorm activity. It looks more impressive out there. It is just a depression. Wind are 35 miles per hour. It is expected to make a turn more to the north and east. Making a land fall. What is forecast to be a strong Tropical Storm. Let me talk about the warnings and watching. Weve got Tropical Storm warnings for this entire area, including panama city. Goes down to tarpon springs. The hurk watches for a portion of that because there is a chance that it increases to hurk status. Look at how far reaches these clouds are, very wide cloud shield with outer periphery rain in tampa. The bulk of the Activity Still over the gulf of mexico. Were going to start the day with rain and that will be a nice wakeup call for folks here in the tampa area. There could be impacts. Youre not in the cone tampa, but doesnt mean there wont be impacts. Even if youre outside the cone, there will be rain, there will be strong gusty winds, but some of the most severe kbangts we think closer to the center of the circulation as it makes the approach to florida with the risk of surge and also with that risk, very heavy rain. When you have land fall hurricane, you have the risk of tornado. These are the areas we are watching. This is an area really prone to storm surge so just one of the issues, one of the many issues we are looking at i. You mentioned the two hurks over there in hawaii as well. Calling them a pair hurricane v of hurricanes. We have two lined up. Madeline and lester. Wind of over 6080 miles an hour to the big island of hawaii. Were going to talk more about that right now because those two major storms threatening the Hawaiian Islands putting tourism at risk. Met me show you the weather picture with the two hurricanes. Madeline and lester. Not one, two hurricanes hurling towards the state of hawaii. Madeline apparently weakening. Thats the notice we got this morning. Category two storm. Moving southwest of honolulu. Not a direct hit. It would have been a first direct hit since 1949. You have the strong hurricane fouling th ing following that. Back to back hurricane. Hawaii though we know tourist destination. Tourist favorite. And tourism is the biggest employer in the state, accounting for 35 of jobs in hawaii. Also the biggest component and contributor to hawaiis economy. The state is coming off a record month of Tourist Spending in july of over 1. 5 billion. Theyve seen five straight years of Record Numbers in terms of tou tourist numbers and visitors to the state. Internationally japan sends in the Largest Group of tourists. Those tourists went down in the month of july, but for the half year in 2016, theyre up 1. 5 . Theyre spending a little bit less. After japan, its canada with the currency weakness. Fewer canadians have visited hawaii. Thats being made up right now by the huge increase and they said huge on the phone last night in korean numbers. Australia and Chinese Tourists coming in. Hawaii in the mids of tourism boom. Thank direct flights. Also the zika outbreak in the mainland and also made latin america and the caribbean less attractive. Theyre going to hawaii inside. Okay. Thats good data there. Thanks susan. When we come back, we have more of todays top stories. Including another setback for theranos. Later a celebrity broker showdown. Facing off on the latest edition of cnbc Million Dollar home series. Take a look at yesterdays s p winners and losers. When whirlpo buildsdsn appliance, they put everything they know to it. But once its sold, there usually it a way to keep improving that prodt. Toda whirlpool can analyze iot sensoror fr concted appliance the ibm cloud. So they n contuously learn how customers e using their products and how the machines respond. Rnessing data to make eat products better thats at the ibm cloud. Welcome back to squawk box, everybody. Happy wednesday. This is cnbc. First in business worldwide. Lets check out the u. S. Equity futures on the last trading day in the month of august. Looks like things are slightly weaker. Nasdaq down just over 4 points. We do have a lot of data coming up today. Mortgage applications in about half an hour. 8 15 a. M. We are awaiting the adp report. Maybe give us inclination on what to expect on the big jobs report on friday. Right now its time for the executive edge. More headaches ftheranos, according to the wall street journal, theranos did not include the proposer patient safe guards in a study of the test. This is the latest setback for the firm which has faced numerous regulatory sanctions for testing practices. Theranos emailing investors saying it plans to request Additional Data under properly reviewed protocols and resubmit the application. Given the noise around this company, theres a hard way thinking its going to be past regulators. Swift disclosing new hacking attacks. Follows 81 million heist from the bangladesh bank. The Federal Reserve here in new york revealing some victims lost money in the new attacks, wouldnt say how much. Company is hoping to convince clients to increase security. Sent out a letter to clients say the systems are very adaptive. The attackers are very adapt skpif doing it through the tax security procedures. Trying to convince these online players that theyre legitimate as they make these requests for transfers. That way the money gets sent. Sneakier and sneakier. Thats a nigerian king promised he would send. It was the prince. Thats right. The fcc has awarded more than 22 million to a former monsanto executive. Ward is tied to a 80 million settle measurementmement in feb the agency has paid 33 people a combined total of 107 million. Hewlettpackard Ceo Meg Whitman making her first appearance on the campaign trail for Hillary Clinton. Calls herself a life long republican has decided to Cross Party Lines and throw support been hillary. Making the case why clinton would help the u. S. Economy. My view is that hillary would make the far better prosecute and really for two reasons. Temperament, stability, leadership experience and then frankly i think the economy is so important to the United States, i think she will be better for business, for job creation and for small business. So theyre related, but i think she would make the much better president. Wit mhitman saying shes interested helping to rebuild the republican party. This is going to be controversy. Theres going to be a lot of folks that argue she thinks donald trump is going to lose, lets just give it up and build reputation and come around four years from now and do something different. I think theyre afraid of endorsing trump because of what it will mean four years from now too. Its a huge divide. This is a bull moose moment. The Bull Moose Party 100 years ago splitting off Teddy Roosevelt being reinlisted. This feels like that kind of historic moment. One wonders even in a short time we could have a third party. We do. We have the libertarians. You get my broader point. The story about how maybe it was an offbet. What if neither could run . Neither could be in the debates unless they get 15 . Clearly do you give a podium to neither. Gary johnson is hoping for a podium. Today is the last day of fund raising for the quarter. Ive gotten emails from most of the candidates. Last numbers. This is what we need in the next 12 or 20 hours. Originally point about being afraid to endorse donald trump. A lot of republicans, its another thing to endorse and campaign for Hillary Clinton. I mean, that is a huge step to take. Yes. For a republican. And wont go down well in a lot of circles. Ted cruz didnt go down well with his refusal to endorse when he was speaking at the rnc. The irony a lot of this is happening, Silicon Valley, we cant support trump. Dont worry your state is not going to be close. Why are you even talking . If youre in ohio, weve got a story. Folks, it is a big night on cnbc prime. Dont miss a new episode of cleveland hustles from none other than the executive producer lebron james. Tonight successful cleveland tour two Small Businesses competing for investment. First candidate is an urban honey making company. Hey, whats happening. Wesley has never operated a retail space before. I need to find out how he can grow his business and revitalize gordon square. This was once a home here. They raised it. This is my one hive. Ive got about four right now. You see outside of the hive. So warmer day and also this indicates its like bursting at the seams pretty much. They need room. My business began as a way to make our community better. There was a vacant lot of land around the corner from my house. My wife let me buy it. I transformed it into a bee yard. Akron Honey Company was born. Last year i had a pretty strong year. I harvested probably like three different times from it. Dont miss tonights episode of cleveland hustles. 10 00 p. M. Eastern time. I love our programming. Last night was from mere for the profit too. I had to go to bed early. The beginning was awesome. Coming up, Million Dollar homes, celebrity broker edition. Starts of reality show will face off to find the best Million Dollar deal. Round one starts tonight. Well give you a prove. As we head to break, lets get a quick check of whats happening in the european markets right now. Not only the final trading day of august, but also the final day of august. The ftse 100 is down. 25 of 1 . Were always up for you. Squawk box returns right after this. Is car is traveling er 200 les per hour. To win, ery millecond maers. Both on trac d thousands of miles away. With the hp of at t, red bull cing can share critical formation about every inch of the r from viral ywre. Bres are getting warm. Confirmed, daniel you need toc. Understood, ake bias back clic. Giving tm e agility toaveed toc. Spee precision. Because no o kno like at t. Weve ju bn hearingsouch abw youre a digitompany, yet here you a building a jet engi. Well, ge is digital and strial. Like peat butter and jelly. Yeah. Ancheese. Cops and robbe. Nachos andarate. Ahh. Not that one so much. Rest were rely goo socks and shoe ok, ricky. Welcome back to squawk box. Show you whats going on with us equity futures. The dough open right now by lower 12 points. The s p would be flat and nasdaq would be lower by nearly 3 points. Taking a look at currencies where the dollar is trading. Weaker against the euro. Weaker against the pound. Cost you 1. 31. We are coming up on the 15 Year Anniversary of the 9 11 terror attacks. A new documentary out next week tells the story how the pentagon stayed open for business. The executive producer of 9 11, inside the pentagon and joins us now. Thank you for joins us. On obviously here in new york we can look down and see the freedom tower. We forget about the awful day the pentagon and a lot of people had as well. What went on from just a few moments after the attacks through the next couple of days. Ill tell you, youre right. The World Trade Centers has said theres no competition about tragedy. It was horrible all over. The pentagon kind of got lost for 14 years in terms of people talking about it. Its military, they wont talk. That was not the case at all. The fact is. There were a lot of civil dwr yans inside the pentagon. To me its an every man story. Its not a military story. There were plumbers and electricians and private contractors besides all the First Responders in this building that day working. When the plane hit and all the destruction started and the fires, they were the first guys to stay in the building keep working try to keep the water going. In that sense, it was truly a unique american, you know, every man story. What happened is, you know, the pentagon never closed. It opened in 1941. It has not closed one day since 19 h 1941. Even that day. They stayed open for business even though the roof was on fire for the next three days. Everybody went to work. 20,000 people. Everybody knows off the top of their head how many people died at the World Trade Center. Very few know how many died that day at the entity gone, more than 180. 184. That included the people on the plane. The blast proof windows. Tell us about the blast proof window asks the tradeoffs we make for certain kinds of security versus other kinds of security. Well, very cleverly after the Oklahoma City bombing, tim mcveigh, and the bombing this kenya of the u. S. Embassy. They made the determination that what really killed the people in the buildings was the flying glass. These were bombs set on the ground outside the building. When they exploded, it was the flying glass that caused the most damage and fatalities. What they did is learn a lesson. Put blast proof windows on the building. However. However it wasnt an explosion from outside. It was a penetrating explosion. The fire eresuupted inside and blast proof windows couldnt be open. Where are with this many years later . Where are the survivors and how many still work there and how has the pentagon changed as a result. Ive been there a couple tine times on other projects. You wouldnt know anything happened there as far as the physical structure, the security is the security. Its tough to get into the pentagon without getting a lot of clearance. As far as the people, it was amazing when we reached out to talk to people how many said, yes, i would like to tell my story. Its going to be hard, but i need to tell it. And they told it and then a lot of them after we were finished said i dont know that im going to be able to watch this. It was so painful and its been so many years now, but the people we did get, told a fabulous story about being in that building and staying in that building. Like new york where there were two planes. After the first plane hit, there were radar evidence that there was going to be a second plane coming in. As that rumor began to spread throughout the whole scene, they people were rushing into the building. They couldnt run away. They were rushing into the building to try to save people. Where can we see it. Its going to be on pbs on the sixth of september at 8 00 and nationally broadcast. Thats great. What about the windows . Have they changed them at this point or still the blast resistant windows. I think theyve upgraded them now. Thank you very much for coming in. Appreciate it. Coming up tomorrow night on cnbc, ground zero rising. Freedom versus fear. This folks, a new original documentary of our own that gives you an unprecedented look of the redevelopment of the World Trade Center reported on by jim cramer. Airs tomorrow night. Squawk box will be right back. Welcome back to squawk box. Google nest labs. Maker or internet smoke detecters and thermostats is undergoing major restructuring. Group team will become a part of google to create a unified platform. Paid 3. 2 billion in 2014. Posting higher than expected revenue as spending by companies and governments on Cyber Security stayed strong. However, the companys First Quarter profit and revenue forecast is below what the street was expecting. That stock is down 5. 5 . Couple of other stocks to watch on this wednesday morning, vise veeva reporting better than expected results. A Cloud Computing company focused on the pharmaceutical and life science sectors. Expecting Third Quarter results to come in above analyst forecast. Meantime, astrazeneca will pay 5. 35 million payments made by staff to state officials in russia and china. However, astrazeneca is not admitting or denying any wrongdoing. Justice department closed a similar bribery. Imagine that, having to give money to do business in russia. Im amazed every day on this program. Cnbc Million Dollar memo series is back. This time celebrity brokers face off to find a better bang for your buck. Looking at two multiMillion Dollar properties. Round one in San Francisco. Show us the penthouse clock tour up against the sleek sanctuary. This historic clock tourer penthouse. Evaluated ceilings line the 3,000 open concept concept livi space. The complete is the look, there are exposed steel beams and Custom Floors throughout. Plus two bedrooms both with baths and a gar may kitchen. The upper levels include an office and game room. But the crown jewel, exclusive access to the clock room. Price tag for buying time . 6,995,000. The contemporary custom built home in russian hill, 1500 square feet span four levels. Solar power lighting makes for an ultra space. Plus a Gourmet Kitchen and three fire places. Downstairs, a rec room with a tv worth more than a hundred grand. But the prime spot . This private rooftop terrace. 9,500,000. With us now is ryan hunt, hes the star of Million Dollar listing new york on bravo. Tell us whats going on in the San Francisco market. San francisco is awesome. And as a new york broker i always like talking about San Francisco. Because . Well, one i have to put out there as disclosure, im friends with all the brokers were talking to today. I have nothing personal against them because there has to be a winner here. Were figuring out which house. Between these two has the most bang for the buck. San francisco like most of the United States is undergoing a real estate correction where over the last couple years youve had a lot of inventory built up. Some of it hasnt sold and thats bringing prices down. Thats kind of what youre seeing in south beach. Its almost like a moat, right . An island that rarely suffered corrections in san fran. Thats what we think in new york. But when you go to the west coast, we hear about the penthouses in new york not selling so they must be crashing. Not really. Theres a little bit of correction but things are still selling. 6. 995 was recently reduced. So it is correcting. And that makes sense because the south beach area of San Francisco year over year has come down about 2. 5 whereas the russian hill neighborhood where our sleek sanctuary is with the 100,000 tv i think it was. Elevators to all the floors. That area year over year is up about 23 . What . Wow. In part because theres less competition and less inventory. Theyve seen a massive increase in development over the last six years. If youre a buying trying to figure out, okay. I really like telling the time and multiple levels, where am i going to get the most bang for my buck. Youre looking at do i want a unique property like the clock tower . Or do i want to change this time for everybody on is the bridge coming over because that would be awesome. Thats why i would buy it. Or do i want to be in an area where i have less competition like russian hill where kwour going to have a lot more people coming into the area and doing new flips. So youll have an appreciation built into it. Then ive got to make that decision. Make the decision. Well, what do you think . I want to know what you think. I know what i think. I want the clock tower. Because i want to change the time. Going to change time. Im late maybe we cant let you buy the clock tower. Also if you know that area, youre probably stating at interstate 80. Yes. Youve got a lot of traffic by there. The upside is, hey, where do you live . Just look for the clock. Its not hard to find. Other than that the sanctuary has got to win. But because of the markdown, thats interesting. Marked down for a reason though. Any time theres a price reduction, im thinking maybe thats an opportunity, a reason to buy. But if you look at it really, its a great price reduction. Its a better price. Were now well under our competition. But its still only two bedrooms. Its still 3,000 square feet. So youre paying 3. 5 million per bedrooms where our sleek sanctuary is four better thanes for the same price. My choice, my winner is sleek sanctuary. I think im with you on that too. I still like the clock. I think ive been very vocally anticlock tower from the beginning. You have. I wont take it personally. I feel like hugo or whatever, Charlie Chaplin where you hang on the outside of it. That would be cool for a day. Someone is going to buy it and theyre going to do that. Thats what you would do. Thats a unique property. But theres only one buyer in the world whos going to want that clock tower and its up to justin, the fabulous broker, to go find them. And when you want to sell it, theres one unique buyer in the world that wants it. Now that weve had this conversation, i think justin needs to make sure that the buyer sign something that says they will not change the time for everybody coming over the bridge because theyre going to say, what . I got an hour to kill. And youre like haha. Love it. Thank you, ryan. Hes going to be here all day because hes going to be back on squawk on the street with the next round of competition. All right. And now to sports. More first round action for the u. S. Open on tuesday night. Serena williams kicking off her bid for a record 23rd major title. Showing trouble from her right shoulder that bothered her since wimbledon. She cruised by in straight sets. 63, 63. In the a later match, andy murray coasted to victory in three sets. And you were there and you saw it all. I was there. And i saw it all. And thats why im tired today. And by the way live a little. U. S. Open is an awesome event. New york city has got to invest time to plan for that thing. No one knows where theyre going. Unpleasant experience . No. Its just this great event and youve got to keep people safe but also have a humane experience. Just my personal anyway. Your thoughts. When we come back, here comes september. But will it be a september to remember or forgettable month for the market . Don chu is going to krunk tcrun numbers for us. Squawk box will be right back. A september to remember . Investors turning their attention to jobs data and the fed. We ask Louis Navellier where hes putting his money to work and why he thinks a big correction in Energy Stocks is coming. Is housing on firm footing . Were going to find out. Mortgage application data minutes away. Find out what is being said about the state of housing and why investors should be concerned about an affordability crisis. Plus Jetblue Airway is making its first regularly scheduled air flight to santa clara. Heres a hint. [ speaking in Foreign Language ] live from the beating heart of business, new york city, this is squawk box. I didnt do that just in spanish. I did it in cuban. Hint, hint, everybody. Stick around. Welcome back to squawk box here on cnbc, first in business worldwi worldwide. Im becky quick along with Brian Sullivan and michelle carusocabrera. Weve been watching the futures this morning. So far not a lot to really keep your attention. Thats because we are awaiting some data this morning. Got Mortgage Applications hitting just about now. Youve got adp, the employment report hitting in under an hour and 15 minutes. That could be an indication of what we might see on friday. Right now you see the dow futures down by about nine points below fair value. S p futures essentially flat. The nasdaq down about 1. 5 points. Heres whats making headlines at this hour. Investors looking ahead to 8 15 eastern time when were going to get the august adp report. Compared to 179,000 in july. Everybody wondering if thats a precursor to what were going to see on friday. Donald trump will be visiting with mexican president enriq enrique today. The president has invited the mexican president has also invited Hillary Clinton to visit him. No word on whether or not she is going to go. Oil prices moving a bit lower this morning with traders concerned about a stronger dollar and rising inventories. The next data point that comes out. Wti 46 bucks per barrel lower by 35 cents. Brent at 47. 92. Next point when the department looks at oil and gasoline supplies. Google and uber used to be kind of friends. Not anymore. Google is going after uber with a Ride Sharing Service through waze traffic app. Unlike uber and lyft, googles waze m project connects people with random groups of strangers headed in the same direction. It charges 54 cents a mile which is less than others for now. Basically you stand outside, you look for rein dom groups of peoples in vans or large cars. And you get in and go. Sounds a lot like something people used to do in the 70s except this is the digital version of hitchhiking. I suppose you know each other no. Youre on the phone, youve got a phone. Its connected to an account in theory its traceable. Of course. But carpooling with strangers. So they can find you afterwards. So they will find where youre left. Women think differently about this than men. I think so too. And maybe people who lived through the 70s do than the millennials. Like the comedian steven wright. He says i like to pick up hitchhikers and say so where do you think youre going. I have one dream in live, dom chu. I want to dress up in clown suits and launch this app and look for people. Oh, yeah, youre going there. Hop in. And i just want to see what happens. Im going to do this one day. Dom, do your best. Im trying not a weigh in. Its a great conversation. You admit. Youre many just getting into random strangers cars. When you did that read, i thought to myself, there cant be anything that goes wrong with this. Getting into a car with a group of strangers you dont know. Its like the whole uber pool thing. But this is really random. Its anybody its a sharing economy. Were all friends, dom. Then it feels like its back to the 60s again. Lets be clear on what were talking about. Thats the thing. Well, you know what i think it is though . It speaks to the changing paradigm that we have to michelles point. A lot of younger folks these days are not even looking at car ownership or car leasing at all. Why do that when i can just go everywhere i want . I was speaking to a couple different parents last night who have early teenage sons and daughters. Like 14, 15, 16. They all have the app on their phones. So now instead of parents taking them places around town, they just use uber. Back it up. Oh, uber. Thats fine. I wasnt talking about waze. This is a Pilot Program. Theres one upside to that plan. You know what it is . Whats that . You can go back and look at where the app went. Where were you last night . I was at jennys. No you werent. You were down here loitering. You went to San Francisco and got in a clown car. We always talked about this, dom. Dont get into clown cars. Im not getting in the clown cars. Theyre very small. I think its so weird to think of it that way. Weve got strangely off course here. Yes. Dom, youre supposed to be talking to us about september. Today is the final trading day of august. It also happens to be the final day of august. Thats something no ones telling me. The stock market is on a flat period, historically biggest of all time. But do not hold your collective breath. Dom chu, he is here to discuss. Maybe well talk a little bit more about waze and google and whatnot but heres what we got. First of all what were talking about is this idea if youre looking for a breakout, youre not really going to get one. Thats if history has anything to say about it. If you look over the past 10, 20 years or so, numbers suggest september is not the breakout month. According to our partners, they looked just in september over the course of the past ten years. On average the s p is up 0. 3 . Its still positive. But its a coin toss over the last ten years. Over the last ten years is a weird frame. It is a weird time frame, but it is framing it within the realm of central bank easing and current Market Conditions and whatnot. I dont think anybody can say it was like it was in the 70s or 80s. If you take a look, though, over the slightly longer determine 20 years, how does the rest of rest of the year end up going . Its positiveish. However, we do have, again, a really bad financial technical lingo. Positiveish. You know what your Financial Adviser is going to tell you . What do you think the market is going to do . Upish. September to the end of the year the past 20 years, we have seen some positive trend. And its decent for the rest of the year. If you look at the average performance going back overall since the financial crisis, whats interesting about this is we do have about a 60 positive skew. 60 positive trades for both the dow and s p 500. And generally speaking, things are okay. However, we do have one big financial crisis in the mix back in 2008 that throws things off. Just that one little thing. The worst one since the depression, right . So as we talk about the forwardlooking indicators and nobody says that history is going to be the end all be all guide to this. Its just what some traders use to perhaps give color to whats happened in the past. The key here, guys, is this idea we have a jobs number coming out today. The adp report. And the granddaddy of them all number coming out. All of that frames whether theres a hike. I watched Muhammad Al Erian talking last night. Right now according to the cme watch futures, they look at the futures prices and assign a probability. Its around a 24 , 25 chance of an Interest Rate hike. So if the jobs number really does come in good, that could throw everything out the door. If we do see the hike come in, maybe the markets go haywire. They did last time, september last year. So thats going to be an all bets are off type of situation. Dom, thank you. Good to see you. Good to see you guys too. Im going to take waze i mean uber somewhere else now. Probably down to the exchange. Right now for more on the markets as we prepare for the jobs number on friday, were joined by Louis Navellier. His platinum portfolio is up about 9 so far this year and hes sticking with his picks so far. Randy anderson is from griffin capital. Lets start with you. We just left off talking about the fed and what they might do. Erian says 80 chance the fed will hike in september if that jobs number high. I think the fed is dovish but theyre data dependent and want to keep their credibility. So i think theyd prefer to wait until december, but if all of a sudden you get a job number that has a two handle on it, you get 200plus jobs, i think that combined with any other sort of strong data between now and then increases the odds. What they dont want to get caught is somehow they missed the september window, we get some event like a brexit and they end up without raising rates. I think a job number of 200,000plus increases the chances of a fed rate hike in september. We talked here about how the feds not going to want to get in the middle of an election. Theyre not going to want to do anything into an election cycle like what happened with Alan Greenspan when george bush the first was running. And also we dont want to not do anything either. How do you come down on the election . The fed has been doing a good job. Their job is communication, communication, communication. Again, i think they wants to prepare the markets for a rate hike. Wanted to leave the option on the table. And if they got good job numbers and if the market could react and digest that information, i think theyll go ahead and go. But i do think its going to be a one and done rate hike. Getting it out of the way and watching a slow gradual policy, slow moves will be good for us Portfolio Managers as we look into our allocation decisions for the rest of the year. Louis, i know you are not a top down guy. You dont care as much as the macro. Youre a bottoms up guy and analyze individually. But how much thought do you put into the idea of whats happening in the Interest Rate environment right now . Thats why i dont own banks. The flat yield curve really helps bank profits. You know, all the fed is doing is creating uncertainty. And i personally dont think theyll hike in september. They dont want to be part of the election debate. The more they hike, the more income inequality were going to have in america. When were busy in the holidays, we wont notice anything. Markets in the meantime are still under tremendous pressure. Deflation materialized in july. I think we might have more deflation in september when we get the seasonal drop in crude oils. We always do because demand will drop. Its going to be very precarious to raise rates in september. I think they should wait. Youre negative on Energy Stocks. I was going to ask if that was a fed call. In theory if they raise rates then in theory the dollar goes up which then hurts commodities and theoretically hurts oil stocks even though we havent seen a lot of the correlations that were true in the past come to play. But why are you negative on Energy Stocks if you dont think theyre going to hike . Well, natural gas is okay, but crude oil and the Refined Products have a glut. Theres more people in the Northern Hemisphere than the southern hemisphere. What happens after labor day, worldwide demand will drop off. And the glut will be out of control. Its worse than it was last year. Its worse than its been the last ten years. So you think a big correction in those stocks or youre just not buying them . Absolutely. Those have been the market leaders this year. And they dont have the earnings and the sales to sustain it. We had dividend cuts in e the First Quarter. 84 were from dividends and energy. Im worried that people have confused seasonal strength with real strength. And so, you know, its not going to end well. Oil always goes up in march and goes down in september. Well just see where the lows going to be. We dont know if its 32 or 28. We just dont know. But we do know that prices are going to drop in september. Well see how it hurts the companies. Louis, can you make a broader call on earnings as a result . So many hopes have been riding on the idea that earnings improve and a big part of that for the s p 500 is the earnings of the energy companies. If oil does fall like that. If Natural Gas Prices do come down sharply, that puts that whole thesis of a stronger earnings environment for the s p 500 at risk. Well, sure. First of all, natural gas is okay. We had a hot, miserable summer. Natural gas is okay. But if you throw out financials in energy, theres plenty of earnings. And weve hit the trough. Weve been improving the last couple of quarters. But energys going to have more favorable year over year comparison. Im just worried about the normal seasonality which happens every september. This is a worldwide phenomenon. Oil is manipulated by futures traders. Theres always a rumor about iraq. And last week it was russia and iran. Theyre not going to we have a glut and its a real problem. And its just going to take Market Forces win it in the end. And job owning doesnt necessarily work. Louis, thank you very much. Its great to see you. And randy, thank you for joining us. Great to see you too. Up early. Hes in l. A. Good man. Coming up, exxonmobil has been the target of nearly 20 state attorneys over Climate Change. But the company has been pushing back in court and by other means. Now the wall street journals Holman Jenkins has penned a piece on why against the company could unravel completely. And later, Mortgage Application just out. Were going to talk housing and whether or not theres a bubble brewing in the housing sector. Squawk box will be right back. Im ju a guy who wan to buy tt truck. I ud car. Toelhiat tck aniju s it td me wha other ople in the area pfor thtruck i want. And cause were a truer other ople in ceified dealsh, i i ready know foree evenets re. The same pag ifa look goologreat. And itfa th ihow car ng was alwa meanto be. Is itrcar. Look goologreat. And itfa last November Eric snyderman announced to determine whether the company lied to the public about the risk of Climate Change. Other states notably california began to look into those claims as well. Or maybe they didnt. The next guest shez schneidermans gains. Joining us now Holman Jenkins. He has an article out this morning about how exxon unravelled. Its interesting because you noted in the top of your oped that california and you can read the press from january earlier in january where california was going to jump on the back of this and go gung ho into it, but maybe they didnt do anything at all. This was all Eric Schneidermans idea. He claimed he assembled this whole posse of ags from around the country. 22 democratic ags. They were going to tear open exxon and show they had been lying to the world about Climate Change. That was the case theyre going to prove. And it has unravelled. Schneiderman said i basically dropped all that and now im going to look into how they value their current oil and gas reserves which is a completely different question. So Eric Schneiderman clearly went to the Rudy Giuliani or the Eliot Spitzer school of advancement. At least giuliani was prosecu prosecuting the mob. He sends out a press release every day which i sent to junk mail because so much stuff comes to this guy. You send over the links to some of the articles that were written the investigative pieces about exxon and what they were doing in the 70s. You will see memos that suggest they are worried about rising temperatures and what it would do to the Business Model. How does that not contradict what people get the impression that they say that it isnt an issue . They still profess to be worried about that and are in favor of a carbon tax to limit peoples incentive to burn fossil fuels. There is no change. What exxon learned in the early 70s is what anybody who looks at climate models know which is theyre very uncertain. Even if you buy the assumption of the climate models, the future we face is one that may be just slightly warmer or significantly warmer. We may face a problem. We may face no problem. Thats based on the climate models that are approved by the highest authorities of climate science. Thats all exxon is saying. Its very uncertain. You want to spend a lot of money to solve what may be a nonproblem. Its odd going after a company for something and that doesnt happen. Now you decide to go to the same company over something else. You wonder how much is the issue and how much is the company . It started with the hash tag. Thats what everybody does. Yeah. But it was stirred up by activist groups which were financing these journalistic enterprises that were exposing exxon documents which were already in the Public Record about their environmental research. This pinned this narrative on it saying exxon knew about the Climate Change in the 70s and now claims not to know. Which is not true. When the government decides that it wants to go after you, thats always been the case. If the government wants to have its way, usually were talking about the federal government but it works if youre looking at state or wherever else you go with some of these issues. Theres not a lot you can do about it. No. They find a criminal first and then find a crime. Its not the way its supposed to work. But this was all motivated by a Climate Movement that is getting nowhere in congress, nowhere in legislation. Not very far in regulation. Their whole shtick now is to find enemies, attack them, move the ball that way. I would say the movements picked up quite a bit with president obama making sop significant look. Since this whole thing began in mid80s, fossil fuel consumption up, up, up. Especially as prices drop. But this whole ball of issues is not having an effect in the real world. We had you on last time. Trump headed to mexico. What do you think . I havent been reading up on that. I would be surprised if it isnt a success for him. Hell present himself in a good light. If there are protesters that will just prove his point. It will be interesting. But i hope he also uses it to show he can deal with other countries. Hes not going to meet everybody and turn them into an enemy. What does he come back and say . Does he soften his stance or come back with a check to pay for the wall. Hes definitely not coming back with a check to pay for the wall. But he has to do something to reconcile americans about immigration. The fact nobody really wants to see thugs going house to house looking for illegals. He could set up an auto factory while hes there. Thanks, holman. You bet. Still to come, the ceo on the housing market. We have a lot of questions to ask in a couple of minutes. And as we head to break, here is your aflac trivia question. Which Emmy Award Winning actor of the film chicago was born today. Thus making today his birthday. How do you know its a guy . Actor actress . Squawk box returns. Whats goi on here . Im l, the orangmoy rement squirrel from voya. Were putting ay acorn you know, to show thimportance of saving fothe futu. So youre rt of like spokes perso moref a spokes methor. All right. Welcome back. Here is the answer to todays aflac trivia question. What Emmy Award Winning actor from chicago was born today . Richard gere. The philadelphiaborn actor turns 67 today. Pretty woman. I like that. Officer and a gentleman. When we come back, the ceo of the Mortgage Bankers Association Says forget a housing bubble. We could be facing an affordability crisis. And later, our space segment continues on the space race. Right now as we head to a break, look at the u. S. Equity futures. Thats cool video. I like that. Things are relatively flat. But we do have data coming up. Dow futures right now would open down about six points. S p futures up by less than a point. The nasdaq down by less than a point. Stick around. Squawk box will be right back. [cheg] the highly advand di a4. Welcome back to squawk box. Among the stories front and center this morning, its a very busy day for Economic Data. Were going to get the latest adp report 8 15 a. M. Eastern time. Its a look at payroll data of the private sector. Also ahead after the wall street open, the latest chicago purchasing manager index and pending home sales. Republican senator marco rubio and Debbie Wasserman schultz winning their primaries. Wasserman schultz had been removed from the Committee Following the Democratic Convention after leaks of emails showing she preferred Hillary Clinton over Bernie Sanders. U. S. Economic growth may have slowed permanent and that will keep Interest Rates low for a long time. He. And Jetblue Airways set to make history today. Will become the first carrier to laumpbl regularly scheduled flights in decades. Introductory airfares started 99 one way. Theyre going to santa clara. Theyre not going to havana. Not to santa clara. Theyre going to santa clara. There have been direct flights to havana for decades. Every time ive gone. Its always convoluted and a pain in the neck. So this is a commercial advancement for sure. Easier way to get there. Yes. How would one get from santa clara to havana . That is very tough because transportation within cuba is difficult. There are rental cars that are newer with air conditioning. But the trains and the buses you could use the ride sharing app. If you had the internet. Theres no internet. Its the thumb. Oh. In case you missed our conversation earlier with, this is because google is starting its own process which is ride sharing. Waze. Its a ride sharing on waze traffic app that basically you carpool with random groups of people. Carpooling with strangers. Im headed north did want a ride. Is that freedom rock, man . Turn it up. All going to woodstock, dude. We do have a lot of Economic Data out today. The first of which im taking myself out. In that data we saw earlier today Mortgage Applications rose by 2. 8 for the last week. Thats according to the Mortgage Bankers association. Both mu purchases applications and refinancings were up. That happened even as Mortgage Rates remain unchanged. About future sales numbers. And so too could brand new data from one of the largest real estate information companies. It is using military technology to try and spy from the sky on both residential and commercial real estate. Our very own diana olick took a ride with the company and joins us from a hangar reagan rational airport. Reporter its a lot of fun. This is a low flying military grade reconnaissance plane equipped with the same video Mapping Technology used over afghanistan and iraq. But the ceo of costar saw a unique peacetime operation. He is using the plane to gather Construction Data on millions of properties from apartments to offices to farmland. How is what youre doing today different than how you were gathering data even than a year ago . A year ago we were on the ground driving around. To cover a city like baltimore, it would take us an entire year with two or three vehicles trying to find all the activity. Now we can fly over baltimore in the course of two or three days. Reporter now, this data is invaluable on several fronts for developers and landlords. Costars major companies. It tells them where the competition is. Landlords may be sitting in offices setting rents on buildings in other states and they cant see if another building is going up next door. As for lenders, they want to know if a property theyre lending to will be able to sustain occupancy and rent. And finally, costar which owns apartments. Com is using the plane to find new Apartment Units that might not be listed on it site. Florance says the next is residential. Ground surveillance is a gold mine. And its really pretty simple. You can see the camera on the bottom. Its called the red epic dragon. Im not going to explain why. But really whats so cool is the Mapping Technology inside that is bringing things so close in millions of miles and very, very valuable information to real estate companies. Back to you guys. Incredible data collection. Cool, diana. Thank you. Joining us now with reaction to the mortgage numbers that becky was talking about, more on the state of the housing market, David Stevens from the Mortgage Bankers association. Good to have you here. Mortgage applications rising 2. 8 last week. What do you make of those numbers . I think the week to week number is not the big story. I think overall the story of mortgages this year is what i would describe as sort of the brexit bump. Refinances are up about 100 billion over last year. We expected them to decline. Not expecting whats happened in the International Markets that drove this sort of quality to drive rates lower. Home purchases are strong. But steady. Were going to have about 5. 5 million home sales this year. Thats an increase of about 200,000 over the previous year. I think thats fully reflective of household formation, this sort of emerging millennial generation thats continuing to drive and will drive the next generation of housing. So the media, government, regulators, everybody always wants to see the last crisis come around again. And diana did a story earlier this week about how home prices nationally may finally regain the peak that we saw in 2006. So of course were asking does that mean the bubble is back home prices rising. But that has to do with whats being built and whats being sold. Were doing well providing housing to wealthier americans. Were thats the market thats most active. But lets just go back. 2005 the peak just before the bubble hit us all. There were 7 million home sales in this country. A lot of it due to flipping. Household information was fairly anemic. It was declining. This year well have about 5. 5 million households home sales with 1. 2 million households formed. We expect it to go through 1. 4 through the remainder of the decade. The reason the home price is rising is were not building enough to support this Younger Generation of home buyers coming into the market. Thats why rent rates are rising and younger people are taking longer to move out of rental. And thats why we talk about this affordability crisis amidst all this story on the good news side about home sales continuing to rise. David, in a housing crisis, there was almost no documentation needed, right . Now the complaint seems to be theres too much documentation needed. People are literally sending in basely sort of the mag enough opus of their life. About a hundred pages of documents. Have we gone too far in the other direction or do you believe that really what you have to supply is whats needed . Well, its interesting. Secretary clinton and her platform talks about getting regulatory clarity. Talking about overlapping regulators. I published one yesterday on the same subject. I think what were all realizing is we had an underregulated world that created the bubble and allowed for all these unsustainable exploding loan programs, home flipping speculation. But things do overcorrect. Today we have an extraordinary web of regulators and state regulators all regulating in the same space in house iing to bui entry level Housing Stock because of time to market. And lower margins as a result of that. Its causing lenders to pull back on the margin for otherwise well qualified stable borrowers simply because theyre concerned about where the rules intersect and they sort of go to the lowest common denominator. You need good regulation. You need to hold lenders accountable. But at the same time this overcorrection is something that needs to be resolved. We believe that the next president ial administration has to focus on housing. Its a fifth of the Gross Domestic Product of this country. Its an extraordinarily important part. You must want donald trump, a real estate magnet . I want a president with a solid policy thinking about housing. But you heard him here on squawk box. Becky you asked what do you think of janet yellen. He said she likes low Interest Rates. Hes in real estate so of course he likes low Interest Rates. Nothings so simple. If it were that simple, it would be great. As we all know, low Interest Rates are good for home buyer demand. But they make it difficult for companies that lend to make margin on their cost of funds versus their revenue from their sources. We need a fully healthy market. Weve actually price into our models another 15 basis point increase in Mortgage Rates. We still see home sales steadily increasing simply due to demand and the fact that rates will still be at the low end of the Economic Cycle regardless of whether rates rise slightly. So it isnt just regulation. Its not unwinding regulation. Theres multiple elements. Something thats been mentioned by both sides of the aisle for quite a while is to simplify the tax code and doing that by getting rid of a lot of the deductions bringing tax rates down. Would you be okay with either limiting what you can deduct from your mortgage interest depending on how much home youre buying or okay with getting rid of it entirely . I think its a great question. Were not religiously wed to the mortgage Interest Deduction. What we dont want to see is tax reform done item by item. We need to look at the broad sweeping revenue system we have through the tax structure. If the entire tax code were to be looked at through a formal process and it was thorough and mortgage Interest Deduction then became part of that dialogue, we certainly would support that. Meaning as long as everybodys getting clipped, youre okay too. Its not a matter of getting clipped. Entry level home buyers dont deduct, dont itemize. And wealthy buyers wont really care. What hits is really the middle class homeowner. So if youre going to modify that, you need to think about overall tax policy. It is part of a broader discussion which you guys know all too well. You would be in favor of going along with something that was comprehensive in the system. If it was maybe a limit that you could take. Because you dont want to hurt the middle income buyer but youre okay with it having a bigger impact on wealthy buyers who are paying a Million Dollars plus . I think you need to consider you cant touch everybody elses pocketbooks but not mine. So i think it needs to be part of the discussion. I think Everybody Needs to recognize that the american the benefits from the deduction is a middle class home buyer. Ultimately that impact needs to be understood so we can understand what thats going to mean to household demand and affordability. As long as thats considered in the overall dialogue, were eager to participate. Thank you, david. Good to see you. Likewise. Coming up, money pouring into space. Look at the people and companies driving the innovation for Space Exploration next. Check out the futures at this hour auz we wait for the adp number to come out. They suggest a little bit of a negative number. Call it flat. See if that changes later this morning. Welcome back, everybody. And good morning. Dubai, the city that already houses the worlds tallest building and most Luxurious Hotel is adding another to its list. The largest indoor theme park. The project opens today. Its the size of 28 football fields. Its called img world adventures and features rides with characters from Cartoon Network and disneys marvel universe. Governments across the middle east are eyeing tourism to fight off plunging oil revenues. This is the latest in that battle. In dubai, everythings got to be inside because its so hot. It is hot. In Silicon Valley, venture capitalists are now exploring space for return. What startups are raising the most money . Josh lipton in san fran with that story. Josh . Reporter well, brian, vcs have already committed a lot of capital to spacerelated startups and they say interest is only heating up. Believe it or not Silicon Valley has been inspired herdlike behavior. Were at the nexus at one of those where theres probably not a week that goes by where i dont get outreach from some other investor saying theyre looking for a space investment. Reporter so far this year vcs have acquired 200 million across 20 spacerelated deals. Thats on top of 2 billion in 2015. For Companies Like spacex. The startups that have raised the most money include spacex, one web which uses satellites to provide Internet Access. Blue origin. Satellite builder planet. And kymeta backed by bill gates that sells small satellite antennas. The rise of private spacecraft, analytics, as well as the increased efficiency and drop in price of electronic components. Have all contributed to the growth of these space related startups. There are challenges though. Vcs say theres not enough Software Engineers right now to meet demand. In order to flourish, there needs to be more reliable commercial launches. Theyre confident theyre going to see good returns on their investments either through ipos or m a. It does seem like a smart bet just given the interest were seeing from big tech. Google, remember, bought satellite maker sky box imaging for 500 million. And facebook plans to launch a satellite into orbit providing internet coverage to large parts of subsaharan africa. A lot of vc money pouring into space startups. But who is the top investor behind the money . Is there anybody really in the forefront . Reporter i would say probably the most well known would be dfjs steve jurvison. He was interested in spacex. Also in planet that builds the small relatively cheaper satellites. Theres actually 60 of their satellites high above us right now. He also has this just incredible private space museum which he was generous to give me a tour of. Were going to show you that coming up later this morning on squawk alley. What a tease. Saving stuff for other shows. Thanks for much. Appreciate it. By the way, michelle, to your point i looked while josh was speaking. Real feel temperature in dubai right now, 120 degrees. Thus the indoor theme park. Cant do anything outdoors. Makes sense. Folks, when we come back, marketers turning to Machine Learning to help target ads to possible customers. But as machines get smarter, should you be concerned about your Online Privacy . That discussion is next. Dont forget, folks. Were counting down to the adp private payroll numbers. We have the Market Reaction straight ahead. Well, in a few minutes. You got to stick around a little bit with us. Squawk box will be right back. Simple i but with groh simecocoxity. Thats why so my innotors e ond but with groh like rery 29, with neaya billi. Simecocoxity. Orepa trainingpp us ber 5millionns. But with groh lik ge develope whoseaya billi. Pularityependscoxity. Nchiew upd fas helping to keea compas succesd is built for. Thwhat t m thisusgot teg. Y pause to take a ll . P toind a ba . Ketell yr door abo is approvedt alyour medical cditionst. Anmedicines, a ask iyo heis healt enough for se pertrton, adempas for py asmacause an ue drooprsure. , a ask iyo heis healt enough for se pertrton, adempas for py do nrink aoholn excess. Side effts maynclu heache, set stach, t dil help rht away. Aidgter, for an ereion lagmorehafourou. If you he any suddenecasoross , fnyymptoms on lagmorehafourou. Agic action stop takinciis and get dical he right away. Welcome back, everybody. Improving Artificial Intelligence offers, the prospect of highly targeted more relevant ads to online shoppers. But putting users data to work making predictions about behavior also raises tricky privacy questions. Joining us now to talk about the intersection of socalled Machine Learning and privacy is nick edwards. He is the ceo and cofounder of boom train. Thats a Software Company that provides Artificial Intelligence to marketers. Thanks for being with us today. Thanks, becky. Good morning. Why dont you first of all tell us what you can do with marketers right now. Right. So boom train offers Artificial Intelligence for marketers. We use ai to help answer questions such as who should they speak to, what should they say, what channel, at what time. Then of course deliver those messages and those insights through email, through mobile notifications, through any digital channel. But i think advertisers have been doing that for awhile. I think about when i search for something on google then all of a sudden ads for that particular type of dress or that particular type of hair product come up again and again in my google feed. I feel like ive been spied on for years like this. Yeah. Datas certainly been following you around for awhile. I think its a level of sophistication. Most of whats out there from an advertising world is retargeting what youve done before. What were taking is looking at it from a marketing angle. Helping deliver relevant engaging valuable experiences that are of course valuable for the brands themselves but ultimately should be better for the consumers as well. Lets cut through that. Whats better about what you do versus what ive been getting for years . So first off, were in the marketing tech space. Okay. I know. But give me a hard example, nick, of what you do that is different than what ive seen in the past. Sure. What you primarily have seen in the past is a clear retargeting. You looked at this bag and that bag follows you around the internet. What were doing is taking a holistic view of everything youve interacted with, who you are on the web or who you are in regards to a particular brand and then predicting what that next experience should be. Think of it as the personal shopper that walks you through a High End Department store to cure rate a better experience rather than just someone blaring messages in your ear saying youve seen this before, do it again. Figure me out though. If i look at the grudge report and then the Huffington Post then checks out facebook maybe and then looks at the New York Times. I mean, i dont know that i fit a typical mold of a lot of people. What do you do with me . Yeah. Absolutely. So first off we only use data for a particular brand, for a particular customer. And so were not merging data into every site youre looking at. If youre on the New York Times and if the New York Times were a customer, we would help that we would help you get a better experience with that particular site based on how youre interacting with it. How do you merge the privacy concerns that come with that . Like, its fine that you may be trying to give me something that the marketer wants to get to me. But how do i know youre not impinging on just stay out of my business. So paramount to us is the dont be creepy rule. First off, we only work with highend brands that are very transparent about their privacy rules. What we talk about in terms of dont be creepy. Its like if you walk into a coffee shop and you know the barista and they recognize you by name and make your favorite drink. Thats a great experience for everyone. But if you walk in and they say hey, i was looking through your window this morning and saw you were you were getting dressed. Thats a horrible thats a creepy experience. It is creepy. Thats the line we walk. We stick very clearly on the not creepy side of the ecosystem. I like the dont be creepy rule. Thank you very much. Thank you, becky. Coming up, donald trump meeting with mexicos president ahead of tonights immigration speech. Were going to talk politics with former senator Kay Bailey Hutchinson and former governor ed rendell. Plus well get the adp private payroll data. Next. Hello. If i wt to go wn. Noo. En ii want to comeacai. Yes it perfectnothat we added adjustab bas my favore part it peis to able to lift your legs up a lite bit, lift tead up aittle t, and it f le im stradled. I love the adjusble bed causlovet wh le im watchiv. Anthere you have it. Causangeeep, lchange your li. Im watchiv. Ge ttempedic. Now th septemb1 grade and save on sele tempured mates anjuable bas breaking jobs news. The adp report just a few minutes away. Well bring you the numbers and what they could tell us about friday. Donald trump heading to mexico. Meeting with the countrys president ahead of a big immigration speech. Were going to tell you what to expect straight ahead. All that plus bring on the funny business. An Improv Comedy Group is using jokes to teach business philosophy to students and fortune 500 companies. Final hour of squawk box begins right now. Live from new york where business never sleeps, this is squawk box. Welcome back to squawk box, everybody. This is cnbc, first in business worldwide. Im becky quick along with Brian Sullivan and michelle carusocabrera. Joe and andrew are off today. We are less than 90 minutes away from the opening bell on wall street. And so far, yeah, no exact decision on which way the markets going to go. Weve been looking at this all morning long. We do have adp coming out in a few minutes. Right now the Dow Jones Futures down by over eight points. If you check out oil prices theyve been under a little bit of pressure this morning. Last i look its down to 45. 97. Among the top stories, it is a tale of two fed speakers. Charlie evans and Eric Rosengren both weighing in on a hike. Evans said it may have slowed down. Will keep rates low for a long time. But rosengren made the case to raise rates. He said the Federal Reserve will likely meet the employment goals soon and quicker rate hikes over the time could shield the economy from risks. Meantime, there was new data out on housing in the past hour. Mortgage applications and they rose 2. 8 last week. Both new purchase applications and applications to refinance rose even as Mortgage Rates remained unchanged. We do have potentially market moving data coming up. The adp payroll number comes out at 8 30 a. M. Eastern time. 8 15. 8 15 a. M. Eastern time. Thank you. I need to move into that clock tower and change the clock back. Forecasts call for 180,000 private sector jobs to have been added last month. Versus 179,000. Really its only 12 1 2 minutes. You just time traveled and it was awesome. It was. It was fun. Its 12 minutes and 20 seconds. Here we go. It was a mixed quarter for brownforman. That stox is down by about 1 . Shares of palo alto is under pressure this morning. This is the Cyber Security company. It matched the streets expectations. Revenue beat forecast but pam low al toe also gay a forecast that rises above the consensus forecast. The Current Quarter outlook, though is below estimates. Thats causing concern here. In other earnings news, h r block in the First Quarter missed forecasts. I think by a couple sents. The Tax Service Provider says it had fewer in the United States and results were impacted by foreign currency. Donald trump announcing he will travel to mexico city today for a meeting with the president of mexico. This just hours before hes set to give a speech in arizona to clarify his immigration policy. Joining us now to discuss, ed rendell and Kay Bailey Hutchinson. Senator, what do you make of this move . Is this smart on the part of trump zdonald trump . Well, i think he has a chance to show he can Talk Straight but also be diplomatic. He must be looking for that opportuni opportunity. He cant mince his words. But needs to show the ability to talk to a head of state. One with whom he is going to have a lot of interaction. We have 2,000 miles of border with mexico. And i think this is going to be a good test to see how he can perform. Do you think hes going to ask him to pay for the wall . I think hell probably talk about the wall. Hell talk about immigration and what is in the interest of both of our countries to have a secure border but also one that has the ability to trade and work together. Governor rendell, Hillary Clinton was also invited by the president of mexico to go to mexico. She says she looks forward to meeting with president pena nieto at the appropriate time. Should she go too . I dont think she needs to enhance her ability working with foreign leaders. This is an opportunity for donald trump to show he can be stable and interact with a world leader without calling names, et cetera. I think the commercial thats out from the Clinton Campaign about is donald trump stable enough to be in charge of the country and make these decisions is a very effective commercial. And i think hes got to dispel that. I think its the main reason hes having trouble in the suburbs all across america where there are moderate and republicans. Moderate independent voters. I think its a big opportunity for him. But he cant at the same time change his position. And thats also operative for the speech tonight. If he backs away too much from his position that he staked during the campaign, hes not only accused of being a flipflopper but some of that enthusiasm which will drive trump voters to the polls i think will begin to dissipate. Its a difficult line for him to walk. Senator, do you agree with that assessment . What does he do tonight what would you like to hear him do that would improve his standing in the polls not just nationally among democrats and republicans but republicans as well . I think the governor is right. I think he has to walk a fine line. He has staked out an immigration position that is a major part of his Previous Campaign which he won which was the primary. But i also think that he needs to have in hiss immigration policy and i think this is where the Vice President ial candidate mike pence is very credible. Because hes worked on this issue. And there can be a way for which you can have a selfdeportation thats by a lot of people who dont want to have reform. But we need immigration reform. You can have a selfdeportation and you can secure our borders and you can do it in a way that is humane, its reasonable, and its also right for america and for mexico. Should he reiterate that he want thos build the wall . Well, building the wall is something that was actually started in the very beginning. Reyes who became a democratic congressman in that area. There are place where is it is reasonable to have a barrier to have the ability to have the security for our country. And so as i saw Rudy Giuliani talking about and he is on the inside with the Trump Campaign he talked about using technology. He talked about having a wall that would be a virtual wall. About ten miles in not just on the border. So there are different ways to have barriers that would protect our security. Governor, the polls have narrowed between Hillary Clinton and donald trump. If he comes up with what would be a more tenable position on immigration, do you worry about those polls narrowing even further . Sure, it could happen. Particularly with those swing suburban voters. But i will tell you listening to the senator talk and shes right in terms of whats good for the country. But gosh, if he started doing that did you watch the high dive in the olympics from the high platform . You know, those divers flipflop at least three times before they hit the water . Well, donald would have to be doing one of those to adopt a position. Which is the right position. Its the humane position. Its the sensible position. Were not going to build a 2,000 mile wall. Were not going to deport 11 million people. Were not going to have a deportation force. All of the things he told us he would do are all unpractical, unreal and bad for the country. Hes got to modify those positions. I think youre suggesting that that would if he did that that the voters who wanted him for those reasons wouldnt necessarily vote for him. But theyre not going to vote for Hillary Clinton. No, no. The danger is that those voters, a lot of them are firsttime voters. The danger is they just stay home. They dont show up. Got it. Okay. Governor, thank you. Senator, thank you. Good to have you this morning. Thank you, michelle. Have a great day. Folks, we should point out there are some additional headaches for theranos. Ceo withdrawing the zika virus blood test. Theranos did not include the proper safeguards in the study of the test. This is just the latest setback for the Embattled Firm which has faced numerous sanctions for its testing practices. Some that question whether or not shes even going to be able to continue to act with the company. Thats been the battle its been facing. Theranos emailed investors and said it does plan to collect Additional Data under properly reviewed protocols and then resubmit that application. The s. E. C. Has awarded 22 million to a former monsanto executive. It is tied to a settlement monsanto agreed to back in february. The since the whistle blower Bounty Program was launched, its paid 107 million. All right. Up next, breaking economic news. We are minutes away from that adp payroll report. Which everyone knows is always out at 8 15 a. M. Eastern. Were going to bring you the numbers and the Market Reaction when squawk box returns. G the. Where explo. Prectingiodiversit everywre wwork. Feating malaria. Developing more clean burning natural gas. My j my job at exxonmobil . Tug algae into bioels. Reducing energy port tuimaking cgo further. Wi less. Fueling e global emy. D you thought we just made the. Welcome back to squawk box. A quick check on the markets ahead of some key data. U. S. Equity futures suggest it would be opener by eight. Lets look at crude and wti at this hour is trading at 45. 87. Brent in london up at 47. 27 lower by a little more than 1 . Again, weve been watching whats been happening with the markets trying to figure out where things are headed and we do know that so far everybody is waiting for this next number. It is the adp employment report. You can see the 10year right now is at 1. 583 . Friday we get the big jobs number. Today may be a bit of a precursor. Its the adp employment report and its out now. Steve . 177,000 the adp private company does their own payrolls. They came up with the number they think approximates the private sector. They were biased up last month from up by 15,000 to 194,000. The good sector, though, down by 6,000 while services carried the entire weight of all of the job gains up 183,000. And theres your nonfarm payroll adjustment. 180,000. This is right in line. I would not expect any revisions. Looking at jobs by industry, theres the good sector, construction down 2,000. Manufacturing unchanged. Trade transportation down 26,000. Financial activities up 15,000. Professional Business Services up 53,000. By business size, you see a rebound in large businesses. They have been down for the count in the 20s and 30s. And some people thought that was a result of the january economics boom 3 but now theyve fired back on all cylinders by business stuff. Hes the guy who puts it together. Before we do that, did i hear you correctly yesterday . You think it goes in september if the number is good friday . I do. What constitutes good . 180 maybe down to 170 is okay. I think they may want to put a quarter point on the tab. Even before the election . Even before the election. Or maybe despite the election. I dont know. Or because of the election . Because of the election. Theres the argument theyre going to just try so hard to prove theyre independent that theyre going to do it maybe even if they dont want to just to prove a point. I think theyre going to try hard to show theyre people of their word. If these things pan out the way they think theyre going to pan out and they have but if thats the case, why does one jobs report make the difference . I mean, why now after all of this time when you could look at so many of the big reports up to this point . Because i think they had you know, you could go through the whole litany of issues that were out there. When brexit came along, i think they were going to hike in july. They would have much pr fred to hike in july. But i think brexit has been either delayed or just become a nonissue at least for the u. S. You know, like, and respect now michelle wants you to bring in after interrupting me. I was trying to bring in zandi. Now michelle wants to bring him in. Interrupting around here. Youre interrupting. Im interrupting the interruption. We are four levels deep into absurdity. Thank you for joining us. Thank you. Awesome. So lets talk about this number. It was right in line with what was expected. Good job growth by industry size. I guess i look at the goods producing sector falling by 6,000 and i see the Service Sector doing all the heavy lifting. It causes some concern, mark. Thats always thats generally the case, right . And its in large part due to losses in the Energy Sector because of the collapse in Oil Prices Back a couple years ago. The Energy Sectors been shedding 10,000 per month. Thats a pretty big drag. The other change more recently was construction which is perplexing to me. Construction which had been adding a lot of jobs late last year, early this has gone essentially flat here in the last few months. I suspect thats going to pick up. Saw you had dave stevens on from the nba. That means more construction jobs are coming. But that means thats been the recent weakness. Of course manufacturing is the other major sector. Thats a very productive sector. In good months it adds 5,000, 10,000 jobs. You had an unusual weather situation where they brought on boricers earlier this wiyear. Its unclear whether to add any relative to the amount of construction workers that are out there now. Whats going on in professional and Business Services, mark . Well, its a melange of stuff. Doing reasonably well. Entertainment, media, legal, accounting. Also you have a lot of temp help in there. Thats a good sign. Businesses are, you know, hiring lots of temp help thats a good leading indicator. You know, just broadly speaking, the labor market feels really good. Theres all of the internals of labor market are solid. Theres a Record Number of open job positions. Number of people quitting their jobs because people feel like theyre steve must be right then, right . If this numbers good on friday, is steve right then . Theyre going to hike in september . You know, i think they should hike in september. I think theyre running the risk that the longer they wait to normalize rates, the greater the odds that the economy overheats. Were going to overshoot unemployment. Were at full employment by this time next year. Wage growth is going to be accelerating relatively quickly. Thats a classic business cycle. You want to avoid that, then you should go sooner. When i hear rosengren talk about the tradeoff of Financial Stability and pumping up the e the economy, it tells me at least some part of the committee is ready to begin to raise rates that wasnt before. So i think theres a lot of support not a lot of support but a good amount of support. Heres the other thing id say about september. I mean, the Financial Markets are eerily calm. Why dont you take advantage of that calm the lack of volatility in markets and move forward . Because, you know, these markets are not going to stay this way. Theres going to be a lot of volatility. You know, we could get to the other side of the election and everyone is thinking december and then they dont raise rates again and, you know, we havent moved off of where we are. Seems to mee that youve got a window. The window is pretty wide open at this point. Of course it depends on the jobs number. But one other point with the jobs number, be the august number is notoriously very weak for lots of technical reasons. The last five years its undershot by 70,000. I want you to take off your adp hat and put on your cnbc hat because you also are involved with us in helping calculate the rapid update which is the only average of tracking forecasts on the street. Gives you the instant this is a commercial gives you the instant idea of the economic number. First adp, get five jobs free. You can call in and well give you two. And free shipping. But mark, the number now is running about 2. 7 . So give us your idea i mean a lot of folks in jackson hole, some of the fed guys said we did 1 in the first half, we think we can do 3 in the second half. Is that your estimate . Yeah. Actually, our tracking estimate, the moodys analytics estimate which is one of the contributors to the ive got to practice that. You know, were at 3. 5 tracking in q3. So were getting my view is were going to get 3 second a of the year. The year as a whole, its like 2 which is basically what weve been getting for seven years now. So growth, gdp growth has theres quarter volatility but looking through the volatility to get to the underlying trend, nothings changed. One of the trends in there is the strong consumer. The data we got on monday and the tracking from the Second Quarter as well showed a very strong consumer. Id say booming, right . Last year real Consumer Spending growth was over three. Thats about as good as you can get. Were going to get another 3 this year. By the way, thats happening without any decline in the saving rate. So its not like people are drawing down saving to spend more. That goes to the strong job market. Youve got record stock prices. Youve got close to record low gasoline prices which is to juice vehicle sales. The consumer sales theres nothing but tail winds behind the consumer. Michelle, did you have anything more to weigh in with . We have got a new line producer and you guys are terrible. Youre not listening. Were just breaking her in. Thank you, mark. Take care now. Coming up, calling all pizza fans. Whos not a pizza fan . Papa johns wants to make sure you can get a piece of the pie without leaving your couch. Details after the break. Welcome back to squawk box, everybody. If you want to order a pizza, guess what. Now you dont even have to leave your couch. Not that you did before. But this time you dont have to talk to anybody. Papa johns is laumpbling an app to pay through tv. Dominos lets customers order just by tweeting a pizza emoji. Pa ta johns has been a tech pioneer. But yes. Make sure you dont misfire. So your kids messing around with your phone, pizza emojis. 12 pizzas show up. Wow. Thats cool, i guess. Coming up, students across the country heading back to school. Rewrite the rules of traditional education and looking to teach the world. Salman khan will join us. Squawk box will be right back. Itold what other people i e ea paid forthe tr. Anbecause were a truer rtied dealership, i aly know the uck he wan. So weren thsame. Okood . Its fair. And itst oks great. Th is uecar. She id suld think of myteeth l. Om thing. Th is uecar. Iteaon the o noso greatn thsisi r vice use toothpaste a mthsh thattrengtns both. With est ohealth advanced it uquely formed wh tivestngth technogy to stngth teenside all right. Welcome back to squawk box. Heres whats making headlines this morning. Adp just reported 177,000 new private sector jobs were added to the u. S. Economy this month. It was below forecasts but julys was revised higher by 15,000 to 194,000. The Brazilian Senate expected to vote today to out Dilma Rousseff from office. Shes been accused of breaking budget regulations. She has denied any wrong doing. Mortgage applications rose 2. 8 last week. Thats according to the Mortgage Bankers association. Both new purchase applications and refinances rose with the rate unchanged 3. 67 . New Jersey Governor Chris Christie has vetoed a bill that would have raised the states minimum wage to 15 per hour over the next five years. New jersey would have been the third state to adopt the 15 minimum wage. Currently new jerseys rate is tied to the Consumer Price index at about 8. 38 per hour. Christie said the bill failed to absorb those increased labor costs. Students across the country are preparing to go back to school. Some are already there. Our next guest is a pioneer of Online Education and joining us is sal khan. He is c erk o and founder of the khan economy. Thank you for being here. Most of our guests are probably familiar with with the khan economy does. But for those that dont, lets tell them about you. Youre a hedge fund analyst. You were teaching your cousin some math problems, how to do things. You had other family members asking for help. So you started doing this with online courses and you realized you had something there. Thats right. I started with one cousin and then word got around to the family fru tutoring was going on. Then it was 10 or 15 cousins. Then i started writing software for them for kicks. Then i started making youtube videos for them. Then people not my family were watching. And now its much more than my cousins, much more than me. What are the latest numbers . 40something million registered users. And the amazing thing about what youve done is not only finding ways to teach kids, but you turned down all kinds of funding and people who were going to give you money and find ways to monetize this and give it away for free. Which is why i think so many people have so much respect for what you do. Appreciate that. I think i read too much Science Fiction books. When i was thinking about what to do with with khan academy, it was clear it was something. I live in the middle of Silicon Valley and people offered why dont you do this as a venture startup. But then kind of the idea is kind a delusion back then. I thought this could be an institution for the planet. Any person anywhere with access to a computing device, you could selfeducate yourself. We could empower the teachers. Lets talk about toe state of education today. Public schools in particular. How do you think were doing as a nation . And where do you think we could use a little help . Its easy for folks to pick on Public Schools. Web all even think about our own cool chances and think that could have been better or not. It is worth mentioning that overall Public Schools have been a success from 200 years ago. To have close to 100 literacy rates now. Theres pockets more than just pockets. Theres a lot of Public Schools doing great work. I think the problem today the its not as equal as we would hope. I think theres also a sense that what students are learning in school doesnt necessarily connect well with what they need to do. You see, you know, kind of structural unemployment. Youre seeing unemployed students not just from High School Graduates but even college graduates. So i think thats the problem and the opportunity to allow students to learn at their own time, own space. Snoeb wants to dump on the Public Schools. I think what people get frustrated about, the vast majorities of schools do okay in the United States. But where you look there are the most dropouts, there are certain schools that if they were in the private sector they would have failed. Nobody would send their kid there because it doesnt work. But yet they dont fail. Right . How do we deal with the worst schools that somehow keep on going when theres no correction . Look, im not an expert there. Whenever people ask us about that thing, we stay neutral on it. We say, look, whatever the resources, whatever model a school has chosen, we hope to go in there and supercharge it in some way. If students dont have access to the new extextbooks but we think what were going give free to schools is better than the latest textbooks. Its more interactive. Even if youre in an affluent suburb or going to a fancy private school, if what youre learning in class isnt connecting with you, if you dont gel with how the instructions been given, we hope to fill that gap too. We see ourselves, we stay out of the political debate. Youre doing a good job of that. Smooth. Whatever resources you put and i do think you cant put too many resources into education although i also agree that some of it might be good money following bad where its not being what are your most watched videos . What are people interested in learning about . Well, you know, some of them are the things youd imagine. Algebra, trig nom tri. But a lot is close to what yall do. In 2008 and 2009 and today those are some of the most watched videos. What are they not interested in . What do we not want to learn . Ville to look that up. We dont look at the bottom. The view of zebra mating has two views. Thats popular. Why wouldnt it be . Sal, you mentioned that, look, you want to work with places maybe schools that dont have the latest textbooks. If they dont have the latest textbooks what are the odds they will have not only Internet Access but computers to access the internet . Is that part of your fight to make sure those resources are available . Obviously everything we do is not for profit. Its free. Its dependent on having a device. If you take an extreme example, were working in places like india in villages. And a lot of these governments in india are viewing this as an opportunity to leapfrog. They can never imagine affording these physical textbooks. Theres issues with graft and corruption. But now all of a sudden, smartphones are everywhere. And students can have access to the smartphone. Not only will the students have access, but the administrators can see people are using that. You collect data. Do you know whats your average the average age of your user. What parts of the world are you most popular . We do and its a sensitive thing. The data can be used for good where you can we can see what students are using and whats effective and whats not. Obviously data kg can be an issue. And you dont commercialize your data . Thats a third rail for us. We dont commercialize. Thats one of the reasons we became not for profit. We said, look. At the end of the day students work, theyre learning work. We dont want any commercial barrier for them to access it. And we dont want people to be weirded out. Am i going to start getting ads based on the zebra mating habits or you know. Thank you by the way because youre the only company apparently not doing that. We had a guest on earlier who does Artificial Intelligence marketing. He said we dont want to be creepy but i think the fact he brought it up indicates that some people do find it creepy. A lot of people find it creepy. Listen. Learning is awesome, but it also shows a weakness. I need to learn more about this because i dont know enough about that. I think you can poke holes. Brian hasnt admitted he watched your credit default swap video to understand what was going on. Right . Im your man. Ill make it interesting. No, absolutely. The male zebra quietly approaches. Your model is picking up with others though. Thats how you acquire duck duck moose. Why dont you tell us about what the app is and how you dont how they came to be part of khan academy. This is one of those wild things. I sometimes joke in the office that benevolent aliens are working on our behalf where duck duck moose its an early app creator. I have Young Children and as they grew up, they were on they use these apps. My son whos oldest out of three, he learned his numbers, letters, on these duck duck moose apps. And we explore Early Learning multiple times. Free education for anyone anywhere. Learning is foundational there. And id also cite duck duck moose as the best out there. If we do it, weve got to do it as good as duck duck moose. Its quirky, fun, but educational. Then they reached out to us. Did they know you were citing them . No. They had no idea. They were trying to meet with us and finally about six months ago, they came into the office and they start telling us. Im a huge fan. They said were interested in becoming part of khan academy. I said what does that mean. I read youve got venture funding, youre for profit. They said we have acquisitions but we all decided the legacy of what wed do would be more powerful if we joined forces with you and be not for profit. Whos funding you . So the funding they were willing to donate the company. So that was going to be for free. I think legally it ended up being a dollar to get literally the best Early Learning app company out there. Then the network stepped up to do the initial funding so theyve given us 3 million to start the funding. That isnt the full support we need to get that team. But its charitable donations. Yeah. Sal, thank you. Youre going to be with us for the rest of the show. We have more to talk about. Thank you. Coming up, there is no business like show business. Youve heard that before. An Improv Comedy Group is using standup to teach students and executives. Theyre going to join us next. As we head to break, lets look at the price of crude oil and what it is doing today. Well, what it is doing is falling. Again. It is down 1 to 45. 88. Brent crude 47. 70. Gasoline also lower. We are back after this. Welcome back to squawk box. The futures right now suggest that were going to have a flat to negative open. Have the adp numbers. So more negative but still the s p would open lower by a little more than one point. The nasdaq by 5. 5. And the dow by 22 points. A comedy group is using jokes and things to teach students in fortune 500 companies their own unique business philosophy. Joining us cofounders of four day weekend. Welcome. Thank you very much. Okay. Be funny, go. Here we go. Do it whats the we im trying to say this delicately. We interview a lot of ceos and Network Executives here. And sometimes they lack a little humor. Money and numbers. How do you break through to them . Its really interesting. Yes, are we comedians . Yes. Do we run a business that is what we are becoming . Were becoming entrepreneurs. Weve done the comedy thing for 20 years and its the philosophies of improvisation that weve taken into the business world. And that philosophy is yes and. And that is what were teaching. What does that mean . Give us an example. Its two words. Yes and is a philosophy in which we take the me to we. So your idea becomes our idea. Now we both have buy in for the success of this idea. In our world there are no good or bad ideas. Only higher and lower percentage choices. Most executives ive met say no but. We live in a world of no but. Thats a challenge for us. When we go in with this yes and policy, it resonates. Give me a funny example. Be funny about something. Like, how do you you use comedy to well, we use the yes and philosophy to create comedy. Thats the end result. But what we have found is that the yes and philosophy just also relates to business and personal relationships and especially salman talking about education. It really resonates with students and faculty how to become a yes and classroom, a yes and school. So if we hire you, youre going to do what . Were going to help you communicate are you going to do a skit in front of the classroom, in front of my employees . Some of it is we take them through some of the exercises. Yes and exercises. Sort of educate them on the principles. How to be an active listener. As our business grew, we were had to think about whats our business philosophy going to be . And we thought, well, you know, all of this stuff that works so well for us on stage with comedy, active listening, being present, not judging. Might just work with our Business Model which it has. Cut to 20 years later and counting. And people are curious to know how can we apply this out in corporate america. Or how can we apply this to education. So we take them through a series of exercises that talk about yes and. And comedy is a byproduct we can use. But the yes and philosophy serves better communication, learning to build on pertinent information. Can we present it in a funny way . Absolutely. Do we expect the ceo to do that . Not particularly. We just want nem to listen and line build with others so were not having the no but people. But as sal did, he used humor to get the message across. Right . So we by doing this in its interactive, there are a sense of play. We talk about bringing a sense of play to the work place or to school, for instance, to help with education. Theres a return on investment in the business world. We talk about a return on improv. Were improvising every day. This conversation with all of us is based on improvisation. Were just talking about how do you enhance that in your daily life. How long does it take . To teach somebody this . Its not like going to a gym where we come in 90 minutes you go, i look great. But it is an introduction to this philosophy and the road map. Here are the rules were going to play by. If everyone agrees to play by these rules, then every time you practice it it gets better. Weve been living this philosophy for 20 years. So its Second Nature to us. But, you know, if we can teach or reprogram the brain to go to yes and instead of a knee jerk no and i get it. Im a father of two. We were talking in the green room. If my kids say im going to go play on the highway. Im not going to say yes and wait until midnight and wear camoufla camouflage. I mean, thats not the proper yes and. Sometimes you have to say no. But lets make it a reflective considered no and bring the person into the congratulations of why its a no and lets yes and the solutions. And its this philosophy that brought us to education and being entrepreneurs and residents at tcus neely school of business. Well, good luck, guys. Thank you so much. Thank you. Youre welcome. Go horned frogs. Right. When we come back, jim cramer will be joining us from the new york stock exchange. Well get his take on the top stories. In the meantime, folks, check out the futures. Theyve been relatively flat all day. Weve got that adp number up 177,000. Right now the dow futures down by about 30 points though. S p futures down by two and the nasdaq down by close to seven. Squawk box will be right back. Lets get down to the new york stock exchange. Jim cramer joining us now. Jim, obviously you have a lot of stuff youre following in the markets even in slow times and also got this amazing look at the World Trade Center. Yeah. Thats tomorrow night at 10 00. Its about remembrance and honor, its also about rebirth. Those of us who worked down here forever kind of took it for granted that theyre just going to be big construction site, saw the walls, never looked behind them. Its open for business and were going to demonstrate how hard that was to get it back and but that it is back and quite exciting frankly. And i will say this, just as somebody that i took the path train over from hoboken a couple weeks ago when joining you guys and it took a long time, i know but i have to say it does look beautiful what theyve done. Do you agree. Its kind of stunning. I want everyone to go by and make up their mind. Its a complicated set of buildings, but the oculus, which is the kind of rib cage dinosaur rib cage, my daughter describes it, is actually quite stunning and see that on display and other things that will surprise you whats going on downtown and surprised me and ive been down here forever. A lot to it in terms of the substance of how it got rebuilt and what it took and took both emotionally and physically and monetary. Quickly, whats number one thing for you in the stock market today, my friend . Look, im looking at palo alto this is once again one of the high multiple stocks nobody seems to like. They want down and dirty stocks, ten times earnings even if its a bank versus 40 times earnings and its a tech company. See you live in a few minutes time. Thank you. Thank you. Coming up on squawk box, much more with the economys sellcon. His call on the state of education and tonight on mad money dont miss United Airlines Ceo Oscar Munoz and Salesforce Mark Benioff joining jim cramer 6 00 p. M. Eastern time. Well be right back. None one. E. One rout there. No oneay of iving on n conqthem. Rthe mercedbe. Five drivi mes let custize steeri, ift points, ansuspenon toit tood youren. And the roadoue on. The 2016lass. Lease the 00 for 369 a month at your local welcome back, everybody. Back to our special guest this hour. Khan the founder and ceo of khan academy. As were looking back to school, parents are getting anxious about how theyre going to do and it does feel like education these days are very different than when we went to school, as parents trying to figure out how to help, what would you suggest that we do, how can we help things because look, theyre using the internet like we, obviously, didnt have an internet then . Yeah. I think the simple a lot of things are different. Lot of things are the same. Still a lot of students struggling with their math homework, a lot of parents who are struggling how do i help my son or daughter with their math. I was glad to be done with math for but theres a website youll realize how fun it is. What we tell parents the best thing you can do is sit with them and model that learning. You dont have to be an expert at algebra yourself. There are resources Like Khan Academy and other websites you can go and search for whatever you need and youll get explanations and practice problems. I think the cool thing is, its easier as a parent now. Where before you have resources. Resources. Before if your son or daughter hands you page 500 of the textbook and says how do i do this youre stuck. You can get helping yourself as a parent. What i tell every parent if you go to sites like chan academy and learn at your time and pace thats the best modeling for the students. Feels like theres a potential sea change under way when it comes to Higher Education, whether traditional campuses will still be the way, whether you can continue to keep up with the price hikes to date. How do you see Higher Education in the future . I think no nothing can just continue to increase 5 faster than the rate of inflation without just taking over the economy at some point. And i think already, were seeing students take a hard look at, especially some universities that might not be giving Financial Aid and might be 250,000 for a fouryear degree and looking at the return on that and unless you its not worth it. Unless you majored in very specialized things high paycheck in return. Its going to be hard to justify that. Thats happening its hard to get a job if you dont have a university degree. At certain levels. Part of going to college is just having the impression you did something. For credentials. In the next five to ten years, were talking to folks about this, if we can create credentials that arent 200,000 but a few hundred dollars that will immediately get you a job. Want to thank you for your time. Gives everybody a lot to think about and appreciate you being here. Thank you. That does it for us today. Michele, brian, thank you for being here. Went from one to three also. Check him out later. That does it for us. Time for squawk on the street. Good morning, and welcome to squawk on the street. Im david faber along with jim cramer. We are live from the new york stock exchange. Carl quintanilla has the day off. A look at futures this morning as we head towards the hump day as we like to call it here. Mike mike mike. Down as you see right there on the dow and the s p and the nasdaq as well. European markets lets check them out. Do we include italy and spain today . No. Just the big three for you. Theres france,