Transcripts For CNBC Squawk Box 20160909

In the might be team take a look at what happened overnight in asia. Right now, asia closed up just slightly. The shanghai comp was down slightly. The hang sang up. 30 . Europe in the the early trading right now. See red arrows across the board. These are declines. Pretty mad rat. Basically a quarter percentage point decline across the board. If you check out crude oil prices big thing to watch yesterday. Crude oil up jed yesterday. Biggest jump in five months. After we saw that confirmation of the drawdown that had been suggested the night before, you see right now wti giving back a little gain. Decline of. 51. Breaking news out of north korea overnight that could be ralting markets this morning. The country claiming to have successfully tested a Nuclear War Head in what may have been most powerful detonation ever. South korean said it was the fifth test and had the impact of a ten killton explosion. President obama was briefed on that test aboard air force one. He said any provocative action would have series consequences. Chinas state run news agency a said the test was unwise and violated u. N. Es legal conclusions, but would be curious to see how markets think about this this morning. Soek is freaking out. Had to go home and leave early. You can understand that. We keep says huge rep you are cushions. Not sure what those are beyond sanctions at this point. Ten killton, thats stimatomic. They tried to el us it was hide gin last tiemt. Its enough. They claim it was hydrogen, which is you know, exponentially greater than atomic. I dont they got that technology. That guy is wow. Crazy. You read what goes on there. What was it last week, one of his lackeys looked bored at one of the speeches, dead. Dead. Off with his head. By the way. Id be dead like 100 times. Just this week. Does the market react or you think theres nothing to react to. I dont think this is it. Its all about the fed. What if they raise points. Nuclear bomb the one thing. What if they raise a quarter point. Lets keep our priorities straight, andrew. On todays economic agenda, july wholesale trade. Inventory forecast to rise slightly. Rosengren is a voter. Dont miss Steve Liesmans interview. That is at 10 00 a. M. Eastern. One topic for sure to be covered recommended that pair back wall street ability to own physical commodities and engage. Fed cautioned against behavior poses risk to the Financial System in 1999 lawmakers grant permission to morgan and Goldman Sachs to store and transport physical commodities. Fed wants to congress to revoke that. Surprise the Congress Also revoked the ability to make investments in nonfinancial companies. The fed said this would preclude to legal belief or operations of a company in its portfolio. The number of Bank Industry groups have protested that. Saying regulators havent provided a costbenefit analysis of justification for the change. Could have a big impact for a couple of big banks. Very complicated. A lot of them exited commodities anyway, didnt they. Some have pieces of it. Merchant banking to itself is not just a commodity business. Thats one business, but theres all sorts of other businesses theyve owned and Goldman Sachs has owned some of those businesses. You could make different argument accide arguments. Did you twla story. I didnt decide anything. You seem you knew what you were talking about. I chose i occasionally. Wow, this is detailed minutia. This is a serious issue. Look at the revenue. Its not an insignificant chunk for some of these banks. Theres another piece that the fed coming out with in terms of regulation around private equity, which is the other issue by the way in sorm papers this morning you can read about how theyre regulated. Private equity is loosening some restrictions. Some want to keep them and make them more restricted. So were going to be continuing to hear about this. Well hear more about this, joseph. Im going to study up on it. There was oo whole lot going on. Youre right. Th. Joseph was not convinced there was a lot going on. I said in the opening of the show theres a lot going on. Thats right. There is. Thank you. Look at these stocks. These are things youre going to want to keep an eye on. Shares of Restoration Hardware surging. Beating profit and sales expectations. Plus reaffirmed Earnings Guidance for the year. Check that out, up better than 12. 5 . Enterprise Product Partners is no longer pursuing a deal to merge. Saying it wit drhdrew offer bece of lack of engagement. Two samsung reports weighing on the strong. Faa warning travelers suggesting to them not to use the samsung note seven on planes. Those phones were recalled after complaints that the batteries can catch fire. Weird thing is the faa is just recommending this. Not saying you cant bring it on. They dont want you to check it or charge it because again it can start fires. Allowing to pay Cargo Handlers to remove goods. Around 14 billion in cargo has been tied up globally. I believe samsung has Something Like 38 million of its products that are stuck on these boats and some cases the boat haves been picked up and taken by creditors who want to make sure they get paid their money after h h hanjin declare ed bankruptcy. Samsung already said it causes fire. Right. If theres the slightest chance, but to tell you you cant tell people they cant. There will would have to be some type of law. Tell people they cant bring the hovercraft on. We told them you cant bring those on the planes. You were forbidden too. This was like a recommendation. If you have to, go ahead. Its weird. You know they say you cant do things like charge it. You cant do things like pick it up while youre on the actual plane, but we all know people who on the plane are using phones when theyre not supposed to. Right. Youre looking at me. Okay. Ive done it before too. I want the get to very last email. Somebody is cheating. Its coming. So ill put it in my pocket. And i get those last couple of tweets or which is sick and sad because theres never anything on the tweets that i need to see pu i dont want to miss them. Dont want to miss them. The dow and s p logging second negative session in a row. Nasdaq breaking a fourday winning streak. Joining us now katie stockton. And, you know, theres some shows episodic that are on tv and others that stand alone. I see you as providing an ep d episodic thing for squawk box. I remember the things youve been saying over the past six to nine months or so as a technician. I want to go back to the last couple of times you were on. Did the market sustain that upward move that you were looking for to indicate the near term we were going to head higher or are we failing once again. Where are we. It did already. If you rook at the s p 500, it confirmed the breakout if remember in july to a new alltime high. All we needed was consecutive closes above former resistance. Thats right around 21. 35. That breakout was confirmed. Does set a longterm bullish buy for the market. At the same time we song longterm momentum improve. We had monthly indicators negative since 2015 and just this month now turning positive with a slight lag on the back of that breakout. Indeed we got the breakout. Now were entering a bit of a consolidation phase. August was characterized by a tug of war on the sector front. We saw the defensive sectors really underperform and upside leadership from tech and financials held the market up. Now we see a little bit of a loss of leadership there, that sets us up for a bit of a pull back. People that follow fundamentals have their pros and cons. People with technicals have pros and cons as well. Every day talk about the flaws of fundamental buy side no, sell side guys. Theyre whole skill is in saying, you know, being able to see why it goes up or down. You just said, i mean, you have to go out on a limb, but youre out is when you say this was violated and so the technicals that were indicating a bullish move have be violated and no longer in effect. At this point youre saying were in a bullish phase. Bullish phase intermediate and longterm. Looking for more weakness shortterm and that should be an opportunity. What we can do next is focus on support levels as gauge of Downside Risk for individual stocks that have broken out and look to add exposure closer to those support level. Whats my key support level for the s p . Its right around 2100 h. I think it actually goes a bit lower than that. The 200 Day Moving Average is closer to 2060. I wouldnt rule that out, but it will be sort of fast, furious little pullback here. Can i ask what longterm, shortterm intermediate. What are you talking about roughly with those sorts of time frames. I tend to be pretty shortterm myself. Shortterm for me is days to weeks, intermediate term weeks to months, longterm beyond that. So to me the shortterm pull back could be two to three weeks in duration. So what is the intermediate and longterm target upside on the s p. The breakout that we did see in july yielded at a measured move, we call that, of about 2400 for the s p 500. Doesnt sound measured. No one thinks thats going to happen. So yeah, thats about 10 higher of course and, certainly, would dictate that bullish buy. So now what we want to do is make sure were in the right sector. That sector strength becomes important. Most recently even this week weve seen that rotation into energy. I think is pretty compelling. See that breakout in crude oil. Pending confirmation today. If we get that breakout, nrch is something people can act on even right away without waiting for that pullback. So, you know, even though you dont need to worry about fundamentals like the fed, i bet you have some technical viewpoints on the tenyear. Are we finally staying above 160 or maybe were right around there today, i think. Yes, i call it hovering. Hover tlg. Theres resistance if you want to call it that on the chart around 164. The important thing with the tenyear yield is to respect the longterm down trend channel that has been in place for decades and assume these up moves we see are counter trended nature. Without a breakout above this only 164 level, but the 200 Day Moving Average would be more convincing to me. Thats closer to 177. On the downside support around 139. Thats really final support. So you dont need to be emotional. I would be afraid to be her to be a Technical Analyst and say things on this show which no one else does of the guests we have. Were trend followers. I can think of a couple people. Theyre probably usually wrong. All right. Katie sticks her neck out. Were in a longterm downturn on yields. Longterm trend. Well have her back and see. Thanks, katie. All math. Our other guest on recently talking about math the other day. Its all math in a way based on assumptions. Going to talk twitter in a moment. Having their own math problems. Just how much time jack dor si still has left to turn that company around. Joining us now is robert. Editor of fast company. Fast companys cover story this month. Show it. There he is. The man, jack dor si. Picked the right guy this month or what. I hope so. Theres a lot of interesting things happening. A lot of interesting things happening at twitter also. Cranking. Its wild. Every day. Katie is great, by the way. She is just so smart. Clears all the nonsense away. I think thats what twitter is trying to do. Trying to clear some nonsense away around his company. Part of the nonsense orp the kmaj he has is the constant comparisons with facebook which is a comparison that he loses with every time. But its tougher and tougher. What is he going to do. So our staff spent a lot of time with the Management Team at twitter. The challenges how you find the strength the twitter has and lean into what those are. One of the key things he points to is something that happened last spring where twitter reclassified app on the app store from being in the social networking category well behind facebook and instagram and other to the news category where it was suddenly number one. This is an indication of trying to reframe what twitter is about. That sounds like dressing around the edges frankly. There are. There are strants. Im not saying twitter stock is suddenly going to move and make a ton of money in the next five minutes. There are strengths that twitter has as a business that they have not been able to make use of. There are strong groups affinity groups where a lot of activity and news happens on twitter. Theyre investment in Live Streaming the nfl. I know nfl season is starting. Theyre trying to define themselves as a different kind of media company. Multiple on a news Company Relative to a tech company or a social media company. I dont disagree with you. I think the conversation around the Board Meeting is are they going to put themselves up for sale. Is somebody going to buy them. If you look back, twitter went public too early. At the time they went in 2013, having a 10 billion valuation was like why not. Its time to go public. Now youve got Companies Like uber, airbnb. Much larger valuations still private. I was watching. I think it was melissa at five. The point was that twitter went public too late. A lot of the growth that the company had by the time it finally went public, it was a mature entity and all that growth and now if it was private, it might have a better if we werent looking at every detail, it might have a higher private market valuation and Public Market valuation. That was a guy was a good analyst. Maybe. I think their business is what it is. The valuation falls what the business actually sports and the question is where does the business strength really lie. If you look at the more analogous this is what jack is trying to do. Make them more analogous to say youtube, not really a social networking. You dont have to post videos to use youtube. You dont have to tweet to get value out of twitter. If they can make that work, they can generate more around it, but thats a transition theyre in. Thats where theyre not growing. Twitter is part of the conversation right now because of the election because donald trump udonald trump uses it so much. Nchl thing coming up. If there are this many concerns from the board and how you make it work now, this seems like this is their moment in terms of relevance. I think they have a longterm challenge about how to generate a different functionality for the company. Theyre in the process of trying to do that. Will the marketplace be patient enough or believe it enough, thats jacks job to prove. Can they keep people around, talented people around . So much of the compensation there is stockbased compensation. They do a nongap accounting thing. A lot of people dont like and people are moving away from the valley which will put pressure on how they approach that. I think a lot of Valley Companies have challenges once theyre mature. The number of people who are going to leave and go to places like uber and airbnb. Will he be on the cover where will jack dor si be in two years. Back on your cover as a poster boy for good or bad. I dont know whether im going to make that bet a this time. I think jack is a smart guy. Whether he can make this work, its a challenge. Thank you. Appreciate it. Thanks for having me. This months issue of fast company hitting the stands on monday this is friday. This is a sneak peak. Thats right. We have some for sale right here. Wow. Thank you, bob. When we come back, a startup that wants to replace your filing cabinet and keep your Important Documents secure. The crow will tell us how the Company Wants to be the dropbox for crucial files. Well tell you next. We call it dark data. 80 is invisible to most businesses. The ibm cloud has tools that can help see dark data and put it to work. Hello, my name is watson. Working with watson in the ibm cloud, we can help an Energy Company predict pipeline corrosion. And help a startup to use social data to predict market trends. Now businesses can get more out of their data. Thats what the ibm cloud is built for. Now businesses can get more out of their data. [engine revs] now businesses can get more out of their data. [cheering] the highly advanced audi a4. Im just a guy who wants [ clock titime. ]ruc you only have so much. Thats why we want to make sure you wont have to wait on hold. And you wont have to guess when well turn up. Because after all we should fit into your life. Not the other way around. Welcome back to squawk box. Chipotle has agreed to a financial settlement with more than 100 customers. Resolving the matters outside of court in an attempt to avoid long public battle and risk more attention to food safety issues. The terms of settlement not disclosed. Right now time for todays executive edge. A new Cloud Storage Company Looking to replace filing cabinet at how many. Futurevault. Organizes documents from report cards for kids to bank statements. We have the ceo and founder joining us now. Thanks for having me. Lets get into the notion behind this. The idea is so many documents are now electronic that we get sent, even kids report cards, things like that. Unless you have some way of keeping track of it, it gets lost in the ether. Every day you think about it. We gt more and more innovated with documents. Think about where is your house deed, your life insurance, broker statements, bank accounts. Each entity is creating solution. One of my Money Managers sent a big email. So excited spent countless hours building this portal. The reality is i dont want to go to 40 different portals. I want to go to one spot and be able to store and manager it for the rest of my life. What happens, you go to the companies or schools and all of these different businesses and say use our portal and its an easier point to point. Our Business Model is b to b to c. Were going after the Financial Services. Banks, credit unions. Unions, accounting firms, law firms. Anybody with a direct relationship with the tend consumer. Right now delivering documents typically in point solution format. My view and our view is the company within five years, every Financial Organization in the world is going to deliver documents through a voult type product. Part of making the relationship sticky. In the fintech world with all these things from robo advisers and micro lending and a bunch of things. B to b to c. Business to business to customer. What would you do about nirp. Good old nirp. Negative Interest Rate. I was going a barnacle. I grew up in the brokerage business. And he knew he wouldnt know then he goes aleppo. It was such a so you know what you would do about nirp. I would love. He did know. He was supposed to not know. Im going to do it to every guest today and ruin their life. Let me ask you a different question about your business, which is about this disintermediation issue. Which so tay there are Services Like mint for example whiching a ga ing aggregates information together. They dont want necessarily the relationship to be disintermediated this way. Why are you going to succeed where others havent. The horse has left the barn on that one. Theyve already lost that battle. What we see on the ground is the big skbanks Financial Institutions are embracing this which i think. In this case youre seeing them hire lots of people, spend time on fintech. They dont want to be disintermediated. I think its a great idea from the consumers perspective in terms of ease. What concerns me is the security aspect of it. Why should i feel safe having stuff here. I dont put important files in anything. We said that was table steaks. Youre correct. We hired the people. Or cto is former of water house. Recruit add whole team of former Bank Executive Technology People and love to tell you about our technology with respect to security, but its two levels of encryption. Multiple points of security. That is the game. We dont even know as employees of futurevault whats in your vault. Great. Scott, thanks for coming in. Horse has left the barn. Do you think about tooth paste left the tube. What about geneny is out of the bottle. Train has left the station. Well come up with some more. Especially since im trying to be techky. Im looking through the guest list for people who wont know nirp. Im going to spring it on one of them. What about the kroger cfo. Do you think he will . He might not. Im going to get one of these guys. We do live in fascinating times on that issue. Just the whole negative Interest Rates. I grew up in the brokerage business. Coming up, your money, your vote. Grading the candidates economic plan. Joining us next, author of how money walks. We head to break, s p 500 winners and losers. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Weve just been hearing youre a digital company, yet here you are building a jet engine. Well, ge is digital and industrial. Like Peanut Butter and jelly. Yeah. Ham and cheese. Cops and robbers. Yeah. Nachos and karate. Ahh. Not that one so much. The rest were really good. Socks and shoes. Ok, ricky. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Mapping the oceans. Where we explore. Protecting biodiversity. Everywhere we work. Defeating malaria. Improving energy efficiency. Developing more clean burning natural gas. My job . My job at exxonmobil . Turning algae into biofuels. Reducing Energy Poverty in the developing world. Making cars go further with less. Fueling the global economy. And you thought we just made the gas. Energy lives here. Welcome back to squawk box. This is cnbc first in Business Worldwide. Lets check out the u. S. Equity futures on this friday. See redd arrows. Down 55 points below fair value. S p down close to eight and the nasdaq down 18 after the market had a down day yesterday as well. The New York Stock Exchange is going to be implementing changes to opening procedure on monday to speed up trading and efficiency. The new procedure will eliminate rule 48. Allows Market Makers to delay the opening of the stock. Fcc approved changes in july. The flash crash of august of last year when the dough dropped 1,000 points in a tenminute period. Political news, Donald Trump Campaign raised 90 million in august. Thats three times more than trump raised in july. Falls short of 143 million that Hillary Clinton raised and her campaign did in august. Speaking of Hillary Clinton and donald trump, both are making big promises to create jobs and boost the economy. Joining us at a score of economic plans, travis brown. Ceo of first rule and also author of how money walks. Travis thanks for joining us. We should point out, wrote an intro or something. Coauthor of the book called wealth of states. We look back at literature that grows the economy at federal and state local level. Were in some very partisan times right now. Indeed. And ive always been of the opinion that earned success and trying and having the dignity of work is paramount for what all policymakers should try to allow every citizen to do. We want a strong safety net, obviously, for people, but as a bridge, hopefully to some day doing what the dignity of work and earnings a living and i think the two parties have vastly different ideas how to get there. One, im not shy about having this opinion, one, i think causes people to be stuck on the state dole forever which is not good for anyone and the other rewards work. So im prefacing all this because youre going to say trumps economic plan is probably better than hillarys. Is that correct. What were looking at is what is the incentive proposed by either campaign. We have a conversation about whether we should reward work or punish work in the future. Unfortunately, i mean, it would be great if we could create work from nowhere, but it comes from pooift Sector Employment at risk capital. Weve seen that over the last eight years. Got to be the case. If youre going to reward work that is at risk, you want to lower tax rates. Steam line those bracts and try to make it easier for the private sector to create jobs and employee people. I got i was totally i dont know. The original Hillary Clinton ad where she said im going to tax everybody a lot more here and use the money to create really good jobs makes me want to pull my hair out. The government is not in the business of creating jobs. Thats not the way. It comes from the ground up from the private sector. Andrew disagrees probably. No, i dont disagree. I think theres a missing piece of context which is that my understanding of what that Hillary Clinton ad is trying to suggest is this idea that she will a, a tax issue on a fairness thing. I know people have a complicated relationship with. Its not complicated at all. I dont know what that means. The question is what do do you with that money and using it for Infrastructure Spending and Infrastructure Spending creates jobs and Government Spending has historically created jobs and under people like Ronald Reagan has spent a ton of money and created jobs in defense. Whether its defense money or whatever, the money is getting spent and people are creating jobs and looking under certain president s why you think the economy has done what its done. This is what it is. My question to you is are you saying that government shouldnt spend any money . Shouldnt come from the government . Look, we have essentially a third term that Hillary Clinton is running for. We already had that opportunity with Infrastructure Spending. We looked at Shovel Ready Projects supposed to happen through the public sector. Donald trump wants to spend. Theres no doubt that both have Spending Plans e. When you rook at the economic plan presented in detail, one favors lowering the marginal tax rate and dramatically lower what Small Businesses could get ahold of taking it down from 39. 6 to 15 . That hasnt happened in quite a long time. This is like jfk kind of stuff looking at getting out out of the way. Jfk was taking rates from 90 to 60. When you add rates of local. Depending what state youre . Hillary clinton is doing the opposite. We have a real contrast on economic plans we want to look at. When it comes to spending, both have spending ideas. Its not clear who is going to spend more and how theyre going to do it, but on tax rates and deductions and simplificatiosim youre starting to see breaking points. Youre also seeing the different attitudes about work in general. Should we pay for parental leave districtly or should we reward block grants and things on education and child car deductions through the tax code. A lot of work on the tax code ahead. Paul ryan is going to have to sort this out in congress. Its the question of our time. We can talk about all these other things, and we do. Ridiculous backdrop of this election, but jobs, wage gains, gdp growth above 3 . Its the economy and its never been more, but its all theres so many strange narratives out there about, well, growth policies caused the financial crisis. The supply weve tried low e taxes before and you see what happened. Now you drove the car in the ditch. Now you want the keys back. Look what weve done over the past eight years, you cant hold that up as a recovery that has helped generate the type of prosperity that were looking for. I mean, its tough. Its tough to get out there and like were reeducating a third of the population. The millennials who think Bernie Sanders has the right idea. Its very unusual for america to have this jobless recovery no matter where youre sitting in the last eight years. Its natural to have anxiety here. No wage gains for make less as you pointed out. Now venezuela, look down there, middle class people are going through the garbage to try to find enough to and theres an imminent possibility of a complete economic collapse. Interestingly the countries that did the best in terms of wage gains actually had unions and all sorts of other issues that would be on the opposite end of this. Just, again, when you look at it, its not look, im not suggesting higher taxes. Its not a straight line. Which countries have the wage gains. The highest wage gains that we reported yesterday in france. To what . And the gdp. Of 7 . The gdp growth in france, terrible over the past 40 years. The average french citizen is probably 60 based on just the wealth accrual and how their economy has performed. Our gdp is outperformed 40 pkts year in and year out. You cant go to france and say actually, we have a president that thinks everything might be better in the euro style. Im talking about the jobs. It becomes a very complicated conversation all of a sudden. The dignity of work in france is not close to the dignity here. Lets not forget, france tried this. Raise to 90 . Im not putting them up as an example. Apples and oranges comparison. Thank you for being with us today. Coming up, weve got a lot coming up. A lot going on joseph. This mornings top stories. Including delivery drones. Get a burrito at your house today. The new richest man in the world, were going to tell you about him in just a moment. With dynamic performance, to help you hold the curve. And bold styling to stay ahead of the curve. The lexus rx, rx hybrid and rx f sport. This is the rx, elevated. This is the pursuit of perfection. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. 13 million to settle claims made by 270 former employees. Former Merrill Lynch advisers fired after bank of america merged with the broker in 2008. Claimed the bank failed to follow proper procedures after terminating them. While were on the subject of big settlements. Wells fargo paying 190 million to settle customer fraud case. Illegally opened millions of accounts for customers, but not authorized them to do so. Bank employees were under pressure to meet sales goals and opened more than 2 million bank and credit cards accounts. Many without the customers knowledge. They have apologized. Saying 5300 employees were fired over this inappropriate sales conduct over a fiveyear period. This is a bigger story. A lot of times i hear about the fines and blow it off thinking this is the government cracking down on things. The wells fargo story they were opening accounts for customers. Putting money in accounts never authorized. Some cases being charged 14 a month for having these accounts. Creating false names. Falls emails for it and it was 5300 people. It was not one or two bad apples. That is a significant number. Managers were also involved. They were only fired. Versus those other people that youre talking about that were terminated. Where was that place, which one was that. Wells. Bank of america. No bank of america they were terminated after the deal. Hes talking about the language. I think we should stick with fired. When you said it. Youre thinking north korea. Im thinking the terminator. Fwoogle parent alphabet using drones to deliver a burrito. I didnt know how a drone would change my life. You get it to deliver mexican food, and weve got to get some seed money there. We got to get rid of the regulation. Anything holding back that industry. Although, this could happen. Burritos to staff and students at virginia tech. Limited test of the drone program. Drone will take burritos from Chipotle Mexican Grill food truck to an official who will distribute the orders. Just burritos. Thats the easiest to load up. You dont want a big bowl of rice. I want an encha lad da. No burrito. You like all the rice and stuff . I try to do it without the rice. Cheese. Okay. Cheese. Im a quesadilla guy to be honest. Do you have a barbecue chicken quesadilla. Very good. When we come back, squawk ceo call is in session. Here to talk about the markets, economy, and using data to make Better Business decisions. Its scary when the lights go out. People get anxious and my office gets flooded with calls. So many things can go wrong. Its my worst nightmare. Every second that power is out, my citys at risk. Siemens digital grid manages and reroutes power, so service can be restored within seconds. Priority number one is keeping those lights on. It takes ingenuity to defeat the monsters that live in the dark. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov upgrade your phone system and learn how you could save at vonage. Com business welcome back, everybody. The 175yearold firm dunn and bradstreet is helping other Companies Make Smart Business decisions. Its making a few good decisions itself. That stock is up 32 so far this year. Here is the ceo bob kerrigan. Thank you for coming in. Thank you for having me. The last you were with us was about a year and a half ago and you were telling us about a plan to take data and use it to help companies figure out better ways to do their work. Tell us about that again for people who dont exactly know. What are things you can help a company do . This is a golden age for data. Were executing against a strategy where previously we had an Addressable Market of about 8 billion. And now were going after 8 billion. Now were going after a 24 billion base. Which reflects how companies are using data in areas like supply management and global compliance. Like a retailer whos trying to keep track of all of their vendors . Exactly. So they want to understand their downstream risk and their supply chain risk. So before where they use this maybe just for trade credit purposes, now theyre using that to get transparency all the way through the chain. Would you tell them hahn might be filing for bankruptcy, the shipping company . We understand how those businesses are connected. And so if theres downstream risk, we understand the Ripple Effect of that. To a company counting on inventory or a large retailer that needs those products on their shelves. Part of what youve done is beat earnings expectations as theyve come in. What are they underestimates . That youve been able to deliver on. Well again, the larger trend around how companies are embracing data is just an exciting secular trend in the market. Then were executing a lot better against our core markets. Were relying on our Reliance Partners more. We struck 16 new alliances in the last months. And new use cases. Thats the critical issue here. Strong underlying market and better execution against the strategy. Whats your strategy for the next 12 to 18 months . Its more about grabbing the market. Going much deeper in sales and marketing and analytics and data management. These are some of the key areas of opportunity for us and a company with the kind of assets, the crown jewel assets we have, its about activating that serving customers putting them at the core. And were excited about where were going. Does that require more investment from you . Look, weve made investments in the business. And we one of the beautiful things about a data business is as you grow revenue, were able to kind of fund our growth from there. Thats been the key. For us its really about continuing that organic Revenue Growth and then throwing off the margin to be able to continue to invest and keep it cranking. Thats the formula. So you still survey every Small Business around. Weve talked about it a million times. Dnbs call every small, medium, Large Businesses you have the ceo. Do you ever survey them for information that is useful to policy makers to try to decide whats holding them back . Whats holding Small Businesses back right now . So we produce the Small Business health index. And through july, you know, we saw another downturn in the and the index is based on, you know, what we see in credit applications and payments and timing of payments. And were seeing its a good predictive indicator. Unfortunately were seeing it at a low. And so we have some concerns about the slowing economy as we go forward. Well, we dont have time to find out what they attribute it to. You should come in and tell us about this next time. Send out a question and what it is you need. Less regulation, easier access to credit. Access to capital is key for these small companies. Bob, thanks for coming in. Thanks for having me. Dun bradstreet. I have to get on the phone and make cold calls. Coming up, kate moore will be our guest host for the next hour. Well talk Interest Rates, the moving crude prices, and portfolio strategies straight ahead. Still paying for your home when you should be enjoying your retirement . If youve paid off at least 50 of your mortgage and youre 62 or older, a reverse mortgage might be the answer. A governmentbacked reverse mortgage stops your mortgage payments and gives you steady taxfree income. Let the home youve taken care of, take care of you. Turn your equity into a comfortable retirement, all while continuing to live in, and own, your home. Find out how much you could receive for retirement. Lendingtree when banks compete, you win. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Breaking overnight. North korea claiming success in its fifth nuclear test. Details and the reaction from washington is straight ahead. September to remember . Fed speak will be driving market momentum today. Plus a new warning from investors jeff gunnlack. Kate moore will join us with reaction. And are you ready for some football . Thats a record setter. If you went to sleep early, you missed a great start to the season in a rematch of last years super bowl. Were going to bring you the highlights as the second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box, everyone. This is cnbc, first in Business Worldwide. Im becky quick along with joe kernen and andrew ross sorkin. The futures have been weaker this morning after you see the dow futures arent do. The nasdaq down by 17. Weve got some breaking news this morning. North korea conducting what its calling a successful test of a Nuclear Warhead and the country said it had the ability to produce Nuclear Tipped Missiles at will. Eamon javers will join us with more on this story. Well see if it rattles markets today. General tauhill hes going to be in charge of Cyber Security threat. He is a deputy at the department of Homeland Security. Plenty of fed speak today. Fed president s both having public appearances. Steve leisman will have an interview request fed reserve governor Daniel Tarullo on squawk on the street. Warning not to use your samsung note 7 smartphones on airplanes. They were recalled after complaints about the battery. Separately asked a u. S. Judge to pay it Cargo Handlers to remove its goods from shipping vessels. 14 billion have been tied up. Which one . There was all shipping carriers. Yeah. I thought it was hanjin. Chipotle has agreed to financial settlements with more than 100 of its customers. Those diners fell ill this is not funny. I dont think theyre dead, but they probably wish they were after when you get sick from mexican food. Eating at a burrito chain last year. We decided it can be both, right . You can come out of standing sitting standing sitting. When youre sick with that, yes. Not really standing. In an attempt to avoid long public battles and risk more attention, terms of the settlement were not disclosed. Google announced its acquiring apigee for 625 million. Theyre going to pay shareholders 17. 40 a share. First customers include at t, burberry, and vodafone. Apigee shares down by 5 cents but still trading at around the dealing price. Snapchat is taking on a new line of credit with Morgan Stanley as the lead banker on the deal. The Credit Facility will allow the company to fund Growth Without the shareholderers. Valuing snap chat at reportbly 18 billion. Spacex could be grounded for 9 to 12 months as it investigates the cause of last weeks launch pad accident. This is according to the chief executive of United Launch Alliance which is spacexs prime competitor. Spacex 9 falcon booster exploded. Remember at the beginning of the month while it was being fueled. I could see that. Competitor wants them to be out of business. Incredible is what that was. Elon musk tweeting about the investigation saying still working on the falcon fire ball investigation. Turning out to be the most difficult and complex failure weve ever had in 14 years. Facebook cofounder Dustin Moskovitz is pledging 20 million to Hillary Clintons campaign. In a new blog post, he says he and his wife have donated to several democratic groups. Moskovitz says he was compelled to doing so because if donald trump wins the country will fall backward and more isolated from the global community. Larry ellison had been the tech industrys biggest donor giving 5 million to support rubio. The market is no longer pricing in a rate hike for september. But one high profile market watcher says investors could be blind sided. Jeff gundlach is to show it is independent and could hike rates this month to prove it. They usually dont do things to make a statement. They kind of do the opposite. But who knows. He says in his words they want to show theyre not guided by the markets. Why would we think that . Goldman sachs reducing expectations that the fed will hike. Now theyre at 40 citing weaker economic growth. Gundlach suggests the central bank is not as data dependent as we think. Joining us now is bruce kazman. And our guest host for the next hour is ms. Moore. Good morning. Im not saying a nobel prize means that much for economics but mr. Phelps was kind of an ant anticainsian. O similar to the precrisis policies from a decade ago. When they looked at what easing money does, it never changes the unemployment picture. It changes wage and price levels and youre left with unemployment unchanged. He says the sooner we get out of this box were in, the better. So this is just one more voice saying its a problem. Well, i know you think they should stay at zero forever. Right . No, i dont. And i think they will be raising rates over the next year. We think december is the first. Over the next year . Another quarter point . We think theyll be moving three or four times between now and the end of 2017. I think its correct to say that the very aggressive fed policy has created imbalances in the economy, creating financial excess in some places. Down the road were going pay a price for it. The consequences of not having had not everyone agrees. Thats the discussion we have every day. Let me make one other point. What we need right now is higher wages and higher prices with stable employment levels. Thats exactly what the economy needs. And you think zero does that . I think that easing Monetary Policy combining with other things happening here, were hopefully fading the big drags that have hurt u. S. Corporates in the Energy Sector and the dollar. Those things combined are going to help us to give us performance. We do have a real problem here which is that were not generating productivity. The underlying potential is very weak. And were going to face constraints down the road. We need an easy fed. Not as easy as it has been and i think we are going to get okay Economic Performance out of this over the next year. You know, youre at blackrock. Larry doesnt tell you what to say, obviously, but larry fink wanted to raise rates awhile ago. I dont know if he changed that. Larry tends to want to do things that might benefit blackrock like anyone would whos the ceo. But in your view, feds been too easy too long or just right . I think the thing i worry about the most is the sentiment impact of not raises rates. The signal the feds been giving corporates and risk takers and investors is nothing is good enough in the u. S. Economy. We cant give you the all clear. I think thats really caused, you know, companies to horde cash more than they otherwise would and be reluctant to engage in capex and investment. To feel normalization would spur some of that. Thats a totally different reason and a valid one. Its not the same people arent going to you know, if they thought rates went up they might start doing things. So that might engender some and also the main thing people talk about is moving them out to rusk curve and causing all these bubbles we dont know about until hindsight. We hear some companies say, look. Things feel pretty good in my industry. Im able to pay my workers a little bit more. Im able to maintain my margins this far into my cycle. What am i missing . Am i missing something . Whats the fed that we dont . Should we be concerned . I dont think we can have it both ways and say on the one hand that easy money is causing asset prices to go up in financial excess and say on the other hand we need to have the fed tighten. Doesnt work both ways. And i think right now we should recognize that the market is not thinking the fed is going to tighten much because weve just finished a year of 1 gdp growth. Weve got inflation low. We still have risks in the fed economy. That labor markets are getting tight. There are going to be signs we are going to see prices go up at a faster pace. Theyre telling us theyre going to stay behind the curve but theyre not going to be static. With the debate about september being an interesting one, that is the right message they should be sending us. Its the one thats most conducive with keeping Business Confidence and Consumer Confidence at a supportive level. I want you to be going i know you want me to disagree, but i have Great Respect for bruce. What i would say is if the fed doesnt move by the end of this year, that would be an additional confidence killer. If they continue to give us this message that they will normalize, theyre not totally paraly paralyzed, that will help. But i think theres something weighing in the back of minds of business Decision Makers and investors asking this question how weak is the economy really. And if we are really concerned about Global Growth and Global Financial conditions and the effect on the dollar, should we be really cautious . Not to mention that they still have the aftereffects of what happened in 2008. I mean, thats psychological too. And everyone has to be defensive. They have to worry about their jobs and how theyre compensated and whether or not their companies will be able to weather the next storm. Is it 2017 or 2018 or further out. And does the fed know something we dont know . Just note the problem we have in the economy right now is that profits have been declining for six quarters. Business investment has been declining now for three quarters. This is really the heart of the issue for the u. S. Outlook. Whether a more stable dollar is going to give us that lift. So far we havent seen it. So why do you think the fed will actually raise rates in september . The first thing on september is they dont feel theyve gotten enough. But you think they will feel that by december . Two or three months of solid payroll growth, hopefully some news from corporate will start to build the case. Again, also, with a little bit of signs you think were all just too negative . Were in new york. The only reason i say this, you talk to people who dont live here and theyre not nearly theyre not having this conversation. No, but they are they think the rest of the world but a lack of security in their own jobs. In certain places. But dont you think the rest of the country think its actually better than the 70 wrong direction . I think one thing we have to be aware of right now in terms of the way this economy has performed over the last year, year and a half, jobs have been growing rapidly. Consumers have been getting good purchasing power with Falling Energy prices. Consumer confidence is at a good level. But look at Business Confidence. Look at business behavior. We have a bifurcated economy right now. If the business sector doesnt do better over the next year, were not going to be able to sustain. And the capex intentions gets me worried. Weve seen a lot of cfos looking not to spend more over the next four quarters. At the lowest level since 2009. And that i think so gets me a little bit nervous. We Want Companies to feel confident. To the earnings side, we should have slightly better comps in the back half of this year. But they really have to come through. Because those numbers and expectations are baked into current prices, i think. Told me the American Dream is dead. And b, everybodys going to be replaced by robots. Thats what youve been telling me for five years. Thats 2030 problem. Its not fair and people dont thats an immediate problem. You said people are happy because theyre in the heartland and happy. You know what . You take either side just depending on where we are. He learned that from you. Yeah. What are you going to be about nerp . What am i going to do . You know it. Okay. What are you going to do about aleppo. Im not even sure. Dont go there. Im asking everybody about nerp because im trying to get a got ya moment where they dont know what it is and im going to shame them. Ask our guests that dont work in the markets. Everybody knows what nerp is. We think about nerp all the time. All right. Im going to ask one of our generic nonfinancial guests what nerp is. But theyre not supposed to know. Thats right. Not everyone pays attention to the same acronyms we do. You could have started with, wow, syrias really a problem. Theres several the refugees. What about aleppo and then the poor guy wouldve but if youre running for president you should know. But dont set it up in a way if youre in the Tech Community you should know about fintech. What . Thank you. Thanks, bruce. Kates staying with us for the hour. When we return, the pentagon returning to north koreas latest nuclear test. And tom ridge warning of what he calls a gaping security flaw in the u. S. Mail system. We have the details right after the break. Squawk box will be right back. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov welcome back, everybody. Former Homeland Security adviser tom ridge writing a 9 11 themed oped on wednesday warning about the dangers of terrorists using the u. S. Mail system. But theres one piece of information ridge left out. Eamon javers joins us now with more only the story. Reporter good morning. Before i get to that let me bring you up to speed on the north korea apparent nuclear test that happened overnight. The pentagon is reacting to it this morning. Heres the statement from pentagon spokesman peter cook who says this test is yet another flagrant violation of u. N. Security Council Resolutions and a serious provocation. The test poses a significant threat to the peace and security of the asia pacific region. Now, speaking of National Security, guys, as you know we are coming up here on the 15th anniversary of 9 11. So much has been written about 9 11 this week. Were going to see a lot more through the weekend. But i wanted to flag for you one piece that was written this we can. I think it shows sort of behind the scenes how washington really works. Former Homeland Security adviser tom ridge wrote, there remains a gaping hole in our National Security preparedness. Coming from a largely ignores source, the global postal system. He also said ultimately that theres a real problem here with the post system because private carriers like u. P. S. And fedex are doing enhanced security but the United States postal system and other global postal systems are not doing. He says thats a security weakness. That also happens to be the same argument that u. P. S. And fedex have been making on capitol hill for awhile now in terms of their lobbying campaigning. Tom ridge says hes joining a new group called americans for securing all packages. Now, in classic washington fashion, thats a 501c4 organization. So its impossible to tell who their donors are and whos financing this group. A spokesperson would not tell us who is financing them. It involves tom ridge and also juliet kaiem who were both involved with that group. What we know about that group, though, from doing some reporting is that there are financial links between u. P. S. The postal Carrier Private postal carrier and that group. And money changed hands between u. P. S. And trade association and the nonprofit group. And ultimately tom ridge has been paid for his involvement in this issue as has juliet. The payment there is not mentioned necessarily in the oped piece. We asked tom ridges spokesman about that. He said tom ridge is a ruskmanagement consultant. Hes paid for his time and expertise. Hes sincerely concerned about this issue and believes its important to speak up. Its very interesting trying to find out where the funding is coming from. But sit true . Does the postal system not do the testing that u. P. S. And fedex do . Reporter when you talk to u. P. S. , they say its a problem for National Security because they are imposing a higher standard for security and the u. S. Postal service is not getting the data that it needs to apply that level of security ultimately to the packages that are coming into this country. Ridge is arguing in this oped piece that thats a security problem. But one of the things you should ask yourself, whenever you see an oped piece in this town, ask yourself is money changing hands here. Because often you do find financial links between the people who benefit from the argument being made and the person whos making the argument. Interesting to know. Definitely interesting to know. You want more transparency with these issues. But it does sound like this is a serious problem that i wasnt aware of. Reporter yeah. Absolutely. What would a stamp cost if they did everything that u. P. S. And fedex does . Reporter thats a good question. Think about it. Theres no way. They already lose reporter a lot of security that the other side the government is not providing. But the answer is not to enforce everything too. On top of everything else. Thats why these guys are turning the screws on them for not doings it. Its because congressmen wont allow the u. S. Postal service to get rid of some of the less profitable delivery systems. Its rough. Snail mail. Thank you, eamon. Coming up im very excited about this philadelphias federal doughnuts are invading. The chain opening a popup stand for one day only. Were going to tell you where you can find it and what theyre going to be serving after the break. Youre going to eat one of everything, arent you . I might. Lets take a look at futures. Theyre down but im up. Dow looks like its going to open up 58 points off. Were back in a moment. Man, im glad aflac pays cash. Aflac isnt Major Medical enough . No whos gonna help cover the holes in their plans . Aflac like rising copays and deductibles. Aflac or help pay the mortgage . Or child care . Aflaaac and everyday expenses . Aflac learn about one day pay at aflac. Com boat blurlbrlblrlbr its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Folks, lets check out the futures this morning. Yesterday the markets ended a little bit lower. Thats the indication this morning. In fact, we have gotten progress ily weaker through the morning with the dow futures down now 60 points below fair value. The nasdaq off by 19. Stick around. Squawk box will be right back. When we return, protecting your portfolio from politics. A look at stocks that are winners and losers for either side of the aisle. Dan clifton joins us with his president ial stock picks. Squawk box will be right back. As you can see, i build the jet engines, and programmers teach them to talk. So yeah, ge is digital and industrial. So its indigital. Digidustrial. Indigenous. Shhhh. Lets go with digital industrial. For now. Digidustrial. Yeah. Or, digital industrial. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. Theres only one place where real and amazing live. Book a seaworld vacation package and eat free. Welcome back to squawk box. Im in love with the doughnuts. Im going over there in a second. Among the stories front and center, Williams Companies this morning rival Enterprise Products saying its no longer interested in a deal to buy williams. It says, quote, there is no actionable path forward for an agreement. European regulators have halted their review of the merge enbetween dow and dupont. Theyre asking for more data. Both companies have offered concessions which were deemed insufficient thus far. Samsung considering slling its printer business to hp inc. Now to sports and Opening Night of the nfl season with a rematch of super bowl 50 as the Denver Broncos played host to the carolina panthers. Without peyton manning, the broncos still managed to mount a comeback in the second half and went ahead by one point late in the fourth quarter. A lastsecond field goal missed wide left. Thats, you know, those guys get paid a lot. Only go in once in awhile. When it goes bad, i dont know what itd feel like. Denver holds on for the victory beating carolina 2120. And from football to tennis, a major upset at the u. S. Open. Serena williams going down. This was sad. Pliskova of czech republic. Second Straight Year serena has lost in the u. S. Open semis. Shes only the fourth player to beet both serena and venus williams. She will take on the number two seed. Im not even going to try. Im going to call her kerber in the finals on saturday. I was there. It was the saddest thing. It is sad. Its unbelievably sad. That angelique is too much for you. I mean but you watched this. I was there in person. But you were watching this. What if you were bill or what if some of these names. It would be a struggle. I would struggle like serena struggled last night. You would need therapy. Do you remember what al michaels did in the 1980 olympics . He and his coanchor decided were going to pick a way to say all these names. Nobody else knows. Were sticking with it. As long as youre consistent, nobody else will know. She looked hurt last night with though. Serena. Her hamstring on her left leg. She kept touching. The threeset match the night before she just seemed a whole step lower. Plus she was wearing stupid things on her arms. But she did fine with those. Last night you couldnt even breathe outside it was so hot. There was a big discussion. You were at the game but i was listening to the discussion. Shes over 30. And no one, you know guys that are pliskova is number 22. We expect her to go out there thats why they play the game. You have to do it every time. You expect greatness and youre surprised. But i dont know if we should be. I hope she eventually gets you know, she lost her number one ranking because of this. I hope she gets the next major to beat steffi. Lets get to the election now and effects on the markets. As we are approaching the grand finale, investors are thinking about which Companies Stand to benefit the most from each Party Winning in november. Joining us right now is dan clifton for strategas. You put together two portfolios. One that tracks what the republican winner might do and the democrat winner best portfolio. Its not just about tracking for this election. Its also about seeing which does better over time. What have you found so far . Thats right. So thats right. Thank you for having me on, becky its a diagnostic tool where we can run those portfolios relative to each other. It also works out as a good portfolio. In the two years after president obama got elected. What were seeing today is that the democratic portfolio is outperforming the republican portfolio by about 3 year to date. What we find to be very interesting about this, though, is that at one point the democratic portfolio was outperforming the republican portfolio by 10 . And that portfolio peaked on july 5th and slowly the republican portfolio has been outperforming. That was the day the fpi released findings on clintons emails. The market has been pricing in a closer election all summer. Now the polls are starting to catch up what investors had been sensing. Do you look at it based on what the candidates are saying maybe for the republican portfolio youd have more financials. Maybe for the democrat portfolio youd have more new energy type sources of something . Thats exactly right. You can really get a sense of where these candidates want to go. I would say their one caveat is in divided government you may not be able to get everything you want. Were trying to handicap a reasonable what can actually get done in congress with those leaders getting elected. And so what you see is a bias on the democratic side towards health care not including pharmaceuticals but hospitals and medicaid hmos. You see renewable energy. The push for Carbon Limits is working its way through policy. And also, you know, if youre looking a t the democrats, infrastructure. I think its going to go up regardless. But a Democratic Congress is more likely to increase infrastructure more. Thats why we have infrastructure names in our democratic portfolio. Dan, you actually made an interesting point there. The fiscal spend and infrastructure spend is different regardless of who wins the white house. I wonder if and it looks this way that those stocks are already pricing in future spend. You know, how likely are we going to get that spend in 2017 and really what is sort of the time frame we should be thinking about in looking at the expenditure on transportation in particular. Well, i think you just hit the nail on the head. One, are we going to do fiscal policy in 2017 so Monetary Policy can relax. Is infrastructure going to be part of that. And we do believe that infrastructure will be part of it. But our strategas is up 25 this year year to date. Clearly out performing s p 500. So the market has begun to price in these infrastructure stocks. And interestingly, were starting to see the infrastructure stocks slightly underperform the s p 500 as Hillary Clintons probability of winning has gone down in the last couple of weeks or so. But i do believe as we get closer to the election, we will be more focused on that infrastructure. Youre probably going to get a second leg up if the democrats look like theyre poised for a big election night. If you see the republicans are going to possibly win this election, youll probably see some more rotation into defense and a little bit away from Infrastructure Spending. Because thats where the republican priority will be on the budget overall. Dan, thank you for joining us today. Thank you for having me. Okay. Enough of all this frivolous news. Were going to do the important stuff now. This is it. Ive been waiting for it. The sweet smell of victory doughnut wars. They are heating up. And a new competitor taking the market by storm. Susan li joins us with more. Lucky me. Lucky you. Lucky you as well. You know breakfast is an important Battle Ground for restaurants and americans are consuming morning snacks at a faster rate than the u. S. Population is growing. You know theres a lot of opportunity. The most important thing about breakfast is portability and speed. And also doughnuts, of course, seem to fit that. For one day only in new york federal doughnuts is here with a federal popup store. And also its been featured in a lot of magazines. Eater calls it the hottest doughnut chain in america. If you eat a lot of these, you cant probably be in gq. The founder is here with us. And theres already a lineup in your store. We opened up at 7 00. Where is this . This is going to be at food and wine chefs club on mulberry street. Thats happening just today. Were doing doughnuts throughout the day. And well do our Fried Chicken sandwiches starting at 11 00. Theyre going for 2 and also 3 for the specialty ones. We are in new york. Thats good for new york, right . So this is people who watch the show know im a doughnut guy. This is our blueberry pancake doughnut. Okay. I like that idea. This is our chocolate oh, my god. Wow. Im sorry. Thats im not making that up. It really does taste like a blueberry pancake. Its magic, right . Yeah. Chocolate eclair. Youve got to double fist the doughnuts. Whats the calorie count here . Zero calories. Okay. Fat free. This is chocolate eclair. One of our biggest sellers. And this is marshmallow on marshmallow. They sell a million doughnuts a year. Look at this. Can people get in on this one . This is something. Okay. Hold on. We do a thousand chickens a week. Wow. Okay. Hows the marshmallow . Whats your favorite so far . Blueberry. But awesome. And then we have our hot fresh doughnuts too. These are just hot doughnuts that come out and we roll them in fancy sugar. Made to order. This is apple. Its got cocoa powder, orange blossom, a bit of clove. You have to do some more running later on. This is amazing. We need to get you a new tie and shirt after this. Sorry. Making a mess. Then wash it down with a chicken sandwich. Double fried. With buttermilk ranch. Okay. Cheers. Plenty of calories. Plenty of coffee. Guys, this is like heaven right here. I cant. I cant even get over it. Thank you. They look delicious. Thank you for having us. Wow. Im going to come over there. Coming up, its a hot new trend among companies. Now professional Services Firm is offering its employees the benefits of 16 weeks of paid leave for maternity, paternity, and beyond. Were joined by the ceo to talk about the policy change and how shes transforming the company. Well see if she know what is a nerp is. Futures at this hour still down. 64 on the dow. Down 10 on the s p. Almost 20 on the nasdaq. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Welcome back to squawk box. This morning deloitte with nearly 80,000 employees announcing this week theyre expanding the family leave benefit for 16 weeks of fully paid leave for any family situation. Kat Kathy Englebert is the ceo. How did you get to this decision . Were looking at innovation around talent. Lots of companies are looking at innovating. This is when of the things we wanted to do to be more inclusi inclusive. We wanted to do it because we thought it was the best thing for our people and our business quite frankly. And to provide the multigenerational workforce were working in now with someone like myself the baby boomer looking at more caring for aging parents at this point. And looking at maybe the new employee coming in looking for maybe more predictability, flexibility type programs. Looking for maybe student debt consolidation or even a fitness subsidy. Then the midcareer professional. Is this about talent recruitment though . Do people ask this question when they come in . Absolutely. We did a survey and over 50 surveyed a thousand employees across the country said they would rather have expanded family leave than a pay raise. Wow. So we really looking at the pulse of what theyre looking for. What do you think thats about . Why . I really think this is about people kind of looking for peace of mind as they think about taking care of families. You wouldnt believe the emails ive gotten over the last 24 hours about people in their in a broad set of, you know, my husband had a heart attack a month ago, this is really going to give me peace of mind i can take the time off to take care of him. Hows it work . What do i have i have to come to you and say im leaving. How much under what are the circumstances . We have a whole process of which you would notify us that you were leaving taking up to the 16 weeks off. Obviously, you know, we have a broad set of capabilities in our teams. And so well fill gaps where we need to. But people will just ask permission to go take care of an aging parent or a sick child. Or again, the traditional parent leave. It seems to me the Consulting Companies have been on the forefront of a lot of this. Six months for Maternity Leave 37 why is that . Is it you have a hard time keeping the toll talent or you have more young people coming through . We hire more off campus out of the universities. We tend to be on the forefront to attract and retain the best talent. Soing thats really and when youre not selling a product and youre selling your people and service, thats why as a professional service firm its so important. But the flip side of that, right, is how hard is it to have a key person in a group say im actually out of commission for the next 16 weeks . I think weve thought long and hard about that. We say this is the right thing to do for the people. We think the productivity of that employee and that team you know, we work with big fortune 500 company and big teams so we can fill that gap quickly without going out and hiring. We may use the open talent economy thats emerging to fill some gaps. But, you know, were really, really dont think therell be a big disruption to the teams. Cathy, while youre here, you have a good insight to how Businesses Across Industries around the globe are performing. And you have a good idea of economy in places. Thered been a lot of concerns based on recent numbers in the United States. Ism manufacturing, ism nonmanufacturing, the services industry, also the jobs number was lower than expected. Does that fit up with your view of whats happening in the u. S. Economy right now . Yeah, i think ive talked to a lot of ceos over the past couple months who they think are well positioned about their investments in innovation whether thats digital or cyber. I know at deloitte were looking at the year of cognitive, internet of things and how thats changing business. So i think companies are, you know, less focused on the uncertainty out there and more focused on what choices they should be making around investment. But do you get the sense that the economy is weakening . Maybe a little softness. But certain areas are continue to be very healthy and hot. And you see that in the numbers. And you see that in our clients investments whether theyre investing in m a activity or ecosystem plays around alliances and collaborations. Okay. What is the average paternity leave for a person . It will be up to 16 weeks for paternity. Ive already gone to bat for you. I insisted i was going to leave if they didnt give you six months off for this time. How many are you getting . I havent figured out entirely. You promise youll take the six months. Because i went to bat. I sacrificed everything and risked everything. We need role models. Men to be role models to take the paternity leave. Didnt Mark Zuckerberg take it . Yeah. He took two months. What month . Youre going to have to take off all of 2017 and 18. Thats for you. For what . Im not having any. Youre not having children . No. Im just saying i hope you appreciate it. Let me know. When we come back, more market thoughts with kate moore. And oil and Gas Companies have had to live through a boom and a bust. Now theyre dealing with a different reality. Living with oil stocks in the 40 to 50 barrel range. Brian sullivan will join us with how dealers are dealing with the prices. Hes in the thick of things. Stick around. Squawk box will be right back. [ clock ticking ] time. You only have so much. Thats why we want to make sure you wont have to wait on hold. And you wont have to guess when well turn up. Because after all we should fit into your life. Not the other way around. Right now its time for some final thoughts from our guest host before we let her go. Kate moore from blackrock. We talked about this at the top of the hour. Just your idea of what the market is headed at this point, how optimistic are you about things . Weve been in a tight trading range. The thing that sort of stresses me out the most, if you will, has been the lack of volatility in the market. Why is that . Because were not really seeing significant position. Everyone is holding their position steady. In a normal market, you get consistent pullbacks. Usually a few times a year. And weve been in this period where i think Political Uncertainty is high. Not just brexit. But also u. S. Politics, the rest of europe. Where growth concerns are the forefront of peoples minds. And yet its just not coming out in equity volatility. See it again in january and in june. Big opportunity ifs you had some money on the sidelines as a way to pile back in. Is that what youre waiting for . Yeah. Look, i think investors need to be ready to step into the market and buy high quality and high yielding assets. If we do get a bit of a pullback. I think the one thing im going to watch closely as we get into the election is whether or not volatility picks up in that month ahead of election. Traditionally it does, but were also not traditionally starting at this level. So i think the magnitude of the move might be a little bit less than in previous cycles. Isnt the feds zirp policy causing no volatility . None of the markets know where to go. It is kind of artificial. Youre not clearing trades necessarily the way you would. Who knows with the stock market. It seems all bets are off with all these markets. I think Monetary Policy is part of it. I think the earnings story is part of it. I think the uncertainty around the oil price which youll talk about in a bit. Most of those things are given though. A lot of people say theres a lot of uncertainty. Ive never known when there wasnt a lot of uncertainty. With over 20 or 30 years of watching. The always thing thats different is the extended period of time of what seems like artificially low rates. Well, weve had this disconnect, too, i think between whats an okay economy and whats been pretty uninspiring profits. You know, weve had okay earnings but the earnings coming through are through Cost Reduction and not top line growth. We get these valuations which i think, you know, Monetary Policy and low rates have contributed. And a lot of investors who have been in the market for multiple decades say at these levels im not super comfortable at these multiple levels adding additional money. There is no alternative. If it is that, how do you know what anythings worth . I think you have to think really hard about the quality of the assets that youre owning. And valuation should be a part but not necessarily the single driver of your process. Thats the mind shift that needs to happen. They could go higher if Monetary Policy stays accommodative for the next five, six years. We dont even know at this point. We also need to think about what were buying when were buying individual assets instead of the broad market. We want investors to be more active. Kate, i want to thank you for being here today. Its been a pleasure. Thanks for having me. I want a doughnut. Theyre on the way out. We have them back there. Coming up, the ceo of Waste Management is going to join us for the remainder of the show. His thoughts on the global economy, politics, and more. Then the cfo of kroger on the quarterly results. Squawk returns from that on a sugar high in just a moment. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. Upgrade your phone system and learn how you could save at vonage. Com business new this morning, crude prices slumping after a big rally. A live report from the oil patch straight ahead. Talking trash. Golf clap . Golf clap. Our special guest this hour, David Steiner, the ceo of Waste Management. Well get his take on the risk of recycling and much more. Plus raise a glass to premium brands. But can the worlds second biggest distiller drive up profits . The final hour of squawk box begins right now. From the most powerful city in the world, new york city, this is squawk box. We got a big drinker joining us on the set. David steiner. Did you request this . I apologize. A shot or two of tequila in the morning. Gets you going. Its the ceo secret. It really is. In the freezer because it doesnt freeze. So cool and delicious. Anyway, that was a joke. David is here. Well talk to him in a second. Im joe kernen with becky quick and andrew ross sorkin. This time we went with i called you a morning drinker. You keep coming back though. Its amazing to me you havent got a broken leg yet. Thats the amazing thing. In an accident. Accidents happen. As you slip off the step. Our guest host this morning is David Steiner. Amazing i havent got a broken leg. I love that. Ceo of Waste Management. One of the greatest ceos in the history of all businesses. Better. Is that better . Meantime, futures right now are indicated actually theyre getting worse. And yesterday wasnt great either. Now theyre indicated down about 75. I dont know whats ailing the markets at this point. Oils up. Technology was weaker yesterday. Apple was weaker. Gains for the nasdaq. Headphone jack. Maybe its all related to that. Markets in europe at this hour are indicated or have been trading mostly in the red. Thats worse than it was across the board. Among todays top stories, north korea is conducting what its called a successful test of a Nuclear Warhead. The country says it has the ability to produce Nuclear Tipped Missiles at will. Fed speaks going to be dominating the todays conversation. Public appearances by fed president s. And Steve Leisman has an interview with fed governor Daniel Tarullo. Twitter remains in focus after this weeks Board Meeting had some speculation about the companys future. The New York Post reports that contrary to rumor, investor carl icahn is not building a stake in the company. Cnbc reported earlier this week that no bids have come in for twitter. App lot of talk about whether they want to sell themselves. The more you talk about it, the worse to bring bidders out. A few stocks you might want to watch this morning. Jpmorgan downgraded to neutral from out perform. Citing valuation, challenging interest raut environment, and the higher than peer required capital buffers. Shares of Restoration Hardware rising this morning. The retailer of luxury home goods posting better than expected earnings and revenue. And kroger reporting quarterly profit of 47 cents a share. Revenue is slightly short of forecasts. Supermarket operators also cut its fullyear outlook. The companys cfo is going to joins live in 15 minutes. Oil and Gas Companies are dealing with the reality of living with oil in the 40 to 50 range. Brian sullivan joins us now from Oklahoma City. Hes got more. Brian . Good morning. Weve been talking to you from texas permian basin. This is area that not many have been talking about. Want to expose the scoop and the stack. Those are acronyms. I could explain them but it would take the rest of the hit. Either way, its a huge oil basis west and southwest of Oklahoma City. Theres a rough map of where we are. And the idea, guys, is while texas has gotten all the attention, actually the lowest cost production for much of the United States may be in those two areas where we are. And we wondered why. So we came out here and we went out to a rig yesterday and spoke to a senior drilling engineer. Basically he told us that its where they are, a lot of labor, and also good land. Listen to what he had to say. Weve been able to draw off the other technologies of the surrounding basins. Its we have easy access to louisiana, texas, other basins that started way before us. And so were able to draw that technology in here and basically all those learnings are culminated right into our stack play and were able to execute well with the learning curve already taken care of. You know, guys, we hear a lot about that kind of stuff. Technology and learning curves. Let me give a concrete example. That was a new exploration rig. The well cost two years ago was about 8. 5 million per well drilled. Its now 6. 5. Theyve cut the time to drill a new well from 21 days to 9 days. They say time is money. Time is money on an oil platform literally. So that gives you an idea of how much cost and time has been cut and why they can be profitable with 40 oil. Wow. I dont see why that doesnt show up in productivity, brian. Why everybody keeps crying about those numbers are unbelievable. And you said in two years. Yeah. And actually its less than two years. I did two years because i wanted to be safe. Its more actually like a year. I asked him why didnt you get faster before . And they sort of hemmed and hawed. The idea was they didnt really have to at 70 oil. Now they have to. Necessity is the mother of all invention, right . And good drill bits. Cheap land. And beckys from oklahoma. No, actually its more expensive i lived in oklahoma but his producer is brad. And brad was born in oklahoma. You were in broken arrow. Cool name. Thats by tulsa on the other side of the state. Brian, what yeah, but have you ever been to okarchi . I have not. Where is that . Where you are . I have now. Were in Oklahoma City here, becky. Were at a ge building. Later on in the show, i dont want to give too much away. Why are we in a ge building . Were going to show you. Its an oil and gas story. Its kind of cool. But ive got to save stuff for the rest of the day. Because Oklahoma City is not the easiest place to get to but theres a lot of nice people. Were going to talk about who the players are, why is it cheap, what are the names you need to be paying attention to all day long. Hopefully its going to be a new angle to the oil story. The scoop and the stack. Later on i will explain what those acronyms mean. Whoever came up with them is a mad genius. Brian, thank you. Well be watching. Appreciate it. All that low cost oil, it poses a challenge believe it or not to the sanitation and recycling industries. Our guest host today is David Steiner, ceo of Waste Management which serves more than 21 million customers in United States and canada. We talked about this before but its a little surprising. You would think Lower Oil Prices would be good news because of all of the trucks you have out there. It lowers your cost structure. What happens with recycling . It is good news for our fleet. But with recycling, low Energy Prices both oil and electricity is what drives fiber and plastics recycling. So when you have those low oil prices, you cant sell the materials for as much on the back end. Which means it becomes less profitable. Which means you disinvest in it. So we went from a high of investing upwards of 300 million to 400 million a year in recycling. The last couple years thats been under 20 million a year. So, you know, what you need to do is you either need to drive down the processing costs or drive up the price on the back end. Hopefully both. You know, we havent seen that in three to four years. Usually recycling has a v shaped curve. Goes down quick, pops back quick. Were now in the fourth year of basically a recycling recession. What i like to say is if were disinvesting in recycling, think of what the other folks are doing that dont have other parts of business to fall back on. Weve got a large business. Recycling is only about 8 . For folks who theirs is 100 , youre seeing it go down. Which for the first time in 50 years you saw recycling what is your peak of dependency on recycling . Was it above 8 five years ago . It was about 12 five years ago. Investment point of view, it was the business that we were investing in. Investing in. And also what was the thing waste to energy . You sold that. Three or four years now . We did. We did. Did you keep a stake and whod you sell it to . Sit still in business . Absolutely. Its a great business. The reason we got rid of it is its really two things. Its taking the waste in and then the electricity on the back end. We know all about taking the waste in, selling the electricity on the back end, not something we were good at so we sold it. Is it competitive with the way electricity is produced. Extremely competitive. So the folks we sold it to were energy players. So they understood the energy on the back end. So we have a longterm contract with them where we supply the waste to them. Then they take care of the energy piece. Basically we got rid of the volatility of the energy while keeping the ability to dispose of that waste into those plants. For us it was both a great financial deal and a great strategic deal. When it comes down to it, though, the rest of your business obviously this is a small part of your business. The rest of the business, the pricing is up, yield is up, and churn is down. Whats happening in the garbage industry overall that allows you to keep those metrics . Its interesting. In the Great Recession, we didnt bounce back as fast as other businesses. Im on the board at fedex. And fedex was well right after the recession was higher than they were prerecession. Right . We still are not higher in volume than we were. I like to say now is our time. The economy has done well for us. We are now tied into housing stocks. Now we see housing stocks above a million moving toward that 1. 2 million to 1. 3 million. Youve seen the volumes bounce back nice for us. We kbpt that to continue for three years. New houses means new customers. All the junk that gets created in the housing production. And then all the surrounding businesses. So you have to open a new restaurant, a new gas station, a new dry cleaner. Those are the customers for us that are basically annuities. When you got a Small Business, theres one thing youve got to have. Youve got to have that waste picked up. We keep those customers on average about eight years. And thats what really starts piling up. After the eight years they go out of business or you lose them to somebody else . Its just an average. So most of the business were losing about half of it are people going out of business or moving location. And then about half of it is just sort of systemic churn. Put the dumpster out there. You own the dumpsters too, right . We own it all. How much is it . Do you charge by the month for the dumpster . Yes. It depends on the size. If you have a Small Business, you might get a two yard dumpster, four yard dumpster and were going to charge you. You might want it picked up once a week. Or if youre a restaurant, you might need it picked up four times a week. Well work out a price for you, joe. Awesome. Davids going to be with us for the rest of the hour. We got kroger out with numbers and the cfo after this short break. Everyone thought i was crazy to open a hotel here. Everyone said its so hard to be a musician, but i cant imagine doing anything else. Now that the train makes it easier to get here, the neighborhood is really changing. Im always hopping on the train, running all over portland. I have to go wherever the work is. Trains with innovative Siemens Technology so neighborhoods and businesses can prosper. I can book 3 or 4 gigs on a good weekend. Im booked solid for weeks. It takes ingenuity to make it in the big city. Im booked solid for weeks. Whmade plastics that tmake them lighter . Rs the lubricants that improved fuel economy. Even technology to make engines more efficient. What company does all this . Exxonmobil, thats who. Were working on all these things to make cars better and use less fuel. Helping you save money and reduce emissions. And you thought we just made the gas. Energy lives here. Welcome back to squawk box. Take a quick look at the futures. Now down over 80. Oil prices not the necessarily the issue today. Theyre up above 45. Theyve been traded above that. They are down a little today. 1. 5 . And we got some breaking fed news. Steve leisman joins us live in washington. Thank you very much. Boston fed president Eric Rosengren will make the case essentially for raising rates saying that the low rates increase the chance of overheating the economy. Youll remember he got concerns about Financial Stability relative to low rates. Hell go on to say that by raising rates the fed has a chance of lengthening the recovery. Not doing so he says could shorten the recovery. He says raising rates are best for achieving employment. He says the economy is growing fast enough to raise employment to improve the labor markets. So hell be one of several speakers we have this morning dallas fed president will be in question session. And then we talk to dan tarullo. Thats before fed speak on monday well be covering for you as well. Okay. Thank you, steve. Kroger reporting quarterly profit of 47 cents a share, 2 cents above estimates. However, revenue slightly short of forecasts. Supermarket operator also cut its full year outlook by about 10 cents. Joining us now mike schlotman, cfo of kroger. Also part of the cnbc council. So you are in wheres your studio, mike . Im right across from the big Kroger Building that you know. Yes, i do know that. What is that on . Right on vine street. Vine street and whats a cross street like 6th . Court street. Court street and vine. Okay. I know exactly where you are. I love businesses like yours. Because i it boggles the mind. You do about 1 100 billion in sales. 26. 6 billion in this quarter. And 383 million in net. That is a i think thats a fair margin for any company. I dont think anybody that makes more than that really needs to make any more. What is the net margin in number thats like making a penny on every dollar. We are a penny business. We fight for every penny every day whether its how we procure product or how we get more efficient inside the store. Always has been. It always has been. And i think thats you know, i feel much fairer about that. That youre not gouging people and trying to maximize profits which ends up hurting so many people. Being sarcastic. I have to say that now with, you know, a lot of times people dont understand. You cut guidance because of continuing deflation. We talked about disinflation, low inflation in other words. We dont really think deflation is still that prevalent. But in your business, is it deflation . Well, it absolutely is deflation. Its pretty broad based in our book of business. We are about 1. 25 deflationary in the quarter compared to this time last year. In our grocery category which is still about 45 of our business was about 1. 5 deflationary. If you look at the price of milk and eggs and commodities like that, theyre historically low. Eggs are under a dollar. This time last year they were over 2 a dozen. Thats pure deflationary. Produce is on a deflationary trend. It was slightly inflationary in the quarter but it was more disinflation than deflation in that category. But it looks to be trending toward deflation with where the last three periods have been. Were proud of the quarter we posted. Strong id sales. When you look at the real growth if you look at our id sales plus the deflation in our quarter, it was a midtwo number. Lower households grew nicely. And theyre making more visits and buying more on a monthly basis when they come in the store. Weve been through deflationary periods before and well continue to work hard through this. Theres always light at the tunnel. This is dave steiner from Waste Management. We use kroger in our pharmacy program. How important is the pharmacy business to the grocery business . Its extremely important for us. 10 of our sales are out of our pharmacies. You know, were one of the largest pharmacy providers in the country. You may have seen an announcement we added to our Specialty Pharmacy business. We merged with a Company Called axium a couple of years ago. Last couple weeks bolted onto that with modern health who is a large Specialty Pharmacy provider. We think that combination with our focus on health and wellness as well as our brick and mortar locations to provide that environment is something that will serve us well in the future for our customers. So you went over like six Different Things that have been going down. No, theyve been going down in price. What are the are there Different Reasons and dynamics for each of those . I figure there must be. Its not just the dollar. What is causing that . Whats the primary reason . Its pretty much supply and demand. If you look at the meat complex, all three proteins have been coming down for awhile. Global consumption of Meat Products is down. Which leads to higher supply and over time those things balance out. If you look at the dairy complex, milk has been very low for an extended period of time today. And that effects not just the absolute fluid milk, but it winds up affecting cheese and yogurts and ice cream and everything that contains that. We do it on less land than we ever had. And these arguments that were not going to be able to keep up with. I dont know. It just never seems to be born out in reality. And then how about your cage free eggs . Now, im not a person that thought that eggs would try to escape. Like, do they roll out of the and if they do how do you prevent that if its cage free . Well, the eggs come out of chickens that are raised in a cage free environment. Oh, oh, oh. Okay. I know you knew that. I know you knew that. Dont assume anything on this. You know what nirp is, mike . Well, its a game i play with my son when he was growing up. For sure. Theres some scary pictures of me stressed up in stuff to get how about aleppo . Im going to get you on something. Appreciate it. Good luck. I dont know. Were the salt of the earth from that town, arent we . You going to beat purdue . Well, im a university of kentucky grad, so ooh. But youre on the board of uc for something . I am not. The Economics Council i was on the board of the uc Economics Council. Ive cycled off of that. You can only do so many things like that and you take your turn and hand it off to somebody else. I guess when it comes to basketball theres probably not a lot of love lost between the university of kentucky and the bear cats. But you seem to be doing okay. Yeah. I dont im not that kind of fan that laments anybody else. If there arent two teams, theres not a game. You need strong competition out there which is fine. Do you remember the old song lets go kroger the happy way to shop. Do you know that one . I absolutely knew that one. Im a native from here. Lets go kroger. All right. Thanks, mike. See you later. Thank you. When we come back this morning, a rescue in the french alps. Dozens of tourists spent the night in cable cars. We have the details on this rescue after the break. Time to squawk and roll. Kansas is back on the road kicking off a 40th anniversary tour. First stop . Squawk box. With details about their new album and to weigh in on the big business of music. Monday starting at 6 00 a. M. Eastern. Squawk box will be right back. Still paying for your home when you should be enjoying your retirement . If youve paid off at least 50 of your mortgage and youre 62 or older, a reverse mortgage might be the answer. A governmentbacked reverse mortgage stops your mortgage payments and gives you steady taxfree income. Let the home youve taken care of, take care of you. Turn your equity into a comfortable retirement, all while continuing to live in, and own, your home. Find out how much you could receive for retirement. Lendingtree when banks compete, you win. What if 30,000 people download the new app . Were good. Okay. What if a Million People download the new app . Were good. Five million . Good. We scale on demand. Hybrid infrastructure, boom. Ok. What if 30 Million People download the app . Were not good. Were total heroes. Scale on demand with the Number One Company in cloud infrastructure. Hewlett packard enterprise. Welcome back to squawk box this morning. Making headlines, snapchat has hired several bankers to help it raise debt financing. Morgan stanley Goldman Sachs among those involved as well. Snapchat did not accept an ipo banker yet and has no plans to go public. Tourists who were trapped in cable cars in the french alps were rescued this morning. A series of cable cars stopped working at High Altitude in the mountains yesterday. Pretty scary stuff. It prompted a major rescue operation. But it left 45 people trapped in midair overnight. Four helicopters were deployed when they were stalled because of a mechanical incident. They rescued people before the efforts had to be suspended for the night because of rough conditions. They did provide blankets, food, and water to help weather through some of that stuff. But again, you could imagine being stomach up there. And its just scary when youre on one. When it stops for a second, youre like please go. Coming up we have todays top stories plus find out why one investor is doubling down on biotech and oil. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov boston fed president Eric Rosengren pushes for a fed Interest Rate hike. A Voting Member of the fomc this year says failure to gradually raise rates could actually shorten the economic recovery. The longer you wait if youre trying to get somewhere and you dont start, then it gets steeper when you finally have to. Since steve told us about the comments we have seen additional weakness. Dow futures now down triple digits. Down 103. John williams said it. Then the employment report came out, took it off the table. We go up. Now its back on the table. Now we go back down. So its the same crack addict market. If you look at individual stocks, some of the banks taking it a little bit harder. You can see that Goldman Sachs is down by over 1 . They did have that big fine against them too. Wells fargo. Any reason to think its not okay, now you think you know what youre going to do. Theres no way were raising in september because of the election but were going to make you think we might again with the jawboning again. What i will say is leisman said even a 150 number might be enough. The 150 jobs number might be enough for them to actually go in september. And now the narrative is theyre going to prove that theyre not political and prove that theyre not market dependent and finally going to show some theyll show you. Theyre finally going to show some that they do something without thinking very quickly check out oil prices too. Oil prices after two huge days of gains yesterday wti was up by 4. 7 . This morning that has picked up again after comments from rosengren. Youre looking at wti down by 1. 9 . 46. 70 is where its trading. We can Kate Stockton on this morning who said if oil could close above 46. 60 that would feel more comfortable in energy stocks. But its at 46. 69. Lets look at stocks to watch this morning. Mattress firm reported quarterly profit estimates by 8 cents. Revenue also falling short of forecast. Comp store sales fell by 1. 1 . How do you think they came up with that name . Clever. We sell mattresses. What if you said Mattress Firm mattress. They changed it for you. Mattress retailer Mattress Firm for the lack of confusion. We should tell you Deutsche Bank is expected to settle several Mortgage Backed security cases for more than 2. 4 billion. According to a german magazine, the report says the Justice Department will send a formal agreement to that bank next week. And Samsung Electronics is reportedly considering selling its printer business to hp inc. Thats according to a newspaper report in seoul who says the deal could be worth 1. 8 billion. Our next guest is bidding on biotech and oil. Davids platinum portfolio is up over 22 so far thissier. Congratulations on that. Thanks. You like wells fargo. We were just talking about it. We do. You mentioned the banks were down. If the fed is actually going to raise rates, its very bullish for banks. We think wells fargo is well positioned for that. Its paying a 3 yield. If its off anything today, we would be buying. The fine is ridiculous in terms of the business practice. We dont think it was a companywide thing. We think its a good organization. We think can i ask you about that . I was shocked by at least what the headlines were. This idea that there were a million 1. 5 million accounts opened without anybody knowing what was going on. And 5300 employees that thats pervasive. Thats systemic. Thats not its extraordinary the bad actors that have been involved in a lot of these companies but its not the entire company. Thats a small percentage of the company. And we think wells fargo is actually a very well run highly ethical organization. We would use that headline risk to buy. This isnt what runs wells fargo. That was 5,300 employees they had to fire. At aig, there were fewer people involved in that entire scandal. Its extraordinary, but as an investor you want to look at what the companys earnings are, their longterm positioning. And you dont think theres large repercussions to come from this . Definitely not. All right. We can move on to some other ones you do like. You like qualcomm. Qualcomm is doing well this year. They had a lot of turnarounds in the last year. Theyve resolved issues and are at 14 times earnings. Youre seeing on a daily basis articles about the dividend trade being crowded. We think thats the case especially for utilities. But there are other businesses paying multiple story for this to actually work . Its got to have better earnings and we think youll get a multiple expansion. Really quick, occidental. Youre starting to see them do better here. We think were in a new trading range. Occidental is a well positioned company. Just raised the div deidend thi summer. We think the stock could be 15 to 20 higher. Thanks a lot. Lets get back to our guest host David Steiner. Ceo of Waste Management. Do you think about the fed very much . You dont, do you . You know, i think when youre running a business, i think wall street thinks about the fed and what effect its having on the market. When you run a business you think about tax policy and regulatory policy. Right . I mean, thats what drives our business. If we could get a logical tax policy, i think we all know that Business Investment follows jobs. And jobs follow Business Investment. So if we could spur some Business Investment through tax policy, i think you start creating jobs. If we could get rid of the regulatory maze, youre going to start to see jobs created. Look. Interest rates are important. But theyre not what we sit and worry about running the business. The economy does though. The economy is. If Housing Starts are what you most closely track. Absolutely. And i would tell you that i think tax policy and regulatory policy would help the country imminently more than anything with Interest Rates. If the fed wants to prove its not worried about Market Reaction to what it does, the market theyre giving it a chance to prove that. Because its doing exactly what they worry about. All they do is intimate that maybe september is a possibility and immediately go down triple digits. Does the market and the economy really need rates where they are . Or else everything comes to a stand still . Look, i think its the difference between the market and businesses. Right . Interest rates on wall street are am i in bonds or equities. Right . We dont think like that when were running a business. Computer trading or whatever. Immediately you feed that in you feed that possibility into these program trades and it immediately starts selling based on a quarter point possibility . And ive been doing this now for 16 years. And ive seen every Interest Rate cycle. I will tell you other than just the cost of capital has no effect on how we run our business but tax policy, regulatory policy, thats what drives our business. I think thats what drives all businesses in the United States. If we want to create jobs, lets start focusing on that. And lets let the fed do what they need to do. We dont think that anymore, what you just said. We think and the fed seems to think that the entire world, you know, revolves on what central bankers do. Its kind of sad that weve been conditioned to think that in the past five years. The real world does not revolve around the fed. The fed needs to do what they have to do with the Interest Rates. We want the real world to create jobs, lets look at the tax policy and regulatory policy. Is the epa coming after you . We actually have a Good Relationship with the epa. Oh, okay. We do have a Good Relationship with the epa. Look. Landfills are for sophisticated animals. Right . They are not just the old in the old days in the 1950s you put it into a hole. Now it is theyre highly engineered and the epa has actually helped us develop regulations around landfills to make sure theyre environment tally safe. They put golf courses on top of them now. Absolutely. So youre not just throwing the trash in a big hole now. Were recycling the land ultimately. Thats a pretty good thing. It should be like a big compost pile, shouldnt it . To a great degree, it is. We grow natural grasses on them. Ill take you to a closed landfill and youll see put a golf course here. Why dont you just tell me. Ill take your word for it. I didnt say id take you there voluntarily. Yeah plp i come back from there . Thats the question. Theres the Waste Management rubbing me out joke again. It never gets old. I like it. It does scare you a little. It does. Lets look at wti. Oil started out down this morning. It took another leg down as we got these comments from fed president rosengren suggesting that the fed is more likely to hike. You can see right now that wti is down by 2 p. 3 . Wti has been up yesterday up 4. 7 . The idea the fed might actually hike rates puts the dollar on stronger footing. Wti sells in dollars. You can see this morning that theyre trading at 46. 50. We spoke to an analyst that said if it could close above 46. 60 this could be the leg up on the oil prices. This puts some of that into question. 46. 50 is the last trade. Well continue to watch it. When we come back, it is 5 00 somewhere. Pernod ricard is raising. Also getting hit by a whiskey sales slump. The ceo will join us next. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. 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Understoake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Welcome back to squawk box. Theres the futures. Triple digits has been uncommon to see lately. Yeah. Because of the lack of volatility. Big lack of volatility. Down 104 on the dow indicated this morning. Going to need a drink. Down 14 on the s p and down 33 now after a weak session yesterday on the nasdaq. Youll see why i said im going to need a drink. Show them as were speaking. Changing consumer tastes are an issue in the world of high end spirits. Our next guest says a shift to premiumization is lifting. Get a camera on him. Joining us now is Alexandre Ricard ceo of pernod ricard. Its the worlds second largest distiller. What have you brought us . Thats part of our latest innovations. This is all premium. At the service of our premiumization strategy based on authenticity and quality. So you have extra which we launched last year. The glen founders reserve. Which is our newest to join the family which is the Market Leader here in the u. S. And globally. Jameson which is my personal favorite. And the Fastest Growing here in e the u. S. And Fastest Growing spirit premium spirit drink in the u. S. , yeah. Whats that about . Why is that happening . Well, basically that brand is really cool. Its very accessible. Its very versatile. The taste is smooth. You say its cool. What do you do to make it cool . Its an irish its basically an irish spirit. In both senses of the word spirit. Its triple distilled which is quite differentiated. Basically we say we like to say triple distilled, twice as smooth, and one great taste. People like to drink it on the rocks, neat, as a shot, or with ginger ale or cocktail base. Dont get upset with me, talking cool and not cool, what happened to absolut . Its not as cool as it used to be. Ill tell you. Absolut is actually pretty cool outside of the u. S. Within the u. S. Market the vodka segment is competitive. Weve upped our investment behind absolut. The one thing we forgot to communicate to our Consumer Base in the u. S. Is absolut is a one source one Community Vodka based in south of sweden in a Small Community called ahus. And its based on winter wheat. I went and visited these beautiful fields of winter wheat. They grow during winter and harvest happens in spring. Theres a changing sentiment in the United States after years and years of being told moderate to light drinking is good for you. It seems theres a changing theme from medical establishments and obviously these things change all the time. But how difficult is that for you to fight, this idea that maybe younger people arent going to take it up quite as much as people in the past have . You know, the fact of the matter is and like most things in life, a balanced and responsible attitude is what really works. What andrew said about vodka is also true of tequila. Remember stoli and then grey goose. They all taste the same expect they got cooler bottles. I want to know about tequila. What is premium tequila . If its 100 agave, is it any difference if its patron or this . Ive seen 350 bottles of tequila. Does it taste better . Can i notice it . Thats the thing in the industry. You have craftsmen that work behind these products. There is a heritage behind them. And theres a knowhow, an expertise. You know, the art i call it an art of distilling and of making these kind of spirits. You can tell the difference between terrible tequila and premium 350 tequila . Oh, yeah. Vodka . Vodkas tasteless. Can it be more tasteless . I strongly suggest and recommend you try some of this. If you insist. We like to call it liquid silk. And we do blind tastings. And you do see that there is a taste difference. Im a wine guy. And thats like saying its all just grape juice, right . And theres a wide variation in wine. I assume that where your product comes from, that its important. And that the ingredients and the way you distill it makes a big difference. Yeah. We have a very strong approach. Basically the glen has to come from scotland. It has its own distillery. And has been so for a couple hundred years. And likewise for jameson which comes from ireland and was founded in 1780. They all have a story and heritage behind them. Im going to get in trouble because we got to go, china, whats the market like and whats popular there . Ill tell you, china is a difficult market currently. The most popular segment in china right now is cognac with the Market Leader being marto switch a 300yearold brand. What about in russia . They dont drink the good stuff do they . Some of them do. The affluent consumers do. Thank you for being here. Come on back. When we come back, jim cramer will be joining us live from the New York Stock Exchange. Well get his take on the top stories. Check out the dollar right now. You will see the dollar has moved up against the euro. Up at 1. 1244. Stay tuned. Youre watching cnbc, first in Business Worldwide. Lets get down to the New York Stock Exchange. Jim, my man, you probably have struggled with this. The guy was here trying to get the perfect margarita again. Im not you know, i keep trying Different Things. San miguel you got the perfect margarita . 100 agave the state makes it the same. People want to pay up and put these more expensive tequilas in thats a mistake. I like casanova. I am a huge cas drinker. Its the best. The drink that i serve as soon as september comes around. Really . Yeah. I switched right out of tequila into jame missson. Is that Irish Whiskey . Its irish. Ive been to the distillery. An amazing institution and its just a fun thing. I know my friend david is a wine man and there theres actual great deviations. But theres not as much difference as, you know, as people think in a lot of these drinks. Down 100. We were talking about it, maybe use a drink. Its not oil, jim, its, again, a quarter point again. Well, look, we had the story, its when you talk about there must be a rate hike, there are people trying to build it in who werent building it in. I think theres going to be one. Im not crazy about it. Its something you have to deal with. I dont know if it pro longs growth. I think its something they want to do and we have to be ready and were not ready. Just a lot of people are complacent why theres been, you know, the vix is so low. Im urging people not be complacent. I would be flabbergasted if it was september. For me to see they can do it with some courage, i would welcome it. I still dont believe it. I just dont think i am with you. I dont think they have i see the market today and go oh, no. Yeah. This is the exogenous down day. James corden is here on the floor of the exchange. Is he the karaoke guy . I was in the back seat with him over here and were doing brown eyed girl. Excellent. Youre not joking . Im just dreaming. Dreaming. My wife would think i was really cool. You had the song ready to go. I told him i was in the back seat of his car. Which is fine. I dont know who he is. Well, i kind of know. You know. All right. Hes not as big a mad money fan as david stein. No one can be as big a fan as David Steiner. Sing us out, brown eyed girl. You know down in the hollow. Behind the stadium with you, becky. Playing a name game. Youre blue eyed girl cant do that. Well see you in a few minutes. Thank you. All right. Coming up, we will have much more with our guest host David Steiner including his call on the economy when we return. Man, im glad aflac pays cash. Aflac isnt Major Medical enough . No whos gonna help cover the holes in their plans . Aflac like rising copays and deductibles. Aflac or help pay the mortgage . Or child care . Aflaaac and everyday expenses . Aflac learn about one day pay at aflac. Com boat blurlbrlblrlbr remember here at ally, nothing stops us from doing right by our customers. Whos with me . Im in. Im in. Im in. Im in. One, two, wait, wait. Wait wheres tina . Doing the hand thing . Yep we are all in for our customers. Ally. Do it right. We are all in for our customers. Okay, so you launched your banks app. Now what . How will you keep up with the new demands of todays Digital Economy . The fact is some believe they wont need a Traditional Bank down the road, so at cognizant, were helping banking and Financial Services Companies Think digital, be untraditional, and reimagine what the bank of the future can be. Our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. Were creating new platforms across channels so customers can effortlessly invest, borrow, lend, transactwhereverwhenever they choose. And were digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. Digital works for banking and Financial Services. Lets talk about how digital works for your business. Welcome back, everybody. Our guest host this morning David Steiner the ceo of Waste Management. David, we talked about a lot over the course of the hour. What the economy looks like from your perspective, how business is going. What types of things have we not gotten yet to . You know, i think its interesting in the Business World that weve become happy with 1 to 2 gdp. Weve become complacent you mean, settling for less . Yeah. Things are going okay and, you know, after the Great Recession, okay, became really good. Right. And i think, you know, we were he all looking at it saying, whats the next big shoe to drop, right. And thats why i say, i think we need to bolster the economy from down below. Look, Interest Rates are Interest Rates. Lets get some rationale tax policy. Lets get some good regulatory policy and focus on creating jobs in the United States. Right. And i think thats what worries businesses. Is that were not creating the jobs that we should be creating. We have seen the Unemployment Rate fall from 10 to 4. 8 . Gdp were looking at the third year since the Great Recession where we will have below 2 . Thats been the real crazy story and how do you figure out whats happening. Productivity numbers are down. You think its participation. Labor participation rates at the lowest theyve been. You have the income gap, right. So the jobs being created are low value, low productivity jobs and dont dont generate enough garbage. Yeah. And we really need to in the United States, we need to figure out a good policy to create longterm jobs that create high value wages. Thank you so much for being here. Thank you. Its always a pleasure. Thank you. Appreciate it. Make sure good to see everyone. Make sure you join us on monday. Squawk on the street is coming up right now. Good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with david faber, jim cramer at the New York Stock Exchange. Stocks threatening a loss for the week now as futures tumble to the red on some of these comments from the boston fed chief about a potential rate hike. A lot to cover as well interest wells, to kroger to samsung. Europes been on