Transcripts For CNBC Squawk Box 20160922

For a market holiday. The hang seng up by a third of a percentage point. The shanghai up bay hay a half percent. The kospi up. In europe, in early trading. Green arrows there. Much bigger adavans than here. This is playing catch up and then some. The dax up 1. 9 . The cac up by 1. 8 . The ftse up 1 . Crude oil having its best day in two weeks yesterday. It was up nearly 3 at 45. 34. This morning up 1 to 45. 79. Big question around whether opec can pull anything off with this meeting they have next week or whether this is nor jawboning. Well continue to watch this. Lets get you through some big top stories. Weekly jobless claims come out at 8 30 eastern time. Filings are expected to hold steady at 260,000. Then at 10 00 a. M. , august existing home sales which are forecast to have risen more than 1 . Yahoo reportedly expected to confirm a massive data breach exposing millions of User Accounts. Re code saying the breach was widespread and serious. The data allegedly includes user names, passwords and personal information such as birth dates. Warning users if they use the same password and berth date on any of these, they are likely exposed. I have never given my real birth date on these things. Good for you. I tell the truth. I have a problem on my hands. Theres no reason for them to know that information, and theres a real chance it could get hacked. You can get that off of google in about ten seconds. Like yahoo or retailer or somebody else gets hacked, its happening all the time. A story well talk about today, a frequent guest of this program, leon cooperman in the hot seat telling investors that hes refusing to settle Insider Trading charges that came yesterday because he wont let anyone destroy his legacy. The s. E. C. Charged the 73yearold and his 5 billion Firm Yesterday with illegal trading in Atlas Pipeline Partners six years ago after they found out a planned sale of one of the units. Cooperman says he will continue to fight the charges and continue to invest money for clients. Did you guys read this letter . Yeah. He says he got the inside information, but that the trades he made because he had been invested in it prior dont make those trades illegal. I dont know. I will try to give him the benefit of the doubt. I know mark cuban won, but it seems strange. The soak you know something you become restricted you cant do anything. I dont understand enough of the terms of the detail, but he could have settled this for a lot less money, and he wants to fight this because hes concerned about his reputation. Everything is going to rest on whether theres emails that can back up his point. Unless he can provide documents to show they already had these plans plans, it will be difficult. Isnt that going to be on the prosecutors in. It goes both ways. But hedge funds are under scrutiny and the heat is on. Well talk more about this story in a bit. We have another person in the hot seat. It has been a busy week in washington. Mylans ceo, Heather Bresch, got her turn for a grilling yesterday. Lawmakers blasted the steam prices in the epipen. After mylan takes our punches, theyll fly back to their mansions in their private jets and laugh all the way to the bank. While constituents suffer, file for bankruptcy, and watch their children get sicker or die. One lawmaker noted that mylan said it would soon sell a generic version of its epipen for about half of the price on after the price increases ignited national uproar. Mylans chief defends the companys response to the controversy. Im honored and proud to be the ceo of mylan. I spent my career working to break down barriers to access and expand access to high quality medicine and lower healthcare cost. I wish we had better anticipated the magnitude and acceleration of the rising Financial Issues for a growing minority of patients who may have ended up paying the full wholesale acquisition costs or more. We never intended this. We listened and focused on this issue and came up with an immediate and sustainable solution. Shares of mylan actually rose in yesterdays session. What do you think . I think investors are baking in a lot of concern about the wider political backlash. It comes at a time when in many ways as the election draws close, lawmakers are shifting their attention away from typicbanks and on to other sectors. We have a story today about 10 thoish 10,000 acne cream. And the news to investors is pharmaceutical stocks right now are in the spotlight and will stay that way, particularly in the run up to the election. Well talk nor about that story as well. We have an update on the escalating violence in North Carolina. Police say a man in Critical Condition this morning was shot by an unknown person and not an officer, he is now on life support. Hundreds took to the streets protesting the shooting of 43yearo4a 43yearold. The unrest in charlotte continues. A second night of violent protests brings out police in riot gear using flash grenades, rubber bullets and tear gas to disperse the crowd. Hundreds taking to the streets with signs protesting the death of 43yearold keith scott, killed tuesday by police. Overnight, loud booms sent demonstrators running for cover. At least one person was not. The gunman was not a police officer. I dont know. He was just lying there. Reporter on tuesday night demonstrators shut down an interstate, looting trucks, setting fires,. Police justified the shooting saying scott ignored commands to drop his weapon, that despite witnesses saying he did not have a gun but was holding a book waiting for his son to get off the bus. An evening beginning with a peaceful candlelight vigil was overshadowed with a display of violence. Sarah rosario, nbc news. The governor of North Carolina declared a state of emergency in charlotte sending in the National Guard and Highway Patrol to help police. Well continue to monitor the situation and bring you updates as we get them. You had an update down there. Its a tense situation down there. People i know working down there are saying groups like bank of america a large employer. Telling people to stay home or be vigilant today. Theres a lot of anger right now. Back to the markets. The feds decision to hold rates steady. Janet yellen saying she expects to see a rate increase this year. Bill gross said that the fed contradiction, after expecting, leading people to this conclusion, has left investors confused. Here was his reaction to that decision. Im choked with emotion and hardly able to speak. After hawkish talks and saying there would be two hikes in 2016, they deferred to Interest Rate hikes and provide savers with a bit of thin gruel to work with to provide for education retirement and healthcare needs. So i would say if not now, when . Hes asking if not now when. And the market is maybe saying maybe, with a big maybe, december at this point. Steve liesman has more. I have more on gross. This is i want to say, be careful investors. Dont let what you want to happen pollute your forecast for what you think will happen. Bill gross had come out he said 50 50. He obviously wants it to happen. I dont think any fed observer looking at it would have put those odds at 50 50. You can see why he did that. He wants it to happen. He thinks its the right nithin to do. The idea what he wants to happen pollute what he thought would happen you walked away from jackson hole thinking a rate hike would be coming. I did then i changed my mind when i saw the two isms come this soft, we covered branard. You put all the that together and you come to the right conclusion. The fed keeps saying, yes, were going to do it, and then pulls back. That leads to wall street thinking is this ever going to happen . Thats the interesting thing from yesterday, the new metric put out there. Lets forget the script go to the chart room to run on jobs. If you wouldnt mind putting that up. Talk about what janet yellen is saying. You guys are great in the back. This is the new thing up. This chart shows that the Unemployment Rate has held steady since october, while jobs have gone up. This is telling the fed that theres more slack out there in the market than they think. Duh. Whats happened is 2. 5 Million People have come back into the work force in the past year. Watch what Morgan Stanley says about this and what this means for rates to go up. They said let me find this quote here. We believe the key determinant of a rate hike this year is the amount of slack in the labor market. We think the Unemployment Rate needs to decline again for the fed to hike rates. Many people are banking on december. But right now that probability is just 51 . Its kind of an even chance here. Youre saying you disagree you dont think well necessarily see something in december . I need to put meat on the bones of this new metric the fed is talking about. This concept of room to run. A new goalpost. I went back and looked at yellens testimony in july, her speech in august. She has not talked about slack animating monetary policy. What weve had is we had the du dual mandate, jobs were cool, looking at inflation. Now were back at jobs. How does this explain two years after qe ends, they raise once and they are creating this new rule. The problem with this analysis of the labor market, its a lagging indicator. When the labor market is perfect, thats usually the end of a cycle. Theyll wait to raise Interest Rates when the market is perfect, but that is the end of a cycle. Were at a 1. 5 run rate in gdp. The fed is looking to raise Interest Rates . Theyre looking now to raise Interest Rates . The other problem s the fed keeps saying its data dependent. There are two problems with that. Firstly, its also indicating its time dependent, too. Secondly the data goalpost keeps shifting. Essentially what theyre saying now is we have this new data metric, we think theres slack in the economy, slack in the labor market. We dont know whats happening with productivity. Let me push back on that here. What is new is the chart we put up. Weve been running average 200,000 plus jobs, which according to the feds estimate is 100,000 more than is needed to reduce the Unemployment Rate. Yet the Unemployment Rate does not decline. There are 94 million americans who are not in the labor force. 16 years and older. This is a combination of people in school, people who are retired, and people who have dropped out of the work force. We have had this story on squawk box for several years now. You guys remember alan kruger. He said they aint coming back. Now they are coming back. This contradicts that entire theory that this is all the about demographics, that there are more baby boomers aging out. No, no, it says thats still happening but theres a portion of folks who have dropped out that are coming back in. Because they want and need jobs. Remember the cramer economy . H the depressing chart is the Participation Rate of 25 to 54yearolds what are these people doing every day . The participation of baby boomers has gone up in the recovery. We will make this more confusing. Joining us is tlets go to o now. Matt, weigh in on this debate. If youre looking at what has been happening with the bond markets, whats happening with the pension plans, with retirement plans, a lot of this explains why baby boomers need to keep working. Absolutely. The fed will be patient here. Appropriately so. They have an intent to try to move fire. But its more of a bias than a clear objective. We think theyre following the bond market here. Theyre afraid to move too quickly, flatten the yield curve that they have done multiple times. But is there damage thats being done as a result . Again, if you look at pension funds, retirees, if you look at the insurance companies, if you look at the financial institutions, this is something that the boston fed has been raising all these issues about. We hear it from richard fisher, the former dallas fed president. The longer you stay at zero, the more pain you inflict on those areas. Thats why theyre getting nervous. Is that something doing damage . Absolutely. We think thats why they have that bias and weve heard that out of japan with the acknowledgment that there are unintended consequences of this aggressive monetary policy. The fed clearly stated that they intend to keep with the qe measures by buying up the 2 trillion assets. So were worried, but we wont do anything about it. I think theyre trying to. Thats the question. They have the concerns about this. Do they have the fortitude to go ahead and do it . Which one does this . A dove or hawk case come december . You know, into september this was about if the data were Strong Enough they could go. Now in december theres meaningful disse meaningf meaningful dissent on the board, so this comes to growth and the lack of it. It has been a mini temper tantrum a smaller version of what we saw in 2013. When you look at Interest Rates, earnings in a discounted cash flow model, if the tenyear were to back up 20 basis points, it would be overvalued. If Earnings Growth goes to 6 , the earnings market would still be undervalued. Its talking about movements in Interest Rates when theres not enough growth to handle it. Thats the fundamental problem we have with this cycle. Thats why the market is looking through this and seeing only about one more hike for the cycle, which is the right way to look at it. If you watched the market activity yesterday, people talked about this rally of stocks. The dow up 0. 9 . Didnt even make a 1 move. This morning futures up by 50 points, 60 points above fair value. Not a whole lot of bang for your buck. What the fed did was not a huge surprise. It makes you wonder. If we are hitting a sort of ceiling in terms of als will ge. What do you think . We had a mini temper tantrum. We are sort of reversing some of the gains now that the fed is holding off until december. But, you know, its what i said before. If theres no Earnings Growth, and there is no Earnings Growth, earnings are contracting by about 1 , theres only so much you can do in terms of a market rally no matter what the fed does. And thats why were kind of stuck in this holding pattern. Matt, what do you tell investors when it comes to bonds . Be wary of negative rates. We think negative rates are destined to fail. Thats led to a rise in rates as the boj and fed signaled that those rates are likely to work. Its a time to be cautious as a bond investor and look for high income and low volatility strategies. Thank you for joining us. Our guest hosts will stick around. Steve, well see you in a bit . Perhaps. Stick around. We have a great lineup of experts to react to the fed decision including chris good guy. And we have dino kos. Smart guy. And james paulsen. Kneel irwin. He was with the post. Now with the times. Mark will join us with his best bets in the tech sector. Why netflix has some room to run. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back to squawk box on cnbc. Look at the u. S. Equity futures. At least at this point things are solidly in the green. Dow futures up by 75. S p 500 futures up by 7. Nasdaq up close to 20, this after gains yesterday after the fed decided not to move. That was good for just over 160 points for the dow rally yesterday. Lets talk tech. The tech sector surging up more than 16 in the last year. Joining us with top tech picks, mark mahaney from rbc capital markets. Should we talk about some things you love these days . Lets do it. We can talk about some things i dont love. Netflix is high on your list. Among the large cap internet strongs, the f. A. N. G. Names is that an internet stock or media stock . Its both. But on demand streaming company. Its where tv viewing, Video Entertainment is moving towards. Its a global company. 80 million subscribers. We think it will double, 150, 160 million subscribers. In the u. S. We see Rising Subscription levels. When you say its a tech company and media company, those are different valuation scales. Which do you measure it by . Based on cash flow it kicks off, the earnings it kicks off. Did i get around that question . In terms of the multiple. Youre assigning a tech multiple to the company . Im serious when it depends on the Earnings Growth. We think this is generate 10 of Gaap Earnings in 2020. We think it could be a 200 stock. At 95 now. Thats i wouwhy it could double three years. They implemented a price increase, 7. 99 to 9. 99. They had a sub shortfall. If there is another sub shortfall this quarter, the stock wont move. Im curious, do you think most of the growth will come internationally or inside the u. S. . The u. S. Market is saturated. 50 of u. S. Broadband households are netflix subscribers. 50 of amazon prime subscribers. In the uk, its 40 . In almost every market they entered, within three years they reached 10 . They did it in latin america, france and germany different countries. How does that complete to hbo now, hulu, amazon, theres so much overlap. Do they become substitutes for each other or not . They could be. Right now theyre about eight times bigger than the closest competitor in terms of paid subscribers. The closest company is huely with 8 million. Youre not counting amazon because it is. The biggest push back i get, bulls like myself get on netflix, isnt amazon prime going to destroy net flick . We ran this survey of 2,000 amazon customers. 50 sign up to netflix. 70 of the amazon prime customers sign up for netflix. I dont think theyre a threat. Do you see where all this supply of content overwhelms the viewer and theres too much to watch and that they lose some Pricing Power . Theres only should many shows we all can watch. I see that theres potentially an overwhelming amount that swamps demand. I think theres already an overwhelming amount of content out there. Theres big bundles people have been buying. I think were going through an unbundling of content. In 10, 15 years i would imagine people will bring it down to five or six mini bundles theyll buy for much lower prices than today. One of those five bundles is going to be netflix. Let me talk about two other stocks. Expedia. You love expedia. Yeah. Tell us what you like about that. One of the best executers in the internet space. We like to see that consistency. A good play in online travel. Two Great Companies in that space, priceline and expedia. We would be long both stocks. Expedia now seems more dislocated. Do you like the operations or you like whats going on in the economy and travel broadly . I think travel turns out to be much more of a fixed expense item than discretionary. We dont really see especially in europe, where priceline is strong. Europeans will give up almost anything before they give up travel. Am i right . Absolutely. These days betting on services is much more important than spending on goods. Says the person with the accent at the table. I single handedly represent europe as a whole. Who do you hate . The ones were most cautious on, we saw a fall off in consumer interest in ebay. The other one, the real disappointment in the large cap internet space is twitter. Even with nfl streaming on thursday nights. Im not sure it moves the needle. If that happens, does that company get picked off . Maybe, but not any time soon. Theres not a strategic bidder in the internet space. Traditional media, are they going to step in and buy twitter . I think theres a yahoo scenario for twitter. But yahoo got bought after years of no growth. One more working is google . I think so. Its working already. 1,000 price target on google. Its risen with the market. No dramatic outperformance. Theres a deceleration debate, i think people are missing basic things about google, particularly the power of youtube. I love that you cant call it alphabet either. Terrible name. Why google over facebook or alphabet over facebook . This is probably the most Investor Sentiment is more bulled up on internet stocks than two years. When i talk with investors in new york, were not ive had many opportunities to really pitch aggressively stocks in the past. This is not one of those types, with the exception of netflix. Thanks for coming. When we come back, were days away from the first president ial debate and the latest wall street journal poll Shows Hillary clinton with a slim lead. And lets look at yesterdays s p 500 winners and losers. 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Quick question, what are voya retirement squirrels doing in my house . Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . No, im more like a metaphor. Okay, a spokesmetaphor. No, im. Youre a spokesmetaphor. Yeah. Ok. See how voya can help you get organized at voya. Com. Welcome back to squawk box on cnbc. The u. S. Equity futures have been indicating higher. The dow futures up by 73 points. S p 500 futures up by 7. Nasdaq up by 18 after a market gain. Yesterday the dow was up, less than 1 . S p 500 up by 1 . It was all because of the fed. Lets talk politics. New nbc wall street journal poll out for the 2016 election. John harwood joins us with some results. Andrew, the interesting thing about this poll is that for all the twists and turns weve seen in the race over Donald Trumps comments and birtherism, Hillary Clintons health problems, all sorts of headlines that tru s s fluctuated daytoday, this is a stable race. This is the first poll weve done that screens leikely voter, Hillary Clinton has a six percent lead over donald trump. 43 to 37 . Gary johnson gets 9. Jill stein, the green party person gets 3 . If you look at a twoparty race, Hillary Clinton gets 48 , trump 41 . Sevenpoint lead, a substantial lead. If you look at the contributors to that lead first donald trump is doing less well than mitt romney. Hes leading among those people but not overwhelmingly, and less than romney did. Hillary clinton is Winning College educated white voters. Thats extremely rare for a democrat. In the history of exit polls weve never seen that happen. She has a lead of six points among that group. Though Hillary Clinton does less well than barack obama among young people, 18 to 19, these doing better than him among 30 to 44 and among senior citizens. Those are the foundations of Hillary Clintons strength. Its heading into the debate next week. Peter heart, the democratic pollster, and the republican who do our polls Say Something has got to change for donald trump to get back into this contest. What happened . There seemed to be such a Momentum Shift after 9 11 and hillarys fainting or whatever it was. The numbers come all neck and neck, and some say trump has a legitimate chance. He still has a chance, however not all polls are created equal. Our poll, im biased because i worked with it for 25 years. I think our poll is among the very small number of elite polls. Some National Polls you can throw out. Secondly, the daytoday fluctuations in headlines have less effect than we typically assign them. Hillary clintons lead got too big. Got bigger than could be sustained. Donald trump had some republicans come home. Our poll in the twoway shows her lead down from 9 to 7. A shrinkage. When were the polls . September 16th to 19th. The last day of polling was monday. The first day was friday. What about states like ohio, pennsylvania, florida . If you look at the Electoral College, theyll make all the difference. Donald trump is doing well in ohio. Hes leading many ohio. Hes very close in florida. That looks like an even race. We had a poll that showed this week donald trump behind by one in florida. Others have shown him ahead. Three polls yesterday by fox showed him leading North Carolina, though there was a new one out this morning showing her ahead. North carolina, nevada, donald trump had a lead as well as ohio. Heres the thing. Because of the patterns of support weve seen in past elections, donald trump could win ohio, florida, and nevada and still lose this race if Hillary Clinton can win colorado and virginia. There was a poll that showed Hillary Clinton up nine in New Hampshire. A new poll out just a few minutes ago that showed her up nine in colorado. Shes got the advantage. No question about that. Theres always a question about margin. Theres a threepoint error margin in our poll. Nevertheless, she has got an edge and this shows its fairly stable. John, thank you for this. Well continue the conversation now. For more on the president ial election, lets bring in ben white, cnbc contributor. We dont talk about it in that poll and in many polls, what has been polled which is the enthusiasm gap, which is to say who will show up at the poll ultimately. Its one thing to tell a pollster on the phone how you feel. Its another to get out of the house and wait on line. Thats true. The Clinton Campaign has to contend with that. Has to get their vote out. They have to drive up big margins in urban areas, particularly in places like North Carolina to overcome trumps strength. He has motivated supporters, particularly in rural areas with less educated white voters. A lot of them will turn out. The Clinton Campaign is working hard on turnout models, what the electorate will look like and getting those people to the polls. The advantage she has there over trump, she has Massive Organization in all of these swing states. He doesnt. They have much more money. They have a lot more tv ads on the air. In addition to everything john talked about, all those advantages, particularly the Electoral College which tilts in her favor, they have a structural organizational advantage. Based on johns poll, does that assume hillary survived the deplorables comment . I think she survived it. And he made the point that a lot of these headlines that people in the media say this will shift the race that will shift the race, they dont shift the race that much. We have a traditional democrat versus republican president ial election, despite all the craziness. Despite all the stuff donald trump says. He is close, but not close enough to win. Her advantage is such in the states that getting over the top will be hard for him. This issue of enthusiasm or what people call intensity of electoral intentions, its fascinating. Its something that pollsters cannot measure accurately. If you look back at the brexit vote, it can matter enormously. One of the reasons why brexit happened is because it turned out the pro brexit camp were that much more intense and committed to getting to the polls, even on a rainy day. You hear a lot from clinton supporters about brexit and are we in for a big surprise like brexit. I dont think we are, partly because of the organizational advantage that democrats have. Maybe theres not the same enthusiasm for clinton as there was for Obama Jack Welch was on earlier this week. Did Kellyanne Conway tweet it out . Was a cnbc. Com article. I cant tell you when i tell you the rabid following to watch what happened to that, it was astonishing to me in terms of the enthusiasm, which i dont believe would have had had we had a guest come on and say similar things about Hillary Clinton. Thats true. His supporters online im not saying twitter is representative. But it suggests something theres an intensity there. No question. No question. His rallies are huge. Hers are not. He has an intensity of support. We dont know the extent to which that will translate into election day. Gillian is right we cant test it. Theres an unknown factor that maybe there are secret trump voters who show up and blow her out in places like pennsylvania. In Morning Money this is about Elizabeth Warren and how far left she can pull Hillary Clinton. She said she is warning on wall street picks this revolving door issue, you say if you get into office there will be nobody from the Financial Sector is allowed. I find this odd. Do you want experts . This is the heart surgeon argument. Youre having heart surgery, youre not going a psychologist. Theres also the argument that people who were in the industry sometimes are tougher on it than people who never were. Gary ginsler is a perfect example of that. Hes a hero on the left. He was at goldman forever. But she will put pressure on people like larry fink, because they worked in these places they on a black list. I know theyre playing the music. Donald trump talking about his support for stop and frisk at the same time that he is courting the africanamerican vote. How does that work . Badly. Its not going to work out well for him. His africanamerican outreach is question the president s birth, talk about stop and frisk this wont take him from the 1 where he is right now with africanamericans and may take him to zero. Great to see you. When we come back, a top lif the top universities, and for the first time a u. S. School is not at the top of the list. Theres no one road out there. 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This is the first time in 13 years of the newspapers rankings that a u. S. University was not at the top. After that, California Institute of technology, stanford, cambridge and m. I. T. This is streaking. Are you an oxford grad . I went to cambridge, the other place. Youre still on the list. You can tell from my accent. Whats fascinating is that oxford unlike most american colleges does not have a big endowment fund. The funding in the uk is different. In some ways that makes this achievement more striking. When we come back, well talk about leon cooperman, the s. E. C. Accusing that billionaire and telling his investors he is not settling that case and wont let anyone destroy his legacy. Kate kelly is going to join us to talk about it when we return. 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. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley yeah. Well, we gotta hand it thto fedex. Glasses. Theyve helped make our ecommerce so easy, and now were getting all kinds of new customers. I know. Can you believe were getting orders from canada, ireland. This ones going to new zealand. New zealand . Psst. Ah, false alarm. Hey you guys are gonna scare away the deer idiots. Providing Global Access for Small Business. Fedex. [baby talk] [child giggles] children i, j, k. [telephone rings] man hello . Man you may kiss the bride. [applause] announcer a full life measured in seats starts with the right ones early on. Car crashes are a leading killer of children 1 to 13. Learn how to prevent deaths and injuries by using the right car seat for your childs age and size. Welcome back to squawk box. The s. E. C. Announcing wednesday theyre charging leon cooperman with Insider Trading. Kate kelly joining us to break it down. Good morning. This happened after the show yesterday. We havent had a chance to discuss it. The s. E. C. s suit against cooperman is a move against a Hedge Fund Manager that enjoyed returns of 14 for nearly 25 years. But the allegations in the suit appear damning. About a pending asset sale at pipeline partners. And then bought shares based on that tip that helped create 4 million in ill gotten gains. Shortly before getting that tip and taking that long position. The suit alleges. And beginning to have sold it. It got worse. Coopermans buying actions struck a Family Member at the fund. That relative called the trades fishy and shady. Even saying somebody should investigate. Once served with a subpoena, cooperman tried to fabricate a cover story with the executive he betrayed. That executive looks to have cooperated on the case against cooperman. Cooperman whose assets have sunk to about 5 billion after two difficult years in the market has come out swinging. In a fivepage letter and on an investor call yesterday afternoon, he called the charges baseless. He vowed to fight them vigorously. He notes that atlas purchases the ones in question were to personal accounts he maintained and they werent sold for a year or more. Hardly evidence of a get rich quick insider scheme. He wants to protect his legacy which he said on his phone call took 50 years of hard work and playing by the rules to establish. Cooperman is not shy when it comes to a fight. And in an infamous 2011 letter he accused president obama of embracing desperate demagoguery with partisan antielitist rhetoric. Were going to have to run but real quick, once you have Insider Information you cant buy it or sell. It doesnt matter if you buy it and own for the year, thats not the measure. Thats the question here. In this case its a simple chain of communications. There was an insider at the company. Cooperman a longtime shareholder. The executive told the s. E. C. I assumed cooperman knew he had a duty not to trade upon this and it seems he did. Cooperman says its not cut and dry. Hes a character like ken langone. Maybe a hank greenburg. He is not going to take this lying down. Mark cuban as well. And he prevailed. Do you worry if youve saved enough for retirement . Are you or your spouse 62 or older . A governmentbacked reverse mortgage enables you to turn the equity youve built into the retirement you deserve. With over 20 years in the mortgage business, lendingtree allows you to compare free reverse mortgage offers with no obligation. Just go to lendingtree. Com or call now to get started. Live in your home and get the steady income you need. Enjoy your family. Your home. Your life. Lendingtree. When banks compete, you win. A Global Market rally. Stocks rising around the world as the fed kicks the can on raising rates. What it all means for your money and the chances of a december rate hike. Special market round table covering all the angles straight ahead. Heather bresch grilled on capitol hill. Are you telling us youre doing us a favor . A closer look at the political fire storm over pharmaceutical profits is straight ahead. And we hit the campaign trail and get an update on which candidate is spending more as the second hour of squawk box begins right now. Live from new york where business never sleeps, this is squawk box. Welcome back to squawk box, everybody. This is cnbc. Im becky quick along with Andrew Ross Sorkin. Joe has the day off. Peter boockvar is here. He is also a cnbc contributor. And julianne teff is also here. Were looking at the gains in the morning. Markets building this morning. Yesterday the dow was up by just over 160 points. This morning the futures are indicated up another 64 points. S p futures are above fair value, the nasdaq by about 16. The dow rallying yesterday for its second positive session in a row. Went from a loss to a gain as i mentioned of about 163 points. That was its best day since september 15th which is a week ago. The nasdaq hitting an alltime intraday and closing high. But again, these gains were not blowout gains that you might expect when the fed says its not going to be raising rates. Lets continue the conversation about the fed because they are holding rates steady, but odds of december hike now only about 50 50 after chair yellen saying she expects to see a rate increase this year. Steve leisman is here with more. The new mantra at the fed is to give the economy, quote, room to run. With inflation low, gdp weak, job growth strong but the Unemployment Rate not moving. Were not seeing strong pressures on utilization suggesting overheating. And my assessment would be based on this evidence that the economy has a little more room to run than might have been previously thought. Thats good news. There it was. She said it, i didnt make it up. Room to run. Most economists now pegging december as the likely time for the next fed rate hike. The fed market sees a 12 chance for november and at 50 in december. At oxford, theyre saying it was with several key indications and indications from chair yellen suggests the fed is strongly poised to raise rates in december. Not so much belief over there by mike england. He says the three dissents suggests the fed is on the brink of taking action perhaps thumbing their nose at a new administration in november after all. Insisted yesterday the fed not motivated by politics in this decision, guys. Why doesnt she just raise in november . That would be six days before the election. Shes not motivated by politics. It would be interesting to see if they come up with another reason not a hike. There are those who accuse the Federal Reserve of moving the goal posts yet again. Can i wind back to the brexit vote again . Do you remember how the fed delayed the rate move because of the brexit issue or rather because of fears of turmoil in the markets . This could play out again come november. If there is going to be a close race, if there are signs of market turmoil, thats going to be yet another reason for the fed to sit on its hands. She was asked about that yesterday and i think if there is actual volatility in the market, if theres a big selloff in one way or the other, remember the fed meets before the election. So its really hard in my opinion for the fed to say we are not hiking because of the democratic process in america. I think thats a really troublesome excuse from the central bank. But it can certainly say were not hiking because were concerned about the market volatility and we dont want to add to it. Were going to continue this fed conversation in just a minute. Actually were going to do headlines but maybe well continue right this minute because dean is here to talk about this. Deano is Bank Executive havent. Both previously worked at the fed. Steve is going to stick around. I have one question we can follow up on what was just being said here. On the political front, i thought one of the most fascinating things that was said was she said, look, when transcripts of all of this come out five years from now, i assure you you will not find any political influence. I agree. I imagine in five years we wont see anything in the transcript. But my question is since you guys have been part of this, are there phone calls going on or other things that wouldnt be recorded in the transcript where people are saying, look, we should just not talk about politics . Youre absolutely right. The people know that theyre being recorded. Theres other things that might be said behind the scenes in phone calls, side bars, et cetera. And theyre aware of the political calendar. And to juliannes point, theyre aware of the volatility. Its not about the election. Its not about the outcomes. Its about how the market might react. Its a ready made excuse for november. Youre asking for my opinion, i would say yes. Yes they stand fast. So nothing in 16 . Thats my view. Again, its like you know, if you think about the three dissents, to me thats yellen putting a stake in the ground. She was willing to take the three dissents because she had conviction. She wanted to stay where she was willing to take the three dissents. Therefore now that those guys have played their hand, those three president s, they played their hand. Now what . Is there a new metric out there. They said we have a jobs and inflation. Weve done it on jobs waiting for inflation to come up. Now were back looking at the jobs mandate because theres this notion of room to run. Is that a new metric out there for the fed . And how do you work with that . You know, how many metrics have we had over the last few years . Every year this seems like theres a new metric. Every month maybe. I dont want to exaggerate, but certainly theres ban new metric. Weve been focused on different metrics over different times the last few years. So absolutely, that is an issue with moving goal posts. If i could jump in for a second. I think youre overdoing the moving the goal post move. Its maximum employment and price stability defined as 2 inflation. People only looking at payrolls have been missing the larger point which is that unemployment hasnt declined this year. Total hours worked have barely moved since february. At the same time core pc inflation, same as it was in february. Inflation expectations still soft. And then the most recent run of the data, a little soggy. Its perfectly reasonable and consistent in this situation to let the economy run a bit more, let this second half play through and move at the end of the year. Which im confident they will do. This is peter. The Unemployment Rate has fallen from 10 to 5 essentially. Core pci is high for ten straight months and hive raised once. Can i comment on that . I went back this morning and looked at chair yellens speech in august at jackson hole and i looked at her testimony. This notion that se possibility that theres more labor should determine policy is nonexistent in both of those two speeches. So i think its fair, steve, to say that the committee has drawn too much attention to the payroll numbers themselves rather than looking at the broader picture of the labor market as well as the fact that there still isnt the progress yet definitive progress that theyd like to see on the inflation side of the mandate. But we know what the mandate is. We know what the data is. It would be curious to push rates higher in an effort to raise inflation and inflation expectation. Thats your goal without a very convincing backdrop of firming up in the labor market. Given what you just said, what are you telling your clients . What do they raise if they raise ever . I think they are raising 60 , 65 probability theyre raising in december. Give me a reason why you think that. Because i have reason to be optimistic for the second balance of the year. Can i follow up on that . I want a number that i can follow to try to get a sense of what the feds going to do. Do you need to see the Unemployment Rate decline . Or some form of the decline and even the u6 which is the broader measure of labor slack in order for the fed to get convinced that the amount of job growth out there is actually tightening up the labor market . As you well know, steve, its never down to any one single metric which was the mistake of focusing exclusively on payrolls in this debate. But certainly i think if they were to see a combination of strength in the payrolls the last payroll report was a bit soggy. Wier seeing a little bit more firming in the private payrolls combined with, you know, a tenth down or so resumption of declines. This is the larger picture you want to see. You also want to see this second half growth finally played through. Its a sense of the momentum here thats pushing you. Gives you more confidence on the inflation front. Remember we still need that progress on inflation. Dino does krishna has his reasoning or understanding. On the other hand is the fed undermining its correct going to what appears to some as new metrics here . I think the credibility of the argument is overdone. They can say, look, were being analytical. We are adjusting to a new environment and trying to find metrics to suit that new environment. Im not so much concerned about that specific aspect about credibility. You know, i think the question is, you know, what where are they right now with their policy mix . Where are they going . You know, have they clearly arctically what is driving the function because you could make the argument that all as has been said, you know, all of the goal posts that they set out some time back have been met. The employment, the picture where the economy is relative to potential. Thats all been met. But on the other hand they clearly want coming out of the crisis still that they want to be sure. They dont want to have a boj style reversal and go back to zero. And thats really the strategic asset. This debate is going to continue, guys. We got to leave it there. We appreciate it. Dino, thank you. Krishna, thank you. Lets get to some of the mornings top headlines. It is a busy day for economic numbers today. In 90 minutes time well get the jobless department claims. And out we the august existing home sales. Automakers are pushing the white house. Industry officials will tell a house panel today that low gas prices and weak demand for electric vehicles will make it pretty difficult and expensive to meet those targets. When prices are low, consumers just dont want cars that are supposedly more gas efficient. And after a 74day run pokemon go is no longer the top seller in apples app store. Its streak was snapped despite the release of a wearable device that makes the game easier to display. The next is crash royale. Red hat reporting better than expected results. Numbers above analyst estimates and is lifting the full year guidance. Jabil circuits revenue dropped less than expected. The Electronics Supplier also plans to streamline its capacity and support infrastructure which will result in nooerly 200 million over a twoyear period. And Bed Bath Beyond missed forecasts. I guess joe and i arent spending as much time there this quarter. Same store sales fell more than 1 despite soft results. The retailer is sticking with its profit outlook for the year. And finally housing industry deal announced lennar buying rival wci communities. The deal is worth 643 million in cash and stock. The deal in stock term is at 23. 50 per share. Thats a 37 premium to yesterdays close. Would have been nice to be in that stock yesterday. Yeah. The governor of North Carolina declaring a state of emergency in charlotte after protests overnight led to gunfire all in response to tuesdays officer involved shooting of a black man. We are joined now with the latest on the investigation and the public outcry. Sarah, it has been a very long night there. Reporter thats right, becky. Its been a violent night here in charlotte, North Carolina. And things right now are actually very calm. Much different from what they were than a couple hours ago when hundreds of people were marching through the streets. It was anger and rising racial tensions here after yet another officer involved shooting. So this brought out protesters to the street. Forced to use tear gas all in an effort to disperse the crowd and protest peacefully. Originally it started out as a peaceful protest. But things started getting more violent. Protesters taken to the streets. Were told they even broke into hotels, broke through windows of stores, had beer bottles smashed all along the floor here. We had people riding and demonstrating in front after a line of cops just blocking the street there. And at one point when they got to the center of the city, thats when shots rang out and a protester was shot. Police say that protester was shot by a civilian and not by a Police Officers. Were told that that protester is now fighting for his life on life support right now. Other Police Officers and civilians were also taken to the hospital. They were injured in those protests. Governor pat mccrory declaring a state of emergency bringing in the National Guard and Highway Patrol here to bring for support just in case if more protests arrive today. Reporting live in charlotte, sarah rosario, back to owe. Coming up, the business round table president will join us. Hes here to explain why. We will debate that with him. Meantime check out the futures flight. Lao looks like it would open up 65 points. The nasdaq up about 16 points. We are back in just a moment. re. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Apple could be facing 14 billion in back taxes to the European Union after its executive arm ruled that the company has got illegal state aid from ireland. Tried to put a positive spin on that action against apple. The takeaway is that europe is open for business. And we welcome anyone who wants to do business in europe, be successful, attract customers. But europe is not open for a tax evasion. Joining us is john engler. He issued a letter to the eu states to issue a return on apple. And we should point out that ireland itself is fighting this. Good to see you. Great to be with you. So the basic thrust of your letter was what . You made the point in the question. Ireland is the country thats the taxes country in this case. They have a law. The company in this case apple followed that law is now finding out years later the European Commission and really the competition had is saying youre doing something wrong and were going to retroactively point out this burden. That youre creating great uncertainty. Itd be like me offering something when a Company Located a new plant there and then later on finding out in washington they objected to michigans policy and overrode that. Thats whats happening. The eu is overriding irelands policy and thats why ireland is fighting this. And the company in this case is our worry is that could spread. This could be something and the commissioner even hinted at this that we could reach after other companies and try to assess liability to them. John, its jillian. Hi. Weve been paying attention to this story. Im curious. I recently spoke with official who is said they are concerned that there may be a bigger message sent to International Investors from this case. They insist that there are still plenty of investment coming into ireland. But are you seeing any of your members saying actually were going to put plans on hold . They havent said that. But i think this is the kind of inside companies that are members of the business round table, this is the kind of thing that alarms them. Its sort of like our own treasury here on 3785 looking at how they handled that. These kinds of sort of taxing official decisions that end up overturning what we thought was settled law creates great confusion. I think with the slow growth around the world, thats what we dont need at the moment. I think the u. S. Could fix its own tax system and we could help reduce the risk. But the european decision, this ones far reaching and very different than what weve seen. This is why we rope ahead of the countries and say look you need to Pay Attention to what the bureaucrats are doing. Theyre going at your decisions and your tax structure. John, i wonder if theres an irony in all this. Weve watched American Companies pursue inversions, take their business abroad because they thought the tax rates were going to be lower or environment more hospitable. Weve argued in the United States that we need to change things here because our policies are not conducive enough to business. I wonder whether this decision in part changes the calculus which is to say to jillians point whether American Companies plan to decide to put those on hold and whether it takes any pressure off oddly enough congress or others in washington to actually make some of the hard decisions weve talked about. Because they say to themselves, actually, this is a pretty attractive environment relative to the possibility that youre going to get sued and find out retroactively that your tax bill is different than what you thought it was. Thats an interesting question. I actually think it ups the ante here in washington. Remember, weve still got more than 2 trillion trapped offshore. And id like to see that money come home. Id like to see the u. S. Make the policy decision id hope the new administration might think this. We ought to be a magnet for all headquarters to be here. Lets fix our tax code and then have a predictable, reliable, set of administratable followons and it can be attractive again. I dont think any would like to be prefers elsewhere in the u. S. The tax code we have today has dictated that if you want to get your foreign earnings home. There have been suggestions that the u. S. Fine that theyre asking for of Deutsche Bank is tit for tat in this. The number is right at 14 billion both. Any truth to that . I havent heard that. But these boxcar sized fines that were seeing, im not sure theyre really helping anybody get their economies straightened out. I really think back to fundamental right tax policy, right Economic Strategies and the whole world would be better off with greater growth. Do you think that the relations trade relations between us and the eu, trade relations between us and china and other places, are they under more strain than recently s . Or am i reading the tea leaves wrong . No. Youre reading those collective collectivecollecrrectly. Weve seen some of the European Reaction to the negotiations in pretty early stages. And clear le arent going to get across the finish line before the end of this year. Then the problems were having in trying to get tpp which has been signed, agreed to, passed by the congress, we still hope that that can happen at the end of the year. But boy, trade pressure around the world is i think probably as tough as its been. What odds would you put on tpp actually getting passed here . You know if youre betting your money . Look, lets see what happens in the election. Lets see where we go. I think theres senator hatch was encouraging a week ago. The pieces are in place. I think the administrations worked hard. And the public support, thats important. The polling that we see really hasnt wavered very much. Theres still recognition for the u. S. That 4 of the worlds population, we can make food and provide services. We sure cant consume them all. We need to sell them to the world if were going to be a wealthier country. John, thank you for joining us today. Great to see you. Thank you. And good luck with the baby. Coming up when we return, donald trump spending on the rise thanks to climbing donations. Weve got details straight ahead. Well be right back with more on squawk in a moment. Ey just dr. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Ifmercedesbenz for under a 33,000 looks like. Think again. And. Again. The 2017 cla and gla, both starting at under 33,000. Mercedesbenz. The best or nothing. Every great startup begins with a simple idea. But with growth comes complexity. Thats why so many innovators are on the ibm cloud. Like refinery 29, with nearly a billion views a year. Or runkeeper, a training app used by over 50 million runners. Or Game Developers whose popularity depends on launching new updates fast. Helping to keep a companys success uncomplicated thats what the ibm cloud is built for. Among the stories front and center right now, the Labor Department to release jobless claims. They think the claims came in at 260,000 last week which would be the same last week. Joe biden says he sees a less than even chance that congress improves the tpp before the next president takes office. Both candidates oppose the pact. And the feds move to keep Interest Rates steady has taken its toll on the dollar this morning. Its touched a fourweek low against the japanese yen even though the fed did say that the case for a rate increase has strengthened. Also big news this morning, yahoo expected to confirm a massive data breach involving accounts. The breach is widespread and serious. Earlier in the summer yahoo said it was investigating an incident where hackers claimed to hack the account and were selling them online. The data includes, user names, passwords, and personal information such as birth dates. It could have major implication on the sale of yahoos core business to verizon. Well keep an eye on that. Becky says she lies about her birth date. Theres no reason they should have that information. You want to wish me a happy birthday . Why should i give you my birth date. I dont want to hear from you. I think if you have a user name or password on yahoo and use them on other sites, you should think about changing it. I dont do those things. Mylan ceo testifying before the House Oversight committee getting grilled over the epipen price hikes as we expected. Meg tirrell joins us with more. It was a very long hearing lasting into the evening last night. They kept having to break for votes. But it went on for several hours. Very heated questions to Heather Bresch. Not just over the price of the epipen but everything was on the table from her compensation to usa today story about her mothers involvement about getting epipens into schools. You could sense the frustration among the congressmen on this panel. Theyve had a lot of drug price hearings before. This wasnt the first one. You could hear that frustration coming through from Elijah Cummings in his opening statements. Take a look. I begged Martin Shkreli to use whatever influence he still had over his company to lower their prices. I pleaded with valeant executives to lower their prices. I called on mylan to reverse its drastic increases. But they all refuse. Cummings saying that mylan executives were going to laugh all the way home to their mansions on their private jets after the hearing. Later in the hearing bresch was questioned whether she did fly there on a private jet and she said she actually had. So she didnt apologize didnt they learn from the auto bailout . Do you remember that . It was because of safety and because of convenience shed flown there with employees earlier in the week. Safety . Yeah. They didnt give her a chance to answer that. Thats a common theme for the day. Maybe because people might throw rocks on me . I dont know. Well, theyre coming from pittsburgh. Anyway, she didnt apologize. She did say she thinks the 600 price initially was fair. Its interesting she didnt get a lot of chances to even complete a sentence or a thought. Here is where she explained what went into it. I hope no one would want to go back to where the awareness was so shockingly low and the access was almost nonexistent for epipens. I believe that we have continued to balance that access. It does come at a price and weve tried to balance that price and access while at the same time continuing to have access in more places. So her argument there is that theyve invested in awareness of anaphylax anaphylaxis. Thats a fair point. The other issue is theres pressure on the fda. They need to start looking at some of these areas where you have these drugs that have no competition. Is that a message you think is getting through on the hill too . I think the main focus was on Heather Bresch. However, from the fda getting a lot of heated questions as well about the pipeline of drugs for generi generics, why it takes so long to improve them. In cases where with the epipen theyre protecting the delivery system. There was a viable competitor that the fda has turned down. Thats right. But we dont know exactly why the teva generic was turned down. We havent seen exactly what was wrong with their application. Why it wasnt identical. But this morning ronny gal put out a word saying the sanofi product, there was a lot of talk about whether it could come back on. They discontinued that product but its not necessarily dead. Another Small Company has reacquired the license to that product and theres questions over whether that will come back. You have to wonder would somebody buy that product and bring it to market. Bossidy said when he was at ge, they could not raise prices on anything because they had massive competition. Thats the thing that keeps you in check. And the problem with the epipen, if it is such a clearly understood products in so many households, so many kids, its such a symbolic issue that anyone can understand. After the wells fargo grilling two days ago, there was a real sense that congress may really push not just on wells but banking broadly. Did you feel after this that that is clear not just from mylan but for the industry, that it is actually going to get worse for them in terms of theres a new target on their back that there wasnt before . Im not sure theres a new target on their back. A lot of people trying to see what actions will come out of this. People are in agreement there is a clear focus on the epipen. We will see changes around that and on the fda, but whether more broadly there will be practices in the drug industry. The things that drive up the prices, is there even an understanding in congress about that . Does bresch keep her job . There were no questions about whether she should resign. So well see. Thank you. When we come back, Wells Capital management strategist jim paulsen will join us. First look at the futures. S p up close to eight. Squawk box will be right back. Whats going on here . Im val, the orange money retirement squirrel from voya. Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . More of a spokes metaphor. Get organized at voya. Com. Welcome back, everybody. Weve been watching the futures this morning. They have been higher all through the day. Or all through the morning, i should say. Getting back to that story right now, dow futures up by about 73 points. Joining us more to talk about it is jim paulsen. He is chief investment strategist at Wells Capital management. We did see the markets rally although the dow was up by less than 1 . You can green arrows this morning but thats what weve seen every morning. Weve seen stronger gains in the futures up triple digits. What do you think about what the fed said yesterday and where does this lead you in terms of what youre thinking about about the markets over the next couple of months . Well, becky, id like to have the fed get on with it. The market always pauses historically whenever the fed is involved in e the first rate hike of the recovery cycle. And theyve sort of like perpetuated this process now for over two years starting with putting qe back in 2014. Its kind of keeping us at the starting line which is probably the worst place for the markets to be. I wish theyd get on with it. I hope they do in december. But really i think the market was ready for it, becky. And would have been fine if the fed came through. Im sure it would have had a knee jerk reaction but then probably recovered and done okay. I think the biggest one of the big variables that has been involved in this cycle i think has been earnings. In other words, about the time that we reached full employment at the end of 2014 or early 2015 when the fed discussion really heated up, you saw earnings fade. Earnings growth rolled over with the commodity collapse and theyve been down ever since. And its difficult to raise rates in the face of negative Earnings Growth. But i do think thats about to change. I think were going to head now in the second half this year back towards positive Earnings Growth. What ive looked at back to 1950 is whenever weve raised rates with when the Earnings Growth rate exceeds the 10year yield, stocks have annualized almost 10 annualized gains. So i think the market can handle rate increases as long as earnings return a little bit. Jim, this is peter. Why do you think earnings are about to reverse higher . What factors are telling you that . Well, i think one big part of the negative earnings decline was the collapse in commodity prices. And thats still working through the system. But its clearly ended. You could argue about we havent had full recovery by any means but just the ending of the collapse in is going to make a big push back. I also think, peter, that were going to have much better growth. Weve got a gdp close to three for this quarter. I think were going to do three or better in the fourth quarter. The global leading Economic Indicator index has been rising of late. The ecri has been rising. Our leading Economic Indicator just went to a new high for the cycle. I do think we get better growth and better earnings. Isnt the issue right now with Profit Margins labor costs are rising as a percent of profits and thats going to continue . Thats my concern with earnings is the Profit Margins to where it would be good for employees but not necessarily be good for employers. I totally agree, peter. I think the earnings story and the rest of the cycle will be far more muted than what weve already seen. But heres the deal. As i said about the earnings relationship, its not like its the late 70s or early 80s where growth had exceed 15 bond rate in order to be positive for stocks. Right now if earnings grow 2 year on year, its going to exceed the current 10year rate. Even if we had manage modest 3 to 5 growth, were probably still going to have a positive impact on stocks overall against a low hurdle rate on the debt rate. So i think the history suggests doesnt take much earnings to get an okay stock market from here. Were also seeing a slowdown in stock buybacks. Do you see that continuing or do you think the high level will persist . I think it might slow a little bit. And part of that, i think, is also because i think Capital Spending might pick up a little bit here over the next year. Why . Well, ive looked back historically and if you look at cap spending generally picks up whenever the factor rates tend to rise. Weve been flu this period of energy and Materials Companies causing a big collapse over the last two years. But now thats starting to pick up. And if the utilization rate picks up, i think Capital Spending will follow a little bit. Im not talking about super robust growth, but lets say we go back to zero year on year back to 3 or 4 . That might make quite a difference. To peters point, that may take away from stock buybacks. This recovery has not been like previous recoveries. And theres a lot of signs that capex is not behaving as anyone had predicted. Thats true. Theres no doubt about that. But i think its in the last two years the primary reason has been a falling factor of utilization rate due to collapse in energy which has ended. And i think whats different going forward, too, for the first time i would argue we have synchronized economic policies across the globe. This is e the first time in this recovery that every policy official in the world is pushing upward on the cycle at the same time. I think its likely to work. I think were likely to get a little balance in growth everywhere. And if theres one thing as a ceo that keeps me from a Capital Spending program is i look at europe and they cant get out of the way. If i see everyone bouncing even if its not robust, i think thats going to help Capital Spending and the rest of the cycle. I think were out of time here, jim thank you for joining us. Its great to see you. Thanks for having me, guys. When we return, the Campaign Spending is heating up with just 46 days to the election. A closer look at trumps recent rampup in spending. Robert frank is going to join us with that story. Back in a moment. 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 help keep cities moving, 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. [indistinct conversations] man looking for these . You drive buzzed, it could be one very expensive ride. First you got to make bail. Then pay me to get your car back. Your insurance premiums will go through the roof. And my legal fees just keep adding up. All told, it could end up costing you 10,000. [siren in distance] announcer buzzed, busted, and broke. Because buzzed driving is drunk driving. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley welcome back, everybody. Donald trumps spending level jumped to the highest in august but still trailing Hillary Clintons campaign cash. Robert frank joins us with more. Good morning. Donald Trumps Campaign did ramp up its spending in august but cut back on the controversial payments to his own companies. Trumps Campaign Spending top 30 million in august. That was up from 18 million in july. So big jump there. Hillary clinton still vastly outspending him with 50 million in august. Now, his biggest expense was 11 million to Giles Parscale that does work for trumps private companies. To date his campaign has spent more than 8 million on his own businesses like his golf courses, his office tower rent, and that Aircraft Company that he owns. But that amount dropped dramatically in august. Only about half a Million Dollars went to trump and his company. Most of that was going to tag air, thats the Aircraft Company he owns. Hes now chattering planes from a New Hampshire Company Called private jet services. The campaign spent a total of 2 million on companies affiliated with him or his children in august. That includes 1. 6 million to the maker of those make America Great hats. The owner of that company sits on the board of eric trumps foundation. A data on littics firm who happens to be one of trumps biggest private donors. Trump has also given his own Campaign Around 50 million. So we kind of have to balance that against the charges that he is using his campaign to enrich his company. Where is Hillary Clinton spending the 50 million . On the traditional political pollsters, advisers, you know, very few if any of the people who are getting paid by the Trump Campaign have ever worked on a campaign. Hillarys campaign is more the traditional groups and her staff the more than ten times what trumps staff is. He of course saying he has lean staff and thats a good thing. Theres been so many questions this time where raising money has always been seen as a bragging point. Maybe not so much this time because of just the politics in the nation at this point and how angry people are at traditional politics. How do you measure that out . With trump both and the foundation and the campaign the question is these blurred lines between the foundation, campaign, and private companies. The Campaign Finance law never pondered the idea you could have a campaign benefit someones company. The laws are prevented from a corporation to bribe a campaign. So the laws never envisioned that someone could use their own campaign to benefit their own companies. And thats the issue both with this and the foundation. He of course would say i want to use companies and people i trust and thats why im using them. Thank you, sir. Thank you. When we come back, stocks on the move ahead of the opening on wall street. On the top of the hour, david perdue will join us to talk about the election and why he suz he thinks trumps going to win big. Squawk box will be right back. Coming up, the business of optimism. How one Apparel Company is betting on positive state of mind styles. The cofounder of life is good will join us live from the iconic conference. Squawk box will be right back. With handles designed here, made here, shipped from here, on this plane flown by this pilot, who owns stock in this company, that builds big things and provides benefits to this woman, with new cabinets. They all have insurance crafted personally for them. Not just coverage, craftsmanship. Not just insured. Chubb insured. Now that fedex has helped us we could focus on bigger issues, like our passive aggressive environment. Were not passive aggressive. Hey, hey, hey, there are no bad suggestions here. No matter how lame they are. Well said, ann. Ive always admired how you just say whats in your head, without thinking. Very brave. Good point ted. Youre living proof that looks arent everything. Thank you. Welcome. So, fedex helped simplify our ecommerce business and this is not a passive aggressive environment. I just wanted to say, you guys are doing a great job. Whats that supposed to mean . Fedex. Helping Small Business simplify ecommerce. Announcer theyll test you. Try to break your will. But however loud the loudness gets. However many cheese puffs may fly. Youre the driver. The one in control. Stand firm. Just wait. [click] and move only when you hear the click that says theyre buckled in for the drive. Never give up till they buckle up. Lets take a quick look at some stocks to watch this morning. Seaworld entertainment upgraded to buy. Citi says that the theme park operator could if it is toward capital expenditures. Also autozone reported quarterly profit of 14. 30 per share. Thats 5 cents above estimates with Comparable Store sales rising by 1 . Also a double digit increase in year over year earnings. And cbs was downgraded at tel see telsey. They said cbs has better metrics by itself than it would with viacom. Going to be stepping down in november. Theres also questions about leadership and this is at viacom, that is. Story to watch. We want to thank our guest host for the last two hours. Peter boockvar. I might be here for another hour. Are you sticking with us in. We finally lured you in. Never mind. Theyre staying. Were staying. Were back in just a moment. When we come back, former Dollar General ceo turned republican senator from georgia david perdue joins us to talk about the election. Plus the business of optimism. Apparel maker life is good is building an empire out of positivity. The companys cofounder will join us in a bit. Squawk box will be right back. Its me, arty come see what i collected from the creative galaxy in my idea box. Would you help me make art . Each one of our journeys keeps us young hey, i have an idea well never get older. Arty go be amazing amazing announcer give your Cardboard Box another life. New this morning, Hillary Clinton leads donald trump in the latest national poll. But the race is tightening ahead of next weeks debate. Grilled on the hill. Billions of dollars in profits. We cut the price you cut the price in half. Do not do that to me. Heather bresch fields tough questions from lawmakers and defends the drug companys epipen price hike. Plus the multimilliondollar business of optimism. Apparel maker life is good is building an empire out of positivity. The cofounder joins us as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box here on cnbc. Im Andrew Ross Sorkin along with becky quick. Our guest hosts jillian tett and peter boockvar. Take a look at the futures this morning after we got that news from the fed yet. Markets look like theyre going to be up today. Nasdaq up about 22 points. Among our top stories today, just this story. Asian markets closed higher as well. You saw our futures. Asian markets we should point out the nikkei was closed in japan for a holiday but the hang seng up by a third of a percentage point. Shanghai over half a percentage point. And the kospi gained more than that. The dax up by better than 2 in europe. And so is the cac in france. Ftse up about 1. 3 . Gu gundlach says he sees december hike as a possibility. I think december is a huge who knows at this point. Think of the magnitude the fed guessed for todays nonmove. And how thats changed over the past months. Which thinking of president ial debates, election. This is highly unknown whats going to happen in december. And so im not surprised that the work function that shows the embedded probability of the fed moving from the short end of the bond market is right about 50 . Because thats probably what the any rational person would put the odds at. Theres too much wood to chop economically between now and december. In Corporate News yahoo is reportedly expected to confirm a massive data breach exposing millions of accounts. The breach is widespread and serious. Earlier in the summer, 200 million yahoo User Accounts were announced. That data allegedly includes user names, passwords, and personal information like birth dates. Were going to do stocks to watch quick. Lennar is building wci communities for 643 million in cash and stock. Its 23. 50 per share. It is a nice little 37 premium compared to yesterdays close. Also Seaworld Entertainment upgraded to buy from neutral. The firm says that pricing pressure should be offset by cost cuts. Seaworld believes it will benefit from recent dividend cuts by capital expenditures. And cbs down to market perform. That firm siting an increased likelihood cbs will combine perhaps with viacom. It is the open opera that keeps on rolling. Telsey says that well, that the chances are much better. So well see. We are just seven short weeks away from the president ial election. A new nbc news wall street journal poll today shows clinton is leading trump in a fourway race. 43 to 37 with gary johnson taking 9 and jill stein 3 . U. S. Senator david perdue says that the country is in need of a major change and he thinks donald trump can and will be the guy to do it. He joins us this morning from washington. Senator perdue, by the way, is also the former ceo of reebok and Dollar General. Senator, thank you for joining us. Good morning. So were looking at these new polls and obviously polls have been up, polls have been down. Momentum seems to be flowing all over the place. But the latest poll weve been talking about this morning does give a significant advantage to Hillary Clinton. Why is it that you think the poll is picking up . First of all, this same poll had me down four points. The National Polls had me going down six point and we won by more than eight points. So i dont put a lot of stock in the current polling. For a lot of reasons. We have a lot of new voters this time and an unusual candidate. We have an outsider. Frankly the Polling Industry as well as the media frankly look at these candidates through the lens of the washington bubble. So im not putting a lot of stock in these polls yet. And frankly i think a lots going to happen over the next few weeks as we move into the election and have these debates, by the way. Let me point out the polls. Its kind of struck me as amusing to watch. Each camp on both sides of the spectrum on this. The democrats and the republicans trash the polls say theyre no good until the polls have them up. In which case they tout the polls. Youre saying forget all the polls, right . Im just saying you have to take it with a grain of salt. Were looking at the. The intensity that you see behind a donald trump candidacy belies the favorables and unfavorables. Going into the final weeks of a race. What i see going on right now is these polls are not picking up on new voters. Theyre not picking up the intensity. So i think what youre seeing is a greater range of variability in these polls and youre going to see that over the next few weeks. I would predict that trump is going to out perform these poll nos matter what they say. Senator, im curious. The race being watched closely around the world. If you had one or two key pieces of advice that you would give donald trump right now for how to keep building on this momentum, what would they be . I think to talk to people about the Obama Administration and how Hillary Clinton is going to double down on the failed policies. We have exampled around the world too. The United Kingdom reduced their Corporate Tax rate in 2009 over five years from 28 to 18 . They got rid of their repatriation tax and we now see in london as a mecca for corporate headquarters. I think these are the things we ought to see him talking about. Hes beginning to do that. His Economic Policy is a great first step. To get the economy going again. Thats what people want to hear out there. People are hurting. I mean, between unemployed, underemployed, and people who have stopped looking for work, people are struggling getting from payday to payday. But do you think that hes doing enough to reassure people who were worried about some of the inflammatory language . Because, you know, i speak to Business Leaders who say to me we like some of these points talking about business and taxation. Yes we recognize that people were hungry for change, but some of that language makes me very scared. We have the weakest recovery in 70 years. We have fewer people working as a percentage of the workforce than any time since jimmy carter was president. We have a gdp thats growing under 1 on a compound basis under this president. And in the last seven years we let 4 million women fall into poverty. Thats what we should be scared of which is the status quo which is what Hillary Clinton is promising us. Can you speak to the temperament issue . I have to imagine there are comments that he has made during this campaign that you would not be proud to say out of your mouth. Hes a different person. Im a different person. Hes had a Business Career though. And look at the stark contrast between these two candidates. On the one hand weve got a person whos a derivative of the political bubble who in some cases in my mind believes shes above the law. Then an outsider guy, a business guy whos been a fighter his entire career and is listening to the people back home. I think weve got a stark contrast of two individuals. Im excited about whats going to happen over the next few weeks. Would you do business with donald trump . I have, absolutely i would. You have and you did. Yes. This is a guy in the real world. This is what washington misses. People who have been in washington, never been in the enterprise world in the real world have no clue in whats happening in capital employeeing people. Do you think it was a mistake for macys to stop doing business with him . Im sorry. Do you think it was a mistake for macys, for example theres a list of companies that stopped doing business with donald trump for doing macys said it was because he was running for campaign. Thats part of it. I think what youve got to do is look at each situation. The Bigger Picture here some was the inflammatory language. Nbc universal stopped because of the inflammatory language. Thats their decision. If you need somebody to get this country going, many think rereally theyre really concerned about their own security. If you look at the National Security situation, the two go hand in glove. Because of aur debt situation were not really able to defend our country the way we need to right now. I think donald trump is talking about getting the economy going and developing a longterm strategy to become responsible again financially. Lets talk about the debt because the committee for a responsible federal budget, this is the group. The Bipartisan Group that had been going around trying to get people to come to the table and deal with that they say looking at the latest numbers clinton has released and the numbers that trump has released, theyre now expecting that clintons plans would be over the current law levels. They would now, thats down from what they were expecting before. What do you think when you see numbers like that that are assessed and tossed around . See, the media looks at numbers like that as absolute. Im a business guy. I understand what happens when you adjust the tax rates, when you get after regulation, then you unleash this energy boom. What an effect that will have on the economy. Thats a forecasting model im not sure i agree with these people with an increase. Its hard granted, it is really hard when you look at dynamic scoring and say, you know, im going to get 5. 5 growth of gdp which is quite a bit higher than weve seen for a very long time. Youre looking at the lowest gdp weve seen in years right now. Obviously regulatory stripping away some of that would probably help. A lot of these things to unleash it. But its hard to come up with a way to score the growth youre going to get out of these things. Of course it is. Remember when Ronald Reagan cut taxes in the 80s. Nobody thought it was a good idea and it worked. We have the highest Corporate Tax rate both nominal and effective tax rate in the world. We know we have to deal with that. Weve got a lot of regulations right now that are sucking the very life out of our economy. We know we have to deal with that. What Hillary Clinton is talking about in her model is basically a continuation of these failed policies weve seen in the last eight years. The last thing the Business Community wants to see in my opinion is a continuation of this environment that frankly is shutting us down. Let me put out a warning here. We dont talk about this a lot, but china right now has a larger economy. When you have parity than the United States. Theyre informsing 300 million in their military which on paper is half of what were spending. But theyre about the same as we are. Were moving into a situation where china could do to us over the next decade what we did to the soviet union and that is bankrupt them trying to defend their country. I think were in a dangerous time right now. I really want somebody in the white house who understands our Free Enterprise system and wants a different direction for our country. Senator perdue, thank you for your time today. Thank you, guys. Coming up when we return, the big business of optimism. Apparel company life is good doubling down on positivity in the wake of the election season. The cofounder is going to join us live from the iconic conference in just a moment. Welcome back, everybody. A deal Just Announced between Cisco Systems and salesforce. Those two Companies Going to be integrated cloud based platforms and marketing various solutions enhancing business productivity. The companies did not reveal the financial terms of the deal. If you can get your head around what theyre doing, more power to you. Now to a Business Success story. We love these stories. From selling tshirts on the street to earning over 100 million in revenue, one company has found success in building a brand of optimism. Joining us now is the cofounder of life is good. Good morning. John, can you hear us . Yeah, andrew. How are you . How are you doing . Im doing well. Tell us for those uninitiated how you started your company and what this is all about. Well, thats the short version is my brother and i wanted to convert art and business somehow. We found tshirts to do that. We basically lived out of a van for five years trying to sell shirts to kids in College Dorms without much success. Finally we landed on something after some being wildly unsuccessful. We found this one shirt that said life is good with this character named jake. And that changed our lives forever. That shirt took off and we started building on that. Over the years we built so much from our customers on that message. That life isnt easy, life isnt perfect. The people that are most loyal to our brand are the ones that have been through the most adversity. And what was it about that moment . Was it just the tshirt itself . Was there a marketing opportunity around it . What was the Inflection Point there . It was actually a conversation we had a lot about how people get fed a lot of negative news and its hard to navigate and we wondered how to create a rallying cry for optimists. Thats where the first life is good shirt came from. People weve realized since then whether its a wartime, whether the economy is struggling, people want something positive to rally around. And fortunately our brand has become one of those things. Its one of the great things about america, isnt it . Ive noticed in the past that pessimism sells in europe and optimism sells in america. But im curious are you seeing at the moment more demand for optimism amongst the consumers youre selling to given the gloomy tone of the election and all the fear amongering and stuff . We actually are, absolutely. And weve seen it as i mentioned in wartime. And at first when something terrible happens in this country, lets say 9 11, we didnt know if it was probably to send out. But they want it more than ever. To a lesser degree right now, its a strange year and theres a lot of tension on different levels. And people that the demand is higher. And i think people are looking for ways to rise above the noise and the mud slinging. And were trying to provide that. We started something monday called positive state. And were highlighting people that are doing good in every state in the 50 days leading up to the election and were giving out grants to people in every state to help them grow good in their community. Thats another question i had. When you look at your consumers, is there a particular demographic that is hungry for optimism or a particular part of the country . And is it correlated to sunshine . We actually its not a demographic based on age or background. Its really, you know, its about optimists and then ast about people who are trying to help convert to optimism. Its as simple as that. John, this is a business question. Maybe its a hard business question. Whats the defensibility of a tshirt company in this day and age when i imagine if many of us had a great slogan and i cant claim i have one at the moment could start a tshirt company tomorrow . Its a low barrier to entry. So absolutely. Its one of the reasons we jumped in. Fortunately we found something with much greater depth than a trendy slogan. We learned that from our customers. We didnt know at the beginning were trying to celebrate the good, help people focus on the good. We learned something much greater which is life isnt easy, life isnt perfect, life is good. And again, people seem to be drawn to our brand even more when they go through difficult adversity. John, we love the message of optimism. Especially given the doomsday scenarios talked about at this table. And its great seeing a Success Story like yours. Wish you a lot of luck at the Conference Today and with your business. Thanks. Thank you so much for having us on. Great to see you. When we come back, the zuckerberg family announcing one of its biggest investments ever. A multibilliondollar initiative to try to wipe out diseases around the world. No small goal, but they are not putting up any small dollars either. Were going to hear from p Priscilla Chan right after the break. Hey nikki what are you doing here . You tell me, stephen. What . Im snapping. Youve been streaming my videos all morning. Now youre with this thing . No its not you its verizon they limit my data. I had to choose. Come on, girl. Lets get us a man with unlimited data. Why pay verizon more for data limits . Introducing tmobile one. One price. Unlimited data for everyone. Americans are buying more and more of everything online. And so many businesses rely on the United States Postal Service to get it there. Because when you ship with us, your business becomes our business. Thats why we make more ecommerce deliveries to homes than anyone else in the country. The United States Postal Service. Priority you welcome back to squawk box, everybody. Weve been watching the futures this morning. They have been higher all morning long. Right now the dow futures up about 75 points above fair value. S p futures up by 7. 5. Spurred by the feds decision not to raise rates. We saw the dow up by about 163 points yesterday. Lets give you some stocks to watch this morning. A mixed quarter for autozone. Earnings beating the street although revenue did fall short. Still that stock is up by about 1. 65. Rite aid earnings topping estimates. Although same store sales to be acquired and still expects the deal to close before the end of the year. And Facebook Ceo Mark Zuckerberg and wife Priscilla Chan are pledging 3 billion over the next decade to try to cure disease. They are funding a 600 Million Research center in San Francisco called the biohub. Priscilla talked about the initiative on the today show. I think whats important to us is to actually invest now to work towards a future where our children are living in a better world. Pretty cool to see them do this kind of thing. Not only that, you know, zuckerberg i heard him make comments how priscilla herself is a doctor and has seen this up close. Shes been so touched by having to give bad news to parents and families. And zuckerberg has added we spend Something Like 50 times the amount in terms of trying to help people who have these diseases and cure them afterwards than we do on Research Going into how to fight the diseases rather than just deal with it with understand its here. Gates have been at this. Theyve spent about 14 so far. And theyve almost eradicated polio from the globe as a result. Thats the model theyre looking at, the gates family. We should give them credit. Oh, no. I wasnt being cynical. I was just suggesting unfortunately i think this is going to cost a lot of money. But its interesting how theyre stepping into a place that used to be the reserve of the state increasingly were seeing ngos and entrepreneurs who are billionaires coming in and providing the backbone. The philanthropy, that money is good at going in and funding the projects that government money wont quite fund. Its good at finding solutions that you have government this goes to the larger question. The government used to do these moon shot projects. Thank god somebodys doing it. It has been an incredibly contentious election season here. We think thinks are bad here but check this out. Nothing like a european political brawl. But weve seen good ones out of asia too. This comes to us from the country of georgia. Two candidates starting insulting each other on set. It erupted into a physical fight. The election is scheduled for october 8th. Now, we think were going to see some fireworks out of our debate season, but nothing like this im guessing. Ive got to say, this is eastern europe. Its not quite brussels. Although brussels can get into tussles as well. Were just minutes away from the jobless data. Plus is the fed on the hunt for a new framework . Neil irwin friend of mine and favorite joins us next. Squawk box will return. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Yeah. Well, we gotta hand it thto fedex. Glasses. Theyve helped make our ecommerce so easy, and now were getting all kinds of new customers. I know. Can you believe were getting orders from canada, ireland. This ones going to new zealand. New zealand . Psst. Ah, false alarm. Hey you guys are gonna scare away the deer idiots. Providing Global Access for Small Business. Fedex. I was diagnosed with parin early 2013. Lly it took awhile to sink in. We had to think a little more seriously about saving money for the future and for the kids. The income of airbnb really helped to mitigate the stress. But we have that flexibility of knowing that if you know things get worse, we have this to help keep us afloat. So thats very, very important for us. Welcome back to squawk box. Lets get you through some of the big headlines. We are about to get the weekly report on initial jobless claims. But several other reports are ahead today. 10 00 eastern time we get august existing home sales as well as the index of leading Economic Indicators. Were now about ten seconds from the big numbers. Thats right. Weve been watching the futures. They have been higher. Lets get down to rick santelli. Hes got the jobless claims. Rick . We are looking at a jobless claim move of down 8,000 from an unrevised 260,000 last week. We now sit at 252,000. Obviously these are pretty low levels historically. And theres no bad news inherent in this number. The jobs market at least the creation numbers we see every first friday havent been too bad. The big story continues to be the digestion process. Stocks up. Dollar down. Rates down. Going more negative again in the uk excuse me, in the eurozone back to about a minus five, minus six basis point boom. And we do have more data points today. Its going to be more digestion especially when you consider whats going on with all the Central Banks and how investors may react. Have they reached the end of their limits . Many believe that time has come and gone. But well continue to monitor. Becky, back to you. Rick, you keep saying the digestion process. Are you feeling any indigestion over any of this . Well, i dont think anybody holding the long equity position is going to get any indigestion. And i think when it comes to Interest Rates, Everybody Knows that theres been a lot of thumbs on the scale there. But i do think that in the end the notion that the governor for all the policy is 2 inflation rate it creates a dynamic where theoretically if thats the litmus test, we could be at the same rate for years. Japan because it is possible with low growth and productivity youre not going to have the pricing pressures. To me they should target something else. Even though you may not reach the new rate, the fact is the patient has a host of other symptoms that are being completely ignored. Yeah. And we have a real life example of it when you look to japan. Absolutely. You know, and japan if we over simplify, their compounded loss of productivity over the years is something you cant get back. The easiest thing to think about when we think about our lack of growth is how many trillions of dollars over a tenyear period you get in the economy by just increasing gdp a half a percent. And i think that the metrics need to shift. We have stable to talk about the dual mandate. This is arbitrary. They need to be more flexible on it. They need to treat that 2 the same way they treat the notion of their variables and how they refrain from normalization. Theyre very flexible on that. Theyre inflexible on the 2 . I think history will deem that a large mistake. You did have three fed officials voting against this yesterday. So well see what happens in november and december. Rick, thank you. See you soon. Thank you. Joining us right now is steve leisman. Also New York Times senior economic correspondent neil irwin. Neil, welcome to the table. Its good to see you this morning, sir. Thanks, you too. So what do you think about what the fed said yesterday . Because janet yellen did say a rate hike is likely this year. Then she laid out three contingencies that shed need to see. Jobs, growth continuing. Need to be looking at Unemployment Rate down. In order for all of this to stay in what shes calling for fair balance. How likely is it that you do see a rate hike this year . I think its quite likely. What were seeing is janet yellen threading a needle. That for Risk Management reasons, for international reasons you need to really hold off a long time on rate increases. And shes trying to keep this committee together. This is a group of policy makers and its clear the move is going in december barring some real setback. She doesnt seem to have bought into what Eric Rosengren has been buying either which is this is dangerous to keep rates at these levels. It hurts retirees, pension companies, and the longer you keep it here the more pain you could inflict. Yeah. I think thats telling. Eric rosengren was dovish just three years ago. Now hes hawkish. If you look around the system, the advocates for keeping low longer are few and far between. Keeping that policy in place, its taking every bit of kind of maneuvering that janet yellen has on a committee. Steve, id like to ask you a question and maybe neil would like to come in here as well. Weve seen the recent election that donald trump has directly attacked janet yellen and in a sense politicized the fed. How do you think this is going to play into the feds Decision Making process in the coming months . Well, its an interesting question because its one thing to say theyre not political. But thats to say theyre not human beings. The idea that somehow they can be they can live in the vacuum and make policy in the vacuum is just not credible. They have to be aware in how their policy plays. If nothing else in order to secure the future of the institution. Thats something that has to play into it. I think that ultimately they would prefer not to have any roll in it. I think they dont want to be blamed for having an influence such that they can say the fed hike, the market tanked, trump was elected. Or the idea that they held. The way trump has set it up for better or worse, its a damned if you do, damned if you dont decision. I tend to agree with that. But i do think theres a way trump is so critical saying these low Interest Rate policies are about trying to get Hillary Clinton elected or help obama i think that can create a counter reaction. If anything i would imagine that it increases the resolve to stick with the policy theyve laid forth and tighten when they think its time. I think the conversation on tightening has changed here. In the data dependency weve been pounding in our heads over the last couple of years. The data has deteriorated over the past months. Now were hearing they want to raise rates. I think its shifted to oh my god weve raised rates once in ten years. We have all these excesses that have been building for years. Weve reached an Inflection Point. Oh, my god. And thats a different conversation. Oh, were data dependent and focused on that. There is something both camps can point to. First of all, can you really be sitting at zero Interest Rates this far after a financial crisis when it seems like the appropriate time to be at zero . Second of all, can you raise rates when the economy is on wobbly ground . It is the absolute scenario for the fed. Trying to imagine a room with donald trump and janet yellen facing each other off and talking about this. The mind boggles. I want to just interrupt that thought for a second. Look. Everybody always says the fed is in a box. Guess what. Thats their job. Their job is always to be in the box somewhere between maximum employment and stable inflation. That creates an ongoing dilemma. And every four years, that box includes a political dilemma. So its not a nightmare scenario. Its a scenario. Its a rather normal and regular scenario. This is no usual box they put themselves in. This is a corner that they put themselves in. One thing to remember, eight years into a recovery. Look. The one thing of all things yellen wants to avoid is the scenario of hiking and having to go back. If nothing else is consistent in fed policy, its the need or the desire to avoid that. Trying to avoid the financial crisis . Maybe thats the top priority. Maybe after avoiding the next financial crisis. I want to give you the last word, neil. Its hard to edge in when youre not sitting at the table. One thing to remember, if you went back in time and told yellen youd be chairwoman there would be 0 or 0. 5 rates, what would you do . Shes say tightening. Theyre moving gradually despite the economics. Thank you for joining us. Coming up when we return, under pressure on capitol hill. Heather bresch defending the decision for upping the price of e the epipen. Were going to talk to a pharma guru. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. 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. Another contentious hearing with Heather Bresch in the hot seat. Meg tirrell was there and here with highlight zblps a real attempt on behalf of members of congress to understand the pharmaceutical supply chain and the actual profit mylan makes off the epipen. Theyve argued they dont profit that much from each epipen. This is how Jason Chaffetz started off the hearing. Theyre here to tell us they make about 50 profit. Which i find a little hard to believe. And thats why i think its important that the ceo and i appreciate her willingness to come in and talk to us. Is telling us the middle man makes more than we do. So theyre saying they dont believe that mylan only makes 50 per epipen. Theres also a lot of confusion about why introduce a generic version of the price and not just bring down the price of the branded product. Listen to this exchange that Heather Bresch had. Were supposed to feel good because youve taken a drug youre overcharging six times what its worth and drop the price to 300. Sir, we were receiving 274 out of the 608. Do you think you were charging too much at 608. Sir, we believe it was a fair price and we just now lowered that price by half. Whyd you lower it by half if you thought it was fair . If you thought it was fair, leave it where its at. Heather bresch came with props and brought out these giant poster boards and it was just you can see here shes showing them shes trying to explain how the profitability works. She had a number of these. And, you know, they were just kind of they were trying to understand them but they couldnt get their minds around what the numbers meant. Theres a lot of skepticism this was the real profitability. I think if theres one takeaway about what might happen, toward the end they got to a need for transparency. What are the rates getting paid to pbms. Pharmacy benefits managers. Come back in ten days and share all of the information with pharmacy benefits managers. We dont know if theyll actually do it. This carries so many axes of the Financial Sector. You have middle men, you have confusion. You have the experts trying to blind people with complexity. And yet all the pundits are saying you know what this just smells wrong. Right. Were going to continue this conversation. Thank you, meg. Stick around. For more were bringing in a professor of management at Neeley School of business. Good morning to you. We were just talking about this particular grilling. There was another grilling on capitol hill this week as well with john stumpf from wells fargo. I gather you think that he may be on his way out. Well, its surprising to me that we havent heard more on that. Its really interesting to see whats going to happen. It was quite a grilling on tuesday. And i think that he has a difficult situation to deal with. The public is not very happy about these kinds of stories. And i think it feeds into the perception that business is out for greed. With the wells fargo case, its very difficult because this has been going on for five years. He was asked a lot of questions. And what comes across with john stumpf is that he was talking like a politician or hed been coached by attorneys or pr people. Mary, how do you compare the two . How do you compare the Heather Bresch performance to the degree these are performances well i think that john stumpf didnt come across as very sincere. He looked nonemotional. I think that Heather Bresch on the other hand tried to take a different tact. She at least tried to tie it more to data, figures, numbers. And i think she was trying to link it to a higher purpose. Whether she was successful at that, i dont think that she was. And if you were john stumpf, what could have, should have you said and now the damage is done if you think its done. Is there anything he could say now . What people want to hear is first they want transparency. But in addition to transparency, they want to hear a sense of remorse. And they want to know that these executives understand what theyre dealing with. This raises again the issue of executive pay and the extreme disparity between people, the working people and the executives who were paid exorbitant amounts of money. So when those questions get asked about the amount of money theyre paid, they dont answer that. They try to side track to another issue. So you heard john stumpf talk about the board and the board would make a decision. And you hear the massive numbers coming in in terms of pay. And you know that this is coming off the backs of workers or of people who are trying to take care of their kids. Mary, i was pretty shocked by the performance of john stumpf in congress. And im curious, if hed gone into that hearing and said im going to give up my bonus, im deeply sorry. I know weve messed up and i know i have to take a personal financial hit, do you think that would have helped at all . I think its always tricky when you think about an apology or a person taking responsibility. I think what was so difficult for john stumpf was he said i take responsibility yet he showed no sign of that at all. I do think that what people want to hear more than an apology is a sense of understanding. That executives realize that there are people who are suffering. And for them the amount of money thats been thats going across the table here is just exorbitant. Let me ask you this. If you think about and i dont mean to describe these things as witch hunts because bad things have taken place. But to the extent these things are theater and if you are a senator or congress person, you want to get your sound bite. And so there is a question, i imagine, going into a hearing like this. Do you say im not only going to take responsibility, im taking back the money, im not going to take a salary. Do you still get the same sound bite . Meaning, does it take the sting out of it or not . Of course that makes it difficult. And it is theater and we see the congressmen who are trying to make this political theater. But i think it comes down to really an issue, we talk about the performance of the executives but theres a higher level question here. And that is really about the purpose of business. And what the purpose of business is. What comes across to the American Public is that the purpose of business is to make more and more money. I think as a Business School professor, i see this quite often. Its frustrating for me because i see the benefits that it offers. But when we see cases like this and theyre so extreme and so excessive, it makes others go after business. And so it makes it much harder for businesses trying to do good. Mary, we appreciate your time this morning. Thanks. Thank you. Up next, jim cramer will join us live from the new york stock exchange. Once again, take a look at the futures this morning. Theyve been higher all morning long. Right now looks like things are up by about 93 points so you are getting toward triple digit gains for the futures. Weve seen that this week and hasnt necessarily meant that youd close higher. Got to watch the opening bell and closing bell too. Squawk box will be right back. A we want to thank jillian for being our guest host and having so much fun with us. Great to be here. A lot of fun. Come on back. In the meantime down to the new york stock exchange. Jim cramer joins us now. Good morning to you, jim. Loving the show this morning. Just terrific. Thank you. And lots to talk about. I dont know where you want to go. I wanted to talk briefly about mylan just to figure out where you stand on all this both as a stock and what you saw yesterday. I continue to believe that epipen had to be a much bigger source of their profits than they really are kind of than the inclination were hearing. Because this is just, you know, frankly, this should have been something that was dropped very quickly. They should have cut the price immediately. They did not do that. I really would like to see the actual p l. Really would. I thought you had a great interview last night with brent saunders. Just the idea that he is standing up to this trying to lead the industry away. I dont know why none of the other drug ceos seem to be getting the message. Happy birthday, did you ever raise the right question . Yeah. Thats exactly what bothered me, what bothered brent frankly. Where are these guys who are all saying, hey, listen, were not mylan, were not teva, were not valeant. Why didnt they sign . They should sign. Its quite embarrassing these other guys didnt sign on. Because this is a social contract they have with the country. Right. And i think these Drug Companies that are good guys ought to stand up and admit that theyre the good guys, or maybe theyre not. Jim, talking good guys and bad guys, i dont know if you want to weigh in before we go, leon cooperman, guest of this show often and guest on cnbc frequent lir. Ill say two things. Lee is a friend. Going to put that right up there. Hes inspirational from what i got in the business he was the Research Director at goldman. And the second is how about innocent until Proven Guilty . Its this Novel Concept i learned at law school. Kind of really helped me through my career. Good answer. We will leave it there. We look forward to seeing you in just a couple minutes, jim. Thanks. Coming up this mornings biggest movers plus a programming note, you dont want to miss this, jim cramer has an exclusive interview with the ceo of lululemon. Thats tonight on mad money at 6 00 eastern time. Were back in a moment. Hey gary, what are you doing . Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. 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. 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Ideas, inspirations, strategy from the best in business all day coverage continues on cnbc. Alphas not gone. Alpha hasnt disappeared. I mean, to think that the human brain cant make a judgment about one Company Versus another, one set of products versus another. I mean, these companies are run by human beings, right . And each one of us makes that judgment every single day as to what we think the future is of those opportunities. And thats what great Portfolio Managers do. That was j. P. Morgans mary erdoes rejecting the idea active management is dead. You can hear more of what she and other big Money Managers had to say about watching the entire panel. Its available at deliveringalpha. Cnbc. Com. Our guest list this morning has been peter boockvar, cnbc contributor. Peter, just a quick thought on the markets from here. I know theres a tremendous amount of focus on what the fed did and what they will do, but dont let that distract you from focusing on longterm Interest Rates globally. Which i think bottomed in the middle of july in the postbrexit blowoff. Bank of japan is acknowledging they cant push this any further. That in order to achieve 2 inflation, basically destroying their Banking System, the europeans are doing the same. So is the benefit to them of 2 inflation worth questioning your Banking System . So i think weve seen the bottom in global Interest Rates. And that should be peoples focus the longer end of the curve. What does that mean . If weve seen a bottom in Interest Rates, where should we be focusing as the best place to invest . Well, if longterm Interest Rates go higher, than all asset prices are as a ruvulnerable. Lose some steam. Yes. How quickly you think this catches up . Well, its going to be a process rather than an event, but the wheels have begun in motion. And japan was the epicenter of it. But youve been negative on the stock market for a while now. Well, i was negative because of the earnings declines and the slowdown in the economy. That has proven to be irrelevant to stock investors. Stock investors have only paid attention to Interest Rates. Well, if Interest Rates are now bottoming and in a process of rising, thats the last crutch that stock prices have. And you dont think that if Interest Rates rise even marginally that somebody will take that as a positive sign . Thats the flip side. Because youve made that argument too, i think. If Interest Rates stay low, i think they can keep this equity game going longer. Okay. Peter, been great having you here. Thank you for joining us. A fun couple of hours. Make sure you join us tomorrow, everybody. Squawk on the street begins right now. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. The s p set to erase its losses for september at the open in the wake of fed decision. And the stock rallying yesterday. Japan was closed for the first day of fall, which they do celebrate. Europe solidly in the green. 10year yield down to 1. 63, jobless claims were good, 252, thats the lowest since april. And that is the survey week. Road map begins with dissecting the fed. They didnt raise but chair yellen stoking a lot of speculn